Esmertec Reports Solid Operational Performance for the First Half-Year, 2007

Jean-Claude Martinez to be nominated Board Member candidate - Thomas Hornung to succeed as new CEO of Esmertec as of January 1, 2008 - Management team completed with the appointment of Patrick Remy as CTO as of October 1, 2007

Esmertec(TM) (SWX:ESMN), a focused provider of software and
services to communications device manufacturers and mobile telecom
operators, announced today its financial results for the first six
months ended June 30, 2007. Esmertec reported growth of revenues to
USD 17.0 million representing an increase of 76.6 % compared to the
first half-year 2006 and an increase of 12.3% compared to the second
half-year 2006. In the first half-year 2007, cash flow from operations
was positive with an amount of USD 1.6 million. For the full year 2007
Esmertec now increases its revenue expectations from USD 34.0 million
to USD 35.5 million.

Jean-Claude Martinez, CEO of Esmertec, said: "Esmertec continued
to grow during the first six months of 2007. The overall development
is very satisfying thanks to a solid performance from both segments.
We are particularly proud that in the second quarter 2007 for the
first time Esmertec was the largest independent JVM provider to the
mobile device industry."

The market share in the Mobile and Multimedia Devices segment
continued to increase to an estimated 8.7% in the first half-year 2007
from 3.9% in the first half-year 2006 In the Mobile Operator segment
two new customers have committed to Esmertec's USSD browsing solution.
As of June 30, 2007, 20 mobile operators had deployed the Mobile
Operator segment's solution to serve a cumulative consumer base of
over 100 million mobile phone subscribers.

-0-
*T
Esmertec Key Figures
------------------------------------------------ --------------- -----
FY H1 H2 FY H1
2005 2006 2006 2006 2007
In USD millions

----------------------------------------------------------------------
Revenues 39.2 9.6 15.2 24.8 17.0
----------------------------------------------------------------------
Gross profit 24.3 2.1 7.9 10.0 10.6
----------------------------------------------------------------------
OPEX* 27.9 16.8 13.5 30.3 13.6
----------------------------------------------------------------------
LBITA -5.9 -14.9 -6.7-21.6 -1.7
----------------------------------------------------------------------
Operating income/EBIT (loss) -13.8 -34.2-11.1-45.3 -4.3
----------------------------------------------------------------------
Net loss attributable to equity holders of
Esmertec AG -15.7 -34.2-14.3-48.4 -4.7
----------------------------------------------------------------------
Cash flow from operating activities -15.7 -15.2 -5.0-20.2 1.6
----------------------------------------------------------------------

*excluding bad debt expense, amortization of intangible assets,
impairment of intangible assets, restructuring expenses, other income
and expenses and capitalized development costs.
*T

The Board of Directors announced that Jean-Claude Martinez has
chosen to step-down as Chief Executive Officer as of December 31,
2007. After 6 years with the company during which he successfully
turned around Esmertec's organization and operations, he believes it
is time to pass on the oversight of the daily operations to a new CEO.
The Board is very pleased that Jean-Claude Martinez has accepted its
offer to play an important new role, that of a Board Member.
Jean-Claude Martinez will be put forth as a candidate for the Board at
the next Annual General Meeting to be held in May 2008.

Thomas Hornung succeeds Jean-Claude Martinez as Chief Executive
Officer in the course of the company's succession plan effective
January 1, 2008. He will initially join the Executive Management Team
on October 1 as Deputy CEO, and will work jointly with Jean-Claude
Martinez for an optimal transition.

Thomas Hornung has more than 20 years experience in IT and
telecommunications industries including executive management positions
in leading companies such as Nixdorf Computer, Siemens/Cisco and
debitel AG. Prior to joining Esmertec he worked as executive business
consultant for international customers and investors in the area of
telecommunications, convergence technology and consumer electronic
solutions, focusing on business development, innovation and partner
management and ,,go to market" strategies. He holds a Masters degree
in physics and environmental techniques and earned a PhD in
semiconductor physics.

