Gates switches on new MSN Search tool

Wednesday, February 2nd 2005, 10:47 am

By: News On 6

NEW YORK (AP) _ Microsoft Inc. Chairman Bill Gates personally launched the latest salvo in the race to draw Internet surfers on Tuesday by switching on a redesigned MSN.com Web site that features an upgraded search engine _ a move that coincidentally fell on the same day rival Google Inc. posted impressive earnings.

Gates, in a letter posted on MSN, introduced the Web site's redesign that now boasts a search engine with news headlines, music downloads, and even a feature that looks for files on a user's own computer. The Redmond, Wash.-based software giant _ which had been working on the redesign for the better part of a year _ has been criticized for falling behind rivals in search capabilities.

``Searching the Internet today is a challenge, and it is estimated that nearly half our customers' complex questions go unanswered,'' Gates wrote in a letter posted on MSN, adding that ``input from millions of our customers _ including me _ was crucial to our efforts to make MSN Search the best it can be.''

The timing of the launch might be a subtle warning for Google, which released impressive fourth-quarter profit after the closing bell. The Mountain View, Calif.-based Google now lays claim to being the most-used search engine on the Internet, and its products are being duplicated by competitors such as Microsoft and Yahoo Inc.

``The timing is sure coincidental, and it really speaks to the competition between them,'' said Stephen Leeb, whose New York-based Leeb Capital Advisors manages some $110 million of assets. ``Google has formidable competition in the form of Microsoft. I don't think tonight's earnings are that important, the key is if other companies like Microsoft can make inroads.''

Google said it earned $204.1 million, or 71 cents per share, during the final three months of 2004, up from $27.3 million, or 10 cents per share, in the same quarter last year. Fourth-quarter revenue was $1.03 billion, more than double the $512.2 million posted a year ago.

Specifically, analysts said they were more interested in comments about new products that might help keep Google ahead of its rivals than they were in earnings news. The company last week announced it would offer users the ability to search television programs, a move also being pursued by Yahoo.

Investors like Leeb say Google's earnings really aren't Wall Street's main interest, considering the company's stock continues to trade near $200 levels. Instead, he's more interested in how Google might be able to fend off competitors _ especially those with the financial reach of Microsoft.

``Though they enter markets late, Microsoft often ends up dominating them,'' he said. ``There's a whole graveyard of corpses that have gone up against them and lost.''

He pointed out Netscape Communications, which originally had the most popular Internet browser. Netscape Navigator _ now owned by Time Warner Inc. unit America Online _ was once the most popular browser before Microsoft Explorer put the squeeze on it.