Search: Golden, Results: Google
SAN FRANCISCO (AP) - May 8, 2008 But as Google holds its annual shareholders meeting Thursday,
the company looks stronger than ever. Its stock is hot again and
Microsoft has scrapped its plans to buy Yahoo, with Google playing
the spoiler's role.
"Google is winning again. What a surprise," said Canaccord
Adams analyst Colin Gillis. "If you want to invest in the Internet
space, where else do you want to be but Google?"
More investors have been coming to that conclusion since last
month, when Google's stellar first-quarter results cast aside
concerns that the drooping U.S. economy would depress the online
advertising spending that generates most of the company's profit.
Google shares have surged 29 percent since the first-quarter
report, regaining a little more than half of the $100 billion in
shareholder wealth that evaporated as the stock plunged from an
all-time high of $747 last November to a 52-week low of $412 in
mid-March.
Meanwhile, Microsoft and Yahoo are again trying to figure out
how to lessen Google's dominance of Internet search and
advertising.
Microsoft hoped to throw Google for a loop by buying Yahoo for
$47.5 billion. Unnerved by the threat, Google worked behind the
scenes with Yahoo to thwart Microsoft's unsolicited takeover
attempt.
The counterattack now has Yahoo considering a deal that would
allow Google to sell some of the ads displayed alongside the search
results on Yahoo's Web site. The alliance, which has already been
tested in a two-week trial, will likely hinge on whether the two
companies can persuade antitrust regulators the partnership
wouldn't undermine competition in the ad market.
Even if a Google-Yahoo pact isn't consummated, the threat of it
helped drive Microsoft away from Yahoo for now. Microsoft Chief
Executive Steve Ballmer cited Yahoo's negotiations with Google as
one of the major reasons why the Redmond, Wash.-based company
decided to abandon its takeover attempt.
Yahoo is considering the Google deal because it believes its
rival's superior ad-serving technology will boost its profits. But
by acknowledging the shortcomings of its own ad system, Yahoo could
end up driving even more business to Google even if their
partnership doesn't pan out.
"Google is still in the driver's seat either way," said
analyst Martin Pyykkonen of Global Crown Capital.
Perhaps Google's only glaring weakness is its dependence on
those ubiquitous ad links that appear alongside search results and
other content on thousands of Web sites. They have generated
virtually all of the $42 billion in revenue that has poured into
the company's coffers since 2003, even though Google has invested
billions to build software applications for businesses and an array
of other products.
Google wants to sell more visual advertising through its two
biggest acquisitions - video-sharing site YouTube and DoubleClick,
which specializes in the Internet's equivalent of billboards.
The DoubleClick deal, completed for $3.2 billion in March,
represents the first time that Google will have to absorb hundreds
of new employees into its work force. The acquisition also prompted
Google to make the first mass layoffs in its nearly 10-year
history. At least 300 of DoubleClick's 1,500 workers are expected
to lose their jobs, and the number could rise in the months ahead.
Google also has been losing some of its top talent to rising
Internet star Facebook Inc., which runs an online hangout with
about 70 million users worldwide.
Sheryl Sandberg, formerly Google's vice president of global
online sales, became Facebook's chief operating officer in March.
This week Elliot Schrage, Google's head of communications,
announced he is taking a similar job at Facebook. Google also has
seen a couple of top engineers move to Facebook.
But Google's challenges are outweighed by its opportunities.
Besides developing more ad avenues on the Internet, Google is
extending its reach into television, radio and mobile phones. In
its latest push into the mobile market, Google on Wednesday
disclosed a $400 million investment into a new high-speed network
being developed by Clearwire and Sprint Nextel.
Google's success and bold ambitions figure to make its
shareholder event a congenial affair, much like the three previous
meetings that the Mountain View-based company has held since going
public in August 2004.
Meanwhile, Yahoo is girding for what's likely to be the most
contentious meeting in its 12-year history as public company. The
meeting, scheduled July 3, will provide a forum for Yahoo's angry
shareholders to excoriate - and possibly oust - the company's board
for its handling of the Microsoft bid.
"If I were an executive," Pyykkonen said, "I would much
rather be presenting at Google's annual meeting than Yahoo's
meeting."