At one time, Yahoo! Inc. (NASDAQ:YHOO) was on top of the world. The company served as a web portal in the early days, as consumers were growing comfortable with the concept of using the internet. Then Google Inc (NASDAQ:GOOG) came along, and computer users realized they could go straight to the information they wanted, no portal necessary.
Still, Yahoo! Inc. (NASDAQ:YHOO) lingers, visited by sports fans and those who set up a customizable start page on the site years ago and who like the familiarity. The company’s search market share continues to drop as competitors like Microsoft Corporation (NASDAQ:MSFT)’s Bing see increased use. But the company continues to report disappointing numbers, dropping an average of 2% in year-over-year revenue each quarter for the past four quarters. Earlier this year Yahoo! Inc. (NASDAQ:YHOO) experienced its biggest drop in recent years, falling 6% from the same quarter in 2012.
Still, Yahoo! Inc. (NASDAQ:YHOO) isn’t going down without a fight. Since bringing CEO Marissa Mayer on board last year, the company has gone after a younger audience. Recent acquisitions are proof that Mayer wants to make Yahoo! Inc. (NASDAQ:YHOO)’s offerings more relevant than ever, with the company’s purchase of social blogging site Tumblr and e-mail organizational tool Xobni serving as proof of Mayer’s plans. But is it enough to convince Google Inc (NASDAQ:GOOG) and Bing fans to make the switch?
Bing’s increasing success is good news for Microsoft Corporation (NASDAQ:MSFT), which is currently losing ground in other areas. As the technology landscape continues to shift, Microsoft Corporation (NASDAQ:MSFT) is focusing more of its efforts on mobile and social media — two areas experiencing success. Bing recently climbed to 17% of the search engine market share, which is still small when compared to Google’s 66.5%. But Google Inc (NASDAQ:GOOG)’s search engine share dropped slightly while Bing’s grew.
This shift in thinking is paying off for the software company. In its last earnings report, Microsoft stated that profits were up 18.5% from last year at the same time to a total of $6.06 billion. Revenue was flat, but this was due to the cost of deploying a big upgrade to Windows 8. The company restated its intention to focus its efforts on the changing world of devices, with more of an emphasis on mobile. To continue to lure customers away from Google, look for Microsoft to find new ways to get those customers to check “Yes” when asked if they’d like to switch to Bing as a default search provider.
The search king
As Google loses ground to Bing, the company is beefing up in other areas. Ventures like Google Glass and the company’s own social media service, Google Plus, are helping increase confidence in the company’s stock. As the world is poised to hear the company’s latest earnings report, expectations are high. But Google has a history of strong performance that can’t seem to be shaken.
In its last earnings report, Google reported a 22% increase in revenue to nearly $10 billion. The company brings in much of its earnings from cost-per-click revenue, and paid clicks rose 20% during the last quarter.
Because of the success of Google’s Android operating system, Microsoft’s loss is Google’s gain. The company provides its O/S to smartphone manufacturers at no charge to encourage them to include it. Today, the company’s stock is rising as many of its rivals are seeing falling prices.
But with the stock rising more than 30% this year to a price that tops $900 a share, many investors simply find the stock too expensive. For investors looking for a bargain, Yahoo! may be a better buy. But for investors looking for a winner, Google is an even better choice than Microsoft, even with Bing’s recent usage increases.
Still, none of Yahoo! Inc. (NASDAQ:YHOO)’s acquisitions are as game-changing as, say, Facebook purchasing Instagram or Twitter’s notable success with newly-purchased Vine. Both purchases are proof that it’s one thing to purchase a company, but it’s another to let that purchase make a big difference in your stock’s value. Unless Yahoo! can find the next Vine or Instagram, chances are the company will only do more of what it’s been doing since the days of dial-up and, in the competitive social media world of 2013, that likely won’t be enough.
The article Yahoo!’s Buying Spree May Not Be Enough to Save the Day originally appeared on Fool.com and is written by Stephanie Faris.
Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Microsoft. Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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