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Zoom Reports Results For Third Quarter Ending

Boston, October 28, 1997 - Zoom Telephonics, Inc. (NASDAQ: ZOOM), a leading manufacturer of faxmodems and other data communications products, today reported sales of $13.0 million for its third quarter ending September 30, 1997, down 35% from $20.0 million for the third quarter of 1996. Sales for the first 9 months of 1997 were $43.0 million, down 42% from the same period in 1996.

Zoom reported a net loss for the third quarter of 1997 of $2.2 million or $.29 per share, versus net income of $253 thousand or $.03 per share for the third quarter of 1996. For the first nine months of 1997, Zoom reported a net loss of $7.4 million or $1.00 per share, versus net income of $2.7 million or $.38 or share for the year earlier nine month period.

The Company said the transition to 56K modems had been slower than expected, negatively impacting sales, average selling prices, and gross margins.

Zoom ended the quarter with a strong balance sheet, with a current ratio of 8.0, cash of $12.4 million or $1.65 per share, and stockholders' equity of $5.30 per share.

"56K has been disappointing, but we do see some encouraging signs for K56flex," said Frank Manning, Zoom's President. "Ascend has been shipping for some time; but only now are some of their largest customers going live. Erol's has begun a major rollout; and they are recommending Zoom modems in their extensive advertising. We expect to see major rollouts in the near term from America Online, Microsoft Network, and UUNET. Livingston has been shipping for several months, and many of their customers have gone live. Cisco and Shiva have also started shipping. As more and more Internet Service Providers bring K56flex online and begin advertising it to their customers, sales should ramp significantly. Zoom is beautifully positioned, with strong relationships with major retailers and distributors, an excellent cooperative promotion program for Internet Service Providers, and superb reviews of our 56K technology. In its October 1997 issue BYTE magazine awarded Zoom's 56K external modem 'BYTE Best' for 'besting not only its K56flex companions, but the entire x2 field as well.' Other recent awards include 'Tester's Choice' by Data Communications magazine, 'Buy It' from CNET, and 'Net Best' from ZD Internet Magazine. We've also done a good job internationally, with recent orders and commitments from some of the largest accounts in Europe dovetailing with homologation of new K56flex designs for a number of European countries and recent 'Best Buy' awards from PC Online in Germany and PC World in Poland."

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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