Sonus Networks, Inc. reported its financial results for the third quarter ended September 30, 2005.

Revenues for the third quarter of fiscal 2005 were $45.7 million compared with $58.1 million in the second quarter of fiscal 2005 and $46.8 million for the third quarter of fiscal 2004. Net loss for the third quarter of fiscal 2005 was $2.7 million or $0.01 per diluted share compared with net income of $9.7 million or $0.04 per diluted share for the second quarter of fiscal 2005, and compared with net income of $10.3 million or $0.04 per diluted share for the third quarter of fiscal 2004.

Revenues for the first nine months of fiscal 2005 were $137.4 million compared with $125.7 million in the same period last year. Net income for the first nine months of fiscal 2005 was $3.3 million or $0.01 per diluted share compared with net income for the first nine months of fiscal 2004 of $18.2 million or $0.07 per diluted share.

Third quarter revenue and earnings per share were lowered by $4.7 million and approximately 2 cents per diluted share respectively, as a consequence of the accounting treatment required for the renegotiation of certain customers' bundled maintenance and support arrangements in the quarter. This revenue will be recognized in subsequent periods as service revenue.

"While our reported financial results were lowered by the deferral of revenue related to two of our Tier 1 customers based on our accounting policies, our business in the third quarter expanded in several important ways," said Hassan Ahmed, chairman and CEO, Sonus Networks. "Our global leadership in the VoIP market resulted in the continued solid demand for Sonus' IP voice solutions from network operators around the world. We extended our wireless business in the U.S. and Japan, announced our first IMS-based consumer voice service in the U.S., achieved strong order activity in Europe, and delivered significant cash flow from operations."

In the third quarter, Sonus continued to broaden its customer base with the addition of several new customers and expansions of existing deployments. In September at this year's Fall Voice on the Net (VON) Conference, Sonus announced that Internet Service Provider (ISP) EarthLink selected Sonus Networks as the framework for its complete suite of consumer voice services. EarthLink is deploying key components in the Sonus Networks IP Multi-media Subsystem (IMS)-ready architecture, including the ASX(TM) Access Server, PSX(TM) Call Routing Server, and the Sonus Insight(TM) Management System. With the Sonus ISP solution, service providers like EarthLink are able simultaneously to deliver high quality telephony service and enriched communication applications.

Sonus and AOL announced the rollout of AOL's TotalTalk(TM), the first IMS-based consumer voice product to launch in the U.S. The two companies, which announced the first phase of their deployment in March 2005, announced that they are working together to deliver the next generation of enhanced consumer voice services that integrate voice, instant messaging and multi-media, as well as solutions that incorporate services based on VoIP/mobile integration.

Intrado, a leader in VoIP E9-1-1 solutions, also deployed Sonus solutions in the third quarter. Intrado is expanding its network coverage to support its VoIP service provider customers in meeting the functional requirements of the recent Federal Communications Commission ruling, which mandates E9-1-1 capabilities for VoIP service offerings. Intrado is leveraging a full suite of Sonus products to support the delivery of VoIP E9-1-1 calls using the Intrado(R) V9-1-1 Mobility Service, offering carriers both the security and point of demarcation functionality critical to delivering emergency services.

Sonus also announced three additional service providers as new Sonus customers in the third quarter: RANGER Wireless, which offers a patented 611 roaming service that enables wireless operators to route roaming calls back to home calling centers; ANI Networks, Inc., which offers wholesale long distance voice service for facilities and non-facilities based communications providers; and Vistula Communications Services, Inc., which provides hosted and managed VoIP services to carriers, service providers and transit network operators throughout the world.

In the third quarter, Sonus, which announced the unveiling of its IMS architecture in June 2005, was honored with a 2005 Frost & Sullivan Award for Technology Innovation in recognition of its achievements in building the industry's most advanced IMS solutions. The award is presented to the company that has demonstrated technological superiority within its industry, reflecting Sonus' early focus on building and deploying carrier-class distributed architectures that enable network operators to leverage new efficiencies and to provide a solid framework for the delivery of innovative new subscriber-centric services.

Further reinforcing Sonus technology leadership, at Fall VON Sonus demonstrated a variety of services that leverage the Company's award-winning IMS platform, such as its pre-WiMAX wireless Voice over Broadband solution. Using Motorola's Canopy(TM) wireless broadband system with Sonus' wireless VoBB architecture, service providers are able to architect a carrier class network that meets the growing demand for wireless broadband services.

In tandem with Belkin Corporation, Sonus showcased a new ring tone service that leverages the seamless interoperability between the Sonus-branded line of Belkin's VoIP broadband phone adapters and Sonus' industry leading ASX(TM) Access Server. Sonus uses Session Initiation Protocol (SIP) to communicate with solutions from other market-leading vendors and has built one of the largest interoperability programs in the industry.

"This is an exciting juncture in the evolution of the telecommunications industry. Service providers globally are focused on deploying innovative network architectures that not only deliver cost-efficiencies, but also change the way consumers communicate. This is the industry dynamic that Sonus' solutions were designed to address. As a pioneer and industry leader, Sonus is well positioned to capitalize on the momentum in the market and continue to expand its business," concluded Ahmed.