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HandHeld Entertainment Remains on Target to Be Cash Flow Positive By the End of 2007, Company Execs Say in Investor Conference Call Held Wednesday, February 7, 2007

Posted on: Friday, 9 February 2007, 06:00 CST

Executives of HandHeld Entertainment™ (NASDAQ:ZVUE)(NASDAQ:ZVUEW) reiterated that the company expects to achieve cash flow positive results by the end of 2007 and that the Web sites now in its network had more than 13.7 million unique visitors in January 2007.

The disclosures were made during HandHeld Entertainment's investor conference call, held Wednesday, February 7, which is available for telephonic replay or viewing via the Internet -- details of which are below.

Key points made by HandHeld Entertainment executives during Wednesday's call include the following:

1) Monetize Recent Content Acquisitions

As a result of four Web site acquisitions made by the company since mid-November and most recently Putfile.com™ on February 5 (Dorks.com™, FunMansion.com™, YourDailyMedia.com™ and PutFile.com -- each focused on free user-generated video and other forms of media), HandHeld Entertainment now has a network of Web properties that (in combination with ZVUE.com™) attracted more than 13.7 million unique visitors and 83 million page views in January.

HandHeld Entertainment expects to be able to increase traffic to its network of Web properties from 17 million to 20 million unique visitors per month by end of 2007.

Increased traffic to HandHeld Entertainment's network of Web properties should lead to increased advertising revenue for the company: $0.025 to $0.03 per visitor by the end of 2007 up from the current revenue of $.005 per visitor.

As a result, the company expects to increase the advertising revenue from its network of Web sites to $500,000 per month by the end of 2007 up from the present $40,000 per month.

Additionally, the company also plans to continue its efforts to license and acquire compelling portable video content and build one of the largest online libraries in the world of downloadable videos with both free user-generated and premium commercial content.

(All traffic figures and rankings noted in this release were determined by the company by using Google Analytics and Alexa's traffic ranking system--unless stated otherwise)

2) Continue Operating Plan to be Cash Flow Positive by End of 2007

The company has reduced its operating expense through dramatic reduction of expenses and personnel to 30 full-time employees/equivalents down from 55.

Monthly cash burn has been reduced at HandHeld Entertainment to approximately $400,000 from approximately $700,000.

3) Hardware Business with Goal to Break Even

HandHeld Entertainment's next generation ZVUE player, the ZVUE 260, will remain value priced at less than $149. The ZVUE 260 is the smallest and lightest ZVUE yet, weighing nearly one ounce less than the video iPod (3.98 ounces versus 4.8 ounces respectively), it features a 2.5-inch active matrix TFT backlit screen and is the first ZVUE to feature a built-in audio speaker.

The company will continue its strategy for mass-market retail distribution, a strategy anchored by its relationship with Wal-Mart that sees HandHeld currently shipping product into more than 2,200 Wal-Mart stores in the U.S., while looking for opportunities to expand into other distribution outlets.

HandHeld Entertainment is continuing its plans to outsource future PMP development efforts to leading original equipment manufacturers (OEMs) and Original Design Manufacturers (ODMs), cutting time-to-market to four-to-five months versus the previous 12- to 18-month product design cycle.

The first example of its new OEM/ODM strategy is HandHeld Entertainment's successful launch of its ZVUE MP3 player in late Fall 2006. Developed in partnership with Sony BMG, the ZVUE MP3 player provided 30 of the top hits of 2006 pre-loaded on the player and was sold through Wal-Mart and InMotion Entertainment stores. Such pre-loaded ZVUE players are characterized by positive cash flow and solid gross margins with tie-ins back to the content sites and HandHeld Entertainment plans to continue such OEM and content partnering efforts in the future.

"In less than three short months we have successfully transformed our company into a world leader in the online video marketplace by creating our network of Web properties, giving us a complete media ecosystem of free and premium content that can be watched online, on our ZVUE players or on smartphones and PDAs," said Jeff Oscodar, president and chief executive officer of HandHeld Entertainment. "The Web sites now in our network attracted more than 13.7 million unique visitors and more than 83 million page views in January. Those traffic results make us a significant force in this market.

"I also believe that we will be able to leverage our library 400,000-plus (and growing) free and premium videos across our entire network of Web sites. Doing so will help us to attract more visitors and attract more user-generated content and create even more compelling advertising and promotional opportunities for our advertisers. We feel the end result should be increased revenue as we move forward and cash flow positive results by the end of 2007."

For further highlights of Wednesday's conference call held by HandHeld Entertainment, interested individuals are invited to listen to a replay by calling 877-660-6853 in the U.S. and 201-612-7415 for international callers. The following pass codes (both of which are required for playback) are as follows: account #: 286 and conference ID #: 230834.

The conference call and attendant slide presentation can also be viewed online by visiting the corporate Web site www.hheld.com/ir or at http://www.vcall.com/IC/CEPage.asp?ID=113382.

About HandHeld Entertainment, Inc.

HandHeld Entertainment is a digital-media-to-go company. Its network of Web sites (Putfile.com, YourDailyMedia.com, FunMansion.com and Dorks.com) attracts one of the largest audiences in the world of unique visitors viewing user-generated content. Its ZVUE family of mass-market portable media players is mass-market priced and available for purchase online and in retail locations across the U.S. Additionally, portable video lovers can visit HandHeld Entertainment's premium video content store at www.zvue.com to buy pay-per-download videos. HandHeld Entertainment's common stock and warrants are traded on the NASDAQ Capital Market (ZVUE, ZVUEW) and Boston Stock Market (HDE, HDEW), respectively. For more information, visit www.hheld.com/ir or call 415-495-6470.

About the ZVUE

HandHeld Entertainment's ZVUE line of portable media players is available in more than 2,200 Wal-Mart stores throughout the United States, as well as through other retailers and on the Internet. The SRP $99 (US) ZVUE plays videos and MP3 files and also allows users to view digital pictures from a digital camera or home recorded on a camcorder. HandHeld Entertainment also supplies Wal-Mart and InMotion Entertainment with the ZVUE MP3 player, an MP3 player pre-loaded with 30 of the top songs from 2006.

HandHeld Entertainment, Putfile.com, YourDailyMedia.com, FunMansion.com, Dorks.com, ZVUE.com and ZVUE are trademarks of HandHeld Entertainment. All other trademarks are property of their respective owners.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of various factors including the ability of the company to successfully commercialize its new technologies as well as risk factors set forth from time to time in HandHeld Entertainment's filings with the United States Securities and Exchange Commission, including Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K and other reports filed by the company with the SEC. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. As a result, investors should not place undue reliance on these forward-looking statements.

Source: Business Wire

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