PowerDsine Reports Fourth Quarter & Year End 2005 Financial Results; Fourth Quarter Sales of $7.2 Million

PowerDsine Ltd. (NASDAQ: PDSN) announced today financial
results for the fourth quarter and the year ended December 31, 2005.
   For the fourth quarter of 2005, sales were $7.2 million, compared
to sales of $10.9 million for the third quarter of 2005 and sales of
$11.6 million for the fourth quarter of 2004. This decrease in sales
is a result of an unexpected weakness in midspan sales during the
fourth quarter.
   The Company reported a net loss for the fourth quarter of 2005 of
$(1.7) million, or $(0.09) per diluted share, compared with a net
profit of $0.9 million, or $0.04 per diluted share, for the third
quarter of 2005, and a net profit of $1.0 million, or $0.05 per
diluted share, for the fourth quarter of 2004. Fourth quarter results
are in line with revised guidance provided during the Company's fourth
quarter preannouncement conference call.
   Net loss for the fourth quarter of 2005 includes $0.5 million of
non-cash stock-based compensation expense, compared to $0.5 million of
non-cash stock-based compensation expense in the third quarter of
2005, and $0.6 million of non-cash stock-based compensation expense in
the fourth quarter of 2004.
   Non-GAAP net income excludes the effects of non-cash stock-based
compensation expense. Non-GAAP net loss for the fourth quarter of 2005
was $(1.2) million, or $(0.05) per share, compared to non-GAAP net
income for the third quarter of 2005 of $1.4 million, or $0.07 per
share, and non-GAAP net income for the fourth quarter of 2004 of $1.6
million, or $0.08 per share. The number of shares used to compute
non-GAAP net income (loss) per share for the three-month and full year
periods ended December 31, 2005 was 21.4 million.
   As of December 31, 2005, the Company had cash, cash equivalents
and marketable debt securities of $76.5 million compared to $80.8
million as of December 31, 2004. This decrease was caused primarily
due to a one-time payment of withholding taxes resulting from
employees' exercise of share options, which occurred during the first
quarter of 2005.
   Commenting on the results, Igal Rotem, Chief Executive Officer of
PowerDsine, said, "As we had announced in mid-December, sales of our
PoE midspan products, particularly to OEM customers, declined
significantly during the fourth quarter and weighed on our overall
performance for the year. Despite what we believe is a temporary
setback, we are optimistic with respect to the long-term potential of
the PoE market and PowerDsine's position as one of the leaders in this
emerging industry."
   Mr. Rotem continued, "With new products released during the fourth
quarter, we are further strengthening PowerDsine's position within the
PoE market. New integrated solutions such as our 4-channel PoE
integrated circuit further broaden the reach of PowerDsine's
technology with products developed for specific market segments."
   He concluded, "We are confident in our ability to leverage the
opportunities that exist in the integrated space, which we believe
presents the greatest potential for long-term growth, while working to
grow our midspan business. Our performance in the fourth quarter was
disappointing; however, we remain confident about our future growth as
a leader in the Power over Ethernet market."

   Earnings Conference call

   The Company will host a conference call to discuss its financial
results and other fourth quarter business developments at 8:00 a.m.
EST on Tuesday, February 7, 2006. The call will be available live on
the Internet at www.kcsa.com or www.powerdsine.com. Following the
call, the webcast will be archived for a period of 30 days. There will
be a replay available from 10:00 a.m. EST, February 7, 2006 until
February 14, 2006 at 11:59 p.m. EST. To listen to the replay, please
call 1-877-519-4471 in the U.S. or 1-973-341-3080 internationally. To
access the replay, users will need to enter the following code:
6939460.

   About PowerDsine

   PowerDsine Ltd. (NASDAQ:PDSN) designs, develops and supplies
integrated circuits, modules and systems that enable the
implementation of Power over Ethernet in local area networks,
providing the capability to deliver and manage electrical power over
data network cables. PowerDsine offers integrated products and system
solutions to communications equipment manufacturers in the telecom and
datacom industries who incorporate them into, or bundle them with
their products. PowerDsine is a founding, contributing and active
member of the IEEE 802.3af and 802.3at Task Forces. For more
information, please visit http://www.powerdsine.com.

   PowerDsine is a registered trademark of PowerDsine Ltd.

   About Power-over-Ethernet Technology

   PoE is a technology for wired Ethernet, the most widely installed
local area network technology in use today. PoE allows the electrical
power necessary for the operation of each device, to be carried by
data cables rather than by separate power cords. It minimizes the
number of wires that must be used in order to install the network,
resulting in lower cost, less downtime, easier maintenance and greater
installation flexibility.

   Forward Looking Statements

   Statements made in this press release that are not historical
facts, including statements regarding our expectations of future
events or our future financial performance, are forward-looking
statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are not guarantees of future performance and are subject to
risks, uncertainties and assumptions about PowerDsine and the matters
covered in this release. You should not place undue reliance on these
statements. Actual events or results may differ materially. Many
factors may cause our actual results to differ materially from any
forward looking statement, including acceptance of new products, costs
relating to such products and other factors detailed in PowerDsine's
filings with the Securities and Exchange Commission, including its
Annual Report on Form 20-F. The forward-looking statements are made as
of this date and PowerDsine does not undertake any obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise.

