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Search Engine Google conceals rivals with YouTube |
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SAN FRANCISCO -- Google’s headline-grabbing acquisition of online video
pioneer YouTube represented another page in a script that is becoming
depressingly familiar for all the rivals that are continually being beaten to
the punch by the Internet’s search leader.
Perhaps no Google competitor is weary of the story line than Yahoo Inc. - an
Internet icon battling perceptions that it has lost its competitive edge, even
as it continues to attract the largest audience on the Web.
Google’s
$1.65 billion deal to buy YouTube Inc., announced Monday, is just the latest
flexion of the Mountain View-based company’s muscle.
During the summer,
Google formed an advertising alliance with News Corp.’s MySpace.com, a
social-networking site that is challenging Yahoo as the Internet’s most viewed
site. Just as important, Google has continued to widen its lead in the lucrative
search market - the main reason investors think the company is worth $130
billion after just eight years in business.
Meanwhile, Yahoo delayed a
highly anticipated improvement to its advertising network and missed analysts’
third-quarter revenue targets. Those disappointments have contributed to a 38
percent decline in Yahoo’s stock price so far this year, wiping out $22 billion
in shareholder wealth.
Yahoo shares fell 56 cents Tuesday to close at
$24.47 on the Nasdaq Stock Market, where Google Inc. shares also declined $2.35
to finish at $426.65. In contrast to Yahoo, though, Google’s stock price has
edged up by 3 percent so far this year.
Contacted Tuesday, Yahoo
declined to comment about Google’s YouTube acquisition or its strategic
response.
Yahoo Chairman Terry Semel has repeatedly described the
Sunnyvale-based company as being well positioned to capitalize on the
entertainment and advertising industries’ continuing migration to the Internet.
To be sure, Yahoo is making plenty of money - a $324 million profit on revenue
of $3.1 billion through the first half of this year.
But Internet
observers are convinced that Yahoo will have to do something dramatic to get
Wall Street and Web surfers excited about the company again.
The
conventional thinking is that Yahoo will step up its efforts to buy
Facebook.com, the second most popular social-networking site behind MySpace.
Yahoo reportedly has been talking to Palo Alto-based Facebook for at
least three months and has offered as much as $1 billion for the site. Those
protracted negotiations have made Yahoo look somewhat indecisive, particularly
since Google was able to close its deal with YouTube in one week.
Edwina Baniqued
Search Engine Optimization Company
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