Sonus Networks Reports 2011 Fourth Quarter and Full Year Results

SONUS NETWORKS REPORTS 2011 FOURTH QUARTER AND FULL YEAR RESULTS

Reports Strong Session Border Controller Growth in 2011

Westford, MA, February 21, 2012 – Sonus Networks, Inc. (NASDAQ:SONS, news, filings), a market leader in next-generation IP-based network solutions , today announced results for the quarter and year ended December 31, 2011 and provided its outlook for the quarter ending Friday, March 30, 2012 and the year ending December 31, 2012.

Fourth Quarter 2011 Highlights 

• Total revenue was $74.3 million
• SBC total revenue, including maintenance and services, was $22.5 million, compared to $13.9 million in the third quarter of fiscal 2011 and $12.2 million in the fourth quarter of fiscal 2010
• SBC product revenue was $17.5 million, compared to $10.4 million in the third quarter of fiscal 2011 and $8.7 million in the fourth quarter of fiscal 2010
• Sonus added 12 new customers in the quarter, 11 of whom purchased SBC products and services

Full Year 2011 Highlights

• Total revenue was $259.7 million
• SBC total revenue, including maintenance and services, grew 46%, to $52.0 million, up from $35.6 million in fiscal 2010
• SBC product revenue grew 56%, to $37.9 million, up from $24.3 million in fiscal 2010

“We have made significant progress over the past year repositioning Sonus for growth,” said Ray Dolan, President and Chief Executive Officer. “We will remain focused on high growth areas of opportunity such as the Session Border Controller market and I believe we are well positioned to again outpace SBC industry growth expectations in 2012.”

Revenue for the fourth quarter of fiscal 2011 was $74.3 million, compared to $66.4 million in the third quarter of fiscal 2011 and $83.0 million in the fourth quarter of fiscal 2010. GAAP net income for the fourth quarter of fiscal 2011 was $3.7 million, or $0.01 per diluted share, compared to net income of $1.9 million, or $0.01 per diluted share, in the third quarter of fiscal 2011 and net income of $11.4 million, or $0.04 per diluted share, in the fourth quarter of fiscal 2010. Non-GAAP net income for the fourth quarter of fiscal 2011 was $5.4 million, or $0.02 per diluted share, compared to non-GAAP net income of $4.1 million, or $0.01 per diluted share, for the third quarter of fiscal 2011 and non-GAAP net income of $15.0 million, or $0.05 per diluted share, for the fourth quarter of fiscal 2010.

Revenue for fiscal 2011 was $259.7 million, compared to $249.3 million in fiscal 2010. GAAP net loss in fiscal 2011 was $12.7 million, or $0.05 per share, compared to a net loss of $10.7 million, or $0.04 per share, in fiscal 2010. Non-GAAP net loss in 2011 was $4.4 million, or $0.02 per share, compared to non-GAAP net income of $6.8 million, or $0.02 per diluted share, in fiscal 2010.

2012 First Quarter and Fiscal 2012 Outlook

The Company’s outlook is based on current indications for its business, which may change during the current quarter. A reconciliation of the GAAP to non-GAAP outlook and a statement on the use of non-GAAP financial measures are included at the end of this press release.

For the first quarter of 2012, management provides the following outlook on a non-GAAP basis:

Management provides the following outlook on a non-GAAP basis for the year ending December 31, 2012:

• Total revenue of $270 million to $280 million
• Full year overall revenue growth includes expected media gateway product revenue decline of approximately 10%, offset by strong SBC growth
• Total SBC revenue, including maintenance and services, between $75 million and $80 million, up 44% to 54%
• SBC product revenue between $60 million and $65 million, up 58% to 72%
• Gross margins between 59% and 61%
• Operating expenses between $165 million and $170 million
• Loss per share of $0.01 to $0.02
• Basic and diluted shares of 282 million

“Our outlook reflects sesonality typical for the first quarter as well as conservative spending expectations from our carrier customers in the first half of the year”, said Moe Castonguay, Senior Vice President and Chief Financial Officer. “We are providing a quartley outlook, and will continue to do so over the course of the year in an effort to provide greater transparency into our business.

