SOMERA COMMUNICATIONS INC, S-1/A, 1999-10-27

SOMERA COMMUNICATIONS INC
S-1/A, 1999-10-27
ELECTRONIC PARTS & EQUIPMENT, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on October 27, 1999
Registration No. 333-86927
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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SOMERA COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)

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Delaware 5065 77-0521878
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)

5383 Hollister Avenue
Santa Barbara, California 93111
(805) 681-3322
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

DAN FIRESTONE
Chief Executive Officer
Somera Communications, Inc.
5383 Hollister Avenue
Santa Barbara, California 93111
(805) 681-3322
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:

Jeffrey D. Saper, Esq. Patrick A. Pohlen, Esq.
Richard Jay Silverstein, Esq. COOLEY GODWARD LLP
Craig N. Lang, Esq. 5 Palo Alto Square
WILSON SONSINI GOODRICH & ROSATI 3000 El Camino Real
Professional Corporation Palo Alto, CA 94306
650 Page Mill Road (650) 843-5000
Palo Alto, CA 94304
(650) 493-9300

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion, dated October 27, 1999

PROSPECTUS

8,500,000 Shares

[LOGO OF SOMERA]

Common Stock

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This is our initial public offering of shares of common stock. We are
offering 8,500,000 shares. No public market currently exists for our shares.

We propose to list our common stock on the Nasdaq National Market under the
symbol "SMRA." Anticipated price range of $11.00 to $13.00 per share.

Investing in the shares involves risks. "Risk Factors" begin on page 6.

<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Public Offering Price............................................... $ $
Underwriting Discount............................................... $ $
Proceeds to Somera Communications................................... $ $
</TABLE>

We have granted the underwriters a 30-day option to purchase up to 1,275,000
additional shares of common stock on the same terms and conditions as set forth
above solely to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

Lehman Brothers expects to deliver the shares on or about , 1999.

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Lehman Brothers

Dain Rauscher Wessels
a division of Dain Rauscher Incorporated

Thomas Weisel Partners LLC

, 1999
<PAGE>

Immediately above 6 photographs of representative pieces of telecommunications
infrastructure equipment is a heading entitled "We supply de-installed and new
telecommunications equipment from over 250 different manufacturers..." The 6
photographs of equipment have the following captions beside them: "Switching,"
"Wireless," "Transmission," "Microwave," "Access" and "Power". Immediately
below the photographs is a heading entitled "...to leading carriers".
<PAGE>

In center of page, an oval containing the words "Somera" and the company logo.

In each of the four corners of the inside front gatefold, a circle icon with
arrows pointing into and out of the oval in the center of the page. The four
circle icons have the following captions: "Local Telephone Carrier," "Wireless
Carrier," "Competitive Local Telephone Carrier" and "Long Distance Carrier",
which are four types of customers to which Somera sells telecommunications
equipment.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary...................... 1
Risk Factors............................ 6
Use of Proceeds......................... 16
Dividend Policy......................... 16
Capitalization.......................... 17
Dilution................................ 19
Selected Financial Data................. 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 22
Business................................ 34
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management........................ 46
Certain Transactions.............. 56
Principal Stockholders............ 58
Description of Capital Stock...... 60
Shares Available for Future Sale.. 63
Underwriting...................... 65
Legal Matters..................... 68
Experts........................... 68
Available Information............. 69
Index to Financial Statements..... F-1
</TABLE>

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ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information that is different from
that contained in this prospectus. We are offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of the common stock.

Until 1999, all dealers that buy, sell or trade the common stock, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to unsold allotments or subscriptions.
<PAGE>

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company, the common stock being sold in this offering
and our financial statements and related notes appearing elsewhere in this
prospectus.

We provide telecommunications carriers with a broad range of infrastructure
equipment and related services designed to meet their specific and changing
equipment needs. We offer our customers a unique combination of new and de-
installed equipment from a variety of manufacturers, allowing them to make
multi-vendor purchases from a single, cost-effective source. De-installed
equipment consists primarily of equipment professionally removed from a
carrier's existing telecommunications network. Following removal, de-installed
equipment is shipped to our distribution facility where we test and refurbish
this equipment as necessary. To further address our customers' dynamic
equipment needs, we offer a suite of customized, value-added services,
including asset recovery, inventory management, technical support and other
ancillary services. We sell equipment to over 750 customers which are located
primarily in the United States. For the nine months ended September 30, 1999,
we had net revenue of $87.0 million, gross profit of $30.3 million and net
income of $16.7 million and our net revenue consisted of sales of approximately
30% of new equipment and 70% of de-installed equipment.

The telecommunications infrastructure equipment market has experienced
tremendous growth in recent years. Dataquest projects that worldwide sales of
telecommunications infrastructure equipment will grow from $180 billion in 1998
to $230 billion in 2002. Telecommunications carriers are facing a number of
challenges, including increased competition, the need to rapidly expand service
offerings, increased demand for communications services and technology
advancements. These challenges are having a significant impact on carriers'
equipment and service needs. Carriers have invested hundreds of billions of
dollars in telecommunications network infrastructure. To maximize the value of
their investments, carriers are expanding and upgrading their existing networks
and utilizing existing and new technologies and equipment from multiple
vendors. In addition, carriers are seeking cost-effective ways to expand and
maintain existing elements of their networks based on mature technologies. A
significant portion of the equipment replaced by carriers is suitable for
redeployment in other parts of a carrier's network. While historically carriers
may have scrapped used equipment or let it remain idle, competitive factors
increasingly require carriers to recapture a portion of their original
investment. As they attempt to respond to their changing equipment and service
needs, carriers are discovering that traditional equipment suppliers, including
original equipment manufacturers, distributors and niche secondary market
dealers are unable to fulfill their complex and changing equipment needs.

