Zim sells mobile gateway busines

Zim sells mobile gateway business

July 17, 2007

Ottawa's Zim Corp. is selling its Canadian mobile gateway technology, customer contracts and proprietary web-to-text applications to SilverBirch Inc. for approximately $265,000 in cash and shares.

Zim's mobile gateway technology, which connects mobile content owners to operator networks and allows mobile carriers to manage billing and provide various text-messaging services to customers, includes clients such as the Ontario Lottery and Gaming Corp., Pitney Bowes and Rogers Wireless.

Toronto-based SilverBirch Inc. will be paying $75,000 in cash on closing of the deal, and will pay an additional $100,000 cash and 500,000 common shares of SilverBirch after certain conditions are satisfied. Shares of SilverBirch, which develops, distributes and publishes cell phone games, closed at 18 cents each on the TSX on Monday.

"We are very pleased with this transaction as it is consistent with our business strategy of focusing on our current mobile content, Internet TV and database applications," said Zim's chief executive Michael Cowpland in a statement. "SilverBirch is the ideal purchaser for these assets as it will ensure the continuity and quality of our Canadian gateway services to our customers and partners going forward."

The company had earlier decided to move away from its short message service (SMS) aggregation business because of the increasing consolidation of the market and difficulty in competing.

Zim's technology allows mobile carriers to manage premium services such as SMS voting and stock chart updates on a customer's cellphone.

"It wasn't core to our business," Mr. Cowpland told OBJ in an interview.

The company said it was getting out of the wholesale side of the text-messaging business, where the profit margins are slim, but that it would continue to develop its mobile content division, as well as its other two applications.

Zim noted earlier that revenue for fiscal 2007 dropped by 38.9 per cent to $2.2 million US because of the losses in its text-messaging management division.

Mr. Cowpland had said in a previous statement that revenues were unlikely to improve because of declining sales in that segment.

He said today that no jobs would be affected by the sale, but rather there would be "more focus on the other three divisions."

He noted that Zim is currently working on expanding the programming for its Internet TV division and that the company had recently teamed up with VMWare to bundle its software with Zim's database application. As such, Zim's team is "steadily expanding" and the company is "always looking for new talent."

Source: ottawabusinessjournal.com