Network Equipment Technologies, Inc. Form 8-K

Exhibit 99

NETWORK EQUIPMENT TECHNOLOGIES ANNOUNCES
FINAL FINANCIAL RESULTS FOR FISCAL Q4 2007

Quarterly Revenue Grows 87 Percent From Prior Year

Fremont, CA, May 2, 2007 – Telecommunications equipment maker Network Equipment Technologies, Inc. (NYSE:NWK), today reported its results for the fourth quarter of fiscal 2007, ended March 30, 2007.

Total revenue in the fourth quarter was $25.0 million, up from $13.4 million in the fourth quarter of fiscal 2006. Product revenue in the fourth quarter was $21.3 million, up from $10.2 million in the fourth quarter of fiscal 2006, an increase of 110 percent.

At the end of the fourth quarter, NET vacated its former manufacturing building in Fremont, incurring a charge of $10.1 million in the quarter. Of this charge, $5.4 million is related to the write-off of leasehold improvements and is non-cash. The write-off assumes that the company will be able to sublease the facility; the amount of the write-off could change depending upon actual market conditions. The write-off will eliminate expenses on the operating statement of approximately $850,000 per quarter going forward.

Net loss for the fourth quarter was $9.5 million or $0.37 per share, compared to a net loss of $10.2 million or $0.41 per share in the fourth quarter of the prior fiscal year.

For the fiscal year, total revenue was $84.1 million, up from $69.8 million in fiscal 2006. Product revenue for the year was $72.8 million, up from $56.7 million in fiscal 2006. Net loss for the year was $16.2 million or $0.65 per share, compared to a net loss of $27.2 million or $1.10 per share in fiscal 2006.

Cash balances at the end of the fourth quarter and fiscal year were $90.1 million, compared to $84.9 million at the end of the prior quarter and $86.2 million at the end of the prior year.

“Throughout fiscal 2007, we executed on a plan to reduce expenses, preserve our cash, and roll out a new product strategy. As a result, although we had some large non-recurring expenses this past quarter, today we are approaching profitability and we are cash flow positive from operations. In addition, we introduced a suite of NX Series and VX Series products that enable interoperability and integration with existing networks for seamless migration to secure IP-based voice and data communications,” commented C. Nicholas Keating, President and CEO. “Our VX1200 Unified Communications Gateway is now generally available and has received its first initial order for unified messaging and unified communications. In addition, version 1.2 of our NX5010 was made generally available today. We currently have more than 20 units of the NX5010 delivered and with th is new release have received an order for eight more systems.”

“We have also made progress on the operational front. We recently expanded our relationship with CACI International, we obtained final acceptance from NATO on a significant network upgrade, and we have begun the transition to a new contract manufacturer,” Keating added.

Conference Call Information:
The Company will be hosting a conference call today to discuss these results at 5:30 p.m. ET. Please dial (800) 561-2813 or (617) 614-3529 and provide conference ID# 96823708 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 May 9, 2007. To access the replay, please dial (888) 286-8010 or (617) 801-6888 and enter conference ID# 59204530. The replay will also be available on the Company's website for one year.

About Network Equipment Technologies, Inc.
For nearly a quarter of a century, Network Equipment Technologies, Inc. (NET) has provided voice and data communications equipment for multi-service networks requiring high degrees of versatility, interoperability, security and performance. NET’s broad family of products are purpose-built for mixed-service, multi-protocol networks; bandwidth-sensitive site communications; high performance, security-sensitive transmissions; and converged communications. The Company’s NX (network exchange) and VX (voice exchange) products enable interoperability and integration with existing networks for seamless migration to secure IP-based voice and data communications.

Forward Looking Statements
This press release contains forward-looking statements relating to profitability, future sales, new products, 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 our ability to commercialize new products and product enhancements in the near term, new competition and technological changes in the telecommunications industry, the performance of strategic partners and sales channels regarding product and marketing activities, 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 sub sequent 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.

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


	Quarter Ended							Fiscal Year Ended
		March 30, 2007			March 31, 2006				March 30, 2007			March 31, 2006
Revenue:
Product	$	21,343		$	10,173		$		72,813		$	56,712
Service and other		3,688			3,235				11,281			13,056
Total revenue		25,031			13,408				84,094			69,768
Costs of revenue:
Cost of product revenue		8,131			5,440				28,821			26,328
Cost of service and other revenue		3,026			2,841				10,249			11,665
Total cost of revenue		11,157			8,281				39,070			37,993
Gross margin		13,874			5,127				45,024			31,775
Operating expenses:
Sales and marketing		4,971			5,266				18,699			23,493
Research and development		5,685			5,901				21,432			23,235
General and administrative		3,574			3,225				13,129			11,265
Restructuring costs		10,187			1,096				10,183			2,921
Total operating expenses		24,417			15,488				63,443			60,914
Loss from operations		(10,543	)		(10,361	)			(18,419	)		(29,139	)
Other income (expense), net		19			(48	)			(67	)		(59	)
Interest income, net		526			235				1,784			802
Loss before taxes		(9,998	)		(10,174	)			(16,702	)		(28,396	)
Income tax benefit		(513	)		(10	)			(508	)		(1,161	)
Net loss	$	(9,485	)	$	(10,164	)	$		(16,194	)	$	(27,235	)
Per share data:
Net loss:
Basic	$	(0.37	)	$	(0.41	)	$		(0.65	)	$	(1.10	)
Diluted	$	(0.37	)	$	(0.41	)	$		(0.65	)	$	(1.10	)
Common and common equivalent shares:
Basic		25,354			24,786				25,003			24,725
Diluted		25,354			24,786				25,003			24,725

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


		March 30, 2007		March 31, 2006
Assets
Cash and investments	$	90,132	$	86,221
Accounts receivable, net		14,822		9,705
Inventories		10,452		12,229
Prepaid expenses and other assets		3,242		3,407
Total current assets		118,648		111,562

Property and equipment, net		10,581		20,749
Other assets		4,790		4,367
Total assets	$	134,019	$	136,678
Liabilities and Stockholders' Equity
Accounts payable	$	8,569	$	6,061
Other current liabilities		15,274		13,092
Total current liabilities		23,843		19,153

Long term liabilities		3,886		673
7 1/4% convertible subordinated debentures		24,706		24,706
Stockholders' equity		81,584		92,146
Total liabilities and stockholders’ equity	$	134,019	$	136,678

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Exhibit Number	Description
99	Press release dated May 2, 2007.



Delaware (State of incorporation)	001-10255 (Commission File Number)	94-2904044 (IRS Employer ID No.)