Esmertec expects double digit revenue growth for full year 2008 and operational profitability (EBIT) for the second half of 2008
Esmertec on track to finalize acquisition of Sagem Mobiles' software platform activities before end of year
Thomas Hornung, CEO of Esmertec, said: "Esmertec has continued to develop steadily in the third quarter of 2008 and the fourth quarter should confirm the trend. We expect double digit revenue growth for the full year 2008 and continued improvement in profitability. We plan to finalize the acquisition of Sagem Mobiles' software platform activities during the fourth quarter 2008. We also have a very solid basis for accelerated growth and profitability in 2009, and we are looking for achieving a quantum leap forward as a company".
Third quarter 2008 business report
In the Mobile & Multimedia Devices Segment, shipments by customers grew by +4.1% reaching 28.2 million units, compared to 27.1 million in the third quarter 2007. As of 30 September 2008, Esmertec's Jbed software has been shipped in over 289 million mobile phones and consumer electronic devices cumulated. Esmertec's market share of the total mobile phone market is at 9.1%.
The involvement in the Google-driven Open Handset Alliance is progressively bearing fruits, accelerated since the official launch of the first Google-phone (HTC G1 on T-Mobile USA network end of September 2008). In addition to further engineering contracts for the Open Handset Alliance itself, Esmertec has engaged advanced discussions with Tier One mobile manufacturers for the design of Jbed empowered Google-phones.
In the Mobile Operator Segment, Esmertec grew its mobile subscriber base by +52.4% from Q3 2007, with 157 million mobile subscribers having access to our Cellicium USSD offering as of 30 September 2008. Esmertec deployed its services within 2 additional operators during the third quarter, totalling 28 mobile operators in key regions like Europe, Africa, Middle East and Latin America. This demonstrates that Esmertec USSD services are gaining solid traction around the world, and highlights the recognition of the high quality of products and services provided.
The cumulated installed capacity of platforms reached 4,080 MPS (Messages Per Second), +162.4% from the 1,555 MPS deployed by Q3 2007. Such a significant growth, driven by the extension of capacity for the existing customer base, is to support increasing subscribers' usage and growing adoption of services.
Update on the acquisition of Sagem Mobiles' software platform activities
As previously announced, Esmertec has invited its shareholders to an Extraordinary General Meeting the 15th of December 2008 to vote on the increase of the authorized capital necessary to finalize the acquisition of Sagem Mobile's software platform activities. Final closing of the transaction is expected before the end of 2008, enabling Esmertec to integrate and develop these new activities from January 2009 on.
Highlight of the Sagem transaction:
- EBIT-profitable contract with Sagem Wireless for an aggregated guaranteed minimum revenue of EUR 51 million over three years.
- Immediate positive cash impact for Esmertec
- Transfer of Intellectual Property for a value above EUR 10 million (valued by an independent third party)
- Acquisition paid-off 100% in shares; EGM to be held December 15th 2008 to vote on the increase of the authorized capital by CHF 241'334.20 valid for a period of two years.
"We are reaching the final stage of this very important and attractive transaction which will accelerate the transformation of Esmertec into a major player of the mobile and multimedia devices industry", said Thomas Hornung, CEO of Esmertec. "Adding complementary products and services, we are able to develop new business opportunities in the mobile device market, significantly increasing our potential value per device enabled by our extended portfolio of technologies. In addition to this newly acquired IP and assets, representing several hundred man-years of development, Esmertec will continue to look for strategic opportunities to be the partner of choice of all the key players in the mobile and connected devices industry."
Quarterly shipments: Number of mobile & multimedia devices integrating Esmertec's Jbed engine sold by manufacturers in the quarter.
Cumulative shipments: Cumulated number of mobile & multimedia devices integrating Esmertec's Jbed engine sold by manufacturers over the years.
Market penetration: Esmertec's quarterly shipments divided by the total industry's quarterly shipments. Note that only around 65% of these devices integrate the Java technology.
Committed shipments ratio: Ratio of Esmertec's quarterly shipments related to committed volume contracts (i.e. accounted in revenues during the previous quarters) divided by total Esmertec's quarterly shipments.
Unit backlog: Total volume of mobile & multimedia devices related to committed volume contracts that have not been yet shipped by Esmertec's customers.
Number of customers: Total number of operators using Esmertec's mobile services platforms. An operator is recognized as a customer at the time when the PAC (Provisional Acceptance Certificate) is received (time when we account all license and hardware revenue in IFRS).
Number of subscribers: Cumulated number of subscribers of all Esmertec's mobile operator customers.
Cumulated installed capacity: Sum of all platform capacities installed for our customer base. Metrics expressed in MPS - Messages Per Second.
Average capacity per million of subscribers: Cumulated installed capacity divided by the number of subscribers.
Maximum capacity per million of subscribers: Highest ratio of cumulated installed capacity divided by the number of subscribers among the customer base.
This communication contains forward-looking statements based on current expectations and assumptions of the company's management only, and involves certain risks and uncertainties. The forward-looking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected, or projected. Esmertec disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Esmertec is a leading provider of Java(TM) in-device engines and mobile services platforms. The company's high-performance solutions enable consumers to easily discover and access content and services on any mobile phone. Esmertec's customer database has grown to more than 90 customers, including mobile operators and manufacturers of mobile handsets, set-top boxes and interactive televisions. Its in-device engines power 1 out of 10 new phones (shipped in more than 289 million devices) and its USSD mobile services platforms serves more than 157 million mobile subscribers world-wide.Esmertec is a founding member of the Google initiated Open Handset Alliance, delivering customized solutions for Android, the mobile platform. Founded in 1999, Esmertec is headquartered in Zurich-Switzerland with subsidiaries in China, France, South Korea, and the USA, and offices in Taiwan and the UK. Since 2005, Esmertec is listed on the SWX Swiss Exchange (ESMN). www.esmertec.com
Esmertec and Jbed are trademarks of Esmertec AG. Java is a trademark of Sun Microsystems Inc. Other company, product and service names may be trademarks of their respective owners