TCS Sells Two Business Units (1/26)
Friday, January 26, 2007 | Comments
TeleCommunication Systems sold two of its three enterprise division units to strategic buyers in exchange for restricted stock in acquiring companies and earn-out arrangements. The enterprise division business units were acquired by TCS from Aether Systems in early 2004 and classified as discontinued operations in TCS' 2006 quarterly financial reports. The mobile finance unit, including the unit's U.S. and European operations, has been sold to Stockgroup Information Systems, a financial media company based in Vancouver, British Columbia, Canada. This transaction is expected to close by the end of the month. Assets of the mobile office unit doing business as mobeo have been acquired by MobilePro, a broadband telecommunications services company based in Bethesda, Md. This transaction closed earlier this month. Both subscriber-based business units had been transitioning from services based on data-only and pager-based networks and had generated operating losses for TCS during 2005 and 2006 as the books of customer subscriptions for updated offerings were rebuilt. While TCS is exiting the enterprise wireless data space, its election to take equity positions in the acquiring companies reflects its expectation that each operation presents opportunities for future growth and profitability. TCS received 1.5 million shares of Stockgroup and 9 million shares of MobilePro. The remaining TCS enterprise business unit is the mobile asset management division, which delivers proprietary proof-of-delivery and asset-tracking technology for logistics management customers using wireless hand-held devices. Preliminary results for this unit indicate that total yearly revenues grew from $6.5 million in 2005 to $10 million in 2006, and that the unit was breakeven to profitable in the fourth quarter. Arrangements for sale of this unit are progressing, and TCS expects the sale to be completed during the current quarter.

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