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ERG cuts free from Motorola

ERG cuts free from Motorola

Australian smartcard vendor ERG has ended an alliance it formed three years ago with Motorola to cooperate on selling smartcard products and services.

"ERG will assume responsibility for all existing projects and those currently being pursued by the alliance," ERG said in a statement. "All revenue and earnings from these projects will flow to ERG."

ERG said it initiated the break and will pay Motorola $46 million in cash to reacquire the 13 per cent stake which Motorola owns in ERG.

In the statement, ERG said it has developed a strong financial position and capability to support its global smartcard aspirations on its own. This contrasts with its position in 1997, when ERG needed to strengthen its balance sheet and expand its capacity to support a number of new projects, ERG said.

The two companies will continue to cooperate and maintain a relationship in support of current customers, according to the statement.

ERG is a specialist in smartcard-based fare collection projects, but is making a push into the broader multi-application smartcard market, the company said.

The company's boldness in going it alone was not shared by investors. On a day when the company announced a 4 per cent rise in half-year revenues to $184 million, its share price fell 24 per cent on the Australian Stock Exchange, to end Monday's trading down $0.61 at $1.87.


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