Munster Says Microsoft's (MSFT) Bing Is A Threat, But Will Not Impact Yahoo! (YHOO) This Quarter
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Piper Jaffray's Gene Munster published a note on whether Microsoft's (Nasdaq: MSFT) new search engine, Bing, will impact Yahoo! (Nasdaq: YHOO). Munster said that Bing's modest gains in market share from its launch are unlikely to affect Yahoo's June quarter and he reiterates Microsoft's need to deal with Yahoo!.
Bing gained just 40 basis points in U.S. market share to 8.4% in June, while Yahoo! lost 50 basis points to 19.6% of the market shares. Google's (Nasdaq: GOOG) market share was unchanged at 65%. Piper Jaffray feels given Bing's modest market share gains, Microsoft's best way into becoming a meaningful search player is through a deal with Yahoo!.
Munster believes the slight increase from people using Bing was the result of users being curious about the new engine and are likely to revert back to their prior search habit. Munster believes there is a 35% chance of the parties engaging in a search partnership by the end of the year.
Despite Yahoo's small loss in market share, Piper Jaffray noted that Yahoo! ended the June quarter with an increase in query volume of 2%, which is slightly better than its previous expectation of down 1%.
Piper rates Yahoo! with an Overweight with a $18 price target.
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