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Comtech Group, Inc. Subsidiary Signs Agreement With China Telecom for Its Location-Based Search Applications15 November 2005
Comtech Group, Inc. (Nasdaq: COGO), a leading provider of customized module design solutions for more than 200 domestic and international technology product manufacturing companies based in China, today announced that its recently formed subsidiary, Comtech Wireless Ltd., will provide a location-based search platform, including hardware modules and software, for installation at its first customer, China Telecom, beginning in the fourth quarter 2005, starting with one city. Comtech's location-based search product will allow users to identify a wireless subscriber's geographic location within approximately a 90-meter area. The service will initially target a market which includes both children and the elderly with plans to expand to additional demographics and other location based services in the future. This is a new proprietary offering and Comtech expects to file patents for both its hardware design and search engine software in the near term. Comtech will provide the specialized mobile handset, which will be sold to consumers, and bundle the new location based service to be offered by China Telecom. Comtech will outsource the manufacturing of the phone but will brand and own the proprietary product technology. China Telecom has 100 million subscribers and is prepared to roll the service out to several targeted cities in the near term. Comtech will generate revenue from both the sale of the phone, and will also receive a revenue share for the monthly subscription service fee generated by each subscriber. The service will initially be launched in a few selected cities in China during 2005 and is expected to be introduced to a large number of cities during 2006. This first contract grants Comtech as the exclusive provider of location based services for China Telecom in this city for three years with the opportunity to renew in two year intervals thereafter. Jeffrey Kang, Chairman and Chief Executive Officer of Comtech Group, commented, "We are excited to be in a position to commercialize this new technology, and pleased to partner with China Telecom to make it possible. This initiative, which was funded from capital generated through our recent public offering, will enable us to target a substantial new market opportunity with minimal risk. This product launch provides Comtech with two revenue streams, one from the handset sales, which incorporate our proprietary chipset designs, and the other derived from a share of the recurring, high-margin monthly subscription fee. This will be our first time receiving service revenue." "Many industry experts have highlighted location based search as a potentially fast growing market, specifically as services begin to evolve to more complex options, such as geographically locating not only subscribers, but also specific places and entertainment destinations. This announcement represents continued improvement in Comtech's business model as we incorporate additional high-margin products with new recurring streams to increase visibility going forward," Mr. Kang concluded. About Comtech Comtech Group, Inc. is a leading provider of customized module design solutions in China, serving as a gateway to leading international and domestic electronics manufacturers in China. Comtech's core business has historically focused on the mobile handset and telecom equipment end-markets, but has recently expanded its market to include the digital consumer electronics end- markets. Comtech has worked with more than 200 customers. Comtech's customer base includes a majority of the largest and most well-known manufacturers in the mobile handset and telecom equipment end-markets in China. Safe Harbor Statement This press release includes certain statements that are not descriptions of historical facts, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include statements about our plans and objectives for future expansion, including into our location based search application; expectations for the location based search application related market, domestic mobile handset, telecom end- markets in China; anticipated margins for our solutions; general and cyclical economic and business conditions, and, in particular, those in China's mobile handset, telecom equipment and consumer electronics industries; our ability to enter into and renew key corporate and strategic relationships with China Telecom; changes; and other statements containing forward looking terminology such as "may," "expects," "believes," "anticipates," "intends," "expects," "projects," "looking forward" or similar terms, variations of such terms or the negative of such terms. Such information is based upon various assumptions made by, and expectations of, our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. Accordingly, there can be no assurance that actual results will meet expectations and actual results may vary (perhaps materially) from certain of the results anticipated herein. For a further description of these and other risks and uncertainties see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at http://www.sec.gov.
Source: PR Newswire
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