SANTA CLARA, Calif. -- Terayon Communication Systems, Inc. (NASDAQ:TERNE) , a leading provider of video localization-on-demand solutions, today announced a restructuring to focus the company's strategy solely on its digital video applications and reduce its overall cost structure as a pure-play video business.

"Our decision to concentrate solely on digital video applications enables us to laser-focus the company on a growing market for real-time network digital video processing and expand our applications and services," said Jerry Chase, Terayon, CEO. "Network operators worldwide in cable, satellite, telco and mobile, understand that they must customize digital video programming services and advertising to become more relevant to their individual customers. The move to customizing content the instant before viewing creates substantial opportunity for Terayon, particularly in the area of digital video advertising, as it builds on our existing core competencies and market leadership. Localizing services and advertising plays strongly to the core strength exhibited in our award winning CherryPicker(R) product line."

As part of the company's move to a pure-play video business, Terayon is reviewing strategic alternatives for its Home Access Solutions product line including the opportunity to monetize its current investment in working capital. As part of the restructuring, Terayon expects to record charges of approximately $0.6 million for employee related costs in addition to other restructuring costs, the majority of which are expected to occur in the first quarter of 2006.

Chase continued, "We are now structured to take advantage of what we do best. By focusing on digital video, we expect to drive our strategic goals of increased market penetration and improved financial performance. With the savings we obtain from the restructuring, we intend to allocate additional resources for digital video software application development to pursue new revenue-generating video opportunities. Through our focus and partnerships with key industry players and existing customer relationships in the cable, satellite and telco markets, Terayon is well positioned for success."

Terayon Communication Systems Inc.