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Digi International Enters Satellite M2M Market with Acquisition of MobiApps Assets

Asset purchase positions Digi with satellite M2M technology and strong India presence

MINNETONKA, Minn. (June 8, 2009) - Digi International® Inc. (NASDAQ: DGII) today announced the purchase of substantially all the assets of the U.S., Indian and Singapore affiliates of MobiApps Holdings Private Limited (MobiApps), a developer of machine-to-machine (M2M) communications technology, focusing on satellite, cellular, and hybrid satellite/cellular solutions. MobiApps employs 63 people in India, Singapore, and the United States with a vast majority based in its India headquarters in Bangalore. The asset purchase positions Digi with satellite products and technologies that complement its wireless M2M strategy. MobiApps has a strong technology and product position in the Orbcomm satellite ecosystem.

"Our wireless M2M customers are increasingly asking for satellite as a communications option to complete their coverage model," said Joe Dunsmore, Chairman, President, and CEO of Digi. "We're looking forward to moving MobiApps products into Digi's strong global sales and distribution network. We believe satellite M2M will be a high growth opportunity for the foreseeable future."

MobiApps recently introduced a new generation of products based on its own custom designed and patented mixed signal application specific integrated circuit (ASIC), which dramatically reduces the complexity and improves performance of satellite M2M system solutions. Satellite M2M applications include fleet management, marine vessel tracking, container tracking, agricultural monitoring, energy management, and remote field service applications. Satellite is especially suited to applications that cross country and continental boundaries, providing connectivity in very remote locations, and providing mission critical wireless backup solutions when cellular coverage is insufficient. MobiApps also has cellular and hybrid cellular/satellite products packaged with various asset tracking management services, including employee tracking, focused on markets in India and Southeast Asia.

MobiApp's India presence positions Digi to be much stronger in this targeted international growth market. MobiApps employs 53 people in India, including sales, marketing, and administrative staff, as well as approximately 30 engineers with strong wireless expertise. This cross-functional group of talented people provides a strong foundation for growth in India and Southeast Asia.

"MobiApps is known for its leading edge satellite technology products and solutions built around its patented mixed-signal ASIC. With the resources, scale and market presence of Digi now underpinning MobiApps' technology expertise, it will be in a position to take greater advantage of the growth opportunities that M2M markets offer around the world," said Taroon C. Kamdar, CEO, MobiApps.

"This acquisition is a very good strategic, cultural and financial fit for Digi and its shareholders," said Joe Dunsmore.

Strategic Fit

Strategically, the acquisition of MobiApps satisfies two target areas in Digi's acquisition strategy by providing leading edge M2M satellite products and technologies, and providing a strong base of operations to grow Digi's wireless solutions business in India and Southeast Asia.

Key aspects of the MobiApps strategic fit with Digi include the following:

  • Strong "tribal knowledge" in M2M satellite communications
  • Custom satellite ASIC for use across Digi products as needed
  • Strength and focus in India and Southeast Asia
  • Ability to leverage the broader Digi global sales channel, especially in Europe and the Americas
  • A common "customization" and product differentiation strategic orientation and capability to Digi
  • Product synergies with iDigi wireless solutions and several of Digi's wireless product lines

"The acquisition of MobiApps is pursuant to our stated 5-year objectives of driving wireless to over 60% of our revenue base and growing international revenues to over 60% by the year 2013," stated Joe Dunsmore.

Cultural Fit

"Culturally, we believe we have an excellent match. We have found MobiApps to be an open, high integrity culture, where listening and teaming are highly valued, and where innovation is ingrained. We have found the management team be entrepreneurial and yet mature. These values are very compatible with the Digi culture," said Joe Dunsmore.

Financial Fit

Mobi Apps has recently introduced new products that Digi expects to market globally and that are expected to provide high growth even in this difficult market environment. Digi expects the acquisition to be breakeven if all financial targets are reached in fiscal 2010. Digi expects high revenue growth on an annual basis over the 5-year time horizon.

