I've been watching the software wars since I was a child, which means when Bill Gates was a child, which means before Microsoft existed. The changes have been nothing less than astonishing. The next big thing, some people think, is applications that both sit on your desktop and run off the Web.
Before microcomputers everything ran on a central computer, first mainframes and then sometimes minicomputers. With the introduction of spreadsheets on microcomputers it became possible for ordinary people to become highly productive on a computer they controlled. In the late 1980's Microsoft emerged as king of the personal computer business application - spreadsheets for bookkeeping and analysis, databases for mailing lists, and word processing for letters and reports. At the same time Apple and Adobe came to dominate what might be called the creative side: graphics and sound, including publication layout.
At the same time networking PCs, both to each other and central computers became popular. In the mid 1990's the Internet went mainstream. Web page layout became a big deal. But open-source and standards-based protocols emerged as rivals to proprietary players like Adobe and Microsoft.
Today Adobe announced the general availability of its much-pre-announced AIR tools. The basic idea is to have applications that can run on your personal computer and also connect to Internet. It is not a new concept, but it is a new battleground. In some ways it is not really very different than Web services, which are available through standard Web browsers.
Aside from a swarm of open-source or Googled up small competitors, Adobe's big rival is still Microsoft, which introduced a similar Silverlight toolkit in 2007.
I think Microsoft has the main advantage here. It has had ASP and .NET technology for connecting PCs to servers, including Web servers, for years. The focus of ASP/.NET programmers has always been getting business data to end users. Of course you can also do that with Java and Linux, if you can get volunteers or can afford to pay that sort of brain power.
Adobe now has absorbed the old Macromedia products like Dreamweaver into its creative suites. Adobe has great technology. I use Dreamweaver to lay out my Web pages (though this blog is done within Google's blogging online service). When it comes to visual presentation, Adobe has a strong lead. So you are likely to see AIR backed by creative professionals, including advertising agencies.
What are the chances of merging Microsoft's business oriented back-end with Adobe's eye candy front ends? It is possible, but then you are dealing with two proprietary systems.
The real solution for us all would be high-end open source systems. But the money is not there. Open source mostly seems to work well when the real work is done by professionals at companies like Sun and Red Hat. So Linux is great if you are deploying a server farm, and it is a great way to share code, but commercial sites are going to continue to be built with expensive, professionally developed tools.
As in the past, Microsoft and Adobe will probably both come out winners. Microsoft's installed Windows/Office base, deep programming knowledge (Visual Studio), database expertise and ability to redeploy vast resources as necessary will keep it in the game. Adobe AIR builds on Flash and other great technologies and a general graphical advantage, plus a huge Acrobat installed base. I imagine most programmers and designers will stay in the camp they are in.
If you are an investor you can see my financial commentary on Adobe (ADBE) and Microsoft (MSFT) at:
My main Adobe page
My main Microsoft page
Showing posts with label msft. Show all posts
Showing posts with label msft. Show all posts
Monday, February 25, 2008
Friday, February 1, 2008
Microsoft Eyes Yahoo; I Sell My Microsoft Stock
A couple of years ago I bought some Microsoft (MSFT) stock because I thought it was undervalued. I do freelance technology and analysis work. Back then Microsoft was one of my customers and my analysis of the real competitive situation convinced me investors were wrong, yet again, that Microsoft was about to be destroyed by a rival. I have heard such talk since the early 1980's and so far all rivals have been left in the dust. Google is a standing man, but Google has not been around very long.
Yesterday I thought the stock was very undervalued given the recent earnings growth. But then Microsoft made what could play out to be the stupidest move in its history: a high-ball bid for Yahoo. There were rumors of this weeks ago, which may account for the Microsoft's low stock price leading up to the actual announcement.
I covered the Yahoo (YHOO) conference on Tuesday (See my Yahoo January 29, 2008 analyst conference summary). Yahoo is a good company and profitable, trying to deal with changing Internet culture and heavy competitive pressure from Google (GOOG). But its stock, by my valuation methodology, was overvalued on an absolute basis and especially when compared to the prices of other technology stocks during this liquidity sqeeze.
