Sales on par with released forecast - the first design within the Xpeedium3 family completed

Sales on par with released forecast - the first design within the Xpeedium3 family completedFinancial statement January 1-December 31, 2006 for SwitchCore AB (publ) Corporate Identity Number 556541-8869SummaryThe Group's sales for the period totaled SEK 59.4 million (108.2) which is on par with released forecast in the 3Q report. Sales calculated in USD amounted to 8.0 million (14.5). 4Q sales reached SEK 8.4 million (15.3) with sales calculated in USD reaching 1.2 million (1.9). The Group's operating loss for the period was SEK 80.0 million (-27.8). Loss after taxes amounted to SEK 79.1 million (-27.8). The loss per share was SEK 0.13 (-0.13). The Group's operating loss for 4Q totaled SEK 32.2 million (-9.9). Loss after taxes amounted to SEK 32.3 million (-10.4). The loss per share was SEK 0.05 (0.05). Orders received during the period reached SEK 56 million (82), with orders received during 4Q reaching SEK 6 million (15). The variation between the years' figures is attributed to a generally lower demand for the company's products. Liquid funds stood at SEK 96.4 million (16,1) at the close of the period. Development of SwitchCore's third product generation, Xpeedium3 is progressing according to plan The first design is now completed and will be launched in the spring 2007. SwitchCore will reduce the number of consultants in tune with the completion of the Xpeedium3 products, thereby reducing the company's costs during the first six months of 2007. The drop in sales during 2006 and the current sales level will remain until Xpeedium3 start generating revenues. The company is actively working to develop partnerships with industrial and financial partners to accelerate growth. General information about the business: SwitchCore AB develops, markets and sells integrated network devices for data, voice and video communication based on the Ethernet standard. The core of SwitchCore's expertise is in its CXE technology, which allows for significantly higher network product capacity. Using SwitchCore's components, customers can develop network products that cost-efficiently manage and prioritize data, video and voice traffic for many demanding applications. Customers and partners are network equipment manufacturers and suppliers, including Intel, Allied Telesyn, Huawei/3Com, Alloptic, Fiberhome, Flextronics, Keymile and World Wide Packets. The Group presently has about 55 employees and some 45 consultants contracted. SwitchCore's headquarters is in Lund, Sweden. The Company also has offices in San Jose, USA, as well as Singapore and Shanghai in Asia and Rotterdam in Europe. The Company is listed on Stockholm Stock Exchange's Nordic List under Smaller Companies under the SCOR ticker. For more information visit http://www.switchcore.com/ Footnote: The figures in parenthesis (xx) correspond to the figures for the same period last year. Comments by the CEO"SwitchCore has made important progress in the development of the next product generation, Xpeedium3. We completed the first product, a Network Search Engine that is a device for quick searches in address lists based on our in-house designed CAM technology around the end of last year, which is very satisfying. We will now continue to work unrelentingly on the other Xpeedium3 products and predict that they will be ready for a market launch around the end of 2007. "We received our first volume order for Xpeedium2Pro from the Austrian company, Keymile in 2006. We have also entered a partnership with Fujitsu Microelectronic Europe to provide advanced Metro, Access and Core network solutions. Our two companies' products complement each others' well and together give our customers a stronger product range. "The sales figures for 2006 are disappointing. The Xpeedium family has been a success but is now declining. That together with the lower sales of Xpeedium and Xpeedium2pro, explains the drop in sales. "Finally I`m happy to say that we have employed Johan Ericsson as VP of Engineering and Matz Öhlén as VP of Strategic Marketing. Sales and results for the period The Group's net sales for the period amounted to SEK 59.4 million (108.2). Billing in USD reached 8 million (14.5). OEM sales to Intel made up 40 percent (30) of the total sales. SwitchCore complies with IAS1 as of January 1, 2005. This means the Group will separately account for capitalized development costs among the Group's earnings, in total SEK 92.8 million (26.2). The sum is not included in the above net sales. The gross profit margin for the period was 41 percent (53). The drop in margin is due to increased inventory write- offs of 7 MSEK. The Group's operating loss was SEK 80.0 million (-27.8). A total of SEK 40.8 million (17.4) for R&D costs brought forward were depreciated in 4Q. Results were negatively affected by declining sales, write-offs in inventory and the company's decision to accelerate the depreciation rate of Xpeedium 2, which has been written off in full from the turn of 2006/2007. USD exposure in the net operating loss amounts to about 0 percent of sales since all billing is issued in USD and most of the company's operating costs are in USD. The Group's results for the period include a foreign exchange profit/loss of SEK 0.1 million (0.5). The loss after tax was SEK 79.1 million (-27.8). Loss per share was SEK 0.13 (-0.13). 4Q sales and resultsThe Group's 4Q sales amounted to SEK 8.4 million (15.3). Sales calculated in USD totaAttachment: Financial statement January 1-December 31, 2006Text version / Internet version / Print / Close