IncrediMail Ltd. (NDAQ: MAIL) shares jumped over 20 percent in early trading today after the company announced that Google Inc. (NDAQ: GOOG) agreed to reinstate the advertising agreement between the two companies. The e-mail company received notice that it was banned from Google’s AdSense program last week, which sent shares spiraling downwards. Now, the company said it is cooperating with Google with the goal of resolving any remaining compliance issues.

IncrediMail’s quarterly and yearly results are likely to be adversely affected by this Google AdSense downtime, but a reinstated contract is definitely good news after such a short time. In a previous article, we speculated that the company would either reinstate AdSense or find a similar advertising program very quickly as it is a very liquid marketplace. We suggested that the stock price would likely rebound once they had re-established this agreement as it did today.

Ultimately, shares dropped over 45% after this problem began and have only recovered around 20%. The earnings for next quarter may be hurt, but it is unlikely that the damage would justify a 25% reduction in the company’s market capitalization – especially since we know it is a short-term, one-time issue. While the argument to buy is not as strong now as it was before this announcement, it still appears as if IncrediMail is a stock that was made cheaper by a relatively non-material event. Combined, these factors may warrant a second look at this company!

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