Incredimail extends agreement with Google

The new agreement expires at the end of the year, and it remains unclear if it will be renewed.

Internet and email software developer IncrediMail Ltd. (Nasdaq:MAIL) has extended its agreement with Google Inc. (Nasdaq: GOOG) by six months until the end of 2010. However, it remains unclear whether the agreement will continue through 2011, leaving the company vulnerable because Google is its dominant customer.

IncrediMail CEO Ofer Adler said, "We don't know what will be next year. One of two things can happen. Either Google will make changes or they won't and we will sign a new agreement similar to the current one. Therefore, we have extended the original agreement temporarily and at the same time we are working on similar cooperation with other companies."

In recent years, IncrediMail has based part of its growth on online advertising via Google. But Google is trying to make changes in its agreements, and companies like Adsense and Incredimail realize that it is worth making contact with other search engine companies to reduce their dependence on Google.

Adler said, "We have to worry about ourselves. We cannot wait until Google decides the content of their changes."

He added, "Over the last few months we have had numerous discussions with Google regarding possible market-wide changes being discussed internally, and the time frame for implementation. Although these discussions continue, Google continues to state that no decision has been made regarding the precise changes, or their timing. As the first anniversary of our current agreement approached, we needed to formalize the relationship beyond that anniversary, and this is the intent of the current amendment."

He continued, “At the same time, we have been focusing on diversifying our revenue base, having discussions with most of the major players in the search market, and testing their services with different search properties that we offer our diversified user base, using our IncrediMail Xe, HiYo, PhotoJoy, Magentic and IncrediGame products.”

Adler said, “We expect that by the fourth quarter we will have a more diversified source of search generated revenues, as well as a substantially higher level of revenues generated from other Internet based advertising."

IncrediMail's share fell 4% on Nasdaq today to $5.05, giving a market cap of $48.67 million.

Published by Globes [online], Israel business news - www.globes-online.com - on June 24, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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