Now Microsoft proposes to buy Yahoo for even more than its already overvalued price. I think Microsoft would have been much better off just getting out there and competing with Yahoo and Google. Merge in Yahoo and its earnings will become stock valuation at Microsoft's relatively low PE ratio. Combined the two companies are worth less than if kept separate.
In addition, I don't see Microsoft infusing new vigor into Yahoo, or the other way around. Two heads are less than one, in this case.
So I sold me Microsoft stock today. There are better values in the market, both in technology stocks and in other segments. I still think Microsoft is a great company. For its most recent view of itself you can see my Microsoft (MSFT) analyst conference summary of January 24, 2008.
If I'm wrong, so be it. I don't see much reward, and I see a lot of risk, in this merger for Microsoft shareholders. But for Yahoo shareholders it is a great deal.
See also:
http://www.microsoft.com/
http://www.yahoo.com/
http://www.google.com/
Yesterday I thought the stock was very undervalued given the recent earnings growth. But then Microsoft made what could play out to be the stupidest move in its history: a high-ball bid for Yahoo. There were rumors of this weeks ago, which may account for the Microsoft's low stock price leading up to the actual announcement.
I covered the Yahoo (YHOO) conference on Tuesday (See my Yahoo January 29, 2008 analyst conference summary). Yahoo is a good company and profitable, trying to deal with changing Internet culture and heavy competitive pressure from Google (GOOG). But its stock, by my valuation methodology, was overvalued on an absolute basis and especially when compared to the prices of other technology stocks during this liquidity sqeeze.
Now Microsoft proposes to buy Yahoo for even more than its already overvalued price. I think Microsoft would have been much better off just getting out there and competing with Yahoo and Google. Merge in Yahoo and its earnings will become stock valuation at Microsoft's relatively low PE ratio. Combined the two companies are worth less than if kept separate.
In addition, I don't see Microsoft infusing new vigor into Yahoo, or the other way around. Two heads are less than one, in this case.
So I sold me Microsoft stock today. There are better values in the market, both in technology stocks and in other segments. I still think Microsoft is a great company. For its most recent view of itself you can see my Microsoft (MSFT) analyst conference summary of January 24, 2008.
If I'm wrong, so be it. I don't see much reward, and I see a lot of risk, in this merger for Microsoft shareholders. But for Yahoo shareholders it is a great deal.
See also:
http://www.microsoft.com/
http://www.yahoo.com/
http://www.google.com/
Sunday, January 27, 2008
Microsoft's Fourth Quarter
With Apple (AAPL) stock down Friday to $130 per share, off 36% from its recent peak of $202.96, folks might want to revisit the adage "slow and steady wins the race." Apple is a good profit generator and reported good Q4 2007 earnings recently, but its stock had been in its own private bubble. Its high PE ratio could only be maintained by the fiction of eternal rapid revenue and earnings growth. With iPod sales up only 5% from year-earlier (which I warned about: See Apple iPod Sales Decelerate?), Apple will probably continue to grow. But not at the rate it has seen since the iPod lifted it off its moribund pre-iPod base.
Even after Friday was over Apple's P/E ratio was 28.51. Microsoft had a very upbeat Q4 earnings report on Thursday, but its PE ratio at close of day Friday was a quite conservative 18 (I am using today's Nasdaq figures: be warned all PE calculations are not alike!).
See my Summary of Microsoft's January 24, 2008 Analyst Conference for details on Q4 2007 (their fiscal Q2 2008). Here I'll just highlight some issues.
Microsoft revenue was $16.37 billion, up 30% from year earlier. Basically everything sold well, from Xbox 360 consoles and games to Vista to business software like SQL Server and Office. This figure was turbocharged because in the December 2006 quarter some revenues were deferred for purchases of Windows XP that allowed a free upgrade to Vista.
Earnings per share (EPS) were $0.50, almost doubling the $0.26 of the year-earlier quarter.
Like Apple, Microsoft's business is somewhat seasonal. It is strongest in the back-to-school and Christmas periods. So for the March quarter Microsoft guidance on EPS is $0.42 to $0.45. Still, the earnings run rate is moving towards $2 per share per year.
