Search Engines Explode Abroad
Search Engines Explode Abroad
By Peter Lauria
New York Post
08/25/05
According to Internet World Stats, for instance, between 2000 and 2005, Internet usage in Asia grew 183 percent. In Latin America and the Caribbean, that number climbs to 277 percent, and in the Middle East usage rose a stunning 312 percent during those five years.
Internet search companies have gone global, and their growth is exceeded only by their potential.
Since May, Yahoo (Nasdaq: YHOO) , Google (Nasdaq: GOOG) and AskJeeves (Nasdaq: ASKJ) have bought assets in such overseas markets as Brazil, China and Italy, all with the aim of establishing leadership positions to capitalize on the Internet's tremendous growth prospects internationally.
Escalating Statistics
According to Internet World Stats, for instance, between 2000 and 2005, Internet usage in Asia grew 183 percent. In Latin America and the Caribbean, that number climbs to 277 percent, and in the Middle East usage rose a stunning 312 percent during those five years.
More telling than usage growth rates, however, is that fact that in each case the percentage of the population online is less than 15 percent.
"There's a window of opportunity around the world for these companies to come in and become the dominant player or cede that position to someone else," said Ken Marlin, managing partner of boutique investment firm Marlin & Associates.
There's a massive amount of money to be made as well. According to a recent report by Citigroup analyst Mark Mahaney, Google's international revenue grew at twice the rate of its domestic revenue -- 149 percent year-over-year versus 75 percent year-over-year for its U.S. unit -- in the second quarter.
For the six months ended June 30, before its deal for Alibaba.com, Yahoo increased international revenue 101 percent to US$372 million. International revenue accounted for 30 percent of Yahoo's bottom line through June 30.
Invest Now, Reap Later
But that's only scratching the surface.
"These markets are still comparatively small," said SG Cowen senior Internet analyst Jim Friedland. "Returns on the investments being made today won't be realized until three or four years from now."
That could explain why the already cash-rich Google moved last week to raise an additional $4 billion. When combined with the roughly $3 billion in liquid assets the company already had on its books, Google will have amassed an enviable war chest with which to invest now and reap rewards later.
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