Sonus Networks Reports 2000 Fourth Quarter and Annual Financial Results

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Q4 Revenues Grow to $28.6 Million, Increase 84% Over Preceding Quarter; Company Reports First Profits

WESTFORD, Mass., January 18, 2001 -Sonus Networks, Inc. (Nasdaq: SONS), a leading provider of voice infrastructure solutions for the new public network, today reported financial results for its fourth quarter and fiscal year ended December 31, 2000.  

Revenues for the fourth quarter of fiscal 2000 were $28.6 million compared with $15.6 million for the third quarter ended September 31, 2000, an increase of 84 percent.  Net income, excluding stock-based compensation, for the fourth quarter of fiscal 2000 was $0.1 million or $0.00 per share, compared with a net loss, excluding stock-based compensation, of $5.4 million or $0.04 per share on a pro forma basis for the third quarter of fiscal 2000. 

Net loss for the fourth quarter, including stock-based compensation, was $6.3 million or $0.04 per share, compared with a net loss of $12.4 million or $0.09 per share for the third quarter of fiscal 2000.

Revenues for the fiscal year 2000 were $51.8 million.  Net loss, excluding stock-based compensation, for the fiscal year 2000 was $23.3 million or $0.17 per share, on a pro forma basis.  Net loss, including stock-based compensation, for the fiscal year 2000 was $50.0 million or $0.37 per share on a pro forma basis.

Certain per share amounts above are on a pro forma basis, which assumes the conversion of all redeemable convertible preferred stock into common stock as if such conversion occurred at the date of original issuance. 

"We are extremely pleased with our fourth quarter results, particularly since we achieved our first quarter of profitability, excluding stock-based compensation," said Hassan Ahmed, president and CEO, Sonus Networks.  "The significant growth in revenues reflects increased demand for our next-generation voice infrastructure products, and the expanding number of customers who have adopted Sonus solutions.  We're very gratified with the progress we've made in our drive to become the premier franchise in next-generation voice infrastructure solutions."  

Commenting on the year, Ahmed said: "Fiscal 2000 was a year of significant growth across every dimension of our business.  During the year, we undertook the initiatives to establish Sonus as the leader in the market for packet voice solutions.  We embarked upon our acquisition strategy with our purchase of telecom technologies.  We expanded our product portfolio, established new partnerships, and moved into new geographies.  At the same time, we continued to build an excellent team of networking professionals and an infrastructure that positions us for success as we enter the next phase of our company's growth."  

In November, Sonus announced that it would acquire privately-held telecom technologies, inc., a leading developer of next-generation softswitch solutions.  The acquisition of Richardson, Texas-based telecom technologies and its award-winning INtelligentIPO Softswitch, furthers Sonus' drive to deliver all of the network intelligence that service providers require to successfully deploy end-to-end, heterogeneous, packet voice networks.  The acquisition, which also provides Sonus with a strong team of engineering and product development talent focused on advanced software solutions for the voice market, was completed today. (See related press release "Sonus Networks Completes Acquisition of telecom technologies, inc.")  

Also in the fourth quarter, Sonus continued to add to its list of marquee customers.  The company announced that XO Communications, one of the world's fastest-growing providers of broadband communications services, selected Sonus to provide an IP-based telecommunications switching platform.  XO plans to deploy the Sonus Packet Telephony suite, including the GSX9000 Open Services Switch, the PSX6000 SoftSwitch and the SGX2000 SS7 Signaling Gateway, throughout its North American fiber optic network over the next 18 months. 

In December, Sonus was recognized as the worldwide leader in providing carrier-class media gateway and softswitch solutions to the telecommunications industry.  The company's leadership position was confirmed in reports issued by three leading industry research firms, Synergy Research Group, Infonetics and Cahners In-Stat.  Synergy Research ranked Sonus number one in both the carrier-class voice-over-packet media gateway and softswitch categories.  Additionally, Infonetics named Sonus as the leading provider of voice/data switches and Cahners In-Stat data showed Sonus as the leader in purpose-built carrier VoIP gateways.  

In the fourth quarter, Sonus continued to expand its international operations, enabling the company to better support carrier customers in Europe and Asia as they plan, and begin to deploy, their next-generation voice networks.  In October, Sonus built on its presence in Europe with the opening of regional offices in France and Germany.  In November, Sonus established direct operations in Asia, locating its Asia Pacific headquarters in Singapore.  Sonus' new direct operations will serve the rapidly growing Asia service provider market, including next-generation carriers as well as established service providers throughout the entire region.  

Additionally, Sonus continued to forge relationships that broaden the solution set the company offers to the service provider market.   In that vein, Sonus formed a partnership with Riverstone Networks under which Sonus will resell the Riverstone RS series of switch routers to carrier customers.  The combination of the Sonus Packet Telephony suite and the Riverstone solutions offers service providers a reliable and cost-effective platform to aggregate and deliver packetized voice traffic to the network core.

About Sonus Networks

Sonus Networks, Inc. is a leading provider of voice infrastructure products for the new public network.  Sonus' solutions enable service providers to deploy an integrated network capable of carrying both voice and data traffic, and to deliver a range of innovative, new services.  The Sonus Open Services Architecture (OSA) and award-winning Packet Telephony suite cut the time-to-market for competitive new service products, allowing carriers and third-party developers to expand marketshare and build important new revenue streams.  Its highly scalable products fully interoperate with and extend the life and utility of today's public network.  Sonus embodies in its management and staff decades of experience in developing carrier-class voice, data and multimedia solutions for implementation in the world's largest networks.  Sonus, founded in 1997, is headquartered in Westford, Massachusetts.  Additional information on Sonus is available at http://www.sonusnet.com. 

This release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sonus that involve risks and uncertainties.  Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to Sonus' Prospectus, dated January 12, 2001, filed with the SEC, and the associated Registration Statement on Form S-4, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.  These risk factors include, among others, the Company's ability to grow its customer base, dependence on new product offerings, market acceptance of its products, integration risks relative to its acquisition of telecom technologies, rapid technological and market change and manufacturing and sourcing risks.

INtelligentIP is a registered trademark of Sonus Networks.  GSX9000, PSX6000, SGX2000 and Open Services Architecture are trademarks of Sonus Networks.  All other company and product names may be trademarks of the respective companies with which they are associated. 

(1) Pro forma basic and diluted net loss per share has been calculated assuming the conversion of all outstanding preferred stock into common stock, as if the conversion had occurred at the date of issuance. 

NOTE: Shares used in the net loss per share and the pro forma net loss per share calculations are split adjusted.