“Google shares were falling in early trading Friday after Bank of America Merrill Lynch downgraded the Internet giant to ‘neutral,’ citing several factors including worries about the search business and increasing competition from Apple and Facebook,” Chris Ciaccia writes for TheStreet. “Analyst Justin Post lowered his rating and cut his price target to $580 from $600 on grounds that the company’s major revenue driver, its search business, may be nearing maturity. He pointed out that Google hasn’t had a major product launch this year, an event which might have offset slowing revenue growth.”
“Not only are there major concerns about its core business maturing, but Apple’s exceptionally strong product cycle this year, led by the iPhone 6 and new MacBooks, as well as concerns about its search deal with Apple’s Safari browser, also cause for concern,” Ciaccia writes. “‘Apple is having a strong phone product cycle, which could benefit search activity, but is a potential headwind to Android,’ Post noted. ‘Also, according to press reports, Apple and Google’s search agreement may expire in 1H’15, and we see risk that Apple switches default search providers given Android phone competition. While we wouldn’t expect an International change, Mozilla recently switched to Yahoo search in the US (mostly PC), so a US change would not be unprecedented.'”
“Safari had over 45% of the mobile browser market in the U.S., and losing that would be an enormous blow for Google,” Ciaccia writes. “Apple CEO Timothy D. Cook recently noted that Apple’s only real competition is Google, so losing the Safari deal to be the default search engine is perhaps the biggest headline risk for the company going into 2015.”
Read more in the full article here.
Google’s going to rue the day they got greedy by deciding to try to work against Apple instead of with them. – MacDailyNews, March 9, 2010