Openwave Reports Fourth Quarter Financial Results

Revenue of the recently divested client business, which was sold on June 27, 2008, and is included in discontinued operations, was $7.5 million for fiscal fourth quarter 2008, compared with $11.1 million in the prior quarter ended March 31, 2008 and $7.1 million in the same quarter in the preceding year.

"Despite a number of distractions that could have impacted our business, I am pleased with the quarter's results and the positive resolution of several corporate activities, including the divestiture of our client asset, the appointment of a new CFO and the conclusion of our internal investigation and subsequent third quarter 10-Q filing," said Bruce Coleman, interim CEO of Openwave. "As we enter into our new fiscal year, we are focusing our efforts on delivering new and innovative server side products to our tier one customers, as well as building a robust channel offering that complements our direct sales efforts and extends our customer base."

On a GAAP basis, net income for the fourth fiscal quarter ended June 30, 2008 was $8.2 million, or $0.10 per share, compared with a net loss of $14.7 million, or $0.18 per share, in the prior quarter and a net loss of $123.8 million, or $1.50 per share, in the June quarter in the preceding year.

On a non-GAAP basis, net loss, which excludes discontinued operations, amortization of intangibles and other acquisition-related costs, stock-based compensation, gains on sales of non-operating assets, costs associated with the stock option review, special investigation, and proxy contest, retention bonuses related to exploring strategic alternatives and restructuring costs, for the fourth fiscal quarter ended June 30, 2008 was $0.9 million, or $0.01 per share, compared with $7.2 million, or $0.09 per share, in the prior quarter and $11.2 million, or $0.14 per share, during the June quarter of the prior year. A reconciliation between net income (loss) on a GAAP basis and a non-GAAP basis is provided below in a table immediately following the Condensed Consolidated Statements of Operations.

Non-GAAP Measure

The Company's stated results include a non-GAAP measure: non-GAAP net loss. Non-GAAP net loss excludes certain items since they are related to unique non-recurring events, such as gains on sales of non-operating assets, costs associated with the stock option review and proxy contest, and retention bonuses related to when the Company explored strategic alternatives. Additionally, non-GAAP net loss excludes other items since they are non-cash items that other companies often exclude, in order to compare the Company with other companies, such as stock-based compensation, and other expenses which management believes are of limited usefulness in evaluating the Company's on-going business, such as restructuring costs and discontinued operations. Lastly, non-GAAP net loss excludes non-cash expenses that relate to non-routine events, such as the amortization of intangibles and acquisition-related costs. The company considers non-GAAP net loss to be an important measure because it provides a useful measure of the operational performance of the Company and is used by the Company's management for that purpose. In addition, investors often use a measure such as this to evaluate the financial performance of a company. Non-GAAP net loss results are presented for supplemental informational purposes to facilitate understanding Openwave's operating results. These non-GAAP results should not be considered as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

Conference Call Information

Openwave has scheduled a conference call for 5:00 p.m. eastern time today to discuss its financial results for its fiscal fourth quarter ended June 30, 2008. Interested parties may access the conference call over the Internet through the Company's web site at www.openwave.com or by telephone at (888) 740-6140 or (913) 312-0726 (international). A replay of the conference call will be available for one week beginning at approximately 8:30 p.m. eastern time today by calling 888-203-1112. The replay can be accessed internationally by calling 719-457-0820. Reservation number: 2375184.

A live webcast of the call, together with supplemental financial information, will also be available on the Quarterly Earnings section of Openwave's website at http://investor.Openwave.com/ for at least 12 months.

About Openwave

Openwave Systems Inc. (Nasdaq: OPWV | Quote | Chart | News | PowerRating) is one of the world's leading innovators of software applications and infrastructure designed to enable revenue-generating, personalized services, including merchandising and advertising, which converge the mobile and broadband experience across all of a user's devices.

As the communications industry intersects with the Internet, Openwave software enables service providers to converge services, increasing the value of their networks by accelerating time to market and reducing the cost and complexity associated with new service deployment. Openwave's unique product portfolio provides a complete range of service management, messaging and location technologies. Openwave is a global company headquartered in Redwood City, California. For more information please visit www.openwave.com.

Openwave is a trademark of Openwave Systems Inc. All other trademarks are the properties of their respective owners.

