BILLERICA, MA, May 8, 2007 - CSP Inc. (NASDAQ: CSPI), a provider of IT solutions, systems integration services and dense cluster computing systems, today reported financial results for the second quarter of fiscal 2007 ended March 31, 2007.

For the first six months of fiscal 2007, CSP Inc. sales increased to $39.9 million from $32.7 million for the first six months of fiscal 2006. Net income for the first six months of fiscal 2007 was $1.2 million, or $0.32 per diluted share, compared with net income of $487 thousand, or $0.13 per diluted share, in first six months of fiscal 2006.

For the second quarter of fiscal 2007, CSP Inc. sales increased to $18.8 million from $17.6 million in the second quarter of fiscal 2006. Net income for the second quarter of fiscal 2007 was $255,000, or $0.07 per diluted share, compared with net income of $1.0 million, or $0.27 per diluted share, in the second quarter of fiscal 2006.

"The strong performance of our Service and Systems Integration segment enabled us to report another quarter of year-over-year sales growth even though our systems shipments to Raytheon were not significant during the quarter," stated Alexander R. Lupinetti, CSP chairman and chief executive officer. "CSP's net income declined on a year-over-year basis as a result of a lower level of higher-margin systems revenues in the quarter."

"During the second quarter, our Systems segment received a follow-on order from Raytheon related to our existing contract to supply FastCluster 220R MultiComputers," said Lupinetti. "This brings the total value of the contract to $18 million. Thus far, we have shipped $5.1 million of product and services to Raytheon and expect to ship the remaining systems under the contract by the end of the fiscal year. The vast majority of our systems revenue in the second quarter was related to systems shipped to an international defense contractor for a continuing deployment."

"MODCOMP's Systems and Solutions Division (SDD) reported excellent sales growth," added Lupinetti. "We continue to see healthy demand for our cutting edge IT infrastructure solutions and we are focused on hiring salespeople to capitalize on this market opportunity. At the same time, our German subsidiary continues to perform well on the strength of its professional consulting services. The demand outlook in Germany is improving and we plan to capitalize on this higher margin business in the coming quarters."

"Our prospects for the remainder of fiscal 2007 are bright. We are on schedule to complete our FastCluster 200R shipments to Raytheon and we are confident in the quality and performance of our multicomputer product suite. We also expect to continue to capitalize on strong demand for MODCOMP's IT products and services," concluded Lupinetti.

Safe Harbor

The Company wishes to take advantage of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. Such forward-looking statements may include, but are not limited to, the follow-on order from Raytheon, the timing of shipments to Raytheon, and the strong demand environment for MODCOMP's SSD and Germany subsidiary. The Company cautions that numerous factors could cause actual results to differ materially from any forward-looking statements made by the Company. Such risks include general economic conditions, market factors, competitive factors and pricing pressures, and others described in the Company's filings with the SEC. Please refer to the section on forward-looking statements included in the Company's filings with the Securities and Exchange Commission.

About CSP Inc.

Based in Billerica, Massachusetts and founded in 1968, CSP Inc. and its subsidiaries develop and market best-of-breed IT solutions, systems integration services, and high-performance computer systems. CSP's Systems segment includes the MultiComputer Division, which supplies high-performance Linux cluster systems for a broad array of defense applications, including radar, sonar and surveillance signal processing. The Company's MODCOMP, Inc. subsidiary, also part of its Service and Systems Integration segment founded in 1970 and which includes the fiscal 2003 acquisition of Technisource, is a leading provider of IT solutions and systems integration services. MODCOMP works with fourth parties to develop customized solutions in the global IT markets and has offices in the U.S., U.K. and Germany. More information about CSP is available on the company's website at www.cspi.com. To learn more about MODCOMP, Inc., consult www.modcomp.com.

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