Extreme Networks' Net Revenue for the Third Quarter Up 7 percent

Extreme Networks, Inc., a leader in Ethernet broadband networking solutions, today announced financial results for its fiscal third quarter of 2004, ended March 28, 2004. Net revenue for the third quarter was $88.9 million, up 7 percent sequentially from $83.4 million in the second fiscal quarter and up from $85.2 million in the third fiscal quarter a year ago. On a GAAP reporting basis the Company recorded a net loss for the third quarter of 2004 of $1.1 million or $0.01 per share. This is improved from a net loss of $5.6 million or $0.05 per share in the second fiscal quarter, and reduced from a loss of $7.1 million, or $0.06 per share recorded in the third quarter of fiscal 2003. "We increased revenue, expanded gross margins, and tightly controlled our operating expenses," said Gordon L. Stitt, president and CEO of Extreme Networks. "We are pleased with our results for the quarter." "During the quarter, we continued our strategy of being the innovation leader -- enabling customers to build integrated wired and wireless networks for voice, video and data applications, that are fast and secure. We introduced the second phase of our Unified Access architecture by adding support for our modular Alpine® platform. We now provide Enterprises with a comprehensive solution that integrates wired and wireless along with VoIP support in both modular and stackable systems. We also completed the next phase of our 10 Gigabit Ethernet rollout with the introduction of the Summit 400-48, the first edge switch that brings together high-density gigabit ports with 10 Gigabit uplinks. Combined with our BlackDiamond 10K and BlackDiamond 6800 we deliver high performance 10 gigabit Ethernet support for demanding applications across several product lines," added Stitt. Quarterly Financial Highlights Revenue in the U.S. was $38.8 million or 44 percent of total consolidated revenue, up $9.6 million from the previous quarter, representing a solid improvement from the previous quarter. International revenues were $50.1 million, down $4.1 million from the second quarter of fiscal 2004, due to weakness in the Company's business in Asia. Gross margins were 51.2 percent of sales in the third quarter, an increase from 48.5 percent of sales in the second quarter, and up from a 39.8 percent of sales in the year-ago period. The gross margin improvement stems primarily from reduced manufacturing costs and favorable geographic mix. The company managed operating expenses tightly during the third quarter at $46.6 million or 52.4 percent of sales on a GAAP basis. With increased revenues, operating expenses declined as a percentage of sales from 55.4 percent in the preceding quarter and from 54.0 percent in the fiscal third quarter of 2003. Cash, cash equivalents and investments increased to $416.9 million during the third quarter, up from $412.6 million from the second quarter of fiscal 2004 and from $407.3 million from the third quarter ended March 30, 2003. Management Expectations Going forward, the Company anticipates a gradually improving business environment for networking vendors. For the quarter ending June 27, 2004, the Company currently anticipates that revenues will be flat to up 5 percent as compared to the March quarter. The company anticipates that gross margins will be flat to down slightly depending on the mix of product and regional sales, and that operating expenses will be flat to up slightly on a dollar basis. Sales Management Change Extreme Networks also today announced that Chris Todd, senior vice president of Worldwide Sales, has resigned and will be leaving the Company following a brief transition in order to pursue other interests. A search for a successor to Todd will begin immediately. Quarterly Business Highlights Extreme Extends Unified Access to Enterprise Edge With its innovative Unified Access architecture, Extreme enables customers to deploy wired, wireless and telephony services at the network edge by offering PoE, real-world security with flexible authentication and Extreme RF Manager, a sophisticated tool for site prediction and deployment. Extreme Networks further broadens its edge strategy by delivering UA capabilities on its high-density Alpine switch, making it the industry's first modular switch with native wireless support and PoE. Extreme's Altitude 300 achieves an Industry-First Certification from Wi-Fi Alliance Extreme's Altitude 300 wireless port becomes the first Wi-Fi certified dual-radio Access Point capable of concurrently supporting 802.11b/g and 802.11a connectivity with Wi-Fi Protected Access security. Such certification will give customers the confidence that Extreme's Wi-Fi certified Altitude 300 AP will interoperate with the broadest spectrum of other hardware compliant with this standard. Extreme Continues to Add New Healthcare and Education Customers: Lowell General Hospital, a not-for-profit community hospital, chose to unify its scalable wired and wireless network with Extreme's leading edge, new Unified Access for seamless wired and wireless connectivity. This powerful and highly manageable network includes integrated bandwidth management and security functions to help support Lowell's emerging PACS imaging applications, streamline patient care and improve the speed of diagnosis. Nation's Sixth Largest School District Selects Extreme Networks The nation's sixth largest school district, Clark County, NV, selected Extreme Networks for its expansive network upgrade encompassing 289 schools. The 250,000-port network will leverage Extreme's wire-speed performance and advanced bandwidth management to enhance the classroom experience with converged communications and high-speed network connections for more than 290,000 combined students and staff. Clark County School District, which expects to grow at an average rate of one new school per month, is performing this extensive, multi-year LAN backbone and network edge upgrade with the goal to deliver flawless network performance backed by scalable and reliable Gigabit Ethernet. Extreme Networks' Technology Wins Awards: Extreme's New BlackDiamond 10K Core Switch Named "Product of the Month" Further extending its record of recognition in the industry for the most innovative switching solutions, Extreme's new BlackDiamond 10K core switch was named "Product of the Month" for February by Telecommunications Magazine. The new BlackDiamond 10K switch was noted in the profile for its adaptable, non-stop packet switching at wire-speed 10 gigabit Ethernet. The magazine article highlighted carrier class elements of the switch that promote increased levels of resiliency, security and extensibility from ExtremeWare® XOS modular software operating system and Extreme's new Fourth Generation Networking Silicon System ASICs. Extreme's New BlackDiamond 10K Switch Named "Product of the Year" Extreme's new BlackDiamond 10K core switch was named 'Technology Product of the Year' by InfoWorld Magazine. The new BlackDiamond 10K received an "excellent" rating from the experienced review staff, based on a "hands-on" test, featured in the January 16, 2004 issue. Conference Call Extreme Networks will host a conference call to discuss these results today at 5:00 p.m. EDT (2:00 p.m. PDT), for more information visit http://www.extremenetworks.com/aboutus/investor/