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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

January 19, 2012 at 12:28 PM

Motricity jumps on Asia cutbacks, layoffs

Motricity stock closed up 5.5 percent today after the company said it’s withdrawing from Asia, a move that will cut 135 jobs in India, Singapore, Malaysia and Indonesia by April.

The Bellevue-based mobile marketing services company has been reorganizing for months and finalized the Asia decision after losing a major customer, Kuala Lumpur-based carrier Axiata, on Jan. 5. Motricity expects the shift will cost around $2.5 million, including severance costs of $1.5 million.

Overall the company now employs between 320 and 350, down from 522 at the end of June.

It’s a sharp reversal. In 2010 Motricity was aggressively expanding overseas, making deals that pushed its stock above $15. Today the stock settled at 87 cents, after rising to more $1 during the day’s trading.

Interim Chief Executive Jim Smith said in a statement that the company’s “had to make some difficult choices, including streamlining and exiting areas of our business that were no longer strategic or profitable. I believe the strategy that we’ve since adopted now aligns with the strong market opportunity that exists in mobile enterprise and advertising.”

Motricity continues to have offices Europe but they’re being evaluated as the company turns its focus to North America, where its operations are more profitable.

Smith explained that in North America, the company runs a broader set of businesses, serving large enterprises in addition to wireless carriers. Those businesses share capabilities, enabling it to deliver services at a lower cost, he said.

A more streamlined company could be a more attractive acquisition target but the company’s trying to grow and not pursue a merger or acquisition, Smith said.

“Anything’s possible with M&A but it’s certainly not something we’re focused on,” he said. “We’ve got to go build the business.”

Motricity’s also trying to raise more capital, which could lead to more hiring in Bellevue. Smith said the company will provide an updated outlook when it reports 2011 earnings; the report hasn’t been scheduled but will happen before March 15.

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