50 job cuts in growth plan

Motricity lays off as it fine-tunes

One of the area's fastest-growing technology companies is laying off about 50 employees in what its CEO says is an effort to fine-tune its business and cut costs.

CEO Ryan Wuerch said the layoffs bring new efficiency to Motricity's operations and put it in a position to become profitable next year. "We're doing what's necessary ... to make this company more successful," he said.

The layoffs are a dramatic turn for Motricity, which has added hundreds of workers over the past 18 months, growing to 425 employees.

The company, which provides technology that helps people buy and receive games, graphics, ring tones and music on their mobile phones, is one of the leaders in its industry, with customers including Cingular and BET.

Major venture capital firms have bet on Motricity's potential, investing $166 million over the past five years. That's one of the largest sums ever raised by a Triangle company. Wuerch expects the company's revenue to more than double in 2007.

But the most recent cuts bring the announced layoffs at Motricity to about 65 since October, or about 15 percent of the company's work force.

About half of the just-announced 50 job losses will be at the company's Durham headquarters, where it has 375 employees. The affected employees, most of whom were notified Thursday, will keep their jobs until Jan. 29.

Wuerch says the company will continue to hire, but much more deliberately than over the past 18 months. He said advances in the company's technology enable Motricity to do more work with fewer people.

As a fast-growing company in an exploding industry, Motricity has to make sure its operations are as streamlined as possible, Wuerch said. Motricity competes with large companies such as VeriSign, InfoSpace and Amdocs.

The company has regrouped its employees by customer type and appointed four general managers to oversee their efforts. The changes already have improved speed and collaboration throughout the company, Wuerch said. The layoffs, which are broadly distributed throughout the business, remove layers within the company's organization, he said.

Roger Entner, an analyst with technology research group Ovum, said Motricity is trying to avoid Yahoo's plight, as described in its "peanut butter manifesto." This month, a senior Yahoo executive wrote that the company was spread like peanut butter -- equally thin among many areas and lacking focus on any one. The memo was leaked to The Wall Street Journal.

"It's a very gutsy move to cut people when you're growing by triple-digit" percentages, Entner said. "But the marketplace is changing, and if you don't proactively realign with the market while it's changing, you fall asleep at the steering wheel."

Consumers are buying more frequently from media companies and less from their own cell-phone carriers, Entner said. What's more, the industry is going through a lot of consolidation.

"Ryan [Wuerch] wants to be much more the consolidator than the consolidated," Entner said. "This keeps this company sharp and in focus, and brings a lot of urgency."

Until now, Motricity has focused on adding customers, including 25 major companies in 2006. It announced in August that it would partner with Universal Music Group to deliver music from artists such as Eminem and U2 to mobile phones. Wuerch's next goal is to deepen Motricity's business with existing clients.

He is trying to shore up the company's financials to make it an attractive investment, possibly even for public investors. He has been coy about the company's plans, but Motricity is on the short list of local companies that could raise money in a public stock offering.

"Hopefully the signs you're seeing right now are making us very strong for anyone who is looking at Motricity from an investment perspective," Wuerch said.

Wuerch said he turned to his board of directors and other chief executives for advice as he contemplated layoffs. Although many CEOs told him they regularly eliminate a percentage of employees, Wuerch said it was difficult. "I have made sure this company was based around people," he said. "I never want to be callous about it."