Our innovative equipment and service offerings are delivered through our team
of more than 75 sales and procurement professionals, who work individually with
carriers to understand, anticipate and meet their ongoing equipment
requirements. Our sales teams utilize our relationship management database, our
selective inventory and our distribution center to provide our customers with
rapidly deployable equipment solutions.

1
<PAGE>

The key benefits of our solution include:

. Broad Multi-vendor Equipment Offering. We provide customers with an
effective alternative to traditional telecommunications equipment supply
channels by offering a broad range of new and de-installed equipment that
includes switching, transmission, access, wireless, microwave and power
products from a variety of manufacturers.

. Rapid Responsiveness to Dynamic Customer Needs. We provide carriers with
convenient access to our skilled and dedicated sales and service
professionals who are capable of quickly identifying and responding to
their diverse equipment needs by using our relationship management
database and maintaining selective inventory.

. Simplified, Value-added Materials Management Services. We provide
carriers with a full range of value-added services, including technical,
materials management and other network deployment services that
simplifies the management of their equipment inventory and allows them to
focus more on their core business.

Our objective is to be the premier provider of telecommunications
infrastructure equipment and related services to carriers worldwide. Key
elements of our strategy include:

. Expanding our penetration of the telecommunications carrier market;

. Expanding our product lines and service capabilities;

. Increasing our penetration into the regional bell operating companies, or
RBOCs;

. Pursuing opportunities for international growth; and

. Pursuing selective acquisitions.

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All trademarks or service marks appearing in this prospectus are the property
of their respective holders.

Somera Communications, LLC was formed in California on July 27, 1995. Somera
Communications, Inc. was incorporated as a Delaware corporation in August 1999.
The unit holders of Somera Communications, LLC will exchange all of their
outstanding units for shares of common stock of, and Somera Communications, LLC
will be succeeded by, Somera Communications, Inc. prior to this offering. Prior
to the date of the exchange, Somera Communications, Inc. will have only nominal
operations, assets and liabilities, and should have no contingent liabilities
or commitments. Our principal executive offices are located at 5383 Hollister
Avenue, Santa Barbara, California 93111. Our telephone number is (805) 681-
3322. Our web site address is www.somera.com. Information contained on our web
site does not constitute part of this prospectus.

2
<PAGE>

The Offering

<TABLE>
<S> <C>
Common stock offered by Somera
Communications.................... 8,500,000 shares

Common stock outstanding after the
offering.......................... 46,562,500 shares

Use of proceeds.................... We intend to use the net proceeds of this
offering to repay outstanding bank
indebtedness, for capital expenditures and
for general corporate purposes, including
working capital. See "Use of Proceeds."

Dividend policy.................... We do not intend to pay dividends on our
common stock. We plan to retain earnings
for use in the operation of our business
and to fund future growth.

Proposed Nasdaq National Market
symbol............................ "SMRA"
</TABLE>

In addition to the 46,562,500 shares of common stock to be outstanding after
the offering, we may issue additional shares of common stock under the
following plans and arrangements:

. 6,750,000 shares issuable under our 1999 Stock Option Plan, consisting
of:

. 2,943,343 Somera Communications, LLC units underlying outstanding
options at a weighted average exercise price of $9.53 per share, none
of which were exercisable as of September 30, 1999, and which will be
converted into options to purchase an equivalent number of shares under
our 1999 Stock Option Plan; and

. 3,806,657 shares available for future grants;

. 207,655 Somera Communications, LLC units issuable upon exercise of
outstanding warrants at a weighted average exercise price of $8.07 per
share, which were fully exercisable as of September 30, 1999, and which
will be converted into warrants exercisable for an equivalent number of
shares of our common stock;

. 300,000 shares available for issuance under our 1999 Employee Stock
Purchase Plan; and

. 300,000 shares available for issuance under our 1999 Director Option
Plan.

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Unless otherwise indicated, all information in this prospectus:

. Reflects a 3 for 2 split of the Class A units and Class B units of Somera
Communications, LLC, a California limited liability company;
. Reflects the exchange of all of the Class A units and Class B units of
Somera Communications, LLC, for shares of common stock of Somera
Communications, Inc., a Delaware corporation, prior to this offering;
. Reflects the assumption of the operations, assets, liabilities and
commitments of Somera Communications, LLC by Somera Communications, Inc.
prior to this offering;
. Assumes the filing of our amended and restated certificate of
incorporation, which, among other things, will authorize 200 million
shares of common stock and 20 million shares of undesignated preferred
stock; and
. Assumes no exercise of the underwriters' over-allotment option.

3
<PAGE>

Summary Financial Data

The following table summarizes the financial data of our business. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.

