News that Google Inc. (NASDAQ: GOOG) is adding more e-mail security and storage products for businesses helped send the stock of Commtouch Software Ltd. (NASDAQ: CTCH), an Israeli email security firm, higher by 7%. The tools to be introduced Tuesday build upon technology that Google acquired last year when it bought e-mail specialist Postini Inc. for $625 million. The package of products are designed to weed out junk mail and potential viruses as well as protect against leaks of confidential information sent through e-mail. Google also is offering to retain e-mail data for longer periods.
This move into email security is seen by some as a salvo against rival Microsoft Corporation (NASDAQ: MSFT). Why does this impact Commtouch? Because the firm has some of the most cutting edge email security out there, and could be an acquisition target by Microsoft, or even by Google to help enhance their offerings. For Microsoft this purchase would come with a price tag of less than $45 billion, as Commtouch trades with a market cap of just $120 million.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has a position and is long CTCH stock. He has no positions in any other stock mentioned as of 2/5/08.
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Reader Comments (Page 1 of 1)
2-05-2008 @ 8:11PM
sleepydba said...
Aaron, you've echoed my sentiments regarding the Google announcement. I see this as a very bullish development for Commtouch's technology. I also think Google is just as likely to pony up for Commtouch as Microsoft. I've not been particularly enamored with Postini and certainly not with Google's anti-spam efforts to-date. I can't even get Google to discuss the topic with me.
By the way, I don't think the announcement has even touched the share price yet. Wait until the Commtouch story hits the masses.
Keep up the superb work Aaron.