Eagle Broadband First Quarter Results Reflect Accelerating Momentum and Sequential Quarterly Revenue Growth

LEAGUE CITY, Texas--(BUSINESS WIRE)--Jan. 14, 2004--

Recent Restructuring Yields Strengthened Balance Sheet, Improved Margins and Dramatically Improved Cash Position

Eagle Broadband, Inc. (AMEX:EAG), a leading provider of broadband and communications products and services, announced today that the company has filed its Form 10-Q with the Securities and Exchange Commission reporting results for the company's first quarter 2004 ended November 30, 2003.

Revenues for the first quarter were approximately $2.4 million, which represents a sequential quarter-to-quarter increase of 16%, compared to revenues of approximately $2.1 million in the quarter ending August 30, 2003. Revenues from the same quarter last year were $4.6M, a decrease of 48%, primarily attributable to discontinuing sales of low-margin commodity computer products and a decline in structured wiring sales as the company continues its shift to higher-margin product sales (i.e., Orb' Phone Exchange, set-top boxes, etc.) and recurring services sales (i.e., voice, video, data and security services, etc.).

Overall, the company posted a net loss of $8.5 million versus a net loss of $831,000 in the same period a year ago. The net loss included non-cash interest and depreciation charges of $7.7 million resulting in EBITDA of negative $767,000. The company's net cash used by operating activities for the entire quarter declined to $490,000 from the same period in fiscal year 2003.

Dave Weisman, CEO of Eagle Broadband, commented, "When I started as CEO in October 2003, I said we would focus on fully meeting customer needs in order to drive profitable revenue growth. I am very encouraged by the results of our first fiscal quarter which demonstrate that our recent restructuring and increased sales focus is starting to pay off. During the quarter we grew our core bundled digital services revenues, announced key new channel partners and further reduced our liabilities. We believe that the steps we have taken to improve our execution and financial performance sets the stage for further improvements over the remainder of our 2004 fiscal year."

Weisman added, "We have the products and services, for the right markets at the right time. Our core bundled digital voice, video, data and security services, along with our new Orb' Phone Exchange satellite communications platform and our HDTV set-top boxes should be key growth engines in the coming quarters. We are continuing to grow our sales pipelines and remain focused on delivering profitable revenue growth."

Key operational and financial highlights for the quarter included:

-- 16% quarter-over-quarter revenue growth (Q4 2003 to Q1 2004).

-- 132% growth in core bundled digital services revenues (Q1 2004 compared to Q1 2003).

-- 197% improvement in cash position from $2.5 million at 8/31/03 to $7.5 million at 11/30/03.

-- Increase in gross margins from 43% to 46% (Q1 2004 compared to Q1 2003).

-- Substantial reductions in litigation outstanding and other liabilities.

-- The company's net cash used by operating activities for the entire quarter declined to $490,000 from the same period in fiscal year 2003, despite cash used to finance working capital increases for receivables and inventory required to grow the business.

-- Implementation of a major restructuring plan which began on 10/1/03 to streamline the organization, reduce costs and invest in key businesses to drive profitable revenue growth.

-- New financing and completion of a $10.6 million bond offering ($3.9 million of which was raised in the fiscal 2004 first quarter) providing capital needed to reduce liabilities and invest in key businesses.

-- Addition of key management personnel including a new CEO and Vice President of Marketing.

-- New contract awards from key customers including Truckee Donner Public Utility District, Lake Las Vegas and North Peak Construction.

-- Launch of our new Orb' Phone Exchange satellite communications platform and signing General Dynamics as a key distribution partner.

-- Launch of our new HDTV multimedia set-top box and software platform for broadband and hospitality markets.

Eagle Broadband will be hosting a conference call on Tuesday, January 20, 2004 at 4:00 p.m. EST to discuss the first quarter results and update Eagle shareholders on recent progress in executing the company's new business plan and positive new company developments. Participants will be able to gain access via the Internet or by dialing in to a conference bridge. Specific instructions on how to access the call will be posted on the Investor Relations section of the Eagle Broadband web site at http://www.eaglebroadband.com/investor/investor.htm on Friday, January 16, 2004.

About Eagle Broadband

Eagle Broadband, Inc., is a leading provider of broadband, communications and enterprise management products and services. Eagle's exclusive "four-play" suite of very high-speed Internet, cable TV/video, voice and security monitoring Bundled Digital Services (BDS(SM)), HDTV-ready multimedia set-top boxes, and turnkey suite of financing, network design, deployment and operational services enable municipalities, real estate developers, hotels, multi-tenant owners and service providers to deliver exceptional value, state-of-the-art entertainment and communications choices and single-bill convenience to their residential and business customers. Eagle has extensive "last mile" cable and fiber installation capabilities and provides complete IT business integration and enterprise management solutions including network security, intrusion detection, anti-virus protection, managed firewall and content filtering to Fortune 1000 companies. Eagle also markets the Orb' Phone Exchange non-line-of-sight communications system that provides true "total" global voice and data communications services through the Iridium Satellite constellation to Fortune 1000 enterprises, commercial aviation, government, military and homeland security customers. The company is headquartered in League City, Texas, south of Houston, near the NASA Johnson Space Center. For more information, please visit www.eaglebroadband.com or call 281-538-6000.

Forward-looking statements in this release regarding Eagle Broadband, Inc., and its subsidiaries are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the company's products, increased levels of competition, new products and technological changes, the company's dependence upon third-party suppliers, intellectual property rights, and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.