Motricity Files For $250 Million Public Offering


Credit: Motricity

Motricity, the Bellevue, Wash.-based company that provides back-end infrastructure to wireless carriers, including web portals, storefront and messaging platforms, has filed documents with the SEC today with the intention raising $250 million in an initial public offering. It will trade under the ticker “MOTR.”

The company, which has raised $267 million in venture capital and has promised an IPO since 2004 has not been without its controversies, but says it sees significant growth opportunities and would like to raise additional capital. The opportunities include expanding into international markets, such as Southeast Asia, India and Latin America, developing new technologies for the carrier; and acquiring companies.

It appears that some of the stock being sold will be owned by shareholders and it is not clear how much of the proceeds will go to the company. In the filing it simply says “Motricity will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.” The biggest shareholders are: Advanced Equities (26.4 percent), Carl Icahn (21.1 percent), New Enterprise Associates (8.38 percent), Technology Crossover Ventures (5.54 percent) and the company’s CEO Ryan Wuerch (4.98 percent). Well-known shareholder advocate Icahn got involved following Motricity’s of InfoSpace (NSDQ: INSP) Mobile.

Now that Motricity has filed for a public offering, the covers can now be pulled back on the company’s financials. It said its customers include the top five wireless carriers in the U.S., including Verizon Wireless, AT&T (NYSE: T), Sprint (NYSE: S), T-Mobile USA and TracFone Wireless, and that to date, more than $3 billion in revenue has been generated through its mobile data platforms. For the past 12 months ended Sept. 30, the company, which has 346 employees, generated revenue of $117.1 million. For the nine month period ended Sept. 30, the company’s net loss attributable to common shareholders totaled $28.8 million. As of Sept. 30, the company almost had $20 million in cash and equivalents.

A majority of its revenues come from its largest customers — more than half, or 55 percent, of its revenues come from AT&T, and 19 percent from Verizon Wireless. Its five largest customers accounted for about 67 percent of its revenues in 2008 and 83 percent of revenues for the nine months ended September 30, 2009.

The company definitely has its risks. Mostly, it has to contend with being an old-school infrastructure company in a fast-paced business climate where mobile is increasingly becoming open and leaving the old walled-garden approaches in the dust. It also said some of its contracts with its two biggest clients — AT&T and Verizon Wireless — will be expiring in mid-to-late 2010. Motricity addressed the concerns about where the open platforms are headed: “We derived 31% of our revenue based on the number of active mobile subscribers who accessed mobile content and applications through our customers


Looks like...

…it ain’t happening. As tough to sell risk in this market as to sell ice to eskimos. Even companies with good track records of profit and real growth, rather than “growth” bought dollars for dimes with other peoples’ money, are having to pull IPOs.


Will they even be able to pull this thing off? To market it? It seems evident that they’re running out of money, and every time before when they’ve run out of money, they’ve raised more in the private market, but this time Uncle Carl said “No, thanks” (remember when he scolded his son in public for dropping this steaming heap in his lap?). So now they’ve got to turn to public markets. Carl wants some money back, and everyone figures it’s now or never where the markets are. Lots of questions from the filings: Why are the figures through September 30 rather than December 30? Have the past 25 days not been enough to add up the losses? The HUGE impairment charges show they’re no good at picking acquisitions. Are public buyers going to want to buy a piece of that sort of management? I guess Goldman, who’s running this thing, can shill with the best of them. But the fact that they’re doing this shows just how desperate they are, how dry the IPO market is. And who wrote the compensation contracts described in the filings? Incredible naivete among what should have been sophisticated venture folks. The idea is that management is supposed to get low pay with a high equity kicker, gives them incentive to grow it and float it. No wonder there has been 6 years of promises of IPO with no delivery, with a cushy pay package, the preferreds picking up that monstrosity of a house, etc. There’s just no downside.


This is classic Motricity. $267m in VC, $250m in IPO is awfully convenient cut-and-run tactic. And their announcement is so pitiful: They’re flat out saying that the carriers have them by the short-and-curlies and they can’t make money if they get squeezed. All the real smartphone app stores use the Real Intarwebz, not their silly WAP technology.

This is your chance to help stop a bailout. Short early, short often.

Comments are closed.