Mobile Strategy: 2 Losers and 5 Winners

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Amidst the challenging PC environment, Dell finally announced an official deal to go private yesterday. HP felt it necessary to weigh in: "Dell has a very tough road ahead" – thanks captain obvious.

HP and Dell face the same enemy: mobile devices. Mobile devices continue to play increasingly important roles in our lives. This disruptive trend works both ways: some companies are ruined, others are enhanced. For investors, recognizing these trends and watching to see how management adapts is of utmost importance.

Unlike Dell and HP, some companies can adapt to mobile trends and even benefit from them. Google (NASDAQ: GOOG), Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), and eBay (NASDAQ: EBAY), in fact, are already executing successfully on mobile strategies. Then there are companies like LinkedIn (NYSE: LNKD) who are just beginning their mobile journey but hold plenty of promise in the future.
As an investor, I'm looking for companies that can both make the transition to mobile and benefit from it.
5 companies poised to benefit from the migration to mobile
I believe the following five companies could benefit from the migration to mobile by connecting with their customers on deeper levels and monetizing their services on mobile devices:
eBay - Consider this monstrous number: gross merchandise volume on Black Friday 2012 was up 150% on eBay's mobile platform. Not convincing enough? In the company's most recent earnings release, mobile volume exceeded $13 billion, more than doubling the prior year. Even better, PayPal handled almost $14 billion in payment volume, more than tripling the prior year – talk about effective mobile monetization.
Amazon - Amazon doesn't say too much about its mobile progress. I suspect they would like to keep their success in this area "under the radar." But here are a few comments I found.
  1. April 26, 2012 Earnings Call Transcript - "Certainly, the mobile part of our business is growing very, very fast. And it's a very exciting opportunity."
  2. July 26, 2012 Earnings Call Transcript - "Clearly, smartphones and tablets are a significant tailwind for our business. While we are not breaking out the numbers, it’s a big tailwind on our business and it’s going great. So we are seeing a very nice impact from that and again it’s a tailwind that we expect that will continue."
Google - Here are a two important landmarks announced in the company's most recent earnings call:
  1. YouTube is now available on over 400 million mobile devices.
  2. Google's Chief Business Officer claims that the "vast majority of our advertisers have opted into mobile from an advertising point of view."

Facebook - Facebook has blown away expectations in the mobile arena. Between the third and four quarter alone, mobile revenue doubled. In Facebook's most recent earnings release the company announced that 23% of its ad revenues now come from mobile. In dollars that's $300 million in just one quarter.

Among the fourth quarter 2012 operational highlights, Facebook acknowledged a 57% year-over-year increase in mobile monthly active users (MAUs) and mobile daily active users (DAUs) that exceeded web DAUs for the first time.

LinkedIn - LinkedIn's progress in mobile is more subtle. First of all, the company has made massive strides in the mobile user experience over the past year, including the ability to see jobs in mobile apps. This of course means greater user engagement and makes the service more valuable to those who are paying.

LinkedIn's progress in mobile isn't as clear but I think the company is poised to benefit heavily in the future. LinkedIn CFO, Sordello, commented on mobile saying that it's "still early days for us" and stakeholders are "likely to see more there next year." And CEO Jeff Weiner assures investors that the company is "generating momentum in the things we're working on internally."

The bottom line

Don't invest in companies struggling to make the switch to mobile. Instead, look for companies who will most likely go beyond successful adoption to actually benefit from the change – companies like the five listed above.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends, eBay, Facebook, Google, and LinkedIn. The Motley Fool owns shares of, eBay, Facebook, Google, and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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