How good a business is search? With low bandwidth, G&A, and maintenance costs its a great business that churns out an impressive amount of cash. Google is on pace to generate about $10 billion in free cash flow this year so it’s cash-generating power is no secret. However, comparing FCF generated in recent years by Yahoo in comparison to Google underscores the point. Specifically:
- 2005: Google had a modest lead in search with 37% US share versus 31% share for Yahoo.
- 2009: In just four years Google establishes itself as the dominant player in search with about 65% share of US searches versus 16% for Yahoo at the end of 2008 and into 2009.
- End Result: From 2005 through 2008 Google generates about $12 billion in free-cash-flow versus $5 billion for Yahoo.
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