BILLERICA, MA, May 7, 2008 - CSP Inc. (NASDAQ: CSPI), a provider of IT solutions, systems integration services and dense cluster computing systems, today reported financial results for the three and six months ended March 31, 2008.

For the second quarter of fiscal 2008, CSP Inc. sales increased to $21.6 million from $18.8 million in the second quarter of fiscal 2007. Net income for the second quarter of fiscal 2008 was $189,000, or $0.05 per diluted share, compared with net income of $255,000, or $0.07 per diluted share, in the second quarter of fiscal 2007.

For the first six months of fiscal 2008, CSP Inc. sales were $39.6 million compared with $39.9 million in the first six months of fiscal 2007. Net loss for the fiscal 2008 six-month period was $70 thousand, or $0.02 per share, compared with net income of $1.2 million, or $0.32 per diluted share, for the fiscal 2007 six-month period.

In addition to the transfer of $4.8 million to non-current investments, the Company's receivables increased by $6.2 million as a result of the timing of shipments at the close of the quarter.

"CSP Inc. achieved 15% year-over-year sales growth primarily due to the strength of its Service and Systems Integration business," stated Alexander R. Lupinetti, CSP chairman and chief executive officer. "The investments that we have made in this business are paying excellent dividends. We returned to profitability in the quarter, although the bottom-line year-over-year comparison was affected by sales mix as the year-ago quarter included a greater amount of high-margin Systems business."

"As we have stated previously, the current military conflicts have shifted priorities away from strategic programs and have tempered our expectations for our Systems business for the near term," said Lupinetti. "For fiscal 2008, we expect to report revenue from a number of smaller multicomputer contracts rather than the large contracts that we have received in the past. As a result of some contract delays earlier in the fiscal year, we anticipate that our Systems business will report improved results in the second half of the year compared with the first half."

"Our Service and Systems Integration German subsidiary continued to report excellent results," said Lupinetti. "The Lifecycle Management, Archiving and Network Migration professional consulting practice we initiated last year has performed very well, with our consultants fully utilized at premium rates. Our security practice also continues to drive growth for our German subsidiary. Greater awareness for the need for security solutions and the scarcity of consulting talent in this area is creating strong demand for our expertise."

"MODCOMP's U.S.-based Systems and Solutions Division (SSD), which provides IT infrastructure solutions, also performed well in the quarter," added Lupinetti. "Our initiative to bolster our staff at this division to capitalize on demand has been very successful, and has resulted in a measurable increase in sales. Our U.K. operation continues to report profitable growth as a result of the restructuring program we completed in the third quarter of last year."

"We believe that we will continue to see a healthy demand environment across our Service and Systems Integration business in the second half of the year. We expect that our utilization rates and pricing will remain strong in Germany, and that our expanded sales force at the Systems & Solution Division will continue to grow our revenue in the U.S."

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