Overall, given the outlook for strong growth in the mobile gaming market and the smart steps that Glu is taking to expand its business, I think shares of Glu Mobile are attractive.
The wireless carriers keep a percentage of the fee (generally between 30% and 50%) and the rest goes to Glu Mobile, which is booked as net revenue, for its own games, or shared with the company that owns the game.
While I expect Glu will be able to renew those licenses, any fallout will hurt the bottom line.
While this could be beneficial in the long run, it could delay Glu's ability to achieve profitability in the near term.
And that seems to be giving a big lift this morning to shares of Glu Mobile, a San Francisco-based company that provides games for the iOS, Android, Palm and Windows Phone 7 platforms.
As it builds up its business, Glu Mobile is also now working to streamline its technology further.
As game developers and content providers such as Cartoon Network and FOX Sports Interactive scramble to figure out how to make their games work on cellphones, and as wireless carriers look for ways to keep people on their networks longer, Glu holds the key.
Glu Mobile shares are trading sharply higher Wednesday morning on what would appear to be speculation that the mobile gaming company could be a takeover target.
Relan says that a number of the developers who have used OpenFeint on the iPhone plan to use it for games on Android as well, like Glu Mobile, Digital Chocolate and Hudson Entertainment.
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Glu's technology lets companies port over their games faster and more inexpensively than if they tried to do it themselves.
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