Integration

Digi expects to immediately functionally integrate MobiApps with current MobiApps CEO Taroon Kamdar facilitating the integration process with the Digi management team over the next several months.

Transaction Specifics

The purchase price of $3.0 million is a cash transaction for substantially all of the assets of MobiApps. An additional $0.5 million may be payable at the end of fiscal 2010, contingent on the achievement of certain performance milestones.

Digi expects MobiApps to contribute in excess of $0.35 million in revenue for fiscal 2009, from date of acquisition. Digi anticipates MobiApps will contribute revenue in a range of $2.4 million to $3.0 million for fiscal year 2010.

Digi expects the MobiApps acquisition will be approximately $0.01 to $0.02 dilutive for fiscal 2009, and that MobiApps' impact on earnings per diluted share will be breakeven to $0.02 dilutive for fiscal 2010.

Pursuant to the terms of the asset purchase agreements, Digi International acquired the U.S. assets of MobiApps, located in Herndon, Virginia. Digi established Digi Wireless Singapore Pte. Ltd. and Digi m2m Solutions India Private Limited, which acquired the assets of MobiApps' affiliate companies located in Singapore and India, respectively.

About Digi International
Digi International is making wireless M2M easy by developing reliable products and solutions to connect and securely manage local or remote electronic devices over the network or via the Web. Digi offers the highest levels of performance, flexibility and quality, and markets its products through a global network of distributors and resellers, systems integrators and original equipment manufacturers (OEMs). For more information, visit Digi's Web site at www.digi.com, or call 877-912-3444.

About MobiApps
MobiApps™ is a leading provider of hybrid terrestrial and satellite technologies for commercial communications. MobiApps converges wireless communications technologies such as 802.11, GPRS, CDMA, and satellite to provide global communications capabilities at a low marginal cost – allowing its customers to deploy state-of-the-art communications products across a number of industrial applications. For more information, visit MobiApps' website at www.mobiapps.com.

Forward-Looking Statements
This press release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which generally can be identified by the use of forward-looking terminology such as "anticipate," "believe," target," "estimate," "may," "will," "expect," "plan," "project," "should," or "continue" or the negative thereof or other variations thereon or similar terminology. Such statements are based on information available to management as of the time of such statements and relate to, among other things, expectations of the business environment in which the companies operate, projections of future performance, perceived opportunities in the market and statements regarding the combined company's mission and vision, future financial and operating results, and benefits of the transaction. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, including risks related to the highly competitive market in which the companies operate, rapid changes in technologies that may displace products sold by the combined company, declining prices of networking products, the combined company's reliance on distributors, delays in product development efforts, uncertainty in consumer acceptance of the combined company's products, and changes in the companies' level of revenue or profitability. These forward-looking statements are neither promises nor guarantees, but are subject to risk and uncertainties that could cause actual results to differ materially from the expectations set forth in the forward-looking statements, including but not limited to uncertainties associated with economic conditions in the marketplace, particularly in the principal industry sectors served by the combined company, changes in customer requirements and in the volume of sales to principal customers, the ability of the combined company to achieve the anticipated benefits and synergies associated with this transaction, the challenges and risks associated with managing and operating business in numerous international locales, competition and technological change, and the risks that the businesses will not be integrated successfully. These and other risks, uncertainties and assumptions identified from time to time in Digi's filings with the Securities and Exchange Commission, including without limitation, its annual reports on Form 10-K and quarterly reports on Form 10-Q, could cause future results to differ materially from those expressed in any forward-looking statements. Many of such factors are beyond Digi's ability to control or predict. These forward-looking statements speak only as of the date for which they are made. The companies disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Contacts:
S. (Kris) Krishnan
Digi International
952-912-3125
Email: S. (Kris) Krishnan

Tom Caden
Dian Griesel Inc.
212-825-3210
Email: Tom Caden

Press Contacts:
Jan McBride
Digi International
952-912-3473

For more information, visit Digi's Web site at www.digi.com, or call 877-912-3444 (U.S.) or 952-912-3444 (International).

All brand names and product names are trademarks or registered trademarks of their respective companies.

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