Street Seems Skeptical of Microsoft's Live Search CashBack

by: Eric Savitz May 23, 2008 | about stocks: GOOG / MSFT    

Eric Savitz

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Microsoft’s (MSFT) new Live Search Cash Back program, which gives online shoppers rebates from about 700 retailers for purchases made through the company’s product search service, is a fascinating idea, which seems to basically amount to bribing Web surfers to get their traffic. That’s not necessarily a new idea, but the ambition of Microsoft’s effort suggests investors ought to at least consider whether it has a chance to work.

Bernstein Research analyst Jeffrey Lindsay says he likes the service, and finds it “clever and innovative,” but that it does not have game-changing potential. “In the unlikely event that Google (GOOG) experienced significant share loss to Microsoft as a result of Cash Back, it would retaliate with a similar scheme of his own,” he wrote in a research note today.

“Since Google would only need to offer a scheme with a similar number of merchants to match Microsoft’s offer, we estimate the effect would be limited in scope and would not undermine margins across Google’s larger market share.”

Lindsay maintains his Outperform rating and $750 price target on Google.

Douglas Anmuth, the Internet analyst at Lehman, says he was initially dismissive of the program but that it has “grow on us, at a least a little bit.” He thinks Live Search could gain some traction in the near term, and potentially take a modest amount of market share. But he also writes today that in the long run,

“users will still gravitate toward the search engine that provides the best user experience, most relevant results and strongest product innovation.”

And that company, he says, is Google.

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This article has 3 comments:

  •  
    May 23 04:09 PM
    Nice cherry picking, let me guess... the author is long Google. Then again analysts (especially internet analysts) are rarely wrong.
    Reply | Link to Comment
  •  
    May 24 08:47 AM
    I will bribe you too buy something off of my website will give you a free gascard to fill your tank just find the right link and make a purchase and it is all yours!seeksomething.com
    Reply | Link to Comment
  •  
    Dec 14 09:03 AM
    it will be interesting to see what google reply will be. Perhaps they will introduce cashback hehe.
    Reply | Link to Comment
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