Yahoo!'s Brainpower

For an Internet company, research is the creation of innovation -- the ability to plant seeds for growth several years down the road. And investors who don't know the nuances of search algorithms can still handicap a stock's long-term prospects by looking at the intellectual brainpower going into its research initiatives.

In the horse race between Google(GOOG Quote) and Yahoo!(YHOO Quote), the conventional wisdom is that Google has the edge in research: Its stock is up 240% since its IPO nearly a year ago, vs. a 26% appreciation in Yahoo!. Google is very finicky about its hires, which means if you get in, your job becomes a kind of daily Mensa party. And then there's the freedom -- if not the expectation -- to spend 20% of your time on a labor of love.

But it's far too early to write off Yahoo!, which has been steadily, if quietly, building a stable of brilliant researchers on its own. Under the leadership of Usama Fayad, Yahoo!'s chief data officer, the company has brought in its share of intellectual caliber, most recently in the hiring of Prabhakar Raghavan, head of Yahoo! Research, as well as a research partnership announced with the University of California, Berkeley. ...