Out Fox The $treet

With the much-published failures of Facebook (FB) and Google (GOOG) to monetize mobile traffic that switched from desktop, the sector has obtained a ton of bad press, mostly from uninformed journalists and investors not understanding the difference between legacy companies and new entrants focused on mobile. While other people focus on the rather large missteps, Stone Fox Capital has been focused on the companies benefiting from the monumental shift to mobile provided by fast wireless data networks and a movement to more advanced smartphones and now, more importantly, tablets. A whole slew of companies are benefiting from this shift as happens with every technological move. Legacy companies either aren't savvy enough to make the shift or the economic structure prohibits a move as revenue is cannibalized by the currently lower monetization rates. Read the full article at Seeking Alpha. Disclosure: Long VELT. Please review the disclaimer page for more details. 

Niccolo De Masi, chief executive officer at Glu Mobile Inc (GLUU) ., talks about his company's strategy and the video game industry. He speaks with Pimm Fox on Bloomberg Television's "Taking Stock." Great interview and interesting company that is taking advantage of the move to mobile gaming. Clearly Zynga (ZNGA) and Facebook (FB) have been huge losers from this quick transition away from Facebook web. The interview is about a month old, but still applies.  Disclosure: No positions mentioned. Please review the disclaimer page for more details.

Anybody following this blog for the last six months knows that Stone Fox Capital has been extremely bullish on the independent mobile advertising sector. Velti (VELT) remains our favorite while Millennial Media (MM) has quickly become a second favorite pick. Unfortunately the latter has jumped from $12 to $14 this week. The below interview on Mad Money has great review of the industry. The most important statement was that mobile monetization is not a problem, the problem is the migration from desktop to mobile. As with any industry, the legacy company is impacted while the new company gains the benefits. One part that concerns me is that Cramer didn't ask about the click fraud or click accidents on a mobile phone. The CEO mentioned the higher click thru rate, but it has largely been reported that users accidently click on mobile phones a lot more than desktops. Disclsoure: Long VELT. Please review the disclaimer page for more details.

After the market closed on Wednesday, Kayak Software (KYAK) reported Q2 2012 earnings that slightly beat estimated results. Importantly this was the first earnings report since going public back on July 20. See article here. The company proclaims itself as the best place to plan and book travel. The basic focus of the company is to enable people to easily research and compare accurate and relevant information from hundreds of other travel websites in one comprehensive, fast and intuitive display. While revenue easily beat estimates, the adjusted earnings came in at $0.25 versus the $0.24 analyst estimate. The company only provided the GAAP earnings of $0.19 possibly providing for the stock sliding after hours. Read the full article at Seeking Alpha. Disclosure: Long VELT. Please review the disclaimer page for more details. 

After repeatedly hearing so many issues with monetizing mobile traffic from the likes of Facebook (FB) , Millennial Media (MM) continues to report massive growth. The company reported 75% revenue growth in Q2 2012. This number bodes well for Velti (VELT) owned in our models. The CEO of MM went on CNBC this morning. Its worth a watch for anybody interested in the sector. One of the most important take aways from this industry is that companies moving from a reliance on desktop supported ads for revenue to mobile is having a hard time matching those numbers. In cases such as Facebook, the company wasn't even ready for the transition to mobile by customers. Another important distinction is that a major difference exists between a retailer advertising on mobile versus Facebook attempting to place ads on mobile devices.  Companies such as MM and VELT sees gains from all the new traffic migrating to mobile. Anything is a net positive to them no matter whether i...