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Tickers in this Article: GOOG, AAPL, MSFT, NOK, FB
Google Inc. (GOOG) is set to acquire Israel-based mobile mapping and navigation company Waze Inc. for about $1.1 billion.

Waze Ltd. was founded by Ehud Shabtai and Amir Shinar in 2008. It developed a free GPS application, which features turn-by-turn navigation. It can be downloaded on Android, Apple’s (AAPL) iPhone, Nokia’s (NOK) Symbian, Microsoft’s (MSFT) Windows Mobile and J2ME devices. It has 50 million users worldwide.

The app uses real user signal feedback to collect traffic information. It sends alerts to users for traffic information and suggests alternate routes to reach a particular destination. The service also notifies drivers of road work, speed traps and other potential obstacles using data from other users. It has a similar function to Google Map, which makes one's location known to his or her friends.

Top tech giants such as Apple and Facebook (FB) have been trying to acquire Waze for quite some time. However, the deals fell out due to various reasons. Both companies are trying to improve their mobile navigation capabilities. However, Apple’s bid was likely not attractive enough and Facebook would have integration issues.

This was good for Google, with its sprawling operations and already leading position in mapping software. The acquisition will boost Google’s offering in contextual data, which is a combination of social, interactive with GPS-based location tracking. Further, through the acquisition process, Google will be successful in eliminating a competitor. The acquisition will also bolster its own social mapping system and help it to generate revenue via location-based advertising.

Google has been active on the mergers and acquisitions front. In Feb 2013, it acquired Channel Intelligence for $125 million to boost its e-commerce business. Earlier, this year, it also acquired an infrastructure startup company, Talaria Technologies, to boost its cloud offerings. Recently, Google acquired Behavio, a mobile sensor start-up company, for an undisclosed sum.

In the first quarter of fiscal 2013, Google’s gross revenue (including TAC) touched a record $14.4 billion, representing sequential and year-over-year increases of 2.3% and 36.2%, respectively. Excluding the $1.5 billion contribution from Motorola, revenues were up 21.9% from the year-ago quarter.

Google has a Zacks Rank #3 (Hold).

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