“Yahoo is trying to become a broadcasting platform, creating original content, cutting deals with film studios and TV networks,” Mr. Weiner said. “None of that has really panned out.”  The company may have tacitly acknowledged that on Monday when its chairman, Terry S. Semel, gave up his role as chief executive. He will be succeeded by Yahoo’s co-founder, Jerry Yang.  A management change had been seen as vital if Yahoo were to turn itself around, and the stock rose immediately after the announcement. But even after three years of strong outperformance, Google appears to be the relative bargain. Analysts expect Google’s earnings to grow 30 percent a year for the next five years, compared with 23 percent for Yahoo, according to Standard & Poor’s. Despite that gap, Google trades for a smaller multiple of current earnings, 44 versus 55.  Are analysts overestimating Google’s ability to grow faster than its rival? Jason Schrotberger, a portfolio manager at Turner Investment Partners and a Google shareholder from the start, doubts it. He pointed to a virtuous circle that perpetually allows Google to become bigger and richer.  Strong technology increases traffic, which provides more information about users, which enables better aiming of ads. The result is more revenue, which lets Google spend more on technology and so on.  Yahoo is tracing out a circle, too, he said, but the wrong kind. “Yahoo has good technology, but without the traffic that Google has, it can’t get the history, and that means there’s not enough money coming in to drive innovation.”  That attitude is widespread, and it has steered some contrarians into Yahoo, including Kevin Landis, a portfolio manager for Firsthand, an investment firm that owns both stocks, with the bigger position in Yahoo.  “There’s so much negative sentiment around that company that it’s almost as if the least little thing they do right is going to seem like a sea change,” Mr. Landis said.  With Mr. Yang once again at the helm, Wall Street will be eager to see what course he sets. The consensus among back-seat navigators is that Yahoo must focus on far fewer activities, emphasizing ones that are immediately commercially viable. But it may be difficult for Mr. Yang to exceed shareholders’ hopes and send the stock much higher.  GOOGLE has demonstrated the strong focus and the ability to convert clicks to cash at a fast clip that Yahoo these days can only hope for. Google’s shareholders have been rewarded so far, but Mr. Landis warns of a harsh reassessment if the paid search business begins to level off.  “The raw materials for criticism are in place for Google, but we’re not seeing it yet,” he said.  Mr. Weiner has no worries about Google’s ability to keep growing if it continues to make acquisitions, like the YouTube video site, and form partnerships with other tech heavyweights. A widely mooted deal in which Google would furnish targeted advertising to users of the fledgling Apple TV would be ideal, he said.  What could cause Google to stumble, he said, is not inadequate growth but enough of it to “step on people’s toes.” Some holders of copyrighted material do not like Google searching their content already, and as it expands, Google is bound to usurp territory that companies like Microsoft consider theirs alone, he said.  A big technology company “has to make sure it doesn’t get too full of itself,” Mr. Weiner said. “It’s easy to go from a darling of industry to a hated icon. You don’t want to become an enemy of the people. Hubris is a funny thing.”
Being a great technology company is still being learned — the easy way if you own Google and the hard way if your money is in Yahoo.