Wall Street pans Yahoo's search result enhancements

Shares drop after Internet pioneer unveils 'immersive Search' features

If Wall Street is an arts critic, Yahoo's "visually stunning" enhancements to its search results were getting panned Thursday.

Shares of Yahoo (NASDAQ: YHOO) were down 34 cents, or 2.4 percent, to 14.17 in early afternoon trading. If that price holds, Yahoo is on track to record its biggest one-day share price drop in almost two months.

Thursday's price drop also undid the incremental gains Yahoo shares had been making since closing at 14.17 on Sept. 30, when the company acknowledged three more executives were joining the recent exodus of top-level talent from the embattled Internet pioneer.

The message Thursday from investors clearly is, "Is this all that you've got, Yahoo?" And it's a fair question. Yahoo's search revenue has stalled, along with its stock price. Neither will be moved by incremental changes to search. But that's what Yahoo offered up -- reorganized search results with an emphasis on graphics. Not exactly a game-changer, which is what Yahoo needs.

While it's true that Google seems to have leveled out with about 65 percent of the search market, Yahoo either is 1) tied for second with Microsoft's Bing with 17.1 percent (according to the latest data from comScore) or 2) trailing Bing, 13.9 percent to 13.1 percent (according to Nielsen).

Whichever market share data is more accurate, the bottom line is that Yahoo is fighting to establish itself as a distant second in search. That's fine (as far as it goes), if you can maintain that position and continue to grow revenue. But Yahoo hasn't, and to do so would require a significant gain in the search market. "Immersive Search" isn't the answer, and Wall Street clearly knows it.

Also see:

Maybe Yahoo just can't be fixed

Street hasn't freaked (yet) over Yahoo executive departures

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