In a very interesting article published by Dow Jones today, the question is asked is Google of Today like Yahoo of 1999.
The article states:
“”””In 1999, it would have been presumptuous to compare the fledging online search company Google with the world’s most popular Internet portal, Yahoo.”””
“””Google of today finds itself in a position similar to the Yahoo of old: Both are quirky-named companies with a corporate counter-culture and a seeming control of the Internet world. However, Yahoo’s inability to react quicker to changing user patterns, evolving Internet business models and a weakening economy sent that stock into a multi-year tailspin that it is still trying to fix – a fate that Google is looking to avoid.””””
“People felt these companies could do no wrong in 1999 and 2008. Now that Google’s stock has fallen 40%, the tough questions are starting to manifest themselves,” said
Scott Kessler, analyst at Standard & Poor’s. “I’m not sure that they are prepared for this kind of environment.”””””To be sure, the Internet economy is more mature than when the tech bubble burst earlier this decade, and no one is predicting that
Google will lose 95% of its market value, as Yahoo did in less than two years. Nonetheless, investors are warily watching how Google responds to looming challenges to its text-ad business, as well as an economy that is expected to slow even further.”””””
“The business may not be as recession-resistant as we originally expected,” Morgan Stanley analyst
David Joseph wrote in a recent note.””””””””Behavior Shifts””””
“””Internet users again are shifting their behavior – they are now searching less and spending more time on social networks such as MySpace and Facebook, where they bypass search engines and seem to ignore ads.”””
“””Google was quick to recognize the threat, and the opportunity, but its early attempts to monetize ads on MySpace haven’t gone well.”””
“”””Shifts in user behavior are a concern given that Google, like Yahoo before it, is heavily dependent on a single source of revenue – in this case, text-based search ads. Worries about Google being a one-trick pony were easy to dismiss as long as it continued to rack up stellar growth.”””””
All and all a very interesting article that you can read in full here
