Top 5 Takeover Targets In The Mobile Internet Space

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 |  Includes: ADTM, FH, GLUU, HIPPQ, MITK
by: AppHead

The mobile space continues to heat up every day. Mobile apps, mobile transactions, mobile advertising and mobile devices are playing a key role in determining the value of the next trillion dollar company. Sometimes in order for a company to rapidly adapt and compete, acquisitions must take place and at a rapid pace. Google made 50 acquisitions in 2011 and continues to do so in 2012. Facebook (NASDAQ:FB) recently made plans for "massive acquisitions" this year and most in mobile. Facebook has already purchased a single mobile app company for $1 billion and plans many more. The most valuable company out there, Apple (NASDAQ:AAPL), has recently acquired a mobile app search company. Below are 5 companies that are well positioned as takeover targets in the area of the overall mobile Internet.

Vringo (VRNG)

Vringo is a company that provides mobile apps and a video ringtone product platform that allows users to create, download, and share mobile entertainment content in the form of video ringtones for mobile phones; and Facetones, which allows users to create social picture ringtone and ringback content in the form of animated slideshows sourced from friends' social networks. In relation to a patent dispute with Google (NASDAQ:GOOG), Vringo has received some attention based on receiving a positive Markman ruling. At that time the stock was at $3.70 per share and went to $5.45 a few days later. This was a 45% gain in 5 days driven by the favorable court ruling.

These Markman rulings determine what language the jury will hear when determining whether or not the patent has been infringed. They have a significant impact on the potential outcome, in this case of Vringo vs. Google. A company like Google, which is used to making defensive acquisitions, will no doubt look at a company like Vringo as a potential takeover target if uncertainty continues related to this potentially significant patent ruling. A price target for a Vringo takeover could easily reach $7.00 per share.

Mimvi (MIMV.OB)

Mobile apps are making or breaking the successful shipments of smartphones and mobile devices. Mimvi knows this. Mimvi, also known for being "the Google of mobile search platforms" that helps people find and discover mobile apps, is succeeding in becoming the leading platform for providing search and recommendation services to the consumer and enterprise on the mobile front. It's essential to note that Mimvi competitors, Chomp and Quixey and now Facebook, have drawn quite a bit of attention. Chomp was recently taken over by Apple 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 over $2 per share on Mimvi.

Meanwhile, Facebook, like Apple, is looking to take over companies to help its mobile app initiatives. Mimvi has also attracted top executives from Google to smartly position themselves as an attractive target. The mobile search space is white hot and shows no signs of slowing. Just as with 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 they lead the mobile search space in terms patentable algorithms, number of search results and relevance. A takeover price target for Mimvi could reasonably be in the $5.00 per share area.

Mitek Systems (NASDAQ:MITK)

Mikek Sytems has strategically positioned itself to be part of the mobile payments and transactions revolution. Mitek Systems offers the sale, and service of software solutions related to mobile imaging solutions and intelligent character recognition software. It provides Mobile Deposit, a software application that allows users to remotely deposit a check using their smartphone cameras; Mobile Photo Bill Pay, a mobile bill paying application that allows users to pay their bills; Mobile ACH Enrollment, an application that enables consumers to enroll their checking accounts as funding sources for mobile payments; and MitekONE, an enterprise platform that addresses various deposit types.

Many are saying that the next trillion dollar company will be one that is front and center when it comes to mobile transactions. Interestingly, Mitek Systems has suffered a decrease in its stock price. Combined with being in the right place at the right time, Mitek Systems, can be an attractive takeover target at its current levels. A target price of $8.00 per share could be in order for a company like Mitek Systems.

Augme Technologies (AUGT.OB)

Augme Technologies has been described as a "Patent Gold Mine With Buyout Potential" by others in the past. Augme focuses its technology on providing strategic services and mobile marketing technology to consumer and healthcare brands. The company offers mobile marketing, and advertising technology and services to brands, advertising agencies, media companies, and enterprise customers. It provides AD LIFE, an interactive software-as-a-service platform for marketers, brands, and agencies to plan, create, test, deploy, and track mobile marketing programs across various mobile channels, including SMS, 2D/QR codes, mobile Web sites, advertising networks, social media, and branded applications. The company's patented device-detection and proprietary mobile content adaptation software provides a solution to the mobile marketing industry problem of disparate operating systems, device types, and on-screen mobile content rendering.

The revenue opportunity for a company like this is clear. The largest competitors of Augme have to make that age old decision to either buy or build. The competitive landscape for mobile advertising is changing rapidly. Large over-sized competitors in this area such as Microsoft, Google, Apple, Samsung or Facebook may not have enough time to innovate and build in-house mobile advertising solutions. This is the reason Augme Technologies can be viewed as a potential takeover target. Augme is currently trading at about $1.50 per share. A target price of $4.00 per share would not be out of the ballpark for them, considering the value of the this space.

Glu Mobile (NASDAQ:GLUU)

Glu Mobile is an intriguing company, as it had a pure focus on mobile gaming apps long before companies like Zynga (NASDAQ:ZNGA) ever did. Glu's games are gaining traction ever quarter and their games stand to have the same opportunity for consumer adoption as some of the world's most popular titles like Angry Birds or Draw Something. Glu also has the potential of ousting old traditional gaming companies like EA (NASDAQ:EA) or Take Two (NASDAQ:TTWO). This introduces a unique and powerful value that Glu Mobile retains that could be very attractive to those companies.

Of course, at the same time, Glu remains a threat to these companies which could trigger defensive acquisitions. Mobile gaming apps are one of the most popular segments of mobile content that consumers are searching for and downloading. Glu is certainly executing in one of the most exciting spaces since the dawn of the Internet. It can be expected that Glu Mobile will be an attractive takeover target as the mobile gaming area is one of the main reasons many consumers purchase mobile devices and tablets.

It's clear to see the attraction that Glu Mobile holds with companies that are battling it out for consumer adoption of their devices. Some are now considering Glu Mobile to be "The Biggest Acquisition Target In The Gaming Market" Glu Mobile is a fair target for a takeover as many are seeing and while it's trading just over $5.00 per share, a takeover price target in the range of $8-9.00 per share seems reasonable.

Diversification is important when positioning investment in takeover targets. It can be anticipated that more takeover targets will arise in the future as the mobile Internet begins to take over the lives of most every consumer on Earth.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.