Web search and advertising account for the majority of Google’s stock that we estimate is worth an intrinsic value of about $192 billion, and so it is little surprise that Microsoft wants to get a piece of the search action as well. Moreover its deal with Yahoo is bearing fruit as ComScore data suggests that Bing now powers nearly a third of all U.S. searches once you combine Yahoo and Bing together.
We have a $28 price estimate for Microsoft and estimate that Bing accounts for around 5% of its value. Our price estimate is about 10% ahead of the market price.
Bing-Yahoo Alliance Gaining
Bing has been growing at a steady pace in the U.S. market. ComScore released some figures this week that suggests that while Bing’s market share remained relatively flat at 14.4%, Yahoo’s market share increased by 0.2% to 16%. Google’s market share decreased from 65.5% to 65.1%. [1]
Since Yahoo’s search engine is powered by Bing, this brings Bing’s total U.S. marketshare to 30.5%, which is almost half of Google’s market share.
While it’s making inroads in the U.S. search market, it hasn’t been able to make much of a dent in the global search market. It still serves only around 4% of the global search market compared to Google that can brag about its 80% share. Bing did score a major victory in its deal to power the English search results for Baidu – the popular Chinese search engine.
Is it Worth it?
While Bing’s efforts have been quite successful, have they been worth it?
Microsoft incurred losses of $2.6 billion in the online division in the fiscal year ended June 30th and lost $728 million last quarter alone. It has been bleeding cash for almost 22 consecutive quarters now, with no signs that it will ever improve. Despite spending so much, data suggests that Bing hasn’t gained market share from Google but instead from other players like Yahoo, Ask and AOL.
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