Openwave Reports Fourth Quarter Financial Results

REDWOOD CITY, Calif.--(Business Wire)--
Openwave Systems Inc. (Nasdaq:OPWV), one of the world's leading
software innovators enabling revenue-generating personalized services
which converge the mobile and broadband experience, today announced
that revenues for the fourth fiscal quarter ended June 30, 2008 were
$53.5 million, compared with $47.0 million in the prior quarter ended
March 31, 2008 and $61.0 million in the June quarter in the preceding
year. Bookings for the quarter were $60.1 million.

Revenue of the recently divested client business, which was sold
on June 27, 2008, and is included in discontinued operations, was $7.5
million for fiscal fourth quarter 2008, compared with $11.1 million in
the prior quarter ended March 31, 2008 and $7.1 million in the same
quarter in the preceding year.

"Despite a number of distractions that could have impacted our
business, I am pleased with the quarter's results and the positive
resolution of several corporate activities, including the divestiture
of our client asset, the appointment of a new CFO and the conclusion
of our internal investigation and subsequent third quarter 10-Q
filing," said Bruce Coleman, interim CEO of Openwave. "As we enter
into our new fiscal year, we are focusing our efforts on delivering
new and innovative server side products to our tier one customers, as
well as building a robust channel offering that complements our direct
sales efforts and extends our customer base."

On a GAAP basis, net income for the fourth fiscal quarter ended
June 30, 2008 was $8.2 million, or $0.10 per share, compared with a
net loss of $14.7 million, or $0.18 per share, in the prior quarter
and a net loss of $123.8 million, or $1.50 per share, in the June
quarter in the preceding year.

On a non-GAAP basis, net loss, which excludes discontinued
operations, amortization of intangibles and other acquisition-related
costs, stock-based compensation, gains on sales of non-operating
assets, costs associated with the stock option review, special
investigation, and proxy contest, retention bonuses related to
exploring strategic alternatives and restructuring costs, for the
fourth fiscal quarter ended June 30, 2008 was $0.9 million, or $0.01
per share, compared with $7.2 million, or $0.09 per share, in the
prior quarter and $11.2 million, or $0.14 per share, during the June
quarter of the prior year. A reconciliation between net income (loss)
on a GAAP basis and a non-GAAP basis is provided below in a table
immediately following the Condensed Consolidated Statements of
Operations.

Non-GAAP Measure

The Company's stated results include a non-GAAP measure: non-GAAP
net loss. Non-GAAP net loss excludes certain items since they are
related to unique non-recurring events, such as gains on sales of
non-operating assets, costs associated with the stock option review
and proxy contest, and retention bonuses related to when the Company
explored strategic alternatives. Additionally, non-GAAP net loss
excludes other items since they are non-cash items that other
companies often exclude, in order to compare the Company with other
companies, such as stock-based compensation, and other expenses which
management believes are of limited usefulness in evaluating the
Company's on-going business, such as restructuring costs and
discontinued operations. Lastly, non-GAAP net loss excludes non-cash
expenses that relate to non-routine events, such as the amortization
of intangibles and acquisition-related costs. The company considers
non-GAAP net loss to be an important measure because it provides a
useful measure of the operational performance of the Company and is
used by the Company's management for that purpose. In addition,
investors often use a measure such as this to evaluate the financial
performance of a company. Non-GAAP net loss results are presented for
supplemental informational purposes to facilitate understanding
Openwave's operating results. These non-GAAP results should not be
considered as a substitute for financial information presented in
accordance with generally accepted accounting principles, and may be
different from non-GAAP measures used by other companies.

Conference Call Information

Openwave has scheduled a conference call for 5:00 p.m. eastern
time today to discuss its financial results for its fiscal fourth
quarter ended June 30, 2008. Interested parties may access the
conference call over the Internet through the Company's web site at
www.openwave.com or by telephone at (888) 740-6140 or (913) 312-0726
(international). A replay of the conference call will be available for
one week beginning at approximately 8:30 p.m. eastern time today by
calling 888-203-1112. The replay can be accessed internationally by
calling 719-457-0820. Reservation number: 2375184.

A live webcast of the call, together with supplemental financial
information, will also be available on the Quarterly Earnings section
of Openwave's website at http://investor.Openwave.com/ for at least 12
months.

About Openwave

Openwave Systems Inc. (Nasdaq: OPWV) is one of the world's leading
innovators of software applications and infrastructure designed to
enable revenue-generating, personalized services, including
merchandising and advertising, which converge the mobile and broadband
experience across all of a user's devices.

As the communications industry intersects with the Internet,
Openwave software enables service providers to converge services,
increasing the value of their networks by accelerating time to market
and reducing the cost and complexity associated with new service
deployment. Openwave's unique product portfolio provides a complete
range of service management, messaging and location technologies.
Openwave is a global company headquartered in Redwood City,
California. For more information please visit www.openwave.com.

