Somera Communications Reports 17% Sequential Quarter Revenue Growth

DALLAS, Nov. 2  /PRNewswire-FirstCall/ -- Somera Communications (NASDAQ:SMRA), a global provider of telecommunications equipment, asset management, and recovery services, today announced financial results for the quarter ended September 30, 2005.

Total revenue for the third quarter of 2005 was $21.8 million, compared with $18.7 million in the second quarter of 2005.  This also compares with $22.7 million in the third quarter of 2004.

Net loss was $4.2 million, or ($0.08) per share, for the third quarter of 2005, compared with a net loss of $7.9 million, or ($0.16) per share, for the second quarter of 2005.  This also compares to a net loss of $8.5 million, or ($0.17) per share, for the third quarter of 2004.

David Heard, CEO of Somera, commented on the third quarter results, "We are very pleased that we were able to meet our top- and bottom-line financial targets in the third quarter, which is typically a period in which seasonality tends to apply downward pressure on our top line.  We successfully increased our penetration into major carriers for our brokerage business, and also increased revenues driven by our asset management services, highlighted by our RecoveryPLUS program.  Additionally, through tighter business execution, we have increased our gross profit by almost twice the level it was in the third quarter of 2004.

"We also continued to streamline our operations by completing the transition of our corporate headquarters to Dallas and consolidating our European facilities.  We believe these actions, as well as other expense reduction initiatives, have reduced our breakeven level to approximately $30 million in revenue per quarter, and solidified our drive to profitability," said Mr. Heard.

Third Quarter Financial Highlights

Gross margin for the third quarter of 2005 was 33.0% and in line with the Company's expectations.  This compares with a gross margin of 33.6% in the second quarter of 2005 and 17.2% in the third quarter of 2004.

Operating expenses for the third quarter of 2005 were $11.5 million, compared with $14.1 million in the second quarter of 2005 and $12.6 million in the third quarter of 2004.  The reduction in operating expenses from the prior year is primarily attributable to a reduction in General and Administrative expenses, partially offset by continued investment in Sales and Marketing to drive further growth in the business.

Somera's balance sheet at September 30, 2005 included $22.5 million in cash, cash equivalents, and short-term investments, a current ratio of 1.9 and no long-term debt.

Outlook

In the fourth quarter of 2005, Somera expects to generate continued sequential quarter revenue growth and further reduce its net loss to a range of a net loss of ($0.04) to ($0.07) per share.

Mr. Heard commented on the outlook for Somera, "We expect our fourth quarter revenue to be positively impacted by a growing pipeline of brokerage opportunities, our improved inventory position, at least one new RecoveryPLUS implementation, and the typical seasonal strength that we experience at the end of the year."

Conference Call and Webcast

Management will hold a teleconference with simultaneous webcast today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss third quarter results. Please dial 800-240-2134 for domestic callers, or 303-262-2194 for international callers. The call will be webcast on the Investor Relations page of the Somera web site at http://www.somera.com/.  Listeners will need to have Microsoft Media Player installed on their computers. A telephonic replay will be available from one hour after the call ends through November 9, 2005, at 800-405-2236 for domestic callers, or 303-590-3000 for international callers, passcode 11041276.

About Somera

Somera Communications is a telecom asset management firm that assists service providers generate greater value from their network assets in the form of lower operating costs, longer product life, higher productivity, and real measurable savings.  Somera provides immediate availability of quality, warranted new and refurbished equipment at savings of 25% to 60%. Extending these benefits is Somera RecoveryPLUS(TM), which deploys knowledgeable personnel, proven processes and proprietary software to each client location to provide professional discovery, valuation and asset cataloging, thereby enhancing ongoing network efficiency while improving the accuracy and quality of reports required of today's regulatory environment. In addition, Somera offers outsourced network operations, logistics, and technical service, as well as comprehensive repair services for wireless, wireline, and data products -- all at significant savings and reduced cycle times. Founded in 1995, Somera has developed an impressive base of over 1,100 customers worldwide, including the industry leaders from each segment of the telecommunications market.  Visit Somera on the web at http://www.somera.com/.

