Vertel Reports First Quarter 2000 Financial Results

WOODLAND HILLS, Calif.--April 27, 2000--Vertel(R) (Nasdaq:VRTL), a leading provider of mediation software for telecommunications networks, today reported total revenues of $5.0 million for the first quarter ended March 31, 2000 compared to $5.0 million for the fourth quarter of 1999 and $4.5 million for the first quarter of 1999. Loss from operations for the first quarter of 2000 was $1.3 million, an improvement over loss from operations for the fourth quarter of 1999 of $2.2 million and loss from operations for the first quarter of 1999 of $1.7 million.
The company posted a first quarter 2000 net loss of $1.0 million, or a loss of 4 cents per share, compared to a net loss of $1.5 million, or a loss of 6 cents per share, in the fourth quarter of 1999 and a net loss of $1.5 million, or a loss of 6 cents per share, in the first quarter of 1999.
Results for the fourth quarter of 1999 were impacted by two non-recurring items which included a restructuring charge of $723,000 and an income tax benefit of $477,000.
"We are pleased with the progress we made this quarter," said Bruce Brown, president and chief executive officer of Vertel. "Revenues were in line with our expectations while operating performance was a little better than anticipated. We realized the full quarter impact of last year's October restructuring, resulting in expenses that were substantially reduced from the third and fourth quarters of 1999.
"Revenues related to our newer product initiatives such as mediation and CORBA continued to show improvement over the fourth quarter but were offset as traditional TMN revenues declined. Most exciting, however, is the continued acceptance and evolution of our e*ORB(TM) product line. To date, we have had several important customer wins including Alcatel, Compaq and Tellium. Our pipeline has continued to expand with more than 70 additional companies currently evaluating our e*ORB software," said Mr. Brown. "Additionally, during the quarter we made e*ORB software available for UNIX operating systems, expanding the platforms on which it can be utilized. Recently, we also made our e*ORB software accessible over the Internet. The small size of our powerful software makes it ideal for downloading, which gives us a new avenue for distribution of our products."

Vertel's April 27 Conference Call Available on Web

Vertel's First Quarter Fiscal 2000 earnings release conference call with investors and analysts, to be held on Thursday, April 27, 2000, will be available over the Internet at 12:00 p.m. EDT/9:00 a.m. PDT through Vcall at www.vcall.com and on Vertel's website at www.vertel.com. To listen to the call, please go to either website 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 websites.

About Vertel
Vertel is a leading provider of mediation software for telecommunications networks enabling such devices as cellular phones to become integral, intelligent parts 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, California, 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, California 91367; telephone: (818) 227-1400; fax: (818) 598-0047 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 December 31, 1999.

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

                                             March 31,    December 31,
                     ASSETS                   2000           1999
                                           (unaudited)
Current assets:
  Cash and cash equivalents                $ 11,459       $  3,974
  Short-term investments                         --          5,677
  Trade accounts receivable (net of
   allowances of $488 as of March 31,
   2000 and $486 as of December 31,
   1999)                                      6,028          6,289
  Prepaid expenses and other
   current assets                               387            519
     Total current assets                    17,874         16,459

Property and equipment, net                   1,337          1,638
Investments                                   1,437          1,437
Goodwill                                      3,749          3,987
Other assets                                    305            306
                                           $ 24,702       $ 23,827


    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                         $    249       $    931
  Accrued wages and related liabilities       1,562          1,672
  Capital lease obligations                      --             26
  Accrued restructuring expenses                108            439
  Accrued taxes payable                         560            483
  Other accrued liabilities                   2,085          1,773
  Deferred revenue                            1,301          1,621
     Total liabilities                        5,865          6,945


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:
   2000, 27,570,690;
   1999, 26,246,531                             276            262
  Additional paid-in capital                 85,043         82,049
  Accumulated deficit                       (66,282)       (65,242)
  Accumulated comprehensive loss               (200)          (187)
     Total shareholders' equity              18,837         16,882
                                           $ 24,702       $ 23,827


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

                                          Three Month Period Ended
                                            March 31,      March 31,
                                               2000          1999
Net revenues:
  License                                    $ 2,911       $ 3,162
  Service and other                            2,100         1,360
    Net revenues                               5,011         4,522

Cost of revenues:
  License                                        223           570
  Service and other                            1,414         1,414
  Total cost of revenues                       1,637         1,984

Gross profit                                   3,374         2,538

Operating expenses:
  Research and development                     1,453         1,636
  Sales and marketing                          1,578         1,557
  General and administrative                   1,096           820
  General and administrative -
   non-cash stock compensation                   259           192
  Goodwill amortization                          238            40
    Total                                      4,624         4,245

Operating loss                                (1,250)       (1,707)
Other income, net                                250           249
Loss before provision for income taxes        (1,000)       (1,458)
Provision for income taxes                        40            --
Net loss                                      (1,040)       (1,458)
Other comprehensive expense                      (13)          (30)
Comprehensive loss                           $(1,053)      $(1,488)

Basic and diluted net loss per common share   ($0.04)       ($0.06)

Weighted average shares outstanding used in
  net loss per common share calculations -
  basic and diluted                           26,992        25,016

Karin Hollink
Vertel Corporation
(818) 227-1478
E-mail: karin-hollink@vertel.com

Gordon Almquist
Vertel Corporation
(818) 227-5751
E-mail: gordon-almquist@vertel.com

or
The Financial Relations Board, Los Angeles
Rose Anunciacion
(310) 442-0599
E-mail: ranuncia@frb.bsmg.com