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Yahoo executives address misconception about search

Fri, 02/12/2010 - 4:13am

(Reuters) - Yahoo Inc executives defended the company's commitment to Internet search on Wednesday, vowing to reverse the erosion of the company's market share and to fix the "misconception" that the company has given up on the business it helped create.

Speaking at Yahoo's Sunnyvale, Calif., headquarters on Wednesday, a string of Yahoo executives took the stage to provide a peek at innovations that Yahoo said will distinguish its product after it completes a deal to let Microsoft Corp handle the back-end technology that powers its Internet search service.

"We have not been sitting on our backside doing nothing. We just have not been talking about it," said Shashi Seth, Yahoo's new Senior Vice President of Search, who joined the company last month.

"We are doing a lot to continue to invest in that space, continue to maintain our market share and grow the market share," he said.

Executives pointed to a variety of features under development, including a way to search for restaurants on smartphones by using a finger to draw a circle on an online map, that it said will produce the "next generation" of search.

Yahoo executives also showed examples of search results that instantly bring up a variety of related information, for instance, images of albums alongside search results for the rock band U2. And the company said it was working to better integrate search results into other popular Yahoo properties like email.

On Tuesday, Google Inc unveiled a new product called Google Buzz that adds social networking features directly into the company's Web-based email product Gmail, a feature that Yahoo unveiled last year.

Yahoo, the world's No.2 search engine behind Google, has been shedding assets and reorganizing the company under CEO Carol Bartz, who took the helm in January 2009.

In recent weeks, Yahoo has announced the sale of the Hot Jobs website and the Zimbra email business. In July, the company signed a 10-year deal with Microsoft designed to save hundreds of millions of dollars a year in expenses by shifting Web indexing chores to Microsoft while Yahoo focuses on improving the consumer search experience. Yahoo executives said they still expected the deal to win regulatory approval and close early this year.

But Yahoo's slide in share has raised questions about its staying power in the search business.

Yahoo's share of the U.S. search market has declined or been flat every month since January 2009, when it had a 21 percent share, according to ComScore. Last month, Yahoo's U.S. search share was 17 percent, according to the latest comScore numbers cited in a note to investors from JP Morgan on Tuesday.

Google had 65.4 percent share in January, JP Morgan said, while Microsoft had 11.3 percent share.

Seth reiterated previous comments by Yahoo executives that the share loss was primarily the result of Yahoo walking away from unprofitable distribution deals with PC makers.

He noted that the company's popular Web properties, such as Yahoo Finance and Yahoo News, meant that it already had plenty of traffic for its search engine, eliminating the need to strike partnership deals for placement with PC makers.

Asked when he expected Yahoo to begin regaining search share, Seth would only say that it would take time. "In the next couple of quarters we will both know if our efforts in this space are paying off," Seth said.

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