Earnings Conference Call Details:

Sonus Networks will host a conference call to discuss its fourth quarter and full year 2011 financial results, business outlook and outlook for 2012 financial performance today at 4:45 p.m. ET.

To listen live via telephone:
Dial-in number: 800-954-0654
International Callers: +1 212-231-2900

To listen via internet:
Sonus Networks will host a live audio webcast of the conference call. To access the webcast, visit  www.sonusnet.com , About Us, Investor Relations.

Replay information
A telephone playback of the conference call will be available shortly after the conclusion of the live event and can be accessed by calling 800-633-8284, or for international callers, +1 402-977-9140. The reservation number for the replay is 21573853 and will be available until March 6, 2012.

Non-GAAP Financial Measures

Sonus Networks presents its financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). Many of our investors have requested that we disclose non-GAAP information because it is useful in understanding our ongoing performance and comparing it to our historical results, as our non-GAAP financial measures exclude certain non-cash and one-time charges or benefits. Likewise, we use non-GAAP measures that exclude certain expenses, such as stock-based compensation expense, amortization of intangible assets and restructuring charges, in analyzing and assessing the overall performance of our business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. We exclude stock-based compensation expense and amortization of intangible assets because these charges are non-cash in nature. We exclude restructuring charges because they are one-time events. No adjustment to income taxes for non-GAAP items was required, as we were unable to recognize a tax benefit on domestic losses incurred in any of the periods presented. We believe that non-GAAP financial measures, including gross profit, gross margin, operating expenses, net income (loss) and earnings (loss) per share, are useful when evaluating our ongoing operations and comparing them to our historical results, including our liquidity.

Whenever we use a non-GAAP financial measure, we provide a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.

Our non-GAAP financial measures are not presented in accordance with, nor are they intended to be a substitute for, GAAP financial measures. In addition, our presentations of these measures may not be comparable to similarly titled measures used by other companies. Our non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as analytical tools. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.

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About Sonus Networks

Sonus Networks, Inc. is a leader in IP networking with proven expertise in delivering secure, reliable and scalable next generation infrastructure and subscriber solutions. With customers in over 50 countries across the globe and over a decade of experience in transforming networks to IP, Sonus has enabled service providers and enterprises to capture and retain users and generate significant ROI. Sonus products include media and signaling gateways, policy & routing servers, session border controllers and subscriber feature servers. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world’s largest and most complex IP networks.

For more information, visit and the Sonus in Session blog .

Cautionary Note Regarding Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events that involve risks and uncertainties. All statements other than statements of historical facts contained in this release, including statements regarding our future results of operations and financial position, performance, customer growth, business strategy, plans and objectives of management for future operations are forward-looking statements. Without limiting the foregoing, the words “anticipates,” “believes”, “estimates”, “expects”, “intends”, “plans”, “believes”, “outlook,” and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the timing of our recognition of revenues; our ability to recruit and retain key personnel; difficulties supporting our new strategic focus on channel sales; difficulties expanding our customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; market acceptance of our products and services; rapid technological and market change; our ability to protect our intellectual property rights; our ability to maintain partner, reseller, distribution and vendor support and supply relationships; higher risks in international operations and markets; the impact of increased competition; currency fluctuations; litigation; changes in the market price of our common stock; actions taken by significant stockholders; and/or failure or circumvention of our controls and procedures. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

We therefore caution you against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in these forward-looking statements are discussed by reference to the factors described in Item 1A, “Risk Factors” of Part I and Items 7 and 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures about Market Risk”, respectively, of Part II in the Company’s most recent Annual Report on Form 10-K, and in the Company’s quarterly reports filed thereafter in Part I, Items 2 and 3 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk”, and Part II, Item 1A, “Risk Factors”.

Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for Sonus to predict all of them. Sonus undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Sonus is a registered trademark of Sonus Networks, Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

For more information, please contact:

Patti Leahy

978-614-8440

pleahy@sonusnet.com

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