Gadzoox Reports Second Quarter 2002 Earnings

Gadzoox Networks, Inc. , a provider of Storage Area Network (SAN) products, today reported financial results for its second quarter of fiscal 2002. The Company reported net revenues of $5.1 million for the second fiscal quarter ended September 30, 2001, compared to $6.6 million in the prior quarter.

“Despite the soft economy and turbulent environment, we have continued to build a better company by enhancing our corporate infrastructure, making progress on our financial goals and releasing new products,” stated Michael Parides, Gadzoox Networks President and CEO.

According to the company, second quarter highlights included the following:

— Announced general availability of Slingshot 4218 2Gb Open Fabric Switch

— Announced and began shipping Slingshot 4210 to major system OEMs

— Officially certified the Slingshot 4218 with more than 10 hardware and
software vendors and storage integrators

— Raised $7.5 million through a private equity placement

— Reduced normalized operating expenses from $12.6 million in the prior
quarter to $11.5 million, an 9% reduction for the quarter

— Reduced inventories by 13% from the prior quarter

— Exceeded analyst expectations for earnings per share

“The industry ramp of 2Gb SANs has clearly been impacted by the overall economic environment. However, our Slingshot products are mature, and the OEM response to date on this platform has been excellent,” continued Parides. “Our future continues to depend upon winning and ramping the OEMs, and we believe that the prospects for Gadzoox Networks success are as bright as ever.”

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