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Zoom Reports Profit For The First Quarter Of 1998

Boston, April 24, 1997 - Zoom Telephonics, Inc. (NASDAQ: ZOOM), a leading manufacturer of faxmodems and other data communications products, today reported sales of $18.0 million for its first quarter ending March 31, 1997, down 46% from $33.2 million for the first quarter of 1996.

Zoom reported a net loss for the first quarter of 1997 of $956 thousand or $.13 per share, versus net income of $2.2 million or $.35 per share for the first quarter of 1996, as gross profit declined from $7.8 million to $3.3 million on significantly reduced sales, while operating expenses rose from $4.1 million to $4.9 million. Gross margin declined from 23.4% of revenues to 18.2%. Selling expenses rose $100 thousand to $2.8 million. General and Administrative expenses rose $229 thousand to $1.1 million, with the largest increase for information systems. Research and Development expenses rose $432 thousand, primarily due to headcount increases to accelerate new product development.

"During the first quarter of 1997 the vast majority of our sales came from V.34 faxmodems," said Frank Manning, Zoom's President. "These suffered from severe price competition and reduced demand, partly due to the transition to 56K. This week we began shipping K56flex™ modems with programmable digital signal processors in volume, and we are experiencing strong demand for these products. Meanwhile we continue to invest in R&D and infrastructure, looking past the near-term numbers as we build a strong long-term position in the data communications market."

Zoom ended the quarter with a strong balance sheet, with a current ratio of 7.2, cash of $9 million, and an unused $10 million bank line of credit.

For additional information, please contact Investor Relations, Zoom Telephonics, 207 South Street, Boston, Massachusetts 02111, telephone (617)423-1072, fax (617)338-5015, E-mail address Investor@Zoomtel.com Zoom's World Wide Web site is www.zoomtel.com

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This press release contains certain forward-looking statements including, without limitation, statements relating to the company's new product development and future market position. These forward-looking statements involve risks and uncertainties, including that there can be no assurance that the company's new products will be introduced on a timely basis, if at all; that the company's new products if introduced will achieve market acceptance; that overall product demand, selling prices, gross margins, or revenues will improve; and other risks and uncertainties indicated from time to time in Zoom's filings with the Securities and Exchange Commission.
 

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