Best Small Company Rank in Fobes.

Minneapolis, MN, October 17, 2007) - Digi International® Inc. (NASDAQ: DGII) was named one of "America's 200 Best Small Companies" by Forbes magazine.

Approximately 2,400 other small public companies, whose revenues were between $5 million and $750 million, with share prices above $5.00, were considered for the honor. "Our 200 Best Small Companies in America must pass through a gauntlet to qualify for the list," the article stated. "It takes more than solid books to make the cut." In addition to revenue and share price, return on equity, sustained sales, and net profit growth over twelve-month and five-year periods were also determining factors. Forbes excluded companies from the running that demonstrated "too much debt, signs of a downturn in the future or a whiff of legal troubles."
"We are very pleased with the Forbes 'Top 200' Ranking based on five-year performance," said Joe Dunsmore, Digi's Chief Executive Officer. "Given our new wireless Drop-in Networking products, we believe that we have the business momentum to continuously improve our performance over the next five years. Further, we believe we have the talented team necessary to do it."

Overall, Digi was ranked152nd.

About Forbes

Forbes is an American publishing and media company. Its flagship publication, Forbes magazine, is published bi-weekly. Its primary competitors in the national business magazine category are Fortune, which is also published bi-weekly, and BusinessWeek. Today the magazine is known for its lists, including its lists of the richest Americans (the Forbes 400) and its list of billionaires.

Forbes USA in 1964 and his brother Malcolm Stevenson Forbes (1917–1990) became Editor-in-Chief and Publisher.

On Malcølm's death, his eldest son Malcolm Stevenson "Steve" Forbes Jr. (1947–) became President and Chief Executive of Forbes and Editor-in-Chief of Forbes magazine.. Between 1961 and 1999 the magazine was edited by James Michaels. In 1993, under Michaels, Forbes was a finalist for the National Magazine Award. In 2006, an investment group that includes rock star Bono bought a minority interest in the company.

Digi International Reports 19.8% Increase in Revenue for Fiscal 2007 Over Fiscal 2006

(Minneapolis, MN, November 1, 2007) - Digi International® Inc. (NASDAQ: DGII) reported revenue of $173.3 million for the fiscal year ended September 30, 2007 compared to $144.7 million for the fiscal year ended September 30, 2006, an increase of $28.6 million, or 19.8%. Other financial highlights for the quarter and the fiscal year include:
Digi's net sales of $45.1 million in the fourth quarter of fiscal 2007 is the highest net sales achieved in the past thirty-one quarters, and represents a 9.8% increase over the net sales for the fourth quarter of fiscal 2006.

Digi has reported net income for nineteen consecutive quarters.
Operating income for fiscal 2007 increased by 53.7% over fiscal 2006.

Net income for fiscal 2007 was $19.8 million, or 11.4% of net sales. Net income for the fourth quarter of fiscal 2007 was 84.9% higher than the fourth quarter of fiscal 2006, including the impact of discrete income tax benefits in both periods.

Digi met its annual revenue and earnings per share guidance, generated strong cash from operations, and continued to maintain a healthy balance sheet in fiscal 2007.

Revenue from embedded products in the fourth quarter of 2007 was $20.6 million, an increase of $3.3 million, or 19.4%, compared to the fourth quarter of fiscal 2006. Revenue from non-embedded products was $24.5 million in the fourth quarter of fiscal 2007, an increase of $0.7 million, or 2.9%, compared to the fourth quarter of fiscal 2006. MaxStream-branded product revenue was $5.6 million for the fourth quarter of fiscal 2007 compared to $3.2 million for the fourth quarter of fiscal 2006, which includes revenue from the date of acquisition of July 27, 2006.

Digi reported net income of $5.6 million for the fourth quarter of fiscal 2007, or $0.21 per diluted share, compared with $3.0 million in the fourth quarter of fiscal 2006, or $0.12 per diluted share. Reversals of tax reserves associated with the settlements of foreign tax audits and other discrete tax benefits increased earnings per diluted share by $0.03 and $0.04 in the fourth quarter of fiscal 2007 and 2006, respectively. In-process research and development and other acquisition-related expenses associated with MaxStream reduced earnings per diluted share by $0.08 in the fourth quarter of fiscal 2006. Earnings per diluted share were $0.18 and $0.16 for the fourth quarter of fiscal 2007 and 2006, respectively, excluding the aforementioned items.

