Layoffs to reshape Motricity

An unspecified number will lose their jobs, but details are not expected until next week

Motricity is preparing for layoffs that will reshape a company long considered one of the area's most promising technology startups.

In an e-mail message Monday, the Durham company's CEO, Ryan Wuerch, told employees to expect details next week.

The impending job cuts, which could affect a large number of Motricity's 650 employees, have rattled the work force and sparked fears that the company's headquarters could shift to the West Coast.

"We know you're all anxious to hear more details," Wuerch wrote in the e-mail message, which was obtained by The News & Observer. "I can assure you that we're working as fast as we can, but we do not want to rush this process."

The staff changes are driven by an acquisition Motricity made at the end of 2007, Wuerch wrote. The company paid $135 million for a division of InfoSpace, a rival in Bellevue, Wash., and it has been working to eliminate redundant positions.

The company has about 300 workers in Durham and 300 in Bellevue. Wuerch, at the time of the InfoSpace deal, said the headquarters would stay in Durham.

Les Hamashima, Motricity's director of communications, confirmed that Wuerch sent an e-mail message to staff but declined to comment further. Internet blogs have been rife with speculation about Motricity's plans and filled with vitriol toward the company and its leader.

Motricity sells technology that lets wireless carriers such as AT&T and media companies such as MTV get ring tones, pictures and games to customers. Though consumers are using phones for more than talk -- in its last quarterly report, AT&T said wireless data revenue rose 57.5 percent -- demand for some content, such as ring tones, has slowed.

"The overall trends have been very good," said William Power, a senior analyst with Robert W. Baird in Dallas who follows the telecommunications industry. "With that said, the picture for the mobile content providers has probably been more mixed."

And that, in part, has prompted a shakeout in the marketplace. Some companies have disappeared altogether. Others have been swept up in consolidation.

Motricity has been an acquirer. The company has raised almost $400 million through its history and attracted well-known investors such as Carl Icahn, a billionaire who has pushed for change at Motorola, General Motors and other corporations.

Motricity is now "the Microsoft of the wireless content delivery business," said Roger Entner, who follows the communications sector for IAG Research. "Motricity is the 800-pound gorilla that truly dominates the market."

Its prominence locally has grown along with its attention nationally, making Motricity one of downtown Durham's most lucrative tenants. It has a flashy headquarters in the American Tobacco district and has been on an almost constant hiring spree. Even now it lists 42 open positions.

Growth, though, has brought challenges. The senior management has been in flux, at times complicating Motricity's strategy. New investors have brought new demands and increased the pressure for Motricity, which has cut staff before, to become profitable.

Add to that the very nature of the business. It's largely dependent on consumers' disposable incomes. With the slumping economy, customers could cut back and erode Motricity's revenue.

What's more, companies such as AT&T, the nation's largest mobile-phone company, hold the most power in the business relationship. If they decide to walk, a company such as Motricity can be devastated. That increases the pressure to meet deadlines and keep customers happy.

It's hard to know how well Motricity is doing, because it is a private company and doesn't report sales or profit. Many customers won't say much about their dealings, fearing that they could tip off rivals. AT&T did confirm that it has a contract with Motricity, as did Sprint.

Atrinsic, an entertainment and marketing company in New York, has worked with Motricity for more than a year and is satisfied.

"Motricity has always been a solid partner," said Jonathan Katz, Atrinisic's chief marketing officer. He has heard about Motricity's plans to cut jobs and is keeping tabs. "At this point, it doesn't cause me any grave concern as it pertains to my business."