Apple's earnings were also growing quickly, up 54% from year earlier.
A economist who believes in rational investors and pricing being automatically set by free markets would have trouble with these numbers. If what investors want is earnings, and Microsoft's earnings are growing faster than Apples, then Microsoft should have a higher PE ratio than Apple, not a lower one.
Well, in case you had not noticed, investors are not entirely rational, and auction pricing of stocks drives prices away from equilibrium in the short run.
There are many details that can be picked apart in the Microsoft and Apple stories to justify bullish and bearish attitudes towards the stocks. But overall, Apple is a pet stock just as its technologies are driven by fashion over function. Microsoft is boring. The only reason to own Microsoft stock is to make money.
The death of Microsoft has been much heralded. Many companies that were going to kill Microsoft are themselves dead. The Internet did not kill Microsoft, and neither did Google. Oh, sure, it still might happen. Microsoft has a very, very, broad set of offerings; failure in one area can be made up in other areas.
Because of the current liquidity scare both companies stock prices now look undervalued to me, and that is true of many technology companies.
The most important thing is not whether you have a lot of Apple stock of Microsoft stock, but how smart you are in diversification. Diversification hedges your bets, but you still want to be careful in the selection of each and every stock in your portfolio.
I own Microsoft stock and have worked freelance for Microsoft. I don't own Apple stock, but have friends and family that own Apple stock and/or work(ed) for Apple.
More data:
My Microsoft main page
My Apple main page
Even after Friday was over Apple's P/E ratio was 28.51. Microsoft had a very upbeat Q4 earnings report on Thursday, but its PE ratio at close of day Friday was a quite conservative 18 (I am using today's Nasdaq figures: be warned all PE calculations are not alike!).
See my Summary of Microsoft's January 24, 2008 Analyst Conference for details on Q4 2007 (their fiscal Q2 2008). Here I'll just highlight some issues.
Microsoft revenue was $16.37 billion, up 30% from year earlier. Basically everything sold well, from Xbox 360 consoles and games to Vista to business software like SQL Server and Office. This figure was turbocharged because in the December 2006 quarter some revenues were deferred for purchases of Windows XP that allowed a free upgrade to Vista.
Earnings per share (EPS) were $0.50, almost doubling the $0.26 of the year-earlier quarter.
Like Apple, Microsoft's business is somewhat seasonal. It is strongest in the back-to-school and Christmas periods. So for the March quarter Microsoft guidance on EPS is $0.42 to $0.45. Still, the earnings run rate is moving towards $2 per share per year.
Apple's earnings were also growing quickly, up 54% from year earlier.
A economist who believes in rational investors and pricing being automatically set by free markets would have trouble with these numbers. If what investors want is earnings, and Microsoft's earnings are growing faster than Apples, then Microsoft should have a higher PE ratio than Apple, not a lower one.
Well, in case you had not noticed, investors are not entirely rational, and auction pricing of stocks drives prices away from equilibrium in the short run.
There are many details that can be picked apart in the Microsoft and Apple stories to justify bullish and bearish attitudes towards the stocks. But overall, Apple is a pet stock just as its technologies are driven by fashion over function. Microsoft is boring. The only reason to own Microsoft stock is to make money.
The death of Microsoft has been much heralded. Many companies that were going to kill Microsoft are themselves dead. The Internet did not kill Microsoft, and neither did Google. Oh, sure, it still might happen. Microsoft has a very, very, broad set of offerings; failure in one area can be made up in other areas.
Because of the current liquidity scare both companies stock prices now look undervalued to me, and that is true of many technology companies.
The most important thing is not whether you have a lot of Apple stock of Microsoft stock, but how smart you are in diversification. Diversification hedges your bets, but you still want to be careful in the selection of each and every stock in your portfolio.
I own Microsoft stock and have worked freelance for Microsoft. I don't own Apple stock, but have friends and family that own Apple stock and/or work(ed) for Apple.
