Peter Adderton, who cofounded Boost Mobile LLC and grew its revenue to more than $500 million before its sale to Nextel Communications, is planning to move his publicly traded technology company from Los Angeles to Orange County.
The Newport Coast resident and chief executive of Mandalay Digital Group Inc. is eyeing new headquarters near John Wayne Airport, the Irvine Spectrum and Aliso Viejo as the company expands its workforce and product offerings.
“I’m relocating the headquarters and everybody down into Orange County,” Adderton said during a recent lunch at Pelican Grill. “We don’t need to be in Hollywood.”
Mandalay Digital primarily targets wireless carriers and cellphone manufacturers with a suite of services, including digital content distribution and licensing, automated and customized software uploads, embedded smart search engines, e-commerce and mobile operating system development.
The company expects to post about $30 million in revenue this year. It employs some 130 globally, with additional offices in Australia, Germany and Israel—all picked up through its roll-up strategy.
About 20 people work in Los Angeles.
Adderton is a native of Australia and an avid mountain biker who was drawn to OC’s picturesque coastline and rugged terrain when he first came to the U.S. more than a decade ago.
“No Better Place”
He said he’s moving the company for a more pragmatic reason: OC offers a more stable workforce than Los Angeles.
“There’s no better place in the world—you can’t pry me out of here,” Adderton said. “The people in Orange County, as far I’m concerned, are not as transient. They’re happy with a really good job and want to stay for the long term. In L.A. everyone is bouncing to the next opportunity.”
Incoming executives often cite the area’s quality of life as a top reason for relocation, despite the high cost of doing business here. Working closer to home is another draw, especially for a commuter who pilots his own helicopter to Studio City a few times a week.
“If there was a nicer place to live, I would be living there,” said Adderton, who certainly could afford to after securing big payouts in several company exits. “It’s one of the special places in the world.”
The move, expected to be announced in the coming weeks, would be a small coup for Orange County as it gains another public company in the technology sector after losing several in the past few years to consolidation and acquisitions.
Mandalay Digital’s market value was about $81 million last week. The company, a unit of Mandalay Entertainment Group, has lost more than $40 million its past three fiscal years, ending in March. It changed its name from NeuMedia Inc. in early 2012 after a restructuring to better capture its mobile content and distribution business.
Entertainment executive and investor Peter Guber is one of its largest shareholders, with a stake of more than 2%. Guber is chairman and chief executive of Mandalay Entertainment Group, which runs movie and TV studios and owns minor league sports franchises. He also is a minority owner of the Los Angeles Dodgers and co-owns the Golden State Warriors.
Adderton joined the company in late 2011 after NeuMedia acquired his Los Angeles-based startup, Digital Turbine, which developed some of the company’s legacy technologies, including an embedded search engine in mobile phones that allows brands to control their messages in an effort to take a slice of the market from search giants Yahoo! and Google.
In one example, an artist like Rihanna would be able to interact with mobile phone users using the company’s IQ search bar to offer special concert or album deals.
“This is four or five years in the making,” Adderton said. “This is what I sold into Mandalay.”
Under this scenario, Mandalay could incorporate a revenue-sharing agreement with the brand or offer premium search placement, as Google does with sponsored links.
The company has deals with 78 wireless carriers and has more than 1.5 billion customers globally.
Adderton made his mark building brands and has several exits under his belt in the telecom and technology industries.
He founded Boost Mobile in Australia and New Zealand in 1999. Adderton won over Nextel executives in the U.S. with his idea to market no-contract mobile phone subscriptions to younger users in urban areas with a $1-a-day plan for unlimited push-to-talk services.
11th Hour
The joint venture, which brought the brand to the U.S and Irvine in 2001, was nearly derailed at the 11th hour during the throes of the dot.com bust.
Adderton received a text message from Nextel Chief Executive Tim Donahue minutes after Adderton’s plane landed in New York after a long flight from Australia saying the deal was off.
Adderton had brought his family, as well as two others from his management team.
“I didn’t tell them because they would have freaked out,” he said.
Adderton called Donahue and told him it would cost the company more to leave the deal than stick it out. Donahue told him he had to win over the company’s bankers in New York.
“I was a good enough salesman, and we sold them,” Adderton said.
Boost Mobile was a key element in Overland, Kan.-based Sprint Corp.’s $36 billion takeover of Nextel in 2005, creating the third largest wireless carrier in the U.S. at the time, behind Cingular Wireless and Verizon Wireless.
Boost Mobile was the only Nextel brand to survive as the industry underwent massive consolidation and failures over the next decade.
“Boost is still growing and still has a great brand affiliation,” said Adderton, who remains the company’s largest shareholder in Australia. “The Nextel brand is gone.”