<TABLE>
<CAPTION>
Six Months Nine Months Ended
Year Ended December 31, Ended June 30, September 30,
----------------------- --------------- -----------------------
1996 1997 1998 1998 1999 1998 1999
------- ------- ------- ------- ------- ----------- -----------
(unaudited) (unaudited) (unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations:
Net revenue............. $10,149 $34,603 $72,186 $34,417 $52,834 $51,271 $87,034
Cost of net revenue..... 5,532 20,587 43,132 21,037 34,023 30,890 56,678
------- ------- ------- ------- ------- ------- -------
Gross profit............ 4,617 14,016 29,054 13,380 18,811 20,381 30,356
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Sales and marketing... 780 2,593 5,747 2,394 4,385 3,895 7,238
General and
administrative....... 696 1,648 3,939 1,326 2,999 2,922 5,085
Stock-based
compensation......... -- -- -- -- 193 -- 652
------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 1,476 4,241 9,686 3,720 7,577 6,817 12,975
------- ------- ------- ------- ------- ------- -------
Income from operations.. 3,141 9,775 19,368 9,660 11,234 13,564 17,381
Interest expense, net... 18 82 187 75 144 117 656
------- ------- ------- ------- ------- ------- -------
Net income.............. $ 3,123 $ 9,693 $19,181 $ 9,585 $11,090 $13,447 $16,725
======= ======= ======= ======= ======= ======= =======
Net income per share--
basic(1)............... $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $0.35 $0.44
------- ------- ------- ------- ------- ------- -------
Weighted average
shares--basic.......... 37,500 38,052 38,063 38,063 38,063 38,063 38,063
------- ------- ------- ------- ------- ------- -------
Net income per share--
diluted(1)............. $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $0.35 $0.44
------- ------- ------- ------- ------- ------- -------
Weighted average
shares--diluted........ 37,500 38,052 38,063 38,063 38,069 38,063 38,115
------- ------- ------- ------- ------- ------- -------
</TABLE>
- -------
(1) See Note 2 of notes to the financial statements for an explanation of the
calculation of net income per unit--basic and diluted. Net income per
share--basic and diluted has been stated above assuming a one-for-one
exchange of the units of Somera Communications, LLC for shares of our
common stock.

4
<PAGE>

The following data provides a summary of our unaudited balance sheet at
September 30, 1999. The pro-forma column gives effect to:

. the exchange on a one for one basis of all the units of Somera
Communications, LLC for shares of Somera Communications, Inc.; and
. the creation of a deferred tax asset of approximately $17.0 million as
a result of the change in tax status from a limited liability company
to a "C" corporation.

The as adjusted column reflects the sale of 8,500,000 shares of common stock in
this offering at an assumed initial public offering price of $12.00 per share
after deducting the estimated underwriting discount and offering expenses
payable by us. See "Use of Proceeds" and "Capitalization."

<TABLE>
<CAPTION>
September 30, 1999
--------------------------------
Pro-forma
Actual Pro-forma As Adjusted
-------- --------- -----------
(unaudited)
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Working capital.............................. $ 7,417 $ 7,417 $51,177
Deferred tax asset........................... -- 17,000 17,000
Total assets................................. 29,432 46,432 83,757
Term debt.................................... 48,900 48,900 --
Mandatorily redeemable Class B units......... 51,750 -- --
Total members' deficit/Stockholders' equity
(deficit)................................... (91,531) (22,781) 69,879
</TABLE>

Commencing with 1997, our fiscal years are on a 52 and 53 week basis. For
presentation purposes we are using a calendar quarter and calendar year end
convention. Our fiscal year 1997 ended on December 28, 1997 and our fiscal year
1998 ended on January 3, 1999. The six month periods presented ended on
June 28, 1998 and July 4, 1999 and the nine month periods presented ended on
September 27, 1998 and October 3, 1999.

5
<PAGE>

RISK FACTORS

You should carefully consider the risks described below before buying shares
in this offering. If any of the following risks actually occur, our business
could be harmed, the trading price of our common stock could decline and you
could lose all or part of your investment. You should also refer to other
information contained in this prospectus, including our financial statements
and related notes.

Our operating results are likely to fluctuate in future periods, which might
lead to reduced prices for our stock.

Our annual or quarterly operating results are difficult to predict and are
likely to fluctuate significantly in the future as a result of numerous
factors, many of which are outside of our control. If our annual quarterly
operating results do not meet the expectations of securities analysts and
investors, the trading price of our stock could significantly decline. Factors
that could impact our operating results include:

. the rate, timing and volume of orders for the telecommunications
infrastructure equipment we sell;
. the rate at which telecommunications carriers de-install their equipment;
. decreases in our selling prices due to competition in the secondary
market;
. our ability to obtain products cost-effectively from original equipment
manufacturers, or OEMs, distributors, carriers and other secondary
sources of telecommunications equipment;
. our ability to provide equipment and service offerings on a timely basis
to satisfy customer demand;
. variations in customer purchasing patterns due to seasonality and other
factors;
. write-offs due to inventory defects or obsolescence;
. the sales cycle for equipment we sell, which can be relatively lengthy;
. delays in the commencement of our operations in new market segments and
geographic regions; and
. costs relating to possible acquisitions and integration of new
businesses.

