IncrediMail Ltd.
(NDAQ: MAIL) shares are trading up today but still off on the month
after Google (NDAQ: GOOG) decided to boot the company from its AdSense
program. Last Friday, the e-mail provider said it received notice from
web search company stating that it decided to stop an advertising
partnership between the two firms, which sent shares down more than 45
percent to a new 52-week low. Since then, shares have recovered
somewhat but many are still unsure of what will happen now.
IncrediMail, which develops software to customize e-mails, relies on
Google for over a substantial portion of its annual revenues. The
company is now trying to clarify matters with the search giant and
exploring alternative relationships with Google and other vendors.
Interestingly, programs like Yahoo! Publisher and similar programs from
Microsoft’s MSN can offer similar rates and would likely be willing to
take the place of Google as an advertiser on their website. This means
that the drop we have seen may be overdone since this issue would only
be temporary.
The only real concern remaining is whether the drop was the result
of fraudulent activity, which would mean some of the company’s revenues
came as a result of illegitimate behavior. However, the company’s
co-founder spoke with a member of the media not long ago confirming
that this is not a fraud-related issue and that in a few days it will
all be sorted out – with or without Google. This has many people
purchasing the stock ahead of an anticipated announcement that all is
again well.
In the end, this is bad news for existing shareholders but a great
opportunity for new investors. There are many programs like Google
AdSense that pay the same or more money per click or impression, so
this problem should be able to be sorted out in a timely manner. This
means that the 40%+ drop last Friday was majorly overdone and this
could be a great buying opportunity. Combined, these factors make MAIL
a stock worth watching!
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