Westell Technologies Reports Fiscal 2010 Second Quarter Profit

Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of broadband products, outside plant telecommunications equipment and conferencing services, today announced results for its fiscal second quarter ended September 30, 2009. Total revenue for the fiscal second quarter was $47.4 million, up 9.8% from $43.1 million in the same quarter last year. Net income during the quarter was $2.9 million, or $0.04 per diluted share, compared to a net loss of $5.1 million, or a loss of $0.07 per diluted share, in the same period last year. Total cash and cash equivalents were $53.9 million at September 30, 2009, up $4.7 million compared to the balance at June 30, 2009.

In the quarter ended September 30, 2009, Westell elected to early adopt new accounting standards1 on revenue recognition. The adoption of these standards allows Westell to recognize substantially all of the revenue from its UltraLine Series3 gateways when the product is delivered to the customer. Such revenue and related direct costs previously had been deferred in the financial results for prior quarters. The UltraLine Series3 gateways are sold predominantly under a single contract, which is the only Westell contract affected by the adoption of these new accounting standards.

As a result of the retrospective adoption of these new accounting standards, Westell’s reported results in each quarter since June 30, 2008, have been adjusted. The cumulative impact of the adoption through June 30, 2009 resulted in additional revenue and gross profit of $37.8 million and $0.5 million, respectively. The effects of the adoption of the accounting standards are summarized in Supplemental Tables 1 and 2. As demonstrated on Supplemental Table 3, the adjustments to prior periods substantially match reported non-GAAP adjustments for revenue deferrals.

“We have moved quickly to implement these accounting changes,” said Chairman and Chief Executive Officer Rick Gilbert. “We feel the changes allow us to present a more straight-forward and accurate picture of the performance of our business.”

The Customer Networking Solutions division, which was the beneficiary of the newly adopted accounting standards, reported revenue of $24.0 million in the second quarter of fiscal 2010. This was up 40.0% compared to $17.2 million in the same quarter of last year. OSPlant Systems revenue declined 12.2% to $13.0 million in the second quarter of fiscal 2010, compared to $14.9 million in the same quarter of last year. ConferencePlus revenue declined 7.2% to $10.3 million in the second quarter of fiscal 2010, compared to $11.1 million in the same quarter of last year.

“We are very pleased to have delivered two strong quarters for this fiscal year,” commented Rick Gilbert. “Looking forward, however, we anticipate a more challenging profit picture for the second half of the year. All three of our businesses are experiencing top-line softness, reflecting lower consumer demand, careful inventory management by our customers, and seasonal factors. Therefore, we remain keenly focused on expense control and excellent business execution to maintain our profitability and positive cash flow.”

Conference Call Information

Management will address financial and business results during Westell’s second quarter fiscal 2010 earnings conference call on Thursday, October 22, at 9:30 AM Eastern Time. Conference Plus, Inc. (ConferencePlus), a Westell subsidiary, will manage Westell’s earnings conference call using its EventManager™ Service.

Participants can register for the Westell conference by going to the URL:
http://www.conferenceplus.com/westell.

With EventManager, participants can quickly register online in advance of the conference through a customizable web page that can be used to gather multiple pieces of information from each participant, as specified by the event arranger. After registering, participants receive dial-in numbers, a passcode, and a personal identification number (PIN) that is used to uniquely identify their presence and automatically join them into the audio conference. If a participant experiences any technical difficulties after joining the conference call on October 22, he or she can press *0 for support.

If a participant does not wish to register, he or she can participate in the call on October 22, by dialing ConferencePlus at 1-877-875-0056 no later than 9:15 AM, Eastern Time and using confirmation number 25506819. International participants may dial 1-847-585-4340. Westell’s press release on earnings and related information that may be discussed on the earnings conference will be posted on the Investor Relations’ section of Westell’s website, http://www.westell.com. An archive of the entire conference will be available on Westell’s website or via Digital Audio Replay following the conclusion of the conference until the third fiscal quarter results are released. The replay of the conference can be accessed by dialing 1-888-843-8996 or 1-630-652-3044 and entering 6061531#.

About Westell

Westell Technologies, Inc., headquartered in Aurora, Illinois, is a holding company for Westell, Inc. and ConferencePlus, Inc. Westell, Inc. designs, distributes, markets and services a broad range of broadband customer-premises equipment, digital transmission, remote monitoring, power distribution and demarcation products used by telephone companies and other telecommunications service providers. ConferencePlus, Inc. is a leading global provider of audio, web, video and IP conferencing services. Additional information can be obtained by visiting http://www.westell.com and http://www.conferenceplus.com.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995:

Certain statements contained herein that are not historical facts or that contain the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “may”, “will”, “plan”, “should”, or derivatives thereof and other words of similar meaning are forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, product demand and market acceptance risks, need for financing, economic weakness in the United States economy and telecommunications market, the impact of competitive products or technologies, competitive pricing pressures, product cost increases, new product development, excess and obsolete inventory, commercialization and technological delays or difficulties (including delays or difficulties in developing, producing, testing and selling new products and technologies), the effect of Westell’s accounting policies, the need for additional capital, the effect of economic conditions and trade, legal social and economic risks (such as import, licensing and trade restrictions), retention of key personnel and other risks more fully described in the Company’s Form 10-K for the fiscal year ended March 31, 2009 under the section entitled Risk Factors. The Company undertakes no obligation to publicly update these forward-looking statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, or otherwise.

1 On September 23, 2009, the Financial Accounting Standards Board ratified Emerging Issues Task Force (EITF) Issue 08-1 and EITF Issue 09-3, creating new accounting standard updates ASU 2009-13 and ASU 2009-14.

Financial Tables to Follow: