Esmertec Moves Beyond the Client

Esmertec (SWX: ESMN) has acquired a company that will help it address the entire mobile phone value chain with enhanced capabilities targeting carriers. The acquisition of Cellicium will provide the basis for the company's Mobile Operator Division.

We just got off the phone with a major equity analyst who wanted to talk about the Linux and Java businesses. Then we saw this release. From our perspective, the mobile Java business comes down to just a couple of companies with Esmertec being one of them. But client side Java can be tough business, companies in this market need to add value around the JVM either on the client or up and down the carrier value chain. It is not enough to just deliver a JVM. With this move Esmertec is working on the later.

Highlights from the release:

Cellicium, founded in February 2001, operates in Bagneux outside of Paris and is a premier provider of mobile browsing solutions, applications and related services to mobile operators. In the new division, Cellicium will continue delivering these carrier-grade solutions and services to GSM operators.

Jean-Claude Martinez, President and COO of Esmertec, has been appointed to take on the additional responsibility as President of this division, effective immediately.

Esmertec has taken a 100% equity stake in Cellicium. The initial purchase price is approximately EUR12.5 Million in cash, with an additional estimated EUR9.5 Million conditional payout in 2006 and 2007. The payout is based on earn-outs, of which 70% will be in cash and 30% in Esmertec shares. Cellicium is a profitable and cash flow positive company.