Google buys Postini: How high can GOOG go?

Google, this morning announced that it is going to buy Postini, a private company that provides security and encryption as a hosted service for instant messaging, e-mail and other forms of communications for $625 million in cash. The stock market obliged by send the stock up about $4 a share.

This has been the pattern every time Google has acquired a company and it has been perceived as one that adds overall value to the total Google value proposition. They bought YouTube, and the stock shot up. The last company that was rewarded by stock market for a buy-and-grow strategy: Cisco Systems.

In Cisco’s case, market believed that their sales team could really monetize the buys. In Google’s case, I am guessing, their ability to leverage advertising and their infrastructure are seen as key advantages. And if the stock markets stay this enamored with the Mountain View-based company, how high can GOOG go.

PS: It is a very good morning for Ryan Mcintyre, a partner at Mobius Venture Capital, and one of the Postini investors. This will help overcome any disappointments in his portfolio. Postini was on an IPO track, but Google made an offer too good to refuse.

Additional Reading:

* What’s weighing down on Google Stock?

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