Yahoo Inc (NASDAQ: YHOO) claims not to be under pressure to ink a search deal with Microsoft (NASDAQ: MSFT). You know what that means ...

The two distant followers in the search engine space were considering a partnership, but Microsoft's newly released Bing search engine raises questions as to how committed Microsoft would be to a deal. Yahoo CEO Carol Bartz was quick to explain, according to Reuters, that "Yahoo doesn't have to do anything with Microsoft about anything" and that it is "a damned big, important site."

The benefits of the deal are salient, mostly involving scale and increased monetization of Yahoo's search service. The second largest search company estimates that it would save up to $700 million in a year through the Microsoft partnership.

Even though Yahoo is "damned big," Bartz believes that the acquisition of smaller companies that could be folded easily would be a good use of the company's cash.

Goldman Sachs has upped its share price estimate on Google Inc. (NASDAQ: GOOG) to $486, an increase of 17%. The analysts cite both search query growth and improvements in emerging markets coverage as the reasons for giving a nod to the dominant player in the online search business. The higher estimate implies that Google still has plenty of room to grow, which leaves plenty of upside for investors.

On a per-share basis, Goldman Sachs pushed its earnings forecast for the search giant 2% higher for this year – to $21.30. Per-share earnings estimates for 2010 were increased to by 8% to $23.36, and the 2011 estimate is now $27.02 (up 12%).

Analysts at Pali Research today started coverage of Baidu.com, Inc. (NASDAQ: BIDU) with a Sell rating and a $90 price target. The brokerage firm cited "short- to mid-term uncertainties," which it says outweigh current opportunities for the Chinese Internet-search titan.

Chief among those uncertainties is Baidu.com's "controversial" business model. The search engine has recently come under fire for hosting search listings paid for by unlicensed medical and pharmaceutical concerns. Last week, the company added to Wall Street's concerns by slashing its fourth-quarter revenue outlook.

Pali Research joins the majority of analysts with its downbeat opinion of Baidu.com. Zacks reports three Holds, one Sell, and one Strong Sell, compared to just two Buy or better ratings. While the shares have already shed 70.8% year-to-date, Pali's $90 price target suggests that the brokerage firm expects additional downside. This estimate represents a discount of 21.1% to the stock's closing price on Friday.

Despite BIDU's negative price action, option players remain relentlessly bullish on the shares. During the past 50 days, traders on the International Securities Exchange (ISE) and the Chicago Board Options Exchange (CBOE) have consistently purchased more calls than puts on this Internet issue.

With the shares up more than 1% in early trading today, the bullish case for BIDU looks curiously compelling. However, considering the company's cloudy fundamental outlook, it's unclear just how long the shares can rely on round-number support at $110 before succumbing to the effects of gravity once again.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Google's (GOOG) shares continue to be stuck below $500 where they have been since late February. Part of the reason for the fall is that comScore data showed that the number of people who clicked on ads at the big search engine was weak in January.

It looks like the stock will drop again as "click rates" for Google ads rose only 3% in February when compared with the figures for the same month last year. According to MarketWatch: "Google reported 25% growth in paid clicks in its fiscal fourth quarter ended in December. But comScore data released last month showed flat growth in Google's paid clicks in January." Now, investors can ponder another piece of bad news.

The easy answer to the Google data is that a recession is slowing down advertising activity everywhere. Google carries millions of ads in its AdSense program, so it would make sense that it should suffer some fallout.

But, the answer may be more troubling than that. Readers of Google's search pages may be discovering that the text ads next to the listings are from marketers trying to take advantage of people looking for information by clogging pages with related messages. As more people understand the system of targeting based on search results, fewer are willing to be sucked in by companies trying to reach them due to their behavior.

If the Google system of matching ads to search results is putting its customers off, that would be worse news than the effects of a recession.

Douglas A. McIntyre is an editor at 247wallst.com.

