Despite the enormous opportunities for growth in mobile marketing today, stark reminders emerge every now and then that serve to reiterate a sober reality for some — not all players survive the challenging game of mobile marketing by playing alone.
One such reminder came into focus last week, as mobile marketing firm Hipcricket announced that it is being acquired by SITO Mobile for $4.5 million.
In the days leading up to the acquisition announcement, Hipcricket filed for bankruptcy protection.
Hipcricket CEO Todd Wilson stated in a news release that the court-approved sales of assets will likely prove to be the “most viable option to protect our human capital and maximize recovery for our stakeholders.”
“Over the past year, management has worked diligently to optimize Hipcricket’s expense structure and move Hipcricket toward profitable and sustainable revenue growth,” Wilson said. “While we have implemented various cost-cutting initiatives and explored a wide variety of strategic alternatives, the benefits of these efforts could not be fully realized and liabilities continued to mount.”
According to published reports, Hipcricket’s present assets will likely not be adequate for overcoming the company’s present debt. Consequently, stockholders won’t be getting a distribution from proceeds of the asset sale. The common stock “will be extinguished upon consummation of the Chapter 11 plan.”
But with promises that current client business won’t be hampered, the companies are optimistic about a new beginning.
“By joining together Hipcricket and SITO Mobile, we will effectively be creating a market leader in mobile marketing and location based mobile advertising,” said Jerry Hug, Chief Executive Officer of SITO Mobile. “We look forward to working with Todd and the rest of the Hipcricket team.”
