Yahoo implications for Google? (YHOO, GOOG)

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 |  Includes: GOOG, YHOO
by: David Jackson

Two sell-side analysts discussed the implications for Google (ticker: GOOG) of Yahoo's (ticker: YHOO) Q2 earnings results. Extracts:


Mark Mahaney, Citigroup

In terms of sentiment derivatives, we expect Net stocks to largely trade down on Yahoo!’s in-line results.  The key derivate is Google, however.  At the margin, we have greater conviction that Google will report a Beat & Raise quarter on Thursday.  We are modeling 7% Q/Q net revenue growth, with consensus at 5-6%.  With Yahoo! having printed approximately 4%, and with several datapoints suggested that Google’s market share increased both in the U.S. and internationally during the quarter, our 7% growth is almost certainly too conservative.

David Edwards, American Technology Research

One note on Yahoo! versus Google: we believe that Yahoo! is currently
being penalized because it isn't Google. We think this is the wrong way
to look at it. In our view, Yahoo! is striving to set the standard for
what a media company should be while Google is striving to set the
standard for what a software company should be. While Yahoo!'s
near-term growth rate may be dampened in comparison by its diverse
business model, we believe that it will provide more predictable and
sustainablegrowth. Of course, Google's leverage in paid search (and
relative outperformance in paid search) has made it an amazing growth
story and amazing growths tock. We look forward to Thursday afternoon
when the next chapter in this thriller unfolds...

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