Baidu.com (NASDAQ: BIDU), China's largest search engine, said this week that it beat profit expectations by doubling its most recent quarterly profit, but shares still are trading quite a bit below where they were just a few weeks ago as the company's management warned on profit guidance moving forward, which fell a little flat compared to what analysts were expecting. Maybe analysts are expecting too much, too soon? It wouldn't be the first time for recklessly, short-mindedness palpitations from Street "experts."

Baidu.com's shares have been on a speculative and hyped journey this year (they are priced way out of whack considering fundamentals), but reality did return to the picture a bit as of a few weeks ago when those shares came crashing down in what could be seen as a needed correction. Although Baidu.com operates as the largest search provider in the world's most populous country, it's no Google (NASDAQ: GOOG) when it comes to monetizing all those eyeballs -- yet.

Baidu.com has a very enterprising future in front of it, although a large question remains on whether it can rake up those revenues like Google has managed to do in many global markets. Yahoo! (NASDAQ: YHOO) is in a similar position: It captures billions of views every month, but lacks the advertising prowess to smartly monetize that traffic compared to industry leader Google. But an advertising explosion is still in the infant stages in China, and Baidu.com -- if it plays its cards right -- has a huge potential in front of it. But torrid, rapid growth? That may still be too much to expect in the next quarter or so.

Visit AOL Money & Finance for more earnings coverage

Apple, Inc. (NASDAQ: AAPL) was recently up $3.60 cents to $157.11.

AAPL is expected to report earnings per share (EPS) in mid-October. AAPL October option implied volatility is at 31 and November is at 39, below its 26-week average of 42 according to Track Data, suggesting decreasing price risk.

Google Inc. (NASDAQ: GOOG) was recently trading up $13.64 to $580.74.

GOOG is expected to report EPS on October 18th. GOOG October at the money 580 straddle is priced at $33.10. GOOG October option implied volatility of 31 is above its 26-week average of 27 according to Track Data, suggesting larger risk.

Volatility Index S&P 500 Options:

VIX decreased as Dow Industrials got above 14,000, down .59 to 17.39. The 10-day moving average was 18.78 according to Track Data.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Those of you who have been interested in blogs for several years are probably well aware of the company Technorati. This website made a splash by becoming the first market-share dominator in the entire Web 2.0 space, especially in the blog search engine space. But times have changed and Technorati is struggling to hold on.

The situation in Technorati is quickly shifting to more difficult, seemingly by the day. As TheDeal.com reported on Friday, the founding CEO of the company recently stepped down. In addition, the company has been forced to recently slash eight jobs to adjust the company's expense structure. Perhaps the most startling of it all -- Technorati is quickly losing its dominant market share position.

According to research firm Hitwise, Technorati's number one market share position is now just secured by 1%. The company currently stands at 34% of the blog search market, while Google's blog search product is a strong and growing 33%.

As you can see from the chart below (courtesy of Alexa.com), Technorati's page views figures are well off of their peak. Understandably, this traffic decline has been a huge catalyst to a weakening position in the blog search market, as well as financial difficulties, because for most internet companies, traffic is everything.

Whether it matters or not Microsoft (NASDAQ: MSFT), Yahoo! (NASDAQ: YHOO), and IACI's (NASD:IACI) Ask.com are all beginning programs to keep users search data private. Yahoo! actually plans to make (subscription required) all user search data anonymous within 13 months of collecting it.

Personal information can be used to improve the search results that are sent back to users. But, Ask and Microsoft are trying to band together with a number of companies and advocacy groups to set a coherent policy for keeping data on individual habits and data private.

Cynics might view the new enthusiasm for privacy two ways. The first is that it is a move by companies with a small share of the search market to pressure Google (NASDAQ: GOOG) to improve its privacy standards. This could hurt the accuracy of the company's search service by taking away key data that allow results to be more accurate.

The other take on the move is that protecting privacy data is much like building "green" cars. Critics and government agencies are becoming more interested in keeping the "Big Brother" aspect of search at bay. People's habits should be private and not part of a large black box that tracks their habits to serve more targeted marketing messages or collect information on who is not paying taxes.