Gross profit margin in the fourth quarter of fiscal 2007 was 52.8% compared with 52.4% during the same quarter of fiscal 2006. Gross profit margin includes the amortization of identifiable intangibles for purchased and core technology, shown separately on our Condensed Consolidated Statements of Operations.

Total operating expenses were $17.6 million, or 39.1% of net sales, in the fourth quarter of fiscal 2007 compared to $18.1 million, or 44.2% of net sales, in the fourth quarter of 2006. Operating expenses for fiscal 2006 include a charge of $2.0 million for in-process research and development associated with the acquisition of MaxStream.

For the fiscal years ended September 30, 2007 and 2006, operating income was $20.3 million and $13.2 million, respectively, or an increase of 53.7%.

Digi reported net income of $19.8 million in fiscal 2007, or $0.76 per diluted share, compared with $11.1 million, or $0.46 per diluted share, for fiscal 2006. Digi recorded benefits associated with reversals of tax reserves and other discrete tax benefits that increased earnings per diluted share by $0.17 and $0.04 for fiscal 2007 and 2006, respectively. Acquired in-process research and development charges and other acquisition-related expenses reduced earnings per diluted share by $0.09 in fiscal 2006. Earnings per diluted share were $0.59 and $0.51 for fiscal 2007 and 2006, respectively, excluding the aforementioned items.

Digi's cash and cash equivalents and marketable securities balance, including long-term marketable securities, was $87.6 million at September 30, 2007, an increase of $28.7 million over the cash and cash equivalents and marketable securities balance at the end of fiscal 2006. At September 30, 2007, Digi's current ratio is 6.4 to 1, and the Company has no debt other than capital lease obligations.

"Fiscal 2007 was a very strong year for Digi," said Joe Dunsmore, Digi's Chief Executive Officer. "Our revenue growth of almost 20% and the 53.7% year over year improvement in our operating income demonstrates a very strong positive momentum for our business. As we move into fiscal 2008, we expect our drop-in networking products will provide the impetus to continue that momentum." Fiscal 2007 Business Highlights:

Digi united wireless technologies to pioneer "Drop-In Networking," with the introduction of the ConnectPort X product family, a line of IP gateways that provide seamless connectivity of Zigbee®, Wi-Fi®, cellular, and Ethernet traffic to centralized applications and databases. Drop-In Networking solutions provide end-to-end wireless connectivity to commercial grade electronic devices in locations where wires don't exist or satisfy customer needs.

Digi strengthened its leadership position in easy-to-use Zigbee® technology with the expansion of the MaxStream XBee brand to include an embedded product with full mesh networking capabilities.

Digi launched a Stand-Alone Wireless Modem product line, based on acquired MaxStream® technology, which provides simple, low-cost serial and Ethernet cable replacement.

Digi extended its family of cellular routers with support of the latest 3G technologies, including HSDPA for GSM-based carrier networks and EVDO Rev A for CDMA-based carrier networks. These latest generation routers are certified on the three largest carrier networks in the U.S., which include AT&T, Sprint, and Verizon, as well as numerous international networks.

Digi moved the Rabbit brand strongly into the embedded wireless market with two new wireless RabbitCore® modules and a new Rabbit Wireless Control Application Kit. The modules, one with integrated Wi-Fi® and the other with integrated Zigbee®, are the latest addition to the popular family of pin-compatible RabbitCore modules.

Digi increased its access to embedded markets by rolling out a new approach to ARM embedded development. Digi JumpStart Kits™ are sub $500 development kits that get design engineers started in developing complex NetOS, Linux, and WinCE based embedded products within 30 minutes.

Digi expanded its strong embedded development relationship with Microsoft with two industry firsts. The Digi Connect ME Jumpstart Kit for Microsoft.NET Micro Framework was the industry's first Ethernet networking solution for .NET Micro Framework. Digi was also the first company to offer a Windows® Embedded CE 6.0 board support package (BSP) for ARM processors and wireless networking. As a Microsoft Gold Certified Partner, Digi is one of the Microsoft Business Partners who receives the highest level of customer endorsement.

