Network Engines WKN: 930110

NEI is a leading provider of server-based application platforms and lifecycle support services for software developers and OEMs worldwide. Through its expertise and comprehensive suite of solution design, system integration, application management, global logistics, support, and maintenance services, NEI is redefining application deployment solutions to provide customers with a sustainable competitive advantage. More than a decade of appliance innovation with the ability to provide physical, virtual and cloud-ready solutions makes NEI one of the most trusted software deployment partners in the industry. Founded in 1997, NEI is headquartered in Canton, Massachusetts, with facilities in Plano, Texas and Galway, Ireland, and trades on the NASDAQ exchange under the symbol NEI. For more information, visit

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A May 2011 independent Forrester Research, Inc. report entitled, TechRadar™ For Enterprise Architecture Professionals: Infrastructure Virtualization, Q22011, said, "We believe that a true virtual appliance must include automated updates to both the OS and application stack and not expose its full management complexity (e.g., configuration) to administrators."

The Update Service is an active agent within NEI's Element Manager Suite, a fully integrated application management tool kit controlled via browser. This new update capability ultimately results in better application lifecycle control delivering improved integrity, longevity and performance on all managed deployments

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CANTON, Mass., June 29, 2011 /PRNewswire/ -- NEI (NASDAQ:NEI - News), a leading provider of application platforms, deployment solutions and lifecycle support services for software technology developers and OEMs worldwide, today announced that it has become a Gold level member  in Oracle PartnerNetwork (OPN), and will focus on providing services to telecom equipment manufacturers.  

As a Gold level member in OPN, NEI will provide its global resources, worldwide manufacturing capacity, and support capabilities to better meet the growing demand in the telecommunications market. NEI offers a comprehensive set of services, encompassing the entire product lifecycle, which enhance and support technology solutions.    

OPN was created to enable independent software vendors (ISVs), systems integrators, developers, resellers and consultants to work collaboratively together to effectively meet customer needs and to deliver superior solutions. As a Gold level member in OPN, NEI has access to Oracle technologies and can bundle its services with Oracle products and other third-party technologies to resell to original equipment manufacturers in the telecommunications market. This allows NEI to take advantage of Oracle-based technologies to deliver value-added services and solutions to the market.  More information is at www.nei.com/oracle.  

"Becoming a Gold level member in Oracle PartnerNetwork reflects NEI's commitment to further strengthen the reach of Oracle's product portfolio," said Jeff Hudgins, vice president of marketing at NEI. "This relationship is also part of a larger initiative aimed at further developing NEI's global technology partner network."  

About Oracle PartnerNetwork

Oracle PartnerNetwork (OPN) Specialized is the latest version of Oracle's partner program that provides partners with tools to better develop, sell and implement Oracle solutions. OPN Specialized offers resources to train and support specialized knowledge of Oracle products and solutions and has evolved to recognize Oracle's growing product portfolio, partner base and business opportunity. Key to the latest enhancements to OPN is the ability for partners to differentiate through Specializations. Specializations are achieved through competency development, business results, expertise and proven success. To find out more, visit www.oracle.com/partners.

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•Non-GAAP net income, which excludes stock-based compensation and amortization expenses, was $2.4 million, or $0.06 per share, better than the expected range of non-GAAP profit of $1.0 million to $1.5 million. The non-GAAP net income compared to non-GAAP net income of $1.2 million, or $0.03 per share in the third fiscal quarter of 2010.
•EMC represented 63% of net revenues, an increase from the 59% of net revenues reported in the second fiscal quarter.  A portion of the increase is due to EMC's acquisition of NetWitness, an NEI customer, during the third fiscal quarter.  Excluding NetWitness, EMC would have represented 61% of net revenues.

Greg Shortell, President and Chief Executive Officer of NEI, commented, "We continued to execute our business plan during the quarter, as evidenced in our revenues exceeding the top end of our guidance range, keeping our operating expenses in check, with higher gross margins and our seventh consecutive profitable quarter. We booked the initial revenue from our recently announced win at Mavenir Systems and won new appliance business for Symantec, a leading global security, backup and storage management software provider. These two wins are consistent with our strategy to win large, run-rate accounts and demonstrate that we are making steady progress in our business development efforts. This was the third consecutive quarter in which we improved our bottom line and we're pleased to report a record quarterly profit. "

For the nine month period ended June 30, 2011, net revenues were $202.8 million, compared to $160.7 million for the same period in 2010, an increase of 26 percent. Gross margin was $22.9 million, or 11.3 percent of net revenues, compared with gross margin of $19.3 million, or 12.0 percent of net revenues, for the same period last year. Total operating expenses were $18.2 million, or 9.0 percent of net revenues, compared with $18.2 million last year, or 11.3 percent of net revenues in the same period last year. On a GAAP basis, the Company reported net income of $4.7 million, or $0.11 per share, compared with net income of $1.1 million, or $0.03 per share, in the same period last year. The Company's non-GAAP net income, which excludes stock-based compensation and amortization expenses, was $6.4 million compared to non-GAAP net income of $3.0 million for the same period last year.

Balance Sheet

NEI finished the quarter with $15.0 million in cash and cash equivalents and $55.6 million in working capital. Accounts receivable increased to $41.9 million and inventory levels decreased to $22.6 million compared to $38.8 million and $26.5 million, respectively, as of March 31, 2011. NEI also has a $10 million bank credit facility that it has yet to utilize.

Business Outlook

NEI currently anticipates the following results for its fiscal fourth quarter ending September 30, 2011, based on current forecasts from certain customers and historical trends.

•Net revenues in the range of $63 million to $68 million.
•Gross margin in the range of 11.0 percent to 11.5 percent of net revenues.
•Operating expenses between $5.9 million and $6.4 million, including an estimated $185,000 of stock-based compensation expense and amortization expense of $332,000.
•Net income on a GAAP basis in the range of $1.4 million to $1.9 million.
•Net income on a non-GAAP basis in the range of $1.9 million to $2.4 million.

We are projecting that our performance in the fourth fiscal quarter will be similar to the financial results achieved in our third fiscal quarter," stated Doug Bryant, Chief Financial Officer. "This guidance continues to be driven by forecasts from our customers and reflects an expected increase in revenues from our telecommunications customers that is projected to offset the impact of EMC's dual-sourcing decision that we previously announced."