Contact: Peter Christy Scott Denne
As its core business of Wi-Fi roaming services grows, iPass plans to shed its managed network services division, which chalked up $33.2m in sales last year, down slightly from $33.4m the year before. We understand the company has already passed on an unsolicited offer from a private equity firm to buy its managed network services business, prompting it to hire Blackstone Group to run a broader effort to sell the division.
After a long sequence of revenue decline and profitless operation, iPass has been inching back toward growth. Since its beginnings as a dial-up access roaming service, the company has transitioned to include Wi-Fi , survived the brief over-exuberance around metro Wi-Fi, and then reengineered its roaming platform as Wi-Fi-only beginning around 2012. Revenue has declined as iPass phased out its legacy connectivity businesses, and the growth of its Wi-Fi services isn’t enough to offset the difference. Last year, the company posted $111.1m in revenue, down from $126.1m in 2012.
Its legacy connectivity business fell by $35.8m to $29.8 in 2013; however, the worst declines are likely behind it. The legacy business shrank sequentially by just $1m to $5m in the fourth quarter, while its Wi-Fi roaming business grew to $13m in the quarter, up from $9.1m a year earlier. Today, iPass has about $24m in cash and a sale of its managed network services business could double that amount.
We plan to cover the resurrection of public Wi-Fi access in a forthcoming 451 Spotlight.
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