Openwave Announces Fourth Quarter Fiscal 2007 Results Revenue Increases Sequentially; Book-to-Bill at 1:1



    REDWOOD CITY, Calif., Aug. 2 /PRNewswire-FirstCall/ -- Openwave Systems
 Inc. (Nasdaq:   OPWV), the leading independent provider of software products
 and services for the communications industry, today announced final
 financial results for its fiscal 2007 fourth quarter ended June 30, 2007.
 The company reported the financial results with the Musiwave results
 categorized as discontinued operations as it considers Musiwave as an asset
 held for sale. Revenues for the fiscal fourth quarter were $68.1 million,
 compared with $62.7 million in the prior quarter ended March 31, 2007 and
 $83.5 million in the same quarter in the preceding year. The Company
 reported bookings of $68.0 million in the fiscal 2007 fourth quarter.
     Including revenue from discontinued operations, revenues for the fiscal
 fourth quarter were $75.6 million, compared with $71.1 million in the prior
 quarter ended March 31, 2007 and $91.1 million in the same quarter in the
 preceding year.
     "I am pleased with our sequential revenue growth and our one-to-one
 book- to-bill ratio which demonstrate our ability to execute," said Robert
 Vrij, president and CEO of Openwave. "With our new executive team in place,
 we are focused on establishing our market leadership as the provider of
 software solutions to the communications industry, leveraging our
 technology expertise in our traditional messaging, gateway, client and
 location businesses, and expanding our overall addressable market."
     On a GAAP basis, net loss for the fourth fiscal quarter ended June 30,
 2007 was $91.8 million, or $1.11 per share, compared to $32.5 million, or
 $0.35 per share, in the prior quarter and $5.1 million, or $0.06 per share,
 for the June quarter in the preceding year.
     Net loss on a non-GAAP basis, which excludes discontinued operations,
 amortization of intangibles, stock-based compensation, gains on sales of
 non- operating assets, impairment charges, acquisition-related costs, costs
 associated with the stock option review and proxy contest, retention
 bonuses related to exploring strategic alternatives and restructuring
 costs, for the fourth fiscal quarter ended June 30, 2007 was $10.5 million,
 or $0.13 per diluted share, compared with $18.6 million, or $0.20 per
 diluted share, in the prior quarter and a net income of $4.7 million, or
 $0.05 per diluted share, during the June quarter of the prior year. A
 reconciliation between net income (loss) on a GAAP basis and a non-GAAP
 basis is provided below in a table immediately following the Condensed
 Consolidated Statements of Operations.
     Conference Call Information
     Openwave has scheduled a conference call for 5:00 p.m. eastern time
 today to discuss its financial results for its fiscal third quarter ended
 June 30, 2007. Interested parties may access the conference call over the
 Internet through the Company's web site at www.openwave.comor by telephone
 at (877) 502-9272 or (913) 981-5581 (international). A replay of the
 conference call will be available for one week beginning at approximately
 8:30 p.m. eastern time today by calling 888-203-1112. The replay can be
 accessed internationally by calling 719-457-0820. Reservation number:
 9373340.
     A live webcast of the call, together with supplemental financial
 information, will also be available on the Quarterly Earnings section of
 Openwave's website at http://investor.Openwave.com/ for at least 12 months.
     About Openwave Systems
     Openwave Systems Inc. (Nasdaq:   OPWV) is the leading independent
 provider of software solutions that ignite mobility for the communications
 and media industries. Openwave empowers its customers to rapidly transform
 their business by sparking new revenue streams and market opportunities,
 building loyal subscriber communities and reducing operational costs.
 Openwave's broad range of IP-based handset-to-network solutions enable the
 rapid launch of information, communication and entertainment services
 across networks and devices and include handset software, content delivery,
 adaptive messaging, location, music and video services. Openwave is a
 global company headquartered in Redwood City, California. For more
 information please visit http://www.openwave.com.
     Openwave and the Openwave logo are trademarks of Openwave Systems Inc.
 All other trademarks are the properties of their respective owners.
     Cautionary Note Regarding Forward Looking Statements
     This release contains forward-looking statements relating to
 expectations, plans or prospects for Openwave Systems Inc. that are based
 upon the current expectations and beliefs of Openwave's management and are
 subject to certain risks and uncertainties that could cause actual results
 to differ materially from those described in the forward-looking
 statements. Notwithstanding changes that may occur with respect to matters
 relating to any forward looking statements, Openwave does not expect to,
 and disclaims any obligation to, update such statements. Openwave, however,
 reserves the right to update such statements or any portion thereof at any
 time for any reason.
     In particular, the following factors, among others, could cause actual
 results to differ materially from those described in the forward-looking
 statements: (a) the ability to make changes in business strategy,
 development plans and product offerings to respond to the needs of our
 current, new and potential customers, suppliers and strategic partners; (b)
 the ability to improve sales productivity; (c) the ability to continue to
 sell our existing products and enhancements; (d) the ability to develop and
 commercialize new products; (e) risks associated with the development and
 licensing of software generally, including potential delays in software
 development and technical difficulties that may be encountered in the
 development or use of our software; and (f) increased global competition
 and pricing pressure on our products.
     For a detailed discussion of these and other cautionary statements,
 please refer to the risk factors discussed in filings with the U.S.
 Securities and Exchange Commission ("SEC"), including but not limited to
 the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
 2006, and any subsequently filed reports. All documents also are available
 through the SEC's Electronic Data Gathering Analysis and Retrieval system
 (EDGAR) at www.sec.gov or from Openwave's website at www.openwave.com.
      For more information please contact:
      Openwave Systems Inc.                     Openwave Systems Inc.
      Mike Bishop                               Vikki Herrera
      Investor Relations                        Public Relations
      investor@openwave.com                     Vikki.Herrera@openwave.com
      Tel: 650-480-4461                         Tel: 650-480-6753
 