Ruedi Noser, Chairman of Esmertec, commented: "We have been
fortunate to have Jean-Claude Martinez steering our company through a
challenging period. Over the past six years, the last 18 months of
which he served as CEO, we have counted on his profound expertise and
inspiring energy. We want to thank him for his unwavering commitment
to Esmertec's success and for achieving major milestones as well as
stabilizing our organization and achieving the operational turnaround.
Esmertec will continue to benefit from his strategic vision when he
moves to his new role as a Board Member. In Thomas Hornung Esmertec
has gained a CEO with impeccable industry know-how and profound
experience. We are delighted that Thomas has decided to join Esmertec
and are confident that he will play a vital role in positioning
Esmertec for long-term growth."

The Board also announced the appointment of Patrick Remy as Chief
Technical Officer of Esmertec effective October 1, 2007. Patrick Remy
is CTO and co-founder of Cellicium SA and he led the company's
technological research, strategy and solutions delivery initiatives.
Prior to founding Cellicium, Patrick Remy held a key engineering
position with France Telecom Mobiles. He is a graduate of Ecole
Nationale Superieure des Telecommunications in Paris, France, and
Ecole Polytechnique in Palaiseau, France.

Furthermore, after having accepted a new CEO position in Asia,
Ulrich Schumacher felt that his new position required his full
attention and has hence decided to retire from the Board of Directors
as of today. Esmertec would like to thank Ulrich Schumacher for his
contribution to the company during the past 27 months and wishes him a
lot of success in his new position.

Highlights of the first half-year 2007

Revenues

1H2007 revenues totalled USD 17.0 million, which is an increase of
76.6% compared to 1H2006 and an increase of 12.3% compared to 2H2006.
In both segments the company obtains revenue from two primary sources:
software licences and services. The licence revenue continues to be
Esmertec's financial backbone although the income generated by
services is gaining importance.

The Mobile and Multimedia Devices segment has shown a solid growth
with an increase of 66.6% compared to 1H2006 and an increase of 16.5%
to 2H2006 and the revenues totalling USD 10.5 million. This
performance reflects the strong ongoing shipments by existing
customers. Esmertec expects shipments and market share to increase in
the course of the year.

In the Mobile Operator segment the revenues totalled USD 6.5
million. The revenue growth was 95.5% compared to 1H2006 and 6.1%
compared to 2H2006. The result in this segment reflects both existing
customers extending their capacities and new customers contributing to
the positive performance.

Revenues from the Global Services offering across the segments
totalled USD 7.2 million. Service revenue is generated through
consulting services, customized software development projects,
engineering and system integration services as well as training and
technical support services. Our customers value the best-in-class
expertise we are able to offer through our global competence centres
with professional local client-facing teams.

Gross Margin

In 1H2007 the gross margin for the consolidated business was 62.3%
of the revenues, compared to 22.1% in 1H2006 and 52.3% in 2H2006
respectively. Gross margin in the Mobile and Multimedia Devices
segment was 51.0%. In the Mobile Operator segment the gross margin was
80.6%.

Operating Expenses

Total operating expenses excl. bad debt expense, amortization of
intangible assets, impairment of intangible assets, restructuring
expense, other income and expenses and capitalized development costs
in 1H2007 were USD 13.6 million, representing a decrease of 19.3%
compared to 1H2006 and an increase of 0.5% to 2H2006.

In 2006 Esmertec launched cost and efficiency improvement measures
including tight control of service costs, research and development,
sales and marketing and general and administrative expenses. The
operational streamlining has resulted in cost savings of USD 3.2
million in 1H2007 compared to 1H2006.

Measures taken to reduce the risk of incurring bad debts have
shown their effect. Minor bad debts to the amount of USD 41,000 have
been recorded in 1H2007.

Net Loss

Net loss attributable to the equity holders of Esmertec AG for
1H2007 was USD 4.7 million (USD 0.28 per share). In 1H2006 net loss
attributable to the equity holders of Esmertec AG was USD 34.2 million
(USD 2.10 per share) and in 2H2006 USD 14.3 million (USD 0.87 per
share).

Cash flow from operations and cash

Cash flow from operating activities improved considerably in
1H2007 and reached USD 1.6 million. The improvement is due to
continuously increasing cash collections as a consequence of the
improvements in the operational performance and tight cost control.
Based on 2006 performance, Esmertec paid USD 6.3 million in cash plus
USD 1.2 million in Esmertec shares as a portion of the purchase price
relating to the acquisition of Cellicium. The last portion of the
purchase price will be due in 1Q2008.

