Being a salmon won't cost InfoSpace (NASDAQ:INSP) much. Scooping up European mobile phone gaming specialist IOMO for just $15 million certainly allows it the freedom to fail without suffering from buyer's remorse.
While it comes at a time when Chinese heavies like SINA (NASDAQ:SINA) and NetEase.com (NASDAQ:NTES) are high-tailing it out of wireless entertainment, the world is a pretty big place. Unlike stateside cell phone jockeys, the rest of the world has taken a shine to wireless gameplay.
Never heard of IOMO? You're not alone. Although the company has developed more than 80 games over the past five years and has crafted working relationships with handset biggies like Nokia (NYSE:NOK) and Motorola (NYSE:MOT), it only mustered revenues of $1 million last year.
Spooked much? You think InfoSpace is being had by acquiring a small wireless upstart at 15 times trailing revenues? Don't look at it that way. If InfoSpace flexes its muscles, there is no reason why IOMO's sales can't explode.
Yes, InfoSpace is connected. It's not just behind a popular search engine and its active Switchboard online yellow pages business. The company had already been a player in mobile music and game products and services. IOMO's game library may prove to be an important piece in InfoSpace's puzzle, and with a green balance sheet rich with more than $8.50 a share in cash, it's not as if InfoSpace is exactly betting the house on the small European player.
Will the purchase have a dramatic impact? Obviously not in the near term, as IOMO will be a mere drop in the $240 million in revenues -- and $1.27 a share in earnings -- that InfoSpace is looking to bag this year. Yet as a company that should already be pinging your radar as an attractively valued alternative to search market leaders like Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO), the game is on. Care to play?
Riding the wave of folks seeking answers on the Internet has been great for InfoSpace, but where do you find answers when it comes to your computer? Got spyware? Hate spam? Did you get a flu shot but forget to treat your computer's virus? All this and more -- in the Help with this STUPID Computer! discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz loves playing games -- but not on his cell phone. He does not own shares in any companies mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks today.
