July 25, 2006 at 16:05 PM EDT
Netopia Reports Third Fiscal Quarter Results

Netopia, Inc. (OTCBB:NTPA), a market leader in broadband gateways and service delivery software, today announced results for the third fiscal quarter ended June 30, 2006. Revenues for the third fiscal quarter were $30.5 million, a 9.7% increase from $27.8 million for the same period in the prior fiscal year, and a 9.3% increase from $27.9 million for the prior quarter ended March 31, 2006.

Net loss on a GAAP basis for the third fiscal quarter was ($0.2) million or ($0.01) per share, compared to a net loss of ($2.3) million or ($0.09) per share for the same period in the prior fiscal year. Net loss on a GAAP basis for the first nine months of fiscal year 2006 was ($2.1) million or ($0.08) per share, compared to a net loss of ($5.8) million or ($0.23) per share for the same period in the prior fiscal year.

Non-GAAP income for the third fiscal quarter (which for the current period excludes SFAS 123R stock compensation expense and amortization of acquisition-related intangible assets) was $1.6 million or $0.06 per basic and diluted share, compared to a non-GAAP loss of ($1.9) million or ($0.08) per share for the same period in the prior fiscal year (which for such period excluded amortization of acquisition-related intangible assets). Non-GAAP income for the first nine months of fiscal year 2006 (which for such nine month period excludes SFAS 123R stock compensation expense and amortization of acquisition-related intangible assets) was $2.8 million or $0.11 per basic and diluted share, compared to a non-GAAP loss of ($4.6) million or ($0.19) per share for the same period in the prior fiscal year (which for such period excluded amortization of acquisition-related intangible assets).

"We are pleased with both our revenue growth and bottom line performance for the quarter," said Alan Lefkof, Netopia's president and CEO. "We believe that we are laying the foundation for strong revenue growth for the next fiscal year."

Note:

Netopia will host a conference call to discuss its results for the third fiscal quarter on July 25, 2006 at 6:00 p.m. Eastern time (3:00 p.m. Pacific time). The conference call will be broadcast live on the Internet and can be accessed by visiting Netopia's Web site at www.netopia.com. To join the telephone conference, dial (913) 312-1305 and enter the pass code 4316510.

An archived recording of the conference call will be available on Netopia's Web site for one year, and by telephone from July 25 - July 31, 2006. To listen to the archived recording, dial (719) 457-0820 and enter the pass code 4316510, or go to Netopia's Web site.

About Netopia

Netopia, Inc. delivers broadband service assurance solutions through high-performance broadband customer premises equipment and carrier-class remote device management and support software. Netopia's broadband gateways feature advanced technology, high reliability, and remote manageability to assure delivery of triple-play and IPTV services. Netopia's service assurance software platforms empower service providers, enterprises, and consumers with remote device management, centralized support, and value-added services to speed deployment of innovative new broadband applications across home and business networks. Netopia has established strategic distribution relationships with leading carriers and broadband service providers, including AT&T, BellSouth, Covad Communications, eircom, Swisscom, and Verizon.

Headquartered in Emeryville, California, Netopia's common stock is listed for quotation on the OTC Bulletin Board (OTCBB) System under the symbol "NTPA." Further information about Netopia can be obtained via phone at (510) 420-7400, fax at (510) 420-7601, or on the Web at www.netopia.com.

Note regarding unaudited Non-GAAP Condensed Consolidated Statements of Operations:

To supplement our unaudited GAAP Condensed Consolidated Statements of Operations, Netopia uses non-GAAP measures of net income (loss) and income (loss) per share, which are adjusted from results based on GAAP to exclude non-cash recurring expenses for stock compensation and amortization of acquisition-related intangible assets. These non-GAAP adjustments are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. These adjustments to GAAP results are made with the intent of providing greater transparency to information used by management in its financial and operational decision-making. These non-GAAP results are among the primary indicators that management uses as a basis for making operating decisions because they provide meaningful information regarding our core operating performance, including our ability to provide cash flows to invest in research and development and to fund capital expenditures. The unaudited Non-GAAP Condensed Consolidated Statements of Operations should not be considered in isolation or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. The unaudited Non-GAAP Condensed Consolidated Statements of Operations includes a quantitative reconciliation of the differences between such statements and the financial information presented in accordance with generally accepted accounting principles.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