Openwave is a trademark of Openwave Systems Inc. All other
trademarks are the properties of their respective owners.

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1943 and
Section 27A of the Securities Act of 1933, including, but not limited
to, material contained in quotations, increased demand for some of the
Company's products and expectations, plans or prospects for Openwave
Systems Inc. that are based upon the current expectations and beliefs
of Openwave's management. These forward-looking statements are subject
to many risks and uncertainties that could cause actual results to
differ materially from those projected. Notwithstanding changes that
may occur with respect to matters relating to any forward looking
statements, Openwave assumes no obligation to update the
forward-looking statements included in this press release.

In particular, the following factors, among others, could cause
actual results to differ materially from those projected: (a) the
ability to make changes in business strategy, development plans and
product offerings to respond to the needs of our current, new and
potential customers, suppliers and strategic partners; (b) the ability
to improve sales productivity; (c) the ability to continue to sell our
existing products and enhancements; (d) the ability to develop and
commercialize new products; (e) risks associated with the development
and licensing of software generally, including potential delays in
software development and technical difficulties that may be
encountered in the development or use of our software; (f) increased
global competition and pricing pressure on our products; (g) the
unknown effects of management changes; and (h) the loss of key
personnel.

For a detailed discussion of these and other cautionary
statements, please refer to the risk factors discussed in the
Company's filings with the U.S. Securities and Exchange Commission
("SEC"), including, but not limited to, the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2007, its Quarterly
Report on Form 10-Q for the period ended September 30, 2007 and any
subsequently filed reports. All documents also are available through
the SEC's Electronic Data Gathering Analysis and Retrieval system
(EDGAR) at www.sec.gov or from Openwave's website at www.openwave.com.

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OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(In thousands)

June 30, June 30,
2008 2007
-------- --------
Assets
Current Assets:
Cash, cash equivalents and short-term investments $224,809 $240,644
Restricted cash 42 2,061
Accounts receivable, net 78,550 72,894
Prepaid and other current assets 33,404 30,482
Note receivable from sale of discontinued
operations 12,294 -
Current assets of discontinued operation - 19,039
-------- --------
Total current assets 349,099 365,120

Property and equipment, net 13,941 19,834
Long-term investments and restricted cash and
investments 52,419 37,944
Deposits and other assets 7,762 4,575
Goodwill and intangible assets, net 66,523 86,162
Noncurrent assets of discontinued operation - 34,652
-------- --------
Total assets $489,744 $548,287
======== ========

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 4,918 $ 10,288
Accrued liabilities 45,329 56,344
Accrued restructuring costs 13,845 26,118
Deferred revenue 48,239 46,342
Convertible subordinated notes, net 149,842 -
Current liabilities of discontinued operation - 18,837
-------- --------
Total current liabilities 262,173 157,929

Accrued restructuring costs, less current portion 41,927 51,140
Deferred revenue, less current portion 17,655 11,917
Deferred rent obligations and long-term taxes
payable 7,876 1,649
Deferred tax liabilities, net 98 1,349
Convertible subordinated notes, net - 149,017
Noncurrent liabilities of discontinued operation - 5,034
-------- --------
Total liabilities 329,729 378,035

Stockholders' equity 160,015 170,252
-------- --------
Total liabilities and stockholders' equity $489,744 $548,287
======== ========
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OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(In thousands, except per share data)

Three Months Ended Year Ended
------------------------------ --------------------
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
--------- --------- ---------- --------- ----------
Revenues:
License $ 13,477 $ 13,742 $ 17,294 $ 50,272 $ 63,524
Maintenance and
support 20,217 14,886 19,144 71,240 74,111
Services 19,793 18,364 24,517 79,365 105,187
--------- --------- ---------- --------- ----------
Total revenues 53,487 46,992 60,955 200,877 242,822
--------- --------- ---------- --------- ----------

Cost of revenues:
License 816 981 1,491 3,635 4,768
Maintenance and
support 4,558 5,176 6,913 21,692 24,119
Services 14,177 13,163 17,790 59,257 76,776
Amortization of
intangible
assets 1,130 1,130 1,291 4,819 4,449
--------- --------- ---------- --------- ----------
Total cost of
revenues 20,681 20,450 27,485 89,403 110,112
--------- --------- ---------- --------- ----------
Gross profit 32,806 26,542 33,470 111,474 132,710
--------- --------- ---------- --------- ----------

Operating
Expenses:
Research and
development 12,303 13,223 15,442 50,024 62,271
Sales and
marketing 13,143 15,696 23,467 64,174 93,527
General and
administrative 15,835 7,496 16,073 46,954 67,060
Stock option
review and
associated costs - - - - 6,782
Restructuring and
other related
costs 1,253 5,852 16,277 8,641 29,224
Acquisition-
related costs
and amortization 153 140 136 841 276
Gain on sale of
technology - - - - (1,287)
--------- --------- ---------- --------- ----------
Total operating
expenses 42,687 42,407 71,395 170,634 257,853
--------- --------- ---------- --------- ----------

