Sources: Motricity to Slash Workforce

Durham, N.C. — Motricity, a fast-growing global provider of mobile content applications for telecommunications providers, is preparing to lay off many of its 650 employees, sources tell WRAL Local Tech Wire and WRAL.com.

Motricity declined to comment on the report.

However, multiple sources said layoffs could affect 200 or more people. Motricity currently has 350 employees in Durham.

Sources also said that Motricity is considering moving its headquarters out of Durham to Bellevue, Wash.

The moves are part of a consolidation of two companies – Motricity and the mobile information business unit of InfoSpace, which Motricity acquired for $135 million in October. The deal closed in January. The InfoSpace group is based in Washington.

As part of the deal, billionaire Carl Ichan and other venture capital investors poured $185 million into Motricity. Motricity, which is privately held, has considered taking the company public, and the InfoSpace buy was seen as part of a growth strategy destined to make it more appealing to Wall Street.

Ryan Wuerch, a co-founder of Motricity, remains the chairman and chief executive officer of the company, sources said. Steve Elfman, who had been executive vice president for the InfoSpace unit Motricity acquired, is Motricity’s president and chief operating officer. He at one time was chief information officer at AT&T. He is based in Bellevue.

The combination of the two companies created one entity with more than 650 workers - and significant duplication, of effort. Rumors had been circulating within the company for weeks that substantial layoffs would be made.

As of Friday evening, employees had not been told about the layoffs.

Motricity also has offices in Los Angeles and Europe.

Layoffs are not new at Motricity. In December of 2006, the company cut its workforce by 16 percent, or 50 employees, as it streamlined operations to focus more on content applications rather than producing and selling content.

When the InfoSpace deal was announced, the companies said a substantial portion of the InfoSpace team would remain based in Washington.

Motricity recently moved into new, elaborate high-tech headquarters in a building adjacent to the American Tobacco Complex in Durham.

Over the years, Motricity has raised more than $350 million in venture capital. Ichan invested $50 million in the company early in 2007 before participating in the $185 million deal that produced the InfoSpace deal. Motricity raised $72 million in 2006.

Local venture investors in Motricity include Wakefield Group and Southern Capitol Ventures. Other investors in addition to Icahn include Advanced Equities and New Enterprise Associates.

Motricity numbers 11 of the top 13 wireless carriers in North America, including AT&T, Sprint, Alltel and Verizon Wireless. Motricity also added several offices as part of the deal, including operations in the United Kingdom, France and the Netherlands.

“Two of the best companies in the industry are now being integrated to create the premier provider of mobile platform infrastructure,” Wuech said at the time of the acquisition. “We have unparalleled experience in mobile platform development, systems integration, innovation and building world class technology with a proven ability to scale – powering the mobile marketplace including the largest operators and media companies in North America and Europe.”

Fallout of the acquisition has been felt in other areas.

In January, Motricity’s Chief Financial Officer Matthew Petzbold left the company to join Triangle-based Bandwidth.com

Motricity also recently sold off its eReader book site to a New Jersey company.