Total revenue for the third quarter was $31.3 million, compared to $42.6 million for the second quarter of fiscal 2001, and $51.2 million for the same period last year. Pro forma results exclude the write-off of in-process R&D, acquisition-related costs, the amortization of goodwill and purchased intangible assets, restructuring charges, the net gain on the sale of certain assets, and tax provision adjustments. net.com reported a pro forma net loss of $10.9 million, or $0.50 per share, compared to a pro forma net loss of $5.5 million, or $0.25 per share, for the prior quarter, and a pro forma net loss of $6.5 million, or $0.31 per share, for the same period of the prior year.

During the third quarter of fiscal 2001, net.com completed the divestiture of the Federal professional services business to CACI International, Inc., a global provider of end-to-end network support for secure networks. net.com received $24.9 million of cash upon closing and recognized a gain on the transaction of $14.9 million, or $0.69 per share. Additional consideration in the amount of approximately $13.0 million is contingent upon the achievement of specific future milestones.

Actual net income for the third quarter of fiscal 2001 was $5.4 million, or $0.25 per share, including the $14.9 million gain on the sale of the Federal professional services business and a tax benefit of $2.3 million. This compares with a loss of $20.0 million, or $0.93 per share for the same period last year which included a $12.6 million or $0.59 per share provision for income taxes.

For the nine-month period ended December 29, 2000, net.com reported revenue of $117.2 million and a pro forma net loss of $22.3 million, or $1.03 per share. This compares to revenue of $178.6 million and pro forma net loss of $9.3 million, or $0.44 per share, for the nine months ended December 26, 1999.

The actual net loss reported for the first nine months of fiscal 2001 was $7.5 million or $0.34 per share, compared with a loss of $19.4 million or $0.91 per share for the same period of fiscal 2000.

During the quarter the company launched its SCREAM Service Creation Manager platform and its ShoutIP platform for IP services in Europe and Asia. CommsLive in Monaco was the site for the European launch, accompanied by media tours in the U.K., Germany and France. The Asia roll-out and attending media coverage took place at the ITU in Hong Kong during the Asia Telecom, the first ITU show sponsored by China.

Other highlights for the quarter include the purchase of a SCREAM platform by France Telecom for service creation development. Previously, France Telecom had tested the equipment in its labs. The company continues to make progress on its next generation SCREAM platform, having achieved several key engineering milestones during the quarter. Additionally, the platform is in trial or committed to trials in China, Japan, Eastern Europe, two locations in Western Europe, and one site in the U.S. The trials are with a variety of carriers, including competitive and incumbent local exchange carriers (CLECs and ILECs).

According to Hubert Bert Whyte, president and CEO, While we had hoped to demonstrate greater traction by now, we’re very encouraged by our engineering development progress and by recent events. We ended the quarter with a strong balance sheet with roughly $148 million in cash in the bank, which gives us the confidence that we have the resources necessary to execute on our plans. It’s been a rough several months for our industry as new economy business models have been challenged, yet many issues seem to point to a SCREAM service creation solution. The message is clear: carriers must achieve competitive differentiation in order generate income and survive. The SCREAM platform enables rapid service creation which enables carriers to achieve differentiation more effectively than other platforms that are currently available, and we believe will be the only system that is CO (central office) -ready by Supercomm.

SOURCE: COMPANY PRESS RELEASE