MTLK Metalink, Ltd. (MM)

Cost Reduction Efforts Continue YAKUM, Israel, September 9 /PRNewswire-FirstCall/ -- Metalink Ltd. (NASDAQ:MTLK), a global provider and developer of high-performance broadband communication silicon solutions, today announced its unaudited financial results for the second quarter ended June 30, 2008. In addition, the Company provided additional details regarding its latest cost reduction plan. Financial Results Revenues for the second quarter of 2008 were $2.7 million, the vast majority of which consisted of legacy DSL sales. This compared to sales of $2.5 million for the second quarter of 2007. Net loss for the period was $(6.6) million, or $(0.28) per share, compared to $(5.6) million, or $(0.28) per share for the second quarter of 2007. Net loss for the second quarter of 2008 includes stock-based compensation expenses of $0.5 million. For the first six months of 2008, revenues were $3.3 million, the vast majority of which consisted of legacy DSL sales. This compared to sales $4.9 million for the first half of 2007. Net loss for the first six months of 2008 was $(16.4) million, or $(0.70) per share, compared to a net loss of $(10.6) million, or $(0.53) per share, for the first six months of 2007. Metalink's cash, cash equivalents, short and long-term investments as of June 30, 2008 were $9.5 million. This amount includes approximately $0.8 million of auction rate securities which are pledged to secure a credit line of $0.4 million. As previously reported Metalink has gone through a restructuring process that will reduce the operating expenses to approximately $4M in the first quarter of 2009 (excluding one time charges, such as restructuring and severance costs, and stock-based compensation expense). This cost reduction process includes a significant decrease in the Company's workforce and several management changes. These include the departure of several executive officers and the elimination of a number of management positions including Chief Operating Officer. In addition, during the quarter the Company closed its design center in Atlanta and its sales and marketing offices in China, Korea and Japan. While funding and restructuring has been a major focus of Metalink during the second and third quarters, we continued to make significant inroads into the emerging 802.11n video streaming market as demonstrated by a number of evaluations and initial deployments. These include: - a major Telco in the US, which successfully evaluated Metalink's chipsets in field trials thereby triggering design activity by its Top Tier IP Set-Top Box provider and its Top-Tier Set-Top Box provider; - a major DBS service provider, which is preparing trials with a European OEM utilizing a Metalink-based IPTV Set-Top Box and Top-Tier US OEM Video Bridge; and - a leading European service provider which has selected a Metalink-based Video Bridge for IPTV deployment beginning in 2008. Commenting on the results, Mr. Tzvi Shukhman, Metalink's CEO, said, "As we announced on July 27, we continue to explore strategic options for developing Metalink towards the future, including beneficial partnerships with major market players as well as long term strategic funding options. The combination of the significant cost reductions that we are implementing and the interim funding announced today will allow us to maintain optimal flexibility as we evaluate our options. We are cautiously optimistic that the measures we have taken will allow us to maximize shareholder value." Metalink's second quarter 2008 conference call will be broadcast "live" in listen-only mode via its website on Tuesday, September 9, at 9:00 AM EDT. About Metalink Metalink Ltd. (NASDAQ:MTLK) is a provider of high performance broadband communication silicon solutions. Metalink's WLAN and DSL technologies are designed to enable true broadband connectivity in every home, and its products revolutionize the broadband experience by facilitating the convergence of telecommunication, networking and entertainment. Metalink's WLANPlus(TM) is a high-throughput, 802.11n-draft-compliant wireless LAN technology optimized for the networked home entertainment environment. Featuring advanced MIMO technology and full support of QoS, and operating in both 2.4GHz and 5GHz bands, WLANPlus enables multi-room networking of multiple high-definition video streams. In addition, Metalink offers a broad range of symmetric DSL and VDSL products used by operators as a cost-effective network upgrade to support triple-play services. Further information is available at http://www.mtlk.com/ Safe Harbor Statement This press release contains "forward looking statements" within the meaning of the United States securities laws. Words such as "aim," "expect," "estimate," "project," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believe," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. For example, when we discuss our expectation regarding strategic options, we are using a forward looking statement. Because such statements deal with future events, they are subject to various risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our need to raise additional funds in order for us to implement our current business plan, including our liquidity requirements, which funds may not be available to us; our inability to satisfy Nasdaq's requirements for continued listing; any unforeseen developmental or technological difficulties with regard to our products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; and the impact on revenues of economic and political uncertainties and weaknesses in various regions of the world, including the commencement or escalation of hostilities or acts of terrorism. Additional factors that could cause actual results to differ materially from these forward-looking statements are set forth from time to time in Metalink's filings with the Securities and Exchange Commission, including Metalink's Annual Report in Form F-20. Readers are cautioned not to place undue reliance on forward-looking statements. Except as required by applicable law, the Company undertakes no obligation to republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events. The Company cannot guarantee future results, events, and levels of activity, performance, or achievements. METALINK LTD. CONSOLIDATED BALANCE SHEETS June 30, December 31, 2 0 0 8 2 0 0 7 (Unaudited) (in thousands, except share data) ASSETS Current assets Cash and cash equivalents $ 2,799 $ 7,291 Short-term investments 5,966 17,233 Trade accounts receivable 1,261 677 Other receivables 1,030 2,284 Prepaid expenses 456 456 Inventories 2,611 1,765 ----------- ----------- Total current assets 14,123 29,706 - - - - - - - - - - - - Long-term investments 756 2,200 - - - - - - - - - - - - Severance pay fund 2,085 2,534 - - - - - - - - - - - - Property and equipment, net 4,245 4,182 - - - - - - - - - - - - ----------- ------------ $ 21,209 $ 38,622 ----------- ------------ ----------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 1,089 $ 1,564 Other payables and accrued expenses 4,214 4,979 ----------- ---------- Total current liabilities 5,303 6,543 - - - - - - - - - - - - Accrued severance pay 3,185 3,748 - - - - - - - - - - - - Shareholders' equity Ordinary shares of NIS 0.1 par value (Authorized - 50,000,000 shares, issued and outstanding 24,389,232 and 24,377,232 shares as of June 30, 2008 and December 31, 2007, respectively) 701 701 Additional paid-in capital 155,627 154,703 Accumulated other comprehensive income (loss) (56) 48 Accumulated deficit (133,666) (117,236) ---------- ----------- 22,606 38,216 - - - - - - - - - - - - Treasury stock, at cost; 898,500 as of June 30, 2008 and December 31, 2007 (9,885) (9,885) - - - - - - - - - - - - Total shareholders' equity 12,721 28,331 ----------- ----------- Total liabilities and shareholders' equity $ 21,209 $ 38,622 ----------- ------------ ----------- ------------ METALINK LTD. CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended Six months ended June 30, June 30, 2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 (Unaudited) (Unaudited) (In thousands, except share and per share data) Revenues $ 2,673 $ 2,539 $ 3,333 $ 4,885 Cost of revenues: Costs and expenses 900 1,312 1,404 2,406 Royalties to the Government of --------- --------- --------- --------- Israel 82 68 105 140 Total cost of 982 1,380 1,509 2,546 revenues - - - - - - - - - - - - - - - - - - - - --------- --------- --------- --------- Gross profit 1,691 1,159 1,824 2,339 - - - - - - - - - - - - - - - - - - - - - Operating expenses: Gross research and Development 6,563 5,542 15,055 10,722 Less - Royalty bearing and other grants 138 506 936 1,090 --------- --------- --------- --------- Research and development, net 6,425 5,036 14,119 9,632 - - - - - - - - - - - - - - - - - - - - Selling and Marketing 1,353 1,391 3,110 2,707 General and administrative 735 614 1,443 1,145 --------- --------- --------- --------- Total operating Expenses 8,513 7,041 18,672 13,484 - - - - - - - - - - - - - - - - - - - - --------- --------- --------- --------- Operating loss (6,822) (5,882) (16,848) (11,145) Financial income, Net 177 256 418 570 --------- --------- --------- --------- Net loss $ (6,645) $ (5,626) $ (16,430) $ (10,575) --------- --------- --------- --------- --------- --------- --------- --------- Loss per ordinary share: Basic $ (0.28) $ (0.28) $ (0.70) $ (0.53) --------- --------- --------- --------- --------- --------- --------- --------- Diluted $ (0.28) $ (0.28) $ (0.70) $ (0.53) --------- --------- --------- --------- --------- --------- --------- --------- Shares used in computing loss per ordinary share: Basic 23,490,643 19,916,856 23,498,760 19,864,665 --------- --------- --------- --------- --------- --------- --------- --------- Diluted 23,490,643 19,916,856 23,498,760 19,864,665 --------- --------- --------- --------- --------- --------- --------- --------- Contact: Yuval Ruhama CFO Metalink Ltd. Tel: +972-9-9605395 Fax: +972-9-9605544 DATASOURCE: Metalink Ltd CONTACT: Contact: Yuval Ruhama, CFO, Metalink Ltd. Tel: +972-9-9605395, Fax: +972-9-9605544,

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