NMS Communications Announces Preliminary Financial Results for the Third Quarter Ended September 30, 2008

  
    
  
  
    
      NMS Communications Corporation (NASDAQ: NMSS), a leading provider of 
      applications and platforms for value-added services in mobile 
      telecommunications today announced preliminary financial results for the 
      third quarter ended September 30, 2008 and is providing a business 
      update on LiveWire Mobile.
    
    
      NMS Communications Corporation currently expects to report total revenue 
      in the range of $16.1 to $16.4 million, and GAAP net loss per share from 
      continuing operations in the range of $(0.16) to $(0.15) for the quarter 
      ended September 30, 2008. Non-GAAP net loss per share from continuing 
      operations is expected to be in the range of $(0.10) to $(0.09). 
      Expected non-GAAP results per share from continuing operations exclude 
      approximately $0.06 of amortization of intangible assets, stock-based 
      compensation expense and transaction costs. Cash, cash equivalents and 
      marketable securities are expected to total approximately $4.6 million 
      on September 30, 2008.
    
    
      The NMS Communications Platforms business revenue was down slightly on a 
      sequential basis in the third quarter due primarily to product that was 
      shipped during the quarter but for which revenue was not recognized 
      until the fourth quarter of 2008. LiveWire Mobile’s 
      revenue increased slightly on a sequential basis in the third quarter, 
      however, growth was negatively impacted due to the decline in the capex 
      portion of the business coupled with delays in the expected launch of 
      new managed services, primarily in Europe. These issues impacting 
      LiveWire Mobile’s revenue are being addressed 
      in the LiveWire Mobile business update.
    
    
      Third quarter preliminary results are subject to change based on the 
      completion of the Company’s final quarter-end 
      review process. The Company accelerated their close process in advance 
      of the proxy solicitation and shareholder approval process relative to 
      the sale of the Communications Platforms business in order to provide an 
      outlook on the LiveWire Mobile business.
    
    
      LiveWire Mobile Business Update
    
    
      The Company announced plans relating to its LiveWire Mobile business, 
      including restructuring actions designed to further increase the Company’s 
      focus on its managed services business and significantly lower the 
      Company’s breakeven level.
    
    
      LiveWire Mobile will undertake the following action:
    
    
      
        Focus exclusively on selling new managed services in North America, 
        the largest long-term growth opportunity for the Company and in turn 
        de-emphasize the focus on EMEA managed services. The focus on North 
        American managed services is expected to significantly increase the 
        Company’s percentage of total revenue 
        generated from recurring revenue sources;
      
      
        More aggressively de-emphasize the capex channel portion of the 
        business, which has been declining faster than anticipated, is less 
        profitable due to the higher cost of goods sold and more unpredictable 
        quarter-to-quarter due to the fact that it is not a recurring revenue 
        source. As a result, the Company expects the capex business to be a 
        much smaller contributor to revenue in 2009;
      
      
        Rightsize the organization to take into consideration the Company’s 
        strategic focus on managed services and capital preservation. The 
        Company expects its breakeven revenue rate to be reduced by 
        approximately half as a result of the restructuring, inclusive of all 
        corporate overhead costs. These actions will also enable the Company 
        to minimize cash usage and end fiscal year 2009 with net cash balances 
        of approximately $8 million, without additional borrowings; and
      
      
        Leverage the Company’s strategic focus to 
        take advantage of a sizeable market opportunity and leading position 
        to build a large, sustainable long-term business model with recurring 
        revenues and an increased profitability profile.
      
    
    
      As a result of these actions, LiveWire Mobile will be a leaner and more 
      focused company, dedicating resources to the sustainable growth engines 
      of the business. Growth is expected to be driven by a combination of 
      growing the active subscriber base and increasing the revenue per active 
      subscriber. This includes increasing the number of active subscribers 
      from existing customers through the launch of new services from our 
      expanded portfolio of offerings in our integrated ringback, ringtones 
      and music storefront as well as growing the revenue per subscriber by 
      increasingly adding higher ARPU subscription revenue to our existing a 
      la carte revenue. In addition, we will look to selectively add new 
      operator customers.
    
    
      “We believe the actions we are undertaking are 
      necessary to position the Company for sustainable growth and 
      profitability. We continue to believe that the market opportunity for 
      the LiveWire Mobile business is large and that our operator customers 
      are moving towards integrated mobile personalization offerings and 
      shifting towards a fully-outsourced managed services model,” 
      said Joel Hughes, President, LiveWire Mobile. “We 
      are excited about our long-term growth opportunity and, with the 
      announced organizational changes and capital from the proposed sale of 
      the NMS Communications Platforms business, LiveWire Mobile has the focus 
      and resources to execute on its strategy.”
    
