Redline Updates 2008 Revenue Outlook


    All figures in U.S. Dollars unless specified

    TORONTO, July 9 /CNW/ - Redline Communications Group Inc. ("Redline" or
"the Company"), (TSX/AIM: RDL), a leading provider of standards-based WiMAX
and broadband wireless infrastructure products, today updated its outlook for
fiscal 2008 and provided estimated revenue for the second quarter ended
June 30, 2008.
    Preliminary results for the second quarter indicate revenue to be
approximately $9.0 million to $9.5 million, a decrease of approximately
$6.0 million from analyst forecasts. The second quarter financial results were
affected by several factors, including a softening in the overall demand for
WiMAX products based on the current 802.16d standard as operators consider
whether or not to wait for the next generation of Mobile WiMAX technologies.
Their decisions have been impacted by recent industry developments, including
the early level certification of next generation 802.16e Mobile WiMAX
    The impact of these market forces was compounded by two key customers
delaying network expansions due to complications in integrating the latest
release of the Redline Management Suite (RMS) with their existing networks.
RMS is a software product that acts as a gateway between Redline's WiMAX
equipment in the network and the network management system. The latest release
of the RMS is an industry first in that it supports auto-provisioning of WiMAX
subscriber units, as well as seamless billing and subscriber management. The
integration of the RMS involved the re-architecture of fully operational core
networks that support existing GSM voice and data mobility services with a new
fixed WiMAX network that supports Voice over IP (VoIP) and data services. The
Company has now successfully completed the integration for one key operator
and is working with its partners to integrate the other network.
    The results for the second quarter were also affected by senior sales
management changes, including the departure in April of the Managing Director
for Europe, who has since been replaced, and the unexpected long-term medical
leave of the Managing Director for the Middle East region later in the
quarter. Redline has also initiated the process to replace its Vice President
of Worldwide Sales and expects to fill the position in the third quarter of
    As a result of these factors, Redline now expects second half 2008
revenue of approximately $20 million to $25 million. The Company will
therefore not achieve EBITDA profitability in the fourth quarter as previously
projected. At quarter-end, the Company's balance sheet showed cash and cash
equivalents of $14.8 million.
    "Some prospective and existing customers have delayed their rollouts and
purchasing decisions as they review the option of adopting a next generation
mobile WiMAX solution," said Majed Sifri, President and CEO of Redline
Communications. "We believe that market opportunities remain strong due to the
demand for broadband access, but the timing of customer decisions has become
more difficult to predict. Based on compelling proven and projected returns on
investment, we continue to believe in the long-term growth potential of fixed
and mobile WiMAX and in Redline's ability to be a leader in these markets."
    "We acted quickly to resolve the integration complications with the RMS;
however, we expect the delays to impact the timing of revenue from new orders
from current customers, which were in our original forecast for the year. We
are moving quickly to strengthen our management and sales teams in several key
areas and are confident we will secure a strong telecommunications veteran to
lead the further growth of our WiMAX business. We are also examining several
strategic options to leverage the value of our BWI business unit."
    "We continue to focus on accelerating the development of our RedMAX 4C
Mobile WiMAX product family, while offering a leading fixed WiMAX solution to
customers that are successfully rolling out WiMAX networks today. The WiMAX
Forum's announcement on the first phase of Mobile WiMAX certification is a
good proof point for the WiMAX industry. We have submitted products for the
next phase of certification and will deliver solutions that offer the features
and functionality necessary for the successful rollout of a Mobile WiMAX
network," added Sifri.
    Redline plans to release its complete financial results for the fiscal
2008 second quarter in early August.

    About Redline Communications

    Redline Communications ( is the leading
provider of fixed and mobile standards-based wireless broadband solutions.
Redline's RedMAX(TM) WiMAX Forum Certified(TM) system, RedMAX 4C Mobile
WiMAX(TM) products, and its award-winning RedCONNEX(TM) and RedACCESS(TM)
families of broadband wireless infrastructure products enable service
providers and other network operators to cost-effectively deliver
high-bandwidth services, including voice, video and data communications.
Redline is committed to maintaining its wireless industry leadership with the
continued development of WiMAX and other advanced wireless broadband products.
With more than 100,000 installations in 85 countries, and a global network of
over 170 partners, Redline's experience and expertise helps service providers,
enterprises and government organizations roll out wireless broadband networks
to support advanced communications.

