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Motricity Renews Contract With Second-Largest Customer

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Motricity has locked in Verizon Wireless—its second-largest customer—for at least two more years. The Bellevue, Wash.-based company, which raised about $60 million when it went public last month, said its contract with Verizon is now good until the summer of 2012, according to documents filed with the SEC. In 2009, Verizon’s business was worth 20 percent of Motricity’s overall revenues in contrast to AT&T’s contract worth 53 percent.

Parts of the company’s contract with AT&T (NYSE: T) are also up for expiration in mid-to-late 2010, but the company did not provide an update in the same filing.

Currently, as part of Verizon’s contract, Motricity is hosting the carrier’s on-device portal and helping with other services including device profiling, editorial, search and advertising integration. In 2012, Verizon may extend the agreement for up to two additional one-year terms, which will renew automatically unless Verizon provides notice. After that, the term will be updated a year at a time until either company terminates the agreement.

Motricity’s stock fell 62 cents today, or 7.71 percent, to close at $7.42 a share.

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Tricia Duryee
@triciad Jul 6, 2010 8:24 PM ET

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Posted In: Mobile, motricity

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  • couldn’t get in on it

    Mmm-mmm-mmm.  Motricity investors!  Ain’t you glad they broke you off a chunk of THAT!  Goldman must hold you in high, high esteem, the very highest of all possible esteems, to have let you get in on the IPO.  And all y’all in the lockup period, who can’t get rid of your toxic waste:  What’s the over/under that MOTR will be delisted before you can fob it off?

  • none

    $6 a share….anyone? Do I hear $5? In less than 1 month, the price will be 1/2 what it opened at

  • Matt

    Please show YOUR work.  A 10 second google search would tell you that the company sold 5 million shares during the IPO, plus an additional 1 million to Icahn, which is $10 x 6 million = 60 million.

  • Details Please

    For what its worth, Motricity netted $37.8M from the IPO after commissions and expenses. With initial hopes of $250M in January, it can’t be considered anything else but a huge disappointment.  Even today, the stock is trading at $7.27, far below the $10 offer price.

    A far as the Verizon deal, the devil is in the details.  Certainly an extension of the partnership is good news, however, the terms of that deal are critical. I can’t imagine the deal is richer than what it had. Verizon has a reputation of bullying to get the deal it wants and they know that Motricity pretty much had to take what was offered.  Not a great negotiating position.  I do find it amusing that the SEC filing indicates that the contract renewal is for its “WAP 2.0 Hosting” (WAP? Really?)  In addition, as critical as Verizon is to Motricity, it pales in comparison to the AT&T deal which on its own dictates Motricity very existence.  I would expect that relationship to continue, but at what terms? Again, I can’t imagine Motricity has any leverage to get more from AT&T.

    All this aside, it doesn’t address the core challenge to Motricity which is growth.  Now that they are public, investors won’t settle for contract renewals which only maintains revenue.  They will demand real growth from new customers, and soon.

  • none

    $60 million?  I think not.  Share price of $10 times shares of 4 million = about $40 million total.  Please show your work…

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