Occam Networks 8-K Occam Networks Announces Third-Quarter 2008 Results

Exhibit 99.1

Occam Networks Announces Third-Quarter 2008 Results

Fiber Business Drives Sequential Top-Line Growth

SANTA BARBARA, Calif.--(BUSINESS WIRE)--November 6, 2008--Occam Networks®, Inc. (Nasdaq:OCNW), a leading broadband access supplier offering multi-service access platform (MSAP) solutions based on pure packet technologies, today reported financial results for the third quarter of 2008 ended September 30, 2008.

Revenue for the third quarter was $25.1 million, up 10 percent compared with the prior quarter and up over 60 percent from the same quarter a year ago. The sequential increase in revenue was due to higher sales of fiber products.

Gross margin was $10.8 million, or 43% of revenue, compared with $10.1 million, or 44% of revenue, for the prior quarter. Gross margin for the second quarter of 2008 benefited from a one-time warranty reserve adjustment. Gross margin for the third quarter of 2007 was $5.7 million, or 36% of revenue.

As reported under U.S. generally accepted accounting principles (GAAP), net loss attributable to common stockholders for the third quarter of 2008 was $659,000, or a loss of $0.03 per basic share, compared with a net loss of $2.7 million, or a loss of $0.13 per basic share, for the second quarter of 2008 and with a net loss of $4.9 million, or $0.25 per basic share, for the third quarter of 2007.

Non-GAAP net loss attributable to common stockholders for the third quarter of 2008, which excludes stock-based compensation expense of $628,000, was $31,000, or a loss of $0.00 per basic share. This compared with a net loss of $1.7 million, or a loss of $0.09 per basic share, for the second quarter of 2008 and with a net loss of $4.4 million, or a loss of $0.22 per basic share, for the third quarter of 2007. A reconciliation of Occam’s non-GAAP results to its GAAP net loss is provided in the financial statements portion of this news release.

“During the quarter, we saw strong initial customer adoption of our new GPON product, recorded additional incremental sales to FairPoint for its Northern New England Initiative, and continued to grow our overall customer base,” said Bob Howard-Anderson, president and CEO of Occam. “In addition we made good progress toward our goal of returning to profitability. While the impact of the current economic environment is difficult to predict, we are encouraged by our results and the early success of GPON.”

Highlights for the third quarter of 2008 included:

• 16th consecutive quarter with 10 or more new customer wins
• Continued customer adoption of GPON product with more than 10 network design wins
• Acquisition of additional Canadian customers -- expanding Occam’s footprint in both Ontario and Quebec -- where there are the highest number of Tier 2 and 3 service providers in Canada
• Continued sales traction with FairPoint Communications for its major broadband initiative in Northern New England
• Metro Ethernet Forum certification of Occam’s BLC 6450, BLC 6312 and BLC 6314 products, demonstrating the company’s innovative product leadership.

Business Outlook

Occam currently expects annual revenue for fiscal 2008 to remain in the range of $90 million to $95 million and full-year gross margin percentage between 40% and 42%.

Today’s Conference Call

Occam plans to hold a teleconference to discuss its third-quarter results at 5:00 p.m. EST (2:00 p.m. PST) today. The call can be accessed by dialing (719) 325-2399 (for both U.S. and international callers). A live and archived webcast of the call will be available on the Occam website for up to one year after the call. To access the webcast, go to the Investor Relations page at http://www.occamnetworks.com, select “Earnings Calls” at the bottom of the page and click on the “Q3 2008 Webcast” link. In addition to the webcast, a phone replay will be available for one week after the live call at (719) 457-0820, code number 8439124.

Non-GAAP Disclosure

Certain non-GAAP financial measures are included in this news release. Occam’s GAAP results have been adjusted to exclude stock-based compensation charges associated with the issuance of stock options, restricted stock units, and restricted stock. These non-GAAP financial measures are provided to enhance the reader’s overall understanding of the company’s financial performance and company prospects for the future. Specifically, Occam believes non-GAAP measures can provide useful information to both management and investors by excluding certain non-cash expenses that are not indicative of the company’s core operating results. Further, these non-GAAP financial measures are one of the primary indicators management uses for planning and forecasting future periods. In addition, since Occam has historically reported non-GAAP measures to the investment community, management believes the inclusion of non-GAAP measures provides consistency in Occam’s financial reporting. The presentation of this additional information is not meant to be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP net loss is included below.

Cautionary Note Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities laws, including statements about the company’s expectations relating to fiscal 2008 revenues and gross margin percentage, the company’s efforts to return to profitability and improve operating performance, and the status of the relationship with FairPoint. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those indicated in forward-looking statements. Risks and uncertainties that could adversely affect the company’s business, revenues, results of operations and financial condition include, without limitation, the following: (i) the company's revenues and operating results have varied substantially on a quarter-to-quarter basis in the past and are likely to continue to vary in the future based, among other factors, on levels of customer demand, capital investment trends in the telecommunications industry, the size and timing of orders the company receives, and potentially substantial delays from the time the company receives orders until the company may recognize revenue under applicable revenue recognition rules; (ii) the company’s expectations concerning gross margin percentage rely on assumptions concerning revenues and costs, particularly manufacturing costs, that are subject to substantial uncertainty; (iii) the company cannot predict the amount or timing of orders from FairPoint or the timing of its ability to recognize resulting revenue; (iv) capital investment in the telecommunications industry may be reduced if macroeconomic weakness continues in North America; (v) any inability to remedy previously disclosed internal control deficiencies could have an adverse impact on the reliability of the company’s financial statements; and (vi) the company is subject to litigation risks associated with pending stockholder litigation arising from its recent audit committee investigation and financial restatement. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made. Please also refer to the company's most recent Annual Report on Form 10-K filed on March 11, 2008 and Quarterly Reports on Form 10-Q filed on August 11, 2008, as well as the company's future filings with the SEC, for other important risk factors that could cause the company's actual results to differ materially from those contained in any forward-looking statements.

