what do you see? - Telular

Dear Shareholder
The past year has been an important one for Telular.
Since I assumed the role of CEO at the beginning of the
year, we finalized our exit of the fixed phone business;
capitalized on the long-awaited analog to digital
conversion in our Telguard business; began repurchasing
stock under a newly instituted share repurchase plan;
and just after the fiscal year ended, we closed an
acquisition in our key growth area – machine-tomachine
(M2M) communications. From a financial
perspective, we increased our income from continuing
operations in 2008 over 2007, despite somewhat lower
revenue; and more than doubled our cash position.
This is a tribute to the team’s careful management of
operating costs and dedicated focus on profitability.
We started 2008 with M2M as the new strategic focus
for Telular and we based this strategy on our key
strengths as a company:
• Designing specialty electronics for transmitting voice
and data over cellular
• The provision of cellular data services via resale
arrangements
• Operating a real-time, message and event
processing system
We have honed these strengths to a great extent
through the operation of our Telguard line of business
for the past ten years. It is our view that our success in
one of the oldest and largest M2M vertical markets –
security monitoring – indicates that we can achieve
even further success as more and more vertical
markets, outside of security, become economically
addressable as M2M applications.
In our Telguard business, we had sold a substantial
number of new units in advance of the analog sunset
date in February 2008. Afterwards, we experienced
a reduction in demand; most likely due to a
combination of factors, including conclusion of the
analog sunset peak demand, weakening of the housing
market, and increased competition. Nevertheless, we
ended fiscal 2008 with a record subscriber base of
427,000, an increase of 26% over fiscal 2007. Looking
forward, we continue to enhance our Telguard offering
and expect to grow its subscriber base and recurring
income stream for years to come. More importantly,
perhaps, is the fact that we can replicate the business
model for Telguard into other M2M applications,
such as tank-level monitoring.
Joseph A. Beatty