Vertel Reports Fourth Quarter and Year-End Financial Results

Woodland Hills, Calif., February 3, 2000 – Vertel® (NASDAQ: VRTL), a leading global provider of telecommunications mediation solutions and carrier-grade network management solutions, today announced results for the fourth quarter and fiscal year ended Dec. 31, 1999.

Fourth Quarter Results
Total revenues for the fourth quarter of 1999 were $5.0 million, compared to $4.7 million for the third quarter of 1999 and $3.5 million for the fourth quarter of 1998. Loss from operations for the fourth quarter of 1999, which included a charge of $723,000 related to a restructuring announced in November 1999, was $2.2 million, compared to an operating loss of $3.1 million in the third quarter of 1999 and an operating loss of $2.5 million in the fourth quarter of 1998.
The Company recorded an income tax benefit of $477,000 in the fourth quarter of 1999 primarily as a result of the lapse of certain contingencies associated with a federal income refund received in a prior year.
The 1999 fourth quarter net loss, including the restructuring charge and tax benefit, was $1.5 million, or a loss of $0.06 per share, compared to a net loss of $3.0 million, or a loss of $0.12 per share, for the third quarter of 1999, and net income of $6.1 million, or $0.24 per diluted share, for the fourth quarter of 1998.
Results for the fourth quarter of 1998 were favorably impacted by a one-time gain of $7.6 million related to the Company's sale of its holdings of Series B and Series C preferred stock in Sonoma Systems, as well as $850,000 classified as other income related to the assignment of certain contracts in connection with the Company's sale of its CDPD and pACT technologies to AMP, Inc.
Revenue in the 1999 fourth quarter included gains from Vertel's TMN business, including approximately $700,000 from a licensing agreement with Samsung Electronics Co., Ltd. The agreement enables Samsung Electronics to implement Vertel's embedded intelligent network management solutions in Samsung's key transmission systems. These systems support the fiber optic backbones of high-bandwidth optical networks worldwide.
During the 1999 fourth quarter, Vertel restructured its operations through a series of initiatives that included a reduction of its workforce, the transfer of some key functions, such as engineering of TMN products, offshore, and the consolidation of its U.S. engineering function into its San Diego facility. As a result of this restructuring, expense levels were reduced by approximately $800,000 in the 1999 fourth quarter. The expense reductions on a full quarter basis are anticipated to be approximately $1.25 million lower in the first quarter of 2000 compared with the third quarter 1999 levels.

Year-End Results
For the year ended Dec. 31, 1999, revenues totaled $19.8 million, compared with $18.4 million in 1998. Loss from operations for 1999, which included the 1999 fourth quarter restructuring charge of $723,000, was $8.9 million, compared to an operating loss of $3.3 million in 1998.
The net loss for 1999 was $7.8 million, or a loss of $0.31 per share, compared to net income of $7.3 million, or $0.29 per diluted share, in 1998. Net income in 1998 included the non-recurring gain of $7.6 million referenced above, related to the sale of securities and approximately $2.1 million classified as other income related to the Company's sale of its CDPD and pACT technologies to AMP, Inc.
"Results for fourth quarter of 1999 were in line with our expectations," said Bruce Brown, president and chief executive officer of Vertel. "Our recent restructuring strengthens our position to build Vertel's revenues in higher growth markets, while operating on a reduced base of expenses. Because of these activities, we believe we are better able to grow our market share. In addition, recent product development and new customer contracts create a favorable landscape for the future of the company."
"We are excited about the market's positive response to our recently announced e*ORB(TM) software and are already focusing on other related software products to increase our offering in this area," said Brown. "e*ORB software was specifically developed to address the needs of the telecommunications market and has many unique advantages. This solution has built-in intelligence and real-time connectivity to the network, and it works across a variety of operating systems such as NT, Unix and Linux. This software is a good example of how we are developing product solutions to address the needs of next-generation networks."
"Over the last year, revenues from Vertel's Professional Services Unit grew 76 percent and are expected to continue to grow during year 2000," said Brown. "Factors fueling the growth include our wireless mediation solutions based on e*ORB products."

Vertel's Feb. 3, Conference
Call Available on Web

Vertel's Fourth Quarter Fiscal 1999 earnings release conference call with investors and analysts, to be held on Thursday, Feb. 3, 2000, will be available over the Internet at 9:00 a.m. PST through Vcall at www.vcall.com and www.vertel.com. To listen to the call, go to either Web site at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call at both Web sites.

About Vertel
Vertel is a leading provider of mediation software for telecommunications networks enabling such devices as cellular phones to become an integral, intelligent part of a company's network topology. The Company's pioneering mediation software, e*ORB(TM) is being adopted by top telecommunications, e-business and manufacturing companies. Vertel offers a variety of technologies and applications, supporting end-to-end network and service management with the highest quality of service for network operations. Vertel's solutions are deployed worldwide by service providers, network operators, software vendors, and systems integrators. Vertel also develops turnkey management applications that fit individual customer requirements through its Professional Services Unit. The company is based in Woodland Hills, Calif., and has sales offices throughout the world.

