America Movil SAB de CV (ADR) (AMX), Google Inc (GOOG): Is Carlos Slim Now “Dumping” Cash?

Nonetheless, the fact that only 20% of its user base access the service on a monthly basis is worrying. The low conversion rate from user-base to MAUs translates to a low revenue conversion rate, thereby casting a doubt on the company’s growth potential. For instance, its revenue of just $300 million compared to a user base of 350 million people means that the company received about $0.86 in average revenue per user, or ARPU.

The other risk comes in the form of competition from industry giants. As noted earlier, Shazam is not the only company with a voice recognition application. If anything, it is following in the footsteps of the likes of Google and Apple. These industry giants need no venture capital funding to develop the best products.

Some would say that America Movil SAB de CV (ADR) (NYSE:AMX)’s investment in Shazam could benefit from the carrier’s massive customer base in Latin America. Nonetheless, we have seen Google and Apple come up with devices that do not need carrier networks to access services like music streaming, TV shows or ads for that matter.

For instance, both companies have tablets, which do not require carrier networks for use. These tablets have audio/voice search capabilities, and can be used in conjunction with TVs. So where is Shazam’s play coming from here? America Movil owner along with the other venture capitalists may have dumped the $40 million by investing in Shazam.

The bottom line

The $40 million funding is definitely big for Shazam, and relatively a smaller effect on America Movil, or Carlos Slim Helu. Nonetheless, when it comes to investing, regardless of how much money you have in the coffers, it is worth putting money in products that make sense. Shazam is a small player in audio recognition compared to Google and Apple.

There is definitely a huge opportunity in audio recognition, but I would bet that the two companies, Apple and Google would be the front runners in making it count.

The article Is Carlos Slim Now “Dumping” Cash? originally appeared on Fool.com and is written by Nicholas Kitonyi.

Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Nicholas is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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