Netopia Reports Second Quarter Results for Fiscal Year 2005

    Business Editors/High-Tech Editors

    EMERYVILLE, Calif.--(BUSINESS WIRE)--April 26, 2005--Netopia, Inc. (Pink Sheets:NTPA), a market leader in broadband gateways and service delivery software, today announced results for the second quarter of fiscal year 2005. Revenues for the second fiscal quarter ended March 31, 2005 were $25.2 million, a 16% increase from $21.8 million for the same period in the prior fiscal year.
    Net loss on a GAAP basis for the second fiscal quarter was ($1.8) million or ($0.07) per share, compared to net loss of ($1.6) million or ($0.07) per share for the same period in the prior fiscal year. As discussed in Netopia's Annual Report on Form 10-K for the fiscal year ended September 30, 2004, the results for the second fiscal quarter ended March 31, 2004 have been restated from the previously reported results.
    "We are pleased to report 16% total revenue growth compared to the same quarter last year," said Alan Lefkof, Netopia's president and CEO. "Broadband equipment revenue grew by 24% year-over-year, reflecting DSL momentum in our key carrier accounts. Equipment gross margins improved sequentially resulting from successful new product introductions."

    Note:

    Netopia will host a conference call to discuss its results for the second fiscal quarter ended March 31, 2005. The conference call will take place on Tuesday, April 26, 2005 at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). The conference call will be broadcast live on the Internet and can be accessed by visiting Netopia's web site at www.netopia.com. To join the telephone conference, dial (913) 312-1294 and enter the pass code 5247415.
    An archived recording of the conference call will be available on Netopia's web site for one year, and by telephone from April 26 - May 3, 2005. To listen to the archived recording, dial (719) 457-0820 and enter the pass code 5247415, or go to Netopia's web site.

    About Netopia

    Netopia, Inc. is a market leader in broadband products and services that enable service providers to improve their profitability. Its portfolio of wired and wireless gateways, software, and value-added services enhance revenue generation while reducing costs for carriers and broadband service providers. Netopia's Wi-Fi CERTIFIED(TM) gateways feature 3-D Reach(TM) technology for enhanced wireless range, security, and performance. The company has established strategic distribution relationships with leading carriers and broadband service providers including Belgacom, BellSouth, Covad Communications, EarthLink, eircom, Hong Kong Telecom/PCCW, MegaPath Networks, Netifice, SBC Communications, Swisscom, and Verizon. Netopia also offers powerful remote-control software for IT support organizations.
    Headquartered in Emeryville, California, Netopia's common stock trades on the pink sheets under the symbol "NTPA.PK." Further information about Netopia can be obtained via phone (510) 420-7400, fax (510) 420-7601, or on the Web at www.netopia.com.

    Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

    Portions of this release that are not statements of historical fact may include forward-looking statements. Statements regarding Netopia, Inc.'s beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning product development, anticipated new products and customers, growth opportunities, and future operating results. Netopia's actual results could differ materially. Factors that might cause a difference include, but are not limited to: Netopia's continued ability to form key relationships for our broadband products and services; Netopia's ability to enter into new distribution partnerships; Netopia's ability to develop new broadband products and services in a timely manner; market acceptance of Netopia's broadband products and services; Netopia's ability to list its common stock on the Nasdaq Stock Market; Netopia's ability to resolve pending private securities litigation, the Securities and Exchange Commission formal order of investigation and other government investigations arising out of the restatement of Netopia's consolidated financial statements in a timely and economic manner; the pace of development and market acceptance of Netopia's products and the market for broadband products and services generally; the highly competitive nature of Netopia's markets and competitive pricing pressures; the uncertainties associated with international operations; intense competition from third parties offering competitive broadband products and services; and economic conditions generally. In addition, prior period-to-period comparisons of revenues are not necessarily indicative of period-to-period comparative revenues in future periods. Prospective and current investors are cautioned not to place undue reliance on any forward-looking statements. Further, Netopia expressly disclaims any obligation to revise or update any of the forward-looking statements contained herein to reflect future events or developments after the date hereof. Netopia does not undertake to update any oral or written forward-looking statement that may be made by or on behalf of Netopia. For more information concerning Netopia and risk factors that may affect Netopia's future results and may cause actual results to vary from results anticipated in forward-looking statements, including risk factors relating to Netopia's existing and potential securities litigation relating to the restatements described in Netopia's Annual Report on Form 10-K for the fiscal year ended September 30, 2004 and a formal investigation commenced by the Securities and Exchange Commission to determine whether any federal securities laws may have been violated, investors should review Netopia's public filings with the United States Securities and Exchange Commission, which are available by calling Netopia at (510) 420-7516 or online at www.sec.gov.

