ECI Telecom Returns to Profitability Following 3 1/2 Years of Losses

ECI Telecom earned a $5 million operating profit in the second quarter of 2004, following more than three and a half years of losses. Revenues reached $121 million, a 32% increase from Q2 2003 and 13% increase from Q1 2004.



ECI's Broadband Access Division recorded revenues of $51 million in the quarter, a 14% increase from a year ago and a 7% rise from last quarter. Operating income for the Division reached $5.3 million, compared to $3.3 million in the first quarter of 2004 and $4.2 million in the second quarter of 2003. During the quarter, the Company announced that it had been selected as the sole supplier to BT for its FTTP trial, scheduled to commence in October 2004, as part of its flagship 21st Century Network initiative.



In June ECI announced its first significant order for broadband access equipment to come out of its strategic partnership, to a customer in Europe, several months after the initiation of this strategic relationship.



ECI's Optical Networks Division saw revenues rise 54% from a year ago to reach $61 million for the quarter, compared to $40 million in Q2 2003 and $52 million in the first quarter. For the first time in almost four years, the Division reported an operating profit of $1.1 million, following losses of $15.5 million during the second quarter of 2003 and $3.0 million in the previous quarter. The Division is experiencing strong demand from emerging markets, particularly in India, Russia, the Ukraine and the Philippines. During the quarter, ECI announced a new $16 million order for its XDM products from Ukrtel, which followed the supply of a $7 million order late in 2003.



Sales to Veraz Networks totaled $8.3 million in the second quarter of 2004 compared to $7.0 million in the first quarter of 2004. ECI manufactures and sells products to Veraz for resale to their customer base, and holds 43% of privately held Veraz Networks. http://www.ecitele.com