Exceeds Fourth Quarter Guidance

Revenue Increases 15% Over Third Quarter

Veraz Networks, Inc. (NASDAQ:VRAZ), the leading provider of Multimedia Generation Network (MGN) application, control, and bandwidth optimization products, today announced financial results for the fourth quarter and full year ended December 31, 2008.

Financial Highlights

• Revenues were $26.3 million, exceeding the previous management guidance range of $22 million to $24 million.
• Total gross margin percentage for the fourth quarter of 2008 strengthened to 60%, the highest gross margin percentage in six quarters. In addition, the IP product gross margin percentage was 65%, which is the highest quarterly performance in the history of Veraz.
• Net loss was ($0.9 million) or ($0.02) loss per share, which was lower than the previous management guidance range of ($3 million to $2 million), or ($0.07 to $0.05) loss per share. On a non-GAAP basis, Veraz recorded a net profit of $0.6 million, or $0.01 earnings per share (basic and fully diluted), which was better than the previous management guidance range of a non-GAAP net loss of ($2 million to $1 million), or ($0.05 to $0.02) loss per share.
• Veraz returned to positive cash flow from operations in the fourth quarter recording $4.1 million cash provided by operations, which was better than the previous management guidance range of a fourth quarter net cash used in operations of ($2 million to $3 million). As of the end of 2008, cash, cash equivalents and investments were $38.6 million and the company had no debt.

“I am pleased to report that Veraz delivered better than expected quarterly results as we ended 2008,” said Doug Sabella, Chief Executive Officer of Veraz Networks. “Our switching and bandwidth optimization solutions continued to deliver strong value to our customers, resulting in expansions with our existing customers as well as the addition of new customers.”

Recent Highlights

Veraz continues to make significant progress in both increased market penetration and new product innovation in the fourth quarter of 2008.

• Veraz announced the availability of SmartLink, an end-to-end bandwidth optimization solution to lower operating expenses for wireless service providers utilizing Veraz's I-Gate 4000 family of media gateways.
• Veraz launched its I-Gate 4000 EDGE SIP Gateway offering a migration path to IP networking without the need to forklift existing infrastructure.
• Veraz announced deployments of its Network-adaptive Border Controller (N-aBC), a next generation Session Border Controller, with Dollar Phone Corp. and Digicel Group.
• Veraz continued its progress in penetrating the Brazilian market. In the fourth quarter of 2008, Telecom Italia Mobile – Brazil (TIM) deployed our bandwidth optimization solutions, contributing greater than 10% of the company’s revenue. As of the end of 2008, the top three wireless providers in Brazil have deployed Veraz IP solutions.
• One of the largest mobile operators in Asia awarded their global Class 4 switching project to Veraz.
• Veraz grew its IP customer base to over 115 customers, with product deployments in over 80 countries, and added three new switching customers in the fourth quarter 2008.

“The wireless market is increasingly embracing Veraz solutions,” said Sabella. “Today, our customers include 3 of the top 5, and 7 of the top 20 wireless providers in the world, operating in some of the fastest growing markets for mobile communications. Although the global economy continues to face challenges, we expect that wireless communications will continue to grow around the globe, and we are well positioned to take advantage of this growth.”

Financial Guidance

The company projects revenues for the first quarter of 2009 to be in the range of $21 million to $23 million, and a net loss on a GAAP basis of ($4 million to $3 million) or ($0.10 to $0.07) loss per share; and on a non-GAAP basis, a net loss of ($3 million to $2 million) or ($0.07 to $0.05) loss per share (after excluding stock compensation and SEC investigation expenses).

Conference Call Information

Veraz will host a conference call and live webcast at 4:30 p.m. (1:30 p.m. Pacific Time) this afternoon to discuss the results and the Company’s projected financial guidance. For parties in the United States and Canada, call 1-800-860-2442 to access the conference call. International parties can access the call at +1-412-858-4600. Veraz will offer a live webcast of the conference call, which will also include forward-looking information. The webcast will be accessible from the "Investor Relations" section of the Veraz website (www.veraznetworks.com). The webcast will be archived for a period of 30 days. A telephonic replay of the conference call will also be available two hours after the call and will run for eight days. To hear the replay, parties in the United States and Canada should call 1-877-344-7529 and enter passcode 428204#. International parties should call +1-412-317-0088 and enter passcode 428204#. In addition, Veraz's press release will be distributed via Business Wire and posted on the Veraz website before the conference call begins.