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1943 and Section 27A of the Securities Act of 1933, including, but not limited to, material contained in quotations, increased demand for some of the Company's products and expectations, plans or prospects for Openwave Systems Inc. that are based upon the current expectations and beliefs of Openwave's management. These forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from those projected. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Openwave assumes no obligation to update the forward-looking statements included in this press release.

In particular, the following factors, among others, could cause actual results to differ materially from those projected: (a) the ability to make changes in business strategy, development plans and product offerings to respond to the needs of our current, new and potential customers, suppliers and strategic partners; (b) the ability to improve sales productivity; (c) the ability to continue to sell our existing products and enhancements; (d) the ability to develop and commercialize new products; (e) risks associated with the development and licensing of software generally, including potential delays in software development and technical difficulties that may be encountered in the development or use of our software; (f) increased global competition and pricing pressure on our products; (g) the unknown effects of management changes; and (h) the loss of key personnel.

For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in the Company's filings with the U.S. Securities and Exchange Commission ("SEC"), including, but not limited to, the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2007, its Quarterly Report on Form 10-Q for the period ended September 30, 2007 and any subsequently filed reports. All documents also are available through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov or from Openwave's website at www.openwave.com.

OPENWAVE SYSTEMS INC. CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED (In thousands) June 30, June 30, 2008 2007 -------- -------- Assets Current Assets: Cash, cash equivalents and short-term investments $224,809 $240,644 Restricted cash 42 2,061 Accounts receivable, net 78,550 72,894 Prepaid and other current assets 33,404 30,482 Note receivable from sale of discontinued operations 12,294 - Current assets of discontinued operation - 19,039 -------- -------- Total current assets 349,099 365,120 Property and equipment, net 13,941 19,834 Long-term investments and restricted cash and investments 52,419 37,944 Deposits and other assets 7,762 4,575 Goodwill and intangible assets, net 66,523 86,162 Noncurrent assets of discontinued operation - 34,652 -------- -------- Total assets $489,744 $548,287 ======== ======== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 4,918 $ 10,288 Accrued liabilities 45,329 56,344 Accrued restructuring costs 13,845 26,118 Deferred revenue 48,239 46,342 Convertible subordinated notes, net 149,842 - Current liabilities of discontinued operation - 18,837 -------- -------- Total current liabilities 262,173 157,929 Accrued restructuring costs, less current portion 41,927 51,140 Deferred revenue, less current portion 17,655 11,917 Deferred rent obligations and long-term taxes payable 7,876 1,649 Deferred tax liabilities, net 98 1,349 Convertible subordinated notes, net - 149,017 Noncurrent liabilities of discontinued operation - 5,034 -------- -------- Total liabilities 329,729 378,035 Stockholders' equity 160,015 170,252 -------- -------- Total liabilities and stockholders' equity $489,744 $548,287 ======== ========

