LiveWire Buying Groove Mobile

LiveWire Mobile Inc., a subsidiary of NMS Communications Corp. (NMSS), has acquire Groove Mobile Inc., a Bedford, Mass.-based provider of mobile music solutions. The deal is valued at $14.5 million. Groove Mobile had raised around $32.5 million in VC funding since 2001, from firms like Charles River Ventures, Kodiak Venture Partners and Egan-Managed Capital.



LiveWire Mobile, Inc, a subsidiary of NMS Communications Corporation (NASDAQ: NMSS), today announced that it has acquired privately-owned Groove Mobile, Inc. a leading provider of mobile music solutions based in Bedford, Massachusetts. The acquisition will enable LiveWire Mobile to meet operators' growing demand for a portfolio of managed services, including ringback tones, ringtones, full track music and video downloads, delivered through an integrated storefront.


In December 2007, NMS Communications Corporation (“the Company”) announced the creation of LiveWire Mobile as a separate division delivering mobile personalization services to operators. The Company is announcing today that it has created a new subsidiary, LiveWire Mobile, Inc., to which the Company will transfer all the people and contribute all the business assets, including the cash required to fund this acquisition, related liabilities and intellectual property rights associated with the LiveWire Mobile business.


Under terms of the acquisition agreement, LiveWire Mobile acquired all the outstanding shares of Groove Mobile for the purchase price of $14.5 million, and Groove Mobile shareholders were required to retire all previously outstanding non-trade indebtedness. LiveWire Mobile will hire most of the Groove Mobile employees and the two companies will consolidate office locations.


“With the acquisition of Groove Mobile, LiveWire Mobile gains significant new customers, enhances its value proposition to operators and improves its financial profile by adding a rapidly growing base of managed services revenue and accelerating its expected time to non-GAAP profitability into the fourth quarter of this year,” said Bob Schechter, chairman and CEO of NMS Communications Corporation. “Over the past year, we have taken a series of steps to more clearly delineate and enhance the value of each of our LiveWire Mobile and NMS Communications businesses. Ultimately, we believe the best way to realize value is to separate the two businesses and we are exploring options to do so in the most effective way for our shareholders.”


Groove Mobile is a leading provider of fully-managed, turn-key mobile music solutions for operators and record labels. Groove Mobile has 12 global mobile operator customers including Sprint, 3 UK and Bell Mobility as well as relationships with the major music labels including EMI, Sony BMG, Universal Music Group and Warner Music Group.


“This acquisition represents a major milestone in solidifying LiveWire Mobile's early leadership position in the large and rapidly growing market for mobile personalization services. LiveWire Mobile now delivers the industry's most complete suite of personalization services, spanning the traditional service silos that exist today,” said Joel Hughes, president, LiveWire Mobile. “Through our fully managed and integrated service offering, we empower operators to cross sell and up sell personalization services while delivering a better mobile experience, resulting in higher levels of service adoption, usage and operator profits.”


With the addition of Groove Mobile, LiveWire Mobile's personalization products and services are now deployed in 42 operators around the world reaching more than 260 million subscribers, including 15 million active subscribers.


Strategic Reasons for LiveWire Mobile's Acquisition of Groove Mobile
1) Triples LiveWire Mobile's addressable market –With an integrated suite of personalization services, LiveWire Mobile is now in a position to capitalize on a much larger market opportunity. The market for ringbacks alone is expected to be $2.9B in 2008, while the market for mobile music personalization services, which includes ringbacks, ringtones, full track downloads and subscription music services is estimated to be $10.7B in 2008, growing to $17.5B in 2012, according to Juniper Research.


2) Ability to deliver an integrated music and video solution