After Long Underperformance, Google (GOOG) Passes Yahoo! (YHOO)

Through most of this year, Yahoo! (YHOO) shares have outperformed Google’s (GOOG). At two points over the period, Google was flat for the year and Yahoo! was up over 30%. One of those run-ups in Yahoo! was caused by rumors that Microsoft (MSFT) would buy the big portal.

But, over the last three months, the tables have been turned. Yahoo!’s shares are down 15% and Google’s are up by 15%.

It appears that Yahoo!’s shareholders got what they wanted. Terry Semel moved out as CEO. The Panama launch got decent early reviews. And, Yahoo! launched a new system for behavioral targeting of display ads, a move the industry believes is good for the company’s ad rates.

Google has not done much of anything over the period. It put out more free software that could compete on the desktop with some Microsoft Windows functions. And, the company’s lead in the search business is as big, if not bigger, than it was a year ago.

The difference in the share prices cannot be entirely laid that feet of disappointment about Yahoo!’s prospects for the next couple of quarters. The market already knew that was a distinct possibility. And, Google is expected to turn in another quarter of spectacular results.

Perhaps it is that Wall St. is catching on that after no bid from Microsoft, after the Panama launch, after the departed CEO, and after creating new software for advertising targeting, Yahoo! is really no better off than it was a year ago. The company is in essence, beyond saving, at least as a growth company. It has joined the ranks of Microsoft, IBM (IBM), and Sun Microsystems (SUNW). It is just another big tech company which once had bright prospects which have now turned mediocre.

It is just a regular company, with regular prospects.

Douglas A. McIntyre can be reached at [email protected].