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Fast Money

Trading The Online Ad Wars


Microsoft (MSFT) beat Google (GOOG) to the punch and made a 5% investment in the social networking phenomenon says WSJ. This comes as Bill Gates wages a campaign against Google's $3 billion purchase of online advertising firm Doubleclick, which is being reviewed by Congress later this week. How do you trade?

Kourosh Karimkhany joins the panel to discuss this battle of titans. He’s manager of wired digital at Conde Naste.

Do you believe that MSFT can become a formidable competitor to Google in the world of online ad sales?

Tomorrow's Trades #1

There’s a lot “if’s” there. If they actually make an investment in it will be a very interesting move, says Karimkhany.

He adds that Facebook is well on its way to developing an operating system for the web which is something Google has already been doing successfully for the past 5 years. He feels a Microsoft investment in Facebook would be for the operating system.

So the investment in Facebook is about software development for the internet?

Oh yes, says Karimkhany. And it makes sense. Think back to the early ‘80’s he adds. Microsoft made a genius move when they bought a little operating system called DOS believing they could build a whole bunch of stuff on top of that. The rest is history.

Who is capturing the biggest slice of on-line ad revenue?

5 years ago the top 50 internet companies were capturing 80% of revenues. I would bet now it's would be the top 80.

How do you trade this?

Jeff Macke recommends getting long Microsoft (MSFT).

Pete Najarian prefers ValueClick (VCLK) as well as Focus Media (FMCN).

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Trader disclosure: On Sept. 24, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (DIS), (EMC), (ATVI); Najarian Owns (AAPL), (DGX), (VCLK); Najarian Owns (TSL) Options; Finerman's Firm Owns (JNJ), (NMX), (NYX), (VCLK), (TGT); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm And Finerman Own (HD), (FLS); Finerman's Firm Owns (MSFT) Options