Digi International Acquires Wireless Leader MaxStream

Digi International Acquires Wireless Leader MaxStream

August 04, 2006

Completely Complementary Product Lines Move Digi into Leadership Position in Wireless Device Networking

    MINNETONKA, Minnesota, Aug. 4 /Xinhua-PRNewswire/ --
Digi International(R) Inc. (Nasdaq: DGII) today announced
the acquisition of MaxStream(TM), Inc., a fast-growing,
privately held corporation and a leader in the wireless
device networking market.  The acquisition is a merger
transaction for $38.5 million of cash and stock, with
$19.25 million paid in cash and $19.25 million in Digi
stock.  

    Based in Lindon, Utah and employing 49 people,
MaxStream generated $10.4 million in revenue and $1.3
million in net income, or 12.7% of revenue, in the year
ending December 31, 2005. 

    MaxStream supplies device manufacturers and integrators
with reliable wireless modules and box products that meet
the unique needs of industry and commerce. The products are
easy-to-use and allow customers to wirelessly monitor and
control electronic devices.  To meet market needs,
MaxStream provides a menu of distance and speed options,
ranging from 100 feet to 40 miles, and a few kbps to 1.5
Mbps.  Some typical applications include automated utility
meter reading, oil and gas monitoring, remote control and
monitoring of commercial heating and air conditioning
systems, vehicle information access for fleet management,
industrial controls, wireless sensors, and electronic
signals.

     "This is really an exciting combination -- the
strategic fit between the two companies is
remarkable," said Joe Dunsmore, Chairman, President
and CEO of Digi. "Our product lines are entirely
complementary.  We're both focused on the commercial-grade
device networking market and our core strategies of
providing turnkey box products and embedded modules are the
same."

     "What a great opportunity this is for MaxStream
to join with a company that has such a great reputation in
the industry," said Brad Walters, President and CEO of
MaxStream.  "Culturally, the two companies are very
compatible and we're really looking forward to jointly
addressing the rapidly growing wireless market."

    Broad Wireless Offering

    Digi is focused on connecting commercial and industrial
devices via both embedded and boxed/packaged products.  With
a long history of wired connectivity solutions -- serial,
USB, Ethernet -- Digi has moved aggressively into wireless
in the past four years with products and capabilities in
both the WiFi (802.11) and cellular arenas.   As the world
continues to migrate from wired to wireless, MaxStream
wireless technologies and products significantly expand
Digi's wireless offering -- covering both short and medium
range using embedded modules and boxed/packaged solutions. 
Additionally MaxStream has quickly become a leader in the
ZigBee/802.15.4 market targeted at very low power, low
bandwidth solutions for applications such as wireless
sensor networks.

     "The combination of Digi and MaxStream provides
the capability to provide their customers end-to-end
wireless solutions," said Glenn Allemdinger, Founder
and President of Harbor Research, Inc.  "Other
companies are limited in what they can provide either the
local or the wide area network wireless solution.  Digi had
the WAN with their Cellular Routers and part of the LAN with
their embedded WiFi solutions.  Adding MaxStream's
proprietary and Zigbee-based wireless technologies
completes their portfolio.  Digi has done a wonderful job
of transforming itself from its legacy products into a
provider of commercial grade wireless solutions.  What
impresses me is that they have done this transformation
while maintaining strong financial performance.  We
consider Digi "best-in-class" when it comes to
Corporate Development."

    Merger Specifics and Conference Call

    Pursuant to the terms of the merger agreement,
MaxStream became a wholly owned subsidiary of Digi.  The
cash and stock purchase price was used to purchase all of
the outstanding shares of MaxStream stock and to buy out
all outstanding MaxStream stock options.  Digi will retain
the MaxStream office in Lindon, Utah.

    Digi expects MaxStream to contribute in excess of $2.5
million in revenue for the fourth fiscal quarter of 2006. 
Digi anticipates MaxStream will contribute revenue in a
range of $20 million to $24 million for fiscal year 2007.

    Digi anticipates that one-time expenses associated with
the acquisition, primarily in-process research and
development, will reduce earnings per diluted share by
$0.07 to $0.09 for the fourth fiscal quarter of 2006.  Digi
expects the MaxStream acquisition will be $0.01 to $0.03
accretive per diluted share during fiscal year 2007.  Digi
expects MaxStream's gross margin to be in the 53-57% range
for fiscal 2007.

    Digi will host a conference call to discuss the
transaction at 4:00 p.m. Central Time on Thursday, July 27,
2006, and invites all those interested to participate either
by phone or on the Web.  Participants can access the call
directly by dialing 1-888-548-8860.  International
participants may access the call by dialing 706-679-3942. 
A replay will be available for one week following the call
by dialing 1-800-633-8284 for domestic participants or
402-977-9140 for international participants and entering
access code 21300340 when prompted.  Participants may also
access a live web cast of the conference call through the
Investor Relations section of Digi's web site,
http://www.digi.com .

    About Digi International

    Digi International, based in Minneapolis, makes device
networking easy by developing products and technologies
that are cost effective and easy to use. Digi 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
http://www.digi.com or call 877-912-3444 (U.S.) or
952-912-3444 (International). 

    About MaxStream

    MaxStream is a leading worldwide developer of wireless
modem networking for electronic devices.  MaxStream
provides wireless modem modules, stand-alone radio modems,
RF design services, and supporting software.  Products and
services by MaxStream include designing, manufacturing and
supporting wireless communications for embedded systems and
box products. 

    For more information regarding MaxStream's products and
services, contact MaxStream, Inc. at
http://www.MaxStream.net , [e-mail] , or call
[phone].

    Digi, Digi International, and the Digi logo are
trademarks or registered trademarks of Digi International
Inc. in the United States and other countries.  MaxStream
is a trademark of MaxStream, Inc.  

    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.

    For more information, please contact:

    Press Contact:                                         
         
     Lucy Hou 
     Marketing Communication Specialist, China
     Digi International
     Tel:   [phone] x12
     Fax:   [phone]

    Investor Contact:
     Erika Moran
     The Investor Relations Group    
     Tel:   [phone]
     Email: [e-mail]
     Web:   http://www.digi.com.cn   

SOURCE  Digi International Inc.