“We expect two players to continue to perform strongly, Google and Amazon,” Lindsay writes. “Both Google and Amazon.com are still racking up annual growth rates in the 30-40 percent range, with only a relatively modest slowdown in sight.”
Lindsay reiterates his previous positions that Yahoo eventually will be sold to Microsoft Corp and that Barry Diller’s IAC e-commerce conglomerate will go ahead in August with its five-way split-up, as planned.
“Arguably the weakest players have strayed furthest from their original competences and have been operating largely as conglomerates,” the Bernstein analyst says of Yahoo and IAC.
In the short-run, however, Lindsay believes Yahoo will see gains if it reaches a deal to turn over some part of its search advertising sales to Google to run or if Microsoft resumes acquisition negotiations.
He argues that eBay “could potentially attract a Microsoft-like suitor in the future,” especially if growth in its core auctions business fails to resume and because eBay could spin off its PayPal or Skype units to make a deal work.
Even the strongest companies have weakness, Lindsay argues. Google has yet to articulate a compelling strategy to achieve the same level of strength on the emerging mobile Internet that it has on the computer-based Web.
Amazon and eBay are likely to be forced eventually to pay state sales taxes. Ironically, he notes, this may work to their advantage as large companies, because they have more resources than smaller e-commerce players to collect such taxes.
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