   You may register to receive PowerDsine's future press releases or
to download a complete Digital Investor Kit(TM) including press
releases, regulatory filings and corporate materials by clicking on
the "Digital Investor Kit(TM)" icon at www.kcsa.com.
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                            POWERDSINE LTD.
                       (An Israeli Corporation)
                 CONDENSED CONSOLIDATED BALANCE SHEET
                         AT DECEMBER 31, 2005
                      (U.S. dollars in thousands)

                                            December 31, December 31,
                                            ------------ ------------
                                                2005         2004
                                            ------------ ------------
                                             (Audited)    (Audited)
                                            ------------ ------------
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                     $14,366      $15,616
  Short-term marketable debt securities          26,511       28,149
  Accounts receivable                            10,257        7,563
  Inventories                                     1,616        1,431
                                            ------------ ------------
        Total current assets                     52,750       52,759
                                            ------------ ------------

PROPERTY AND EQUIPMENT - net                      1,864        1,623
                                            ------------ ------------

INVESTMENTS AND OTHER LONG-TERM ASSETS           37,662       38,743
                                            ------------ ------------

        Total assets                            $92,276      $93,125
                                            ============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES                               9,686       13,827
                                            ------------ ------------

ACCRUED SEVERANCE PAY                             2,250        1,973
                                            ------------ ------------

        Total liabilities                        11,936       15,800
                                            ------------ ------------

SHAREHOLDERS' EQUITY                             80,340       77,325
                                            ------------ ------------

        Total liabilities and shareholders' 
         equity                                 $92,276      $93,125
                                            ============ ============

                            POWERDSINE LTD.
                       (An Israeli Corporation)
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

     FOR THE YEAR AND THREE MONTHS PERIOD ENDED DECEMBER 31, 2005
       (U.S. dollars in thousands, except share per share data)

                        Three months ended          Year ended
                           December 31,            December 31,
                      -----------------------------------------------
                         2005        2004        2005        2004
                      ----------- ----------- ----------- -----------
                       Unaudited   Unaudited    Audited     Audited
                      ----------- ----------- ----------- -----------

SALES- NET                $7,222     $11,571     $38,619     $41,168
COST OF SALES              3,469       5,532      18,028      20,050
                      ----------- ----------- ----------- -----------
GROSS PROFIT               3,753       6,039      20,591      21,118
RESEARCH AND
 DEVELOPMENT EXPENSES      1,750       1,851       6,634       6,658
SELLING AND MARKETING
 EXPENSES                  2,682       2,017       9,653       7,507
GENERAL AND
 ADMINISTRATIVE
 EXPENSES                  1,070         899       3,690       2,678
STOCK - BASED
 COMPENSATION                541         572       2,043       5,987
                      ----------- ----------- ----------- -----------
INCOME (LOSS) FROM
 OPERATIONS               (2,290)        700      (1,429)     (1,712)
FINANCIAL INCOME - net       623         360       2,335         699
                      ----------- ----------- ----------- -----------
INCOME (LOSS) FOR THE
 PERIOD BEFORE TAXES
 ON INCOME                (1,667)      1,060         906      (1,013)
TAXES ON INCOME              (29)        (22)       (155)       (121)
                      ----------- ----------- ----------- -----------
NET INCOME (LOSS) FOR
 THE PERIOD              $(1,696)     $1,038        $751     $(1,134)
                      =========== =========== =========== ===========
NET INCOME (LOSS) PER
 ORDINARY SHARE:
      Basic               $(0.09)      $0.06       $0.04      $(0.10)
                      =========== =========== =========== ===========
      Diluted             $(0.09)      $0.05       $0.04      $(0.10)
                      =========== =========== =========== ===========
WEIGHTED AVERAGE
 SHARES USED IN
 COMPUTING NET INCOME
 (LOSS) PER ORDINARY
 SHARE:
      Basic           19,581,070  18,821,615  19,490,449  11,210,780
                      =========== =========== =========== ===========
      Diluted         19,581,070  20,550,746  20,715,844  11,210,780
                      =========== =========== =========== ===========

                            POWERDSINE LTD.
                       (An Israeli Corporation)
         Reconciliation of GAAP to Non-GAAP Financial Measures
          (U.S. dollars in thousands, except per share data)

To supplement our consolidated financial statements presented in
accordance with GAAP, the accompanying table shows a pro forma,
non-GAAP, measure of net income (loss), which is adjusted from our
GAAP results to exclude stock-based compensation. We have provided
this non-GAAP measure to enhance the user's overall understanding of
our historical financial performance and to make period to period
comparisons more meaningful. Specifically, we believe this non-GAAP
measure of net income (loss) provides useful information to both
management and investors by excluding stock-based compensation
expense. Non-GAAP net income consists of net income excluding stock
based compensation expenses. As noted above, we believe that non-GAAP
net income is a useful supplement to net profit and other income
statement data. Non-GAAP net income should not be considered in
isolation by investors as an alternative to net income.

                                 Three months ended    Year ended
                                    December 31,      December 31,
                                 ------------------------------------
                                  2005      2004     2005     2004
                                              Unaudited
                                 ------------------------------------
GAAP net income (loss) - for the
 period                          $(1,696)   $1,038     $751  $(1,134)
Stock-based compensation expense     541       572    2,043    5,987
                                 -------- --------- -------- --------
Pro-forma (non-GAAP) net income-
 for the period                  $(1,155)   $1,610   $2,794   $4,853
                                 ======== ========= ======== ========

PRO-FORMA NET INCOME (LOSS) PER
 ORDINARY SHARE:                  $(0.05)    $0.08    $0.13    $0.23
                                 ======== ========= ======== ========

  WEIGHTED AVERAGE SHARES USED IN 
   COMPUTING PRO FORMA NET INCOME 
   (LOSS) PER ORDINARY SHARE (IN 
   MILLIONS):                       21.4      21.4     21.4     21.4
                                 -------- ========= ======== ========
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