tinyurl.com/264rk -> money.cnn.com/2004/06/10/technology/techinvestor/lamonica/index.htm?cnn=yes
Sign up for the Tech Biz e-mail newsletter NEW YORK (CNN/Money) - When Google finally registered to go public back at the end of April, there was much rejoicing. Google was going to lead tech to a new era of prosperity. But six weeks after the IPO filing, there's starting to be some skepticism about just how well Google will do and if it really deserves to be pegged as a tech savior. Google will probably have a monstrous first day when it starts trading sometime later this year. It's tremendously profitable and dominates Internet search.
"Although we foresee a successful near-term future for Google, we are not as convinced as some about the company's long-term prospects, as it ventures beyond its core competency of search and faces increasing competition." Well, even though its financials look good now, Google is still a one-trick pony, depending almost entirely on advertising for revenues.
And the perception of Google is that Web users love it because it's easy to use and is not cluttered with pop-ups or banner ads like other well-known Web sites. So as Google introduces new online products, users should flock to them, right? Well, a survey of 1,000 Internet users commissioned by S&P showed some surprising results about just how loyal Google users are. Only 23 percent said they would sign up and regularly use a free e-mail service that had targeted advertising tied to it, which is what Google has proposed with its controversial Gmail offering. And it's also worth noting that Google was not named as the favorite Internet company by most of the survey's respondents. It ranked third, with only 9 percent saying that Google was their favorite. Google did not rank as the top Internet company in a survey of Web users. Interestingly, more than a third of the users could not name a favorite Internet company. "When you say Google, people automatically think of online search," said Kessler. "That's great for Google in terms of establishing and promoting a brand for search but the challenge for them is how can you make that brand more representative of other things as well?" A not-so-small company called Microsoft is lurking out there as well.
and Microsoft have reminded investors that search is not a monopoly," Mahaney said. And investors seemed to have quickly come to this realization as well. did tumble 76 percent the day after Google filed for its IPO. The stock has surged 27 percent since the beginning of May Yahoo! has become a Wall Street darling again after falling out of favor with investors during the tech bear market because it has transformed itself from a search engine firm (or portal, if you still like Web jargon circa 1998) to a diversified Internet media company that generates fees in addition to ad revenue.
"The interesting thing is not Google's historical record but what happens going forward." And somewhat paradoxically, the current success of Google makes it more imperative for the company to find new avenues of growth since search has gone from an Internet afterthought to becoming a business model that all online ad companies have adopted. Competition is now fierce and everybody's gunning for Google. "The search category is becoming increasingly crowded and over time search offerings will become more and more similar," said Kessler. "The Google IPO just increases the size and brightness of the target that's on their proverbial back already." Analysts quoted in this story do not own shares of companies mentioned and their firms have no investment banking relationships with the companies. com and CNN/Money have a business relationship with Overture Services, which is owned by Yahoo! The reporter of this story owns shares of Time Warner through his company's 401 plan.
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