Take the recent earnings of both Yahoo! and Google. Both companies reported quarterly earnings recently. Both made a ton of money yet because neither reached "analysts expectations" their shares took a hit because of a huge volume of selling going on immediately after the earnings were reported.

Let me tell you just how wacky this seems to me:

Yahoo reported revenue of $1.5 billion for the fourth quarter of 2005, and a gross profit of $928 million.

Google reported revenues of $1.9 billion for the fourth quarter of 2005 with a net income of $372 million.

These companies earned more money last quarter than some small countries do in a year yet it wasn't enough according to these outside analysts.

So that leads me to the question - what right do these analysts have in deciding how much is enough? I mean, these guys don't work for Google or Yahoo! yet they have this power to say "you know what? I don't think you earned enough and I'm going to let everyone else know."

What's even more surprising to me than this is that investors listen to these analysts. I mean, if one of these analysts said to you "I believe your vehicle is almost out of fuel - you better go to the gas station and fill up." Wouldn't you first check your fuel gauge for yourself to see if you were in fact low?

It just amazes me how outside analysts, who don't necessarily specialize in any one industry can say "Google's tapped out" or "Yahoo! has no where else to go" and people listen to them.

Granted this is what these guys do for a living but would you trust your mechanic to tell you that your car needs a new transmission merely from hearing it idling in the driveway?

So I have a message for the naysayers who think that Google will suffer the same fate as Netscape, or that Yahoo! won't be able to compete with Microsoft:

This market is still in its infancy. Consider how many technologies the engines have invested in these past few years that are just now starting to reap rewards.

They have some visionary people there that are able to identify emerging markets before many of us see them. Further, they make acquisitions and build applications to take advantage of these new technologies.

Also consider that today's fad may be tomorrow's staple. Many people have said that blogging will die. They've been saying that since blogging started - yet here it is 3 years later and blogs are stronger than ever.

Many in the industry thought pay-per-click wouldn't last (me included) yet it's the driving force behind the earnings of Yahoo! and Google. And I'll admit, I'm surprised PPC is still so popular, but they manage to continue to make ever growing profits from these listings.

Not only that, they are finding more and different ways of displaying the paid ads. It used to be you'd only see them on the search results page, but now they show up on other websites, in email, in RSS feeds and more.

But there is so much untapped advertising potential out there. None of the big players are in mobile ads or ads in podcasts yet. There's also the emerging IPTV market that has huge advertising potential.

It is in these emerging markets where Yahoo! and Google will continue to spread their wings and make even more money. We will also continue to see that both companies can co-exist in this environment as well.

What I don't see is either of these companies suffering the fate of Netscape. In fact I think they will continue to grow. So much so that I expect there to be some sort of governmental body stepping in at some point to try and control them, much like they did with Microsoft and it's antitrust problems which are still ongoing.

So to those who think the bubble is about to burst I have to say - don't hold your breath. I think we're just beginning to see what the engines can really do.


Rob Sullivan
Head Organic Search Strategist
Enquiro Full Service Search Engine Marketing

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