Credit Suisse Sees No Impact On Google From Mozilla Switching To Yahoo

Credit Suisse commented on Google Inc. GOOG losing its position as the default search engine on Mozilla's Firefox browser Wednesday.  The firm maintained an Outperform rating and a $722 price target.

Analysts led by Stephen Ju felt that the recent decision of Mozilla to switch search engines from Google to Yahoo! Inc. YHOO would have no meaningful impact on revenue or earnings.

Ju noted that as “Mozilla is a private company, it is difficult to weigh in with specifics, but we believe its annual revenue run rate was around $300mm, with the vast majority coming from TAC payments from Google.

“If we are to bracket a range of 60-80 percent revenue share to Mozilla in TAC payments, this implies about $375mm-$500mm in Gross Network Revenue, correspondingly about $75mm-$200mm in Net revenue, and likely $60-$160mm in Adjusted EBITDA if we assume 80 percent margin on this stream of revenue.”

Ju continued, “Against our current 2015 estimates, this is about 2.5-3.3 percent of Network Gross Revenue, 1.4-3.6 percent of Network Net Revenue, and 0.2- 0.5 percent of Adjusted EBITDA. And this is all baking in a scenario in which 100 percent of Mozilla users elect NOT to toggle the default search engine back to Google. We therefore see little case to update our estimates on this event as it is unlikely to generate a material impact.”

Google Inc. traded at $533.00 in the pre-market, down 0.74 percent.