Portions of this release that are not statements of historical fact may include forward-looking statements. Statements regarding Netopia, Inc.'s beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning product development, anticipated new products and customers, growth opportunities, and future operating results. Netopia's actual results could differ materially. Factors that might cause a difference include, but are not limited to: Netopia's continued ability to form key relationships for our broadband gateways and service delivery software; Netopia's ability to enter into new distribution partnerships; Netopia's ability to develop new broadband gateways and service delivery software in a timely manner; market acceptance of Netopia's broadband gateways and service delivery software; Netopia's ability to list its common stock on a Nasdaq Stock Market; Netopia's ability to resolve pending private securities litigation arising out of the restatement of Netopia's consolidated financial statements in a timely and economic manner; the pace of development and market acceptance of Netopia's products and the market for broadband products and services generally; the highly competitive nature of Netopia's markets and competitive pricing pressures; the uncertainties associated with international operations; intense competition from third parties offering competitive broadband products and services; and economic conditions generally. In addition, prior period-to-period comparisons of revenues are not necessarily indicative of period-to-period comparative revenues in future periods. Prospective and current investors are cautioned not to place undue reliance on any forward-looking statements. Further, Netopia expressly disclaims any obligation to revise or update any of the forward-looking statements contained herein to reflect future events or developments after the date hereof. Netopia does not undertake to update any oral or written forward looking-statement that may be made by or on behalf of Netopia. For more information concerning Netopia and risk factors that may affect Netopia's future results and may cause actual results to vary from results anticipated in forward-looking statements, including risk factors relating to securities litigation arising out of the restatements described in Netopia's Annual Report on Form 10-K for the fiscal year ended September 30, 2004, investors should review Netopia's public filings with the United States Securities and Exchange Commission, which are available by calling Netopia at (510) 420-7516 or online at www.sec.gov.

All company names, brand names and product names are trademarks of their respective holder(s).


                             NETOPIA, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)
                              (Unaudited)

                                    Three Months       Nine Months 
                                    Ended June 30,    Ended June 30,
                                  ----------------- ------------------
                                    2006     2005     2006      2005
REVENUES:
  Broadband equipment            $ 27,333 $ 25,103 $ 71,099 $  73,547
  Broadband software and services   3,154    2,726   11,162     8,823
                                  -------- -------- -------- ---------
     Total revenues                30,487   27,829   82,261    82,370
                                  -------- -------- -------- ---------

COST OF REVENUES:
  Broadband equipment              18,854   18,655   48,751    54,907
  Broadband software and services     625      489    1,734     1,139
  Amortization of acquired
   technology                         300      300      900       900
                                  -------- -------- -------- ---------
     Total cost of revenues        19,779   19,444   51,385    56,946
                                  -------- -------- -------- ---------

GROSS PROFIT                       10,708    8,385   30,876    25,424

OPERATING EXPENSES:
  Research and development          4,505    3,400   12,616    10,009
  Sales and marketing               5,502    4,582   15,254    14,249
  General and administrative        2,268    2,561    6,805     6,785
  Amortization of acquired
   intangible asset                     -       86        -       259
  Restructuring costs                   -        -        -        98
                                  -------- -------- -------- ---------
     Total operating expenses      12,275   10,629   34,675    31,400
                                  -------- -------- -------- ---------

OPERATING LOSS                     (1,567)  (2,244)  (3,799)   (5,976)

  Gain on equity investment         1,079        -    1,079         -
  Other income (expense), net         344      (44)     703       259
                                  -------- -------- -------- ---------

LOSS BEFORE INCOME TAXES             (144)  (2,288)  (2,017)   (5,717)

  Provision for income taxes           12       24       37        68
                                  -------- -------- -------- ---------

NET LOSS                         $   (156)$ (2,312)$ (2,054)$  (5,785)
                                  -------- -------- -------- ---------


Net loss per common share:
       Basic and Diluted         $  (0.01)$  (0.09)$  (0.08)$   (0.23)
                                  -------- -------- -------- ---------

Shares used in per share
 calculations:                     25,817   25,215   25,636    25,000
                                  -------- -------- -------- ---------


                             NETOPIA, INC.
       NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)
                              (Unaudited)

                     Three Months Ended         Three Months Ended    
                       June 30, 2006              June 30, 2005
                --------------------------- --------------------------
                            Non-                       Non-
                            GAAP                       GAAP
                   GAAP    Adjust-   Non-     GAAP    Adjust-   Non-
                 Reported   ments    GAAP   Reported   ments    GAAP
                --------------------------- --------------------------

REVENUES:
  Broadband
   equipment    $ 27,333 $     -   $27,333 $ 25,103 $     -   $25,103
  Broadband
   software and
   services        3,154       -     3,154    2,726       -     2,726
                 -------- -------   ------- -------- -------   -------
     Total
      revenues    30,487       -    30,487   27,829       -    27,829
                 -------- -------   ------- -------- -------   -------

