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VideoServer reports 1996 third quarter financial results.

BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 9, 1996--

Earnings Per Share Increase 110% on Revenue Increase of 78%

VideoServer Inc. today reported revenues of $13.0 million for the third quarter ended Sept. 30, 1996, a 78 percent increase over the $7.3 million in revenues reported in the third quarter of 1995.

Net income for the quarter was $2,762,000 or twenty-one cents per share compared to $1,300,000 or ten cents per share for the corresponding quarter in 1995. Through the first nine months ending Sept. 30, 1996, revenues were $33.8 million, a 72 percent increase over the $19.6 million reported in the corresponding period in 1995. Net income for the first nine months was $6,910,000 or fifty-two cents per share compared to $2,879,000 or twenty-four cents per share in the corresponding 1995 period.

"VideoServer continues to capitalize on the substantial growth opportunities in the market for multimedia conference servers," said Robert Castle, VideoServer president and CEO. "We are very pleased to report another quarter of record sales and earnings. We continue to see strong momentum in our channels both in the US and internationally, including an expansion in the number of carriers deploying VideoServer technology into their service offerings."

Castle continued: "In the third quarter, VideoServer introduced two new entry level products within our Series 2000 MCS product family that are designed to enable more people to gain access to multipoint conferencing. Prices now begin at $22,000 for a fully configured MCS supporting multipoint videoconferences. And, we continue to work aggressively on new partnerships and technologies to address the expanding opportunities related to desktop conferencing and the extension of conferencing to LANs and the Internet." Earlier this week, VideoServer and Intel Corp. announced the industry's first successful demonstration of standards-compliant gateway technology that joins existing ISDN-based business conferencing systems to corporate intranets and LANs via the VideoServer gateway. This technology demonstration showed that H.323-compliant LAN- and intranet-based systems can communicate with the large installed base of H.320-compliant room-sized, rollabout and desktop videoconferencing systems.

Also in the third quarter, VideoServer announced its selection by British Telecom as the technology supplier for BT's new Coordinator Attended Conferencing Service. This world-first service allows conference participants to be connected into videoconferences through a conference coordinator who provides face-to-face assistance and will ensure that the conference runs smoothly. The selection of VideoServer is an endorsement of VideoServer's ability to address the technology needs of the growing service provider market.

VideoServer began the fourth quarter by announcing the appointment of Walter Jones as vice president, research and development and Jack Toto and Richard Moulds as directors of business development. Jones will head up worldwide research and development activities and joins VideoServer from Stratus Computer. Toto joins VideoServer from Netscape and Moulds joins from GPT in the UK. They will direct strategic alliance formation, in particular focusing on VideoServer's strategy to ally with major computer and internetworking companies, telecommunications carriers and equipment providers.

VideoServer, Inc. (NASDAQ: VSVR) is a leading supplier of networking equipment and associated software used to create multimedia conferences that connect multiple users over wide area networks and allow them to interact as a group. The company's MCSs provide multipoint conferencing, as well as applications for conference control, network management and bandwidth management. VideoServer sells its products to leading videoconferencing equipment suppliers, PBX equipment suppliers, telephone carriers, conferencing service providers, computer companies, and others. -0-

Statement Regarding Forward Looking Statements

Statements included herein that are not historical facts may include forward-looking statements that involve risks and uncertainties, including the evolution of VideoServer's market, dependence on major customers, rapid technological change and competition, all as discussed further in the Management's Discussion and Analysis section of VideoServer's 1995 Annual Report to Shareholders as incorporated by reference into the Company's 10-K. Copies of this report, the 1995 Form 10-K filed with the Securities and Exchange Commission, or other financial information may be received at no charge by contacting Investor Relations at VideoServer. -0-

 VideoServer, Inc.
 Consolidated Statements of Income
 (In thousands)

 For the three months For the nine months
 ended September 30, ended September 30,
 1996 1995 1996 1995

Net Sales $13,046 $7,311 $33,826 $19,633
Cost of Sales 4,265 2,567 11,080 6,974

Gross Profit 8,781 4,744 22,746 12,659

Research and
 development 1,996 1,393 5,473 3,722

Sales and
 marketing 2,407 1,357 6,214 3,781

General and
 administrative 1,043 764 2,892 2,172

Total operating
 expenses 5,446 3,514 14,579 9,675

Income from
 operations 3,335 1,230 8,167 2,984

 income, net 448 458 1,298 754

Income before
 income taxes 3,783 1,688 9,465 3,738

Provision for
 income taxes 1,021 388 2,555 859

Net Income $2,762 $1,300 $6,910 $2,879

Net income
 per share $ 0.21 $ 0.10 $ 0.52 $ 0.24

Weighted average
 common shares
 equivalents 13,296 13,151 13,242 11,804


 VideoServer Inc.
 Consolidated Balance Sheets
 (In thousands)

 Sept. 30, December 31,
 1996 1995


Current Assets:
 Cash and marketable securities $ 50,788 $ 45,168
 Accounts receivable, net 6,545 4,231
 Inventories 2,266 1,598
 Other current assets 2,034 843
 Total current assets 61,633 51,840

Equipment and improvements, net 3,680 1,921
Other assets, net 186 141

 Total Assets $ 65,499 $ 53,902


Current liabilities $ 10,858 $ 7,440
Other liabilities 264 673
Stockholders' equity 54,377 45,789

 Total Liabilities & Stockholders' Equity $ 65,499 $ 53,902

CONTACT: VideoServer, Inc.

Stephen J. Nill, (617) 505-2175
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Publication:Business Wire
Date:Oct 9, 1996
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