Data Connection and MetaSwitch Report Another Record Year; Telecom Vendor Sees Increased Revenue and Earnings for 23rd Consecutive Year.

LONDON -- Data Connection, a leading independent vendor of telecom software and equipment to OEM and service provider customers, today released financial results for the 12 months to August 31, 2004. Both revenues and profits were up, to $52M and $15M respectively, representing the 23rd consecutive year of growth in both key measures of commercial success.

"As the telecom market starts to pick up, with increased adoption of next generation technologies, the wisdom of our long-term strategy to invest heavily in both people and products is becoming clear," said Ian Ferguson, Data Connection founder and chairman. "Our breadth of leading-edge, complex technology - from protocol stacks to complete next generation switching solutions and Internet applications - puts us in a very strong position going forward."

Data Connection saw strong revenues from all its business units contributing to this record year for the entire company.

--MetaSwitch, the next generation softswitch division, saw the fastest growth, with revenues up over 250% compared to the previous year, leading to recognition by Infonetics Research as the market leader in the Class 5 packet switch segment. Significant milestones achieved during the year included the 50th switch deployment (to Georgia's Progressive Rural Telephone), acceptance by the federal Rural Utilities Service, and the introduction of a revolutionary new media gateway design with increased density to meet the demands of larger tier 2 telcos. The division now has over 70 deployments with incumbent and competitive telephone operators, primarily in North America.

--The company's Internet Applications Group, which provides unified messaging, web conferencing and directory solutions, saw strength in service provider, OEM and government markets. Highlights included the introduction of version 3.0 of its popular MeetingServer product, recognized by Frost & Sullivan with a prestigious Customer Value Enhancement award, and the introduction of MailNGen, a fully packaged unified messaging solution for service providers. MailNGen is being distributed both directly and via a number of key channel relationships established during the year with major vendors.

--Data Connection's Network Protocols Group continued its leadership position in the areas of VoIP, MPLS, ATM and IP routing, with key product introductions including Routing Information Protocol, Protocol Independent Multicast (PIM) and Internet Group Membership Protocol (IGMP) for multicast-enabled routers and switches. Strategic partnerships announced during the year include Agere Systems, Interpeak, Silicon & Software Systems, Seabridge and Personeta. The extent to which the division's technology has been adopted by the industry was clear at this year's SUPERCOMM conference, with live multi-vendor technology demonstrations by companies including CIENA, Chiaro Networks, Native Networks, NEC and Quarry - as well as MetaSwitch.

--Our Enterprise Connectivity Group also recorded increased revenues, derived from a combination of long-term strategic OEM relationships including Cisco, HP, IBM, and Microsoft, and product sales to blue-chip enterprises such as Citibank and Banco Santander.

In accordance with the objectives of the Employee Benefit Trust, which holds 100% of the company's shares, the profits will be distributed to the employees in recognition of their contribution to the success. This unique ownership structure has been key to the company's long-term investment strategy, and its ability to recruit, develop and retain the very best talent.

About Data Connection

Data Connection Limited (DCL) is the leading independent developer and supplier of unicast and multicast IP Routing, MPLS, SIP, MGCP/Megaco, ATM, Conferencing, Unified Messaging, Directory and SNA portable products. Customers include ARRIS, CIENA, Cisco, Fujitsu, Hitachi, IBM Corp., Lucent, Microsoft, NEC, Nortel Networks, Siemens, and Sun.

Data Connection is headquartered in London UK, with US offices in Alameda, CA, Dallas, TX, Reston, VA and Tampa, FL. It was founded in 1981 and is privately held. During each of the past 20 years its net profits have exceeded 20% of revenue. The company's large proportion of overseas sales has led to the company being awarded two Queen's Awards for outstanding export performance.

For more information, see www.dataconnection.com.

About MetaSwitch

Data Connection's MetaSwitch division is an industry-leading vendor of packet-based softswitch solutions. Its widely deployed VP3500 Series Class 5 Softswitch supports over 100 Class 5 features including CLASS services, IP Centrex, E911, LNP, 1-800 and CALEA, and scales from a few hundred to half a million subscribers. Customers include incumbent and competitive local exchange carriers, as well as operators of broadband wireless, cable and fiber networks.

For more information, see www.metaswitch.com.

Data Connection and MetaSwitch are trademarks of Data Connection Limited and Data Connection Corporation. Brands and products referenced herein are the trademarks or registered trademarks of their respective holders. Copyright (C) 2004 Data Connection Limited