Motricity refocuses, sells electronic books unit

Motricity has sold its electronic books division to a New Jersey firm as it focuses on software that distributes mobile media from entertainment companies such as MTV and prepares for a possible Wall Street debut.

The Durham company's digital book site, eReader.com, is one of the largest sellers of electronic books, with more than 23,000 titles available for download over the Internet.

The site has grown steadily for several years but no longer fit Motricity's business model, company spokesman Les Hamashima said.

"We want to be the gold standard when it comes to the mobile platform infrastructure," Hamashima said. "The eReader business is content, not infrastructure."

The pace of adoption of electronic books might also have played a role. Despite much publicity and promise, digital books have not taken off as quickly as some had hoped. Sony and Amazon.com have been pushing them with sales of portable book readers that store hundreds of works that can be downloaded.

The sale affects three Motricity employees, Hamashima said. Financial terms of the deal were not disclosed.

The buyer, Fictionwise, with headquarters in Chatham, N.J., is an online book retailer that plans to maintain eReader as an independently branded Web site.

Motricity had owned eReader since 2003, a time when it was buying commercial Internet sites as part of its distribution strategy.

But the company has changed direction. As well as streamlining, the eReader sale dovetails with Motricity's effort to shift away from selling content to owning the distribution infrastructure to support the purchase and downloading of content.

The company wants to become the pre-eminent distributor for entertainment companies such as MTV and BET, rather than support sales through individual mobile sites and storefronts.

In July, Motricity bought Los Angeles-based GoldPocket, whose technology helps facilitate and bill for media supplied by content providers.

Motricity designs and runs software that lets people buy and download ring tones, games, video and other media for mobile devices. It makes money by taking a cut of transaction revenue from both wireless carriers and media companies.

As part of its new business strategy, the company raised $185 million in October, including money from billionaire financier Carl Icahn, to buy the mobile services subsidiary of InfoSpace. That deal, which closed Dec. 31, expanded Motricity's infrastructure for delivering mobile content and boosted its revenue, which is key for a technology company looking to make a splash on Wall Street.

"Anytime you're looking to enhance your investors, whether that's [venture capitalists] or if you're looking toward public markets, you want to present a rational business strategy where there is definite focus that shows the company has prepared itself for this execution," Hamashima said.

Motricity CEO Ryan Wuerch has expressed interest in taking Motricity public through an initial stock offering. It's a process that often requires organizational restructuring, sales growth and cost-cutting through acquisitions, sales of noncore businesses and sometimes layoffs -- Motricity let go about 50 employees a little more than a year ago.

"What this company is doing is classic," said John Fitzgibbon of IPOscoop.com, a research site. "They're dressing up for the beauty contest and looking clean as a whistle to prance out on the IPO stage. You have to. You've got to clean up the balance sheet and get rid of all the lead shoes you possibly can."