COST OF
REVENUES:
  Broadband                      
   equipment      18,854     (72)(a)18,782   18,655       -    18,655
  Broadband
   software and
   services          625       -       625      489       -       489
  Amortization                                              
   of acquired
   technology        300    (300)(b)     -      300    (300)(b)     -
                 -------- -------   ------- -------- -------   -------
     Total 
      cost of
      revenues    19,779    (372)   19,407   19,444    (300)   19,144
                 -------- -------   ------- -------- -------   -------

GROSS PROFIT      10,708     372    11,080    8,385     300     8,685

OPERATING
EXPENSES:
  Research and                   
   development     4,505    (590)(a) 3,915    3,400       -     3,400
  Sales and                      
   marketing       5,502    (353)(a) 5,149    4,582       -     4,582
  General and                    
   adminis-
   trative         2,268    (428)(a) 1,840    2,561       -     2,561
  Amortization                                              
   of acquired
   intangible
   asset               -       -         -       86     (86)(b)     -
                 -------- -------   ------- -------- -------   -------
     Total
      operating
      expenses    12,275  (1,371)   10,904   10,629     (86)   10,543
                 -------- -------   ------- -------- -------   -------

OPERATING INCOME
(LOSS)            (1,567)  1,743       176   (2,244)    386    (1,858)

  Gain on equity
   investment      1,079       -     1,079        -       -         -
  Other income
   (expense),
   net               344       -       344      (44)      -       (44)
                 -------- -------   ------- -------- -------   -------

INCOME (LOSS)
BEFORE TAXES        (144)  1,743     1,599   (2,288)    386    (1,902)

  Provision for
   income taxes       12       -        12       24       -        24
                 -------- -------   ------- -------- -------   -------

     NET INCOME     
     (LOSS)     $   (156)$ 1,743   $ 1,587 $ (2,312)$   386   $(1,926)
                 -------- -------   ------- -------- -------   -------

Net income
 (loss) per
 common share:
       Basic    $  (0.01)          $  0.06 $  (0.09)          $ (0.08)
                 --------           ------- --------           -------

       Diluted  $  (0.01)          $  0.06 $  (0.09)          $ (0.08)
                 --------           ------- --------           -------

Shares used in
 per share
 calculation:
       Basic      25,817            25,817   25,215            25,215
                 --------           ------- --------           -------

       Diluted    25,817            26,490   25,215            25,215
                 --------           ------- --------           -------

Non-GAAP adjustments consist of:
       (a) Non-cash stock compensation expense pursuant to SFAS 123R;
       (b) Amortization of acquisition related intangible assets

Note regarding unaudited Non-GAAP Condensed Consolidated Statements of Operations:

To supplement our unaudited GAAP Condensed Consolidated Statements of Operations, Netopia uses non-GAAP measures of net income (loss) and income (loss) per share, which are adjusted from results based on GAAP to exclude non-cash recurring expenses for stock compensation and amortization of acquisition-related intangible assets. These non-GAAP adjustments are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. These adjustments to GAAP results are made with the intent of providing greater transparency to information used by management in its financial and operational decision-making. These non-GAAP results are among the primary indicators that management uses as a basis for making operating decisions because they provide meaningful information regarding our core operating performance, including our ability to provide cash flows to invest in research and development and to fund capital expenditures. The unaudited Non-GAAP Condensed Consolidated Statements of Operations should not be considered in isolation or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. The unaudited Non-GAAP Condensed Consolidated Statements of Operations includes a quantitative reconciliation of the differences between such statements and the financial information presented in accordance with generally accepted accounting principles.


                             NETOPIA, INC.
       NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)
                              (Unaudited)

                     Nine Months Ended          Nine Months Ended 
                       June 30, 2006              June 30, 2005
                --------------------------- --------------------------
                            Non-                        Non-
                            GAAP                        GAAP
                   GAAP    Adjust-   Non-      GAAP    Adjust-   Non-
                 Reported   ments    GAAP    Reported   ments    GAAP
                --------------------------- --------------------------

REVENUES:
  Broadband
   equipment    $ 71,099 $     -   $71,099 $ 73,547 $     -   $73,547
  Broadband
   software and
   services       11,162       -    11,162    8,823       -     8,823
                 -------- -------   ------- -------- -------   -------
     Total
      revenues    82,261       -    82,261   82,370       -    82,370
                 -------- -------   ------- -------- -------   -------

COST OF
REVENUES:
  Broadband                      
   equipment      48,751    (140)(a)48,611   54,907       -    54,907
  Broadband
   software and
   services        1,734       -     1,734    1,139       -     1,139
  Amortization                                           
   of acquired
   technology        900    (900)(b)     -      900    (900)(b)     -
                 -------- -------   ------- -------- -------   -------
     Total 
      cost of
      revenues    51,385  (1,040)   50,345   56,946    (900)   56,046
                 -------- -------   ------- -------- -------   -------

