NMS Communications announced results for the third quarter ended September 30, 2005 and as previously announced, the completion of the independent investigation into an accounting error in the Q2 2005 results. All financial results included in this press release reflect the correction of the previously identified accounting error.

Total revenues for the third quarter of 2005 were $30.3 million compared to $25.7 million for the corresponding quarter in 2004, an increase of 18%, and compared to $24.9 million in the second quarter of 2005, a sequential increase of 21%.

Net income for the third quarter was $3.3 million or $0.07 per share, compared to net income of $1.1 million or $0.02 per share for the corresponding quarter of 2004, and compared to $0.1 million or $0.00 per share in the second quarter of 2005.

Total revenues for the first nine months of 2005 were $77.8 million, a 3% increase compared to $75.3 million for the first nine months of 2004. Net income for the first nine months of 2005 was $1.3 million, or $.03 per share, compared to net income of $2.8 million, or $0.06 per share for the first nine months of 2004.

Business Perspective

"This was a solid quarter for NMS as demand for our newer initiatives continued to build and our Platform Solutions business improved," said Bob Schechter, NMS Communications' chairman and CEO. "In addition, Voice Quality revenues grew reflecting continuing shipments of an advanced optical voice processor that incorporates our VM1000(TM) OEM module and is being deployed by a major Japanese mobile operator in their next-generation network. We expect this deployment to continue, but at a diminishing pace during at least the next two quarters.

"We continue to gain customer wins for our Mobile Applications products, growing our pipeline and winning additional MyCaller(TM) ringback business around the world in partnership with both LogicaCMG and Ericsson. MyCaller reported revenues were down from Q2 levels due to the timing of service launches and customer acceptance; however we expect those revenues to be considerably higher in the fourth quarter. MyCaller is the first offering in our strategy to bring to market content and personalization applications based on our subscriber and content management systems and our network integration products. We're pleased with the results of that strategy and you can expect to hear more about those results in the coming months.

"During the third quarter we launched the Vision family of application-focused media solutions, which now include the Vision VoiceXML server, signaling server, video transcoder and video gateway. Strong positive response from early customers including Ericsson and Interactive Media confirms that our offerings overcome the limitations of earlier entrants and are able to serve the needs of telecom equipment manufacturers and network operators in today's converged networks," Schechter said.

"While revenues were not significant, we've also secured additional wins with mobile operators for AccessGate, our wireless backhaul optimizer, with deployments in process. We're engaged in multiple trials in networks around the world and we're taking full advantage of our relationships with existing partners as well as ramping up new channels like Dancom, our first partner in Southern and Southeast Asia. We expect these activities to bear fruit over the next several months in emerging markets, confirming our go-to-market strategy and building revenue in this part of our business," Schechter continued.

"In summary we made good progress this past quarter toward our goals of top and bottom line growth, continued strong balance sheet controls, with an aim toward value creation over the long term," Schechter concluded.