More data:
My Microsoft main page
My Apple main page
Saturday, December 22, 2007
2007 Wrap Up
This month and the first half of January 2008 I am working on a project for Microsoft; I have not had time to write blogs, though a lot of interesting things have happened with the stocks I cover. So here's a quick summary of 2007, recent events, and my thoughts on 2008 before I dive back into Windows Server 2008.
2007 was a good year for me, but not for my stock portfolio. Fortunately I resisted the temptation to try to flip houses in 2005-2006, which would have left me bankrupt. Instead I paid down my mortgage, which guarantees me about 5.5% in long term savings. So while my residence has declined in auction value, there is still a lot of net worth in it. I live in California, I've seen a couple of downturns, and as they say, you can't make new real estate near the ocean. So I'm not worried. My apple trees brought in a good crop this year, and that is a good metaphor for how I think about investing. I planted the first ones 9 years ago and now just about all I have to do is water them 4 times each summer and I get top-quality organic apples to eat or trade. The best investments may require a long time frame.
My portfolio is another matter. It was an evil year for me; I did worse than the market. There were two major killers: AMD and Marvell (MRVL).
AMD had just introduced Opterons when I made my initial investment. It looked like an Intel killer for a while. Then it bought ATI at the same time Intel tried to crush it with a price war, resulting in a string of net losses. In 2007 the quad-core Barcellona Opterons were supposed to save the day, but they never came. Now AMD says Q1 2008; we'll see. On the other hand the law suit against Intel is probably worth more than AMD's entire market capitalization today. But lawyers, judges and juries are a tricky thing. Intel was caught red handed, but will hide behind their lawyers as long as they can.
Marvell has been a profitless wonder story, which is alright with me. In 2006 they acquired Intel's mobile processor division. The costs from that and heavy investment in research has meant GAAP (and even some non-GAAP) net losses. But revenues have climbed rapidly, and Marvell management says revenues will continue to climb in 2008, but promises to hold research costs steady. Today's bargain stock price will seem cheap if management delivers on that promise. If they screw up, or if the macroeconomic picture gets worse, then the price could fall further.
The massive stupidity of both lenders and real estate investors is creating turmoil that can benefit those who were more conservative and have cash to spend. Most (but not all) stocks are cheap right now. Real estate varies by geographic area; I would not call it cheap, but low ball a house you like and chances are the owner will bargain with you. The global economy is strong with a few weak spots, but that it as usual. Agriculture is strong; land prices in Iowa and other grain-production area are actually rising. Note that sovereign investment funds are jumping in to use cash to buy U.S. assets. They may make some mistakes, but I think foreign investors will see the value in U.S. assets (stocks, bonds, and real estate) first because the dollar is weak and they can be less emotional from a distance.
The main economic problem for the U.S. is the Republican Party's "No New Taxes" pledge. It has been good for partisan politics, but bad for the nation's economy. There is still plenty of government waste, and imperialistic adventures are bleeding the U.S. dry. But mainly low taxes are the cause of the deficit. Pay now or pay more later is a rule for taxpayers. Say half the Bush tax cuts for the wealthy were eliminated. Couldn't the billionaires live with that? They'd still be paying lower tax rates than at any time since World War II, but the deficit could be eliminated and there might even be some money for infrastructure that is not Congressionally earmarked crud.
One last note: Celgene (CELG). Boy, did I think I was smart to buy this company earlier this year. Then they announced an expensive merger. Okay, I could live with that. Recently there has been speculation that a rival will cut into their Revlimid franchise. Ouch! I can't decide whether to buy more stock because it is cheap or to be cautious here.
My best stock in 2007: Microsoft (MSFT). Despite all the mud slung at it, it does a number of things way better than any of its competitors. Internet bandwidths are just not sufficient to allow serious office productivity to run on the Internet. After years of Google hype, when you look at Google numbers, all its revenues come from ad sales. That is great, it is a great, profitable, and useful company (this blog is run on Google). But it is little or no threat to Microsoft's core business, or Adobe's for that matter. Modern PCs are supercomputers; those who know how to use this amazing tool can run circles around those who use them as glorified typewriters.
