LendingTree has built a nice business as an online loan aggregation and personal finance resource — its parent company Tree.com, Inc. generated over $200 million in revenue last year.
Apparently this may have caused Google to take notice and rumours have been circulating the past couple weeks that the search giant may be launching a similar service as recently as in a few weeks.
Yesterday LendingTree announced it was suing competitor Mortech, Inc. because it had broken an agreement with the company by partnering with Google to launch the new service. According to the company:
“Mortech, whose technology helps automate lender offer pricing, violated its contractual covenants by partnering with Google to launch an online mortgage loan aggregator service similar to LendingTree”
The allegations, though not exactly confirmed by Google, were enough to cause analysts to downgrade LendingTree, which is publicly traded as “TREE.” (A Google spokesperson told Stifel Nicolaus analyst George Askew about “a small ad unit test that will run against a limited number of mortgage-related search queries,” but would not confirm a specific product launch or give other specifics.)
This morning, Askew downgraded the TREE shares to “Sell” from “Hold” due to the risks of a similar Google service. Askew said he expects a Google launch in a few weeks.
We’re left scratching our heads at why Google would launch such a service, given the somewhat limited revenue potential. With $22 billion in revenue, one would think another $200 million or so wouldn’t exactly make them froth at the mouth. However, if Mortech is in fact partnering with Google, it may be doing most of the heavy lifting, which would make more sense to us.
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