Icahn Doubles Down on Bad Motricity Bet


Motricity, Inc. (NASDAQ: MOTR) has been a total disappointment and disaster since its 2010 IPO. Shares are surging today on news that activist investor Carl Icahn has taken a larger stake. The problem is that this is not really new and Icahn is effectively doubling down here now that the value has plummeted.

Here is what Motricity announced last Thursday: "Mr. Carl C. Icahn, Motricity's largest stockholder, who as of July 23, 2012 beneficially owned approximately 16.5% of the Company's outstanding securities and controlled approximately 14.7% of the voting power of its common stock, exercised his basic subscription privilege and his over-subscription privilege in full. Following the consummation of the Rights Offering, Mr. Carl C. Icahn will beneficially own approximately 30.7 % of the Company's common stock and control approximately 14.7% of the voting power of its common stock. Additionally, he will hold 1,146,131 shares of Series J Preferred Stock, or approximately 95.5% of that class of stock, which class has limited voting rights."

All you have to do is to go back in time and look at the chart for yourself. Shares initially performed well after the IPO but after peaking in late 2010 above $30... By the end of 2011 this stock was a penny stock. The IPO in June of 2010 was 6,000,000 shares at $10.00 per share but the IPO included 1 million shares which purchased by Carl Icahn at the IPO price and he was already listed as a 18.5% stakeholder in Motricity back around the IPO. This was simply adding in to a losing position.

What is hard to understand is why things have gone so awry here. The company should have won since no one can figure out how to monetarily win by making money in the mobile space. The company describes itself as,

"Motricity delivers compelling, customer-centric mobile experiences through precision profiling and targeting, dynamic content delivery and new rich media technologies. Motricity's advertising, messaging, website, application and merchandising solutions provide brands with intelligent and innovative ways to attract and engage users. Our cross-platform support and dynamic rendering based on device enables companies to send the right message, to the right audience, at the right time, which translates to higher conversion rates and brand engagement."

Revenues reported by Motricity were $121.65 million in 2011 and that as down from $133.379 million in 2010. This is hardly followed now but the run rate is showing that 2012 is going to be lower revenue all over again. Apparently trying to make money in the mobile online space is so bad that even the guys that claim to be the experts in the field have been nothing more than disappointing.

Motricity shares are up 18% at $0.49 against a 52-week range of $0.36 to $2.14.