As at June 30, 2007, cash and cash equivalents (including
short-term investments) amounted to USD 7.0 million compared to USD
13.2 million as at December 31, 2006.

Mobile & Multimedia Devices Segment

Esmertec's technology is currently used in mobile handsets from
three of the four leading handset manufacturers. In the first half of
2007 shipments by customers reached 46.3 million units (19.9 million
in the first quarter and 26.4 million in the second quarter), an
increase of 155.9% compared to the first half of 2006 (with a total of
18.1 million units shipped) and an increase of 11.3% to the second
half of 2006 (with a total of 41.6 million units shipped). The market
share improved to an estimated 8.7% in the first half 2007 from 3.9%
in the first half 2006.

The major achievements in the Mobile and Multimedia Devices
segment in the first half of 2007 included entering the UIQ Alliance
Partner Program to offer the Jbed(TM) Advanced Java(TM) Multi-tasking
Virtual Machine (MVM) to UIQ customers globally. Esmertec also
announced its collaboration with HI Corporation to integrate HI's 3D
rendering engine on Esmertec's Jbed Virtual Machine providing game
developers a high quality platform for creating 3D games on a broad
range of mobile handsets.

Mobile Operator Segment

The Mobile Operator segment, focusing on delivering turn-key
mobile browsing solutions and applications to telecom operators, also
maintained its growth pace and two new customers were acquired. As at
June 30, 2007, 20 mobile operators had deployed Esmertec's USSD
browsing solution to serve a cumulative consumer base of over 100
million mobile phone subscribers.

Strategic Focus and Outlook

The telecommunication industry is driven by new customer
requirements for services and the pace of technological changes.
Esmertec is convinced that its strategic and operational initiatives
lay a solid foundation for future success. Being back on track, the
company now concentrates its efforts on building its marketing and
sales network and developing innovative technology and closely
managing its operational expenses.

In the Mobile & Multimedia Devices segment Esmertec expects
shipments and market share to continue to grow in the course of the
year due to strong order backlog and sustained renewals of contracts
with top tier customers.

In the Mobile Operator segment Esmertec's customers face price
pressures and seek to differentiate and personalize their products in
order to increase customer loyalty. Esmertec is with its product and
service offering in an ideal position to help its customer to achieve
their goals. The company aims at further strengthening the presence in
Americas and emerging countries.

For the full year 2007, revenues are expected to increase at least
43% to be over USD 35.5 million, cash flow from operations is expected
to be positive and global professional services are expected to
continue to be gross margin positive. Building on the efficiency
improvement measures implemented, Esmertec's top priority is to
improve profitability.

Media Conference

Esmertec will host on 25 September 2007 a media and analyst
conference in English and German at 09:30hrs CET at SWX Swiss Exchange
ConventionPoint in Zurich.

IR calendar

-0-
*T
December 6, 2007: Esmertec Technology Day
April 10, 2008: Full year 2008 results
May 15, 2008: Annual General Meeting
*T

About Esmertec

Esmertec is a focused provider of software and services to
communications device manufacturers and mobile telecom operators. The
company provides software platforms that enable the deployment of
content and applications in devices and over servers. Customers
include mobile telecom operators and manufacturers of mobile handsets,
set-top boxes and interactive televisions. Esmertec's software and
service capabilities excel with their reliability as well as fast and
local execution. Founded in 1999, Esmertec is headquartered in
Zurich-Switzerland with subsidiaries in China, France, South Korea,
and the USA, and offices in Taiwan and the UK. Since 2005, Esmertec
has been listed on the SWX Swiss Exchange (ESMN). www.esmertec.com

Esmertec and Jbed are trademarks of Esmertec AG.

Java is a trademark of Sun Microsystems Inc.

Other company, product and service names may be trademarks of
their respective owners

This communication contains forward-looking statements based on
current expectations and assumptions of the company's management only,
and involves certain risks and uncertainties. The forward-looking
statements contained herein could be substantially impacted by risks
and influences that are not foreseeable at present, so that actual
results may vary materially from those anticipated, expected, or
projected. Esmertec disclaims any intention or obligation to update
and revise any forward-looking statements, whether as a result of new
information, future events or otherwise.