Yuck!
Oh Well, Business For Google
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SAN FRANCISCO (AP) - America Online Inc. said Wednesday that its popular Web sites will now get their search results from industry leader Google, replacing an ad-driven database from the increasingly profitable Overture Inc.
Providing search services for AOL's 34 million members under a multiyear contract is a coup for Mountain View, Calif.-based Google and intensifies a fierce rivalry with Overture.
In February, privately held Google took dead aim at Pasadena, Calif.-based Overture by adding a new advertising program to its widely praised mathematical formula for generating fast, relevant responses to online search requests.
"Google is the reigning champ of online search," said Bob Pittman, chief operating officer-elect for AOL Time Warner Inc., the owner of America Online.
Google's decision to combine an advertising program with its algorithms for providing highly relevant results could it an advantage in negotiations with Web sites that seek both search accuracy and revenues, said Danny Sullivan, editor of SearchEngineWatch.com.
Overture's results are drawn exclusively from advertisers bidding to be listed.
"It could be that search won't be all about making as much money as possible for some companies," Sullivan said. "It could be search services will be about making some money while also keeping users happy."
Overture downplayed the impact of the AOL loss, but investors viewed the development as a major setback. Overture's shares plunged $12.20, or nearly 36 percent, to close at $21.99 Wednesday on the Nasdaq Stock Market.
The plunge represented the sharpest one-day drop in Overture's stock since Google outbid the company for a search contract with Internet service provider EarthLink in February.
After Overture reported the EarthLink loss wouldn't diminish its profits, the stock recovered quickly.
Overture projected its second-quarter profit will be slightly lower than the consensus estimate of 25 cents per share among analysts polled by Thomson Financial/ First Call, but management said the shortfall had nothing to do with the AOL loss.
Overture said a $2 million addition for its taxes will lower its second-quarter earnings to $14 million, or 23 cents per share.
Wednesday's shake-up also hurts Foster City-based Inktomi Corp., which had been providing some search services for AOL's main site and CompuServe users. Google already powers the search engine at the Netscape site owned by AOL.
Inktomi's shares fell 56 cents, or 24 percent, to close at $1.76 on the Nasdaq.
AOL's decision casts a spotlight on the faceoff pitting the dueling philosophies of Google and Overture.
Founded by two Stanford University graduate students in 1998, Google always has been devoted to providing the most objective search results possible.
Overture, founded in 1997, is the biggest success to emerge from high-tech incubator Idealab. Unlike Google, Overture always has been commercially driven, basing its search rankings on an auction that allows Web sites to bid for the top spots in certain categories.
Although search purists initially ridiculed the ad-driven concept, Overture has thrived, steadily increasing profits while signing contracts to provide its results to revenue-hungry Web sites eager for a piece of the action.
Overture has been profitable in each of the last three quarters, earning a total of $59 million on revenue of $319.6 million.
Google's new ad program is similar to Overture's, with a twist.
The rankings of Google's paid results are determined by a combination of how much sites bid and how often Web surfers click on links. The distinction isn't great enough for Overture, which is suing Google for patent infringement.
Google already thinks its paid listings provide "better economics" than Overture's, said Sergey Brin, Google's co-founder and president of technology. Although it doesn't publicly disclose its finances, Google has been profitable in each of the last five quarters, Brin said.
Oh Well, Business For Google
LINK
SAN FRANCISCO (AP) - America Online Inc. said Wednesday that its popular Web sites will now get their search results from industry leader Google, replacing an ad-driven database from the increasingly profitable Overture Inc.
Providing search services for AOL's 34 million members under a multiyear contract is a coup for Mountain View, Calif.-based Google and intensifies a fierce rivalry with Overture.
In February, privately held Google took dead aim at Pasadena, Calif.-based Overture by adding a new advertising program to its widely praised mathematical formula for generating fast, relevant responses to online search requests.
"Google is the reigning champ of online search," said Bob Pittman, chief operating officer-elect for AOL Time Warner Inc., the owner of America Online.
Google's decision to combine an advertising program with its algorithms for providing highly relevant results could it an advantage in negotiations with Web sites that seek both search accuracy and revenues, said Danny Sullivan, editor of SearchEngineWatch.com.
Overture's results are drawn exclusively from advertisers bidding to be listed.
"It could be that search won't be all about making as much money as possible for some companies," Sullivan said. "It could be search services will be about making some money while also keeping users happy."
Overture downplayed the impact of the AOL loss, but investors viewed the development as a major setback. Overture's shares plunged $12.20, or nearly 36 percent, to close at $21.99 Wednesday on the Nasdaq Stock Market.
The plunge represented the sharpest one-day drop in Overture's stock since Google outbid the company for a search contract with Internet service provider EarthLink in February.
After Overture reported the EarthLink loss wouldn't diminish its profits, the stock recovered quickly.
Overture projected its second-quarter profit will be slightly lower than the consensus estimate of 25 cents per share among analysts polled by Thomson Financial/ First Call, but management said the shortfall had nothing to do with the AOL loss.
Overture said a $2 million addition for its taxes will lower its second-quarter earnings to $14 million, or 23 cents per share.
Wednesday's shake-up also hurts Foster City-based Inktomi Corp., which had been providing some search services for AOL's main site and CompuServe users. Google already powers the search engine at the Netscape site owned by AOL.
Inktomi's shares fell 56 cents, or 24 percent, to close at $1.76 on the Nasdaq.
AOL's decision casts a spotlight on the faceoff pitting the dueling philosophies of Google and Overture.
Founded by two Stanford University graduate students in 1998, Google always has been devoted to providing the most objective search results possible.
Overture, founded in 1997, is the biggest success to emerge from high-tech incubator Idealab. Unlike Google, Overture always has been commercially driven, basing its search rankings on an auction that allows Web sites to bid for the top spots in certain categories.
Although search purists initially ridiculed the ad-driven concept, Overture has thrived, steadily increasing profits while signing contracts to provide its results to revenue-hungry Web sites eager for a piece of the action.
Overture has been profitable in each of the last three quarters, earning a total of $59 million on revenue of $319.6 million.
Google's new ad program is similar to Overture's, with a twist.
The rankings of Google's paid results are determined by a combination of how much sites bid and how often Web surfers click on links. The distinction isn't great enough for Overture, which is suing Google for patent infringement.
Google already thinks its paid listings provide "better economics" than Overture's, said Sergey Brin, Google's co-founder and president of technology. Although it doesn't publicly disclose its finances, Google has been profitable in each of the last five quarters, Brin said.
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