The mobile space continues to grow at an incredibly rapid rate. Mobile apps, mobile transactions, mobile advertising, mobile search and mobile devices are playing a key role in determining the value of the next trillion dollar company. Below are 8 companies that are well positioned as potential acquisition targets in the area of the overall mobile Internet.
Millennial Media (MM)
Millennial Media holds great promise in this exploding sector and operates the 2nd largest mobile advertising network behind Google (GOOG). It delivers a wide array of solutions and has helped bring more than 45 billion ads to mobile users. It offers a mobile advertising technology platform for developers and advertisers called MYDAS. It provides tools and services that enable app developers to display banner ads and interactive rich media ads through its platform. The company's developer solutions include software development kits that allow apps to receive rich media, banner displays and video, tools which allow developers to allocate ad requests among various advertising campaign sources and data and analytics that detail ad revenue generation reports for their apps across various mobile platforms. Millennial features ads on more than 38,000 apps and works with 75 of the top 100 advertisers ranked by Ad Age. Yahoo's (YHOO) CEO Marissa Mayer's recent announcement that she would transform the company into a mobile-first enterprise drove speculation that it might acquire Millennial. Millennial Media expects revenue for the fourth quarter of 2012 to be in the range of $61.5 million to $63.0 million. For the full year 2012, Millennial Media expects revenue to be in the range of $181.0 million to $182.5 million.
Pandora Media (P)
With more than 150 million registered users, of which 100 million of them listen primarily on their smartphone, Pandora is a natural for mobile advertising. In fact, according to eMarketer Pandora is second only to Google in mobile ad revenue, which estimates it will bring in $229 million in mobile ad revenue this year from both audio and on-screen ads. Pandora is expected to jump to nearly $500M in mobile revenue by 2014. However Pandora's stock dropped 18% after the company released its Q3 fiscal 2013 earnings and increased its loss forecast for the whole fiscal year. But looking at the longer term, if it can manage to get its content costs under control, mobile ad revenues (which were up 61% this quarter) should ensure that Pandora is a winning play.
Mobile apps are becoming a vital component to the success of smartphone and tablet platforms. Mimvi's app discovery and recommendation engine helps people find and discover mobile apps, and is succeeding in becoming the leading platform for providing search and recommendation services to the consumer and enterprise on the mobile front. It's important to note that Mimvi's competitors, Chomp and Quixey and now Facebook (FB), have drawn quite a bit of attention of late. Chomp was taken over by Apple earlier this year while Quixey recently raised a total of $24.2 million, part of which was raised by Google's Eric Schmidt. This places a valuation close to $100 million on Quixey, which in turn translates to a stock price of more than $2 per share on Mimvi. Facebook, much like Apple, is looking to take over companies to help its mobile app initiatives. Mimvi has positioned itself as an attractive target. The mobile search space is growing rapidly and shows no signs of slowing. Like web based search engines, the revenue opportunity for mobile based search engines is tremendous. This is exactly why Mimvi remains as a prime takeover target as it leads the mobile search space in terms of patentable algorithms, number of search results and relevance.
Velti is a leading global provider of mobile marketing and advertising technology and solutions that enable brands, advertising agencies, mobile operators and media to implement highly targeted, interactive and measurable campaigns by communicating with and engaging consumers via their mobile devices. The Velti platform, called Velti mGageTM, allows customers to use mobile and traditional media to reach targeted consumers, engage the consumer through the mobile internet and apps, convert them into customers and continue to actively manage the relationship through the mobile channel. In Q3 2012 Velti reported a loss of $0.03, $0.06 worse than expected, in spite of a 63% increase in revenue to $62.4 million. Research and development cost increases accounted for much of this loss. With the mobile ad market growing so rapidly these investments are surely prudent and will lead to increased market share going forward.
Phoenix New Media Limited (FENG)
Phoenix New Media, an internet and mobile content provider was spun off from Hong Kong-listed TV broadcaster Phoenix Satellite Television in 2011. Phoenix New Media offers its parent's programming, as well as online news, games, videos, and user-generated content. It distributes such content through its popular portal, Ifeng.com, and on mobile devices from China Mobile, China Unicom, and China Telecom. In addition, Phoenix New Media produces its own content for the Web and for its parent's TV channels. Bypassing the Asian markets, Phoenix New Media filed an initial public offering in the US in 2011. Phoenix Satellite Television owns 52% of Phoenix New Media. Phoenix New Media offers content and services through three channels, including an online channel on the website ifeng.com, a video channel, and a mobile channel, as well as transmitting content to TV viewers primarily through Phoenix TV. The company's mobile channel consists of the 3g.ifeng.com mobile website and mobile Internet and value-add services, including mobile newspaper services, digital books services and mobile games services. Phoenix New Media is clearly in the right place at the right time. China is rapidly expanding the online portion of its ad spending, which is set to reach $9.43 billion next year and $11.78B in 2014.
MagicJack VocalTec Ltd. (CALL):
MagicJack VocalTec Provides voice over Internet protocol (VoIP) services in the United States. The company offers magicJack and magicJack PLUS which are VoIP devices that provide phone services for home and enterprise customers. It also sells telecommunications hardware, proprietary software and service agreements to telecommunications carriers. On November 9th, 2012, the stock jumped the most in three weeks as the company announced that lower marketing costs will boost net income. The company raised 2012 operating income forecast to $155 million without giving any details on previous estimates.
MeetMe, Inc. (MEET),
MeetMe the public market leader in social discovery, announced in November that it ranked 32 on Deloitte's Technology Fast 500", a ranking of the 500 fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America. Rankings are based on five-year revenue growth. Over that period, MeetMe, Inc. has grown its revenue 5300%.
MeetMe® is the leading social network for meeting new people in the US and the public market leader for social discovery. MeetMe makes meeting new people fun through social games and apps, monetized by both advertising and virtual currency. With 60% of traffic coming from mobile, MeetMe is fast becoming the social gathering place for the mobile generation. The company operates MeetMe.com and MeetMe apps on iPhone, iPad, and Android in English, Spanish and Portuguese. "We are pleased to be acknowledged for the second year in a row by Deloitte with regard to our revenue growth. We have seen tremendous growth over the last few years and believe internationalization presents an even larger opportunity to build a global, mass market brand," said Geoff Cook, COO MeetMe, Inc.
JIve Software (JIVE),
Jive Software is the world's largest and fastest growing independent social business provider. Jive combines the power of community software, collaboration software, social networking software, and social media monitoring offerings into an integrated platform. The company brings social technology innovations from the consumer world into enterprises securely and at scale, changing the way work gets done. Its platform combines the power of big data, enterprise integrations and social collaboration technologies. Millions of people at the world's largest companies are using Jive-powered networks internally and externally to transform their businesses. The product includes team member blogs, wiki-docs for group editing and discussion tools. Recent versions include video, analytics, and social media monitoring. Jive helps companies like Intel create highly-interactive online communities. Other Jive customers include VMware, National Instruments, NetApp, SAP, Embarq, ManTech and Linden Lab.
These eight companies are growing at a rapid rate and surely must lead the list of takeover targets in the mobile arena, making them all worthy investment opportunities.
Disclosure: I am long MIMV.OB.