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ATCA/Standard Servers

Interphase Reports Q1

PLANO, Texas -- Interphase Corporation (NASDAQ: INPH), a leading international supplier of next-generation networking technologies, today reported financial results for its first quarter ended March 31, 2007.

Revenues for the first quarter of 2007 were $5.1 million compared to $8.2 million in the first quarter of 2006. Revenues for the quarter were also down sequentially when compared to revenues of $8.1 million for the fourth quarter of 2006. Revenues in the quarter were significantly impacted by a decrease in broadband telecom revenues, which were $4.2 million in the first quarter of 2007 compared to $5.9 million for the same period in 2006.

In addition, as expected, enterprise SlotOptimizerT revenues decreased to approximately $400,000 for the first quarter of 2007 compared to approximately $900,000 for the first quarter of 2006. All other revenues for the company were approximately $500,000 for the first quarter of 2007 compared to approximately $1.4 million for the first quarter of 2006. Gross margin for the first quarter of 2007 was 53% compared to 51% for the first quarter of 2006. The company reported a first quarter 2007 net loss of $1.9 million, or ($0.30) per share, as compared to net income of $310,000, or $0.05 per share in the first quarter of 2006. Included in the loss for the quarter was a nearly $700,000 year over year increase in research and development investment as the company continues to prepare for several new product introductions and a number of field trials scheduled for later this year. The company's balance sheet continues to be strong with a working capital position of $25.3 million, including cash and marketable securities of $21.5 million on March 31, 2007.

"The significant slowdown in telecommunications spending together with the ongoing merger activity at our top customers resulted in disappointing financial performance this quarter," said Gregory B. Kalush, CEO and President of Interphase. "However, we are encouraged by this quarter's additional design wins for our AdvancedTCA 10Gbps carrier blade, our PCI-e based T1/E1 solutions and our gateway products. The continued interest in our products from our customers and our strong execution with new design wins across our entire product line is helping expand and diversify both our customer and product base. During the quarter, we also introduced its first high performance multi-core and multi-processor AdvancedTCA embedded processing blade based on the Freescale Power architecture."

Interphase Corp.

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