For more information on Vertel or its products, contact Vertel at 21300 Victory Boulevard, Suite 700, Woodland Hills, Calif. 91367; telephone: 818/227-5735; fax: 818/227-5741 or visit the Vertel Web site at http://www.vertel.com.

"Safe Harbor" Statements under the Private Securities Litigation Reform Act of 1995: Except for the historical information presented, the matters discussed in this news release are forward looking statements. These statements should be evaluated together with the many risks and uncertainties that affect our business, including timely and successful development of products and technologies; successful introduction and customer acceptance of new and enhanced products and technologies in existing and new markets; the possibility that delays or difficulties will arise in implementing complex products and technologies and enabling them to work successfully with other complex products and technologies; the possible development and introduction of competitive products and new and alternative technologies; pricing, currency and exchange risks; governmental and regulatory developments affecting Vertel and its customers; the ability to identify, conclude, and integrate acquisitions on a timely basis; the ability to retain and attract key personnel; and other risks and uncertainties detailed from time to time in public disclosure filings with the U.S. Securities and Exchange Commission (SEC) by Vertel, including, but not limited to, the Annual Report on Form 10-K for the year ended Dec. 31, 1998 and the Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 1999.

VERTEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)


                                                Dec. 31,      Dec. 31,
ASSETS                                            1999          1998
                                              (unaudited)

Current assets:
Cash and cash equivalents                      $  3,974      $ 19,495
Short-term investments                            5,677           978
Trade accounts receivable
 (net of allowances of $486 as of
 December 31, 1999 and $556 as of
 December 31, 1998)                               6,289         4,477
Prepaid expenses
 and other current assets                           519           540
Total current assets                             16,459        25,490

Property and equipment, net                       1,638         1,025
Investments                                       1,437         1,437
Goodwill                                          3,987          --
Other assets                                        306           365

                                               $ 23,827      $ 28,317


LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
Accounts payable                               $    931      $    426
Accrued wages and related liabilities             1,672         1,351
Capital lease obligations                            26          --
Accrued restructuring expenses                      439           224
Accrued taxes payable                               483         1,087
Other accrued liabilities                         1,773         1,942
Deferred revenue                                  1,621         1,115
Total liabilities                                 6,945         6,145

Shareholders' equity:
Preferred stock, par value
 $.01, 2,000,000 shares authorized;
 none issued and outstanding
Common stock, par value $.01,
 50,000,000 shares authorized;
 Shares issued and outstanding:
 1999, 26,246,531; 1998, 24,954,545                 262           249
Additional paid-in capital                       82,049        79,553
Accumulated deficit                             (65,242)      (57,483)
Accumulated comprehensive deficit                  (187)         (147)

 Total shareholders' equity                      16,882        22,172

                                               $ 23,827      $ 28,317


VERTEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)


                               Three Month            Twelve Month
                              Period Ended            Period Ended
                          Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
                            1999        1998        1999        1998
Net revenues:

License                  $  2,977    $  2,390    $ 12,359    $ 12,564
License
 - related
 party                       --          --          --           737
Service and
 other                      2,024       1,148       7,456       5,066
Net revenues                5,001       3,538      19,815      18,367
Cost of
 revenues:
License                       251         121       1,595         816
Service and
 other                      1,293       1,287       5,726       4,784
Total cost
 of revenues                1,544       1,408       7,321       5,600
Gross profit                3,457       2,130      12,494      12,767
Operating
 expenses:
Research and
 development                1,590       1,915       7,319       6,639
Sales and
 marketing                  1,888       1,782       8,194       6,389
General and
 administrative             1,266         956       4,499       3,014
Goodwill
 amortization                 238        --           754        --
Restructuring
 expense, net                 723        --           641        --

Total                       5,705       4,653      21,407      16,042


Operating loss             (2,248)     (2,523)     (8,913)     (3,275)
Other
 income, net                  256       8,809         727      10,998
(Loss) income
 before
 provision for
 income taxes              (1,992)      6,286      (8,186)      7,723
Income tax
 benefit
 (provision)                  477        (150)        427        (446)
Net (loss)
 income                    (1,515)      6,136      (7,759)      7,277
Other
 comprehensive
 (loss) income                (19)       --           (40)        425
Comprehensive
 (loss) income           $ (1,534)   $  6,136    $ (7,799)   $  7,702

Basic net
 (loss) income
 per common
 share                   ($  0.06)   $   0.25    ($  0.31)   $   0.31

Diluted net
 (loss) income
 per common
 share                   ($  0.06)   $   0.24    ($  0.31)   $   0.29

Weighted average shares outstanding used in net (loss) income per
 common share calculations:

Basic                      25,689      24,912      25,425      23,321
Diluted                    25,689      25,807      25,425      24,698

Sandy Christopher
(818) 227-5735
email: sandy-christopher@vertel.com

Karin Hollink
(818) 227-1478
email: karin-hollink@vertel.com