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October 5, 1998

NETSPEAK TO POST WIDER THIRD QUARTER LOSS

By CBR Staff Writer

Internet telephony outfit NetSpeak Corp has pre-announced third- quarter results that suffered from the structure of a deal the company has with Motorola Corp. The Boca Raton company says it will post revenue of only $700,000 for the quarter, although it shipped $3.0m worth of product. The $2.3m software sale to Motorola, however, came with a provision that Motorola was allowed to upgrade or exchange the products for a period of eighteen months. Thus, NetSpeak says, it had to defer recognition of that revenue. The shortfall will result in a net loss for the quarter of $0.35 to $0.39 per share, when analysts surveyed by First Call were expecting a loss of just $0.22. NetSpeak expects to receive full payment of the Motorola order during the fourth quarter and says the revenue will be recognized in subsequent periods. It says that operating expenses for the third quarter should be consistent with analysts’ expectations. Full results will be released on November 3.

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