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How Will The Acquisition Of Teknision Impact Synacor?

|Includes: Digital River, Inc. (DRIV), GOOG, SYNC

When a large or mega-cap acquires a small company like Teknision, the expected impact would barely move the needle in term of revenues. However, when a small-cap company like Synacor, Inc. (NASDAQ: SYNC) is the acquiring party, the impact is expected to be significant. The impact on Synacor's business is much better knowing that the acquisition of Teknision fits well into its business model. Therefore, it is not just an additional revenue generator. The acquisition of Teknision brings many synergies and boosts Synacor's growth potential, especially given the rapid growth in the usage of mobile devices.

Synacor provides start pages, TV Everywhere solutions, identity management services, and various cloud-based services for cable, satellite, telecom, and consumer electronics companies in the U.S., UK, and the Netherlands. It also offers authentication and aggregation solutions for the delivery of online content. Teknision is an award winning mobile product development company focused on merging design and technology to create transformative user experiences on a variety of connected devices. It is the creator of proprietary Android development platform.

The acquisition of Teknision opens doors for Synacor to develop solutions for electronic devices manufacturers to deliver TV Everywhere via Google's (NASDAQ: GOOG) leading android platform. With one billion android activations to date, it is very clear how the acquisition of Teknision could boost Synacor's revenue potential, as it seeks to cement its position as the leading provider of TV everywhere solutions.

Unlike iOS, its closest rival, several device manufacturers use Android as the preferred operating system for their electronic devices, which means Synacor will get to make its TV Everywhere solutions available to all users. Very few app developers do not develop android apps because of worldwide reach and larger addressable markets.

The company's CEO sees a larger opportunity in the TV market, as prospects continue to grow in cable, satellite and wireless carrier consumer electronics.

"The Teknision acquisition is exciting on many fronts. Consumers soon will need one-stop access to all media-a home screen. To that end, we are advancing the presence of our cable, satellite, wireless carrier and consumer electronics customers on a wide range of devices, and all providing their consumers a single point of access. With Teknision's platform, Synacor is able to build upon our HTML5 expertise and pursue the exploding mobile device market opportunity," said Ron Frankel, Synacor CEO.

Android is touted to become the preferred platform of choice for consumer electronics manufacturers, especially the manufacturers of TVs, smartphones and tablets. As the adoption rate continues to go higher, Synacor will be at the center of things to capitalize thanks to the acquisition of Teknision.

Conclusion

Synacor faces direct competition from Digital River, Inc. (NASDAQ: DRIV), a bigger company based in Minnesota. Its business focuses on the cloud computing market, but also pursues opportunities in providing services similar to Synacor's. It serves software, consumer electronics, computer and video game product manufacturers, and online channel partners.

The acquisition of Teknision gives Synacor the necessary muscle it needs to edge out such competition as it ushers in the year 2014. This should be a great year for the company. The current stock price of $2.50 per share presents a compelling entry point, considering its 52-week high of $6.24 per share.