Network Equipment Technologies, Inc. Prices $85 Million of Convertible Senior Notes

FREMONT, CA today announced the pricing of $85 million aggregate principal amount of 3.75% Convertible Senior Notes due 2014 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The company has granted an option to the initial purchaser to purchase up to $20 million aggregate principal amount of additional notes on or prior to December 28, 2007.

Interest on the notes will be paid semiannually on December 15 and June 15 at a rate of 3.75% per year. The notes will be convertible at an initial conversion rate of 73.3689 shares of the company's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $13.63 per share. This initial conversion price represents a premium of 27.5% relative to the last reported sale price on December 12, 2007 of the company's common stock of $10.69 per share. Holders of the notes may require the company to repurchase the notes for cash equal to 100% of the principal amount to be repurchased plus accrued and unpaid interest upon the occurrence of certain designated events.

The company estimates that the net proceeds from the offering will be approximately $82 million (or $101.4 million if the initial purchaser exercises its option to purchase additional notes in full) after deducting discounts, commissions and estimated offering expenses. The company expects to use the net proceeds for working capital and general corporate purposes, which may include capital expenditures and potential acquisitions.

This press release is neither an offer to sell or a solicitation of an offer to buy the notes nor shall there be any sale of the notes in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction. Any offers of the notes will be made only by means of a private offering memorandum. The notes and the company's common stock issuable upon the conversion of the notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's current preliminary expectations and are subject to risks, uncertainties and assumptions, including the risk that the company may be unable to complete the offering. Other information on potential risk factors that could affect the company, its business and its financial results are detailed in the company's periodic filings with the Securities and Exchange Commission (SEC), including, but not limited to, those risks and uncertainties listed in the section entitled "Risk Factors," which can be found in the company's annual report on Form 10-K for the fiscal year ended March 30, 2007 filed with the SEC on May 25, 2007.

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