2008 GuidanceFor fiscal year 2008, Digi projects revenue to be in the range of $197 million to $207 million, or an increase over fiscal year 2007 revenue of 14% to 19%. Digi projects earnings per diluted share to be in a range of $0.69 to $0.87. Projected fiscal 2008 earnings per diluted share of $0.69 to $0.87 represents a 17% to 47% increase over fiscal 2007 earnings per diluted share, excluding the discrete tax benefits of $0.17 recorded in fiscal 2007.
Fourth Quarter and Year-End 2007 Conference Call DetailsDigi invites all those interested in hearing management's discussion of its fourth quarter and year end earnings results on Thursday, November 1, 2007 at 5:00 p.m. EDT (4:00 p.m. CT), to join the call by dialing (800) 952-4645. International participants may access the call by dialing (212) 231-2901. A replay will be available two hours after the completion of the call, and for one week following the call, by dialing (800) 633-8284 for domestic participants or (402) 977-9140 for international participants and entering access code 21351615 when prompted. Participants may also access a live webcast of the conference call through the investor relations section of Digi's website, www.digi.com.

About Digi InternationalDigi International, based in Minneapolis, is the leader in device networking for business. Digi develops reliable products and technologies that enable companies to connect and securely manage local or remote electronic devices over the network or via the web.

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 Company operates, projections of future performance, perceived opportunities in the market and statements regarding the Company's mission and vision. 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 Company operates, rapid changes in technologies that may displace products sold by the Company, declining prices of networking products, the Company's reliance on distributors, delays in the Company's product development efforts, uncertainty in consumer acceptance of the Company's products, and changes in the Company's level of revenue or profitability. These and other risks, uncertainties and assumptions identified from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, its annual report on Form 10-K for the year ended September 30, 2006 and its quarterly reports on Form 10-Q, could cause the Company's future results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Many of such factors are beyond the Company's ability to control or predict. These forward-looking statements speak only as of the date on which they are made. The Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

source :http://www.digi.com/news/pressrelease.jsp?prid=403

Brokerages see double-digit growth for Digi in FY08

ANALYSTS remain bullish on DiGi.Com Bhd's growth rate for the next financial year ending Dec 31, 2008 (FY08) despite the competitive landscape.

Kenanga Research said in its latest report: “We believe net profit growth will still be double digit in FY08 at 11.7% as market conditions remain conducive with continuous fixed-to-mobile substitution and growing usage.”

In a report by Citi Investment Research analysts Karen Ang and Anand Ramachandran, net profit growth is forecast to be 13.7% in FY08.

This is a higher growth than that given in DiGi's FY08 guidance, which was recently unveiled. DiGi is projecting its net profit growth to be a high single digit and EBITDA (earnings before interest, tax, depreciation and amortisation) margin to be in the mid-40s for FY08.

DiGi foresees the competition shifting a couple of notches higher on the back of more intense price competition induced by mobile number portability (MNP).

This would necessitate higher advertising and promotion spending, resulting in lower EBITDA margin, said OSK Research in an update report.

However, DiGi expects some slippage in the implementation of MNP. “The management expects MNP to be launched sometime in the third quarter rather than second quarter of 2008,” said Citi's report.

DiGi also stated that 3G was not a factor in its competitive positioning in FY08.

“The management believes that the absence of 3G is positive in the short term when it comes to network operating efficiency and marketing,” said the report, adding that no announcements on tie-ups with other 3G operators were forthcoming.

In comparison, Kenanga's report stated: “Management alluded that the lack of 3G has not blunted the company's innovative offerings but did admit the inability to tap into the higher-end market which could demand more sophisticated applications and offerings.”

Although its guidance for FY08 was conservative, DiGi raised its key performance indicator for FY07 for revenue growth from mid-teens to high-teens, EBITDA margin to be 47% to 48% from mid-40s previously, capital expenditure (capex) between RM600mil and RM700mil from RM800mil to RM900mil before, and net profit growth to high-20s from mid-teens.

The optimism was probably due to strong results posted in the FY07 third quarter ended Sept 30.

