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October 05, 2006

Mamma.com Powers AOL OpenRide Desktop Search

posted by MR WAVETHEORY at 10/05/2006 10:08:00 AM
It may be time to take another look at Mamma.com Inc. (Nasdaq MAMA), the mother of all search engines. AOL OpenRide bundles Mamma.com Inc. Desktop Search rather than Google Desktop Search. That is a big vote of confidence considering Google Inc. (Nasdaq GOOG) dominates the search market.

By being bundled with AOL OpenRide, Mamma.com can expect to see millions of installations of the Copernic Desktop Search 2.0 software on computers worldwide. The revenue potential is huge. The deal puts Mamma in the lead for desktop search.

The search advertising revenue that Mamma can generate from the users is huge. AOL OpenRide is being downloaded at a brisk pace as users try it out for the first time. Assuming 10 million downloads of OpenRide and revenue per user of $1 per user in the first 3 months, that could be an incremental $10 million in revenues in the first three months of this deal. Revenues could double easily, and earnings potential much much more. I expect to hear good news from Mamma.com, because the AOL deal really turns things around. There is no incremental costs to serving an additional user.

Prior to partnering with AOL, Mamma.com was really falling behind. Revenues were down in the latest quarter from $2.5 million to $1.9 million, the company was burning cash at the rate of roughly $2 million per quarter and cash balances were down to less than $10 million. The AOL deal changes everything.

At $2.00, the stock is a screaming buy if it executes on plan. The market cap is less than $30 million and the market has all but discounted Mamma.com out of existence. Even at half the valuation of search engines like Google, the company could be worth $8-10.

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12:52 PM  

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