Analyst sees desperation in Microsoft SearchPerks

One Wall Street analyst says he doubts the frequent-flier-like program will help Microsoft make headway against Google.

Ina Fried Former Staff writer, CNET News
During her years at CNET News, Ina Fried changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley.
Ina Fried

Microsoft's effort to woo Internet searchers with financial incentives strikes one Wall Street analyst as a "desperate move" that will make little headway.

On Wednesday, Microsoft announced SearchPerks, a frequent-flier-like program that gives searchers one "ticket" for every search they do via Microsoft's Live Search engine.

To Collins Stewart analyst Sandeep Aggarwal, though, SearchPerks is just another sign that Microsoft lacks a "Plan B" strategy to gain share against Google without buying Yahoo.

"Our preliminary reaction is that SearchPerks will likely result (in) a sub-standard outcome," Aggarwal wrote in a report Thursday. "In our view, attempts like this one can in fact hurt Microsoft's reputation in the eyes of end-users and advertisers."

Speaking of Yahoo, its shares have hit new lows, trading around $16.50 recently--half of the $33 per share that Microsoft was willing to pay at one time. Some say a combination of the economy and a lack of alternatives mean that Yahoo will eventually find its way into Microsoft's arms, though the software maker has not been offering any warm words for Yahoo of late.

In any case, Aggarwal still says people should buy Microsoft's shares, despite his lack of enthusiasm for SearchPerks.

"Though organic efforts to ramp up Microsoft's online business are not enough, we like the shares especially given its market-dominating software franchise, strong balance sheet, and $40 billion (stock) buy-back program," he wrote.