OPENWAVE SYSTEMS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED (In thousands, except per share data) Three Months Ended Year Ended ------------------------------ -------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 --------- --------- ---------- --------- ---------- Revenues: License $ 13,477 $ 13,742 $ 17,294 $ 50,272 $ 63,524 Maintenance and support 20,217 14,886 19,144 71,240 74,111 Services 19,793 18,364 24,517 79,365 105,187 --------- --------- ---------- --------- ---------- Total revenues 53,487 46,992 60,955 200,877 242,822 --------- --------- ---------- --------- ---------- Cost of revenues: License 816 981 1,491 3,635 4,768 Maintenance and support 4,558 5,176 6,913 21,692 24,119 Services 14,177 13,163 17,790 59,257 76,776 Amortization of intangible assets 1,130 1,130 1,291 4,819 4,449 --------- --------- ---------- --------- ---------- Total cost of revenues 20,681 20,450 27,485 89,403 110,112 --------- --------- ---------- --------- ---------- Gross profit 32,806 26,542 33,470 111,474 132,710 --------- --------- ---------- --------- ---------- Operating Expenses: Research and development 12,303 13,223 15,442 50,024 62,271 Sales and marketing 13,143 15,696 23,467 64,174 93,527 General and administrative 15,835 7,496 16,073 46,954 67,060 Stock option review and associated costs - - - - 6,782 Restructuring and other related costs 1,253 5,852 16,277 8,641 29,224 Acquisition- related costs and amortization 153 140 136 841 276 Gain on sale of technology - - - - (1,287) --------- --------- ---------- --------- ---------- Total operating expenses 42,687 42,407 71,395 170,634 257,853 --------- --------- ---------- --------- ---------- Operating loss from continuing operations (9,881) (15,865) (37,925) (59,160) (125,143) Interest and other (expense), net (651) (1,091) 3,430 3,641 18,293 Gain on/(Impairment of) investment in non-marketable equity securities - - 1,065 - (120) --------- --------- ---------- --------- ---------- Pre-tax loss from continuing operations (10,532) (16,956) (33,430) (55,519) (106,970) Income taxes 1,519 681 1,840 3,337 5,161 --------- --------- ---------- --------- ---------- Net loss from continuing operations (12,051) (17,637) (35,270) (58,856) (112,131) Net income (loss) from discontinued operation, net of tax 473 2,889 (576) 6,804 3,462 Impairment of assets of discontinued operations, net of tax - - (87,968) - (87,968) Gain on sale of discontinued operation 19,735 - - 36,190 - --------- --------- ---------- --------- ---------- Net income (loss) $ 8,157 $(14,748) $(123,814) $(15,862) $(196,637) ========= ========= ========== ========= ========== Basic and diluted net income (loss) per share from: Continuing operations $ (0.14) $ (0.21) $ (0.43) $ (0.71) $ (1.24) Discontinued operation 0.24 0.03 (1.07) 0.52 (0.94) --------- --------- ---------- --------- ---------- Net income (loss) per share $ 0.10 $ (0.18) $ (1.50) $ (0.19) $ (2.18) ========= ========= ========== ========= ========== Shares used in basic and diluted net income (loss) per share 82,682 82,557 82,449 82,465 90,246 Stock-based compensation by category: Maintenance and support $ 48 $ 100 $ 139 $ 632 $ 764 Services 181 269 208 1,229 1,196 Research and development 154 248 703 1,481 2,127 Sales and marketing 258 480 752 2,388 6,745 General and administrative 371 756 (459) 2,580 6,470 Restructuring and other related costs - - 1,691 - 4,489 Discontinued operation 34 57 251 698 1,225 --------- --------- ---------- --------- ---------- $ 1,046 $ 1,910 $ 3,285 $ 9,008 $ 23,016 ========= ========= ========== ========= ==========

OPENWAVE SYSTEMS INC. RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS (In thousands, except per share data) Three Months Ended Year Ended ------------------------------ -------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 --------- --------- ---------- --------- ---------- Reconciliation between GAAP and Non-GAAP net income (loss): Net income (loss) $ 8,157 $(14,748) $(123,814) $(15,862) $(196,637) Exclude: Restructuring and other related costs 1,253 5,852 16,277 8,641 29,224 Acquisition- related costs and amortization(a) 1,283 1,270 1,427 5,660 4,725 Amortization of stock-based compensation 1,012 1,853 1,343 8,310 17,302 Professional fees associated with unusual events(b) 6,504 (710) 3,314 7,505 12,476 Retention bonuses related to strategic alternatives - - 3,078 3,113 3,450 Gain on sale of technology - - - - (1,287) Discontinued operations, net of tax (20,208) (2,889) 88,544 (42,994) 84,506 Gain on / (Impairment of) investment in non-marketable equity securities - - (1,065) - 120 Other-than- temporary impairments of investments 1,206 2,383 - 3,713 - Tax impact of reconciling items(c) (111) (190) (334) (1,005) (1,501) --------- --------- ---------- --------- ---------- Non-GAAP net loss $ (904) $ (7,179) $ (11,230) $(22,919) $ (47,622) ========= ========= ========== ========= ========== GAAP net loss per share - diluted $ 0.10 $ (0.18) $ (1.50) $ (0.19) $ (2.18) Exclude: Restructuring and other related costs $ 0.01 $ 0.07 $ 0.20 $ 0.10 $ 0.32 Acquisition- related costs and amortization(a) $ 0.02 $ 0.02 $ 0.01 $ 0.07 $ 0.05 Amortization of stock-based compensation $ 0.01 $ 0.02 $ 0.01 $ 0.10 $ 0.19 Professional fees associated with unusual events(b) $ 0.08 $ (0.01) $ 0.04 $ 0.09 $ 0.14 Retention bonuses related to strategic alternatives $ - $ - $ 0.04 $ 0.04 $ 0.04 Gain on sale of technology $ - $ - $ - $ - $ (0.01) Discontinued operation, net of tax $ (0.24) $ (0.04) $ 1.07 $ (0.52) $ 0.94 Gain on / (Impairment of) investment in non-marketable equity securities $ - $ - $ (0.01) $ - $ - Other-than- temporary impairments of investments $ 0.01 $ 0.03 $ - $ 0.04 $ - Tax impact of reconciling items(c) $ - $ - $ - $ (0.01) $ (0.02) --------- --------- ---------- --------- ---------- Non-GAAP net loss per share - diluted $ (0.01) $ (0.09) $ (0.14) $ (0.28) $ (0.53) ========= ========= ========== ========= ========== Shares used in computing diluted earnings per share 82,682 82,557 82,449 82,465 90,246 (a)Acquisition-related costs relates to retention-based consideration under the terms of the Widerweb and Solomio acquisitions. Amortization relates to acquired intangible assets. (b)Relates to legal fees regarding the stock option lawsuits, special investigation, proxy contests and strategic alternatives, net of insurance reimbursement. (c)The tax impact relates to amortization of acquisition-related intangibles and tax benefits related to stock-based compensation.

