STOCKREPORTS		 Network Equipment Technologies, Inc. NYSE Symbol NWK
In S&P SmallCap 600
19-JUL-97 Industry:
Computers (Networking)		 Summary: This company is a leading supplier of multiservice backbone networks for information-intensive organizations worldwide.

Recent Price 18.75
52 Wk Range 20.75 - 11.38		 Yield Nil
12-Mo. P/E 16.6

Quantitative Evaluation:
Outlook (1 Lowest - 5 Highest)
5
Fair Value
24.10
Risk
HIGH
Earn/Div Rank
B
Technical Evaluation:
BULLISH since 05/97
Rel. Strength Rank (1 Lowest - 99 Highest)
76
Insider Activity
NA

Business Profile 05-MAR-97

NWK's products and services provide sophisticated, high-value-added transmission, network management, connectivity applications and solutions. After establishing what it believes is a solid worldwide market for its product platforms, the company is focusing on expanding its presence through the delivery of new products to the market. In February 1997, NWK introduced its Promina ATM product family, designed for mission critical multiservice applications in the growing ATM wide area network market. The company also recently began to offer enhanced versions of its frame relay, ISDN and voice compression products.

Operation Review 05-MAR-97

Revenues in the nine months ended December 29, 1996, were down 3.6%, year to year, reflecting declines in both product and service receipts. Gross margins narrowed, as an increased proportion of lower margin products outweighed a decline in the cost of providing services. With higher spending on both sales and marketing and research and development, partly offset by a sharp decline in interest expense, pretax income fell 27%. After taxes at 34.9%, versus 35.0%, income was down 26%, to $16,243,000 ($0.76 a share, on 4.1% more shares), from $22,085,000 ($1.07). Results in the 1996 period exclude a gain of $444,000 ($0.02) on the repurchase of debentures.

Stock Performance 18-JUL-97n

In the past 30 trading days, NWK's shares have increased 5%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 135,340 shares, compared with the 40-day moving average of 97,029 shares.

Key Stock Statistics

Dividend Rate/Share Nil
Shs. outstg. (M) 21.0
Avg. daily vol. (M) 0.110
Tang. Bk. Value/Share 10.11
Beta 2.34
Shareholders 900
Market cap. (B) $0.395
Inst. holdings 78%
Value of $10,000 invested 5 years ago:$ 11,904

Fiscal Year Ending Mar. 31

Revenue (Million $)
1998 1997 1996 1995 1994 1993
Q1 79.97 76.47 79.61 61.54 54.58 51.40
Q2 NA 78.40 82.96 66.85 55.01 54.00
Q3 NA 83.30 84.56 73.84 61.25 56.10
Q4 NA 86.27 91.77 81.81 66.84 57.31
Year NA 324.4 338.9 284.0 237.7 218.9

Earning Per Share ($)
1998 1997 1996 1995 1994 1993
Q1 0.26 0.21 0.32 0.08 -0.06 0.10
Q2 NA 0.24 0.36 0.16 -0.09 79.61
Q3 NA 0.31 0.39 0.27 0.02 0.08
Q4 NA 0.33 0.43 0.87 -0.24 -0.97
Year NA 1.08 1.50 1.44 -0.38 -0.71

Dividend Data: No cash has been paid. A "poison pill" stock purchase rights plan was adopted in 1989.

Business Summary 05-MAR-97

Network Equipment Technologies is a leading supplier of multiservice backbone networks for enterprises and carriers in more than 50 countries. Customers include financial, airline, manufacturing, service, government and telecommunications organizations. The company's products manage business communications traffic for wide-area networks (WANs) and are backed by an extensive service and support infrastructure.

NWK produces hardware and software network systems, offering sophisticated bandwidth management, connectivity, transmission and network management.

The company's IDNX multiservice bandwidth managers allow users of voice, data image and video communications to achieve full potential from WANs in a highly cost-effective manner. There are three main product types of multiprotocol routers: the LAN/WAN Exchange module interconnects geographically dispersed LANs over a WAN; the FrameXpress products allow the integration of traffic from many different sources onto a consolidated frame-relay or multiservice backbone network; and the Integrated Services Digital Network Exchange module enables a variety of devices to connect to the multiservice backbone network via a Primary Rate Interface.

SONET Transmission Manager broadband switches provide advanced networking functionality for broadband communications.

NetOpen network management systems enhance customers' ability to control and monitor a network and to diagnose and respond to changes or failures in equipment and transmission resources.

