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Digi ventures into M2M with MobiApps asset acquisition

Posted: 18 Jun 2009 ?? ?Print Version ?Bookmark and Share

Keywords:satellite? M2M? communications?

Digi International Inc. has purchased all the assets of the U.S., Indian and Singapore affiliates of MobiApps Holdings Pte Ltd, a developer of machine-to-machine (M2M) communications technology, focusing on satellite, cellular, and hybrid satellite/cellular solutions.

MobiApps employs 63 people in India, Singapore and the United States with a vast majority based in its India headquarters in Bangalore. The asset purchase positions Digi with satellite products and technologies that complement its wireless M2M strategy. MobiApps has a strong technology and product position in the Orbcomm satellite ecosystem.

"Our wireless M2M customers are increasingly asking for satellite as a communications option to complete their coverage model," said Joe Dunsmore, chairman, president and CEO of Digi. "We're looking forward to moving MobiApps products into Digi's strong global sales and distribution network. We believe satellite M2M will be a high growth opportunity for the foreseeable future."

MobiApps recently introduced a new generation of products based on its own custom designed and patented mixed-signal ASIC, which dramatically reduces the complexity and improves performance of satellite M2M system solutions. Satellite M2M applications include fleet management, marine vessel tracking, container tracking, agricultural monitoring, energy management, and remote field service applications. Satellite is especially suited to applications that cross country and continental boundaries, providing connectivity in very remote locations, and providing mission critical wireless backup solutions when cellular coverage is insufficient. MobiApps also has cellular and hybrid cellular/satellite products packaged with various asset tracking management services, including employee tracking, focused on markets in India and Southeast Asia.

MobiApp's India presence positions Digi to be much stronger in this targeted international growth market. MobiApps employs 53 people in India, including sales, marketing, and administrative staff, as well as approximately 30 engineers with strong wireless expertise. This cross-functional group of talented people provides a strong foundation for growth in India and Southeast Asia.

"MobiApps is known for its leading edge satellite technology products and solutions built around its patented mixed-signal ASIC. With the resources, scale and market presence of Digi now underpinning MobiApps' technology expertise, it will be in a position to take greater advantage of the growth opportunities that M2M markets offer around the world," said Taroon C. Kamdar, CEO, MobiApps.

"This acquisition is a very good strategic, cultural and financial fit for Digi and its shareholders," said Joe Dunsmore.

Good fit
Strategically, the acquisition of MobiApps satisfies two target areas in Digi's acquisition strategy by providing leading edge M2M satellite products and technologies, and providing a strong base of operations to grow Digi's wireless solutions business in India and Southeast Asia.

"The acquisition of MobiApps is pursuant to our stated five-year objectives of driving wireless to over 60 percent of our revenue base and growing international revenues to over 60 percent by the year 2013," stated Joe Dunsmore.

MobiApps has recently introduced new products that Digi expects to market globally and that are expected to provide high growth even in this difficult market environment. Digi expects the acquisition to be breakeven if all financial targets are reached in fiscal 2010. Digi expects high revenue growth on an annual basis over the five-year time horizon.

Digi expects to immediately functionally integrate MobiApps with current MobiApps CEO Taroon Kamdar facilitating the integration process with the Digi management team over the next several months.

The purchase price of $3 million is a cash transaction for substantially all of the assets of MobiApps. An additional $0.5 million may be payable at the end of fiscal 2010, contingent on the achievement of certain performance milestones.

Digi expects MobiApps to contribute in excess of $0.35 million in revenue for fiscal 2009, from date of acquisition. Digi anticipates MobiApps will contribute revenue in a range of $2.4 million to $3 million for fiscal year 2010.

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