Product category:
Embedded Software and Operating Systems
News Release from: Esmertec
Edited by the Electronicstalk Editorial
Team on 03 March 2006
Acquisitions drain Esmertec's resources
Esmertec has published its financial results for the year ended 31st December 2005.
Esmertec has published its financial results for the year ended 31st December 2005 The company's 2005 results are marked by a few significant events
This article was originally published on Electronicstalk on 21 Aug 2002 at 8.00am (UK)
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In 2005, Esmertec acquired the mobile division of Coretek Systems in China and grew its staff strength from 162 to 306 employees.
In September 2005, the company completed its initial public offering on the main board of the SWX Swiss Exchange.
Total Esmertec Group revenues for the year were US $39.2 million, a 46.3% increase over 2004.
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Licence revenues increased by 48.6% to US $29.7 million in 2005 and service revenues increased by 39.5% to US $9.5 million.
The customer portfolio was balanced with only one customer representing more than 10% of revenues; that customer, a top-tier handset manufacturer, represented 19.3% of revenues.
Gross margin for the year was 62.2%, a significant improvement over the 55.5% gross margin realised in 2004.
Total Esmertec Group operating expenses were US $38.1 million, compared with US $20.3 million in 2004.
Operating expenses excluding the net increase in provision for bad debt, and depreciation, amortisation and impairment loss, totalled US $22.6 million compared with US $18.0 million in 2004, an increase of 25.6%.
Operating expenses increased significantly compared with 2004 due to the full-year impact in 2005 of the acquisitions of eValley (Japan) and OOVM (Denmark) in mid-2004, the acquisition of Coretek's mobile division (China) in the first half of 2005, and the subsequent ramp-up of Chinese and Japanese operations to meet expected customer demand in those regions.
Amortisation of intangible assets, including capitalised development costs, totalled US $5.5 million compared with US $1.8 million in 2004, the increase reflecting the amortisation of intangibles purchased in connection with the acquisitions of OOVM and eValley during 2004 and Coretek in 2005, as well as ongoing capitalisation of product development cost.
As of 31st December 2005, the company performed detailed discounted cash flow analyses for all categories of intangible assets and determined that based on these calculations there was a likely impairment of the value assigned to intellectual property acquired with eValley in 2004, resulting from a faster than expected transition of revenues in Japan from the sales products based on acquired technologies to sales of Esmertec products.
Consequently, an impairment loss of US $2.4 million has been recorded in the year ended 31st December 2005.
The net increase in the provision for bad debts was US $7.7 million in 2005 compared with US $497,000 in 2004.
The increase in the provision for bad debts reflects management's judgment of the risk of recoverability of amounts owed by certain Asian and European customers.
Esmertec is pursuing all avenues for settlements of the amounts due, including possible legal action in some cases.
Operating loss was US $13.8 million in 2005 compared with an operating loss of US $5.4 million in 2004.
Operating loss excluding the effects of the increase in the provision for bad debts and the technology impairment loss was US $3.8 million in 2005 compared with a comparable operating loss of US $4.9 million in 2004.
Total net loss was US $16.9 million for the year ended 31st December 2005 compared with a total net loss of US $8.9 million in 2004.
Net loss attributable to the equity holders of Esmertec was US $15.7 million in 2005 compared with a comparable net loss of US $9.7 million in 2004.
The loss per share attributable to the equity holders of Esmertec was US $(1.21) in 2005 compared with US $(1.02) in 2004.
Cash, cash equivalents and short term investments at 31st December 2005 totalled US $55.0 million compared with US $19.8 million at the end of 2004.
Accounts receivable, net of allowance for bad debts, was US $36.4 million at 31st December 2005 compared with US $27.9 million at the end of 2004.
All figures are reported in accordance with IFRS.
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