IncrediMail Ltd. (NASDAQ:MAIL) saw its shares just crushed today. The company made the announcement that it received a notification from Google January 9th that Google (NASDAQ:GOOG) disengaged the Google Adsense program from the IncrediMail web site.
What is interesting is that it claims this was an "AdSense partnership" with the company, although Adsense is a program that anyone can set up on their website with a few simple lines of code. Google has disabled ads to search result pages displayed through IncrediMail’s account.
That’s not too good, and the only thing that comes to mind is a highly unusual amount of clicks or the belief that robots are pinging ads. We don’t know if Click Fraud was the reason or not and frankly don’t want to speculate without comments from both sides, but that is the first thing that comes to mind. IncrediMail also noted that in both 2006 and 2007, search revenues powered by Google’s AdSense program made a significant contribution to its results.
IncrediMail said it is currently clarifying the matter with Google and simultaneously exploring alternative relationships, with Google and other vendors. The bad news is that if there was a serious impropriety then another advertiser is going to either be reluctant to take over the relationship. The good news is that if that wasn’t the case then Yahoo! (NASDAQ:YHOO) or Time Warner’s (NYSE:TWX) AOL and Advertising.com properties have a potential huge new account.
IncrediMail isn’t based in the U.S. It is out of Israel and self-described itself as "a global leader in email solutions and offers products that create an entertaining email experience." It also says on its website, "IncrediMail generates revenues by selling premium software products, offering subscriptions to its content database, licensing and co-branding the Incredi- brand to operators of third-party websites; and by selling paid advertising, sponsored links and keyword search capabilities on IncrediMail’s website and email client."
It appears that there is only 43,000 or so shares trading on an average day. Today shares fell about 29% down to $3.24 on more than 790,000 shares, under the 52-week trading range of $4.46 to $10.69. Ouch. Shares slid further in after-hours trading down to $2.93. At the close, IncrediMail had a market cap of $30.45.
Some chat rooms are claiming that this is now close to its cash values, although we aren’t positive if that is really the case if you back out the potential woes here. The truth is that it is simple to turn on a new program as it is only a simple code to install. But if there are issues with the company’s programs having highly unusual activity, then AOL and Yahoo! will either not take them on at all or they’ll only take them on at a significantly discounted rate. We could speculate and we could comment on what others are saying online, but we’ll leave that to the company itself.
Jon C. Ogg
January 11, 2008
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