About Occam Networks Inc.

Occam Networks' broadband access solutions empower service providers to offer profitable new voice, data, and video services over copper and fiber. Occam systems deliver flexibility and scalability in a Triple Play world. Over 2 million BLC 6000 ports are currently deployed at over 300 service providers in North America and CALA. For more information, please visit www.occamnetworks.com.

Occam Networks and Occam BLC 6000 are either registered trademarks or trademarks of Occam Networks, Inc. in the United States and/or other countries.

All other trademarks mentioned are the property of their respective owners.

OCCAM NETWORKS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
	September 30,			December 31,
	2008			2007
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents	$	21,882		$	37,637
Restricted cash		16,909			13,103
Accounts receivable, net		17,104			14,819
Inventories		18,965			13,371
Prepaid and other current assets		3,215			2,108
Total current assets		78,075			81,038
Property and equipment, net		11,035			8,874
Intangibles, net		161			890
Other assets		89			83
Total assets	$	89,360		$	90,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,879		$	10,135
Accrued expenses		7,128			6,464
Deferred revenue		14,575			12,420
Deferred rent		403			237
Capital lease obligations		23			17
Total current liabilities		32,008			29,273
Deferred rent, net of current portion		1,958			1,299
Capital lease obligation, net of current portion		50			47
Total liabilities		34,016			30,619
Stockholders’ equity:
Common stock, $0.001 par value, 250,000,000 shares authorized; 19,988,574 and 19,773,730 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		289			289
Additional paid-in capital		182,391			179,455
Warrants		331			331
Accumulated deficit		(127,667	)		(119,809	)
Total stockholders’ equity		55,344			60,266
Total liabilities and stockholders’ equity	$	89,360		$	90,885

OCCAM NETWORKS, INC. AND SUBSIDIARY
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2008			2008			2007			2008			2007
Revenue	$	25,131		$	22,826		$	15,660		$	67,610		$	53,884
Cost of revenue (1)		14,380			12,731			9,959			38,331			34,054
Gross margin		10,751			10,095			5,701			29,279			19,830
Operating expenses (1):
Research and development		5,004			4,774			3,245			14,337			8,985
Sales and marketing		4,677			5,105			3,728			14,760			10,779
General and administrative		2,050			3,080			4,218			8,253			8,030
Total operating expenses		11,731			12,959			11,191			37,350			27,794
Loss from operations		(980	)		(2,864	)		(5,490	)		(8,071	)		(7,964	)
Other income (expense), net		-			(48	)		(200	)		(702	)		(91	)
Interest income (expense), net		250			275			784			885			2,232
Loss before provision for income taxes		(730	)		(2,637	)		(4,906	)		(7,888	)		(5,823	)
Provision for income taxes		(71	)		22			-			(30	)		-
Net Loss	$	(659	)	$	(2,659	)	$	(4,906	)	$	(7,858	)	$	(5,823	)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.03	)	$	(0.13	)	$	(0.25	)	$	(0.40	)	$	(0.29	)
Weighted average shares attributable to common stockholders:
Basic and diluted		19,894			19,801			19,765			19,826			19,756
(1) Total stock-based compensation included in:
Cost of sales	$	72		$	111		$	71		$	290		$	194
Research and development		243			329			164			868			542
Sales and marketing		149			221			144			557			422
General and administrative		164			237			110			633			407
Total stock-based compensation	$	628		$	898		$	489		$	2,348		$	1,565

OCCAM NETWORKS, INC. AND SUBSIDIARY
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2008			2008			2007			2008			2007
Revenue	$	25,131		$	22,826		$	15,660		$	67,610		$	53,884
Cost of revenue		14,308			12,620			9,888			38,041			33,860
Gross margin		10,823			10,206			5,772			29,569			20,024
Operating expenses:
Research and development		4,761			4,445			3,081			13,469			8,443
Sales and marketing		4,528			4,884			3,584			14,203			10,357
General and administrative		1,886			2,843			4,108			7,620			7,623
Total operating expenses		11,175			12,172			10,773			35,292			26,423
Loss from operations		(352	)		(1,966	)		(5,001	)		(5,723	)		(6,399	)
Other income (expense), net		-			(11	)		(200	)		(11	)		(91	)
Interest income (expense), net		250			275			784			885			2,232
Non-GAAP loss		(102	)		(1,702	)		(4,417	)		(4,849	)		(4,258	)
Provision for income taxes		(71	)		22			-			(30	)		-
Non-GAAP net loss	$	(31	)	$	(1,724	)	$	(4,417	)	$	(4,819	)	$	(4,258	)
Non-GAAP net loss per share:
Basic and diluted	$	(0.00	)	$	(0.09	)	$	(0.22	)	$	(0.24	)	$	(0.22	)
Weighted average shares attributable to common stockholders:
Basic and diluted		19,894			19,801			19,765			19,826			19,756
Reconciliation of non-GAAP net loss to GAAP net loss:
Non-GAAP net loss	$	(31	)	$	(1,724	)	$	(4,417	)	$	(4,819	)	$	(4,258	)
Stock-based compensation		628			898			489			2,348			1,565
Terawave-related divestiture charge		-			37			-			691			-
Net loss	$	(659	)	$	(2,659	)	$	(4,906	)	$	(7,858	)	$	(5,823	)

CONTACT:
Occam Networks
Jeanne Seeley, 1-805-692-2957 (Financial)
ir@occamnetworks.com
or
Stearns Johnson Communications
Tim Johnson, 1-415-397-7600 (Media)
tjohnson@stearnsjohnson.com