Revenue for the third quarter was $11.6 million, an increase of 2 percent from $11.4 million reported in the second quarter and a decrease of 16 percent compared with $13.8 million reported in the prior year’s third quarter. The company reported net income of $691,000, or $0.02 per share, compared with a net loss of $1.2 million, or $0.03 per share, in the second quarter, and net income of $246,000 or $0.01 per share, in the previous year’s third quarter. The company took a one-time litigation charge of $725,000, or $0.02 per share, pursuant to a complete settlement agreement with Paradyne Corporation and Zhone Technologies, Inc.

The company exited the quarter with $10.3 million in cash and cash equivalents. Accounts receivable of $7.9 million at September 30, 2005 represented 63 days sales outstanding.

“We are pleased with our third quarter performance, as revenue from our Ethernet appliances doubled from the previous quarter and our application performance management software modules continued to see strong demand,” said Larry Barker, President and CEO of Visual Networks. “The solid market adoption of our new technologies positions us for growth as four of our major service provider channels – AT&T, SBC, MCI and Verizon – enter the final phases of their merger processes.”

Third Quarter Highlights:

• Added over 20 new enterprise customers;
  
• Recorded approximately 25 percent of quarterly revenues from sales of newest products – Ethernet appliances and application performance management and Voice over Internet Protocol (VoIP) software modules;
  
• Returned to profitability;
  
• Hired Daniel Kim as director of sales for new Asia/Pacific operations;
  
• Announced forthcoming release of Select Bandwidth Manager for Citrix Presentation Server which provides granular visibility into Citrix application protocols;
  
• Launched VoIP Planner, new synthetic call generation solution for VoIP;
  
• Introduced VoIP Advisor product bundle for distribution by our VAR partners;
  
• Passed our ISO 9001 Surveillance Audit;
  
• Raised $10 million dollars in a private placement;
  
• Settled outstanding IP litigation via agreement with Paradyne Corporation and Zhone Technologies, Inc; and
  
• Addressed nearly 300 prospective customers at events in Chicago and Philadelphia as presenting sponsor of Network World's VoIP technology tour.

Future Expectations
The company expects fourth quarter revenue to be in the range of $12.0 to $13.0 million and EPS to be in the range of $0.02 and $0.04.

Broadcast of Third Quarter Results
Visual Networks’ management will host a discussion of this afternoon’s announcement with investors and financial analysts today, Thursday, October 20, 2005 at 4:45 p.m. (EDT). To participate in the teleconference, please dial 617.614.4925 and enter passcode 20656386. A live web cast of the call will also be available at http://www.visualnetworks.com/news.

For those unable to listen to the live call, a replay will be available from 6:45 PM EDT on October 20, 2005 until 6:45 p.m. EDT on October 22, 2005 by dialing 617-801-6888 and entering passcode 93791602. An archive of the call will be available online shortly following the conclusion of the live call on Visual Networks' Web site at http://www.visualnetworks.com/news.

About Visual Networks
Visual Networks, Inc. (Nasdaq: VNWK) is a leading provider of network and application performance management solutions. The company’s technologies enable enterprises to reliably and securely manage the delivery and performance of key applications such as Voice over IP (VoIP) across their infrastructures. Visual Networks' products increase application and network availability, optimize the use of bandwidth across the network, and reduce operating costs across traditional and IP-based infrastructures. For more information, visit http://www.visualnetworks.com.

Note to Investors
This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. The forward-looking information is based upon current information and expectations regarding Visual Networks and its subsidiaries. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such forward-looking statements.

Visual Networks assumes no obligation to update the information contained in this press release. Visual Networks' future results may be impacted by risks associated with market acceptance of Visual UpTime Select, fluctuations in IT budgets and spending, issues related to the Company’s distribution channels , rapid technological change and the emerging services market, potential fluctuations in quarterly operating results, its dependence upon sole and limited source suppliers and fluctuations in component pricing and availability, its dependence upon key employees, and its ability to retain employees. Visual Networks' future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K.

Source: Visual Networks