Telcos Love This Disruptor

The IPO class of 2010 is starting to take shape. Last week, Motricity, a mobile data services provider, filed its intent to raise $250 million in a public offering.

Marketing is Motricity's forte. It hosts and delivers personalized content to handsets on behalf of clients such as HSN (Nasdaq: HSNI  ) through carriers, including AT&T (NYSE: T  ) , Verizon (NYSE: VZ  ) , Sprint Nextel (NYSE: S  ) , and Deutsche Telekom's (NYSE: DT  ) T-Mobile.

"I want to pay for a news service that will deliver the top 10-15 stories that matter to me the most. I want them to be researched and well-written. I will pay money for that," Jim Ryan, Motricity's chief strategy and marketing officer, told mocoNews.net in explaining the company's strategy in October. (Emphasis added.)

The pitch is working so far. Motricity's revenue was up 18% year over year through the first nine months of 2009. Free cash flow rose to $12 million over the same period. Carl Icahn is a big investor.

Telecoms have good reason to love what Motricity does. The upstart maintains its own network, and carriers need the help. Aggressive price cuts among the majors could get more people upgrading to higher-fee smartphones. More users would mean more infrastructure, and more capital spending. (Just ask AT&T.) Doing business with an outsourcer like Motricity could offer low-risk, lower-cost growth.

Meanwhile, a rush to mobile software by way of the iPhone and Android-powered handsets from HTC and Motorola (NYSE: MOT  ) could keep Motricity's coffers full, and fuel interest in the IPO.

Now it's your turn to weigh in. Would you consider buying into Motricity's IPO? Or does this company's telecom taint leave you listless? Make your voice heard using the comments box below.

Sprint Nextel is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy won't be mobile till it gets this leg cast off.


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