The News

Esmertec Announces Sale of Majority Stake in Japanese Subsidiary

09/10/2006

Local management takes a 62% Stake in Esmertec KK (Tokyo) in management buy-out

DUEBENDORF-ZURICH, Switzerland - October 9, 2006 – Esmertec™ (SWX: ESMN), a focused provider of software and services to communications device manufacturers and mobile telecom operators, announced today that the management and employees of Esmertec KK (Tokyo) have formed a partnership and have purchased a 62% stake in Esmertec KK, Esmertec’s subsidiary in Japan, reducing Esmertec AG’s interest in the Japanese company to slightly under 20%.  The remaining shares in Esmertec KK continue to be held by certain sellers of eValley, a predecessor company to Esmertec KK.  The transaction is effective as of September 29, 2006. 

The sale of the majority stake in its Japanese subsidiary is consistent with Esmertec’s strategy of focusing its global sales efforts through direct sales channels in strategic markets.  The management buy-out will support Esmertec in its efforts to optimize its cost structure while efficiently addressing the Japanese market through a dedicated reseller who knows Esmertec’s products and markets.  Consequently Esmertec KK will continue to be the exclusive reseller of Esmertec Mobile and Multimedia software products in Japan.

“The management buy-out is a great opportunity for our management team to continue to build a successful business from a solid base”, stated Naoki Iizuka, CEO of Esmertec KK.  “There is a strong and growing market opportunity for an embedded software solution provider in Japan and our technology and products are the best fit for this market.”

Jean-Claude Martinez, CEO of Esmertec AG, commented: “This transaction allows us to focus our resources on key markets where we continue to strengthen our sales force.  Japan remains an attractive market and we will continue to cooperate with Naoki Iizuka and the Esmertec KK team in the future.  Our existing customers will experience the same high service level they have been receiving from Esmertec.”

The purchase of Esmertec KK shares was financed by a combination of cash and debt.  Both parties have agreed not to disclose the financial details.  The transaction is not expected to have any material impact on Esmertec AG’s financial results for the year ending December 31, 2006.

This communication contains forward-looking statements based on current expectations and assumptions of the company’s management only, and involve 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, Jbed and OSVM are trademarks of Esmertec AG. Java is a trademark of Sun Microsystems, Inc. Other names may be trademarks of their respective owners.

About Esmertec
Esmertec is a focused provider of software and services to communications device manufacturers and mobile telecom operators.  The company provides software platforms that enable the deployment of content and applications in devices and over servers.  Customers include mobile telecom operators and manufacturers of mobile handsets, set-top boxes and interactive televisions.  Esmertec's software and service capabilities excel with its reliability as well as fast and local execution.  Founded in 1999, Esmertec is headquartered in Zurich, Switzerland with subsidiaries in China, France, Japan, South Korea, and the USA, and offices in Taiwan and the UK.  Since 2005, Esmertec has been listed on the SWX Swiss Exchange (ESMN). 

Media contact
Leng Stricker-Wong
Phone +41 44 823 8918
lstricker@esmertec.com

Investor relations contact
Deborah Choate
Phone +41 44 823 8954
dchoate@esmertec.com