Google cuts off Incredimail

News that Google (NASDAQ: GOOG) has decided to stop the AdSense partnership with the Israeli Incredimail (NASDAQ: MAIL) has sent Incredimail stock tumbling. The company said that Google is disabling ads to search result pages displayed through the Incredimail account, and in addition that the Company's AdSense account has been disabled. In 2006 and 2007, search revenues powered by Google's AdSense program made a significant contribution to the Company's results.

There is no reason for this move yet and I shudder to think what happened to cause Google to cancel the program. Incredimail stock has been under pressure since the company announced it was going to focus resources on the top line to grow revenues, at the potential expense of short-term profitability. While this is a short-term setback for the internet company, I am sure that it will quickly announce a new partnership. With the stock under $5, this may be the bottom. This is a very interesting company with a cool product. The company still has cash of more than $20 million and the stock has a market-cap of less than $40 million. Keep in mind too that both revenue streams continue to grow. It may yet turn out to be an Incredible story.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no positions in any stock mentioned as of 1/11/08.