Expanding its focus and revenues, mobile services provider Lightbridge
will buy InfoSpace’s
online payment business for $82 million in cash.
The purchase includes the facilities, staff and intellectual property of InfoSpace’s Authorize.Net unit, which was founded in 1996 — the very early days of e-commerce.
In addition to online credit card processing, Authorize.Net also enables customers to handle electronic check transactions through an automatic clearinghouse system, debiting funds directly from a consumer’s bank.
The operation reported 2003 revenue of $27.8 million last year, with approximately 91,000 small- and medium-sized merchants using the systems, which are sold through a network of resellers.
“We think we’re in the early stages of a growing market opportunity,” Pamela D.A. Reeve, CEO of Burlington, Mass.-based Lightbridge, said in a conference call today.
Industry watchers agree. According to Celent and The Nilson Report, total expenditures for online transactions by U.S. customers using card-based systems grew from $1.9 billion in 2000 to $8 billion last year. By 2005, the total is forecast to reach $12.5 billion.
Lightbridge said its risk and fraud assessment products for mobile carriers and online businesses will match up well with Authorize.Net’s payment offerings. The products will be melded after the deal closes in the fourth quarter, provided the merger passes muster with regulators.
Authorize.Net competes with a number of firms, including Cybersource
, as well as smaller privately held firms, Reeve said.
Bellevue, Wash.-based InfoSpace said it’s happy with Authorize.Net’s performance (the unit is profitable), however, it doesn’t fit into its narrowed focus on search and directory services. The added cash and lower expenses will help InfoSpace concentrate on its core businesses.
In other Lightbridge news, the company reported fourth-quarter revenues of $30.7 million, up slightly from $30.6 million in the same period a year ago. Results were helped by slightly stronger transaction volume and increased consulting and services fees. Net income was $844,000, or 3 cents per share, compared to $1.2 million or 4 cents per share in 2002.