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Google on Acquisition Spree, Purchases Directr & Emu

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Google Inc. (GOOGL - Free Report) recently acquired two small enterprises in a move to bolster its advertising and mobile businesses.

The technology giant announced the acquisition of Directr Inc., a video-creation company, and a mobile-messaging app Emu.  Financial terms of both the deals were not disclosed.

Boosting Video Ads via Directr

Directr is a Boston-based mobile-video app for Apple’s (AAPL - Free Report) iOS, and is used by a number of small businesses to easily make and upload short marketing videos on the Internet.

Video advertising is being increasingly chosen over traditional display advertising because of the growing importance of mobile devices where display ads don’t work that well. Google remains the largest player in a shrinking mobile search market. So it needs to innovate rapidly to fend off competition from non-search apps such as Facebook that are grabbing an increasing percentage of mobile advertising dollars. Google intends to use the acquisition to further enhance YouTube’s advertising tools.

Following the deal, Directr’s staff will join YouTube’s video-ads team. Directr will continue with its service and will gradually be made available for free.

Boosting Mobile Capabilities through Emu

Emu, a California-based start-up, offers a smartphone-texting service that includes built-in personal-assistant technology to help users schedule meetings, share locations, set reminders for activities such as lunches and movies. Emu works a lot like Siri, or Google Now, by adding important information to texts after users enter them by using location awareness and artificial intelligence.

The deal will help Google to enhance Google Now and will boost its capabilities beyond being just a contextual launcher. It can also bring about improvements in Hangouts, which is currently lacking in features and help it transform into a central, multi-featured mode of communications on the Android platform.

The Emu app will be closed following the deal.

To Conclude

Google is a stable company with consistent revenue growth and profitability. It remains the dominant player in search across desktop and mobile platforms. To add to its capabilities and bolster its existing businesses, Google continues to acquire smaller companies with specialized technology and/or strong presence in chosen markets.

However, the impact of acquisitions is not clear because Google usually keeps them small and says little about them. Intensifying competition from companies like Yahoo! and Facebook (FB - Free Report) is also a concern.

Google currently holds a Zacks Rank #3 (Hold).




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