Google and Yahoo set the tone for what investors hope will be a strong first quarter for Internet media stocks. Both companies delivered what Wall Street ordered, with Google far surpassing
expectations. Denise Garcia, an analyst with the firm WR Hambrecht+ Co., said Google in particular will continue to capture the majority of growth in Internet search, but other analysts think the
search pie is big enough for several major players to see continued growth. Even so, it must be underlined that Google did massive numbers: its revenues grew 79 percent, 2-3 times faster than the
estimated 30 percent increase estimated by the Internet Advertising Bureau. Garcia, the Hambrecht analyst, said the overall health of online ads should extend to smaller Internet advertising stocks
like aQuantive, Digitas, and ValueClick, which report next week. The booming Internet ad market has caused major Internet retailers like eBay and Amazon to boost their revenues incrementally with ads.
Last week the
Wall Street Journal reported that eBay was actively seeking a partnership with Yahoo or Microsoft to try to offset the challenge from Google. Analysts, skeptical of such
alliances, pointed out that they often don't work.
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