Revved up

Google earnings report scores high

Google and Yahoo! reported their quarterly earnings last week. Google shares promptly shot higher and Yahoo! shares sunk.

Google beat analyst predictions on revenue, profit and everything else that matters to Wall Street.

Yahoo! basically matched analyst predictions, though those predictions had been ratcheted down based on cautionary comments Yahoo! top execs made weeks earlier.

"We believe Yahoo! shares are halfway through a bottoming phase," RBC Capital Markets analyst Jordan Rohan said. He maintained his "outperform" rating on Yahoo! stock, though he took his target price down to $31 from $33 previously.

Likewise, Goldman Sachs analyst Anthony Noto, who rates Yahoo! shares as "attractive," also cut his target by $2 down to $30.

"Short-run traders may continue to view Yahoo! with a prove-it-first posture," said BMO Capital Markets analyst Leland Westerfield, who has an "outperform" rating and $37 price target on the stock.

All three analysts remain cautiously bullish on Yahoo! due to its Project Panama, the delayed new ad platform that ought to boost Yahoo!'s online ad revenue, though not until it rolls out early next year.

Unlike the reaction to Yahoo!, it was hard to locate an analyst with something negative to say about Google's earnings report.

"Google continues to drive superior monetization of its commanding search market share, both domestically and internationally," said Noto, who reiterated his "buy" recommendation on shares even as they were soaring more than $30 in after-market trading Thursday, the day it announced quarterly results.

Perhaps Google's and Yahoo!'s stock prices going in opposite directions of late might have been predicted, given how Internet users have been flocking to Google for their search needs.

Last month 2.83 billion searches in the U.S. were handled by Google, compared with 1.32 billion by Yahoo!, according to Nielsen//NetRatings. That's year-over-year growth of 23.4% for Google and 12% for Yahoo!

Google now commands a 50% share of all U.S. searches.

Yahoo! is still handily beating MSN, which in September showed a year-over-year decline of 12% to 519.3 million searches, as well as AOL, which declined 8.7% to 358.5 million searches. Rounding out the Top 5 was, which showed a 19% gain to 152.1 million searches in September.

On Monday, Google shares were at $480.78, up 16% so far this year while Yahoo! shares, at $23.37, were down 40.4%.