 
 
                               OPENWAVE SYSTEMS INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
                                  (In thousands)
 
                                                  June 30,           June 30,
                                                    2007               2006
     Assets
       Current Assets:
         Cash, cash equivalents and
          short-term investments                  $246,489           $428,966
         Restricted cash                             2,061                -
         Accounts receivable, net                   82,649            152,547
         Prepaid and other current
          assets                                    33,921             21,449
           Total current assets                    365,120            602,962
 
       Property and equipment, net                  21,667             20,784
       Long-term investments and
        restricted cash and investments             37,944             81,140
       Deposits and other assets                     7,324              9,169
       Goodwill and intangible assets,
        net                                        146,258            205,776
           Total assets                           $578,313           $919,831
 
     Liabilities and Stockholders'
      Equity
       Current Liabilities:
         Accounts payable                          $14,581            $14,951
         Accrued liabilities                        70,069             59,077
         Accrued restructuring costs                26,118             18,542
         Deferred revenue                           47,161             58,964
           Total current liabilities               157,929            151,534
 
       Accrued restructuring costs, less
        current portion                             51,140             60,922
       Deferred revenue, less current
        portion                                     14,011              6,814
       Deferred rent obligations                     1,649              1,055
       Deferred tax liabilities, net                 6,309             11,417
       Convertible subordinated notes,
        net                                        149,017            148,494
           Total liabilities                       380,055            380,236
 
       Stockholders' equity                        198,258            539,595
           Total liabilities and
            stockholders' equity                  $578,313           $919,831
 
 
 
 
 
                             OPENWAVE SYSTEMS INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
                     (In thousands, except per share data)
 
                                   Three Months Ended           Year Ended
                               June 30, March 31, June 30,  June 30,  June 30,
                                 2007      2007      2006      2007      2006
     Revenues:
       License                $19,402   $14,946   $37,797   $88,707   $194,611
       Maintenance and
        support                22,443    22,917    22,821    91,006     93,821
       Services                23,376    22,712    20,425    97,379     93,833
       Projects/ Systems        2,873     2,129     2,466    13,209     13,967
         Total revenues        68,094    62,704    83,509   290,301    396,232
 
     Cost of revenues:
       License                  1,510       872     1,901     4,924      7,189
       Maintenance and
        support                 9,099     9,142     7,046    34,102     30,320
       Services                15,574    17,502    15,588    72,576     70,206
       Projects/ Systems        2,528       817       630     7,021      7,128
       Amortization of
        intangible assets       2,056     2,002     1,519     7,543      6,151
         Total cost of
          revenues             30,767    30,335    26,684   126,166    120,994
     Gross profit              37,327    32,369    56,825   164,135    275,238
 
     Operating Expenses:
       Research and
        development            17,539    17,806    19,046    71,410     84,148
       Sales and
        marketing              24,910    25,216    29,007    99,648    119,653
       General and
        administrative         16,253    19,077    16,290    67,786     67,725
       Stock option review
        and associated costs        -       540       341     6,782        341
       Restructuring and
        other related costs    17,548       576    (3,047)   30,648      4,623
       Acquisition-related
        costs and amortization    823       774       713     3,024      2,852
       Gain on sale of
        technology                  -         -         -    (1,287)   (11,349)
          Total operating
           expenses            77,073    63,989    62,350   278,011    267,993
 
     Operating income (loss)
      from continuing
      operations              (39,746)  (31,620)   (5,525) (113,876)     7,245
     Interest and other
      (expense), net            3,430     4,020     4,267    18,293      9,057
     Gain on/(impairment) of
      non-marketable equity
      securities                1,065    (1,185)     (428)     (120)      (532)
         Pretax income (loss)
          from continuing
          operations          (35,251)  (28,785)   (1,686)  (95,703)    15,770
 
     Income taxes               1,807     1,347       489     6,544      5,377
     Net income (loss) from
      continuing operations   (37,058)  (30,132)   (2,175) (102,247)    10,393
     Net loss from
      discontinued operations,
      net of tax              (54,748)   (2,378)   (2,927)  (62,382)    (5,157)
     Net income (loss)       $(91,806) $(32,510)  $(5,102)$(164,629)    $5,236
 