    NOTE: All registered and unregistered trademarks mentioned in this
    release are the property of their respective owners.

    Forward-Looking Statements

    Certain statements in this press release may contain words such as
"could", "expects", "may", "anticipates", "believes", "intends", "estimates",
"targets", "envisions", "seeks" and other similar language and are considered
forward-looking statements or information under applicable securities
legislation. These statements are based on Redline's current expectations,
estimates, forecasts and projections about the operating environment,
economies and markets in which Redline operates. These statements are subject
to important assumptions, risks and uncertainties, which are difficult to
predict and the actual outcome may be materially different. Redline has made
various assumptions in the preparation of its financial outlook in this press
release, including the following company specific assumptions: An ability to
ramp sales in new WiMAX product lines and in a private label product line in
its Broadband Wireless Infrastructure (BWI) business; the continued network
and deployment expansion by its largest customers, especially in the Middle
East and the Americas; the continued ability to have more WiMAX customers
convert to commercial networks, and the ability to add new WiMAX customers,
using both its 802.16-2004 and 802.16-2005 solutions; improvement in Redline's
product costs due to favorable supplier pricing, offset by higher costs
associated with initial customer deployments in emerging markets; increased
employee costs relative to expected cost of living adjustments and employee
bonuses; and the effective execution of Redline's strategy, including the
execution of Redline's supply chain strategy. Redline has also made certain
macroeconomic and general industry assumptions in the preparation of its
financial guidance including: a modest decrease in the growth rate of the
gross domestic product of global economies which is lower than the growth rate
in 2007; global service provider capital expenditures in 2008 reflecting mid
to high single digit growth as compared to high single digit growth in 2007;
global growth rate to remain stable with investments in next generation
products and services to offset declines in purchases of legacy equipment; and
a moderate impact as a result of expected industry consolidation among service
providers in various geographic regions, particularly in emerging markets; and
the impact of the rise in the Canadian dollar in 2007 and 2008 compared to the
US dollar and other world currencies. The above assumptions, although
considered reasonable by Redline at the date of this press release, may prove
to be inaccurate and consequently Redline's actual results could differ
materially from its expectations set out in this press release.
    Further, actual results or events could differ materially from those
contemplated in forward-looking statements as a result of the following
(i) risks and uncertainties relating to Redline's business including:
significant competition, competitive pricing practice, cautious capital
spending by customers, industry consolidation, rapidly changing technologies,
evolving industry standards, frequent new product introductions and short
product life cycles, and other trends and industry characteristics affecting
the telecommunications industry; any material, adverse affects on Redline's
performance if its expectations regarding market demand for particular
products prove to be wrong; any negative developments associated with
Redline's suppliers and contract manufacturing agreements including our
reliance on certain suppliers for key components; potential penalties, damages
or cancelled customer contracts from failure to meet delivery and installation
deadlines and any defects or errors in Redline's current or planned products;
fluctuations in foreign currency exchange rates; potential higher operational
and financial risks associated with Redline's efforts to expand
internationally; a failure to protect Redline's intellectual property rights,
or any adverse judgments or settlements arising out of disputes regarding
intellectual property; changes in regulation of the wireless industry or other
aspects of the industry; any failure to successfully operate or integrate
strategic acquisitions, or failure to consummate or succeed with strategic
alliances; Redline's potential inability to attract or retain the personnel
necessary to achieve its business objectives or to maintain an effective risk
management strategy; (ii) risks and uncertainties relating to Redline's
liquidity, financing arrangements and capital including: any inability of
Redline to manage cash flow fluctuations to fund working capital requirements
or achieve its business objectives in a timely manner or obtain additional
sources of funding; or any negative impact on Redline's ability to make future
acquisitions, raise capital, issue debt and retain employees arising from
stock price volatility and any declines in the market price of Redline's
publicly traded securities. For additional information with respect to certain
of these and other factors, see Redline's final prospectus (at page 83 under
the heading "Risk Factor") which is available on Redline's website at or through Unless otherwise
required by applicable securities laws, Redline disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

For further information:

For further information: Redline Communications: Tom Hearne/Carolyn
Anderson,, Tel:
(905) 479-8344; Equicom Group: Craig Armitage/Vanessa Beresford,, Tel: (416) 815-0700;
Canaccord Adams, Neil Johnson/Andrew Chubb, Tel: +44 (0)20 7050 6500

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