Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Yahoo! Inc. (YHOO) vs Google Inc (GOOG): Who’d You Buy?

Yahoo! Inc. (YHOO)There will always be comparisons made between Yahoo! Inc. (NASDAQ:YHOO) and Google Inc (NASDAQ:GOOG) because of their history as Internet pioneers and innovators in search. But while Google Inc (NASDAQ:GOOG) has branched into email, cloud services, video, mobile operating systems, and other products, it has stayed a search company at heart, something Yahoo! Inc. (NASDAQ:YHOO) hasn’t done — for better or worse.

Yahoo! has become a true Internet portal — a source for news, financial analysis, and an assortment of other services. Everything the company does is intended to get eyeballs to the site.

The problem for Yahoo! Inc. (NASDAQ:YHOO) is that a search for users has caused the search business to suffer in the mean time. Paid clicks generated from search dropped throughout 2011 and have only began to rebound from lows seen in late 2012. While clicks have picked up, price per click dropped 7% in the first quarter, a sign the company isn’t monetizing search as well as Google Inc (NASDAQ:GOOG). Yahoo! Inc. (NASDAQ:YHOO)’s partnership with Microsoft Corporation (NASDAQ:MSFT), which was supposed to help both companies battle Google, hasn’t resulted in significant financial progress for either company.

On the display ad side of the business, ads sold have fallen every quarter since Q2 2011 and price per ad also dropped in Q1 of this year. It’s really display ads that have been a drag on revenue. When you add display and search together, you get the chart below, with revenue growth lagging well behind Google Inc (NASDAQ:GOOG). The bump in earnings you see is only because of a one-time $2.8 billion gain from the sale of Alibaba shares.

GOOG Net Income TTM Chart

GOOG Net Income TTM data by YCharts.

Desperate times call for desperate measures
Yahoo! Inc. (NASDAQ:YHOO) can’t seem to get traction in its core businesses, so now it’s spending $1.1 billion in precious cash to buy blog site Tumblr. But that may backfire: Tumblr’s users have already started a petition protesting the sale and some say they’ll leave rather than become part of Yahoo!. To make matters worse, TechCrunch reports that visits to the site have been falling over the past year, as much as 21% in the U.S., a trend that makes Yahoo!’s purchase look unwise.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.