Shares of Yahoo stock jumped 7.57% on Wednesday to close at $29.00 on news that Panama, its new advertising filter, will be rolling out February 5.

The news is good for Y!, in that it will increase the number of ad-clicks per search (therefore increasing revenue), but it seems a bit early to be declaring victory for Yahoo.

Google, by all accounts is the market leader in search, reportedly claiming nearly 50% of all online searches (source: Comscore). While an increase in Yahoo’s bottom line would help, it’s not likely to change the dynamics of search for the next year. Indeed, it will likely take six to nine months for advertisers to get used to and adequately optimize their advertisements for the new system.
Over that time, the search wars are likely to heat up, as Microsoft increases its efforts and Wikipedia founders launch and develop Wikiseek.

Indeed, Panama will be good news for Yahoo shareholders. But 7% in one day is a bit much for number two. While it may rise again tomorrow due to momentum trading, I would expect it to lower before the end of the week, giving back about half of today’s gains.

This entry was posted on Wednesday, January 24th, 2007 at 6:23 pm and is filed under Uncategorized, Stock Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.