I don't see them truly competing with big budget search engines, but it's probably easy enough to make decent money from keyword ads and if you can sell the brand, you can get enough users to cover a smaller machine footprint and R&D budget that's orders of magnitude smaller.
The results are probably not awful (I don't use it). Result quality gets exponentially more difficult as you try to push that boundary, so you can probably get 80% of the quality there with 1% of the investment. The results may be good enough for plenty of folks, but I highly doubt they will ever be better than the big budget search engines.