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| Both Yahoo! and Google have diversified into
new product areas |
Shares in search engine companies Google and Yahoo fell in the US on
Thursday after RBC Capital Markets cut its ratings on the companies.
New competition also entered the field as AOL, the search engine and
email service owned by Time Warner, launched a local search service.
Google shares fell 6%, but recovered to close down 2.6%, or $5.06, at
$188.89 on the Nasdaq.
Yahoo dipped 5.6% but closed just 2% lower at $31.48 on the Nasdaq.
The selloff was spurred by
fears the search engines could not charge as much for adverts in the the
first quarter.
Prices for advertising were unexpectedly strong in the fourth quarter
of 2004 but may have been boosted more by Christmas spending than was
realised at the time, say analysts.
Separately, America Online, the email and search engine service,
announced it was launching a comprehensive new search service aimed at
providing one of the most extensive directories of local information
available to help people find information on their local area.
The new service will be integrated with America Online's existing
search engine.
RBC has investment banking relationships with both Yahoo and Google,
according to Reuters.
Micheal Bee, lead equity strategist at Boyd Watterson Asset Management,
said Google and Yahoo "from a fundamental approach seem to be overpriced."
(BBC) | 
Updated: 2005-02-25 09:15