Our business depends upon our ability to match third party de-installed
equipment supply with carrier demand for this equipment and failure to do so
could reduce our net revenue.

Our success depends on our continued ability to match the equipment needs of
telecommunications carriers with the supply of de-installed equipment available
in the secondary market. We depend upon maintaining business relationships with
third parties who can provide us with de-installed equipment and information on
available de-installed equipment. Failure to effectively manage these
relationships and match the needs of our customers with available supply of de-
installed equipment could damage our ability to generate net revenue. In the
event carriers decrease the rate at which they de-install their networks, or
choose not to de-install their networks at all, it would be more difficult for
us to locate this equipment, which could negatively impact our net revenue.

6
<PAGE>

A downturn in the telecommunications industry or an industry trend toward
reducing or delaying additional equipment purchases due to cost-cutting
pressures could reduce demand for our products.

We rely significantly upon customers concentrated in the telecommunications
industry as a source of net revenue and de-installed equipment inventory. We
believe that a downturn in the telecommunications industry in general or
decreased carrier operating performance could result in reduced sales to our
customers and postpone network upgrades. These reduced sales could negatively
impact our ability to generate revenue and delayed projects could impair our
ability to obtain de-installed telecommunications equipment.

The market for supplying equipment to telecommunications carriers is
competitive, and if we cannot compete effectively, our net revenue and gross
margins might decline.

Competition among companies who supply equipment to telecommunications
carriers is intense. We currently face competition primarily from three
sources: original equipment manufacturers, distributors and secondary market
dealers who sell new and de-installed telecommunications infrastructure
equipment. If we are unable to compete effectively against our current or
future competitors, we may have to lower our selling prices and may experience
reduced gross margins and loss of market share, either of which could harm our
business.

Competition is likely to increase as new companies enter this market, as
current competitors expand their products and services or as our competitors
consolidate. Increased competition in the secondary market for
telecommunications equipment could also heighten demand for the limited supply
of de-installed equipment which would lead to increased prices for, and reduce
the availability of, this equipment. Any increase in these prices could
significantly impact our ability to maintain our gross margins.

We do not have many formal relationships with suppliers of telecommunications
equipment and may not have access to adequate product supply.

Historically, 70% or more of our annual net revenue has been generated from
the sale of de-installed telecommunications equipment. Typically, we do not
have supply contracts to obtain this equipment and are dependent on the de-
installation of equipment by carriers to provide us with much of the equipment
we sell. Our ability to buy de-installed equipment from carriers is dependent
on our relationships with them. If we fail to develop and maintain these
business relationships with carriers or they are unwilling to sell de-installed
equipment to us, our ability to sell de-installed equipment will suffer.

Our customer base is concentrated and the loss of one or more of our key
customers would have a negative impact on our net revenue.

Historically, a significant portion of our sales have been to relatively few
customers. Sales to our ten largest customers accounted for 43.8% of our net
revenue in 1998, 42.2% of our net revenue in 1997, and 35.4% of our net revenue
in 1996. In the nine months ended September 30, 1999, sales to our ten largest
customers accounted for 33.4 % of our net revenue. In the first nine months of
1999, no single customer accounted for over 10% of our

7
<PAGE>

net revenue. In 1998, ALLTEL Corporation accounted for 10.2% of our net
revenue, in 1997, Vodafone AirTouch plc accounted for 10.1% of our net revenue,
and in 1996, ALLTEL Corporation accounted for 11.4% of our net revenue. In
addition, substantially all of our sales are made on a purchase order basis,
and no customer has entered into a long-term purchasing agreement with us. As a
result, we cannot be certain that our current customers will continue to
purchase from us. The loss of, or any reduction in orders from, a significant
customer would have a negative impact on our net revenue.

We may be forced to reduce the sales prices for the equipment we sell, which
may impair our ability to maintain our gross margins.

In the future we expect to reduce prices in response to competition and to
generate increased sales volume. If manufacturers reduce the prices of new
telecommunications equipment we may be required to further reduce the price of
the new and de-installed equipment we sell. If we are forced to reduce our
prices or are unable to shift the sales mix towards higher margin equipment
sales, we will not be able to maintain current gross margins.

The market for de-installed telecommunications equipment is relatively new and
it is unclear whether our equipment and service offerings and our business will
achieve long-term market acceptance.

The market for de-installed telecommunications equipment is relatively new
and evolving, and we are not certain that our potential customers will adopt
and deploy de-installed telecommunications equipment in their networks. For
example, with respect to de-installed equipment that includes a significant
software component, potential customers may be unable to obtain a license or
sublicense for the software. Even if they do purchase de-installed equipment,
our potential customers may not choose to purchase de-installed equipment from
us for a variety of reasons. Our customers may also redeploy their displaced
equipment within their own networks which would eliminate their need for our
equipment and service offerings. These internal solutions would also limit the
supply of de-installed equipment available for us to purchase, which would
limit the development of this market.

We may fail to continue to attract, develop and retain key management and sales
personnel, which could negatively impact our operating results.