The best solution is probably for people who don't want their data collected to avoid searching altogether. Personal data makes search results better. People can't ignore that.

Douglas A. McIntyre is a partner at 24/7 Wall St.

When Microsoft (NASDAQ: MSFT) unrolled its new search product, Live Search Club, I personally didn't think much of it. Microsoft has been trying to recapture market share from Google (NASDAQ: GOOG) and Yahoo! (NASDAQ: YHOO) for years and I thought this was just another attempt that would soon be forgotten. However, according to comScore (NASDAQ: SCOR), I am wrong.

Every month, comScore releases its search engine rankings for the United States. June was an interesting month for search engines according to the most recent release. Search activity in America continues to boom - up 26% year over year and 6% month over month. Interestingly, Microsoft's sites were the only sites that gained in market share last month - quite significantly in fact.

While Google and Yahoo lost about 1.2% in market share and the Ask network remained flat, Microsoft's sites were able to increase market share by nearly 3%. ComScore attributed much of Microsoft's gains to its Live Search Club.

I doubt this news is enough to significantly move Microsoft's stock because the company is so gigantic and its search products produce so little revenue. I also don't think Google or Yahoo! are going to be hit because small fluctuations in market share are rather common on the internet and the companies still saw overall increases in search traffic.

Xerox (NYSE: XRX) has launched its own search technology that will comb through mounds of documents in almost any language, format or type. According to TechCrunch, the new tech can "take advantage of the way humans think, speak and ask questions."

Xerox is thinking small with deploying the technology, very small. Next year, the service will launch and be available for a fee as part of the company''s Xerox Litigation Service product.

Now, either the technology is not anywhere close to as good as its sounds, or Xerox is showing why its stock price has fallen from $62 in early 1999 to its current price of $19. A technology as robust as the company's new Factspotter product sounds would certainly have very broad applications outside of working through litigation documents.

Perhaps someone should have a talk with the Xerox people about deploying the product a little more broadly.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Google (NASDAQ:GOOG) owns the index to the world's knowledge. What it isn't good at, however, is telling us which sources are well-written, amusing, or authoritative, especially since a whole industry has evolved to help businesses game the system by pushing their links to the top of the list regardless of appropriateness.

What we net users need is a curator, someone to cull out the crap, spam and marketing spin, leaving only the best answers to our question. This is the role the new search site Mahalo, just launched by internet entrepreneur Jason Calacanis, intends to provide.

Unlike sites such as Digg, which aggregate visitor opinion to vett interesting web content (and whose results are frequently gamed), Mahalo uses a staff of real human professional guides. These guides take the most popular search terms du jour and compile a prioritized list of resources that best address them.

Obviously, indexing even a small part of all possible search terms by hand is impossible, I asked Calacanis what Mahalo's goals were in this respect. He replied, "We are setting the goal of the top 10,000 terms by the end of the year and the top 25,000 next year." He pointed out that the number of unique search terms used every day is hugely inflated because people frame the same question in so many different ways. "If you come to our iPod or flatpanel TV pages, you don't have to do the 10 secondary searches. That being said, our goal is to do the fat part of the long tail and leave the other 60-90% of the tail to Google--which is why we show Google when we don't have a hand-written page."

The latest weekly report from HitWise shows Google Inc. (NASDAQ:GOOG) with over 60% of the US search market. Thirty-eight of the analysts who cover Google have a buy rating or better on the stock. But, according to Bear Stearns, Google's hyper-growth is slowing. Search queries were up 29% in March, but a year ago, that number was 50%.

In the face of all this data, The Wall Street Journal wonders whether investors are putting their expectations for Google earnings, which are going to be released today, too high.

Probably not.

Google still has to earn its tremendous valuation. The company's shares trade at almost 14 times trailing revenue. For Yahoo! Inc.(NASDAQ:YHOO), that number is less than 6x. At eBay Inc. (NASDAQ:EBAY), the figure is about 8x.

None of this is to say that Yahoo! and eBay are not fairly valued. But Google carries a premium of almost 100% when market cap to sales is the measurement. It has to keep growing at the anticipated rate of about 70% year-over-year to keep that premium.

