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SR Telecom Reports Q2

Revenue and gross margin were lower than anticipated as product shipments were delayed

August 11, 2006

2 Min Read

MONTREAL -- SR Telecom Inc. (TSX: SRX - News), a leading vendor of licensed OFDM solutions for broadband access networks with its symmetry(TM) products, today announced its results for the second quarter ended June 30, 2006. All dollar figures are in Canadian funds unless otherwise indicated.

SR Telecom's consolidated revenue improved 35.6% to $19.4 million in the second quarter of 2006 compared to $14.3 million in the second quarter of 2005. However, Q2 2006 revenue and gross margin were lower than anticipated as product shipments were delayed by issues related to the execution of SR Telecom's plan to outsource its manufacturing.

"We are encouraged by the revenue growth we achieved across all sales regions in the second quarter. This is a strong indication that we have made tremendous strides in re-establishing SR Telecom's reputation as a leading global provider of broadband wireless technology. Still, these improved results did not meet our expectations due to issues related to the transition from in-house manufacturing to our contact manufacturers," stated Serge Fortin, President and Chief Executive Officer of SR Telecom. "The decision to outsource manufacturing to strong partners was the right one, and it remains a vital component of our business plan. We have adopted a comprehensive plan to resolve the issues and are working closely with our partners to improve the Company's processes and fully re-establish the supply chain. We expect deliveries will be back on schedule during the fourth quarter."

Consolidated Second Quarter Results

SR Telecom's consolidated revenue for the second quarter 2006 was up 35.6% to $19.4 million, compared to $14.3 million in the second quarter of 2005. This improvement is entirely the result of increased revenue in the Corporation's core Wireless Telecommunications Products segment. Operating loss from continuing operations for the second quarter was reduced to $16.9 million from $24.2 million in the prior year. Consolidated net loss was $17.3 million compared to a net loss of $30.7 million for the same period last year.

Year-to-date, consolidated revenue was $43.7 million, up 52.5% from $28.6 million in the first six months of 2005. Operating loss from continuing operations for the first half of 2006 was $27.2 million compared to $34.5 million in the same period a year ago. The year-to-date consolidated net loss totalled $30.9 million compared to $44.4 million in the first six months of the prior year.

SR Telecom Inc. (Toronto: SRX)

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