The Search Engine Games Continue: Google Inc (GOOG), Microsoft Corporation (MSFT), Yahoo! Inc. (YHOO)

The drive towards mobile is self explanatory: it’s a growing market. But the profit margins and CTR (click through ratio) are the key parameters for higher revenue, and it’s still unclear if Mobile is capable to beat the CTR and a higher effective CPM (cost per mille) of desktops. If these companies will be able to take from Google’s market share in mobile, this could augment their profit margins.

For Microsoft, unlike Yahoo and Google, its search engine operation isn’t its main source of revenue: the company’s on-line division that includes Bing and Adcenter account for nearly 4% of Microsoft’s total revenues; this division continues to lose money for the company.

Unlike Microsoft, Yahoo and Google still present an operating profit: during 2012 Yahoo’s operating profitability was 11.4%; Google’s operating profitability reached 25.4%. Google’s higher profitability isn’t the only thing it has up on Yahoo. Google’s revenues grew by nearly 32% during the year while Yahoo’s revenues remained virtually unchanged.

Despite all that I have stated above, Yahoo’s current outlook is that its revenues in 2013 will remain nearly unchanged compared to 2012. This outlook might come true or is just another tactic of setting the bar low.

I think 2013 might bring some surprises from both Yahoo and Microsoft that could not only impede the sharp growth in revenues of Google but also revive the search engine market.

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The article The Search Engine Games Continue originally appeared on Fool.com and is written by Lior Cohen.

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