Yahoo vs. Google

Scott Jagow Oct 16, 2006
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Yahoo vs. Google

Scott Jagow Oct 16, 2006
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TEXT OF INTERVIEW

SCOTT JAGOW: Today, Yahoo announces a deal with 16 CBS television stations around the country. Yahoo will post video news clips from those stations. It’s yet another example of Yahoo trying to keep up with Google. Last week, Google snatched up the video website YouTube.Yahoo’s thinking of buying the social networking site Facebook, but observers say Yahoo’s moving kind of slow on that. Newsweek’s Allan Sloan tells us why Yahoo can’t act just like Google.

ALLAN SLOAN: Google stock price is based on its prospects, real or imagined, and things like earnings and cash flow and the value of its assets don’t really enter very much into its stock price. Whereas Yahoo is somewhat more mature. It’s got a group of managers who are more than, you know, 12 years old and it tries to run like a conventional company so it actually pays attention to the cost of things and what it pays and it’s very hesitant. And the guys at Google are sort of a concept stock. Despite being very big, they’re doing what they want, they roll the dice and if it works great, and if not, well who’ll ever know and who’ll care. But Yahoo is a whole different game and they’re run much more like a normal corporate entity.

JAGOW: Well are you being critical of Google here?

SLOAN: I’m not being critical of Google. If I were Google I’d be doing the same thing. What Google is doing with YouTube is extremely smart. They’re giving YouTube what amounts to at current prices something like 1% of the combined company in return for YouTube which has all this buzz, all this potential and if I understand this business at all — which it’s not clear that it has a business — one of its major expenses is setting up servers to do what it does and that’s what Google does. You know Google has zillions of servers and tons of machines and probably can do all those mechanical things considerably cheaper than YouTube does and if YouTube works as a business and develops, it’s fine. And if it doesn’t work, well Google’s blown 1% of its net worth for something that didn’t work. It’s not all that much of a gamble. It’s very smart.

JAGOW: Well one common theme here is that you’ve got Yahoo and Google both looking at buying or buying one of these new websites that’s sprung up seemingly out of nowhere and now has millions and millions of people using that website. How does Wall Street view this trend that seems to be happening here?

SLOAN: You know, since Google’s price is based on, I consider it irrational things anyway, the stock price either stayed the same or went up slightly. I can’t remember. Yahoo is judged on Wall Street by a different standard than Google is. I mean Yahoo is actually supposed to care about things like earnings per share and growth metrics and stuff like that. It’s just the companies are being judged, these guys move quick, these guys move slow. Well if you ran Yahoo you’d move slow too and if you ran Google you’d move quick.

JAGOW: Alright Allan thanks a lot.

SLOAN: Anytime Scott.

JAGOW: Newsweek’s Allan Sloan. In Los Angeles I’m Scott Jagow. Thanks for listening.

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