We depend on the performance of our executive officers and other key
employees. The loss of any member of our senior management, in particular, Dan
Firestone, our chief executive officer, or other key employees could negatively
impact our operating results and our ability to execute our business strategy.
In addition, we depend on our sales professionals to serve customers in each of
our markets. The loss of any of our sales professionals could significantly
disrupt our relationships with our customers. We do not have "key person" life
insurance policies on any of our employees except for Dan Firestone.

8
<PAGE>

Our future success also depends on our ability to attract, retain and
motivate highly skilled employees. Competition for employees in the
telecommunications equipment industry is intense. Additionally, we depend on
our ability to train and develop skilled sales people and an inability to do so
would significantly harm our growth prospects and operating performance. We
have experienced, and we expect to continue to experience difficulty in hiring
and retaining highly skilled employees.

Our business may suffer if we are not successful in our efforts to keep up with
a rapidly changing market.

The market for the equipment and services we sell is characterized by
technological changes, evolving industry standards, changing customer needs and
frequent new equipment and service introductions. Our future success in
addressing the needs of our customers will depend, in part, on our ability to
timely and cost-effectively:

. respond to emerging industry standards and other technological changes;
. develop our internal technical capabilities and expertise;
. broaden our equipment and service offerings; and
. adapt our services to new technologies as they emerge.

Our failure in any of these areas could harm our business. Moreover, any
increased emphasis on software solutions as opposed to equipment solutions
could limit the availability of de-installed equipment, decrease customer
demand for the equipment we sell, or cause the equipment we sell to become
obsolete.

The lifecycles of telecommunications infrastructure equipment may become
shorter, which would decrease the supply of, and carrier demand for, de-
installed equipment.

Our sales of de-installed equipment depend upon carrier utilization of
existing telecommunications network technology. If the lifecycle of equipment
comprising carrier networks is significantly shortened for any reason,
including technology advancements, the installed base of any particular model
would be limited. This limited installed base would reduce the supply of, and
demand for, de-installed equipment which could decrease our net revenue.

Many of our customers are telecommunications carriers that may at any time
reduce or discontinue their purchases of the equipment we sell to them.

If our customers choose to defer or curtail their capital spending programs,
it could have a negative impact on our sales to those telecommunications
carriers, which would harm our business. A significant portion of our customers
are emerging telecommunications carriers who compete against existing telephone
companies. These new participants only recently began to enter these markets,
and many of these carriers are still building their networks and rolling out
their services. They require substantial capital for the development,
construction and expansion of their networks and the introduction of their
services. If emerging carriers fail to acquire and retain customers or are
unsuccessful in raising needed funds or responding to any other trends, such as
price reductions for their services or

9
<PAGE>

diminished demand for telecommunications services in general, then they could
be forced to reduce their capital spending programs.

If we fail to implement our strategy of purchasing equipment from and selling
equipment to regional bell operating companies, our growth will suffer.

One of our strategies is to develop and expand our relationships with
regional bell operating companies, or RBOCs. We believe the RBOCs could provide
us with a significant source of additional net revenue. In addition, we believe
the RBOCs could provide us with a large supply of de-installed equipment. We
cannot assure you that we will be successful in implementing this strategy.
RBOCs may not choose to sell de-installed equipment to us or may not elect to
purchase this equipment from us. RBOCs may instead develop those capabilities
internally or elect to compete with us and resell de-installed equipment to our
customers or prospective customers. If we fail to successfully develop our
relationships with RBOCs or if RBOCs elect to compete with us, our growth could
suffer.

If we do not expand our international operations our growth could suffer.

We intend to continue expanding our business in international markets. This
expansion will require significant management attention and financial resources
to develop a successful international business, including sales, procurement
and support channels. We may not be able to maintain or increase international
market demand for the equipment we sell, and therefore we might not be able to
expand our international operations. We currently have limited experience
providing equipment outside the United States. Sales to customers outside of
the United States accounted for 10.7% of our net revenue in the nine months
ended September 30, 1999 and 19.7% of our net revenue in the year ended
December 31, 1998.

We may fail to engage in selective acquisitions which could limit our future
growth.

One of our strategies for growth is to engage in selective acquisitions. Our
ability to conduct such acquisitions may be limited by our ability to identify
potential acquisition candidates and obtain necessary financing. In the event
we are unable to identify and take advantage of these opportunities, we may
experience difficulties in growing our business.

If we do engage in selective acquisitions, we may experience difficulty
assimilating the operations or personnel of the acquired companies, which could
threaten our future growth.

If we make acquisitions, we could have difficulty assimilating or retaining
the acquired companies' personnel or integrating their operations, equipment or
services into our organization. These difficulties could disrupt our ongoing
business, distract our management and employees and increase our expenses.
Moreover, our profitability may suffer because of acquisition-related costs or
amortization of acquired goodwill and other intangible assets. Furthermore, we
may have to incur debt or issue equity securities in any future acquisitions.
The issuance of equity securities would be dilutive to our existing
stockholders.

10
<PAGE>

Failure to manage our rapid growth effectively could harm our results of
operations.

