Which Search Engine Should the Stock Market Back?
Not all individual stock market investors can afford the luxuries of watching titans slug it out: there are profit opportunities to be maximized from regrettably scarce capital! Sure, we can all keep some stock of everything just in case, but the call to back just one horse against the rest of the field cannot be put off for ever!
The brave new worlds of high technology can be tempting but confusing for stock market players of the brick and mortar era. It need not be so because the rules of competition and the principles of management remain the same, regardless of where in the business cycle any sector lies. How can we pick the winner of the search engine wars?
Who is better at Marketing? Sharp focus on a tightly defined market segment, excellence in interactive marketing, detailed internal marketing and synchronized use of all elements of the marketing mix distinguish leaders, regardless of technology and hardware assets. Browsers of the world are fortunate to have google, yahoo and Microsoft fighting for places on screens, but this does not mean that an overwhelming majority will not cast their votes one decisive way!
Who has better productivity? Mergers and acquisitions can quickly become liabilities with drag. Organic growth can produce winning home runs, albeit late in a game, because core competencies are more ingrained in corporate culture, and because fixed commitments are easier to control and to cover. Good communication and an image of reliability can produce alliances that keep companies more agile for hand-to-hand combat than the baggage of M&A.
Who is more financially sound? Conservative dividends are disappointing, but stock market investors in for the long term should prefer accumulation of reserves to support competitive investments for the future. Though Apple is not yet in the search engine business, it does demonstrate that distraction of a founder can hurt. This is also true of significant equity holdings with investors who are not irreversibly tied to the core reason for a business.
Who has better human resources? Who has not heard of Bill Gates? However, the depth of management talent, cutting across functions, layers and locations, matters more than a charismatic and high-profile leader. Organizational effectiveness takes increasing hold as sectors mature, and the search engine race is no sprint!
Who manages risks better? It is not easy for stock market investors to make factual assessments of the preventive and contingent plans that a company documents and rehearses, but they certainly matter. Most companies cover likely and serious risks relatively well, but the improbable and most debilitating ones are the ones which can rob stakeholders of most value. Response to natural disasters, adverse incidents and major accidents provide some leads, as do the details of every company’s insurance policies.
Close interaction with company managements is essential for correct valuation by stock market operators. Statutory reporting may not disclose all that you need to know! Being a customer, supplier or member of the distribution chain can yield great insights, and being any or all of these for all the top search engines is certainly a pleasure!