This is the trouble with instant analysis. On Thursday, Google (NASDAQ: GOOG )
announced that it would buy Zagat, the "quote happy" publisher of thumbnail
" restaurant reviews " with a rating system prone to " grade inflation
." Although Zagat had "struggled" in the smartphone era, an instantaneous
consensus emerged that the deal would " crush " the prospects of
online-reservation pioneer, OpenTable (NASDAQ: OPEN ). Investors responded by
giving OpenTable the kind of bleak rating normally reserved for greasy spoons.
By noon, the stock was down 12% from Wednesdays close, but by days end investors
seemed to think that was a little overdone. The stock still closed down 8% at
$57.50 on six times its average daily volume, and theres reason to think
OpenTable will recover further in the short term. Thats because, as the day wore
on, clearer minds began to look at the deal and see it might not be all it was
cracked up to be. Reuters Felix Salmon, noting that "Zagat is mainly useful as
a source of phone numbers and opening hours" also owns " a massive global
print-publishing business ; I can't for the life of me imagine why that's
something that Google wants to get into." Google is probably interested in
building out a platform where people rate and review restaurants. Its tried to
build its own platform and seed it with users of Gmail and its other services,
but that didnt work. Yelp also rebuffed Googles attempt at a buyout. But Zagat
offers a global brand and an audience of diners who have been crowd-sourcing
Zagat reviews for decades. Google is clearly hoping to plug those readers into
the online platform its been building. The trouble is, most Zagat reviewers seem
to be loyal to the printed guides. When it comes to online reviews, people are
increasingly heading over to Yelp. A story on marketing-news site ClickZ quoted
comScore data showing Yelps unique users rose 42% to 33.3 million this July from
the same month in 2010, while Zagats unique visitors dropped 20%
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