Online Advertising Sector Review – Google, AOL & Yahoo
Source: Google Finance
The online advertising sector includes search and display advertising companies like Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO) and AOL (NYSE:AOL). Below we include a few stories that caught our attention over the past and could influence the stock. Google’s stock has languished to recent lows on ad spending concerns amid a recently launched government investigation on anti-trust concerns. AOL’s stock has been less volatile than some peers though its CEO insists the company’s stock price is severely undervalued in comparison to recent tech IPOs. For Yahoo, the most notable events in the last week has been the negotiations surrounding Alibaba’s transfer of Alipay, and the company held its annual shareholder meeting last week.
Google’s stock touched nine month low last week after an investment bank report suggested search advertising growth might be slower than expected. [1] Google’s stock has declined from its peak levels of $640 achieved in January this year to around $480 as of today, as shown in the above chart.
The Federal Trade Commission launched a review of Google’s business and will likely serve the search giant with civil subpoenas in a wide-ranging antitrust investigation to see if it has used its dominance of the web. [2]
AOL
AOL’s stock price has declined from around $24 at the beginning of year to less than $20 as of today, as the much expected revival in company’s fortunes has not materialized yet. However, AOL’s CEO thinks that the company’s stock is highly undervalued in light of recent IPO valuations. [3] Another report suggested that AOL may introduce premium versions of its online content and make international acquisitions. [4]
Yahoo
Yahoo owns around 43% ownership in Alibaba, a Chinese online player. Alibaba has been in negotiations with Yahoo and Softbank over its transfer of Alipay, to a new corporate entity controlled by Alibaba founder. The deal, however, still requires the consent of Softbank CEO and an Alibaba board member. [5]
Yahoo CEO, Carol Bartz, faced scrutiny from unhappy shareholders about her handling of the Internet giant and the languishing stock price. Bartz defended herself by pointing out that the company’s operating margins have doubled under her watch and that Yahoo continues to draw the largest audience in the U.S. She reiterated the focus on growing its display ad presence and defended the decision to abandon search.
Notes:- Google Shares Sink To 9-Month Lows On Ad-Spending Concerns, Wall Street Journal, June 17th, 2011 [↩]
- Google Says FTC Has Launched Review, Wall Street Journal, June 24, 2011 [↩]
- Armstrong Says AOL Undervalued in Light of IPOs, June 19th 2011 [↩]
- AOL Considering Paid Content, International Acquisitions in Company Revamp, June 20th, 2011 [↩]
- Yahoo, Alibaba, Softbank say making progress on Alipay, Reuters, June 22nd, 2011 [↩]