Press Release

SANTA BARBARA, Calif. – August 6, 2009 – Occam Networks®, Inc. (Nasdaq: OCNW), a leading broadband access supplier offering multiservice access platform (MSAP) solutions based on pure packet technologies, today reported financial results for the second quarter ended June 30, 2009.

Revenue for the second quarter was $21.0 million, compared with revenue of $22.8 million for the same period a year ago and with revenue of $19.4 million for the first quarter of 2009.

Gross margin for the second quarter was $8.0 million, or 38% of revenue, compared with $10.1 million, or 44% of revenue for the second quarter of 2008. Gross margin for the first quarter of 2009 was $8.2 million, or 42% of revenue. The decline in gross margin percentage from the first quarter was primarily due to changes in product mix.

As reported under U.S. generally accepted accounting principles (GAAP), net loss attributable to common stockholders for the second quarter of 2009 was $2.4 million, or a loss of $0.12 per basic share, compared with a net loss of $2.7 million, or a loss of $0.13 per basic share, for the comparable period a year ago. This compared with a first-quarter 2009 net loss of $3.0 million, or a loss of $0.15 per basic share.

Non-GAAP net loss attributable to common stockholders for the second quarter of 2009 was $1.3 million, or a loss of $0.06 per basic share, which excludes a restructuring charge of $213,000 as a result of a previously announced reduction in force and stock-based compensation expense of $891,000. This compared with a non-GAAP net loss for second-quarter 2008 of $1.7 million, or a loss of $0.09 per basic share, excluding stock-based compensation expense of $898,000 and a divestiture charge of $37,000. For the first quarter of 2009, non-GAAP net loss was $2.3 million, or a loss of $0.11 per basic share, excluding stock-based compensation expense of $743,000. A reconciliation of Occam’s non-GAAP measures to its GAAP measures is provided in the financial statements portion of this news release.

"As order rates and shipments improved throughout the quarter, revenue returned to nearly the same level as a year ago,” said Bob Howard-Anderson, president and CEO of Occam. “The cost management actions we took during the quarter allowed us to preserve cash and also mitigate the operating loss. While we remain cautious in the near term, we continue to believe that Occam is well positioned to benefit from the future growth in broadband, as customers build out their networks to deploy new services for their subscribers.”

Highlights for the second quarter of 2009 included:

The company currently expects third-quarter 2009 revenue to be flat to slightly up from second-quarter 2009. 

Occam plans to hold a teleconference to discuss its second-quarter results at 5:00 p.m. ET (2:00 p.m. PT) today. The call can be accessed by dialing (480) 629-9868 (for both U.S. and international callers). A live and archived webcast of the call will be available on the Occam website for up to one year after the call. To access the webcast, go to the Investor Relations page at www.occamnetworks.com and click on the “2Q 2009 Webcast” link. In addition to the webcast, a phone replay will be available for one week after the live call at (303) 590-3030, code number 4117864.

Certain non-GAAP financial measures are included in this news release. Occam’s GAAP results have been adjusted to exclude stock-based compensation charges associated with the issuance of stock options, restricted stock units, and restricted stock, as well as one-time charges associated with a reduction in force implemented during the second quarter of fiscal 2009. These non-GAAP financial measures are provided to enhance the reader’s overall understanding of the company’s financial performance and its prospects for the future. Specifically, Occam believes non-GAAP measures can provide useful information to both management and investors by excluding certain non-cash or one-time expenses that are not indicative of the company’s core operating results. Further, these non-GAAP financial measures are one of the primary indicators management uses for planning and forecasting future periods. In addition, since Occam has historically reported non-GAAP measures to the investment community, management believes the inclusion of non-GAAP measures provides consistency in Occam’s financial reporting. The presentation of this additional information is not meant to be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP. A detailed reconciliation of non-GAAP net loss to GAAP net loss is included below.

This news release contains forward-looking statements within the meaning of applicable securities laws, including statements about the company’s efforts to benefit from anticipated growth in broadband product offerings by service providers and its efforts to improve operating performance. The news release also includes forward-looking statements concerning the company’s revenue outlook for the third quarter of fiscal 2009. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those indicated in forward-looking statements. Risks and uncertainties that could adversely affect the company’s business, revenues, results of operations and financial condition include, without limitation, the following: (i) the company's revenues and operating results have varied substantially on a quarter-to-quarter basis in the past and are likely to continue to vary in the future based, among other factors, on levels of customer demand, capital investment trends in the telecommunications industry, the size and timing of orders the company receives, and potentially substantial delays from the time the company receives orders until the company may recognize revenue under applicable revenue recognition rules; (ii) capital investment in the telecommunications industry may be reduced if macroeconomic weakness continues in North America; (iii) any inability to remedy previously disclosed internal control deficiencies could have an adverse impact on the reliability of the company’s financial statements; and (iv) the company is subject to litigation risks associated with pending stockholder litigation arising from its recent audit committee investigation and financial restatement. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made. Please also refer to the company's most recent Quarterly Report on Form 10-Q filed on May 8, 2009, as well as the company's future filings with the SEC, for other important risk factors that could cause the company's actual results to differ materially from those contained in any forward-looking statements.

Occam Networks' broadband access solutions empower service providers to offer profitable new voice, data and video services over copper and fiber. Occam systems deliver flexibility and scalability in a Triple Play world. Over 2 million BLC 6000 ports are currently deployed at over 300 service providers worldwide. For more information, please visit www.occamnetworks.com.