NMS Communications Announces Financial Results for the First Quarter Ended March 31, 2008

Business Wire, May 12, 2008

FRAMINGHAM, Mass. -- NMS Communications Corporation (NASDAQ: NMSS), a leading provider of applications and platforms for value-added services in mobile telecommunications today announced financial results for the first quarter ended March 31, 2008.

Total revenues from continuing operations for the first quarter of 2008 were $19.2 million, an increase of 7% compared to $18 million for the corresponding quarter in 2007, and a decrease of 15% compared to $22.7 million for the fourth quarter of 2007. Loss from continuing operations for the first quarter of 2008 was $(6.1) million, or $(0.14) per share, compared to a loss from continuing operations of $(4.4) million, or $(0.10) per share, for the first quarter of 2007. Net loss for the first quarter of 2008 was $(6.2) million, or $(0.14) per share, an increase compared to a net loss of $(5.1) million, or $(0.12) per share, for the first quarter of 2007. The first quarter of 2008 includes a write-off of $1.9 million of Verso Technologies, Inc. common stock held by the Company as well as $0.4 million of restructuring charges related to LiveWire Mobile synergies associated with the acquisition of Groove Mobile, Inc.

Non-GAAP loss from continuing operations was $(1.9) million, or $(0.04) per share, for the first quarter of 2008, compared to a non-GAAP loss from continuing operations of $(2.8) million, or $(0.06) per share, in the first quarter of 2007. Our non-GAAP loss from continuing operations for the first quarter of 2008 includes the previously mentioned restructuring charges. A complete reconciliation between net loss and loss per share on a GAAP basis and a non-GAAP basis is provided in the financial tables at the end of this press release.

Cash totaled $10.4 million on March 31, 2008, compared to cash, cash equivalents and marketable securities of $30.2 million at the end of the previous quarter. The decrease in cash was primarily related to the $14.5 million cash paid in connection with the acquisition of Groove Mobile, Inc. on March 17, 2008, and the previously mentioned write-off.

Business Perspective

"We continue to drive our strategy of focusing on value creation in each of our two businesses - LiveWire Mobile and NMS Communications. In March of this year, NMS Communications Corporation created a wholly-owned subsidiary, LiveWire Mobile, Inc. and announced LiveWire Mobile's acquisition of Groove Mobile, which represents a major milestone in solidifying LiveWire Mobile's early leadership position in the large and rapidly growing market for mobile personalization services. With the acquisition of Groove Mobile, LiveWire Mobile gains significant new customers, enhances its value proposition to operators, accelerates its move into managed services and improves its financial profile. The NMS Communications business continues to generate strong contribution margins even in the face of a challenging global demand environment, and we expect a stronger second half of the year in this business," said Bob Schechter, NMS Communications Corporation Chairman and CEO.

"Revenues from the LiveWire Mobile business grew significantly year-over-year and from the prior quarter, with minimal contribution from the Groove Mobile acquisition which occurred late in the quarter. Within the first quarter, LiveWire Mobile successfully converted several previously indirect ringback tone platform customers into direct customers. This is an important step as we continue to focus on transitioning our business model from indirect product sales toward direct managed services delivery. This transition will be accelerated by the addition of Groove Mobile, new managed services wins and cross-sell opportunities based on our expanded managed services mobile personalization platform. While we are still early in the integration of Groove Mobile, we are excited about the number of cross-sell opportunities we have already identified and the ability to expand revenue per subscriber.

"The NMS Communications business experienced a sequential decline due to normal seasonal weakness as well as a challenging deployment environment specifically in the Asia Pacific region. We again had strong contribution margins and this continues to be a hallmark of this business. Within the quarter, we were pleased to have delivered in conjunction with WITCOM Co. Ltd., a new network service to help SK Telecom brand its network and provide incentives through a unique audio experience for customers making in-network calls. Our Open Access media processing boards and signaling products were used to develop this next generation service known as T-Ring. We continue to expect to see a rebound of the NMS Communications business in the second half of the year due to our seasonal patterns as well as an increase in server sales and new design wins," Schechter continued.

"In summary, we remain excited about the long-term prospects of LiveWire Mobile and believe with the acquisition of Groove Mobile, we offer the most comprehensive mobile personalization platform available. We continue to believe that our NMS Communications business is positioned for moderate growth over the long term while generating strong levels of profitability. Over the past year, we have taken a series of steps to more clearly delineate and enhance the value of each of our LiveWire Mobile and NMS Communications businesses. Ultimately, we believe the best way to realize value is to separate the two businesses and we are continuing to explore options to do so in the most effective way for our shareholders," Schechter concluded.