Birdstep Technology (NO) - CEO letter to shareholders - September 2006

 

Ladies and Gentlemen,

We are now in October, with an exiting autumn ahead of us where the full year results for Birdstep will be decided. We will also take actions we believe will strengthen the company long term. This letter to all of our shareholders will thus focus on company strategy and communication and how recent events form part of what we believe in long term.

 

In order to further improve company communication, we will launch our new website during the month of November. Our strategy and objectives will be fully visible and regularly updated. We are also meeting industrial analysts and financial analysts in order for the market to better understand our offering and our market position. Two recently published reports on Birdstep can be found on our website; an industrial analysis by the 451 Group and a financial analysis by Bernstein.  

 

Monday this week we announced that we are setting up a joint venture with TeleVenture, owned by Telenor, on the development of mobile VoIP. As you all know, we are already working towards major mobile phone manufacturers to make mobile seamless connectivity (SmartRoaming) an integrated part of mobile phones equipped with Wireless LAN.

 

During 2006, we have through marketing agreements with Nokia and Sony Ericsson tested our unique SmartRoaming application on the first generation mobile phones equipped with Wireless LAN. Our objective is that when the second generation of Smartphones is launched to market by early 2007, Birdstep SmartRoaming will be an integrated part of mobile phones equipped with Wireless LAN. About 10 000 000 such Smartphones are estimated to be sold in 2007.

 

Smartphones with Wireless LAN can also be used for Mobile VoIP. By forming a joint venture, VoiceRoaming AS with Televenture, we will get funding for the development without having to sacrifice our SmartRoaming efforts as well as the first guaranteed Mobile Operator customer. The Mobile Operator in question will receive a product for commercial trials during second quarter 2007.

 

As also communicated, our CTO Haakon Bryhni will take a leading role in ensuring the success of Birdstep's new subsidiary and leave his full time position as CTO for Birdstep. Haakon will instead be executive consultant reporting to myself during the necessary transition period. As a side comment, Haakon could of obvious reasons not sell any shares until the announcement became public, which is why he for personal reasons sold this week and not earlier.  

 

In summary, we get a new majority owned subsidiary in an exiting field against competence and technology and with stronger commercial possibilities and no financial risk, since all funds will be provided by Televenture. Later, by 2008, we can always make a decision whether to incorporate Voiceroaming AS as a fully owned subsidiary to Birdstep.

 

 

 

 

 

 

Thus, by second half 2007 Birdstep's goal is to be in a position where we are delivering integrated solutions for mobile data to major phone manufacturers and at the same time have a mobile VoIP offering so that we can offer an even broader portfolio to the same target group as well as to Mobile Operators. When the third generation of Smartphones is being scoped, we will have a complete market offering to capture the real market growth that is anticipated. More than 25 000 000 Smartphones equipped with Wireless LAN is estimated to be sold worldwide in 2008.

 

In conclusion, I have great belief in the future for Birdstep, not only in the Smartphone segment described above but likewise in the Laptop segment where we currently still are experiencing above 100% growth in year-on-year license uptake. 

 

Finally, I would like to take this opportunity to answer some specific questions from some of our larger shareholders that I have received recently;

 

Haakon Bryhni has been categorized and registered as insider according to the rules set by Oslo Stock Exchange. This is why the announcement of VRT, including the information that Haakon would leave his full time position as CTO with Birdstep,  preceded the OSE filing of him selling his shares in Birdstep Technology.

 

A second question was related to the possibilities for Birdstep to buy shares back. We are convinced that shareholder value will increase if we use our funds to improve our market position rather than using the money to reduce the number of shares in the market.

 

There have also been some questions regarding Birdstep Information Policy. According to the policy, Birdstep will announce contracts through OSE with higher value than 100 000 Euro. The same information policy also states that Birdstep will only distribute other contracts or information through an OSE filing if it is of such strategic value that it potentially affects Birdstep valuation on the stock market. When it comes to the Turkcell press announcement that was published on the website the 29th of September it referred back to the OSE filing done the 6th of July when the order was received by Birdstep. The 29th of September the software delivery was accepted and launched by Turkcell and the customer subsequently approved the press announcement.

 

I am looking forward to meeting many of you when we present the third quarter results in less than a month's time. We will continue to explain our business strategy, our goals and the actions we take to deliver correct, relevant and trustworthy information to all our shareholders and other stakeholders.

 

 

 

Yours sincerely;

 

 

 

Petri Markkanen