    
      Additional Business Perspective
    
    
      “In the third quarter, we signed a definitive 
      agreement to sell the NMS Communications Platforms business to Dialogic 
      Corporation. Over the course of the past two years we have separated our 
      two businesses, and we believe this final step of selling the NMS 
      Communications Platforms business is the best way to drive long-term 
      value for our shareholders, employees and customers. We are confident 
      about LiveWire Mobile’s ability to create 
      significant shareholder value by executing on its growth initiatives and 
      enhancing its early leadership position in the growing market for mobile 
      personalization services,” said Bob 
      Schechter, NMS Communications Corporation Chairman and CEO.
    
    
      Subject to and effective immediately following the close of the proposed 
      sale of the NMS Communication Platforms business, Joel Hughes will 
      replace Bob Schechter as CEO of the Company and Todd Donahue will 
      replace Herb Shumway as CFO of the Company. In addition, the Company 
      will change its name to LiveWire Mobile, Inc. and currently has plans to 
      change its ticker symbol. An application has been submitted to NASDAQ to 
      reserve the ticker symbol “LVWR”.
    
    
      Guidance
    
    
      The guidance assumes the completion of the proposed sale of the NMS 
      Communications Platforms business and the restructuring actions outlined 
      above.
    
    
      The Company expects to end fiscal year 2008 with cash balances of 
      approximately $11 million, inclusive of the net proceeds of the proposed 
      sale of the NMS Communication Platforms business and debt repayment.
    
    
      The reorganization actions outlined above are expected to preserve 
      capital and significantly reduce the breakeven revenue run rate and cash 
      usage for the Company. The Company currently expects 2009 total revenue 
      to grow modestly to approximately $20 million with significant 
      year-over-year growth in managed services revenue partially offset by 
      the planned de-emphasis of the capex portion of the business. Managed 
      services are expected to contribute the majority of total revenue in 
      2009. In addition, for 2009, the Company expects to have a Non-GAAP net 
      loss from continuing operations of approximately $3 million and to end 
      the fiscal year with net cash balances of approximately $8 million 
      inclusive of cash used in operations, lease obligations and the receipt 
      of the cash in escrow from the proposed sale of the NMS Communications 
      Platforms business. The Company also expects to be profitable and 
      generate positive cash flow from operations in 2010.
    
    
      NMS Conference Call and Web Cast
    
    
      NMS Communications Corporation issues web casts for its conference calls 
      to assure the broad dissemination of information in real time. The third 
      quarter 2008 preliminary earnings results and LiveWire Mobile business 
      update conference call, which is scheduled for 5:00 p.m. ET today, 
      October 23, 2008, will be available live via the Internet by accessing 
      the NMS web site at http://www.nmss.com 
      under the Investor Relations section. Please go to the web site at least 
      fifteen minutes prior to the call to register, download and install any 
      necessary audio software. The webcast is also being distributed using 
      CCBN's Investor Distribution Network to both institutional investors at 
      StreetEvents (www.streetevents.com) 
      and individual investors at www.companyboardroom.com.
    
    
      A replay will be available on the website at http://ir.nmscommunications.com/events.cfm, 
      or you may listen to the replay by calling 719-457-0820 and entering the 
      passcode 5460577. The replay will be available from 8:00 p.m. ET, 
      Thursday, October 23, 2008 until Midnight, Thursday, October 30, 2008.
    
    
      Investors may also access an updated investor presentation at http://www.nmss.com 
      under the Investor Relations section.
    
    
      About NMS Communications Corporation
    
    
      NMS Communications Corporation (NASDAQ:NMSS) is a leading provider of 
      applications, platforms and technologies that make possible the rapid 
      creation and deployment of a broad range of value-added services, from 
      voice mail to IVR to ringback and mobile TV. Visit www.nmss.com 
      for more information.
    
    
      About LiveWire Mobile
    
    
      LiveWire Mobile, a subsidiary of NMS Communications Corporation, is a 
      global provider of managed personalization services for mobile 
      operators. Our integrated suite of music and video services includes 
      ringback tones, ringtones and full track downloads, as well as dedicated 
      content and service marketing. LiveWire Mobile makes mobile 
      personalization services easier to use and helps operators drive service 
      usage and adoption. For more information, please visit www.livewiremobile.com.
    
