Last week’s deal to acquire Aliso Viejo’s Networks in Motion Inc. for $170 million likely is the biggest acquisition of a local technology startup this year.
The maker of navigation and local search software for phones and other mobile devices is being bought by Annapolis, Md.-based Tel-eCommunication Systems Inc. in a deal expected to close by month’s end.
The acquisition is a standout in a slow year for technology deals.
By the Business Journal’s count, the second biggest acquisition of a young tech company here this year was April’s $65 million buy of Aliso Viejo’s SiliconSystems Inc. by Lake Forest-based Western Digital Corp.
Others, including Irvine networking gear maker Aktino Inc., were acquired for undisclosed terms, though presumably for less than either Networks in Motion or SiliconSystems.
The biggest 2009 tech deal of any type—not just for a startup—was October’s sale of Santa Ana’s MSC.Software Corp. to Palo Alto-based private equity firm Symphony Technology Group LLC for $390 million.
Then there was the one that got away: Irvine-based Broadcom Corp.’s failed $912 million bid for Costa Mesa-based Emulex Corp.
Networks in Motion provides software for what’s known as “location-based services” for wireless phones and other handheld devices.
The software looks up maps and offers driving directions and searches for local businesses.
Newer versions touch on social networking with “friend finders” and “child trackers” that allow parents to keep tabs on their kids’ whereabouts via their phones.
Other features veer into entertainment, in-cluding searches for movies, reviews and local events.
TeleCommunication Systems, known as TCS, provides software and text messaging and location-based services for government and corporate customers.
TCS has about $300 million in yearly sales and had a recent market value of $425 million.
The acquisition “provides an ideal opportunity for us to achieve our goals of leadership in location-based services on a faster and much larger scale,” Networks in Motion Chief Executive Doug Antone said.
A spokesman declined to say what TCS plans for Networks in Motion’s local office and managers after the deal has closed.
TCS’ government unit provides software and other telecom services to the Department of Defense and to local law enforcement agencies.
On its commercial side, TCS has Motorola Inc. and France’s Alcatel-Lucent as customers.
Networks in Motion’s customers include Verizon Wireless, part of New York-based Verizon Commun-ications Inc., and other big wireless service providers.
In recent years, Networks in Motion has landed contracts with Verizon’s Alltel Wireless, Sprint Nextel Corp., AT&T Inc., United States Cellular Corp. and Sony Ericsson Mobile Communications AB, among others.
The company’s software also powers AAA Mobile, a navigation and trip-planning program used by the American Automobile Association.
And Networks in Motion runs YellowPages.com Mobile, a local business search program used on AT&T’s phones.
Own Brand
The company has spent the past year or so finishing its own brand of software, dubbed Gokivo Navigator, which can be bought at Research in Motion Ltd.’s BlackBerry App World and Apple Inc.’s App Store for $10.
Chief Executive Antone said he estimates that Networks in Motion has roughly half the market for mobile navigation software.
In 2007, Networks in Motion doubled its space in a move from Irvine to Aliso Viejo. It has some 150 local workers and offices in Sweden and Spain.
In October, the company ranked No. 5 on the Business Journal’s 2009 list of fast-growing private companies with sales growth of 717% for the two years through June 30.
For the 12 months through June, the company saw sales of $62 million, up from $7.6 million for the same period in 2007.
Networks in Motion was started in 2000 by husband and wife team Michael and Angie Sheha.
Both electrical engineers, they met at California Institute of Technology’s Jet Propulsion Laboratory.
The company had an angel round of funding from Stephen Petilli, co-founder of Pasadena-based Pivotal Technologies Inc., in 2000.
Irvine’s Broadcom Corp. bought Pivotal for about $243 million in 2000.
Petilli also knows the Shehas from the Jet Propulsion Lab.
After weathering the technology downturn in 2001, Networks in Motion got off the ground with a break in 2004.
It beat out 60 other companies in a contest run by online map kingpin NavTeq Corp.
The win got Networks in Motion additional startup money as well as free use of NavTeq’s map data for a time.
Networks in Motion raised a $6.5 million round of venture funding in late 2004 and a second $10 million round in 2006.
Antone was brought in by San Diego’s Mission Ventures, which led the second round. Other investors include Redpoint Ventures of Menlo Park and Sutter Hill Ventures of Palo Alto.
The company first turned a profit in early 2008.