This news release contains forward-looking statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements about Somera's expected revenue and net loss per share levels for the fourth quarter of 2005, Somera's brokerage and services businesses, inventory position, and expected seasonality in the fourth quarter of 2005.  Actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements contained in this release, including, but not limited to, general economic conditions particularly affecting the telecommunications industry; capital equipment spending levels in the telecommunications industry, including the risk of continued customer spending delays associated with carrier consolidation; the impact of competition in the market for supplying equipment and equipment lifecycle management services to telecommunications operators; the risk of potential shortage of product supply; and Somera's ability to build its lifecycle management services capabilities; and other factors fully described in the company's reports to the Securities and Exchange Commission (SEC), including but not limited to, the Annual Report on Form 10-K for the fiscal year ended December, 31, 2004, and Quarterly Reports on Form 10-Q. The company does not undertake to update any forward-looking statements that may be made by or on behalf of the company.  Copies of Somera's Securities & Exchange Commission filings may be obtained by contacting Financial Relations Board at 617-520-7064 or by visiting the Investor section of Somera's web site at http://www.somera.com/.

   Contact:

   Jim Gardner
   Vice President, Marketing
   Somera Communications
   972-304-5660, ext. 317
   



                       SOMERA COMMUNICATIONS, INC.

                  CONDENSED CONSOLIDATED BALANCE SHEETS
                  (in thousands, except per share data)
                               (unaudited)


                                                September 30,   December 31,
                                                     2005           2004
                         ASSETS
   Current assets:
   Cash and cash equivalents                        $3,926         $7,654
   Short-term investments                           18,600         32,757
   Accounts receivable, net of allowance for
    doubtful accounts of $454 and $574 at
    September 30, 2005 and December 31, 2004,
    respectively                                    17,379         16,217
   Inventories, net                                 13,847         10,027
   Other current assets                              1,535          1,876

   Total current assets                             55,287         68,531
   Property and equipment, net                       4,109          4,600
   Other assets                                      3,413            148
   Goodwill                                             --          1,760
   Intangible assets, net                               --             50

   Total assets                                    $62,809        $75,089

        LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
   Accounts payable                                $15,761        $12,396
   Accrued compensation                              2,439          2,503
   Other accrued liabilities                         9,418         11,139
   Deferred revenue                                  1,416            723

   Total current liabilities                        29,034         26,761
   Commitments and Contingencies
   Stockholders' equity:
   Preferred stock ($0.001 par value per
    share; authorized 20,000 shares,
    no shares issued)
   Common stock ($0.001 par value per share;
    authorized 200,000 shares, shares issued
    and outstanding: 50,331 and 49,872 at
    September 30, 2005 and December 31,
    2004, respectively)                                 50             49
   Additional paid-in capital                       75,230         74,652
   Unearned stock-based compensation                  (203)           (72)
   Accumulated other comprehensive
    income (loss)                                      192           (191)
  Accumulated deficit                              (41,494)       (26,110)

   Total stockholders' equity                       33,775         48,328

   Total liabilities and stockholders' equity      $62,809        $75,089



             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share data)
                               (unaudited)

                                Three Months Ended    Nine Months Ended
                                   September 30,         September 30,
                                  2005       2004       2005       2004
   Revenues:
   Equipment revenue            $18,832    $20,736    $53,837    $66,496
   Service and program revenue    2,945      1,957      7,155     10,352

   Total revenues                21,777     22,693     60,992     76,848

   Cost of revenues:
   Equipment cost of revenue     12,902     17,346     35,960     51,935
   Service and program cost
    of revenue                    1,683      1,455      3,882      7,554

   Total cost of revenues        14,585     18,801     39,842     59,489

   Gross profit                   7,192      3,892     21,150     17,359

   Operating expenses:
   Sales and marketing            6,896      5,288     19,527     16,847
   General and administrative     4,521      7,309     13,817     16,932
   Impairment of goodwill            --         --      1,760         --
   Other operating expenses         102         17      1,306         50

   Total operating expenses      11,519     12,614     36,410     33,829

   Loss from operations          (4,327)    (8,722)   (15,260)   (16,470)
   Other income (expense), net      163        241        (87)        91

   Loss before income taxes      (4,164)    (8,481)   (15,347)   (16,379)
   Income tax provision              13          8         37         42

   Net loss                      (4,177)    (8,489)   (15,384)   (16,421)

   Net loss per share: basic
    and diluted                  $(0.08)    $(0.17)    $(0.31)    $(0.33)
   Weighted average shares:
    basic and diluted            50,301     49,808     49,973     49,695


DATASOURCE: Somera Communications



CONTACT:  Jim Gardner, Vice President, Marketing of Somera

Communications, [phone], ext. 317, 



Web site:  http://www.somera.com/ 

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