Operating loss
from continuing
operations (9,881) (15,865) (37,925) (59,160) (125,143)
Interest and other
(expense), net (651) (1,091) 3,430 3,641 18,293
Gain
on/(Impairment
of) investment in
non-marketable
equity securities - - 1,065 - (120)
--------- --------- ---------- --------- ----------
Pre-tax loss
from continuing
operations (10,532) (16,956) (33,430) (55,519) (106,970)

Income taxes 1,519 681 1,840 3,337 5,161
--------- --------- ---------- --------- ----------
Net loss from
continuing
operations (12,051) (17,637) (35,270) (58,856) (112,131)
Net income (loss)
from discontinued
operation, net of
tax 473 2,889 (576) 6,804 3,462
Impairment of
assets of
discontinued
operations, net
of tax - - (87,968) - (87,968)
Gain on sale of
discontinued
operation 19,735 - - 36,190 -
--------- --------- ---------- --------- ----------
Net income (loss) $ 8,157 $(14,748) $(123,814) $(15,862) $(196,637)
========= ========= ========== ========= ==========

Basic and diluted
net income (loss)
per share from:
Continuing
operations $ (0.14) $ (0.21) $ (0.43) $ (0.71) $ (1.24)
Discontinued
operation 0.24 0.03 (1.07) 0.52 (0.94)
--------- --------- ---------- --------- ----------
Net income
(loss) per
share $ 0.10 $ (0.18) $ (1.50) $ (0.19) $ (2.18)
========= ========= ========== ========= ==========

Shares used in
basic and diluted
net income (loss)
per share 82,682 82,557 82,449 82,465 90,246

Stock-based
compensation by
category:
Maintenance and
support $ 48 $ 100 $ 139 $ 632 $ 764
Services 181 269 208 1,229 1,196
Research and
development 154 248 703 1,481 2,127
Sales and
marketing 258 480 752 2,388 6,745
General and
administrative 371 756 (459) 2,580 6,470
Restructuring and
other related
costs - - 1,691 - 4,489
Discontinued
operation 34 57 251 698 1,225
--------- --------- ---------- --------- ----------
$ 1,046 $ 1,910 $ 3,285 $ 9,008 $ 23,016
========= ========= ========== ========= ==========
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OPENWAVE SYSTEMS INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS
(In thousands, except per share data)

Three Months Ended Year Ended
------------------------------ --------------------
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
--------- --------- ---------- --------- ----------

Reconciliation
between GAAP and
Non-GAAP net
income (loss):
Net income (loss) $ 8,157 $(14,748) $(123,814) $(15,862) $(196,637)
Exclude:
Restructuring and
other related
costs 1,253 5,852 16,277 8,641 29,224
Acquisition-
related costs
and
amortization(a) 1,283 1,270 1,427 5,660 4,725
Amortization of
stock-based
compensation 1,012 1,853 1,343 8,310 17,302
Professional fees
associated with
unusual
events(b) 6,504 (710) 3,314 7,505 12,476
Retention bonuses
related to
strategic
alternatives - - 3,078 3,113 3,450
Gain on sale of
technology - - - - (1,287)
Discontinued
operations, net
of tax (20,208) (2,889) 88,544 (42,994) 84,506
Gain on /
(Impairment of)
investment in
non-marketable
equity
securities - - (1,065) - 120
Other-than-
temporary
impairments of
investments 1,206 2,383 - 3,713 -
Tax impact of
reconciling
items(c) (111) (190) (334) (1,005) (1,501)
--------- --------- ---------- --------- ----------
Non-GAAP net loss $ (904) $ (7,179) $ (11,230) $(22,919) $ (47,622)
========= ========= ========== ========= ==========

GAAP net loss per
share - diluted $ 0.10 $ (0.18) $ (1.50) $ (0.19) $ (2.18)
Exclude:
Restructuring and
other related
costs $ 0.01 $ 0.07 $ 0.20 $ 0.10 $ 0.32
Acquisition-
related costs
and
amortization(a) $ 0.02 $ 0.02 $ 0.01 $ 0.07 $ 0.05
Amortization of
stock-based
compensation $ 0.01 $ 0.02 $ 0.01 $ 0.10 $ 0.19
Professional fees
associated with
unusual
events(b) $ 0.08 $ (0.01) $ 0.04 $ 0.09 $ 0.14
Retention bonuses
related to
strategic
alternatives $ - $ - $ 0.04 $ 0.04 $ 0.04
Gain on sale of
technology $ - $ - $ - $ - $ (0.01)
Discontinued
operation, net
of tax $ (0.24) $ (0.04) $ 1.07 $ (0.52) $ 0.94
Gain on /
(Impairment of)
investment in
non-marketable
equity
securities $ - $ - $ (0.01) $ - $ -
Other-than-
temporary
impairments of
investments $ 0.01 $ 0.03 $ - $ 0.04 $ -
Tax impact of
reconciling
items(c) $ - $ - $ - $ (0.01) $ (0.02)
--------- --------- ---------- --------- ----------
Non-GAAP net loss
per share -
diluted $ (0.01) $ (0.09) $ (0.14) $ (0.28) $ (0.53)
========= ========= ========== ========= ==========