So, when Google reports earnings, expectations will be too high. But, they should be. Google has managed to beat "too high" before.

Douglas A. McIntyre is a partner at 24/7 Wall St.

2 hours and 52 minutes. What does that number represent? How about the amount of "downtime" experienced so far this year by the top three search engines (Google, Yahoo! and Microsoft Live). It's unfathomable to me how web services like Google and Yahoo! stay operational so much of the time when the customer load and demand (think of it on a global scale) is so huge. The engineering and programming expertise to ensure as little downtime as possible is off the scale in many respects.

Already, we're past the 2,000-hour mark into 2007, and a little less than 3 hours is the downtime mark (combined) of the top three search engines. These engines must serve a never-ending quest of customer interaction 24 hours a day from all over the world. When you think about it, the reliability of these three companies most likely beats the pants off the electricity and home telephone business -- considered to be two staples of reliability in the age of utility services.

But what about the downtimes per search engine? Yahoo: zero minutes. Google: seven minutes. MSN: 1 hour and 48 minutes. How does Yahoo! do it? The company still receives more traffic than Google does when the entire Yahoo! network is considered (not just web searches), and it has a perfect operational record so far. That, to me, is simply amazing. Worse up: what if Google and Yahoo! were to go down for an entire day, globally? Would we be roasting chickens in the street and fighting to the death over bottled water?

Yesterday, comScore released December U.S. search engine rankings. Overall, the U.S. search market grew 1% in December compared to November, as Americans conducted 6.7 billion searches. This still implies a strong 30% annual growth rate.

Interestingly, both Google Inc. (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) gained market share. At whose expense? Microsoft Corp. (NASDAQ:MSFT), IAC/InterActiveCorp's (NASDAQ:IACI) Ask.com and Time Warner Inc.'s (NASDAQ:TWX) AOL.

Google held 47.3% of the search market, a 0.4% gain from November, which means it served 3.2 billion queries. Yahoo! gained 0.3% to hold 28.5% of the market. Yahoo! served 1.9 billion queries. Microsoft lost 0.5% of its share in search market in December to 10.5%, Ask held 5.4%, down 0.1% and AOL was declined 0.2% to 4.9%.

While Google gaining market share isn't surprising -- the search giant has gained market share in the past 16 of 17 months -- Yahoo!'s gain is encouraging. Yahoo!'s search market share has been stumbling, with Google and Ask.com usually the ones gaining. With Yahoo!'s new search advertising platform, Panama, will this share gain (and hopefully the next ones), also translate into better monetization and higher revenue?

The launch of a personalized search engine offering by Google, Inc. (NASDAQ:GOOG) late yesterday of was a non-event thus far, as it remains to be seen how customers will end up finding that this is even available, let alone use it. It's a great product from reading the official Google description and press release, but one thing I've said a few times in the past is that Google needs more marketing to get customers used to using their product outside the search engine.

I really think many of Google's offerings are superior to the competition, but the company tends to rely on word-of-mouth advertising to get its marketing done. This can reach far but isn't enough. The resistance to marketing change is also something Google needs to attack fervently if it is to persuade customers to use its products over the competition. For example, Google's Gmail product -- outside of possible privacy concerns -- is superior in most ways to the way I use email every day. It's better than Yahoo! Mail and miles ahead of MSN's Hotmail product -- again, for the way I use email (not for everyone). Since email is still the "killer app" of the Internet, why hasn't Gmail made more market penetration?

Like Yahoo!'s personalized search engine offering -- which was launched in August -- Google is actually following the lead of a competitor for once. Yahoo!, Inc. (NASDAQ:YHOO)'s "Search Builder" leaves a lot to be desired according to Melly, and I have to agree since I've used it already. Will Google's personalized search engine make for a popular product? Who knows --- first, the company has to make the world very aware of it outside initial fanfare and the early-adopter crowd who jumps on anything new. The long haul provides the best returns, and so far, Google's track record is not that swell outside of search advertising.