Openwave Reports First Quarter Fiscal 2010 Financial Results

http://www.businesswire.com/news/home/20091029006339/en

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 first
fiscal quarter ended September 30, 2009 were $49.8 million, compared with $47.9
million in the prior quarter ended June 30, 2009 and $51.0 million in the
September quarter in the preceding fiscal year. Bookings for the first quarter
of fiscal 2010 were $47.3 million. The company ended the quarter with $121.6
million in cash and investments.

"The data tsunamis we have long talked about are rolling in and carriers are
looking to Openwave for leadership and as a result we are seeing increasing
demand for our mobile Internet products," said Ken Denman, CEO of Openwave. "In
what is traditionally a seasonally weaker quarter for sales activity, we saw a
strong bookings level. We believe Openwave entered the second quarter of fiscal
2010 as a stable, efficient company and that our healthy pipeline will lead to
future bookings and ultimately return Openwave to growth."

On a GAAP basis, net income for the first fiscal quarter ended September 30,
2009 was $990,000, or $0.01 per share, compared with a net loss of $3.4 million,
or $0.04 per share, in the prior quarter and a net loss of $10.5 million, or
$0.13 per share, in the September quarter in the preceding year.

On a non-GAAP basis, net loss for the first fiscal quarter ended September 30,
2009 was $380,000, or $0.00 per share, compared with net loss of $278,000 or
$0.00 per share, in the prior quarter and net loss of $1.0 million, or $0.01 per
share, during the September quarter of the prior year. Non-GAAP net loss
excludes discontinued operations, amortization of intangibles and other
acquisition-related costs, stock-based compensation, professional fees
associated with certain unusual events, impairments, restructuring and other
costs.

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 the non-GAAP measures, non-GAAP net loss
and non-GAAP net loss per share. These non-GAAP measures exclude certain items
that generally are non-recurring events, such as costs associated with the stock
option lawsuit. Additionally, these non-GAAP measures exclude other items that
are non-cash items that many other companies exclude, in order to compare
Openwave with other companies, such as stock-based compensation, amortization of
intangibles and acquisition-related costs, and other expenses. These non-GAAP
measures also exclude items which management does not consider to evaluate
Openwave`s on-going business, such as restructuring costs and discontinued
operations. Openwave considers non-GAAP net loss to be an important measure
because it provides a useful measure of the operational performance of Openwave
and is used by Openwave's management for that purpose. In addition, investors
often use measures such as these to evaluate the financial performance of a
company. These non-GAAP measures are presented for supplemental informational
purposes only for understanding Openwave's operating results. These non-GAAP
results should not be considered 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 first quarter ended September 30, 2009.
Interested parties may access the conference call over the Internet through
Openwave`s Web site at www.openwave.com or by telephone at (877) 941-8416 or
(480) 629-9808 (international). A replay of the conference call will be
available for two weeks beginning at approximately 8:00 p.m. eastern time today
by calling 800-406-7325. The replay can be accessed internationally by calling
303-590-3030. Reservation number: 4171901.

A live webcast of the call, together with supplemental financial information,
will also be available on the Earnings & Metrics section of Openwave`s Web site
at http://investor.Openwave.com. A replay will be available on the Web site for
at least three months.

About Openwave

Openwave Systems Inc. (Nasdaq:OPWV) is one of the world`s leading software
innovators, offering a proactive mediation platform and tools to mobilize the
Internet.

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 mobile internet service management, messaging, and
location based solutions. Openwave is a global company with a blue chip customer
base spanning North America, Latin America, Australia and New Zealand, Asia,
Africa, Europe, and the Middle East. Openwave is headquartered in Redwood City,
California. For more information please visit www.openwave.com.

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

Cautionary Note Regarding Forward Looking Statements

The statements in this press release in Mr. Denman`s quote with respect to
future events or expectations, including the belief that the company`s pipeline
will lead to future bookings and ultimately return Openwave to growth, are
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. 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 current economic climate may
impede the growth of wireless data demand; and (b) Openwave may not be able to
make changes in business strategy, development plans and product offerings to
respond to any changes in wireless demand needs of its customers.

For a detailed discussion of these and other factors that may cause these
forward looking statements not to come true, please refer to the risk factors
discussed in the Openwave`s filings with the U.S. Securities and Exchange
Commission ("SEC"), including the company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2009. These documents 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.

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

September 30, June 30,
2009 2009
Assets
Current Assets:
Cash, cash equivalents and short-term investments $ 104,834 $ 109,082
Accounts receivable, net 36,397 31,107
Prepaid and other current assets 19,119 26,801
Total current assets 160,350 166,990

Property and equipment, net 10,487 11,566
Long-term investments and restricted cash and investments 16,798 17,618
Deposits and other assets 8,459 8,313
Goodwill 267 -
Intangible assets, net 3,461 3,880
Total assets $ 199,822 $ 208,367

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 3,427 $ 5,348
Accrued liabilities 19,325 23,079
Accrued restructuring costs 13,929 15,327
Deferred revenue 39,968 38,349
Total current liabilities 76,649 82,103

Accrued restructuring costs, less current portion 32,093 34,843
Deferred revenue, less current portion 9,881 11,901
Deferred rent obligations and long-term taxes payable 5,625 6,824
Total liabilities 124,248 135,671

