High Speed Internet Access Provider ARESCOM Continues to Post Strong Revenue Growth

Low-cost solutions, unwavering commitment to the customer help Silicon Valley leader nearly double its annual revenues to $58 million in Fiscal 2002; FY 2003 looks even brighter

FREMONT, CALIF. — AUG. 16, 2002 — ARESCOM Inc., a global provider of High Speed Internet Access (HSIA) equipment and related services for the Hospitality, Residential Property, Telecommunication and ISP markets, continues to demonstrate strong revenue growth—posting an 87-percent gain in Fiscal 2002.

In Fiscal 2002, ended June 30, ARESCOM recorded revenue totaling approximately $58 million— $27 million more than the $31 million in sales the company generated the previous fiscal year.

Max Lu, ARESCOM President & Chief Executive Officer, said the firm’s solid Fiscal 2002 performance follows several consecutive years of triple-digit revenue growth. Lu said ARESCOM’s strategic growth plans call for significant revenue gains through new ventures such as the ARESCOM Hospitality Network (AHN)—a rapidly expanding provider of proven wired and wireless High Speed Internet Access (HSIA) solutions to business hotels—with zero installation/maintenance costs or HSIA billing or technical support headaches.

Financially Strong
“We’re poised for continued controlled growth because we’re the low-cost provider in HSIA and we have an unwavering commitment to developing and delivering customer-driven solutions,” Lu said. “Just as important as our proven people and products, we are financially sound.

“ARESCOM is in a select class in its competitive set because we have positive net income, positive cash flow and positive EBITDA, [Earnings Before Interest, Taxes, Depreciation and Amortization],” Lu said. “Customers across the nation can rest assured that ARESCOM will be here for them today, tomorrow and for many, many years to come.”

Scott Arey, ARESCOM’s Chief Financial Officer, said ongoing growth plans call for the expansion of select solutions and services, such as the warmly embraced AHN HSIA venture, to fully capitalize on the company’s low-cost provider position and existing customer relationships.

“As we expand our presence in select vertical markets, we are simultaneously tapping new vehicles to grow both our margins and our top-line revenue streams—an endeavor that will benefit all ARESCOM stakeholders, from our stockholders, management and associates, to our valued clients and growing network of strategic partners,” Arey said.

High-Speed Growth
Less than six months after its official launch, AHN has contracts in place to install ARESCOM’s hard-wired and/or wireless HSIA solutions at more than 100 lodging properties. Beta tests are in place at a number of properties, including some that are expected to serve as stepping-stones to chain-wide and/or company-wide agreements, Arey said.

“Our goal is to install our AHN High Speed Internet Access solutions at 1,000 business-class hotels across the nation by the close of 2003,” said Dave Egan, ARESCOM VP - Marketing. “Because we alone design and manufacture our own HSIA equipment and install it in hotels for free, we are well positioned to become the supplier of choice in this market. Just like our solid reputation and sustained revenue growth, we will build AHN by exceeding expectations one client, one guest request at a time.”

A recent Unisys study found that 92 percent of business travelers base their lodging choices on fast and easy Internet access. While the Unisys study found that 73 percent of hotels said they plan to install HSIA, less than 10 percent have done so to date.

Today’s leading providers of HSIA to hospitality boast installed bases of less than 500 properties. However, Egan said the slow adoption rate is more reflective of business models requiring hotels to invest tens of thousands of dollars and of vendors’ poor technical support limiting guests’ satisfaction and usage rates than anything else.

“Simply put: AHN is where supply-side solutions finally meet hoteliers’ HSIA demands”, Egan said. “When conducting customer focus groups, we found that two of the top barriers to HSIA adoption are that hotels find installation and monthly maintenance costs prohibitive—particularly in today’s weakened business travel markets—and supplier support severely lacking. With our on-line direct credit-card billing model and around-the-clock professional technical support, we are helping hotels meet guests’ demands and differentiate their properties and brands with zero risk or expense.

“Not only do we deliver free of charge a service that bolsters guest satisfaction, occupancy and loyalty among business travelers, but we also share a piece of the revenue pie with our growing installation base, our true partners,” he said. “We also have created a paradigm shift on the support side of HSIA. Because of our unique network management software, we can identify and correct connectivity issues before the guest even knows there’s an issue. At ARESCOM, we’re working hard to put hospitality back in HSIA, and it’s paying big dividends to our rapidly growing base of installed business-oriented hotels.”

About ARESCOM
Founded in the Silicon Valley, in 1996, ARESCOM designs, manufactures and markets a comprehensive line of broadband access solutions, ranging from the most sophisticated turnkey wired and wireless High Speed Internet Access solutions for the booming worldwide hospitality market, to state-of-the-art DSL and wireless solutions for homes and small businesses. Currently, ARESCOM’s DSL broadband access equipment is widely deployed by major telecommunication carriers, REITs, Hotels, ISPs and SOHOs throughout the U.S., Asia and Europe.

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© Copyright 2002 ARESCOM Inc. ARESCOM is a trademark of ARESCOM Inc. All other referenced product names are trademarks of their respective companies