Motorola has found a buyer for Good Technology Inc., the mobile email provider it bought for about $500 million just two years ago to help it compete against BlackBerry and other messaging devices. Visto Corp., a company whose messaging services are offered through carriers including T-Mobile and Vodafone, is purchasing the business to expand its client base.
Terms of the transaction weren't immediately disclosed, but are likely to represent a steep drop in Good's value since Motorola's acquisition. The deal is expected to be announced this week.
The sale comes as Motorola plans to sell some assets as it tries to raise cash and cut expenses to stem losses at its rapidly shrinking cellphone unit. It also eliminates the potential expense of fighting litigation that Visto initiated against Good in 2006.
"Good was either going to fade away or be given to someone," said Ken Dulaney, a mobile-computing analyst at Gartner Inc. "They get rid of a failed business, take some employees off the books and end a lawsuit."
Visto said the deal would enable it to better compete for business from carriers looking to promote their brands through messaging services that can run on any device. "This is a story about Visto's consolidation of the non-Microsoft and non-BlackBerry community of users," said Chief Exec Brian Bogosian.
Despite the expected sale, engineers and other staff who worked on Good's email service are now central to Motorola's efforts to develop a new class of cellphones. These phones, focusing on social-networking and expected later this year, are at the core of Motorola's efforts to turn itself around.
Motorola acquired Good in early 2007, at the height of the ultraslim Razr phone's popularity and on the eve of the company's spectacular collapse from the No. 2 maker of cellphones by market share to No. 5 today. The purchase was part of a series of acquisitions and share buybacks that drained $6.6 billion of the company's $11.2 billion cash pile in a single quarter.
At the time, the world's largest cellphone companies moved to acquire the makers of such software. But turmoil within Motorola's leadership frustrated plans to focus on consumer email, and the unit was integrated into the former Symbol Technologies Inc., which made handheld scanners and other devices for blue-collar workers. That unit had a hard time convincing its retail, delivery services and industrial clients of the need to purchase email services for field staff.
Visto has aggressively sought to defend its patents regarding the "push" email technology and has sued seven rivals. Last year, it settled a case against Microsoft for an undisclosed amount. A separate suit against Research In Motion was stayed in July pending the US Patent and Trademark Office's reexamination of five disputed patents. (info from The Wall Street Journal)