Over the past decade, FusionOne has grown into a top provider of backup and synchronization software for mobile devices. However, building the company has taken at least $140 million in venture capital. Its list of investors includes BlueRun Ventures, El Dorado Ventures, Hewlett-Packard, J.P. Morgan Partners, Credit Suisse, Essex Financial Group, J.&W. Seligman, Pyramid Technology Ventures, Scudder Investments, Vesbridge Partners and Wit Soundview.
Unfortunately, those investors will not get a positive return -- even though FusionOne agreed this week to be purchased by Synchronoss Technologies (SNCR), which describes itself as the "leading global provider of on-demand transaction management software platforms for connected devices." The deal comes to just $40 million: $32 million in cash and $8 million in stock. There is also an earnout that could amount to as much as $35 million if certain targets are met by 2011, though the targets were not publicly disclosed.
All in all, it's an attractive price tag for Synchronoss in light of the strong synergies and revenue potential.
A Look at FusionOne
When FusionOne started, the company focused primarily on software for the desktop. But this changed in 2001, with its introduction of a mobile device product. A few years later, FusionOne struck a key deal with Verizon (VZ) to allow for a fully automatic mobile content backup service.
From there, the company kept innovating. Now, FusionOne's technology has the capability to sync data from one mobile device to another. For example, you can now use its software to transfer your address book, email list, photos and even Facebook friends. When you go to a retailer and buy a new phone, its often FusionOne's software that mediates the quick transfer of the data from the old one.
Of course, developing this technology was not an easy process. In fact, FusionOne has over 40 issued and pending patents. But its technology supports more than 600 cell phone models across various platforms.
A Perfect Fit?
Synchronoss develops a technology called ConvergenceNow Plus+, which allows for mobile subscriber activation of connected devices like smartphones, eReaders and netbooks.
Business has been strong, especially since Synchronoss powers AT&T's (T) activation process for Apple's (AAPL) iPhones. In the latest quarter, revenues increased 19% to $35.1 million.
The FusionOne purchase is expected to contribute a substantial $8 to $10 million in additional revenues, as well as be at least neutral to non-GAAP results. Apparently, the company is on a fast growth ramp and should benefit from the eventual integration of its products into the ConvergenceNow Plus+ platform.
More importantly, the FusionOne deal may help bring Synchronoss new customers and diversification. This is certainly key as Synchronoss still gets 66% of its total revenues from AT&T.
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