Stockholders' equity 75,574 72,696
Total liabilities and stockholders' equity $ 199,822 $ 208,367

OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(In thousands, except per share data)

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
Revenues:
License $ 10,425 $ 13,091 $ 14,327
Maintenance and support 15,798 16,224 16,378
Services 23,619 18,622 20,340
Total revenues 49,842 47,937 51,045

Cost of revenues:
License 230 323 1,154
Maintenance and support 4,316 4,075 4,241
Services 17,773 13,878 14,447
Amortization of intangible assets 420 420 1,129
Total cost of revenues 22,739 18,696 20,971
Gross profit 27,103 29,241 30,074

Operating Expenses:
Research and development 9,864 11,025 12,160
Sales and marketing 10,711 11,768 10,744
General and administrative 7,925 6,539 10,620
Restructuring and other related costs 422 2,274 1,903
Acquisition-related costs and amortization - - 152
Total operating expenses 28,922 31,606 35,579

Operating loss from continuing operations (1,819 ) (2,365 ) (5,505 )
Interest and other income (expense), net (1,209 ) (172 ) (6,496 )
Pre-tax loss from continuing operations (3,028 ) (2,537 ) (12,001 )

Income taxes 498 907 503
Net loss from continuing operations (3,526 ) (3,444 ) (12,504 )
Gain on sale of discontinued operations 4,516 - 2,000
Net income (loss) $ 990 $ (3,444 ) $ (10,504 )

Basic and diluted net income (loss) per share from:
Continuing operations $ (0.04 ) $ (0.04 ) $ (0.15 )
Discontinued operations 0.05 - 0.02
Net income (loss) per share $ 0.01 $ (0.04 ) $ (0.13 )

Shares used in basic and diluted net income (loss) per share 83,295 83,177 82,773

Stock-based compensation by category:
Maintenance and support $ 38 $ 32 $ 72
Services 76 60 166
Research and development 98 154 250
Sales and marketing 146 125 132
General and administrative 189 179 351
$ 547 $ 550 $ 971

OPENWAVE SYSTEMS INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS
(In thousands, except per share data)

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
Reconciliation between GAAP and Non-GAAP net income (loss):
Net income (loss) $ 990 $ (3,444 ) $ (10,504 )
Exclude:
Restructuring and other related costs 422 2,274 1,903
Acquisition-related costs and amortization(a) 420 420 1,281
Amortization of stock-based compensation 547 550 971
Professional fees associated with unusual events(b) 344 (44 ) 2,004
Discontinued operations, net of tax(c) (4,516 ) - (2,000 )
Other-than-temporary impairments of investments 1,464 - 5,632
Tax impact of reconciling items(d) (51 ) (34 ) (293 )
Non-GAAP net loss $ (380 ) $ (278 ) $ (1,006 )

GAAP net income (loss) per share $ 0.01 $ (0.04 ) $ (0.13 )
Exclude:
Restructuring and other related costs $ - $ 0.02 $ 0.02
Acquisition-related costs and amortization(a) $ 0.01 $ 0.01 $ 0.02
Amortization of stock-based compensation $ 0.01 $ 0.01 $ 0.01
Professional fees associated with unusual events(b) $ - $ - $ 0.02
Discontinued operations, net of tax(c) $ (0.05 ) $ - $ (0.02 )
Other-than-temporary impairments of investments $ 0.02 $ - $ 0.07
Tax impact of reconciling items(d) $ - $ - $ -
Non-GAAP net loss per share $ - $ - $ (0.01 )

Shares used in computing diluted earnings per share 83,295 83,177 82,773

(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 and other unusual events, net of insurance reimbursements.
(c) Relates to the release of escrowed funds associated with the previous sale of Musiwave.
(d) The tax impact relates to tax benefits related to amortization of intangibles and stock-based compensation.

OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
Operating activities:
Net income (loss) $ 990 $ (3,444 ) $ (10,504 )
Gain on sale of discontinued operation (4,516 ) - (2,000 )
Reconciling items:
Depreciation, amortization of intangibles and stock-based compensation 2,449 2,519 3,770
Non-cash restructuring charges 391 390 447
Accelerated depreciation on restructured property and equipment - 128 235
Provision for (recovery of) doubtful accounts 31 (595 ) 37
Other non-cash items, net 64 (8 ) 147
Other-than-temporary impairments of investments 1,464 - 5,632
Changes in operating assets and liabilities (9,662 ) 5,487 (687 )

Net cash provided by (used for) operating activities (8,789 ) 4,477 (2,923 )

Investing activities:
Purchases of property and equipment, net (607 ) (1,161 ) (477 )
Sale of discontinued operation, net 4,516 - 9,718
Proceeds of investments, net (700 ) (70 ) 8,969
Maturities of restricted cash and investments, net 419 213 -

Net cash provided by (used for) investing activities 3,628 (1,018 ) 18,210

Financing activities:
Payment on notes payable - - (150,000 )
Net proceeds from issuance of common stock 81 20 -
Employee stock purchase plan - 66 -

Cash provided by (used for) financing activities 81 86 (150,000 )
Net increase (decrease) in cash and cash equivalents (5,080 ) 3,545 (134,713 )
Cash and cash equivalents at beginning of period 91,545 88,000 196,150
Cash and cash equivalents at end of period, including discontinued operations $ 86,465 $ 91,545 $ 61,437

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 2009