Since we began commercial operations in July 1995, we have experienced rapid
growth and expansion that is straining our resources. In the twelve months
ended September 30, 1999, the number of our employees increased from 72 to 128.
Continued growth could place a further strain on our management, operational
and financial resources. Our inability to manage growth effectively could harm
our business. We are in the process of upgrading our internal control and
information systems. We may not be able to install adequate control systems in
an efficient and timely manner, and our current or planned operational systems,
procedures and controls may not be adequate to support our future operations.
Delays in the implementation of new systems or operational disruptions when we
transition to new systems would impair our ability to accurately forecast sales
demand, manage our equipment inventory and record and report financial and
management information on a timely and accurate basis.

Several key members of our management team have only recently joined us and if
they are not successfully integrated into our business or fail to work together
as a management team, our business will suffer.

Several key members of our management team have joined us since May 1, 1999,
including Gary Owen, our chief financial officer and Jeffrey Miller, our
executive vice president of sales and marketing. Additionally, we intend to
hire other key personnel, including a vice president of operations. If we
cannot effectively integrate these employees into our business, or if they
cannot work together as a management team to enable us to implement our
business strategy, our business will suffer.

Defects in the equipment we sell may seriously harm our credibility and our
business.

Telecommunications carriers require a strict level of quality and reliability
from telecommunications equipment suppliers. Telecommunications equipment is
inherently complex and can contain undetected software or hardware errors. If
we deliver telecommunications equipment with undetected material defects, our
reputation, credibility and equipment sales could suffer. Moreover, because the
equipment we sell is integrated into our customers' networks, it can be
difficult to identify the source of a problem should one occur. The occurrence
of such defects, errors or failures could also result in delays in
installation, product returns, product liability and warranty claims and other
losses to us or our customers. In some of our contracts, we have agreed to
indemnify our customers against liabilities arising from defects in the
equipment we sell to them. Furthermore, we supply most of our customers with
guarantees that cover the equipment we offer. While we may carry insurance
policies covering these possible liabilities, these policies may not provide
sufficient protection should a claim be asserted. A material product liability
claim, whether successful or not, could be costly, damage our reputation and
distract key personnel, any of which could harm our business.

11
<PAGE>

Our strategy to outsource services could impair our ability to deliver our
equipment on a timely basis.

Currently, we depend on third parties for a variety of equipment-related
services, including engineering, repair, transportation, testing, installation
and de-installation. This outsourcing strategy involves risks to our business,
including reduced control over delivery schedules, quality and costs and the
potential absence of adequate capacity. In the event that any significant
subcontractor were to become unable or unwilling to continue to perform their
required services, we would have to identify and qualify acceptable
replacements. This process could be lengthy, and we cannot be sure that
additional sources of third party services would be available to us on a timely
basis, or at all.

Our quarterly net revenue and the price of our stock may be negatively impacted
by the seasonal purchasing patterns of our customers.

Our quarterly net revenue may be subject to the seasonal purchasing patterns
of our customers. If our quarterly net revenue fails to meet the expectations
of analysts due to those seasonal fluctuations, the trading price of our common
stock could be negatively affected. Historically, net revenue in the third
quarter has been typically lower than that of the second quarter of that year.
For example, our net revenue decreased in the quarter ended September 30, 1998
compared to our net revenue for the quarter ended June 30, 1998. We believe
this trend may occur as a result of our customers' annual budgetary,
procurement and sales cycles.

Our ability to meet customer demand and the growth of our net revenue could be
harmed if we are unable to manage our inventory needs accurately.

To meet customer demand in the future, we believe it is necessary to maintain
or increase some levels of inventory. Failure to maintain adequate inventory
levels in these products could hurt our ability to make sales to our customers.
In the past, we have experienced inventory shortfalls, and we cannot be certain
that we will not experience shortfalls again in the future, which could harm
our reputation and our business. Further, rapid technology advancement could
make our existing inventory obsolete and cause us to incur losses. In addition,
if our forecasts lead to an accumulation of inventories that are not sold in a
timely manner, our business could suffer.

Our failure and the failure of our suppliers and customers to be year 2000
compliant could harm our business by making it more difficult for us to
communicate effectively with our customers and suppliers and by causing the
equipment we sell to fail.

Many currently installed computer systems and software products are not
capable of distinguishing 21st century dates from 20th century dates. As a
result, beginning on January 1, 2000, computer systems and software used by
many companies and organizations in a wide variety of industries, including
telecommunications, technology, transportation, utilities and finance, could
likely produce erroneous results or fail unless they have been modified or
upgraded to process date information correctly. These computer systems and
software failures could make it more difficult for us to communicate
effectively with our suppliers and customers. In addition, we face the
possibility that the equipment we sell will fail due to processing errors
caused by inaccurate calculations with respect to the year 2000.

12
<PAGE>

The corruption or interruption of key software systems we use could cause our
business to suffer if it delays or restricts our ability to meet our customers'
needs.

We rely on the integrity of key software and systems. Specifically we rely on
our relationship management database which tracks information on currently or
potentially available de-installed equipment. This software and these systems
may be vulnerable to harmful applications, computer viruses and other forms of
corruption and interruption. In the event our software or systems are affected
by any form of corruption or interruption, it could delay or restrict our
ability to meet our customers' needs, which could harm our reputation or
business.

If we are unable to meet our additional capital needs in the future, we may not
be able to execute our business growth strategy.