    All company names, brand names and product names are trademarks of their respective holder(s).

Unaudited GAAP Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2005 and 2004 ----------------------------------------------------------------------

Three Months Ended Six Months Ended March 31, March 31, 2005 2004 2005 2004 (Restated)(a) (Restated)(a) ----------------------- -------- ------------- -------- ------------- (in thousands; except per share amounts) REVENUES: Broadband equipment $22,247 $17,878 $48,444 $41,535 Broadband software and services 2,976 3,879 6,097 8,531 ----------------------- -------- ------------- -------- ------------- Total revenues 25,223 21,757 54,541 50,066 ----------------------- -------- ------------- -------- -------------

COST OF REVENUES: Broadband equipment 16,307 12,573 36,252 29,023 Broadband software and services 384 231 650 439 Amortization of acquired technology 300 300 600 600 ----------------------- -------- ------------- -------- ------------- Total cost of revenues 16,991 13,104 37,502 30,062 ----------------------- -------- ------------- -------- ------------- GROSS PROFIT 8,232 8,653 17,039 20,004

OPERATING EXPENSES: Research and development 3,403 4,057 6,609 8,008 Selling and marketing 4,582 5,037 9,667 10,063 General and administrative 2,029 1,172 4,224 2,407 Amortization of intangible assets 87 87 173 173 Restructuring costs 98 - 98 - ----------------------- -------- ------------- -------- ------------- Total operating expenses 10,199 10,353 20,771 20,651 ----------------------- -------- ------------- -------- -------------

OPERATING LOSS (1,967) (1,700) (3,732) (647)

Other income (loss), net 155 77 303 245 ----------------------- -------- ------------- -------- -------------

Provision for income taxes 20 (11) 44 46 ----------------------- -------- ------------- -------- -------------

NET LOSS $(1,832) $(1,612) $(3,473) $(448) ----------------------- -------- ------------- -------- -------------

Per share data, net loss: Basic net loss per share ($0.07) ($0.07) ($0.14) ($0.02) ----------------------- -------- ------------- -------- ------------- Diluted net loss per share ($0.07) ($0.07) ($0.14) ($0.02) ----------------------- -------- ------------- -------- -------------

Shares used in the basic per share calculation 25,038 23,536 24,892 22,882 ----------------------- -------- ------------- -------- ------------- Shares used in the diluted per share calculation 25,038 23,536 24,892 22,882 ----------------------- -------- ------------- -------- -------------

(a) See Netopia, Inc. Annual Report on Form 10-K for the fiscal year ended September 30, 2004 for a description of the restatements of financial results for prior periods.

Condensed Consolidated Balance Sheets ----------------------------------------------------------------------

March 31, September 30, 2005 2004(b) (Unaudited) ----------------------------------------- -------------- ------------- (in thousands) ASSETS Current assets Cash and short-term investments $22,714 $23,973 Trade receivables, net 15,245 17,812 Inventories, net 6,525 6,280 Prepaid expenses and other current assets 769 1,226 ----------------------------------------- -------------- ------------- Total current assets 45,253 49,291

Furniture, fixtures and equipment, net 2,505 2,694 Intangible assets, net 4,861 5,684 Long-term investments 1,032 1,032 Deposits and other assets 711 886 ----------------------------------------- -------------- ------------- TOTAL ASSETS 54,362 59,587 ----------------------------------------- -------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities 15,117 18,051 Long-term liabilities 305 406 ----------------------------------------- -------------- ------------- Total liabilities 15,422 18,457

Stockholders' equity 38,940 41,130 ----------------------------------------- -------------- ------------- Total liabilities and stockholders' equity $54,362 $59,587 ----------------------------------------- -------------- -------------

(b) Derived from the audited consolidated balance sheets dated September 30, 2004 included in Netopia, Inc.'s 2004 Annual Report on Form 10-K for the fiscal year ended September 30, 2004.

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CONTACT: Netopia, Inc. Mark H. Perry, 510-420-7400 mhperry@netopia.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE TELECOMMUNICATIONS SOFTWARE INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: Netopia, Inc.

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