SSE Telecom, Inc. Reports Second Quarter Results - Company Financial Information

Cambridge Telcom Report, May 8, 2000

SSE Telecom, Inc. (Nasdaq: SSET) announced Wednesday a net loss for the quarter ended March 25, 2000 of approximately $1.0 million, or $0.17 per diluted share, compared to a net loss of approximately $1.9 million, or $0.32 per diluted share, for the same quarter last year. Net loss for the quarter ended March 25, 2000 benefited from a pre-tax gain on the sale of marketable securities of approximately $1.7 million, while net loss for the quarter ended March 27, 1999 included an income tax benefit of approximately $1.3 million.

* Operating loss for the quarter ended March 25, 2000 was approximately $2.7 million compared to an operating loss of approximately $3.3 million for the same quarter last year. Revenue for the quarter ended March 25, 2000 was approximately $3.9 million compared to approximately $4.7 million in the same quarter last year. Backlog at March 25, 2000 was approximately $2.2 million compared to backlog of approximately $2.5 million at March 27, 1999.

For the six-month period ended March 25, 2000, the net loss was approximately $1.7 million, or $0.28 per diluted share, compared to a net loss of approximately $1.3 million, or $0.23 per diluted share, for the same period last year. Results for the first six months of fiscal 2000 and 1999 include pre-tax gains on the sale of securities of approximately $3.3 million and $3.2 million, respectively. Fiscal 1999 also included an income tax benefit of approximately $1.0 million.

* The operating loss for the six-month period ended March 25, 2000 was approximately $5.0 million, compared to an operating loss of approximately $5.7 million for the same period last year. Revenue for the first six months of fiscal 2000 was approximately $8.8 million compared to approximately $12.4 million for the same period last year.

On the balance sheet at March 25, 2000, compared to September 25, 1999, cash increased to approximately $4.1 million from approximately $3.8 million, inventories were reduced to approximately $3.7 million from approximately $4.2 million and short-term assets increased to approximately $8.5 million from approximately $4.5 million.

Lee Blachowicz, SSET's President and Chief Executive Officer summarized: "Revenue for the quarter was impacted by soft demand for our traditional transceiver products. Also, as a result of very strong demand for certain electronic components, parts shortages have become a problem to contract manufacturers. During the quarter, materials shortages at contract manufacturers used for our traditional products negatively impacted our manufacturing cycle times. This in turn caused delays in deliveries and some loss of bookings of these products, further impacting our revenue. We believe these materials problems have now been solved and we are again quoting normal lead times for traditional products. Despite the effect of reduced revenues, our management of working capital continues to provide the funds needed to complete our metamorphosis as we become a provider of Satellite Internet transport solutions. At the end of March 2000, cash plus liquid investments equal about $12.5 million, and we have insignificant debt."

He continued, "We accomplished a number of important milestones in the quarter related to the rollout of our new iP3 Satellite Internet gateway product line. We completed successful beta tests with KPN/Station 12 in the Netherlands and with a large European systems integrator, and our iP3 products performed as specified. We have successfully completed the first two phases of beta test with a major U.S. service provider and are now entering the final phase with them, which involves carrying transatlantic Internet traffic. These beta test programs have accomplished our objectives: validation of iP3 performance by competent third parties, and providing vital customer feedback for product improvements and feature enhancements needed for full-scale rollout. We are now working closely with these and other customers to architect system solutions that will create value for their customers and iP3 orders for us.

"We have also initiated several strategic partnerships that we believe create significant value for our shareholders and make SSE Telecom the leading supplier of satellite Internet transport equipment. We have teamed with LiftOff .NET of the Netherlands to develop European channels to market that will address non-traditional customers of satellite services such as Internet Service Providers (ISPs) who wish to create new e-commerce solutions for their business clients. We entered into a technical partnership with Mentat Inc. of Los Angeles, which allows us to leverage its expertise in Internet protocols like TCP/IP to provide ever more effective IP transport via satellite."

Headquartered in Fremont, California, SSE Telecom, Inc. is a leading satellite earth station equipment supplier. The Company provides digital satellite communications solutions worldwide. The iP3 gateway from SSET enables system integrators, service providers and global enterprises to leverage a satellite's unique capabilities to quickly deploy reliable, revenue-enhancing, mission-critical IP-based services anywhere in the world. SSET can be contacted at 510-657-7552 and the company's web site is at www.sset.com.