Yahoo’s Weakness is Google’s Gain

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Jul 19 2007
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As much as I like Yahoo Inc. (Nasdaq: YHOO, stock) to be strong and muscular in order to prevent Google’s (Nasdaq: GOOG, stock) from becoming too monopolize in the online search and advertisement market, I never really like the stock. I’m not sure what to say about Yahoo. Despite started early in the dotcom boom and survive thereafter, it never seems to be able to lift a finger to fight Google’s domination. I’ve tried trading Yahoo stock before but it simply disappointed me, so I dumped it and never look back.

However Yahoo’s earning result could prove to be the ultimate weapon to make money, not on Yahoo’s stock or option, but on its enemy – Google. So when Yahoo announced its weak earning Tuesday (inline), it simply gives a bonus point to investors to invest on Google. As Forbes pointed out, Yahoo’s weakness is not the Internet that’s suffering – it’s just Yahoo.

Having said that, expectations are high (as usual) for Google to turn in another impressive result when the search giant is expected to announce the earning today, Thursday, July 19th, 2007 after market closed. Analysts and investors have learned that they can continue to raise the bar for Google, and Google will continue to deliver it.

They expect revenues of $2.68 billion, up 60% over the same quarter last year, and earnings of $3.59 cents per share, up 44%. The company’s advertising business, which accounts for nearly all of its revenue, is still growing. So the result would be another earning being beaten up again.

However, investors will want to hear about new ways Google plans to make money when CEO Eric Schmidt speaks to them Thursday. They’ll listen for clues about how and when the company will wring dollars out of video-sharing service YouTube and new mobile products. They’ll also want details about how much headway the DoubleClick acquisition will give Google in the growing field of display advertising once the deal is completed.

# TIP: Even though Google stock is trading at all time high, it can go higher should the result impress investors. I’m considering Call Option on Google at $550 Strike.

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