DiGi recorded a net profit of RM273.3mil on revenue of RM1.11bil for the third quarter compared with net profit of RM180.8mil on revenue of RM920.8mil in the previous corresponding period.

Earnings per share rose to 36.4 sen from 24.1 sen previously.

Citi noted that despite higher competition driving higher churn rates and significantly lower net additions of 92,000 subscribers for the third quarter compared to 241,000 the quarter before, average revenue per user (ARPU) and EBITDA margin were surprisingly resilient at RM59 and 47.3% respectively.

This was compared with ARPU and EBITDA margin recorded in the second quarter at RM58 and 47.4% respectively.

DiGi's strategy to lower postpaid prices (from the 1 Plan postpaid package setting tariffs at a flat RM0.13/min, 13% to 56% below headline tariffs of other postpaid packages) had stimulated more minutes of use, and thus higher ARPUs.

Citi rates DiGi as a “buy/low risk” with a target price of RM28.

“A successful privatisation of Maxis would leave DiGi as one of only two telco options in Malaysia as investors switch at least a part of potential Maxis proceeds to other investments driving a scarcity premium,” said Citi's report.

Citi believes downside risk is limited, thanks to the prospect of higher cash returns to shareholders.

It estimates that DiGi has ample cash to match last year's RM1.35 per share capital reduction on top of its regular dividends.

Kenanga, however, adopts a cautious stance with a “hold” recommendation on a target price of RM23.60 due to intensifying competition, especially with the introduction of MNP.
Telenor had submitted its plans to reduce its stake in DiGi to the Energy, Water and Communications Ministry and would make an announcement soon.

Citi sees any weakness to the stock price on this concern as a buying opportunity.

“We believe an announcement of a sale of 12% to third parties (foreign and local), rather than a potentially earnings dilutive merger with Time dotCom, will be welcomed by the market and mark a positive catalyst for the stock,” it said.

(Source :http://biz.thestar.com.my/news/story.asp?file=/2007/10/29/business/19266169&sec=business)

DiGi 3Q07 net profit to grow 45% to RM263m

KUALA LUMPUR: DiGi.Com Bhd is expected to post a year-on-year net profit growth of 45% to RM263 million on the back of a 21% growth in revenue in its third quarter ended Sept 30, 2007 (3Q07), driven by continued strong subscriber growth and high usage stoked by higher wages, said CIMB Research.

The research house estimated the telecommunications provider had added about 300,000 to 350,000 subscribers in 3Q07 versus 471,000 in 1Q07 and 241,000 in 2Q07.
“Malaysia’s 1.6 million civil servants and pensioners enjoyed a 7.5% to 42% increase in pay from July 1, 2007, which should translate in greater mobile usage.
“Also, we believe the cut in DiGi’s prepaid domestic long distance (DLD) rates to match local call rates should boost revenue in the medium term by attracting more users and encouraging usage,” it said yesterday.

CIMB Research maintained its outperform recommendation on DiGi at RM22.40 and an end-2008 target price of RM30 for DiGi, based on discounted cash flow, 10.3% weighted average cost of capital and terminal growth 2.5%.

The research house said catalysts for re-rating include continued strong growth, market share gains and further capital management initiatives.

“Management may offer greater clarity on its capital management during the results release, in light of the country’s proposed introduction of a single-tier tax system. Our estimates are 6% to 18% above consensus, reflecting our optimistic view of its execution and competitive environment.

“We advocate accumulating on any weakness in the share price arising from concerns over Telenor’s mandated selldown from 61% to 49% by Dec 31, 2007,” it said, adding DiGi offered one of the best values among its regional cellular companies’ universe.

CIMB Research said it expected DiGi to continue clawing its postpaid market share due to its aggressive push in the small and medium-scale enterprise segment.

“The company offers free calls between two companies/organisations subject to a minimum monthly commitment whereas its competitors only offer free calls within a single company,” it said.

The research house said competition had been benign although it appeared to heat up in the middle of this year.

“We expect EBITDA (earnings before interest, tax, depreciation and amortisation) margin to be unchanged quarter-on-quarter at 47%, a little above management’s FY07 guidance of mid-40’s.
“In July 2007, DiGi and Maxis Communications Bhd were locked in a battle to offer the lowest call rates for selected plans but the war did not drag as earlier feared,” it said.

