GoDaddy for Sale, But Which Stocks Are Buying?

GoDaddy.com, the Internet domain register site well known by the Superbowl-watching public for its racy ads, is on the sales block for $1 billion – and companies are surely plotting their bid strategies.

The site has reached more than 40 million domain names under its current management, and the only thing investors are wondering is who’s looking to buy what would obviously be a cash cow for the new parent company. In the last five years, what was once a simple domain site became the biggest name in domain registry.

While GoDaddy was roughly the size of  competitors Dotster and eNom, after its well-known ad placement at the SuperBowl in 2005, GoDaddy.com has become the largest ICANN-accredited registrar in the world. It’s currently more than four times the size of its closest competitor. (Go Daddy filed for an IPO in 2006, but because of “market uncertainties” withdrew that bid.)

So who may link up with GoDaddy?

Well, Google (NASDAQ: GOOG) is always a frontrunner, seeing as it spends freely on acquisitions every year and has no dividend payout to worry about. The foray into special services would dovetail well into its online operation; or would simply be another smart move that would broaden its service division. As well, Google already has a partnership with GoDaddy in selling domains, which doesn’t hurt.

Tech firms such as IBM (NYSE: IBM) and Oracle (NASDAQ: ORCL) are also strong candidates for the job, considering their growth needs and past successes with acquisitions. Domain management is a natural area of business for these networking firms. Hewlett-Packard (NYSE: HPQ) could be a dark horse – the GoDaddy business would be a decent addition but a bidding war for 3Par (NYSE: PAR) just depleted its coffers by $2.4 billion. And of course, it wouldn’t surprise anyone if Microsoft (NASDAQ: MSFT) also reached out. The stock is down -17% year-to-date and hasn’t really had anything grand to hang its hat on lately.

Outside-the-box-thinking would also include Amazon.com (NASDAQ: AMZN). GoDaddy could give a boost to its “Amazon Web Services” platform. Certainly, the company is on the move to reach well beyond its e-sales. And the money is there. UBS Investment Research analysts recently estimated AWS’s revenue this year at $500 million, growing to $750 million in 2011 and $2.54 billion by 2014.

The web hosting company also sells e-business related software and services, so a buy of GoDaddy would also appear to any mid-size company looking to reach beyond itself, but that’s very unlikely. At $1 billion, chances are only the big players would even consider a bid – and that’s guessing the real sales number won’t eventually be lower.

The sale would make sole owner an immediate billionaire. Not bad for a company with a goofy name and a few commercial spots featuring hot chicks.

As of this writing, Burke Speaker did not own a position in any of the stocks named here.

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Article printed from InvestorPlace Media, https://investorplace.com/2010/09/godaddy-sale-which-stocks-buying/.

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