2007 was a good year for me, but not for my stock portfolio. Fortunately I resisted the temptation to try to flip houses in 2005-2006, which would have left me bankrupt. Instead I paid down my mortgage, which guarantees me about 5.5% in long term savings. So while my residence has declined in auction value, there is still a lot of net worth in it. I live in California, I've seen a couple of downturns, and as they say, you can't make new real estate near the ocean. So I'm not worried. My apple trees brought in a good crop this year, and that is a good metaphor for how I think about investing. I planted the first ones 9 years ago and now just about all I have to do is water them 4 times each summer and I get top-quality organic apples to eat or trade. The best investments may require a long time frame.
My portfolio is another matter. It was an evil year for me; I did worse than the market. There were two major killers: AMD and Marvell (MRVL).
AMD had just introduced Opterons when I made my initial investment. It looked like an Intel killer for a while. Then it bought ATI at the same time Intel tried to crush it with a price war, resulting in a string of net losses. In 2007 the quad-core Barcellona Opterons were supposed to save the day, but they never came. Now AMD says Q1 2008; we'll see. On the other hand the law suit against Intel is probably worth more than AMD's entire market capitalization today. But lawyers, judges and juries are a tricky thing. Intel was caught red handed, but will hide behind their lawyers as long as they can.
Marvell has been a profitless wonder story, which is alright with me. In 2006 they acquired Intel's mobile processor division. The costs from that and heavy investment in research has meant GAAP (and even some non-GAAP) net losses. But revenues have climbed rapidly, and Marvell management says revenues will continue to climb in 2008, but promises to hold research costs steady. Today's bargain stock price will seem cheap if management delivers on that promise. If they screw up, or if the macroeconomic picture gets worse, then the price could fall further.
The massive stupidity of both lenders and real estate investors is creating turmoil that can benefit those who were more conservative and have cash to spend. Most (but not all) stocks are cheap right now. Real estate varies by geographic area; I would not call it cheap, but low ball a house you like and chances are the owner will bargain with you. The global economy is strong with a few weak spots, but that it as usual. Agriculture is strong; land prices in Iowa and other grain-production area are actually rising. Note that sovereign investment funds are jumping in to use cash to buy U.S. assets. They may make some mistakes, but I think foreign investors will see the value in U.S. assets (stocks, bonds, and real estate) first because the dollar is weak and they can be less emotional from a distance.
The main economic problem for the U.S. is the Republican Party's "No New Taxes" pledge. It has been good for partisan politics, but bad for the nation's economy. There is still plenty of government waste, and imperialistic adventures are bleeding the U.S. dry. But mainly low taxes are the cause of the deficit. Pay now or pay more later is a rule for taxpayers. Say half the Bush tax cuts for the wealthy were eliminated. Couldn't the billionaires live with that? They'd still be paying lower tax rates than at any time since World War II, but the deficit could be eliminated and there might even be some money for infrastructure that is not Congressionally earmarked crud.
One last note: Celgene (CELG). Boy, did I think I was smart to buy this company earlier this year. Then they announced an expensive merger. Okay, I could live with that. Recently there has been speculation that a rival will cut into their Revlimid franchise. Ouch! I can't decide whether to buy more stock because it is cheap or to be cautious here.
My best stock in 2007: Microsoft (MSFT). Despite all the mud slung at it, it does a number of things way better than any of its competitors. Internet bandwidths are just not sufficient to allow serious office productivity to run on the Internet. After years of Google hype, when you look at Google numbers, all its revenues come from ad sales. That is great, it is a great, profitable, and useful company (this blog is run on Google). But it is little or no threat to Microsoft's core business, or Adobe's for that matter. Modern PCs are supercomputers; those who know how to use this amazing tool can run circles around those who use them as glorified typewriters.
Friday, April 20, 2007
Google and Microsoft
Google (GOOG) reported Q1 2006 results yesterday. The headline numbers hid some sequential weakness in earnings growth, and so far Google has not shown significant revenue beyond its search advertisement and AdSense franchises. [I don't own Google stock, but I use AdSense.] There was some good discussion with analysts. You can check out my summary of the analyst conference at www.openicon.com.
