SBE Restructures Supply Contract with Hewlett Packard

11/1/2002 - SBE, a leading supplier of high performance OEM communications solutions to the Internet, wireless and wireline industries, announced that it restructured its product supply contract with HP (previously Compaq). The agreement provides for shipment of a minimum of approximately $1.6 million of its VME serial controller card products over the first two quarters of fiscal 2003. This will conclude the scheduled shipment of VME products under the HP supply contract supporting their fault-tolerant wireless base station business. The Company will provide ongoing engineering support to HP and will ship further VME products on an as needed basis. As part of the restructured contract, HP will forfeit $4.4 million of its $4.9 million refundable deposit. The new contract does not affect SBE's ongoing business supplying T1/E1 adapters to HP's most recent version of the system.

The Company also announced it has improved its cost structure in response to market conditions while continuing to provide focused customer service. The Company reduced staffing levels saving approximately $2 million per year and will record a restructuring charge of approximately $500,000 in its fourth quarter ending October 31, 2002.

"We are pleased that by this change we have added certainty to our schedule of VME shipments to HP. SBE remains a committed supplier to HP with an ongoing relationship for VME support and for adapter interfaces which are used in other product lines," stated William B. Heye, president and chief executive officer. "The restructuring of the Company's expense levels reflect the realities of our market place while positioning SBE for flexibility in 2003. Our products are well positioned for growth in sectors that are in active design wins today, including security and wireless LAN among others."

About SBE
Based in San Ramon, California, SBE designs and sells products to meet the needs of traditional and converged telecommunication markets. SBE products are designed for incorporation within carrier-grade computer systems and integrated into signaling, switching and routing networks. They include SS7/AIN controllers for switch manufacturers, WAN interface adapters for network servers, and high-speed communications controllers for wireless and data messaging applications.

SBE and the SBE logo are registered trademarks of SBE, Inc.

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