The Tycoon Report

Will Google Buy Expedia?

Wednesday, April 9, 2008 | Wayne Mulligan

I saw this question come up on TickerHound the other day and just had to write a post on it.

A member asked, "Expedia's been up this week on Google acquisition rumors - what do you think?" read more>>

Ok, now I might have to eat my hat on this one, but my gut (and plain business logic) makes me think otherwise. Anybody who is saying different, I won't mention them by name, is probably doing so out of ignorance, desire for attention or a bit of both.

One has to understand that Google isn't some "dot com" growth engine that's looking to build at any cost. This company is extremely disciplined when it comes to its finances and it shows in the bottom line - but more on that in a moment.

The point I'm trying to make is that Google is not going to swallow up a company simply to add eyeballs, revenue or whatever else to the Google pie. They'll only acquire a company when it compliments their core business of search and search advertising.

For example, YouTube.com - Google acquired the company for $1.6 billion last year and hasn't looked back since. YouTube serves up roughly hal the videos on the web right now and I really believe Google has the wallet, connections, etc. to deal with the copyright issues the service faces. The other thing to recognize is that YouTube wasn't just some online video site. The service fit within Google's model of content aggregation, indexing and search - and then monetizing that through advertising.

YouTube doesn't create content, they aggregate it, index it and make it available to the public...strangely similar to Google's search engine. The same applies to many of the acquisitions, albeit smaller, that Google has made over the years...

• Writely.com which formed the foundation of Google's Office applications: users publish documents and Google hosts and indexes them.
• Blogger.com: Bloggers post tons of content which Google indexes and monetizes with advertisements.
• And the list goes on...

Now if Google acquired Expedia they would be entering an entirely new business: E-Commerce.

This might make you say, "Well, why does that matter, money is money, right?".

WRONG!

Money is always money, but the question is, what does it COST to get that money? In other words, what's your Return on Capital?

Right now Google has an average Return on Equity of 21%.

Expedia: 5%

Why on earth would Google take on a business that would make its margins worse off?

Answer: They wouldn't!

Like I said, this is just my opinion and if Google comes out next week and announces that they've taken over Expedia, I'll issue a public apology on TickerHound.com. But, as I said before, my gut and business logic are telling me otherwise.

The one travel company I could realistically see Google taking over would be Kayak.com - it's a privately held travel SEARCH company. They index and search over 140 travel sites in an effort to find you the cheapest airfares, hotels, etc.

While I "think" this would be a match made in heaven, Kayak is a privately held company and I have no idea what their financials look like. But from a synergistic perspective, Google-Kayak makes a lot more sense than the Expedia story.

Visit the TickerHound Blog at http://blog.tickerhound.com to weigh in on this topic today.

New Toys to Play With on TickerHound.com

When we launched our redesigned site a few weeks ago I told you that we would be more consistent about launching new and innovative features for TickerHound. Well, I'm a man of my word.

Today I'm announcing three - yes, you read that correctly - new features for you. We've been working pretty hard on these for the last few weeks and all we ask in return is the following:

• You tell us what we can do to make them better...
• You tell us what you want to see next...
• You use and enjoy them!

We have a ton of other tools coming out soon, so keep checking the site; I think you'll be very pleased.

And now, let me quickly tell you what we've done to make your stay with us even more comfortable.

Where'd That Search Box Go?

As you might've noticed, we removed the "Search" box from the site's homepage. We didn't do this because we thought it was ugly or anything, we did it because we had a secret plan that we weren't ready to share with you yet. But after some testing, tweaking, fixing and more testing, we're ready to unveil our new and improved TickerHound search feature!

Instead of typing keywords into a search box on the homepage, you can just go ahead and type your question right into that big ol' yellow box and click "Get Answers."

On the following page you'll see one of two things:

1. The normal "Ask a Question" page
2. The "Ask a Question" page with a list of "Similar Questions" just below the title field.

So if the question you're asking is similar to other questions that have been asked before, then you'll see those questions right in front of you. This way, if you can get the answer you were looking for without having to wait for somebody to respond, then we just saved you a TON of time.

Not only that but we think this will help with some of the duplicate questions that have been appearing on the site... a few of the TickerHound members have been pretty vocal about how annoying this issue has been so I hope they really appreciate this new feature.

And if you're wondering how we were able to roll out a robust search feature so quickly, I'll let you in on a secret... we had a little "help".

The search technology we're using is being powered by none other than the king of search itself - Google!

We've completely integrated Google's Custom Search engine technology right into our site. This allowed us to get the feature out quicker and ultimately we think it'll provide you with more relevant results and a better experience on TickerHound overall.

Have fun!

Do You Have Any Favorite Questions?

Well, there have been quite a few members who have written in over the last few months and asked why there was no easy way to bookmark Q&A's they really liked. Before, if you liked a Q&A and wanted to save it for future reading, you had to actually save it to your web browser's book marks.

That's all fine and well, but what if you switched computers or something? Then you'd lose all of your favorite TickerHound Q&A's! Well, we heard you loud and clear guys!

So the next feature we built is the "Favorites" feature.

When you're on a Question you really like, simply hover your mouse over the "Save" button and you'll see a small menu drop down. Add the question to your "Favorites" and you're all set. No matter which computer you're using you'll always be able to view your favorite Q&A's on TickerHound.

To get to your Favorites list all you need to do is hover over the new "My TickerHound" menu at the top of the page and click the "Favorites" link.

We hope you enjoy this feature and use it as a tool to build your own personal investing Knowledge Base!

What Are You Watching?

This is the feature that I'm the most excited about!

How many times have you seen a REALLY interesting question and always wanted to know how it was answered?

It happens to me all the time - I see some great questions come in and I want to be notified, right away, when it gets answered.

So we wanted to solve this problem for everybody on TickerHound... ok fine, maybe this was a little selfish gift to myself, but I hope you enjoy it anyway.

What we've done is create a virtual "Watch List". The Watch List works for Open Questions only, and essentially it's a simple way for you to be notified, in real time, when new answers come in for a question you want to track.

Each new answer means a new notification for you!

I'm personally going to be using this fairly often, and I think plenty of other TickerHounds are going to find it as useful as I do.

You can access it from the "Save" button that appears underneath each question.

Feedback

I know there is going to be a lot to absorb here and it might take you a few days to formulate your opinion, but all I ask is that you take the time to send us some thoughts, questions or comments on these new features. Let us know what we can do to make them better.

In fact, write us and let us know what features you want to see on the site next month. Write in as often as you'd like, I love hearing from passionate investors who have put real thought into improving TickerHound.

As always, feedback and suggestions can be sent directly to: feedback@tickerhound.com.

The TickerHound Challenge

Here are this week's questions - remember, 50 bonus points for the Best Answer!

• How can I use the PEG ratio to value stocks?
• Should a person use a full service broker or a discount broker?
• What will the top performing ETFs be for 2008?

Good luck!




Wayne Mulligan
CEO
TickerHound