(Source: The Edge Daily , Surin Murugiah )

Little Rachel Chan gets to meet DiGi’s ‘yellow men’

PETALING JAYA: Little Rachel Chan had been so enchanted by the yellow men on TV that she wanted to meet them.

So the seven-year-old wrote them a letter.“DiGi man, can you come to my house please? I like you because you are yellow.“I see you on TV, you follow people; please, please, please come to my house and follow me to school.”

Yesterday, she got her wish. The yellow men showed up at her doorstep.

Two DiGi Yellow Coverage Fellows (YCF) came to her house in Taman Megah here and the little girl hid shyly behind her mother when she saw them. But not for long.Soon, she started dancing and gave jumping high fives to the duo.

Her first question was, “Why can’t they talk?”, which drew laughter from DiGi officials who explained to her that the YCF was like its namesake, a figure to represent a mobile phone's coverage capacity.She then asked whether the YCF came in other colours besides yellow.“Are there green or blue DiGi men, Mummy?“Why aren't they doing the 'boing-boing' dance now?” the Year Two pupil asked.

Rachel, who first saw the antics of the YCF on television following mobile phone users to illustrate DiGi's wide coverage, had written the letter several weeks ago.Without Rachel's knowledge, her mother Esther Lai forwarded the letter to the mobile communications provider.“Almost every night before I tuck Rachel to bed we would download video clips of the YCF from the Internet and we would always have a good laugh watching what my daughter calls the 'boing-boing' dance.“Even when we pass a DiGi outlet, she would ask me whether the DiGi man was inside hiding somewhere,” said Lai.

Rachel was chauffeur-driven in an MPV and accompanied by both YCFs to her school here yesterday, much to the envy of her schoolmates who were assembled in the hall.Pandemonium filled the hall as the two YCFs thrilled the thousand-odd students with their “boing-boing dance.”They also handed out candies and other goodies to them.

Source: http://thestar.com.my/news/story.asp?file=/2007/3/27/nation/17260493&sec=nation

DiGi’s ad campaign makes Malaysia proud

NAGA DDB, together with DiGi Telecommunications, brought home Malaysia’s first-ever gold at the Asian Marketing Effectiveness (AME) Awards 2006 for the recent DiGi Yellow Coverage Fellow campaign.

In total, the DiGi campaign brought home the gold for “Most Effective Use of Advertising in Asia” and a silver AME in the “Best Idea” category.

The AME is the only international marketing award in Asia judged primarily on the measurable impact of advertising campaigns on the clients’ business.

This is Naga DDB’s fifth AME award in four years, and also the first year that any Malaysian brand has been recognised with a rare gold AME award.

Apart from being one of the most consistently recalled campaigns in Malaysia, DiGi’s own brand health tracking showed the DiGi’s Yellow Coverage Fellow garnered an overwhelming 83 per cent approval rating from the public. It is also reflected in the number of letters and e-mails received by DiGi requesting personal appearances.

The campaign also featured heavily in both local and regional media, generating an estimated media value of RM826,144.83 at the time of submission back in April this year. In the same period, Naga DDB also tracked and documented 349 online blog mentions in at least three different languages and 50 YouTube films, including six home-made spoofs.

“I think of all the votes approval we’ve received from this campaign, the huge public following and affection the Yellow Coverage Fellow has shown — both online and in the letters DiGi received — have been the most gratifying.

“You know you’ve done something right when people ask for Yellow Man baby-sitting services and guest appearances at weddings,” Naga DDB managing director Chit Quah said in a statement.

Naga DDB’s win follows a series of recent coups for the agency, including being named Malaysia’s “Agency of the Year” for the second year in a row by Campaign Brief Asia as well as securing new assignments from Astro and IGB Corp.

Among those present to receive the award were DiGi’s principal brand consultant Steven Mak, associate Marcom consultant Rema Chetty, Naga DDB’s creative director Alvin Teoh, creative group head Richard Koh, business unit head Sarina Sham and brand manager Sazrina Samat.

Source: httpp://www.btimes.com.my/Current_News/BT/Thursday/Nation/20070920004659/Article/