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Zoom Telephonics Reports Results
for the Third Quarter Ending 9/30/01

Boston, October 26, 2001 - Zoom Telephonics, Inc. (NASDAQ: ZOOM), a leading manufacturer of modems and other Internet access products, today reported sales of $12.3 million for its third quarter ending September 30, 2001, down 26% from the third quarter of 2000. Sales for the first nine months of 2001 were $33.4 million, down 23% from the first nine months of 2000.

Zoom’s third quarter 2001 sales increased 14% over the second quarter of 2001, primarily due to growth in sales of dial-up and cable modems.

Zoom’s operating loss for the third quarter of 2001 was $1.7 million or $.22 per share, versus an operating loss of $.2 million or $.03 per share for the third quarter of 2000. This increased loss was primarily due to lower sales and a reduction of gross profit from 38.2% of sales to 27.8%. The reduced gross profit was offset somewhat by a reduction in operating expenses of $1.2 million due primarily to reduced personnel expenses and lower variable selling expenses.

Zoom’s net loss for the third quarter of 2001 was $5.5 million, including a $3.8 million reduction in the Company’s net deferred tax asset balance because a portion of this asset depends on future operating results and consequently may not be recovered. Zoom’s net loss for the third quarter of 2000 was $50 thousand or $.01 per share.

For the first nine months of 2001, Zoom reported a net loss of $13.4 million or $1.70 per share, versus a net loss of $1.9 million or $.25 per share for the first nine months of 2000.

Zoom ended the third quarter with a current ratio of 2.4, cash of $5.8 million or $.74 per share, and stockholders’ equity of $23.4 million or $2.97 per share. Zoom succeeded in reducing its net inventory to $12.9 million, down from $21.9 million on December 31, 2000 and $13.8 million on March June 30, 2001.

"During the quarter we made good progress with our cable modems," said Frank Manning, Zoom’s President and CEO. "We received CableLabs approval for our first USB/Ethernet cable modem, the first in a line of newly designed products. We also placed our Global Village Ethernet cable modem with CompUSA and Fry’s, continued to grow our revenues, and made significant OEM progress. Dial-up modem business was up from the second quarter of this year, and it now looks like significant V.92 service rollout should begin to occur early next year. We also made significant progress toward a launch of new wireless 802.11b products with the goal of best-in-class ease of installation and use. We remain committed to our customers, and to producing and supporting great Internet access products."

Zoom has scheduled a Q3 2001 earnings conference call for Friday, October 26th at 8:45a.m. Eastern Time. The call will be simulcast to stock analysts and other interested parties on Zoom's website (www.zoomtel.com/Q3) and other financial and investor-oriented websites via the CCBN / Business Wire StreetEvents network. Shortly after the conference call, a recorded broadcast will be available on Zoom’s website. For additional information, please contact Investor Relations, Zoom Telephonics, 207 South Street, Boston, MA 02111, telephone (617) 423-1072, email investor@zoomtel.com, or visit Zoom’s website at www.zoomtel.com.

This release contains forward-looking information relating to Zoom's plans, expectations and intentions, including statements relating to the V.92 modem market, Zoom's share of the dial-up modem market, Zoom's ability to make required investments, the importance of the high-volume retailer market channel, and Zoom's ability to sell cable modems, ADSL modems, wireless networking, and other advanced networking products. Actual results may be materially different than those expectations as a result of known and unknown risks, including: uncertainty of new product development and introduction, including budget overruns, project delays and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated and other delays in shipments of products; uncertainties inherent in financial projections that, by their nature, are based upon assumptions, many of which are not in the control of the company; Zoom's dependence on one or a limited number of suppliers for certain key components; early stage of development of the cable and DSL data communications markets, and uncertainty of market growth of those markets; rapid technological change; competition; and other risks set forth in Zoom's filings with the Securities and Exchange Commission. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Zoom's expectations or any change in events, conditions or circumstance on which any such statement is based.

 

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