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Nokia buys Intellisync

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Nokia is paying $430m to acquire Intellisync, or $5.25 per share - $100m more than the company's market valuation.

The San Jose-based company offers email and PIM synchronization, and device management software with enterprises and OEM as its primary customers. But over the past two years Intellisync has pushed hard into mobile carriers - providing the backend email infrastructure for Verizon Wireless, and device management for Sprint, amongst around a dozen wins. More recently the company has also begun to offer mobile application and file synchronization for mobile users of corporate CRM applications, for example, and recently launched a subscription-based corporate wireless sync service aimed at SMEs.

In a conference call on Wednesday, Nokia's enterprise executive VP, Mary McDowell, said that Intellisync's sales force and cross-platform support of many different kinds of devices had appealed to the company.

Enterprise and retail, and OEM deals still account for almost 84 per cent of Intellisync's revenue, but the carrier side is the fastest growing part of the business. Intellisync has been on a steady acquisition spree over the past two years, picking up Synchrologic, Spontaneous Technology, BREW developer Tourmaline Networks, PDAapps (formerly VeriChat), Identity Systems and staff from SoftVision.

Two-thirds of Intellisync's revenue is derived from licensing, the rest from services. Intellisync grossed $59.49m in revenue for the most recent full fiscal year ending July 2005, although with a hefty channel to support - sales and marketing expenses reached $46.3m and R&D expenses cost the company $24.5m - the company reported a net loss of $19.5m.

Commenting on the deal, Kent Thexton, CEO and president of carrier email provider Seven, said Nokia's acquisition validated the booming mobile email market.

"There's lots of room in the marketplace," he told us today. "In a year we've gone from ten to seventy five carrier customers for our white label email service - when customers go into a store to buy a phone they expect to see push e-mail on the device. I think we'll see less competition for the white label positioning."

Carriers typically take a Seven package and pre-load it on the phone, such as Cingular with its Xpress Mail. Thexton cited Sybase's acquisition of Extended Systems as evidence of a maturing and growing market.

For a long time Nokia was criticised for its lethargic response to RIM, but under McDowell's stewardship the company has been wheeling and dealing: inking an agreement with Microsoft to support ActiveSync, rolling out its own business email platform, and finally delivering on BlackBerry support on its own phones. ®

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