Business develops in line with expectations, sustained by positive perspectives for Q2 2008

DUEBENDORF-ZURICH, Switzerland – June 2, 2008 – Esmertec™ (SWX: ESMN), a leading edge provider of software platforms, applications and services to communications device manufacturers and mobile telecom operators, announces that first quarter 2008 performance is in line with expectations: mobile and multimedia devices shipments grew by +33.4% and mobile subscriber base grew by 90.1% compared to Q1 2007.

Thomas Hornung, CEO of Esmertec, said: “In our fast changing markets, we maintained our leadership thanks to the strong relationships we have created with all of our customers. The launch of new products and services in the first quarter sustains our growth potential for 2008. Our new MAX solution – Mobile Application eXplorer – complements our Cellicium USSD offering with enhanced graphical user interfaces and unique accessibility features. Jbed for Multimedia strengthens our Java™ application engine portfolio with the aim to accelerate our diversification in the Blu-ray and home multimedia markets. Based on current market and competitive conditions, I am confident that Esmertec will achieve profitable growth for 2008”.

In the Mobile & Multimedia Devices Segment, shipments by customers grew by +33.4% reaching 26.5 million units in the first quarter 2008, compared to 19.9 million in the first quarter 2007. As of 31 March 2008, Esmertec's software has been shipped in over 233 million cumulated mobile phones and consumer electronics devices. This growth is the result of improved penetration of Esmertec’s technology in a greater number of device models.

Esmertec’s market share of the total mobile phone market increased from 7.7% in Q1 2007 to 9.1% in Q1 2008. The slightly lower performance recorded in Q1 2008 compared to Q4 2007, is mainly due to a lower market share in the device markets of some of Esmertec’s customers and to the postponement in H2 2008 of the commercialization of devices integrating Esmertec’s Jbed engine.

Based on current market conditions, and considering the traditional seasonality of our business, favoring the second semester, and a promising order intake, Esmertec expects its Mobile & Multimedia Devices activities to continue to develop positively in 2008.

In the Mobile Operator Segment, Esmertec almost doubled its subscriber base compared to Q1 2007. As of 31 March 2008, 138 million mobile subscribers had access to Esmertec’s Cellicium USSD solution through 24 mobile operators worldwide, compared to 72.6 million mobile subscribers in Q1 2007.

Esmertec’s USSD services are quickly adopted and regularly used by the majority of the operators’ subscriber as they are convenient, accessible by simply dialing a short code (ex: #121#) and offering a large range of content and services: mobile account top-ups, subscription to options, email, mobile payment etc.

Consequently, Esmertec sold additional platform capacity, measured in Message Per Second (MPS) to both its existing and new customers to support the increasing subscribers’ usage and adoption. The total installed capacity deployed for Esmertec’s customers reached 2,375 MPS in Q1 2008, compared to the 1,115 MPS in Q1 2007, an increase of +113%.

Esmertec anticipates gaining new customers in 2008, starting in Q2 2008 with deployments in new countries, as well as a strong increase in the total installed capacity.

In order to improve the understanding of its activities and outlook, Esmertec introduced new business indicators.

Mobile & Multimedia Devices Segment

2007 2008 YoY Growth
Q1 Q2 Q3 Q4 Q1 Q1oQ1
Quarterly shipments
(million units) 19.9 26.4 27.1 32.8 26.5 33.4%
Cumulative shipments
(million units) 120.2 146.6 173.7 206.5 233.0 93.8%
Market share
(%) 7.7% 9.6% 9.4% 9.8% 9.1% 18.2%
Committed shipments ratio (%) 96.3% 55.4% 24.5% 22.0% 28.1% N/A
Unit backlog
(million units) 32.8 32.3 31.8 34.5 33.2 N/A

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 share: 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.

Mobile Operator Products Segment

2007 2008 YoY Growth
Q1 Q2 Q3 Q4 Q1 Q1oQ1
Number of customers
14 20 20 24 24 71.4%
Number of subscribers
(Million)
72.6 100.0 103.0 125.0 138.0 90.1%
Cumulated installed capacity (MPS)
1,115 1,535 1,555 2,305 2,375 113.0%
Average capacity per million subscribers (MPS per subs)
15.4 15.4 15.1 18.4 17.2 12.1%
Maximum capacity per million subscribers (MPS per subs)
50 80 50 53 50 N/A

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 subscriber: Cumulated installed capacity divided by the number of subscribers.

Maximum capacity per million of subscriber: 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.

About Esmertec
Esmertec is a leading provider of Java™ 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 233 million devices) and its USSD mobile services platforms serves more than 138 million mobile subscribers world-wide.

Esmertec is a founding member of the 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

Financial calendar
Half-Year 2008 Results 25 September 2008

Investor relations contact
Dr. Konrad Hurni, CFO
Phone +41 44 823 8900
khurni@esmertec.com
Media contact
Jan Gregor IR Firm
Phone +41 43 244 8154
esmertec@irfirm.biz