Hauppauge Digital Inc. (NASDAQ: HAUP), a leading developer of digital video TV and data broadcast receiver products for personal computers, today reported financial results for the fourth fiscal quarter and year ended September 30, 2009.

FOURTH QUARTER RESULTS

Net sales were $16.3 million for the fourth quarter of fiscal 2009, an increase of approximately 3.4% from the $15.7 million reported for the previous year’s fiscal fourth quarter.

The Company incurred a net loss of $1,551,256 for the fourth fiscal quarter ended September 30, 2009, compared to a net loss of $2,908,536 for the fourth fiscal quarter ended September 30, 2008. Net loss per share for the fourth fiscal quarter ended September 30, 2009 was $0.15 on a basic and diluted basis, compared to a net loss per share of $0.29 on a basic and diluted basis for the fourth fiscal quarter ended September 30, 2008.

FISCAL YEAR RESULTS

Net sales were $59.3 million for the fiscal year ended September 30, 2009 compared to $89.7 million for the fiscal year ended September 30, 2008, a decrease of approximately 34%.

The Company incurred a net loss of $7,143,021 for the fiscal year ended September 30, 2009, compared to a net loss of $3,088,189 for the fiscal year ended September 30, 2008. Net loss per share for the fiscal year ended September 30, 2009 was $0.71 on a basic and diluted basis, compared to net loss per share of $0.31 on a basic and diluted basis for the fiscal year ended September 30, 2008.

DISCUSSION OF RESULTS

Ken Plotkin, Hauppauge’s Chief Executive Officer stated, “Contributing to the sales decline for the fiscal year were weak sales in Europe, especially in key markets such as Germany and the UK, plus the strengthening of the U.S. dollar against the euro, the closing of Circuit City and a decline in sales of our TV tuner products to personal computer manufacturers. On the positive side, we saw growth in the sales of our TV tuner products in North America and an increase in our gross profit margins due to a favorable mix of products.”

“During fiscal 2009 we completed the integration of the former Pinnacle PCTV product line, acquired on December 24, 2008 from Avid Technologies, Inc. We established a new subsidiary called PCTV Systems SARL, to continue the development of PCTV products. While the integration of this complementary product line was accomplished before the end of our fiscal year, an inventory overhang of PCTV products in the retail sales channel in Europe caused a drag on our sales for the first six months of calendar 2009. With most of this inventory liquidated by the end of fiscal 2009, we anticipate sales of PCTV Systems product to accelerate.”

“Excluding expenses related to the PCTV Systems acquisition and operations, expenses for the fiscal year declined by about $2.8 million compared to fiscal 2008. While we cut expenses, we are cognizant of the fact that we need to continue to maintain our product development programs and other critical parts of our infrastructure for the Company to be well positioned when the global economic conditions improve.”

“In October 2009 Microsoft launched their new consumer operating system, Windows 7. Windows 7 gives live TV, received through a TV tuner card, a prominent spot in the Windows 7 Media Center application. Most of our new product development efforts over the last twelve months have been aimed at Windows 7.”

“With the completion of PCTV Systems integration, the continuing push in new product development at our three R&D facilities, the introduction of Windows 7, the positive sales trends we saw for domestic retail sales in fiscal 2009 and the expense reductions we made in fiscal 2009, we believe Hauppauge is well positioned in both sales channels and our product pipeline to take advantage of the new opportunities created by a recovering global economy.”

ABOUT HAUPPAUGE DIGITAL

Hauppauge Digital, Inc. is a leading developer of analog and digital TV receiver products for the personal computer market. Through its Hauppauge Computer Works, Inc. and Hauppauge Digital Europe SARL subsidiaries, the Company designs and develops analog and digital TV receivers that allow PC users to watch television on their PC screen in a resizable window and enable the recording of TV shows to a hard disk, digital video editing, video conferencing, receiving of digital TV transmissions, and the display of digital media stored on a computer to a TV set via a home network. The Company is headquartered in Hauppauge, New York, with administrative offices in Luxembourg, Ireland and Singapore, sales offices in Germany, London, Paris, The Netherlands, Sweden, Italy, Spain, Singapore, Taiwan, and California and research and development centers in Hauppauge, New York, Taipei, Taiwan and Braunschweig, Germany. The Company’s Internet web site can be found at http://www.hauppauge.com