Benchmark Co. analyst downgrades Yahoo, says competitors’ share of search market climbing

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Analyst downgrades Yahoo on search share concerns

SAN FRANCISCO — A Benchmark Co. analyst downgraded share of Yahoo Inc. Thursday, noting issues like better-scaled competitors grabbing a bigger share of the search market and increasing competition in display advertising.

In a note to clients, Benchmark analyst Clayton Moran cut his rating to “Hold” from “Buy,” saying Yahoo has lost share in the domestic search market, and as of February it was down about 4 percent year over year to 16.8 percent of the market.

While he expects Yahoo’s search share losses to slow down, he’s still concerned about the company’s segment of the market as Bing, Microsoft’s upgraded search engine, gains popularity. He also thinks Google’s share of the market will climb as consumers perform more searches on mobile devices — a number of which now run Google’s Android operating software.

Moran also said that while the reach of Yahoo’s display advertising business has helped the company as the online ad market improves, its growth could be hampered over time by the growth of specialized sites like Facebook.

Yahoo shares fell 34 cents, or 2 percent, to $16.45 in afternoon trading.