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Google's AdMob Mentality

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Last week's flurry of corporate buyouts was apparently only a dinner bell.

Google (Nasdaq: GOOG  ) is coming to the table, announcing a $750 million deal for mobile ad network AdMob.

Cynics will scoff at Google's history of veering into sponsored spaces outside of its dot-com stronghold. Forays into print, radio, and television advertising have been mostly fruitless. Mobile advertising, on the other hand, is a clearer fit for Google's Web-served ads.

Google is already there, to some extent, with DoubleClick Mobile. However, just as it acquired YouTube despite having its own video-sharing offering a couple of years ago, Google wants to make sure that it owns this category.

Mobile advertising is blowing up right now. Google continues to butt heads with Microsoft (Nasdaq: MSFT  ) and Apple (Nasdaq: AAPL  ) , and the latest battlefield is on the smartphone grid. Did you think the Google Android initiative was only a drill? There will be some serious advertising dollars spent to reach folks buried in their wireless browsers, and if Google didn't snap up AdMob, a competitor would have.

This deal is also noteworthy because it's an all-stock deal. Big G was brokering mostly small deals this year until AdMob, and it decides to pay in stock certificates?

Google has $22 billion in cash and short-term investments on its balance sheet. The consensus is that cash-rich tech monsters Google, Microsoft, and Cisco (Nasdaq: CSCO  ) will be going out on massive shopping sprees, turning greenery that is earning a pittance in interest into accretive acquisitions. Well, in this particular case at least, Google would rather print out stock than dig into its coffers.

So let the conspiracy theorists whip up the questions that everyone is wondering:

  • Is Google conserving its greenbacks for an even bigger purchase?
  • Does Google feel that its stock is expensive at this point, making it ideal legal tender?

Google isn't about to tip its hand. For today at least, the AdMob rules.

What do you think should be Google's next purchase? Share your shopping list in the comment box below.

Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor pick. Microsoft is a Motley Fool Inside Value recommendation. Microsoft is a Motley Fool Options recommendation. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz can be bought for Google stock. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 09, 2009, at 4:38 PM, Steve819 wrote:

    Google offered stock because apparently that is what Abmob wanted.

  • Report this Comment On November 09, 2009, at 5:19 PM, rfaramir wrote:

    If that's what Admob wanted, then they are the smart ones.

    In an inflationary environment, dollars become worth less over time, while stocks can rise to compensate. Whether they will or not is a measure of the particular company's strength and ability to raise dollar prices of their products as the dollar falls in value.

    Either Google thinks their own stock is set to fall for some reason, or they really like their cash position. Maybe their 'cash' (liquid short-term investments) is invested in something even more inflation-resistant than their own stock? Gold, maybe? I doubt it.

  • Report this Comment On November 10, 2009, at 8:12 PM, streetstylz wrote:

    How long until Google acquires public company NeoMedia Technologies (NEOM.OB) and dominates the mobile barcode space?

    NeoMedia currently has 30 active patents spanning 13 countries, with 29 additional patents pending. These patents cover various linkage methods including: Barcodes, RFID, Mag Stripe, Voice, and other machine readable and keyed entry identifiers.

    Microsoft is making great headway with their Microsoft Tag technology. What does Google & their mobile barcode scanning application ShopSavvy plan to do to stay competitive? Especially when both Google & Microsoft require a patent license from NeoMedia.

    NeoMedia just partnered with NeuStar who will act as NeoMedia's licensing agent in the US for the next 4 years.

    Also, NeoMedia's long time rival and competitor Scanbuy just signed a 10 year royalty based licensing agreement with NeoMedia, which further strengthens NeoMedia's IP.

    How long until Google or Microsoft buys NeoMedia and their valuable patent portfolio and dominates the mobile barcode market?

    The OMA & GSMA are defining the standards. CTIA is about to award the code registry & clearinghouse to NeuStar. The ecosystem is nearly complete & about to come online.

    What will Google do ???

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