With the possible exception of Oracle, of all the "next Microsofts" investors have bet on in the last 20 years, Google has come closest to fulfilling that promise. Though it had years in the wilderness, it market cap swelled for more quickly than Microsoft's did in the mid-1980s.
Meanwhile, investors show little confidence in Microsoft (I own the stock and worked freelance for Microsoft from 2000 until 2006). Microsoft is due to report on April 26th, with the analyst conference beginning at 2:30 PM Pacific Time (see my MSFT page for previous conference summaries, and this one when it is posted). Today, using www.nasdaq.com figures, Microsoft stock is selling at 24.5 times trailing earnings and Google stock is selling at 49 times trailing earnings. Clearly that is a vote of confidence in Google's growth potential.
Microsoft revenues in Q4 2006 were $12.5 billion. Google had $3.21 billion in revenue the same quarter, so Microsoft is still about 4 times larger. It is also much more diverse. This company that began by selling the BASIC programming language to early microcomputer enthusiasts made its first really big money when it was selected to supply the operating system for the first IBM brand personal computer. That operating system has evolved into Windows Vista. In the meantime Microsoft added its Office Suite, the Visual Studio programming interface, and the XBox 360, to name some notable successes. It has also had some failures.
One big question going forward is whether Microsoft can gain market share in the highly-lucrative search market. Which is to say, in the targeted ad market. While the crew at Google is quite impressive, there is some real danger to Google, and not just from Microsoft. Yahoo has a new search algorithm for ad placement, and smaller search engines like Ask should not be ignored. But Microsoft's profits would go up if it abandoned Internet search altogether. Google has not yet proven it can make any other revenue model stick. Given its bankroll and its brains, I do expect Google to bring out products (or turn some existing products) with revenue streams that will please investors. But Google's big acquisitions, YouTube and DoubleClick, are extending the current franchise rather than branching out into truly different IT areas.
Microsoft had, for all practical purposes, a monopoly on microcomputer operating systems that it still has today. Linux is still more of a threat than an actual competitor. Google has no such safety margin. Microsoft search is not a danger to it, but Yahoo, another "future Microsoft", in many ways is ahead of Google in diversification and has a truly substantial share of the search market.
The days of hyper growth at Microsoft are over, but the stock pays a nice dividend, there is a huge stock buyback program, and growth keeps happening. Google has more potential, but it also has more risk. Choose either, both, or neither; you will probably be fine.
With the possible exception of Oracle, of all the "next Microsofts" investors have bet on in the last 20 years, Google has come closest to fulfilling that promise. Though it had years in the wilderness, it market cap swelled for more quickly than Microsoft's did in the mid-1980s.
Meanwhile, investors show little confidence in Microsoft (I own the stock and worked freelance for Microsoft from 2000 until 2006). Microsoft is due to report on April 26th, with the analyst conference beginning at 2:30 PM Pacific Time (see my MSFT page for previous conference summaries, and this one when it is posted). Today, using www.nasdaq.com figures, Microsoft stock is selling at 24.5 times trailing earnings and Google stock is selling at 49 times trailing earnings. Clearly that is a vote of confidence in Google's growth potential.
Microsoft revenues in Q4 2006 were $12.5 billion. Google had $3.21 billion in revenue the same quarter, so Microsoft is still about 4 times larger. It is also much more diverse. This company that began by selling the BASIC programming language to early microcomputer enthusiasts made its first really big money when it was selected to supply the operating system for the first IBM brand personal computer. That operating system has evolved into Windows Vista. In the meantime Microsoft added its Office Suite, the Visual Studio programming interface, and the XBox 360, to name some notable successes. It has also had some failures.