 
     Basic net income (loss)
      per share from:
       Continuing operations   $(0.45)   $(0.33)   $(0.03)   $(1.13)     $0.12
       Discontinued operations  (0.66)    (0.02)    (0.03)    (0.69)     (0.06)
       Net income              $(1.11)   $(0.35)   $(0.06)   $(1.82)     $0.06
     Diluted net income (loss)
      per share from:
       Continuing operations   $(0.45)   $(0.33)   $(0.03)   $(1.13)     $0.12
       Discontinued operations  (0.66)    (0.02)    (0.03)    (0.69)     (0.06)
       Net income              $(1.11)   $(0.35)   $(0.06)   $(1.82)     $0.06
 
     Shares used in basic net
      income (loss) per share  82,449    92,114    91,709    90,246     82,231
     Shares used in diluted
      net income (loss) per
      share                    82,449    92,114    91,709    90,246     85,316
     Stock-based compensation
      by category:
       Maintenance and
        support                  $168      $180      $207      $953      1,418
       Services                   216       199       343     1,239      1,541
       Research and
        development               757       422       483     2,426      5,787
       Sales and marketing        760     1,356     4,467     6,795     19,089
       General and
        administrative           (459)    2,293     3,208     6,476     12,979
       Restructuring and other
        related costs           1,691         -         -     4,489          -
       Discontinued operations    152       232       147       638        214
                               $3,285    $4,682    $8,855   $23,016    $41,028
 
 
 
 
                               OPENWAVE SYSTEMS INC.
       RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
                       (In thousands, except per share data)
 
                                   Three Months Ended           Year Ended
                               June 30, March 31, June 30,  June 30,  June 30,
                                 2007      2007     2006      2007      2006
 
     Reconciliation between
      GAAP and Non-GAAP net
      income (loss):
     Net income (loss)         $(91,806) $(32,510) $(5,102) $(164,629)  $5,236
     Exclude:
       Restructuring and other
        related costs            17,548       576   (3,047)    30,648    4,623
       Acquisition-related
        costs and
        amortization*             2,879     2,776    2,232     10,567    9,675
       Amortization of stock-
        based compensation        1,442     4,450    8,708     17,889   40,814
       Stock option review and
        associated costs**          -         540      341      6,782      341
       Costs associated with
        proxy contest and
        strategic alternatives    3,314     2,380      -        5,694      -
       Retention bonuses
        related to strategic
        alternatives              3,217       409      -        3,626      -
       Gains/impairments on
        non-operating assets     (1,065)    1,185      428     (1,167) (10,817)
       Discontinued
        operations, net of tax   54,748     2,378    2,927     62,382    5,157
       Tax impact of
        reconciling items***       (826)     (792)  (1,770)    (3,308)  (2,729)
     Non-GAAP net income
      (loss)  per share        $(10,549) $(18,608)  $4,717   $(31,516) $52,300
 
     GAAP net income (loss)
      per share - diluted        $(1.11)   $(0.35)  $(0.05)    $(1.82)   $0.06
     Exclude:
       Restructuring and other
        related costs             $0.21     $0.01   $(0.03)     $0.34    $0.05
       Acquisition-related
        costs and
        amortization*             $0.03     $0.03    $0.02      $0.11    $0.11
       Amortization of stock-
        based compensation        $0.02     $0.05    $0.09      $0.20    $0.48
       Stock option review and
        associated costs**         $-       $0.01     $-        $0.08     $-
       Costs associated with
        proxy contest and
        strategic alternatives    $0.04     $0.03     $-        $0.04     $-
       Retention bonuses
        related to strategic
        alternatives              $0.04      $-       $-        $0.04     $-
       Gains/impairments on
        non-operating assets     $(0.01)    $0.01    $0.01     $(0.01)  $(0.12)
       Discontinued
        operations, net of tax    $0.66     $0.02    $0.03      $0.69    $0.06
       Tax impact of
        reconciling items***     $(0.01)   $(0.01)  $(0.02)    $(0.04)  $(0.03)
     Non-GAAP net income
      (loss) per share -
      diluted                    $(0.13)   $(0.20)   $0.05     $(0.35)   $0.61
 
     Shares used in computing
      diluted earnings per
      share                      82,449    92,114   93,679     90,246   85,316
 
     *Acquisition-related costs relates to payments due under the terms of the
     Widerweb acquisition.  Also includes $672 thousand of acquisition-related
     hedging costs in the year ended June 30, 2006.  Amortization relates to
     acquired intangible assets.
     **Relates to legal fees regarding the stock option review and resulting
     lawsuits.
     ***The tax impact relates to amortization of acquisition-related
     intangibles and tax benefits related to stock-based compensation.
 
 

SOURCE Openwave Systems Inc.

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