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WiMAX Fiscal Reports

Vecima Reports Fiscal 2010 Q3 Results
Vecima Networks Inc.
May 13, 2010

VICTORIA, BRITISH COLUMBIA - Vecima Networks Inc. ("Vecima" or "the Company") (TSX:VCM), today reported its fiscal 2010 third quarter financial results for the three months and nine months ended March 31, 2010. (All dollar amounts are in Canadian funds unless otherwise stated.


"Vecima ended the third quarter with a very healthy sequential revenue growth of 7% over Q2," said Dr. Surinder Kumar, Chairman and CEO. "The Canadian dollar strengthened by 2% relative to the US dollar from Q2 to Q3 and without this effect, revenue would have grown 9% sequentially. Vecima grew revenue by 49% to $30 million in the third quarter compared to the same period last year, despite the dramatic strengthening of the Canadian dollar by 11% between these periods. This is an indication of continued recovery and is in line with a general strengthening of forecasts."

Fiscal 2010 Q3 financial highlights:

- revenue increased by 49% to $30.0 million in Q3 compared to $20.1 million in the same quarter last year;

- gross margin in the third quarter decreased to 35%, providing a gross profit of $10.5 million, compared with a gross margin of 48% for the three months ending March 31, 2009 that provided a gross profit of $9.6 million. This decline was driven by the mix of products manufactured and by the strengthening of the Canadian dollar since last year;

- operating expenses for the three months ended March 31, 2010 was $10.7 million, or 36% of sales, compared to $8.3 million, or 41% of sales, for the three months ended March 31, 2009;

- net income for the third fiscal quarter decreased 30% to $0.9 million, compared with $1.2 million in the three months ended March 31, 2009.

In the 2010 fiscal year we have made progress on a number of fronts including:

- signing a multi-year worldwide supply agreement with a major networking company to private label and exclusively sell a platform providing encrypted High Definition (HD) video to newer flat panel HDTVs. The contract calls for a minimum of $10 to $15 million annual revenue and allows Vecima the rights to sell the platform directly to a single leading US-based multiple system operator (MSO). Driven by the upcoming large scale transition to HD in hotels, the market is expected to grow to a cumulative $600 million worldwide over the next ten years and creates opportunities for operators to deploy all-digital services to new market segments. Vecima is carrying on an extensive field trial for the platform in parallel with certification testing at both the MSO and the large original equipment manufacturer (OEM) customer for worldwide sales;

- shipping healthy volumes of our world leading TerraceA solution throughout the first nine months of fiscal 2010. Our TerraceA multiunit digital transport adaptor (M-DTA) is in rapid deployment in multiple North American cable systems. The TerraceA delivers breakthrough technology to provide a headend quality line-up of services at the entry to multiple dwelling units and allows the MSO to create the capacity for hundreds of HD channels or gigabits per second of high speed data as part of the all-digital transition. All major MSOs are deploying TerraceA or are certifying the product and expect to deploy in the near term. Currently, 17 North American MSOs have deployed the TerraceA, 19 additional North American MSOs are evaluating the product, and we expect to launch additional evaluation trials in the next few months;

- expanding the deployment of our custom-designed 700 MHz solution to Telebec, a member of Bell Aliant, for wide-spread wireless broadband service in rural Quebec;

- we previously announced that Vecima had sold a portion of its wireless spectrum asset to a Canadian wireless internet service provision company. An additional 3% of Vecima's total spectrum holding was sold in the third quarter for approximately $1.2 million. Vecima has now sold about 9% of the Company's total wireless spectrum holdings for approximately $3.5 million. Vecima's wireless spectrum is a very valuable asset which the company believes will appreciate. As previously announced, part of Vecima's growth strategy involves maximizing and monetizing the value of our non-core assets, such as some real estate and wireless spectrum holdings. We now have an agreement to sell one of the two buildings we own in Victoria for a capital gain of about $1.5 million. We have initiated design of our new headquarters building in Colwood as previously announced and will continue to pursue opportunities to sell our commercial spectrum and real estate assets and derive value for shareholders from these assets as economic conditions improve;

- in November we announced the beginning of a full-scale deployment of our 3.5 GHz WiMAX equipment by one of Canada's largest oil production and distribution companies in a multi- million dollar, 3-year program to bring most of its system onto this modern 4G data network. In the third quarter, the Company received additional commitment from our customer more than doubling the size of the current deployment as forecasted in our November announcement. Vecima's solution delivers a sophisticated network while producing significant operations cost savings for the company by adding advanced applications including SCADA, remote office data management, well site security, real time video surveillance and IP based communication. This is strong evidence of the effectiveness of our solution for this growing market segment;

- in November Vecima announced an agreement with SaskTel to install and operate a new network providing residential broadband internet service to 12 underserved remote communities. The deployment was initiated in the third quarter utilizing Vecima's tower construction services and wireless products. Vecima remains committed to expanding wireless broadband access in Canadian rural communities and is pleased that this deployment will help fulfill that objective;

- in addition to the deployments already mentioned, we have made significant progress towards further deployments of our broadband wireless WiMAX family of products in the utility and resource markets. In addition to the utility and resource sectors, Vecima's WiMAX products are currently deployed by 44 Internet Service Providers; and

- Vecima has staged 1.8 GHz WiMAX compliant live trials for Canadian electric utilities that have special rights to license this frequency. Vecima has also set up a demonstration of smart metering and smartgrid applications utilizing Vecima's WiMAX technology at our Saskatoon RND facility. The demonstration includes applications such as meter reading and data collection, IP video surveillance, Voice over IP, and WiMAX backhaul.


Vecima's business fundamentals remain strong and the Company is well positioned to capitalize on opportunities as macroeconomic conditions continue to improve. We remain committed to executing our growth strategy and generating continued improvements in financial performance as the economy recovers in 2010.

The Company's full consolidated financial statements and management's discussion and analysis for the three months and nine months ended March 31, 2010 are posted on www.SEDAR.com.

Vecima's consolidated financial statements and accompanying notes for the three months and nine months ended March 31, 2010 are available at http://www.vecima.com/financials_ir.php.

A conference call and live audio webcast will be held on May 13, 2010 at 1 p.m. ET to discuss the results. To participate in the teleconference, dial 800-291-5365 or 617-614-3922 and enter the code 89327959. The third quarter fiscal 2010 earnings call webcast is available at http://www.vecima.com/events_ir.php.

About Vecima Networks

Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima's hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima's solutions to deliver services to a converging worldwide broadband market, including what are commonly known as "triple play" (voice, video and data) and "quadruple play" (voice, video, data and wireless) services. Vecima's solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to end users, commonly referred to as "the last mile", by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima's products are directed at two principal markets: Converged Wired Solutions and Broadband Wireless. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video. www.vecima.com

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