2010 has been termed the “Year of Mobile”. This is the year where the proliferation and adoption of the smart phone has given rise to staggering industry growth projections. A year where global mobile advertising revenues alone will exceed $3.5 billion dollars.
Right in front of our eyes, a technological revolution is taking place which will not only transform forever the way in which we communicate with others, but how major companies and their brands communicate with us. In fact, the rate at which new technology is emerging in the mobile phone field has even overtaken that of personal computers.
Mobile phones are the new "final frontier". Mobile phone growth has exceeded even the most optimistic penetration predictions. In the United States alone, 84% of the population owns a mobile phone. Worldwide, mobile phone access is growing by about 30% a year. The mobile phone is a lot more personal than, say, a desktop computer or a laptop. A phone owner will go everywhere with his/her phone. This provides a unique advertising opportunity for businesses. Ads can be targeted with an unprecedented level of accuracy and users who view the ads are more likely to interact with them than on traditional media. Furthermore, ads can be location specific or tailored based on other criteria such as behavioral, geographic or demographic criteria, allowing for the targeting of one, the holy grail of marketing.
When I look for next year's big potential stock winners, there’s no doubt what space will most likely provide them. The following companies each represent a specific mobile area that I think will see tremendous growth not only over the next year but over the next few years. As in most high growth technology evolutions, we will see periods of consolidation where larger players aggressively seek out smaller mobile emerging leaders focused on niche markets and verticals that would complement their existing mobile strategy. As is often the case, it’s cheaper to acquire a business than for a company to build it from scratch.
What makes these targets valuable is that they all have deep value that can be unlocked inside the larger scale of the acquirer. With many large players focused squarely on mobile, and hoards of cash in their bank accounts, I expect mobile acquisitions to accelerate in the next twelve months.
Here are two of my top smaller mobile companies who possess unique qualities that would make them highly attractive takeover candidates in the new year:
Augme Technologies (OTC:AUGT) ($2.61)
Augme Technologies has the only innovative patented end to end mobile marketing platform and solution that is instantly formatted for use on all devices and all operating systems. Augme’s patented technology is foundational to key targeted Internet functions, such as advertising, broadcasting and content delivery. Recently, two additional new patents have been issued based on this original technology that cover Internet and Mobile Web sites to be delivered with customized content that is tailored to any end-user's network-enabled device and enables content targeting by publishers of Internet and mobile web destinations. In recent quarters revenues have been doubling quarter over quarter and they recently said they expect revenues to be more than $10M for the next twelve months and they are already working with a host of household name Fortune 100, 200 and 500 companies like Johnson and Johnson, Graphic Packaging, HBO, Lionsgate, News Corporation and others. The company presents a best of both world scenario with an attractive IP portfolio and a rapidly growing mobile business; either would be desirable to host of larger players.
Glu Mobile (NASDAQ:GLUU) ($2.23)
Glu Mobile Inc. is a leading global publisher of social games for smartphone and tablet devices. They just released what they call their first social mobile game. This new business model is focusing on microtransactions within games and in-game advertising. Revenues for this sector grew 98% quarter over quarter. With the explosion of smart phones and tablet devices coming by year end I would expect this trend to accelerate. The following titles are released or will be released before Christmas. Keep in mind they have very strong partnerships with both Apple and Google. They will continue to release 5 to 6 titles per quarter.
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