About Veraz Networks

Veraz Networks, Inc. (NASDAQ: VRAZ), is the leading provider of application, control, and bandwidth optimization products that enable the evolution to the Multimedia Generation Network (MGN). Service providers worldwide use the Veraz MGN portfolio to extend their current application suite and rapidly add customized multimedia services that drive revenue and ensure customer retention. The Veraz MGN separates the control, media, and application layers while unifying management of the network, thereby increasing service provider operating efficiency. Wireline and wireless service providers in over 60 countries have deployed products from the Veraz MGN portfolio, which includes the ControlSwitch(TM), Network-adaptive Border Controller, I-Gate 4000 Media Gateways, the VerazView Management System, and a set of prepackaged applications. Please visit www.veraznetworks.com.

Use of Non-GAAP Financial Measures

Some of the measures in this press release are non-GAAP financial measures within the meaning of the SEC Regulation G. Veraz believes that presenting non-GAAP net (loss) income and non-GAAP net (loss) income allocable to common stockholders is useful to investors, because it describes the operating performance of Veraz. Veraz management uses these non-GAAP measures as important indicators of the company's past performance and in planning and forecasting performance in future periods. The non-GAAP financial information Veraz presents may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP. You are encouraged to review the reconciliation of non-GAAP financial measures to GAAP financial measures included elsewhere in this press release.

In respect of the foregoing, Veraz provides the following supplemental information to provide additional context for the use and consideration of the non-GAAP financial measures used elsewhere in this press release:

-- Stock-based compensation. These expenses consist of expenses for employee stock options, restricted stock units and employee stock purchases under SFAS 123(R). Veraz excludes stock-based compensation expenses from our non-GAAP measures primarily because they are non-cash expenses. As Veraz applies SFAS 123(R), it believes that it is useful to its investors to understand the impact of the application of SFAS 123(R) to its operational performance, liquidity and its ability to invest in research and development and fund acquisitions and capital expenditures. While stock-based compensation expense calculated in accordance with SFAS 123(R) constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by Veraz and because such expense is not used by management to assess the core profitability of our business operations. Veraz further believes these measures are useful to investors in that they allow for greater transparency to certain line items in our financial statements. In addition, excluding this item from various non-GAAP measures facilitates comparisons to our competitors' operating results.

-- SEC investigation expense. Due to the one-time nature and magnitude of expense associated with the SEC investigation, Veraz excludes such expenses from its non-GAAP measures primarily because they are not indicative of ongoing operating results. Further, excluding this item from non-GAAP measures facilitates management's internal comparisons to our historical operating results.

-- Restructuring charges. Due to the nature of these involuntary employee terminations, which are in connection with the operational restructuring of the business, Veraz excludes such expenses from its non-GAAP measures primarily because they are not indicative of ongoing operating results. Further, excluding this item from non-GAAP measures facilitates management's internal comparisons to our historical operating results.

This press release may contain forward-looking statements regarding future events that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. These forward-looking statements involve risks and uncertainties, as well as assumptions that if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include but are not limited to our expected financial results for the first quarter, the expected gross margins for Veraz and other risks and uncertainties described more fully in our documents filed with or furnished to the SEC. More information about these and other risks that may impact Veraz' business is set forth in the "Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2007 and our quarterly report on 10-Q for the quarter ended September 30, 2008 as filed with the SEC. These filings are available on a website maintained by the SEC at http://www.sec.gov/. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

A copy of this press release can be found on the investor relations page of Veraz' website at www.veraznetworks.com.

Veraz Networks, Veraz, and ControlSwitch are registered trademarks of Veraz Networks, Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

Veraz Networks, Inc.