Yahoo! gunning for Google

The #2 search engine's top two executives told investors that its new search tool Panama is leading to higher quality search results and leads.

By Paul R. La Monica, editor at large

NEW YORK ( -- The top two executives of Internet media firm Yahoo! told investors Tuesday that the company hopes to gain market share against industry leader Google as its new search tool is leading to more relevant and higher quality search results for advertisers.

Speaking at the Morgan Stanley Technology Conference in San Francisco Tuesday, Susan Decker, Yahoo's (Charts) head of the advertiser and publisher group and acting chief financial officer, said that Panama, the company's new search platform, has been a hit with advertisers.

Yahoo! chairman and CEO Terry Semel said the mood at Yahoo has improved thanks to the successful launch of Panama.
Acting Yahoo CFO Susan Decker said that Yahoo is hoping to gain market share from Google in search.
Shares of Yahoo have surged this year on hopes that the company can gain ground it has lost in search to industry leader Google.

"We are really pleased with the new system. It is generating higher quality leads at more competitive prices. Click through rates are increasing," Decker said.

Decker also said that Yahoo is not seeing any weakness in online ad spending this year, despite some concerns about the overall economy cooling.

"Secular trends in online advertising have way overwhelmed cyclical trends in the economy," she said. This is a stark contrast to last September, when Yahoo warned that it was seeing softness in online ad demand from auto manufacturers and financial services firms.

Decker added that Yahoo's search market share has remained at about 28 percent, according to figures from comScore Networks, for the past few months, but that Panama could help Yahoo increase its share in search.

She conceded, however, that Yahoo faces a tough challenge due to "the strong brand of our friends up in Mountain View" referring to the headquarters of Google, which has about a 48 percent market share in search, according to comScore.

To that end, Google (Charts) chairman and CEO Eric Schmidt said at the Morgan Stanley conference Monday, and reiterated at the Bear Stearns Media conference Tuesday morning, that his company was not seeing a negative impact from Panama.

Yahoo's stock has surged more than 20 percent this year thanks to optimism that Panama will lift Yahoo's revenues and profits.

During the Morgan Stanley presentation, Yahoo chairman and CEO Terry Semel added that he was happy that the company has finally launched Panama.

He said that the early success of the system has changed the mood at the company, and that he was glad Yahoo took the time to "fix the plumbing" in its advertising system last year.

Semel also touted many of Yahoo's social networking offerings. The company has often been criticized for not being as active in social networking as Google, which last year bought online video sharing site YouTube, or News Corp. (Charts)., which owns popular social networking site MySpace.

He said that Flickr, the photo sharing site that Yahoo bought in 2005, is "growing like a weed" and added that the company also is seeing rapid growth from other recently acquired social networking firms, such as Web bookmarking service, blog tracking site MyBlogLog and video editing site Jumpcut.

Finally, Semel addressed questions about further management changes at Yahoo. The company announced a major management shake-up in December, in which chief operating officer Dan Rosensweig will soon leave the company.

The changes were the culmination of a tough year for Yahoo. The stock fell 35 percent in 2006 due to concerns that Yahoo had lost its focus and was falling behind in search and social networking.

Semel said the company's search for a replacement for Decker at CFO as well as a head for Yahoo's newly created audience unit, which will deal with issues facing Yahoo users, is progressing well and that the company has met with several compelling candidates. However, he did not specify when hiring announcements would be made.

Decker was named to her new position working with advertisers in December and analysts have speculated that this role puts her in position to eventually succeed Semel as CEO.

Last week, Yahoo disclosed that Semel received a bonus of 800,000 stock options, worth about $25.7 million based on the date that the options were granted. Semel's annual salary is just $1, matching the salaries of Google's Schmidt as well as Google's two co-founders.