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Summary:

Motricity paid $135 million in October to acquire the InfoSpace mobile division, and now InfoSpace is taking over. As we reported yesterday,…

Motricity paid $135 million in October to acquire the InfoSpace mobile division, and now InfoSpace is taking over. As we reported yesterday, Motricity said it will be laying off 250 of its 600 employees and will move its headquarters to Bellevue to be with InfoSpace (NSDQ: INSP). The company will also integrate parts of Motricity’s Fuel technology into the InfoSpace mCore platform. The one main thing remaining from Motricity will be its CEO Ryan Wuerch. .

Here’s some more details about the integration based on conversations with employees at the company who preferred not to be named:

Executive changes: Motricity’s Wuerch will move to the Seattle-area to work alongside Steve Elfman, the former EVP of InfoSpace mobile, who is now serving as the president and COO. A few of Wuerch’s direct reports were offered the option to move, but haven’t yet decided on whether they’ll go. Those not offered relocation packages will be laid off. Almost all of Elfman’s direct reports in the new organization are people who reported to him before the merger.

Layoffs: Of the 250 layoffs, only a few were laid off in Bellevue, meaning that of the 350 employees in Durham, about 100 will remain. It will take nine months for the layoffs to be completed, with the first wave occurring May 3.

Headquarters move: The headquarters move also has to do with customers. One of Motricity’s big customers — T-Mobile USA — is also based in Bellevue. Likewise, Microsoft (NSDQ: MSFT), which is just a few miles away, recently purchased the search company FAST, a partner of InfoSpace.

IPO plans: The company shelved IPO plans because revenues were not high enough and the company wasn’t profitable. Together, the two companies will have about $100 million in annual revenues and will be closer to profitability when the layoffs are completed in nine months. At that time, the company will re-evaluate its opportunities, whether that means going public, or being sold.

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  1. 100 Motricity Employees on the Thursday, March 6, 2008

    Take one down, pass the resume around, 99 Motricity employees on the wall.

    The "Last 100" are being offered insultingly small retention bonuses and no guarantees on employment dates to stick around and work 24×7 to keep things running for Lord Elfman while taking over the functions of coworkers who are either laid off or move on to better jobs. Just how many of those people do they think will be around after 9 months? Or even 3?

  2. "Wuerch will move to the Seattle-area to work alongside Steve Elfman". When did CEOs work "alongside" COOs? I think this statement, and the fact that few of Wuerch's Durham reports are moving, shows the truth behind all the lies and smoke. Wuerch's days are numbered.

    "The company shelved IPO plans". Really? When were the plans the shelf? I think "not profitable" is a severe understatement. More like "hemorraging cash". Infospace's 10-Qs filed with the SEC showed them losing an average of 12% of revenue over the past 10 quarters, and an average of 14% for the past 2. At an annual revenue of $50m, that's a rate of losing $7m per year. Without revenue growth or improving profitability. And Motricity PAID Infospace some ungodly sum for the ability to lose that much, so who knows how much they've been losing if that looks good to them. Laying off these 250 people, at $100 thousand each, should save them $25 million ($23 if they buy Mr. Wuerch a new house), and if they can show those savings before losing customers or hiring more in Washington to replace them, I guess they'll be able to pull of a sale or IPO. The question is whether they can keep customers around and revenues up with fewer people and only the mCore platform.

  3. How long is Wuerch going to last in Seatttle? Sorry, the southern charm bit isn't going to fly on the west coast, nor the inspirational speeches with the preacher's charisma? Are Nathan and Larry coming along too? They are all gonna need a new wardrobe….

    Hopefully Lord Elf will turn this around, either sell the company or do the IPO? What's an option worth these days?

  4. I agree with "confusing&q Thursday, March 6, 2008

    When he says "Wuerch’s days are numbered."

    THE best thing that could happen for the company and the investors is for Wuerch to be let go ( or for him to leave voluntarily), put someone else in charge that the employees will have some belief in. Seriously, anyone think that anyone in Bellvue is excited about working with him? Yeah, let's cure the cause of the cancer by moving it from one section of the body to another…. Ryan, you did a great job raising money and doing acquisitions, it is now time for you to move on.

  5. definition of "great job& Thursday, March 6, 2008

    "Ryan, you did a great job raising money and doing acquisitions". Great job? Really? For whom? The people acquired, sure. What I've been doing is transferring my investors' moneys to people with other companies. Those are the only folks getting rich off me. I'm like Robin Hood. I paid $140 million for a company losing $10 million per year. Taking from the rich and giving to the poor. They should have paid ME $200 million to take on that problem. And my money raising, especially the latest round, will prove my undoing and the undoing of investors who trusted me. Mr. Icahn has us all by the scrota.

  6. Moving to Wash might end up to be a good move in retrospect…anyone's planning to move with the company?

  7. whereismycheese? Thursday, March 6, 2008

    So if Motricity (Durham) and it's Fuel platform is being mothballed, didn't Carl Icahn essentially just pay ~$180M to buy INSP mobile unit. It doesn't appear that Motricity is part of this equation at all other than acting a the middleman in the deal.

  8. what you get for $180M Thursday, March 6, 2008

    It looks like Carl paid the ~$180 for the INSP mobile unit's technology, the customer contracts from both (11 of the 13 major carriers, as is so often repeated), and I suppose the ability to aggregate a lot of consumer data passing through the infrastructure. I guess they're hoping against hope that none of the carrier customers will walk away. They might keep them by giving away the service essentially in order to keep the access to the flow of consumer behavior data, which they can sell to advertisers and back to carriers. I don't think he needed a middleman, since he could have put together the same investor group to just buy INSP's mobile unit directly and put Elfman in charge, thereby avoiding taking on Motricity's ongoing losses.

  9. Not with a 10ft pole Thursday, March 6, 2008

    "InfoSpace is taking over"?

    More like Motricity-West is is taking over. Infospace as it exists today has nothing to do with mCore or the mobile technologies. It's all Motricity's now. And based on what I've read about Wuerch's talents and his preach and charm… thank God.

  10. Milking this story… Thursday, March 6, 2008

    Wow Tricia — you're really milking this Motricity layoff. Got anymore useless articles to post with the same crap?

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