NWK has agreements with IBM that give IBM nonexclusive, worldwide marketing, installation and service rights for current and future releases of the company's IDNX multiservice bandwidth managers and certain related products. During FY 96, the U.S. Government and its agencies accounted for 34% of total revenues (32% the year before); international sales accounted for 27% (28%).

In July 1996, directors authorized the repurchase of all outstanding 7.25% convertible subordinated debentures, and up to 10% of the common stock.

Capitalization

Long Term Debt: $28,821,000 of 7.25% sub. debs., conv. into com. at $31.50 a sh. (12/96).
Options: To purchase 2,634,688 shs. at $5.25 to $40.50 ea. (3/96).

Per Share Data ($)
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Tangible Bk. Val. 10.11 8.85 5.43 3.45 3.82 4.15 4.29 7.45 6.21 4.93
Cash Flow 1.89 2.25 2.23 0.56 0.28 0.17 -2.65 1.55 1.65 1.17
Earnings 1.08 1.50 1.44 -0.38 -0.71 -0.76 -3.47 0.93 1.15 0.86
Dividends Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Payout Ratio Nil Nil Nil Nil NA Nil Nil Nil Nil Nil
Cal. Yrs. 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Prices - High 36 42 24 3/4 11 1/2 18 1/4 15 7/8 34 3/8 31 7/8 22 5/8 28
- Low 11 1/8 19 3/4 7 3/8 5 3/8 8 7/8 4 5 16 1/2 14 11 3/8
P/E Ratio - High 33 28 17 NM NA NM NM 34 20 33
- Low 10 13 5 NM NA NM NM 18 12 13

Income Statement Analysis (Million $)
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Revs. 324 339 284 238 219 181 135 181 137 91.0
Oper. Inc. 49.8 62.9 40.8 13.5 25.4 17.4 -30.3 30.8 33.7 21.8
Depr. 17.4 15.5 14.8 15.8 15.5 13.7 11.6 9.1 7.0 4.3
Int. Exp. 2.3 4.7 5.2 5.3 5.3 5.8 6.2 6.3 1.8 1.1
Pretax Inc. 35.8 48.2 23.3 -6.3 -11.1 -12.6 -58.8 21.4 26.6 18.3
Eff. Tax Rate 35% 35% NM NM NM NM NM 37% 40% 35%
Net Inc. 23.3 31.4 27.1 -6.3 -11.1 -11.2 -49.6 13.5 16.0 11.9

Balance Sheet & Other Fin. Data (Million $)
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Cash 139 112 86.6 41.6 52.1 44.8 49.8 66.6 20.4 31.5
Curr. Assets 258 238 190 137 132 118 111 159 69.0 68.0
Total Assets 62.9 282 232 187 187 177 170 234 122 99
Curr. Liab. 25.8 64.0 61.8 59.1 54.8 42.9 34.6 42.7 26.7 22.7
LT Debt 25.8 33.5 68.6 68.6 68.7 69.8 71.5 80.3 8.4 10.8
Common Eqty. 213 184 102 59.0 61.0 64.0 62.0 105 84.0 65.0
Total Cap. 292 218 170 128 132 134 135 191 95.0 76.0
Cap. Exp. 13.9 17.2 8.3 14.2 15.2 11.1 10.1 20.7 17.9 15.5
Cash Flow 40.7 46.8 41.9 9.4 4.4 2.4 -38.0 22.6 23.0 16.2

Curr. Ratio 4.1 3.7 3.1 2.3 2.4 2.8 3.2 3.7 2.6 3.0
% LT Debt of Cap. 10.8 15.4 40.3 53.7 52.1 52.2 52.8 42.1 8.9 14.2
% Net Inc.of Revs. 7.2 9.3 9.5 NM NM NM NM 7.5 11.7 13.1
% Ret. on Assets 8.0 12.2 12.4 NM NM NM NM 7.4 14.4 14.4
% Ret. on Equity 11.7 21.9 32.6 NM NM NM NM 14.0 21.3 20.6

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--800 Saginaw Dr., Redwood City, CA 94063. Tel--(415) 366-4400. Fax--(415) 366-5675. Website--http://www.net.com Chrmn--H.A. Wolf. Pres & CEO--J. J. Francesconi. SVP, CFO, Secy & Investor Contact--Craig M. Gentner. Dirs--D. R. Doll, J. K. Dutton, J. J. Francesconi, W. J. Gill, H. A. Wolf. Transfer Agent & Registrar--First National Bank of Boston. Incorporated--in California in 1983; reincorporated in Delaware in 1987. Empl-- 1,318. S&P Analyst: D.P.B.


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