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2016-11-24

Bittium Oyj: Bittium Corporation updates its strategy and financial targets

Stock exchange release

Free for publication on November 24, 2016 at 8 am (CET+1)

Bittium Corporation updates its strategy and financial targets

Bittium Corporation has updated its strategy to strengthen its
position in the global markets and to speed up its growth. The
company plans to make significant investments in the future by
increasing significantly the R&D investments in its own products and
solutions in the year 2017. In line with the nature of the defense
and public safety markets, the investments will pay back in a longer
time period and therefore Bittium plans to activate the most of the
R&D investments to its balance sheet. The company has a strong
balance sheet and financial position.

Bittium has decided to establish a new product and service area around
healthcare technology. By combining healthcare technologies with
Bittium's long-term experience and knowhow in wireless and security
technologies give the company good conditions to serve its customers
in healthcare sector by offering them new kinds of products and
services. As the first step to build the competencies in healthcare
technology on November 10, 2016 Bittium acquired Mega Electronics
Ltd, a company specialized in measuring and monitoring biosignals.

Bittium continues to search for inorganic growth opportunities in all
its product and service areas and is prepared to invest in
acquisitions that strengthen the company's growth strategy.

According to its updated strategy the company's business will be
divided into three product and service areas effective as of December
1, 2016: Defense & Security, Connectivity and Medical Technologies.

Defense & Security

In the Defense & Security product and service area Bittium offers
globally leading products and services for its customers in the
defense, security and public safety markets. Bittium aims to increase
significantly investments in various authority and special terminals
as well as in related software development and extend its tactical
communication product portfolio for defense industry. Growth in the
net sales is sought especially from own products and product
platforms that Bittium offers for international defense and public
safety markets.

Bittium's competitiveness in these markets is based on trust and
reliability, hi-quality of the products and services, as well as on
advanced technology and security knowhow developed within the company
during the last 30 years. Bittium offers its customers in the defense
market new kind of efficiency for their management systems with
products that enable faster data transfer, better mobility, and large
compatibility with other communication systems.

In the public safety markets the transition towards LTE-based
technology is expected to accelerate in the next few years. As the
security threats are growing increasingly more security demands are
set for the communication systems. Bittium increases investments in
further developing its product offering for these markets. The
company also continues offering public safety markets R&D services to
develop special terminals and related systems that use both
terrestrial and satellite networks.

In the defense, security and public safety markets there are signs of
unification regarding technologies as well as in security demands.
Also many customers, partners and supply chains are mostly the same
and the trend towards this is strengthening. Bittium will merge two
separate product and service areas into one and with that synergy
Bittium is able to better serve the customers in defense and security
technology.

The defense, security and public safety markets are slowly evolving
markets by their nature. They are characterized by long sales cycles
driven by the national governments' long preparation periods of
projects and purchase programs. The purchases of the selected
products are typically executed over several years.

Connectivity

The development of wireless technology continues and the
digitalization creates growing need for wireless connections. Bittium
offers R&D services and wireless connectivity solutions for its
customers, and the demand is expected to increase within the next few
years. The competitiveness of the company in these markets is based
on the strong technology and security competence, as well as on trust
and reliability, and quality. The more critical the system is, the
more significant role Bittium's strengths have.

The demand for developing 4G-technology based network equipment is
decreasing as the technology and market reach their maturity.
However, Bittium is already strongly involved in the development of
5G technology which in a long run gives the company a good position
to offer even more advanced connectivity solutions also for customers
in other markets.

Medical Technologies

In the healthcare sector remote monitoring and home care markets are
growing strongly. Patient monitoring in the hospital environment is
also changing into wireless. These trends create demand for the
digitalization of services, wireless capability and secure
connections. For these markets Bittium has decided to establish a new
product and service area around healthcare technology. As the first
step to build the competencies in healthcare technology, on November
10, 2016 Bittium acquired Mega Electronics Ltd, a company specialized
in measuring and monitoring biosignals.

By combining healthcare technologies with Bittium's long-term
experience and competence in wireless and security technologies give
Bittium good conditions to serve its customers in healthcare sector
by offering them new kinds of products and services.

Bittium plans to strengthen its product and service offering for these
markets also by searching for acquisition targets that complements
the whole.

Financial targets

Bittium has announced earlier that it targets 10 percent annual growth
in net sales and to reach EBIT level 10 percent of net sales in the
year 2017 at the latest. The company believes that in the coming
years it is able to grow its net sales even more than the earlier
announced target, and therefore sets up a target to exceed the annual
10 percent growth target of the net sales.

However, Bittium believes, that during the year 2017 it is not yet
able reach the targets set for the growth in the net sales and EBIT
level. The reason for this is the termination of significant customer
cooperation with a global network equipment manufacturer, of which
Bittium announced earlier, that is expected to materialize faster and
more extensively than the company estimated earlier. According to the
information received by Bittium, the net sales from this customer
cooperation will end completely in the beginning of the second
quarter of the year 2017. To this extend this kind of extensive and
rapid decrease in the services business net sales is most likely
difficult to be replaced in a short term. In addition, the operating
profit level of the year 2017 is also affected by the planned
investments to enable the future growth.

Bittium targets further to increase the share of net sales generated
from own products and product platforms. According to the targets
Bittium announced earlier, in the year 2017 the share of net sales
generated from own products and product platforms is clearly higher
than in the year 2014, when the product based net sales was 26.7
percent of the net sales.

Oulu, November 24, 2016
Bittium Corporation
The Board of Directors

Further information

Hannu Huttunen
CEO
Tel. +358 40 344 3507

Distribution

Nasdaq Helsinki
Main media

Bittium

Bittium specializes in the development of reliable, secure
communications and connectivity solutions leveraging its 30 year
legacy of expertise in advanced radio communication technologies.
Bittium provides innovative products and services, customized
solutions based on its product platforms and R&D services.
Complementing its communications and connectivity solutions, Bittium
offers proven information security solutions for mobile devices and
portable computers. Starting from November 10th, Bittium offers its
customers also healthcare technology products and services in
biosignal measuring in the areas of cardiology, neurology,
rehabilitation, occupational health and sports medicine. Net sales of
continuing operations in 2015 was EUR 56.8 million and operating
profit was EUR 2.3 million. Bittium is listed on Nasdaq Helsinki.
www.bittium.com

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http://news.cision.com/bittium-oyj/r/bittium-corporation-updates-its-str...
http://mb.cision.com/Main/13623/2129814/594588.pdf

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