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Is Search Engine Rediff Worth a Billion Dollars ?

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Is Search Engine Rediff worth a Billion Dollars ? (NASDAQ: REDF) - By George Mentz Esq.

Does anyone remember an article from 2007 where Yahoo and Google were considering paying 25 Dollars a share for (NASDAQ: REDF) or REDIFF.com   SEE REFERENCES BELOW

Well, this REDF buyout story might become a reality if REDF becomes the local option to maintain an India compliant presence with local stakeholders.

According to Alexa, REDIFF.com still maintains the web traffic of a Billion Dollar Internet Search Play. SEE REFERENCES.   Based on the web traffic and customers alone, the REDF market cap valuation could go up 10X ten times or more in the coming year: (NASDAQ: REDF)

If we research China's BIDU (NASDAQ: BIDU)  and Baidu's recent increase of roughly 1000% (10 times increase and split), this would lead us to speculate that: Yahoo, Google and even SINA and SOHU may soon comprehend the true value of REDF's traffic and end user customer base.

Demographics gurus such as  Harry Dent are saying that: INDIA can be the NEXT big mover with over 300 Million Generation X members or younger.  Just like China, surfers and web users want local content, and REDF still has the leadership, news, infrastructure and traffic to remain a market leader in India and the neighboring countries.

If Yahoo Microsoft or GOOG buy control or ownership of the NASDAQ traded REDF, the buyer can monetize revenue quickly on PPC Pay Per Click and content match.  Remember, PPC resellers such as MSN and Google get paid on click through traffic from India and China.

Sometimes, these Pay Per Click Ads are worth 30 dollars per click for content match advertisements.  Here are examples of high dollar advertisements :  MBA programs, drug rehab, attorneys, cosmetic surgery, banking, education, health care, insurance etc.   Plus, a buyer such as Goog or Yahoo can expand their Advertising base and their reseller base. i.e. Thus, you could maximize the localization of distribution channels in a billion person market where consumer spending is growing dramatically … Keep in mind that the GDP Growth in India is still 5.5. percent even in the worst global economy in decades.

In hindsight,  it appears that Google GOOG got snagged by China Regulations recently. Nobody is certain what happened, but it is possible that Google's PPC aggressiveness in China may have backfired.  It is also possible that the Google content and search results may have violated basic cultural norms in Mainland China.   Thus, the Chinese regulators may have limited or technologically buried the Google Pay Per Click Ads within the China System.

Sovereign Risk is always a danger to business. Further, the Chinese or India regulators might simply  use laws on the books such as Anti-Trust or fair use of the airwaves statutes to subdue outsiders  much like FCC regulation in the United States or EU can be used.

However, had GOOGLE  or MSFT purchased some control over BIDUs and its PPC system in China earlier, that may have solved the problem. Again, the purchase of REDF Rediff.com would be an end-around strike to protect against sovereign risk. Similarly, buying REDF is a tactical maneuver to own and control more of:  INDIA’s traffic, eyeballs, and REAL market Share along with REAL Newspapers/Media for Indians round the world.

REDF is one of the Last “free standing” publicly traded pure search plays that has a legitimate market share offshore. REDF is in the Top 15 websites used  in India and the Top 150-200 in the WORLD. SEE REFERENCES

As a side note,  REDF has kept up to  41 million in cash on the books…  SEE REFERENCES   Overall, REDF may have one of the lowest burn rates in the tech business for: Human Capital, Technology and more. Thus, REDF may be malleable,  nimble and valuable.

What will the future bring to REDF?  Who knows.  However, if the India government wakes up tomorrow and decides to regulate the web for cultural reasons or to stop a monopoly, then this is just another reason to  buy a local India company that is traded on the NASDAQ.   Presently, Rediff is trading around $ 2.70 US Dollars.  It has peaked at 16 dollars in 2011, and hit 25 dollars in 2006 and 2007 when the emerging markets in India and Asia had momentum.  Presently the market cap of REDF  is only about 80 million dollars.

Several variables will also increase the value of REDIFF.  1) More hot spots in India 2) More hand held phones & Pads  with data and internet 3) The super technology savvy under 30 crowd of over 300 million potential users.  4) Local content 5) Local language 6) Cultural reasons 7) Sovereign regulators will want to protect the leading local brand. 8) REDF has boots on the ground to work with governments and the private sector.

Rediff.com (Nasdaq: REDF) is a top Internet portal in India. It provides communication services to customers in India and also to the global Indian community. Rediff has over  100 million registered users while Rediff.com is one of the largest Internet portals &  top email providers worldwide.

If anything, a potential buyer of REDF needs to analyze the top revenue opportunities to sell or cross sell to the REDF customers. As an example, a mobile device company such as Nokia (NYSE: NOK) or  Samsung could target these 100 million people to sell phones and monthly services and contracts.

Again, did anyone think Google would have trouble in China leading to a quick 10 bagger for Baidu?  If  I were an executive at Google, BIDU, YNDX, SINA, SOHU, MSFT  or IACI, I would not overlook this gem of a company to obtain an instant and long-term customer base expansion in India and Asia.

 

Symbols:  (NASDAQ: BIDU) (NASDAQ: YNDX) (NASDAQ: SINA) (NASDAQ: SOHU) (NASDAQ: MSFT) (NASDAQ: GOOG) (NASDAQ: IACI) (NASDAQ: YHOO) (NYSE: NOK)

References

http://www.alexa.com/siteinfo/rediff.com#

http://mashable.com/2007/07/15/google-yahoo-want-to-acquire-rediff/

http://investor.rediff.com/conferenceDt.asp?path=2010/Rediff_Q1_2010-11_CC_Script.htm&y=2010

http://articles.economictimes.indiatimes.com/2012-09-24/news/34061940_1_gdp-forecast-india-s-gdp-takahira-ogawa

http://www.hsdent.com/News

 

Lawyer  and Counselor  George Mentz, JD, MBA, CILS, CWM  is a world recognized management consultant and award winning professor who has authored several revolutionary books.  Prof. Mentz, an international attorney, has been a keynote speaker globally in Asia, Arabia, USA, Mexico, Switzerland, and in the West Indies. Mentz can be contacted for speaking engagements at www.gmentz.comor www.managementconsultant.us  Mentz has consulted with companies regarding SEO Search Engine Marketing for over a decade and Mr. Mentz is an owner or has been an investor in most search companies such as:  GOOG YHOO MSFT REDF SINA SOHU AND BIDU     *No counseling, tax investment or legal advice provided herein.  Please consult with a licensed professional in your jurisdiction before making any important career, financial or legal decision.  All rights reserved by George Mentz, Esq.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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