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MSN - ASL - Yahoo and the Looksmart CC (1)

|Includes:GOOG, IAC, LookSmart Group, Inc. (LKST), YHOO


##.[In the Looksmart Conferance Call] - Ted West says ..

......."Based on industry estimates, LookSmart competes in the $1.5 billion non-proprietary keyword search advertising segment, providing search advertisers and publishers value across our search advertising network.. Those who compete with LookSmart in the non-proprietary segment share a relatively stable 20% of the overall keyword search ad market".## 

......Daniel Hung (a shareholder in Google, Microsoft and Yahoo), has made a few very interesting points in a nicely written article here, that is well worth posting some comment on. Microsoft vs. Yahoo: Long term merger arbitrage?

But he is (I strongly feel), an absolute perfect example of exactly how ignorant the market is, in relation to what is going on here.....He says:


DH - Basically, Microsoft will power Yahoo’s search and Yahoo will become the ad platform across both search properties
.

[True. Microsoft's Bing search, is to be used] 

*DH - What becomes of Microsoft AdCenter seems hazy, but without access to a legitimate search destination, it will likely be phased out as advertisers prefer to deal with ad networks that have broader reach.
 
[With Yahoo's ad platform, MSN has no use for AdCenter [it's adCenter] and this was a strong clue they gave when it was announced .... "Microsoft to kill adCenter Analytics by end of year"

http://arstechnica.com/microsoft/news/2009/03/microsoft-to-kill-adcenter-analytics-by-end-of-year.ars ]


*DH - In order to monetize effectively, one needs scale. Advertisers want to reach the most people for their ad dollars. Microsoft’s move here seems impatient. Instead of developing and nurturing an in-house ad solution, it’s signing a pricy deal to license Yahoo’s search IP and as well as pay Yahoo a premium to serve ads on its search results. The two companies immediately achieve scale which could win advertisers away from Google, but it’s a disincentive to Microsoft’s in-house Ad Center group. Will it survive this partnership? 
 

[The writer (*DH......) is not aware of the Global aspect of, not just the scale (in terms of the search deal itself), but the 'icing on the cake' for Yahoo will be, & now having it's Ads soon, to reach out globally to more publisher inventory, and all around the world. IMHO.

Certainly within that Ted West stated $1.5 billion non-proprietary keyword search advertising segment and this IS a US figure, only. In his summing up (in the CC) he makes that clear when in regards to Looksmart, he says:
 
< "What does this mean for our long-term strategy, it remains our firm belief that significant industry value will be created through growth of the non-proprietary keyword search advertising market. With a highly fragmented $1.5 billion non-proprietary search business available in the U.S. alone, and no dominant player currently leveraging the scale">    

An opinion - Continued in Part (2)......

Stocks: LKST, GOOG, YHOO, IAC