u-blox continued growth in Asia, but decreased sales in Americas and Europe due to economic downturn

During this period, u-blox successfully implemented significant strategic initiatives to expand its total available market. Once a pure-play hardware GPS vendor, u-blox is now a provider of complete wireless and positioning solutions that achieve industry-leading performance by leveraging the use of semiconductor, packaging and software technologies.

 

Through the successful acquisition and integration of Neonseven, an established technology provider for embedded mobile communications, and Geotate, a Software GPS specialist, the company has gained immediate access to new customers and markets where its technology offering for both location-awareness and wireless communications are crucial:

 

• GPS and wireless synergies means u-blox now provides comprehensive technology for mass-market consumer products such as location-aware Netbooks, Smartphones and Trackers as well as for vehicle fleet management, anti-theft and emergency eCall applications 
• New wireless products now allow u-blox to participate in the fast growing global mobile Machine-to-Machine (M2M) market which includes wireless monitoring systems for security and surveillance and telemetering 
• Software and innovative online services enable u-blox’ customers to develop ultra low-power handheld devices such as instantaneous geotagging cameras and long-life GPS loggers 
• u-blox continues to develop and maintain crucial software protocol stacks to allow the company to bring cutting-edge 2G and 3G wireless solutions to market

 

By supporting existing customer’s product innovation with more solutions, and by entering into new markets where the company was not present before, u-blox is now in an excellent position for long-term growth.

 

Logistics and Infrastructure

By the end of June 2009, both acquisitions have been successfully integrated into u-blox. This has included the alignment of all logistics, purchasing, finance, manufacturing and quality processes, consolidation of customer base the company’s CRM system, training of all sales and technical support staff, importation and re-branding of all new products and services, and consolidation of the entire operation under a new Corporate Identity including new website, sales documents and product catalog.

 

Operations

First half of 2009 saw several very positive developments:

• Launch of our first GSM/GPRS module LEON based on Neonseven technology
• Three quarters of existing GPS module customers successfully migrated to the new u-blox 5 platform
• A large number of design-ins of the new AMY small-form factor GPS module on a global basis, with the first customer announcement made in the USA for the SPOT personal satellite messenger
• All Neonseven and Geotate R&D staff fully integrated into the u-blox organization and restructuring of Geotate completed
• Expansion of Neonseven capabilities to support 3rd generation mobile technology

 

Finance

• Both acquisitions are fully consolidated as of April 1st, 2009
• Sales continued to grow in Asia Pacific, +14.4% as compared to the first half year 2008. In the Americas the company saw a decrease of sales by -11.5%, and in EMEA by -42.9% as expected due to the economic downturn
• Good improvement of gross margin from 39.8% in the first half year 2008 to 54.0% in the first half year 2009, due to better-than-anticipated customer migration to u-blox 5 and strong growth in chipset sales
• Operating expenses were according to budget
• Inventories reduced to desired level, in-line with current business size

 

 

(in CHF 000s)	Jan. - June 2009 (unaudited)	Jan. - June 2008 (unaudited)	Jan. - Dec. 2008 (audited)
Sales	34'131	40’322	74’506
Cost of sales	-15'713	-24’256	-42’710
Gross profit	18'418	16’066	31’796
Distribution and marketing expenses	-6'226	-5’642	-11’434
Research and development expenses	-7'664	-4’564	-9’277
General and administrative expenses	-2'304	-1’499	-2’813
Other income	33	155	139
Profit from operations (EBIT)	2'257	4’516	8’411
Financial income	165	1’205	2’268
Finance costs	-610	-1’276	-7
Profit before income tax (EBT)	1'812	4’445	10’672
Income tax expense	-274	-754	-1’911
Net profit	1'538	3’691	8’761
Earnings per share (in CHF)	0.25	0.59	1.40
Diluted earnings per share (in CHF)	0.25	0.59	1.40

 

 

 

Outlook

The stable revenue development over the past several months, combined with early indicators of recovery in the Americas and Europe leads u-blox management to believe the lowest point of the recession has past. Asia will remain on track for growth thanks to favorable economic conditions and our continued geographical expansion.

 

The GPS industry in general is evolving towards convergence with both wireless and Internet technologies, a trend that is expected to continue and accelerate, and one that u-blox is well prepared for with the recent acquisitions and latest u-blox 6 receiver generation. The market for embedded wireless communication technology remains very large and growing, and u-blox is now a player in this sector with immediate access via our existing customer base.

 

The company is optimistic that as a result of the acquisitions and significantly expanded product portfolio, market launch of key new products in the coming months, plus access to large new market sectors and business models leaves u-blox well positioned for 2010.

 

Financial Report:

www.u-blox.com/sites/default/files/annual_report_2009.pdf

 

Investor Presentation:

www.u-blox.com/sites/default/files/documents/half_year_results_2009_presentation.pdf