Vertel Reports Third-Quarter 2000 Financial Results

Woodland Hills, Calif., October 26, 2000 – Vertel® (NASDAQ: VRTL), a leading provider of mediation software for telecommunications networks, today reported revenues of $3.4 million for the third quarter 2000, compared with $4.7 million for the third quarter 1999 and $5.3 million for the second quarter 2000.
The company posted a net loss of $2.2 million, or $0.08 per share, for the third quarter 2000. This compares with a net loss of $3.0 million, or $0.12 per share, in the third quarter 1999, and net income of $63,000, or $0.00 per share, for the second quarter 2000. Results in the second quarter were favorably impacted by a one-time gain of $961,000, recorded as other income, from the company's sale of its remaining equity interest in its former Italian distributor.
Results for the third quarter 2000 were negatively impacted by a decline in sales of the company's maturing legacy products, primarily telecommunications management network (TMN) products and services. Although the company posted the best quarter to date for revenue from its e*ORB product line, the increase in e*ORB revenue was not sufficient to cover the shortfall in the TMN product line revenue.
For the nine months ended Sept. 30, 2000, revenues were $13.7 million, compared with $14.8 million for the same period in 1999. Vertel's year-to-date net loss was $3.2 million, or $0.11 per share, compared with a net loss of $6.2 million, or $0.25 per share, for the same period in 1999.

Remarks from CEO Cyrus Irani

"As we have indicated in the past, the core market for our TMN product line is maturing," said Cyrus D. Irani, president and CEO of Vertel. "For this reason, we have focused all of our growth and development efforts in the past year on our new products: e*ORB(TM), our Mediation Solution, and the recently announced WebResolve(TM), all of which represent significant potential for Vertel.
"We expected an overall decline in sales from our TMN product line while sales related to our new product lines increased and became a greater percentage of our total revenue. However, we are seeing a greater-than-anticipated decline in TMN revenue, which is resulting in a temporary shortfall.
"We believe that our outlook for the future remains strong, as interest in each of our new product lines continues to grow and we are seeing solid results in our efforts to build a base of long-term customers and create a healthy revenue stream for the future. During the third quarter, we signed agreements to sell multiple developer licenses of our e*ORB core technology to two major players in the telecommunications industry.
"While these agreements had only a minor impact on overall revenues in the third quarter, they provide the company with the potential to realize much greater revenues in future periods in the form of run-time royalties when these customers successfully deploy products that contain e*ORB," said Irani.
Irani also noted that Vertel is starting to see positive results from the strategic changes made in the company's sales and marketing functions earlier this year.
"Due to our increased presence in trade shows and trade publications, as well as our expanded efforts to educate companies beyond the telecommunications industry about the power of e*ORB (and our other new products), we are generating more potential sales leads than at any point in the company's history.
"The number of new companies and institutions evaluating e*ORB in each of the second and third quarters was approximately 250 compared with the 60 to 70 companies evaluating the software in the first quarter of this year.
"The number of evaluations of the e*ORB technology has re-affirmed our belief that the potential for this product is significant. The initial response we have received to our Mediation Solution and WebResolve offerings have been encouraging as well. We believe that the investment we are making in seeding the market today will enable Vertel to reap significant returns in the future," said Irani.

About Vertel
Vertel is a leading provider of mediation software for telecommunications networks, enabling a variety of devices such as mobile devices 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 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. Based in Woodland Hills, the company also has sales offices throughout the world.

For more information on Vertel or its products, contact Vertel at 21300 Victory Blvd., Suite 700, Woodland Hills, Calif. 91367; telephone: 818/227-1400; fax: 818/598-0047.

