STOCKHOLM, Sweden, February 08, 2002 (PRIMEZONE) --
Increased focus and new products
-- Sales in the year totaled KSEK 10,233 (5,091), a doubling
compared to previous year.
-- Operating earnings improved to KSEK -142,717 (-295,933), of
which KSEK -41,768 (-153,129) accounted for items
affecting comparability arising from restructuring within
the group, KSEK -24,461, and write-down of goodwill, KSEK
-17,307. Result after financial items improved to
KSEK -133,670 (-281,913).
-- Liquid funds at the close of the period totaled
KSEK 179,833, or SEK 3.27 per share.
-- The number of employees at the end of the period decreased by
31 percent to 52 (75), a decline of 23 compared to last year.
At the end of the year 23 of the 52 employees were working
during their period of notice.
-- Operations were increasingly focused on mobile Internet and IP
telephony. The decision was made to reduce operations to one
office in Sweden and one in the U.S. and to phase out the
other facilities. Despite items affecting comparability,
the measures resulted in a much lower burn rate and a lower
general cost level during the second half of 2001. The full
impact of the measures is expected to reduce the cost
level by approximately SEK 40 million on an annual basis.
-- Effnet decided to phase out the IT security services function
of Wkit Security AB. Wkit's Haverud office will be closed and
its copy protection operations has been relocated to Effnet's
office in Stockholm. The measure is estimated to reduce costs
by SEK 8 million on an annual basis.
-- The actions taken in accordance with the cost-cutting and
efficiency-building program together with the strong
financial position of the company opens the door to selective
acquisitions.
-- Wkit Security AB completed the new version of its Don't Bother
Burn copy-protection software for CD-ROM, DBB 3.0.
-- Magnus Ryde succeeded Norman Rasmussen as Chairman of the
Board. At an Extraordinary General Meeting held December 21,
2001, Svante Carlsson and Hans Runesten were appointed to the
Board, replacing Thomas Althen, Stephen Pink and
Norman Rasmussen who resigned.
-- In November, the company launched the EffnetEdge Header
Compression Suite for Mobile Networks, the market's first
comprehensive solution for wireless IP header compression.
Significant events after year-end
-- Effnet released Effnet CRTP, a comprehensive solution for IP
header compression for wireline Voice-over IP (IP Telephony).
The software, which targets media gateways and customer
premise equipment, opens up a new market for Effnet.
-- Wkit Security signed its first licensing agreement for DBB 3.0
with Sonopress, Europe's largest CD manufacturer.
Effnet innovates and licenses award-winning key technologies that resolve data speed, efficiency and security challenges in Internet Protocol (IP) networking and IT security. Effnet's IP packet processing technologies enable optimum performance. Effnet's wholly-owned subsidiary, Wkit Security AB is specialized in developing copy protection software Effnet Group AB shares are traded on Sweden's Nya Marknaden (symbol: EFFN). Read more about Effnet at www.effnet.com.
Read: about Wkit at www.wkit.com.
FOURTH QUARTER 2001
Strong position in a wait-and-see market
The economic slow-down experienced during the year by the telecom sector and network market continued through the fourth quarter. Customers chose to postpone decisions on larger licensing contracts throughout the year, even though interest in Effnet's technology is high. A growing percentage of major industry players now predict a turnaround in 2002.
Despite the weak market, Effnet has not decelerated its pace of new product completion and rather accelerated its sales and marketing efforts. When the market rebounds, Effnet will be armed with a strong position, good customer knowledge, and a number of highly attractive products ready for sale and delivery.
Sharpened focus and fewer offices
In the fourth quarter, a number of new measures were taken to further implement the objectives of the cost-cutting and efficiency-building program introduced in the second quarter. Effnet's offices in Lulea, Sweden, and Mountain View, California, as well as Wkit's office in Haverud, Sweden, were closed. Relocation of the facilities' critical functions to Stockholm, Sweden, and Tucson, Arizona will result in a significant reduction in personnel as well as considerable cost and efficiency gains. The cost-cutting measures, which should achieve full impact in 2002, are expected to lower costs by approximately SEK 48 million. The measures had a negative impact on fourth-quarter earnings of SEK 17,8 million.
New world-leading products
During the year, Effnet has continued to focus resources on developing solutions for header compression.
In the fourth quarter, the second in a series of tests were jointly conducted by leading mobile telephony and header compression companies.
This second round of tests were conducted at Effnet Labs in Tucson and focused on the robustness of the new protocol. The first round of tests were conducted in Southampton, UK, in August 2001. Ericsson, Nokia, Siemens, and Effnet have thus far participated in the tests.
In November, Effnet released the EffnetEdge Header Compression Suite for Mobile Networks, the market's first comprehensive solution for IP header compression. The product suite improves the efficiency of wireless IP networks, such as 2.5G and 3G mobile systems. The products enable equipment manufacturers and telecom operators to squeeze up to 300 percent more interactive content through the mobile phone infrastructure.
The company released another software product, Effnet CRTP, at the beginning of 2002. The software reduces bandwidth requirements for wireline Voice-over-IP (VoIP) by as much as 60 percent for Ipv4, and 75 percent for Ipv6 networks. Media gateways, routers, firewalls, modems, and customer premise equipment can deliver significant bandwidth savings by incorporating EffnetEdge header compression technology into their products. Channel capacity can be increased by as much as 250 percent without increasing the cost of the infrastructure.
In the coming months, Effnet will be launching additional header compression products. Also these products will represent a competitive alternative to development efforts by companies in the network and communication industries.
In November, Wkit Security released a new version of its Don't Bother
Burn copy protection software, DBB 3.0. In late January 2002, Wkit signed its first licensing agreement for the software with Sonopress, the world's second-largest CD manufacturer. In accordance with the deal, Sonopress will offer DBB to its CD-ROM customers.
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