OPENWAVE SYSTEMS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED (in thousands) Three Months Ended Year Ended ------------------------------ -------------------- June 30, March 31, June 30, June 30, June 30, 2008 2008 2007 2008 2007 --------- --------- ---------- --------- ---------- Operating activities: Net income (loss) $ 8,157 $(14,748) $(123,814) $(15,862) $(196,637) Gain on sale of discontinued operation (19,735) - - (36,190) - Reconciling items: Depreciation, amortization of intangibles and stock-based compensation 5,524 6,755 10,242 28,698 52,184 Non-cash restructuring charges 1,024 518 258 2,587 2,641 Provision for (recovery of) doubtful accounts 525 (508) (347) (1,402) 3,238 Other non-cash items, net 907 477 (630) (47) (4,907) Other-than- temporary impairments of investments 1,206 2,383 - 3,713 - Proceeds from sale of technology - - - - (1,287) Impairment of goodwill and other intangibles - - 87,968 - 87,968 Changes in operating assets and liabilities, net of effect of acquisitions (11,998) (6,386) 25,037 (35,531) 53,946 --------- --------- ---------- --------- ---------- Net cash used for operating activities (14,390) (11,509) (1,286) (54,034) (2,854) --------- --------- ---------- --------- ---------- Investing activities: Purchases of property and equipment, net (1,296) (1,095) (1,182) (5,726) (12,450) Proceeds from sale of non-operating assets - - - 1,065 - Proceeds from sale of technology and other - - - - 1,287 Acquisitions, net of cash acquired in continuing operations - - - - (12,090) Restricted cash related to acquisitions - - - - (1,250) Sale of discontinued operation, net of cash divested and costs 20,000 (3,381) - 56,001 - Payments and restricted cash related to prior acquisitions (438) (438) - (1,422) - Proceeds of investments, net 11,830 46,133 87,328 123,447 138,801 Reclass of cash equivalents to short term investments - - - (9,796) - Restricted cash and investments - - (519) 225 1,009 --------- --------- ---------- --------- ---------- Net cash provided by investing activities 30,096 41,219 85,627 163,794 115,307 --------- --------- ---------- --------- ---------- Financing activities: Payment on note payable - - - (113) (305) Net proceeds from issuance of common stock - - 245 88 622 Cash used to repurchase stock from employees 1 - - (504) (988) Stock buy back plan - - (99,394) - (100,000) Employee stock purchase plan 284 - 1,070 820 1,070 Dividends paid - - - - (99,394) --------- --------- ---------- --------- ---------- Cash provided by (used for) financing activities 285 - (98,079) 291 (198,995) --------- --------- ---------- --------- ---------- Effect of exchange rates on cash and cash equivalents - - 135 - 95 --------- --------- ---------- --------- ---------- Net increase (decrease) in cash and cash equivalents 15,991 29,710 (13,603) 110,051 (86,447) Cash and cash equivalents at beginning of period 180,159 150,449 99,702 86,099 172,546 --------- --------- ---------- --------- ---------- Cash and cash equivalents at end of period, including discontinued operation $196,150 $180,159 $ 86,099 $196,150 $ 86,099 ========= ========= ========== ========= ==========

SOURCE: Openwave Systems Inc.

The Blueshirt Group Mike Bishop, 415-217-4968 (Investor Relations) mike@blueshirtgroup.com or Openwave Systems Inc. Vikki Herrera, 650-480-6753 (Public Relations) Vikki.Herrera@openwave.com