Network Equipment Technologies Announces Final Results for Q2 Fiscal 2007

Exhibit 99

Network Equipment Technologies Announces Results for Q2 Fiscal 2007

12% Increase in Revenue Driven by Growth in Sales of VX Series Platform

Fremont, CA, October 25, 2006 – Telecommunications equipment maker Network Equipment Technologies, Inc. (NYSE:NWK), today reported its results for the second quarter of fiscal 2007.

Total revenue was $19.6 million, up from $17.4 million in the prior quarter and down from $21.6 million in the same period of the prior year. Product revenue was $17.2 million, up from $14.8 million in the prior quarter and down from $18.1 million in the same period of the prior year.

Net loss for the quarter was $2.4 million, or $0.10 per share, compared to a net loss of $3.7 million, or $0.15 per share in the prior quarter and a net loss of $5.7 million, or $0.23 per share for the same period of the prior year.

Cash and investment balances at the end of the quarter were $84.3 million, compared to $84.8 million at the end of the prior quarter and $94.6 million at the end of the second quarter of the prior year.

Total revenue for the six-month period ended September 29, 2006 was $37.0 million, compared to $40.0 million for the same period of fiscal 2006. Net loss for the six-month period was $6.1 million, or $0.25 per share, compared to net loss of $10.8 million, or $0.44 per share, for the same period of fiscal 2006.

“In the second quarter, we again saw sequential growth in product sales in the government sector,” commented C. Nicholas Keating, President and CEO. “The increase in revenue was driven by growth in sales of our VX Series platform, which accounted for more than one-third of product revenue in the quarter. The VX Series can now handle 100 secure voice calls, which has been a requirement for a number of key government customers.” Continued Keating, “As we pursue numerous development initiatives, we are also managing our expenses. Our cash balances at the end of the quarter declined only slightly from the prior quarter.”

Other recent highlights include:

NET became a Microsoft Certified Partner earlier this month, which will aid the company as it aligns key elements of its business with Microsoft’s unified communications strategy. Also, Microsoft’s IT Group is continuing its deployment of our VX platform worldwide for their IP telephony network.

In partnership with Bay Microsystems, the company neared completion of the first release of the NX5010 product. The NX5010 is a compact, scalable, 10 gigabit per second, multi-service aggregation and switching platform. As separately announced today, the company received an advanced initial order for multiple units of the NX5010 from the U.S. Naval Research Laboratory, conditioned upon the general availability of the product, which is expected shortly.

Conference Call Information:

The company will be hosting a conference call to discuss these results at 5:30 p.m. ET. The conference call will begin at 5:30 p.m. ET. Please dial (800) 295-3991 or (617) 614-3924 and provide conference ID# 57979240 to access the call. The conference call will also be broadcast from http://ir.net.com.

A digital recording will be provided by telephone two hours after the completion of the conference call through midnight on November 1, 2006. To access the replay, please dial (888) 286-8010 or (617) 801-6888 and enter conference ID# 46352857. The replay will also be available on the company's website for one year.

About Network Equipment Technologies, Inc.

Network Equipment Technologies, Inc. (NET) is a leading provider of multi-service network exchange solutions that enable flexible, cost-effective network evolution. A pioneer of the networking industry, NET has been delivering network exchange solutions to enterprise and government customers for more than 20 years.

Visit www.net.com for more information.

Forward Looking Statements

This press release contains forward-looking statements relating to revenue, expenses, cash balances, existing and potential strategic relationships, product development initiatives, and possible future operating results within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that such statements are based on current expectations, forecasts and assumptions that involve risks and uncertainty that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that could affect such results include the timing and budgeting of government telecommunications projects, our ability to commercialize new products and product enhancements, new competition and technological changes in the telecommunications industry, the performance of strategic partners regarding product and marketing activities, the timing of orders and satisfaction of conditions to recognize revenue, and unanticipated or extraordinary expenses, as well as the factors identified in Network Equipment Technologies' most recent Annual Report on Form 10-K and most recent subsequent Quarterly Report on Form 10-Q. Network Equipment Technologies disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

NX Series, NX5010, and VX Series are trademarks of Network Equipment Technologies, Inc.

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NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)


	Quarter Ended						Six Months Ended
		September 29, 2006			September 30, 2005			September 29, 2006			September 30, 2005
Revenue:
Product	$	17,216		$	18,138		$	32,046		$	32,852
Service and other		2,334			3,497			4,948			7,156
Total revenue		19,550			21,635			36,994			40,008
Costs of revenue:
Cost of product revenue		7,310			8,097			13,128			14,241
Cost of service and other revenue		2,421			3,087			4,794			6,340
Total cost of revenue		9,731			11,184			17,922			20,581
Gross margin		9,819			10,451			19,072			19,427
Operating expenses:
Sales and marketing		4,246			6,515			8,880			13,166
Research and development		5,302			6,049			10,703			11,771
General and administrative		3,004			2,758			6,269			4,987
Restructuring costs		3			1,981			1			1,915
Total operating expenses		12,555			17,303			25,853			31,839
Loss from operations		(2,736	)		(6,852	)		(6,781	)		(12,412	)
Other income (expense), net		(69	)		33			(70	)		58
Interest income, net		403			207			747			350
Loss before taxes		(2,402	)		(6,612	)		(6,104	)		(12,004	)
Income tax expense (benefit)		4			(890	)		6			(1,181	)
Net loss	$	(2,406	)	$	(5,722	)	$	(6,110	)	$	(10,823	)
Per share data:
Net loss:
Basic	$	(0.10	)	$	(0.23	)	$	(0.25	)	$	(0.44	)
Diluted	$	(0.10	)	$	(0.23	)	$	(0.25	)	$	(0.44	)
Common and common equivalent shares:
Basic		24,848			24,624			24,840			24,742
Diluted		24,848			24,624			24,840			24,742

NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)


		September 29, 2006		March 31, 2006
Assets
Cash and investments	$	84,251	$	86,221
Accounts receivable, net		12,102		9,705
Inventories		9,976		12,229
Prepaid expenses and other assets		3,174		3,407
Total current assets		109,503		111,562

Property and equipment, net		18,352		20,749
Other assets		4,603		4,367
Total assets	$	132,458	$	136,678
Liabilities and Stockholders' Equity
Accounts payable	$	7,367	$	6,061
Other current liabilities		12,129		13,092
Total current liabilities		19,496		19,153

Long term liabilities		821		673
7 1/4% convertible subordinated debentures		24,706		24,706
Stockholders' equity		87,435		92,146
Total liabilities and stockholders’ equity	$	132,458	$	136,678