Shares of online travel site Expedia (EXPE) have rallied about 15% this week on rumors of a buyout offer forthcoming, perhaps from Google (GOOG). I don't own EXPE, but if I did, a buyout offer from Google is not something I would place a very high probability on.
Thus far, of the many acquisitions Google has made, the vast majority have focused on their core business of advertising, not e-commerce. Sure, Google could buy a site like Expedia and create a very impressive (and likely popular) travel portal from which it could generate both ad revenue and transaction fees. For those investors who want Google to expand the number of ways the search giant makes money, generating fees from e-commerce transactions, as well as advertising such offers, would go a long way in diversifying the company's profit center.
That said, Google has not shown enough interest in doing so for us to think this is going to be part of their growth plan in the short term. While I think buying a site like Expedia would be a good move for Google, I don't think an offer is forthcoming, and therefore EXPE shareholders should consider their investment options with such rumors at the forefront of traders' minds at the moment.
Full Disclosure: Long shares of GOOG, no position in EXPE at the time of writing
Wednesday, April 02, 2008
Expedia-Google Deal Seems Very Unlikely
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4 comments:
EXPEDIA has a really bad reputation lately (Source: http://www.expedianews.com). Maybe Google cna put EXPEDIA away from the dark side. That would be good for travelers.
Why would it matter for travellers?!
as an infrequent traveller I recently went to their website (which I have used in the past) and after 2 unsuccessful attempts to secure tickets just moved to travelocity.com, which worked just great.
it's not guaranteed that tomorrow roles wouldn't change, but the point is that we have enough choice NOT to care for expedia's troubles from a consumer standpoint.
From a business standpoint I am with Chad on this one...I'd be surprised to see Google getting into an already competitive market with considerably smaller potential for their evaluation level.
If anything Google would acquire a site like http://www.kayak.com/ before it ever acquired Expedia. Google's in the business of acquiring, organizing and allow people to quickly access content.
Expedia adds a new dynamic to the mix that could really screw with Google's AMAZING metrics (profit margins, return on capital, etc.).
A travel search engine would really compliment what they do rather well - if they don't build they're own, I'd bet money Kayak.com gets eaten up by them.
-Wayne
I agree. Google's strategy and core business has always been to provide access to information. I would think it would be difficult for them to attempt to play in the content arena. If Yahoo and AOL are examples of such internet business, it would seem that reach is more important than content in the internet advertising game. Eric Schmidt was recently quoted on this strategy in an interview with Portfolio Magazine.
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