Google's 2010 shopping spree: 22 buyouts

The Internet giant has spent $1.1 billion on acquisitions so far this year.

By InvestorPlace Aug 2, 2010 10:21AM

Saving money © Creatas Images / JupiterimagesIn the Web-surfing world, Google (GOOG) is the undisputed king of searching. In the corporate boardroom, Google also appears to be the king of searching for startups to snatch up.


Despite what most folks would consider fairly lean times, Google has gone on a $1.1 billion shopping spree so far in 2010, buying up 22 companies.


The move shows that Google isn’t content to just rest on its search-engine laurels and is actively trying to grow and diversify its business. But the huge number of buyouts prompts the question of whether GOOG executives are making shrewd moves to stay on top or overreaching at a time when many corporations are on the defensive.

It’s worth noting that more than half the $1.1 billion price tag of Google’s shopping spree in the first and second quarters comes from the recently completed acquisition of mobile ad service AdMob. Serving online ads has been a natural extension of Google’s initial technology and a very healthy revenue stream, and the acquisition will help GOOG better adapt to mobile advertising trends.

But after that $681 million deal, the next-largest buyout was a $123 million acquisition of video service On2 Technologies – showing that the vast majority of Google’s moves in the first half of 2010 were to pick up companies that were little more than seedlings. Post continues after video:

Some seem to serve the core of Google’s business – such as ReMail, a company that developed e-mail search software, and Aardvark, a social search service whereby humans and not computers provide answers. But others seem to have little in common beyond simply being technology companies. The 2010 buyout hit list also includes Agnilux, a server technology startup, and Simplify Media, a company that focused on the very particular area of “music syncing.”

And there are more mergers in the works for the rest of the year. The biggest deal on the horizon is Travel technology company ITA Software Inc. Google made a bid of $700 million, and the deal is expected to close in several months after all the red tape and regulatory approval are dealt with. This could be a game changer for other online travel giants like Priceline.com (PCLN), Orbitz (OWW) and Expedia (EXPE).


Or it could be a $700 million boondoggle that is great for those receiving buyout checks at ITA but a flop for Google.

Google hasn’t seemed to get much momentum going in 2010, with shares down about 20% while the broader market is pretty much flat. Looking through this lens, some observers may think GOOG execs are just flailing around, trying to get their stride back – or to hang on to dominant status that could be waning in the tech world.

But if one thing is true about the technology sector it’s that innovation is the biggest equalizer among companies large and small. If Google keeps swinging the bat at startups, it could very well hit a home run soon. And with a market capitalization of over $150 billion, GOOG can afford to swing and miss many more times before it becomes a problem.


Related Articles:


0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

120
120 rated 1
268
268 rated 2
439
439 rated 3
709
709 rated 4
641
641 rated 5
609
609 rated 6
640
640 rated 7
516
516 rated 8
272
272 rated 9
152
152 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION10
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.