Motricity already had the dubious honor of being the worst performing technology stock in Washington state in 2011. And it looks like things aren’t starting out much better in 2012 for the mobile software company.
In a SEC filing today, Motricity indicated that it had terminated a business relationship with PT XL Axiata, a large Indonesian mobile communications company. XL had accounted for 11 percent of Motricity’s revenue, roughly $9 million, during the first nine months of 2011.
In today’s SEC filing, the company wrote that it is entitled to a contractual revenue share with XL through the end of next year. But the companies also agreed to sever ties moving forward.
“The termination followed negotiations relating to the continued business relationship among the parties and XL’s indication that it wished to exit its relationship with the company, as a result of among other things changes in XL’s business and strategy and XL’s re-evaluation of the economic viability of the contractual relationship.”
A one-time high flyer that went public in 2010, Motricity ran into serious problems last August after its financial results came in well below expectations. The stock fell by more than 50 percent in one trading session, and shortly thereafter much of the management team, including CEO and founder Ryan Wuerch, departed.
Motricity cited the importance of the XL contract in a recent SEC filing, noting that the deal accounted for 13 percent of the company’s revenue in 2010. XL used Motricity for mobile data services, among other things.
“Our ability to continue the terms of our agreements may be impacted by constraints in liquidity and capital resources and the exploration of strategic and financing alternatives. Failure to renew or maintain our agreements with AT&T, Verizon Wireless or our other large customers would materially reduce our revenue and have a material adverse effect on our business, operating results and financial condition.”
Motricity has lost 94 percent of its value in the past year, and the company is currently seeking strategic alternatives. As a result of the termination of the XL contract, Motricity said that it is reevaluating its operations Asia.