VocalTec Announces the Implementation of Cost Cutting Measures and Receipt of a $1 million Bridge Loan; Company Seeking Business Combination; Reports 2005 Second Quarter Results
HERZLIA, Israel----July 27, 2005--VocalTec Communications Ltd. (NASDAQ:VOCL), a telecom equipment provider offering packet voice solutions for carriers and service providers, today announced the implementation of certain cost cutting measures and the receipt of a $1 million bridge loan.
"We are involved in discussions regarding several potential M&A transactions and are simultaneously in the preliminary due diligence stage of a potential business combination with another company. In addition, we are also considering a bidding process," said Elon Ganor, VocalTec's Chief Executive Officer.
"We continue to gain traction with our Essentra product family," continued Ganor. "In Q2 of 2005 we sold our Essentra BAX Voice over Broadband Access platform to two customers and we are encouraged by the feedback we are receiving. The Essentra product family includes, among others, an application server providing a broad range of residential and centrex services, supporting most of the available VoIP telephony sets."
In addition, the Company today reported its results for the second quarter ended June 30, 2005.
Revenues for the second quarter of 2005 were $1.4 million, an increase of 31% from the first quarter of 2005 and a decrease of 25% from the second quarter of 2004. According to U.S. GAAP, net loss in the second quarter of 2005 was $2.4 million, or $0.16 per share, compared to a net loss of $2.2 million, or $0.15 per share in the first quarter of 2005, and a net loss of $3.0 million, or $0.20 per share, in the second quarter of 2004.
Gross margin was 52% in the second quarter of 2005, an increase from 45% in the first quarter of 2005 and an increase from 42% in the second quarter of 2004. Product gross margin was about the same as in Q1 of 2005, but service margin improved substantially due to one-time factors.
Operating expenses for the second quarter of 2005 increased slightly to $3.2 million, compared to $3.1 million in the first quarter of 2005, but declined 16% from $3.8 million in the second quarter of 2004. Operating loss in the second quarter of 2005 declined slightly to $2.5 million compared to $2.6 million in the first quarter of 2005, and $3.0 million in the second quarter of 2004.
At the end of the second quarter of 2005, cash, cash equivalents and short-term investments totaled $1.7 million, compared with $5.0 million at the end of the first quarter of 2005, reflecting a cash use of $3.3 million in the second quarter of 2005, an increase from the cash use of $2.9 million in the first quarter of 2005.
VocalTec Communications Ltd. (VocalTec) is
a telecom equipment provider offering next
generation network (NGN) VoIP carrier class
call control and hosted telephony platforms.
Our customer base spans more than 100 countries
and includes Deutsche Telekom, Intelcom San
Marino (subsidiary of Telecom Italia Sparkle),
RomTelecom and Hanoi Telecom. The company's
flagship Essentra(R) Softswitch Platform offers
carriers a rich set of residential and enterprise
telephony services, supporting both legacy
and advanced IP based multimedia devices. VocalTec's
products provide carriers with call control,
interface to legacy telephone systems as well
as peering with other NGN. Being first to the
VoIP market, VocalTec continues to offer most
innovative and advanced telecommunication solutions
for carriers and service providers who migrate
from legacy TDM to NGN.