724 Solutions scales back efforts in newest wireless operator mobile product

Toronto-based 724 Solutions Inc. has decided to scale back its commitments to its most recently released wireless operator oriented products as it struggles to achieve profitability. As part of the latest round of restructuring, the company has laid off 100 more employees and will also scale back investment in financial service companies. Last October, 724 Solutions unveiled three new products that were designed to help wireless operators gain incremental revenue from a transactional-based revenue model. With the advent of 2.5G networks, like GPRS and 1XRTT, wireless carriers began charging per kilobit of data downloaded as opposed to the length of time spent online. 724 Solutions wanted to capitalize on this transformation by allowing the carriers to charge for alert notification and m-commerce applications (RoW, Oct. 30/01). Moving into the wireless carrier market was a natural step for the company, 724 Solutions’ chair Greg Wolfond told Report on Wireless last October. "In the carrier space, where you want to do things like top up your mobile account, buy goods and services, and get alerts, it’s the same kind of technology that applies to both spaces quite well." But concentrating on the bottom line is more important right now as the company expects to save US$16 million annually as a result of the latest cuts. 724 Solutions also expects to take charges of US$5 to US$7 million and write down investments of US$7 million in the third quarter. The real value of the product was its ability to allow consumers to not only receive an alert, but to act on that alert by purchasing flowers for someone’s birthday, for example. 724 Solutions sells its software applications to equipment vendors, making it easier for carriers to implement the technology. It has agreements with Nortel Networks Corp., Aspire Communications, as well as with other original equipment manufacturers (OEMs) such as Nokia, LM Ericsson and Motorola Inc. The company is likely experiencing carrier reticence to purchase this type of technology due to the overall tightness in the capital markets, and investors’ low willingness to put up with greater capital expenditure as the bottom line takes precedence. 724 Solutions also announced that it will replace its current CFO at the end of next month. Karen Basian will be replaced by Glenn Barret, who is currently VP finance.

724 Solutions scales back efforts in newest wireless operator mobile product

News | 09/03/2002 4:00 am EDT

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