Commentary

Just An Online Minute... Good News For Search

Google's quarterly earnings have again surpassed expectations, sparking a bullish report by Merrill Lynch.

The brokerage house this morning raised its price objective for the company to $530 a share, up from its previous objective of $500. As of this morning, the stock was trading around $455 a share.

"We believe Q4 is off to a strong start and Google will gain share this holiday season," stated research analyst Justin Post in a new report. "Google should have one of the best 2007 growth outlooks in the S&P 500, which could be a catalyst for the stock exiting 2006."

Merrill Lynch estimated that Google now captures more than half of the market in search--an estimate in line with reports by measurement company Nielsen//NetRatings. What's more, Google likely will further pull ahead of rivals Yahoo and Microsoft in the next several quarters, predicts Merrill Lynch.

While Google's pay-per-click revenue continues to soar, the company also appears committed to other forms of online advertising. Jonathan Rosenberg, Google's senior vice president, product management, said during a conference call yesterday that display and video ads could amount to as much as 10% of total revenue in the long-term--but added a qualifier: "We're basically going to have to make it much, much easier to create the videos, submit them and then figure out in the context of a bunch of these sites within the network where they will actually work. I think we are only just beginning to understand that," he said.

Rosenberg also told analysts that the company has sold video ads to "hundreds of advertisers" including Office Max, Paramount, GM, Nike, Renault and British Airways.

The report stood in stark contrast to Yahoo's more modest quarterly earnings. Yahoo Tuesday reported net sales of $1.12 billion, missing Wall Street's quarterly revenue target of $1.14 billion.

It's still probably too early to say whether Yahoo's lackluster revenue stems from a problem unique to that company or foretells a softening of the market in general. But the news out of Mountain View yesterday shows that paid search, at any rate, continues to surge.

Next story loading loading..