Westell Technologies Reports Fiscal First Quarter 2009 Results


Westell Technologies, Inc. (NASDAQ: WSTL):

              Westell Technologies 1st Quarter Highlights

    --  Net loss for the first quarter was $5.5 million or $0.08 per
        diluted share.

    --  Secured orders in excess of $20.0 million from Verizon for its
        FiOS next-generation broadband home router to supply a key
        segment of the fiber-to-the-home market.

    --  OSPlant grew revenues 8% compared to the first quarter of
        fiscal 2008.

Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of broadband products, gateways and conferencing services, today announced results for its fiscal first quarter ending June 30, 2008. Total revenue from continued operations for the first quarter was $38.1 million, compared to the $58.4 million reported in the prior year period. This decrease was significantly due to the previously announced loss of a customer and softening of demand for basic DSL modems. Net loss during the period was $5.5 million, or $0.08 per diluted share, compared to a net loss of $0.9 million, or $0.01 per diluted share in the same period last year. The Company has recorded a full valuation allowance on its deferred tax assets in the first quarter of fiscal year 2008.

Customer Networking Equipment (CNE) reported revenue of $10.7 million in the first quarter of fiscal 2009, compared to the $31.1 million reported in the prior year period. The Company is in a transition period during which CNE segment revenue is currently soft as product mix shifts from legacy towards newer, feature-rich product offerings as previously announced. During the quarter, the Company received orders for over $20 million from Verizon and another fiber-based service provider for its UltraLine Series3 gateway product.

OSPlant Systems, formerly Network Service Access (NSA), reported revenue of $14.9 million in the first quarter of fiscal 2009, an 8.2% improvement compared to fiscal first quarter of 2008 revenue of $13.8 million. The Company continues to enter new market segments with its OSPlant Systems portfolio.

Conferencing Services revenue declined to $12.5 million in the first quarter of fiscal 2009 from $13.5 million in the first quarter of fiscal 2008. A decrease in business from one of ConferencePlus' largest clients accounted for the majority of the decline in revenue in the first quarter of fiscal 2009 compared with the same quarter of last year. As a direct result, the company conducted a workforce reduction at ConferencePlus in mid-July 2008.

On June 30, 2008, ConferencePlus acquired a revenue base from iLink, an enhanced voice/data services provider. "This acquisition is immediately accretive, and we believe can be replicated with other companies in the marketplace," commented Tim Reedy, President of ConferencePlus. "As the price of oil and related transportation costs continue to rise, it's clear the conferencing network space will grow, and we believe we can scale this business further."

    Additional News

    --  Total cash as of June 30, 2008 was $59.9 million.

    --  The ConferencePlus business unit will remain a part of ongoing

    --  On July 8th, Bernard Sergesketter, former Westell Board
        Director and respected leader in the telecommunications
        industry, was named interim Chief Executive Officer following
        the departure of Tom Mader.


"During the next 60 days, my priority and that of the Board is to establish the plan that leverages the market success we are seeing with new products and sets a clear direction for sustainable and profitable growth," said Bernard F. Sergesketter, interim Chief Executive Officer. "Despite a leveling off of industry-wide demand for legacy products, we are at the very beginning stages of a product cycle for which Westell is well positioned. We have a solid foundation including nearly $60 million in cash and an established reputation with our customers for delivering innovative products. We expect nearly one-half of our fiscal 2009 CNE revenue to be generated from the sale of new products. The fundamental goal of returning Westell to profitability has not changed, and our focus for the remainder of the year is to set and execute our plan to yield the growth this business merits."

For the second quarter of fiscal 2009, Westell expects revenue to be in a range of $37 to $39 million. Westell expects EPS to be in a range of $0.10 to $0.11 loss per diluted share.

Conference Call Information

Conference Plus, Inc. (ConferencePlus), a Westell subsidiary, will manage Westell's first quarter fiscal 2009 earnings conference call on Thursday, July 24, 9:30 AM ET using its EventManager(TM) Service.

Participants can register for the Westell conference by going to the URL: http://www.conferenceplus.com/westell

With EventManager, participants can quickly register online in advance of the conference through a customizable web page that can be used to gather multiple pieces of information from each participant, as specified by the event arranger. After registering, participants receive dial-in numbers, a passcode, and a personal identification number (PIN) that is used to uniquely identify their presence and automatically join them into the audio conference. If a participant experiences any technical difficulties after joining the conference on July 24, simply press *0 for support.

If you do not wish to register, you can participate in the call on July 24 by dialing ConferencePlus at 1-877-875-0056 no later than 9:15 AM, Eastern Time and using confirmation number 22235993#. International participants may dial 1-847-585-4340. The Company's earnings press release and any related earnings information to be discussed on the earnings conference will be posted on the Investor Relations section of the Company's website at http://www.westell.com. An archive of the entire conference will be available on Westell's website or via Digital Audio Replay one hour following the conclusion of the conference. The replay of the conference can be accessed by dialing 1-888-843-8996 or 1-630-652-3044 and entering 5057830#.