We currently anticipate that our available cash resources, combined with the
net proceeds from this offering and financing available under our revolving
loan facility, will be sufficient to meet our anticipated working capital and
capital expenditure requirements for at least the next 12 months. However, our
resources may not be sufficient to satisfy these requirements. We may need to
raise additional funds through public or private debt or equity financings to:

. take advantage of business opportunities, including more rapid
international expansion or acquisitions of complementary businesses;
. develop and maintain higher inventory levels;
. gain access to new product lines;
. develop new services; or
. respond to competitive pressures.

Any additional financing we may need might not be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, our business could suffer if the inability to
raise this funding threatens our ability to execute our business growth
strategy. Moreover, if additional funds are raised through the issuance of
equity securities, the percentage of ownership of our current stockholders will
be reduced. Newly issued equity securities may have rights, preferences and
privileges senior to those of investors in our common stock. In addition, the
terms of any debt could impose restrictions on our operations.

Our facilities could be vulnerable to damage from earthquakes and other natural
disasters.

Our facilities are located on or near known earthquake fault zones and are
vulnerable to damage from fire, floods, earthquakes, power loss,
telecommunications failures and similar events. If a disaster occurs, our
ability to test and ship the equipment we sell would be seriously, if not
completely, impaired, and our inventory could be damaged or destroyed, which
would seriously harm our business. We cannot be sure that the insurance we
maintain against fires, floods, earthquakes and general business interruptions
will be adequate to cover our losses in any particular case.

13
<PAGE>

You might not be able to sell your stock if an active public market does not
develop for our stock.

Prior to this offering, you could not buy or sell our common stock publicly.
An active public market for our common stock may not develop or be sustained
after the offering. If a market for our common stock does not develop or is not
sustained, it may be difficult for you to sell your shares of common stock at a
price that is attractive to you, or at all. The initial public offering price
of the common stock will be determined through negotiations between the
representatives of the underwriters and us and may not be representative of the
price that will prevail in the open market.

The price of our common stock may be volatile and subject to wide fluctuations,
which may limit your ability to resell your shares at or above the initial
public offering price.

The trading price of our common stock may be volatile. The stock prices of
technology and telecommunications-related companies have experienced extreme
volatility that often has been unrelated to the operating performance of these
particular companies. Fluctuations may adversely affect the trading price of
our common stock, regardless of our actual operating performance. In addition,
you may not be able to resell your shares at or above the initial public
offering price due to a number of factors, including:

. our ability to meet growth, revenue and earnings expectations;
. industry announcements regarding technological innovations or strategic
relationships; and
. conditions affecting the telecommunications industry generally.

Provisions in our charter documents might deter acquisition bids for us.

There are provisions in our charter documents and other provisions under
Delaware law that could make it more difficult for a third party to acquire us,
even if doing so would benefit our stockholders. See "Description of Capital
Stock -- Delaware Anti-takeover Law and Certain Charter and Bylaw Provisions"
for further discussion of the specific provisions in our charter documents that
may delay or prevent a change in our control.

Our officers and directors exert substantial influence over us, and may make
future business decisions with which some of our stockholders might disagree.

We anticipate that our executive officers, our directors and entities
affiliated with them will beneficially own an aggregate of approximately 69.6%
of our outstanding common stock following the completion of this offering. As a
result, these stockholders will be able to exercise substantial influence over
all matters requiring approval by our stockholders, including the election of
directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or preventing a
change in our control.

14
<PAGE>

Management could invest or spend the proceeds of this offering not being used
to repay debt in ways with which the stockholders might not agree.

We intend to use a significant portion of the net proceeds of this offering
to repay our debt rather than build our business. In addition, we have no
specific allocations for any other net proceeds of this offering that are not
being used to repay debt other than a portion for capital expenditures.
Consequently, management will retain a significant amount of discretion over
the application of these proceeds. Because of the number and variability of
factors that will determine our use of these proceeds, how we spend the
proceeds may vary substantially from our current intentions.

You will incur immediate and substantial dilution.

The initial public offering price is substantially higher than the pro-forma
net tangible book value (deficit) per share of the outstanding common stock. As
a result, investors purchasing common stock in this offering will incur
immediate and substantial dilution in the amount of $10.50 per share. Investors
will incur additional dilution upon the exercise of outstanding stock options
and warrants. See "Dilution."

Special note regarding forward-looking statements.

This prospectus contains forward-looking statements that are subject to a
number of risks and uncertainties, many of which are beyond our control. All
statements, other than statements of historical facts included in this
prospectus, regarding our strategy, future operations, financial position,
estimated revenues or losses, projected costs, prospects, plans and objectives
of management are forward-looking statements. When used in this prospectus, the
words "will", "believe", "anticipate", "intend", "estimate", "expect",
"project" and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain such
identifying words. All forward-looking statements speak only as of the date of
this prospectus. You should not place undue reliance on these forward-looking
statements. Although we believe that our plans, intentions and expectations
reflected in or suggested by the forward-looking statements we make in this
prospectus are reasonable, we can give no assurance that these plans,
intentions or expectations will be achieved. We disclose important factors that
could cause our actual results to differ materially from our expectations under
"Risks Factors" and elsewhere in this prospectus. These cautionary statements
qualify all forward-looking statements attributable to us or persons acting on
our behalf.

