Disclosure: I am long
MIMV.OB.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)
The mobile sector is the single most important sector in business today. Mobile-related business continues to drive gigantic revenues for companies such as Apple (
AAPL), Google (
GOOG), Samsung (
SSNLF.PK) and Microsoft (
MSFT) among many others. Getting it wrong here or dismissing the importance of apps means disaster to your business today. One only has to glance at the stock price of Research in Motion (
RIMM) today for confirmation of this.
I became interested in Mimvi (
MIMV.OB) as the only publicly traded, pure-play mobile app search and recommendation company several months ago. Since then it has signed a partnership and investment agreement with
Microsoft and a partnership deal with
Entrepreneur Media. Mimvi set another milestone
earlier this week, at NASDAQ MarketSite in Times Square, when it announced that it will release a series of what it termed, "Flagship" Mobile Discovery Apps. In particular, it announced that it had developed a native Search and Recommendation app for Microsoft's Windows Phone 8. Mimvi's discovery app will be available exclusively on Windows Phone 8 for 30 days after which, it will also be available on iOS and Android.
After the
announcement and Q+A session, I had the opportunity to interview Mimvi's CEO Michael Poutre and CVO/Founder Kasian Franks by telephone as I was unable to be in NYC for this event. Mimvi believes the release of its app discovery engine is of great significance not only to the company itself, but also to its partnership with Microsoft. As Kasian Franks put it, "this will enable Microsoft users to find apps in a different way - through the process of app discovery." Franks described how Mimvi's engine indexes apps with unique, cognitive systems that provide for a much better search and discovery experience. "We are in the business of breakthroughs," said Franks, "the algorithms have been developed from the ground up and we have patents in process." Having these search and recommendation patents in place will be critical for Mimvi, as the Vringo (
VRNG) v. Google case so clearly demonstrates.
Mimvi's core technology, the cognitive intelligence of its search, recommendation and discovery engine, should also prove to be highly valuable. "We understand the relevance of apps to you," added Michael Poutre, "relevancy is key, that is what we will bring to the marketplace." Poutre said Mimvi plans on generating revenue from its discovery engine initially through sponsored search results, although it is developing other models as well. Poutre pointed out the mobile advertising space is moving from a "push to pull mentality," where the targeted "pull" or relevance of advertising becomes vital.
Mimvi has core technology in this area and Poutre sees several revenue streams in the future, including In-App transactions with partner developers and its MimviLink product. At the press conference, Mimvi's Chief Revenue Officer Eric Rice said of In-App transactions: "Make no mistake, that is the future and that is where we are headed, by capturing as many in-app transactions and partnering with as many good development teams and groups such as Entrepreneur Media."
If In-App transactions are the very near future, then sponsored search and other forms of mobile ads are the present. And while Google is the current leader in mobile ad revenue, Millennial Media (
MM) also holds great promise in this exploding sector. It delivers a wide array of solutions and has helped bring more than 45 billion ads to mobile users. Millennial features ads on more than 30,000 apps and works with
75 of the top 100 advertisers ranked by Ad Age. Yahoo's (
YHOO) CEO Marissa Mayer's recent announcement that she would transform the company into a mobile-first enterprise opened speculation that it might
acquire Millennial.
Getting back to Mimvi, Franks went on to point out that with the release of Windows 8, Mimvi's discovery engine will ultimately allow users to search for, and run, mobile apps on the 400 million or so PCs running Windows out there. This is obviously a huge boon for developers and Poutre suggested that mobile developers are now starting to move towards Microsoft as they realize this potentially massive audience. Poutre added that Microsoft is very pleased that Mimvi is bringing whole families of apps to the Microsoft platform with deals like the one it recently signed with Entrepreneur Media.
When I asked Poutre why the market didn't respond well to the announcement on Tuesday, he pointed out that Mimvi trades on the OTC markets and speculators might have been expecting a huge announcement such as an acquisition. There were some 2 million shares traded on Tuesday, 3x normal, so while there were definitely some short term profits being made, overall awareness of the company is growing. "But," Poutre indicated, "we are not in it for speculators, we are in it for investors who realize we represent value." Mimvi's approach as a technology company stands in stark contrast to a concern like TagLikeMe
(TAGG.OB) which offers no true technology and thus is rife with the type of speculation that recently saw its stock jump to $.40 and then back to $.09 within a week.
Poutre went on to say "we are here to let the world know that the company has been restructured and recapitalized and we're here after a pretty remarkable turn of events." He pointed out that Mimvi didn't go the VC route like competitors Quixey and is most proud of the fact that it is executing a vision. "No one else in our space is doing what we are doing right now. Quixey is blowing through money with no idea how they are going to make money. The executive team at Mimvi is taking the opposite route," he said. At the press conference, Kevin Conner, Mimvi's CFO pointed out that in the past year Mimvi has raised a little more than $2.3 million in equity and cleaned up its balance sheet. "We are in a capital raise right now," he said,"that is going to be quite valuable to our current and future shareholders. Our goal is to grow the business and uplist to the Nasdaq as soon as we can."
Conclusion
As I indicated earlier, as a result of the promising core technology in its discovery engine, its partnerships and the discipline of its management team to locate revenue streams, I believe Mimvi is a good value. Likewise, I consider Microsoft a good value at its current price. I believe Microsoft will gain considerably from its relationship with Mimvi, not only by enabling it to provide WP 8 users with a superior discovery engine but also through the number of developers - such as Entrepreneur Media - that it will bring to the Windows 8 platform.
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