One big question going forward is whether Microsoft can gain market share in the highly-lucrative search market. Which is to say, in the targeted ad market. While the crew at Google is quite impressive, there is some real danger to Google, and not just from Microsoft. Yahoo has a new search algorithm for ad placement, and smaller search engines like Ask should not be ignored. But Microsoft's profits would go up if it abandoned Internet search altogether. Google has not yet proven it can make any other revenue model stick. Given its bankroll and its brains, I do expect Google to bring out products (or turn some existing products) with revenue streams that will please investors. But Google's big acquisitions, YouTube and DoubleClick, are extending the current franchise rather than branching out into truly different IT areas.
Microsoft had, for all practical purposes, a monopoly on microcomputer operating systems that it still has today. Linux is still more of a threat than an actual competitor. Google has no such safety margin. Microsoft search is not a danger to it, but Yahoo, another "future Microsoft", in many ways is ahead of Google in diversification and has a truly substantial share of the search market.
The days of hyper growth at Microsoft are over, but the stock pays a nice dividend, there is a huge stock buyback program, and growth keeps happening. Google has more potential, but it also has more risk. Choose either, both, or neither; you will probably be fine.
Tuesday, February 20, 2007
Search Wars Not Over
Last weekend I made substantial additions to a Web site for my wife's non-profit project, www.TapestryOfTheCommons.org. A lesser version of the site had been up for months. My wife complained today that the site did not come up on Google. I assured her that since there were links from other sites into her site, Google would have picked it up, but maybe not prioritized it yet. I was wrong.
At Yahoo search "tapestry of the commons" came up 3rd in the results. At MSN search the site came up number 1. Google truly did not list the site at all. Since I have an account at Google (for AdSense and this blog site) I was able to submit my wife's site. But I should not have needed to.
So I don't think the search wars are over. Like many people I tried Google early on, based on word of mouth. I was mostly using Yahoo and AltaVista to do my searching. Google, back then, was free from annoying ads. That, I guess, was the cost of entry. Yet more often than not Google gave better results; it is still my first line search engine.
But to my taste Yahoo gives better results for shopping and for investment related searches. I have gotten some good results from Ask.com when Yahoo and Google failed me. Now that Microsoft showed me it can be number 1 in results I want, I'm going to try it more.
What does this mean for investors? Some caution and hedging of bets seems smart. I own Microsoft stock based on its ability to sell operating systems, Visual Studio (which I use and love), and SQL Server. If its Web search division starts making more money, Microsoft stock will look cheap in retrospect. And if Yahoo or Ask make any gains against Google, the high Google price-to-earnings multiplier will look almost as silly as Year 2000 stock prices based on "Web page hits" rather than on earnings.
Don't get me wrong, Google is a great company. It employs lots of smart people; there is plenty of upside potential in its earnings. Google, so far, has excelled at monetizing Web searches and ads.
See also my summaries of the latest quarterly results and analyst conferences for GOOG, MSFT, and YHOO.
At Yahoo search "tapestry of the commons" came up 3rd in the results. At MSN search the site came up number 1. Google truly did not list the site at all. Since I have an account at Google (for AdSense and this blog site) I was able to submit my wife's site. But I should not have needed to.
So I don't think the search wars are over. Like many people I tried Google early on, based on word of mouth. I was mostly using Yahoo and AltaVista to do my searching. Google, back then, was free from annoying ads. That, I guess, was the cost of entry. Yet more often than not Google gave better results; it is still my first line search engine.
But to my taste Yahoo gives better results for shopping and for investment related searches. I have gotten some good results from Ask.com when Yahoo and Google failed me. Now that Microsoft showed me it can be number 1 in results I want, I'm going to try it more.
What does this mean for investors? Some caution and hedging of bets seems smart. I own Microsoft stock based on its ability to sell operating systems, Visual Studio (which I use and love), and SQL Server. If its Web search division starts making more money, Microsoft stock will look cheap in retrospect. And if Yahoo or Ask make any gains against Google, the high Google price-to-earnings multiplier will look almost as silly as Year 2000 stock prices based on "Web page hits" rather than on earnings.
Don't get me wrong, Google is a great company. It employs lots of smart people; there is plenty of upside potential in its earnings. Google, so far, has excelled at monetizing Web searches and ads.
See also my summaries of the latest quarterly results and analyst conferences for GOOG, MSFT, and YHOO.
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