SAN RAMON, Calif., May 21 /PRNewswire/ -- SBE, Inc. (Nasdaq: SBEI), a leading supplier of communications connectivity and specialized broadband solutions for servers and complex telecommunications systems, today reported results for the three and six months ended April 30, 1999. Total revenues for the second quarter were $3.8 million compared with $4.4 million for the second quarter ended April 30, 1998. The company reported a net loss for the quarter of $172,000 or ($0.06) per share compared with a net loss of $241,000 or ($0.09) per share for the same period last year. Total revenues for the six months ended April 30, 1999 were $10.3 million compared to $8.9 million for the same period a year ago. SBE posted net income of $1.1 million or $0.35 per share for the first six months of its fiscal 1999 compared to a net loss of $710,000 or ($0.27) for the same period a year ago. Gross margins for the second quarter of fiscal 1999 were 66 percent versus 63 percent in the second quarter of fiscal 1998. SBE continues to benefit from a favorable product mix and product cost reductions. Operating expenses in the second quarter of fiscal 1999 declined 10 percent from prior year levels as the company maintained an effective cost management program. William B. Heye, Jr., President and Chief Executive Officer of SBE, said, "Our results continue to be affected by our customer concentration. Although our sales to Compaq declined in the quarter, we have received a four-year parts commitment order and expect the dollar volume of sales to Compaq to be higher this year than last year. We are making progress toward our long-term goal to diversify our revenue base as sales to other customers increased approximately 50% during the quarter." Heye continued, "We are focused on meeting the needs of our existing customer base while marketing aggressively to new customers. We continued to keep expenses under control and in line with our revenue levels." "SBE is well positioned to take advantage of growth in the telecommunications sector. We expect strong orders over the next few quarters and anticipate returning to profitability in the third quarter," Heye concluded. About SBE, Inc. SBE, Inc., based in San Ramon, California, designs and markets data communications products for the telecommunications and networking markets. The company offers distinct product lines to meet the needs of the internetworking market including high-speed communications controllers for high-end systems and wide-area network interface adapters for workstations and servers. The products are sold worldwide through direct sales and distribution channels. SBE can be reached at 925-355-2000 or via the World Wide Web at www.sbei.com. NOTE: SBE, and the SBE logo are registered trademarks of SBE, Inc. Except for historical information contained herein, this news release may be deemed to contain forward-looking statements that involve risks and uncertainties. The company's actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those detailed from time to time in the company's reports to the Securities and Exchange Commission, including the company's Form 10-K Annual Report for fiscal 1998, particularly the section entitled "Business -- Risk Factors" in such Report. SBE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the three and six months ended April 30, 1999 and 1998 (In thousands, except per share amounts) (Unaudited) Three months ended Six months ended April 30, April 30, 1999 1998 1999 1998 Net sales $3,760 $4,412 $10,278 $8,857 Cost of sales 1,277 1,644 3,528 3,366 Gross profit 2,483 2,768 6,750 5,491 Product research and development 1,218 958 2,223 2,086 Sales and marketing 971 1,221 1,958 2,547 General and administrative 536 856 1,569 1,647 Total operating expenses 2,725 3,035 5,750 6,280 Operating income (loss) (242) (267) 1,000 (789) Interest and other income, net 60 26 99 79 Income (loss) before income taxes (182) (241) 1,099 (710) Provision for income taxes 10 -- (41) -- Net income (loss) $(172) $(241) $1,058 $(710) Basic earnings (loss) per share $(0.06) $(0.09) $0.37 $(0.27) Diluted earnings (loss) per share $(0.06) $(0.09) $0.35 $(0.27) Basic - Shares used in per share computations 2,870 2,661 2,846 2,656 Diluted - Shares used in per share computations 2,870 2,661 3,007 2,656 SBE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS April 30, 1999 and October 31, 1998 (In thousands) April 30, October 31, 1999 1998 (Unaudited) ASSETS Current assets: Cash and cash equivalents $3,335 $3,381 Restricted cash* 2,716 -- Trade accounts receivable, net 1,863 3,837 Inventories 1,538 1,754 Deferred income taxes 240 240 Other 248 417 Total current assets 9,940 9,629 Property, plant and equipment, net 1,154 1,330 Capitalized software costs, net 260 185 Other 39 39 Total assets $11,393 $11,183 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $531 $1,375 Accrued payroll and employee benefits 322 321 Other accrued expenses 249 323 Total current liabilities 1,102 2,019 Deferred tax liabilities 240 240 Deferred rent 377 391 Total liabilities 1,719 2,650 Stockholders' equity: Common stock 10,843 10,016 Note receivable from stockholder (744) -- Accumulated deficit (425) (1,483) Total stockholders' equity 9,674 8,533 Total liabilities and stockholders' equity $11,393 $11,183 * Security for Compaq parts commitment order  