Blackberry Competitors, SEVEN Networks To Merge With Smartner

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SEVEN Networks Inc. and Smartner Information Systems Ltd., two closely held niche players in the wireless e-mail sector, plan to announce a merger as early as next week, sources told Dow Jones. SEVEN, Redwood City, Calif., provides software that allows wireless carriers to provide subscribers with real-time access to e-mail. Customers include Cingular Wireless (CIW.XX), Sprint Corp. (FON) and NTT Docomo Inc. (DCM). Helsinki-based Smartner provides “push” wireless e-mail services to wireless carriers, though it’s considered a high-end device maker. Customers include Vodafone Group PLC (VOD), Singapore-based StarHub Ltd. (T54.SG) and Germany-based E-Plus Mobilfunk GmbH & Co.


Officials from SEVEN declined to comment. Officials from Smartner weren’t immediately available to comment.

In a research note Wednesday, GMP Securities analyst Ray Sharma said Smartner enjoys a strong presence in Europe for high-end wireless data solutions and complements SEVEN’s unique business model, which allows carriers to host enterprise solutions at a low cost to users.

Smartner has 24 carrier partners plus 120,000 subscribers, including 70,000 additions in the fourth quarter alone, Sharma said. The analyst said Smartner also boasts several big-name device-maker partners, including Nokia Corp. (NOK) and L.M. Ericsson Telephone Co. (ERICY).

SEVEN recently indicated that its software is commercially deployed in nine of the world’s 20 largest carriers, Sharma said. He noted that the company attempted an initial public offering in April 2004, which was subsequently pulled. At the time, the company had $7 million in 2003 revenue with a $13 million net loss, he said. It was reported to be seeking in excess of $100 million in funds, he said.

Sharma said he doesn’t believe the combined company would be a competitive threat to Research In Motion Ltd. (RIMM), maker of the BlackBerry wireless handheld device, over the near term. However, longer term, he said he does expect the broad availability of competitive services will put pressure on the monthly royalty capability for Research In Motion. Waterloo, Ont.-based Research In Motion charges carriers about $7-$10 a month per BlackBerry subscriber.

Sharma doesn’t own Research In Motion shares. GMP has an investment-banking relationship with the company.

Company Web Sites: http://www.seven.com, http://www.smartner.com
-Stuart Weinberg, Dow Jones Newswires; 416-306-2026;
stuart.weinberg@dowjones.com