SOURCE: Enterasys Networks

October 31, 2007 11:36 ET

Enterasys Achieves Profitable Revenue Growth in Q3 2007

Revenues Rise Year Over Year as Company Achieves 9th Consecutive Quarter of Profitability While Adding More Than 150 New Customers

ANDOVER, MA--(Marketwire - October 31, 2007) - Enterasys Networks Inc., the Secure Networks Company™, today announced financial results for the fiscal third quarter ended September 29, 2007. The company continued its positive momentum as customers, partners and prospects invested in Secure Networks hardware, software and services to protect the confidentiality, integrity, availability and performance of IT services and the business users that rely on them. Third quarter revenue increased nearly 17% sequentially and more than 10% over the same period in 2006, while gross margins remained strong at greater than 50%.

Enterasys has now posted nine consecutive quarters of pro-forma operating profitability. These results do not reflect any purchase accounting adjustments that may be applied related to the Company's acquisition in March 2006 by a group of private investors led by The Gores Group, LLC, and Tennenbaum Capital Partners, LLC.

"Networks are the foundation of optimized business processes that leverage interactive voice, video and data communications," said Mike Fabiaschi, President and CEO of Enterasys Networks. "Enterasys delivers the power of information with the strength of security. Our unique role is making the security and priority of convergence, compliance and connectivity applications easy, mobile and adaptive as we embed the granular visibility and control of users, applications and networked devices in everything we do."

New customers in APAC included:

--  Education - University of New England
--  Government - Guangzhou Science Exhibition Center
--  Manufacturing - Daewoo Construction
--  Pharmaceutical - Kwang Dong
--  Transportation - Korail
    

New customers in the CALA region included:

--  Finance - Corretora Arkhe
--  Entertainment - VELOPARK
--  Government - Ministério Público do Estado do Rio de Janeiro
--  Government - Sebrae
--  Healthcare - Unimed Vitória
    

New customers in the EMEA region included:

--  Government - Department of Justice of the State Brandenburg
--  Government - Turkish Republic Parliament (TCBMM)
--  Government - Ministry of Finance of Ukraine
--  Finance - German Insurance Association (GDV)
--  Manufacturing - Erhardt+Liemer
--  Pharmaceutical - Bayer
    

New customers in North America included:

--  Entertainment - Los Angeles Lakers
--  Healthcare - Cochlear
--  Manufacturing - Chrysler Mexico
--  Telecommunications - Verizon Business
--  Transportation - Kelowna Flight Craft
    

Highlights for the third quarter of 2007 include:

-- Overall LAN switching revenue rose 21% both sequentially and on a year over year basis. Total port shipments increased 18% over Q2 2007 and 6% over the year ago period.

-- Triple-speed Power over Ethernet (PoE) shipments increased 50% sequentially and nearly 300% from a year ago as Enterasys continues to be deployed in conjunction with IP telephony (VoIP) solutions from 3Com, Alcatel, Asterisk, Avaya, Cisco, Mitel, NEC (Sphere), Nortel, Panasonic, Polycom, ShoreTel, and Siemens.

-- 10 Gigabit Ethernet (10 GbE) port shipments on the Matrix® N-Series more than doubled from the year ago period while overall modular Layer 3 switching revenue increased 23%.

-- 10 GbE port shipments for the Matrix X-Series secure core router more than doubled from Q2 2007 while sequential revenue growth exceeded 50%.

-- Fixed Layer 3 switch revenue, including the SecureStack™ C-Series and the new SecureSwitch™ I-Series industrial Ethernet offering, rose 35% on a year over year basis, while port shipments were up nearly 30%.

-- Fixed Layer 2 switching revenue, led by the SecureStack A-Series and SecureStack B-Series edge switches, increased 16% sequentially while port shipments rose 12%.

-- License shipments doubled sequentially and year over year for NetSight® and Enterasys Network Access Control (NAC) software solutions for security, visibility and control.

-- RoamAbout® wireless product revenue increased greater than 18% sequentially.

-- Revenues of the Enterasys Dragon® Security Command Console (DSCC) security information and event management (SIEM) solution increased more than 80% compared to the year ago quarter.

-- Enterasys delivered a comprehensive approach to secure IP Telephony (VoIP) solutions from leading voice vendors and NetSight 3.0 management software, while also announcing customer success stories from Ireland's Hermitage Medical Clinic, Massport, TBWA and Umass Medical School.

-- Increased demand generation through face-to-face interaction with prospects at events where Enterasys demonstrates the practical, achievable, rapid time to value of Secure Networks solutions for convergence, connectivity and compliance.

-- The addition of more than 150 new customers, bringing the total for the past six quarters to more than 1,000.

About Enterasys Networks

Enterasys Networks -- the Secure Networks Company -- is owned by a private investor group led by The Gores Group, LLC and Tennenbaum Capital Partners, LLC. Enterasys' unique Secure Networks solutions secure any network to ensure the confidentiality, integrity, availability and performance of IT services and the business users that rely on them. Thousands of leading companies, government agencies and educational institutions in more than 70 countries rely on Secure Networks solutions to maintain business continuity and protect vital information. The company's culture is centered on the principle "There is nothing more important than our customers." Delivering on that commitment, Secure Networks provides granular, policy-based command and control of individual user, application, device, port and flow performance, and security. Enterasys' architectural approach to network security offers a long technology lifecycle and significant operational and business benefits, while reducing total cost of ownership. Information about Enterasys' award-winning policy-enabled switches, routers, wireless products, security software, and services is available at www.enterasys.com.

About The Gores Group

Founded in 1987, The Gores Group is a private equity firm focused on acquiring controlling interests in mature and growing businesses which can benefit from the firm's operating experience and flexible capital base. The firm combines the operational expertise and detailed due diligence capabilities of a strategic buyer with the seasoned M&A team of a traditional financial buyer. The Gores Group has become a leading investor, primarily in the technology and telecommunications sectors, having demonstrated over time a reliable track record of creating substantial value in its portfolio companies alongside management. Headquartered in Los Angeles, California, The Gores Group maintains offices in Boulder, Colorado and London. For more information, please visit www.gores.com.

About Tennenbaum Capital Partners, LLC

Tennenbaum Capital Partners is a Santa Monica, California-based private investment firm managing over $3.8 billion in assets through private funds. The firm's investment strategy is grounded in a long-term, value approach, and it assists -- both financially and operationally -- transitional middle-market companies in such industries as technology, healthcare, energy, aerospace, business services, retail and general manufacturing. Tennenbaum's core strengths include its in-depth knowledge of equity and debt-financing vehicles in the public and private markets, as well as a thorough understanding of special situations. For more information, please visit www.tennenbaumcapital.com.

Contact Information