Reports that Yahoo! will soon release a contextual marketing product to compete with Google's AdSense spurred analyst David Garrity of Caris & Co. to downgrade the Mountain View, Calif.-based
search giant's investment rating to "average" from "above average."
Yahoo!'s anticipated offering will give the Sunnyvale, Calif.-based company "a presence in an SME [small- to
medium-enterprise] market heretofore dominated by Google," wrote Garrity in a report issued Monday.
Yahoo! two weeks ago announced it was releasing revised application protocol
interfaces--which would make it easier for search marketing agencies and smaller publishers to participate in Yahoo!'s search offerings. That announcement fueled speculation that the company
will offer small and mid-sized businesses new opportunities to receive pay-per-click contextual ads, in direct competition with Google's AdSense.
The Caris & Co. report recommended that
investors "prudently assume a more conservative position" toward Google until the impact of Yahoo!'s contextual product becomes apparent.