Safe Harbor Statement: Except for the historical information presented, the matters discussed in this news release are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements should be evaluated together with the many risks and uncertainties that affect our business and may cause results to differ materially from those set forth in the statements. These include, but are not limited to: timely and successful introduction and customer acceptance of new and enhanced products, services and technologies in existing and new markets; the possibility that delays or difficulties will arise in implementing complex products, services and technologies and enabling them to work successfully with other complex products and technologies; the possible development and introduction of competitive products, services and new and alternative technologies; governmental and regulatory developments affecting Vertel and its customers; the ability to retain and attract key personnel; and other risks and uncertainties detailed from time to time in Vertel's periodic and other reports filed 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, and the Quarterly Report on Form 10-Q for the quarters ending March 31 and June 30, 2000. Vertel undertakes no obligation to correct inadvertent or intentional miscommunication by members of the media of the company's formal or informal statements to the media or to update forward-looking statements made in this release to reflect events or circumstances after the date of this statement.

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

                                                 Sept. 30,    Dec. 31,
ASSETS                                             2000         1999

Current assets:
  Cash and cash equivalents                     $ 11,230     $  3,974
  Short-term investments                             988        5,677
  Trade accounts receivable (net of allowances
   of $536 as of Sept. 30, 2000, and $486 as
   of Dec. 31, 1999)                               5,053        6,289
  Prepaid expenses and other current assets          362          519
       Total current assets                       17,633       16,459

Property and equipment, net                        1,088        1,638
Investments                                        1,437        1,437
Goodwill, net                                      3,272        3,987
Other assets                                         306          306
                                                $ 23,736     $ 23,827


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                              $    596     $    931
  Accrued wages and related liabilities            1,639        1,672
  Capital lease obligations                           --           26
  Accrued restructuring expenses                      48          439
  Accrued taxes payable                              508          483
  Other accrued liabilities                        1,747        1,773
  Deferred revenue                                 1,072        1,621
       Total liabilities                           5,610        6,945

Shareholders' equity:
  Preferred stock, par value $.01,
   2,000,000 shares authorized; none
   issued and outstanding
  Common stock, par value $.01,
   100,000,000 shares authorized;
   shares issued and outstanding:
   2000, 28,309,738;
   1999, 26,246,531                                  283          262
  Additional paid-in capital                      86,470       82,049
  Accumulated deficit                            (68,398)     (65,242)
  Accumulated comprehensive loss                    (229)        (187)
       Total shareholders' equity                 18,126       16,882
                                                $ 23,736     $ 23,827


                             VERTEL CORP.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)

                              Three-Month Period    Nine-Month Period
                                     Ended                Ended
                                  September 30,        September 30,
                                 2000      1999       2000      1999
Net revenues:
  License                      $ 1,735   $ 2,618    $ 8,170   $ 9,382
  Service and other              1,629     2,072      5,486     5,432
     Net revenues                3,364     4,690     13,656    14,814

Cost of revenues:
  License                          235       353        713     1,344
  Service and other              1,294     1,522      4,069     4,433
     Total cost of revenues      1,529     1,875      4,782     5,777

Gross profit                     1,835     2,815      8,874     9,037

Operating expenses:
  Research and development       1,216     2,118      4,058     5,729
  Sales and marketing            1,887     2,547      5,357     6,306
  General and administrative       830     1,078      2,883     3,041
  General and administrative
   - non-cash stock compensation    35        --        553       192
  Goodwill amortization            238       238        714       516
  Restructuring benefit             --       (82)        --       (82)
     Total operating expenses    4,206     5,899     13,565    15,702

Operating loss                  (2,371)   (3,084)    (4,691)   (6,665)
Other income, net                  227        79      1,650       471
Loss before provision
 for income taxes               (2,144)   (3,005)    (3,041)   (6,194)
Provision for income taxes          35        30        115        50
Net loss                        (2,179)   (3,035)    (3,156)   (6,244)
Other comprehensive
 income (expense)                    5       (29)      (42)       (21)
Comprehensive loss             $(2,174)  $(3,064)  $(3,198)   $(6,265)

Basic and diluted net loss
 per common share              $ (0.08)  $ (0.12)  $ (0.11)   $ (0.25)

Weighted average shares
 outstanding used in net loss
 per common share calculations
 - basic and diluted            28,165    25,452    27,670     25,337

	   --30--SJK/la* WAM/la

Vertel Corp., Woodland Hills
Lynn Friederichs, 818.227.5735
E-mail: lynn-friederichs@vertel.com