TranSwitch Corporation Announces First Quarter 2008 Financial Results

Q2 Revenue Guidance is up 11% over Q1

SHELTON, CT ¨C May 6, 2008 ©¤ TranSwitch Corporation today announced that it posted first quarter 2008 net revenues of approximately $7.5 million and a net loss of ($5.5) million, or ($0.04) per basic and diluted common share as was previously guided.  This compares to firstquarter 2007 net revenues of approximately $9.3 million and a net loss of ($5.2) million, or ($0.04) per basic and diluted common share.

During the first quarter of 2008, the Company reported a gross profit of $4.4 million or a gross margin of 64% on product revenues.  The gross margin for TranSwitch¡¯s core product business was approximately 74%.  In the first quarter of 2008, new and legacy products represented 67% and 33%, respectively, of total net product revenues.

¡°We are very encouraged by our first quarter results as we saw positive trends as we moved through the quarter.  We saw strength in Asia including China, Korea, and Japan.  We also saw strength in ordering from Southern Europe, Scandinavia, Eastern Europe, Israel, and North America.  As the year progresses, growth of revenue in the UK and India should add to this strength.   We believe that there is a common thread in that some of the infrastructure upgrades we had discussed previously are finally showing signs of ramping ,¡± commented Dr. Santanu Das, President and CEO of TranSwitch Corporation. 

¡°While the telecommunications industry is still in the process of recovery, we believe that the fourth quarter of 2007 represented the trough for the industry as well as for TranSwitch.  Our first quarter 2008 results and our current order position confirm this earlier observation, and we have positive anticipation for the balance of 2008,¡± continued Dr. Das.

¡°We have been designed into platforms of some of the leading equipment vendors who have contracts with the major carriers in countries such as China, India, Korea, the United Kingdom, and the United States.  While the aforementioned platforms have been slow to ramp, we believe that our first quarter results and current order book show signs that a few platforms are beginning to ramp.  We are also enthused by the fact that TranSwitch has not only maintained its position with key system vendors, but also has gained further traction,¡± continued Dr. Das.

¡°Based on our current order position, we are projecting our second quarter 2008 revenue to be around $8.3 million, an increase of 11% over our Q1 results.  Our second quarter 2008 net loss is estimated to be roughly $(0.03) per basic and diluted common share,¡± stated Dr. Das. 

¡°TranSwitch has responded to the challenges stemming from the turmoil in the telecommunications industry by working intimately with a select set of equipment vendors in a collaborative fashion to ensure that our products fit the needs of the converging wireline/wireless networks.  In addition, we have been diversifying into new market segments, such as video transport / processing.  Our HDMI initiative is the beginning of this diversification process.  Based on the results of our HDMI 1.3 prototype testing, we believe that the customer sampling of this product line will commence shortly.  This HDMI initiative is based on technology that we gained through the acquisition of Mysticom, Ltd. in 2006, and we believe it is second-to-none in performance, flexibility, backward-compatibility, and programmability,¡± continued Dr. Das.

¡°Our ASIC Design Center acquisition last year represented another diversifying move, and we are pleased with the fact that this business started the year with very strong bookings.  The business of this group is quite diversified and it has recently gained additional strength from the telecommunications business.  We believe that this strength will continue through the year complementing growth drivers that we see in our standard product business,¡± concluded Dr. Das.