    
      This press release contains "forward-looking statements" within the 
      meaning of the Private Securities Litigation Reform Act of 1995, 
      including forward-looking statements about our expected future financial 
      and operating performance, demand for and performance of our products 
      and growth opportunities and the proposed sale of the NMS Communications 
      Platforms business to Dialogic Corporation (“Dialogic”).. 
      These statements are based on management's expectations as of the date 
      of this document and are subject to uncertainty and changes in 
      circumstances. Actual results may differ materially from these 
      expectations due to risks and uncertainties including, but not limited 
      to, approval of the proposed sale of the NMS Communications Platforms 
      business to Dialogic by NMS’s stockholders, 
      receipt of required regulatory approvals, closing of the proposed sale 
      within the anticipated timeframe, uncertainty in communications 
      spending, the implementation of NMS’s 
      strategy to focus exclusively on the LiveWire Mobile business, the 
      implementation of the Company's strategic repositioning and market 
      acceptance of the Company's managed services strategy, the receipt of 
      less proceeds from the proposed sale of the NMS Communications Platforms 
      business than is currently expected, the incurrence of greater 
      restructuring costs than is currently expected, quarterly fluctuations 
      in financial results, the Company's ability to exploit fully the value 
      of its technology and its strategic partnerships and alliances, the 
      availability of products from the Company's contract manufacturer and 
      product component vendors and other risks. These and other risks are 
      detailed from time to time in the Company's filings with the Securities 
      and Exchange Commission, including the Company's annual report on Form 
      10-K for the year ended December 31, 2007. In addition, while management 
      may elect to update forward-looking statements at some point in the 
      future, management specifically disclaims any obligation to do so, even 
      if its estimates change. Any reference to our website in this press 
      release is not intended to incorporate the contents thereof into this 
      press release or any other public announcement.
    
    
      Use of Non-GAAP Financial Measures
    
    
      In addition to reporting its financial results in accordance with 
      generally accepted accounting principles, or GAAP, the Company has also 
      provided in this release non-GAAP income (loss) from continuing 
      operations, non-GAAP net income (loss) and non-GAAP earnings (loss) per 
      share figures, which are non-GAAP financial measures adjusted to exclude 
      certain non-cash and other specified expenses. The Company believes the 
      use of non-GAAP measures in addition to GAAP measures is an additional 
      useful method of evaluating it results of operations. Management uses 
      these non-GAAP financial measures when evaluating the Company's 
      financial results, as well as for internal planning and forecasting 
      purposes. Specifically, the Company has excluded stock-based 
      compensation, the other-than-temporary impairment of Verso common stock 
      and amortization of intangible assets from its non-GAAP financial 
      measures. The non-GAAP financial measures disclosed by the Company 
      should not be considered a substitute for, or superior to, financial 
      measures calculated in accordance with GAAP, and the expected results 
      calculated in accordance with GAAP and reconciliations to those expected 
      results should be carefully evaluated. The non-GAAP financial measures 
      used by the Company may be calculated differently from, and therefore 
      may not be comparable to, similarly titled measures used by other 
      companies. A reconciliation between these non-GAAP financial measures on 
      a GAAP basis and a non-GAAP basis is provided in a table at the end of 
      this press release.
    
    
      NMS Communications and LiveWire Mobile are trademarks of NMS 
      Communications Corporation. All other brand or product names may be 
      trademarks or registered trademarks of their respective holders.
    
    
    
    
      
        
           
        
        
          NMS Communications Corporation
        
      
      
        
        
        
          Reconciliation of GAAP to Non-GAAP Net Loss per Share from 
          Continuing Operations
        
      
      
        
        
        
          For the Three Months Ended September 30, 2008
        
      
      
        
        
        
        
        
           
        
        
        
        
        
        
        
        
           
        
        
        
        
        
      
      
        
        
        
        
        
        
        
          Ranges
        
      
      
        
        
        
        
        
        
        
          Low
        
        
        
        
          High
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          GAAP net loss per share from continuing operations
        
        
        
        
          $
        
        
          (0.16
        
        
          )
        
        
        
        
          $
        
        
          (0.15
        
        
          )
        
      
      
        
        
        
          Share-based compensation
        
        
        
        
        
        
          0.01
        
        
        
        
        
        
        
        
          0.01
        
        
        
      
      
        
        
        
          Amortization of purchased intangibles
        
        
        
        
        
        
          0.03
        
        
        
        
        
        
        
        
          0.03
        
        
        
      
      
        
        
        
          Transaction costs
        
        
        
        
           
        
        
          0.02
        
        
           
        
        
        
        
           
        
        
          0.02
        
        
           
        
      
      
        
        
        
          Non-GAAP net loss per share from continuing operations
        
        
        
        
          $
        
        
          (0.10
        
        
          )
        
        
        
        
          $
        
        
          (0.09
        
        
          )
        
      
    
    
    
    
      
        
           
        
        
          NMS Communications Corporation
        
      
      
        
        
        
          Reconciliation of Projected GAAP to Non-GAAP Net Loss per Share 
          from Continuing Operations
        
      
      
        
        
        
          For the Year Ended December 31, 2009
        
      
      
        
        
        
        
        
           
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
          (In millions)
        
      
      
        
        
        
          Projected GAAP net loss from continuing operations
        
        
        
        
          $
        
        
          (8.0
        
        
          )
        
      
      
        
        
        
          Share-based compensation
        
        
        
        
        
        
          1.1
        
        
        
      
      
        
        
        
          Amortization of purchased intangibles
        
        
        
        
           
        
        
          3.9
        
        
           
        
      
      
        
        
        
          Projected Non-GAAP net loss from continuing operations
        
        
        
        
          $
        
        
          (3.0
        
        
          )