The News

First Half 2006 Revenues Expected To Drop Dramatically

18/05/2006

Alain Blancquart resigned as Chairman and CEO; Jean-Claude Martinez appointed CEO for the interim period

DUEBENDORF-ZURICH, Switzerland – May 18 , 2006 – Esmertec™ – (SWX: ESMN), a leading provider of world-class software solutions and services for the telecommunication, interactive multimedia and consumer electronics markets, announces today it expects revenues for the six months ending June 30, 2006 will be substantially lower than previously indicated. Compared to revenues of US$20.1 million for the six months ended June 30, 2005, the expectation for the same period in 2006 is significantly below US$10 million. This development is due to a sharp price decline in the embedded Java business of the mobile phone market, and the management decision to focus more on shorter term contracts, which reduce financial risk but result in lower revenues.

On the earnings side, the company expects a high loss in the first half of 2006, even before possible impairment losses on intangible assets. Operating expenses are expected to be stable compared to the second half of 2005 and on target, and existing customers continue to pay based on quarterly shipments.

Alain Blancquart, Chairman and CEO of Esmertec, resigned today from his position, effective immediately. Hans-Ulrich Müller, Vice Chairman of Esmertec's Board of Directors comments, "Alain did a tremendous job in bringing this company from near zero to US$40 million revenue in only three years. After reaching this point and taking the company public, Alain decided to move to another phase in his career. The Board thanks him for his vision and energy since joining the Company in 2002, and for taking Esmertec to a leading market position with its best-in-class Java software solutions."

Jean-Claude Martinez (52), COO and President of Esmertec's Mobile Operator Division, has been appointed as CEO for the interim period. Mr. Martinez has over 20 years of international sales, marketing and strategic development experience in the IT industry. He was brought in by Alain Blancquart three years ago and will now take the lead on the current international and highly qualified management team of the Company. As reported earlier this year, the Company will extend its operations beyond the embedded software market, and consequently reduce dependency on a single market segment. The business strategy will also focus on developing software solutions and services for mobile operators, mobile advertisers and game developers.

The Company will hold its Annual General Meeting tomorrow at 1000hrs CET in Zurich/Switzerland (Hotel Renaissance, Munot 1 & 2, Talackerstrasse 1, 8152 Glattbrugg).

 

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.

About Esmertec
Esmertec is a leading provider of world-class software solutions and services for telecommunication, interactive multimedia, and consumer electronics markets. Engineered for smallness and mass consumption, Esmertec's wireless Java ME solutions, mobile applications and object-oriented software platform (OSVM™) are developed to extract maximum performance from hardware environments. Esmertec Cellicium’s premier mobile browsing solutions, applications and services are designed to bring interactive mobile services to mobile operators. Founded in 1999, Esmertec is a global company headquartered in Zurich-Switzerland with subsidiaries located in China, Denmark, France, Japan, South Korea, the UK and the USA, and representative offices in Taiwan and South Korea.

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

Esmertec is a trademark of Esmertec AG.