Bedminster, NJ, June 28, 1999 - Sales of business telephone systems slowed in the first quarter of 1999, but by no means can the systems be proclaimed dead. These products, otherwise known as PBXs and Key/Hybrid Systems, are still the foundation for voice in the office in spite of the Voice over Internet Protocol frenzy.

U.S. Sales declined to 4.06 million lines in the first quarter, representing a 1.8% decrease over the previous reporting period. Analysis of quarter over quarter growth indicates that Total New Lines decreased 2.3% and Add-On Lines decreased 0.5%. However, sales of Systems increased by 5.8%, indicating there is still strong growth possibilities in the market. This is as reported in the newly released 1Q99 Monitorsm Report, prepared by The Eastern Management Group.

PBX Market Analysis

First quarter 1999 PBX Total Line shipments decreased 0.6% over fourth quarter 1998 resulting in 2.2 million lines shipped. Total PBX System shipments rose 0.6% over the prior reporting period with a total of 8,491 Systems shipped.

Lucent captured the number one position in Total Lines sold with a 32.4% market share and the number two position in Systems sold with a market share of 20.7%.

Nortel held the number one spot in Systems sold with a market share of 23.5% and had a strong number two position in Total Lines with a market share of 28.9%.

NEC surpassed both Siemens and Mitel to claim the number three spot in Total Lines as well as Systems. NECÕs Total Lines shipments increased 11.3% and NEC held 11.9% of the Total Lines market, as well as 16.8% of the Systems market.

Key / Hybrid Market Analysis

Sales of smaller phone systems known as Key/Hybrid Systems were up 6.4% over last period with a total of 100,173 Systems shipped. Total Stations (lines) experienced a slightly weaker growth of 0.8% to 1.85 million over the fourth quarter.

Lucent once again secured the number one spot in sales of both Total Stations and Systems with a 23.8% and a 26.4% market share respectively. Nortel was a strong number two with 21.7% of the Total Stations market and 20% of the Systems market. Panasonic experienced robust growth in the Systems market and was number three with a market share of 9.6%. Inter-Tel remained in the number three position for Total Stations with 9.8% of the market.

Other performers in the Total Stations market were Toshiba and NEC with growth of 10.3% and 36.3% respectively over previous quarter.

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