About Westell

Westell Technologies, Inc., headquartered in Aurora, Illinois, is a holding company for Westell, Inc. and ConferencePlus, Inc. Westell, Inc. designs and develops broadband telecommunications access products. ConferencePlus, Inc. is a collaborative Application Service Provider that manages and hosts voice, video, IP applications and back-office services. Additional information can be obtained by visiting Westell's Web site at www.westell.com.

About ConferencePlus

ConferencePlus, a Westell Technologies, Inc. (NASDAQ: WSTL - News) subsidiary, is a leading global provider of audio, web, video and IP conferencing services. ConferencePlus is dedicated to providing high quality, innovative conferencing solutions to its domestic and international clients and telecommunications resellers. ConferencePlus is recognized for outstanding customer service and support to help clients meet their business objectives. The company is headquartered in Schaumburg, Illinois with an international headquarters in Dublin, Ireland. Additional information can be obtained by visiting the ConferencePlus web site at www.conferenceplus.com.

    "Safe Harbor" statement under the Private Securities Litigation
                           Reform Act 1995:

Certain statements contained herein that are not historical facts or that contain the words "believe", "expect", "intend", "anticipate", "estimate", "may", "will", "should", or derivatives thereof and other words of similar meanings are forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, product demand and market acceptance risks, need for financing, an economic downturn in the U.S. economy and telecom market, the impact of competitive products or technologies, competitive pricing pressures, new product development, excess and obsolete inventory, commercialization and technological delays or difficulties (including delays or difficulties in developing, producing, testing and selling new products and technologies), the effect of Westell's accounting policies, the need for additional capital, the effect of economic conditions and trade, legal social and economic risks (such as import, licensing and trade restrictions) and other risks more fully described in the Company's Form 10-K for the fiscal year ended March 31, 2008 under the section Risk Factors. The Company undertakes no obligation to publicly update these forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or otherwise.

                      Financial Tables to Follow:

                      Westell Technologies, Inc.
                          Financial Results

           (Dollars in thousands except per share amounts)

                                               Three Months ended
                                                     June 30,
                                                 2008       2007
                                               --------    -------

  OSPlant Systems                               $14,882    $13,757
  CNE                                            10,666     31,097
  Services                                       12,510     13,547

                                               --------    -------
Total revenues                                   38,058     58,401
                                               --------    -------

Gross profit
    Equipment                                     7,257     11,136
    Services                                      5,590      6,811

                                               --------    -------
  Total gross profit                             12,847     17,947
                                               --------    -------

Gross margin
    Equipment                                     28.4%      24.8%
    Services                                      44.7%      50.3%

                                               --------    -------
  Total gross margin                              33.8%      30.7%
                                               --------    -------

Operating expenses
  Sales & marketing                               6,489      4,526 (1)
    As a percentage of revenue                    17.1%       7.7%

  General & administrative                        5,485      5,158 (2)
    As a percentage of revenue                    14.4%       8.8%

  Research & development                          5,634      5,738
    As a percentage of revenue                    14.8%       9.8%

  Restructuring (3)                                (58)      3,857
    As a percentage of revenue                    -0.2%       6.6%

  Intangibles amortization                          459        456
    As a percentage of revenue                     1.2%       0.8%

                                               --------    -------
  Total operating expenses                       18,009     19,735
                                               --------    -------
    As a percentage of revenue                    47.3%      33.8%

Operating loss                                  (5,162)    (1,788)

Other income                                        347        979
Interest expense                                      -        (2)

                                               --------    -------
Loss before minority interest and taxes         (4,815)      (811)
                                               --------    -------

Income taxes                                         27 (4)  (261)

Minority interest                                    36         63

                                               --------    -------
Loss from continuing operations                 (4,878)      (613)
                                               --------    -------

 Loss discontinued operations net of tax
  of $0 and 171, respectively (5)                 (643)      (303)

                                               --------    -------
Net loss                                       $(5,521)     $(916)
                                               ========    =======

Net loss per common share:
        Basic                                   $(0.08)    $(0.01)
        Diluted                                 $(0.08)    $(0.01)

Average number of common
  shares outstanding:
        Basic                                    70,723     70,124
        Diluted                                  70,723     70,124

(1) The Company recorded a $3.3 million gain relating to a vendor
 settlement and $600,000 in associated expenses for a net gain of $2.7
(2) The Company recorded $545,000 of consulting costs related to the
 implementation of the outsourcing strategy.
(3) Reorganization costs are for serverance and related costs
 resulting from the outsourcing strategy.
(4) The Company is providing a valuation allowance on deferred tax
(5) The Company discontinued the operations of it's Westell Limited
 entity located in the United Kingdom.
                      Westell Technologies, Inc.
                    Financial Results (continued)
                        (Dollars in thousands)

                                                   June 30,  March 31,
                                                     2008      2008
                                                   --------- ---------

Cash and short term investments                       59,949    68,349
Accounts receivable                                   18,704    19,498
Inventory                                             16,843    17,897
Total current assets                                  97,826   108,748
Goodwill and intangibles                               9,242     9,479
Total assets                                         123,615   134,227
Total current liabilities                             23,906    29,685
Total liabilities and minority interest               35,077    40,733
Shareholders' equity                                  88,538    93,494

Days sales outstanding                                    44        39

Source: Westell Technologies, Inc.