Yahoo! Move Spurs Google Downgrade

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.

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