Shares used in
computing diluted
earnings per
share 82,682 82,557 82,449 82,465 90,246

(a)Acquisition-related costs relates to retention-based consideration
under the terms of the Widerweb and Solomio acquisitions.
Amortization relates to acquired intangible assets.
(b)Relates to legal fees regarding the stock option lawsuits, special
investigation, proxy contests and strategic alternatives, net of
insurance reimbursement.
(c)The tax impact relates to amortization of acquisition-related
intangibles and tax benefits related to stock-based compensation.
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OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)

Three Months Ended Year Ended
------------------------------ --------------------
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
--------- --------- ---------- --------- ----------
Operating
activities:
Net income (loss) $ 8,157 $(14,748) $(123,814) $(15,862) $(196,637)
Gain on sale of
discontinued
operation (19,735) - - (36,190) -
Reconciling items:
Depreciation,
amortization of
intangibles and
stock-based
compensation 5,524 6,755 10,242 28,698 52,184
Non-cash
restructuring
charges 1,024 518 258 2,587 2,641
Provision for
(recovery of)
doubtful
accounts 525 (508) (347) (1,402) 3,238
Other non-cash
items, net 907 477 (630) (47) (4,907)
Other-than-
temporary
impairments of
investments 1,206 2,383 - 3,713 -
Proceeds from
sale of
technology - - - - (1,287)
Impairment of
goodwill and
other
intangibles - - 87,968 - 87,968
Changes in
operating assets
and liabilities,
net of effect of
acquisitions (11,998) (6,386) 25,037 (35,531) 53,946
--------- --------- ---------- --------- ----------

Net cash used
for operating
activities (14,390) (11,509) (1,286) (54,034) (2,854)
--------- --------- ---------- --------- ----------

Investing
activities:
Purchases of
property and
equipment, net (1,296) (1,095) (1,182) (5,726) (12,450)
Proceeds from sale
of non-operating
assets - - - 1,065 -
Proceeds from sale
of technology and
other - - - - 1,287
Acquisitions, net
of cash acquired
in continuing
operations - - - - (12,090)
Restricted cash
related to
acquisitions - - - - (1,250)
Sale of
discontinued
operation, net of
cash divested and
costs 20,000 (3,381) - 56,001 -
Payments and
restricted cash
related to prior
acquisitions (438) (438) - (1,422) -
Proceeds of
investments, net 11,830 46,133 87,328 123,447 138,801
Reclass of cash
equivalents to
short term
investments - - - (9,796) -
Restricted cash
and investments - - (519) 225 1,009
--------- --------- ---------- --------- ----------

Net cash
provided by
investing
activities 30,096 41,219 85,627 163,794 115,307
--------- --------- ---------- --------- ----------

Financing
activities:
Payment on note
payable - - - (113) (305)
Net proceeds from
issuance of
common stock - - 245 88 622
Cash used to
repurchase stock
from employees 1 - - (504) (988)
Stock buy back
plan - - (99,394) - (100,000)
Employee stock
purchase plan 284 - 1,070 820 1,070
Dividends paid - - - - (99,394)
--------- --------- ---------- --------- ----------
Cash provided by
(used for)
financing
activities 285 - (98,079) 291 (198,995)
--------- --------- ---------- --------- ----------
Effect of exchange
rates on cash and
cash equivalents - - 135 - 95
--------- --------- ---------- --------- ----------
Net increase
(decrease) in cash
and cash
equivalents 15,991 29,710 (13,603) 110,051 (86,447)
Cash and cash
equivalents at
beginning of
period 180,159 150,449 99,702 86,099 172,546
--------- --------- ---------- --------- ----------
Cash and cash
equivalents at end
of period,
including
discontinued
operation $196,150 $180,159 $ 86,099 $196,150 $ 86,099
========= ========= ========== ========= ==========
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The Blueshirt Group
Mike Bishop, 415-217-4968 (Investor Relations)
mike@blueshirtgroup.com
or
Openwave Systems Inc.
Vikki Herrera, 650-480-6753 (Public Relations)
Vikki.Herrera@openwave.com

Copyright Business Wire 2008