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Zoom Reports Profit For The Fourth Quarter Of 1997

Boston, MA, February 20, 1998 - Zoom Telephonics, Inc. (NASDAQ: ZOOM), a leading manufacturer of faxmodems and other data communications products, today reported fourth quarter 1997 net income of $290 thousand or $.04 per share, versus a net loss of $243 thousand or $.03 per share for the fourth quarter of 1996. For the full year 1997 Zoom reported a net loss of $7.1 million or $.95 per share, versus a net profit of $2.5 million or $.35 per share for 1996.

Zoom reported sales of $21.5 million for its fourth quarter ending December 31, 1997, down 17% from $25.8 million for the fourth quarter of 1996. Sales for the full year 1997 decreased 36% to $64.5 million from $100.2 million in 1996.

The Company said that sales for the fourth quarter were the highest for the year, reflecting the momentum shift toward the Company's 56K modem technology, K56flex™. Sales for the fourth quarter and the full year 1997 were lower than the prior year because of general market confusion over the competing pre-standard 56K technologies, K56flex and x2™, and because K56flex central site deployment did not gather significant momentum until late in 1997. These factors negatively impacted unit sales, average selling prices, and gross margins of 56K and lower speed modems.

Zoom ended 1997 with a strong balance sheet, with a current ratio of 5.4, cash of $11.2 million or $1.49 per share, stockholders' equity of $5.42 per share, and an unused $5 million line of bank credit.

"Zoom's 56K sales were disappointing through most of 1997, but showed strong improvement in the fourth quarter," said Frank Manning, Zoom's President. "Our product mix continues to shift toward 56K, and we expect this shift to accelerate as a result of the V.90 standard recently recommended by the International Telecommunication Union. We believe that the industry is entering a major new upgrade cycle, and that Zoom is well-positioned to benefit given our number 2 position at retail in the USA, strong relationships and cooperative marketing programs with Internet Service Providers, excellent international products and channels, and eight recent 56K awards. We are in the final stages of testing our V.90 products, and expect to begin shipping in the near future."

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 planned deployment of V.90 products, its relationships with its marketing partners, the prospects of a new industry upgrade cycle, the Company's future results, and other risks set forth in Zoom's filings with the Securities and Exchange Commission. The statements contained herein speak only as of the date of this press release. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any statement to reflect any change in Zoom's expectations or any change in events, conditions or circumstance on which any such statement is based. These forward-looking statements involve risks and uncertainties, including that there can be no assurance of improved results, and other risks and uncertainties indicated from time to time in Zoom's filings with the Securities and Exchange Commission.
 

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