GROSS PROFIT      30,876   1,040    31,916   25,424     900    26,324

OPERATING
EXPENSES:
  Research and                   
   development    12,616  (1,549)(a)11,067   10,009       -    10,009
  Sales and                      
   marketing      15,254    (834)(a)14,420   14,249       -    14,249
  General and                    
   adminis-
   trative         6,805  (1,462)(a) 5,343    6,785       -     6,785
  Amortization                                              
   of acquired
   intangible
   asset               -       -         -      259    (259)(b)     -
  Restructuring
   costs               -       -         -       98       -        98
                 -------- -------   ------- -------- -------   -------
     Total
      operating
      expenses    34,675  (3,845)   30,830   31,400    (259)   31,141
                 -------- -------   ------- -------- -------   -------

OPERATING INCOME
(LOSS)            (3,799)  4,885     1,086   (5,976)  1,159    (4,817)

  Gain on equity
   investment      1,079       -     1,079        -       -         -
  Other income,
   net               703       -       703      259       -       259
                 -------- -------   ------- -------- -------   -------

INCOME (LOSS)
BEFORE TAXES      (2,017)  4,885     2,868   (5,717)  1,159    (4,558)

  Provision for
   income taxes       37       -        37       68       -        68
                 -------- -------   ------- -------- -------   -------

       NET
       INCOME
       (LOSS)   $ (2,054)$ 4,885   $ 2,831 $ (5,785)$ 1,159   $(4,626)
                 -------- -------   ------- -------- -------   -------

Net income
 (loss) per
 common share:
       Basic    $  (0.08)          $  0.11 $  (0.23)          $ (0.19)
                 --------           ------- --------           -------

       Diluted  $  (0.08)          $  0.11 $  (0.23)          $ (0.19)
                 --------           ------- --------           -------

Shares used in
 per share
 calculation:
       Basic      25,636            25,636   25,000            25,000
                 --------           ------- --------           -------

       Diluted    25,636            25,943   25,000            25,000
                 --------           ------- --------           -------

Non-GAAP adjustments consist of:
       (a) Non-cash stock compensation expense pursuant to SFAS 123R;
       (b) Amortization of acquisition related intangible assets

Note regarding unaudited Non-GAAP Condensed Consolidated Statements of Operations:

To supplement our unaudited GAAP Condensed Consolidated Statements of Operations, Netopia uses non-GAAP measures of net income (loss) and income (loss) per share, which are adjusted from results based on GAAP to exclude non-cash recurring expenses for stock compensation and amortization of acquisition-related intangible assets. These non-GAAP adjustments are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. These adjustments to GAAP results are made with the intent of providing greater transparency to information used by management in its financial and operational decision-making. These non-GAAP results are among the primary indicators that management uses as a basis for making operating decisions because they provide meaningful information regarding our core operating performance, including our ability to provide cash flows to invest in research and development and to fund capital expenditures. The unaudited Non-GAAP Condensed Consolidated Statements of Operations should not be considered in isolation or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. The unaudited Non-GAAP Condensed Consolidated Statements of Operations includes a quantitative reconciliation of the differences between such statements and the financial information presented in accordance with generally accepted accounting principles.


                             NETOPIA, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                              June 30,   September 30,
                                                2006        2005(1)
                                           ------------- -------------
                                            (unaudited)
 ASSETS
 Current assets:
  Cash and cash equivalents                     $26,547       $22,234
  Trade receivables, net                         17,057        16,208
  Inventories                                     5,930         8,718
  Prepaid expenses and other current assets       2,378         1,102
                                           ------------- -------------
    Total current assets                         51,912        48,262
                                           ------------- -------------

 Property and equipment, net                      2,556         2,623
 Intangible assets, net                           3,015         4,037
 Equity investment                                1,377         1,032
 Deposits and other assets                          351           481
                                           ------------- -------------
       TOTAL ASSETS                             $59,211       $56,435
                                           ============= =============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
     Accounts payable                           $11,303       $12,525
     Deferred revenue                             3,323         2,946
     Other current liabilities                    5,417         4,737
                                           ------------- -------------
       Total current liabilities                 20,043        20,208
                                           ------------- -------------

 Long-term liabilities:                                           
   Deferred revenue, long-term                      198           109
   Other long-term liabilities                      163           246
                                           ------------- -------------
       TOTAL LIABILITIES                         20,404        20,563
                                           ------------- -------------

  Stockholders' equity                           38,807        35,872
                                           ------------- -------------
       TOTAL LIABILITIES AND 
       STOCKHOLDERS' EQUITY                     $59,211       $56,435
                                           ============= =============

   (1) Derived from the audited consolidated balance sheets dated
       September 30, 2005 included in Netopia, Inc.'s Annual Report on
       Form 10-K for the fiscal year ended September 30, 2005.

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