May 28 (Reuters) - Millennial Media Inc may look toward Latin American countries for acquisitions as it plans to take advantage of a steadily growing mobile advertising market.
The company is interested in countries such as Argentina, Brazil and Mexico, where it does not yet have a presence, Chief Executive Paul Palmieri told Reuters.
Palmieri, who did not rule out such an acquisition in the next 12 months, is also interested in buyouts in China in the longer term.
“Mexico and Brazil each have such a substantial number of smartphones that it’s absolutely exploding down there. And the percentage of smartphone penetration in Argentina is hot,” Palmieri said.
Millennial Media, which helps mobile developers and advertisers to focus on smartphones, tablets and other mobile devices, is the largest independent mobile advertising network, ranked number 2 after Google Inc, according to market research firm IDC.
Palmieri said the company, which posted a loss in 2012 and the first quarter of 2013, will be profitable on an annualized basis this year and throughout 2014.
The company’s earnings quality score on Thomson Reuters StarMine fell to 35 out of 100, from 53, after it reported its January-March quarter. This compares with a sector median of 63. The earnings quality model ranks companies according to the sustainability of their earnings.
The company, which listed its shares at $13 on the New York Stock Exchange in March 2012, was considered by analysts as one of the most promising debuts last year.
Analysts have said Millennial could capture a major share of the increase in mobile advertising budgets in an improving economy but warned it faces stiffer competition from companies like Facebook Inc.
Facebook’s mobile advertising strategy gained momentum in the March quarter as new types of ads designed for smartphones helped lift revenue.
IDC forecast mobile advertising spending in the United States to rise 55-65 percent to around $7 billion in 2013.
Millennial Media also faces competition from real-time bidding platforms and companies that are a single point of contact for desktop, mobile, and social advertising.
Real-time bidding technology, touted as the new growth driver for mobile advertising, is like a stock exchange where buyers bid for ad space according to visitors’ profiles.
Shares of ValueClick Inc, an online marketing services firm that also provides real-time bidding platforms, have climbed 54 percent over the past year while Millennial shares have dropped 50 percent.
Millennial bought Metaresolver in February to utilize its platform that helps advertisers to buy and sell online display advertising on multiple ad exchanges.
“One of the areas we are focused on in 2013 is making it easier for clients to buy and transact on our platform,” Palmieri said.
The company will add “exchange capability” on its ad platform over the next few quarters that will offer ad buyers the opportunity to buy ad space from developers real time.
As consumers increasingly surf the Web on the go, advertisers are looking to ply them with targeted information about nearby restaurants, theaters, shops and salons and Millennial, with its vast trove of user data, can help buyers make better real-time buying decisions, Palmieri said.
Oppenheimer & Co, which has an “outperform” rating on Millennnial’s stock, said these concerns will subside as the company launches its own real-time-bidding platform and continues to report financial results in line with outlook.
Four analysts have a “buy” or higher rating on the stock that trades 28.4 times forward earnings, while four others have a “hold” or equivalent rating. The sector trades 67.7 times forward earnings on an average. (Editing by Don Sebastian)