FinancialNirvana.com

Google and Yahoo Inc. are world’s two best known Internet companies. Google vs. Yahoo Inc. is something I have been thinking about for a while now. So let’s compare the two first (4Q - 2005 financials):

Google’s stock has been struggling as of late and is making its way back to earth. Google slowing growth is the main cause of the recent struggles. Slowing growth was bound to happen so maybe the market reaction was unwarranted. However, that only goes to show you how much overpriced Google was in the 400’s. I still consider Google as overpriced at more than twice the market cap of Yahoo. Although, Google is still the most innovative company in the world and continues to roll out new products and services, they need to diversify. Even after all their innovations that have led to great products and services its sill highly dependent of search engine advertising. How successful Google will be in diversifying their revenue stream is anyone’s guess. They have tried print advertising in Magazines and Newspapers but we still don’t know how lucrative that will be.

On the other hand, Yahoo is looking under-priced at about $30. It’s a much more diversified company compared to Google’s various business units. Yahoo is also challenging Google Adsense domination by rolling out a similar service for web publishers, which is still in beta mode. I for example, use both Adsense and Yahoo on this site. Let’s see what kind of advertisements I see from both Google and Yahoo after this article is published. The way I see it, most of the web publishers will not mind splitting their site between the two competing services.

Anyways, I see this as a good entry point for Yahoo. I wouldn�t buy all at once since Yahoo or the overall market could see further downside.

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