15
<PAGE>

USE OF PROCEEDS

We estimate the net proceeds from the offering to be approximately $93.8
million, or $108.0 million if the underwriters exercise their over-allotment
option in full, at an assumed initial public offering price of $12.00 per share
and after deducting the underwriting discount and estimated offering expenses.

We intend to use $50.0 million of the proceeds from the offering to repay the
entire outstanding amount of our term loan facility. We also intend to use a
portion of the proceeds to repay the entire outstanding amount drawn under our
revolving loan facility, which is approximately $6.4 million as of September
30, 1999. These loans, as of September 30, 1999, have an interest rate of 8.9%
on an outstanding amount of $3.5 million, and 9.5% for the remaining
outstanding amount of $2.9 million of the loan, and have a maturity date of
August 31, 2004. For additional information please see "Management's Discussion
and Analysis of Financial Condition and Results of Operation--Liquidity and
Capital Resources." The proceeds from our term loan facility were used to make
a distribution to our members of $48.5 million in September 1999. We currently
intend to use approximately $2.0 million of the proceeds for capital
expenditures, however there are currently no specific projects identified and
we expect to use the remaining proceeds for general corporate purposes,
including working capital. As of the date of this prospectus, we cannot specify
the particular uses for the general corporate purposes of our proceeds.
Accordingly, our management will have broad discretion in the application of
the net proceeds.

We intend to invest the remainder of the net proceeds in short-term, interest
bearing, investment grade marketable securities.

DIVIDEND POLICY

While we do not plan to pay dividends, any future determination to pay
dividends will be at the discretion of the board of directors and will depend
upon our financial condition, operating results, capital requirements and other
factors the board of directors deems relevant. We plan to retain earnings for
use in the operation of our business and to fund future growth.

Since our inception in July 1995, we have operated in the form of a limited
liability company and income has been taxed directly to our equity members.
During this time, we have made regular quarterly distributions to our members
based on our funds available for distribution. In 1996, we made quarterly
distributions in an annual aggregate amount of $0.06 per unit to our members.
In 1997, we made quarterly distributions in an annual aggregate amount of $0.20
per unit to our members. In 1998, we made quarterly distributions in an annual
aggregate amount of $0.43 per unit to our members. In the period beginning
January 1, 1999 through October 1999, which includes the distribution of the
proceeds of our term loan facility, we made quarterly distributions in an
aggregate amount of $1.75 per unit to our members. In addition, we may make
additional distributions to our members until the time that we convert from a
limited liability company to a Delaware corporation. See "Certain Transactions"
for additional information regarding this term loan facility.

16
<PAGE>

CAPITALIZATION

The following table sets forth our short-term debt and capitalization as of
September 30, 1999. Our capitalization is presented:

. on an actual basis;

. on a pro forma basis to reflect:

. the exchange on a one for one basis of all the units of Somera
Communications, LLC for common shares of Somera Communications, Inc.;
and

. the creation of a deferred tax asset of approximately $17.0 million as
a result of the change in tax status from a limited liability company
to a "C" corporation.

. on a pro forma as adjusted basis to reflect:

. the sale of 8,500,000 shares of common stock at an assumed initial
public offering price of $12.00 per share in this offering, less
underwriting discounts and commissions and estimated offering
expenses; and

. the application of the net proceeds by us from the offering, including
the repayment of the $50.0 million term loan from a syndicate of
financial institutions led by Fleet National Bank.

Please read the capitalization table together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and related notes included in this prospectus.

<TABLE>
<CAPTION>
September 30, 1999
-------------------------------
Pro-forma
Actual Pro-forma As Adjusted
-------- --------- -----------
(in thousands, except per
share data)
<S> <C> <C> <C>
Borrowing under revolving credit facility... $ 6,435 $ 6,435 --
Capital lease obligation--current portion 255 255 255
-------- ------- -------
Total short-term debt..................... 6,690 6,690 255
-------- ------- -------
Capital lease obligations................... 575 575 575
-------- ------- -------
Term loan facility.......................... 48,900 48,900 --
-------- ------- -------
Mandatorily redeemable Class B units; 14,070
units actual, no units pro-forma and pro-
forma as adjusted:......................... 51,750 -- --
-------- ------- -------
Members' deficit/stockholders' equity
(deficit):
Class A 23,993 units actual, no units pro-
forma and pro-forma as adjusted.......... (79,658) -- --
Class B................................... (11,165) -- --
Common stock, $0.001 par value;
Authorized 200,000 shares; issued 38,063
shares
pro-forma and 46,563 shares pro-forma as
adjusted................................. -- 38 47
Additional paid in capital ................. -- (39,111) 54,640
Retained Earnings........................... -- 17,000 15,900
Unearned Stock based compensation........... (708) (708) (708)
-------- ------- -------
Total members' deficit/stockholders'
equity (deficit)......................... (91,531) (22,781) 69,879
-------- ------- -------
Total capitalization..................... $ 9,694 $26,694 $70,454
======== ======= =======
</TABLE>

17
<PAGE>

We expect there to be 46,562,500 shares outstanding after the offering. In
addition to the shares of common stock to be outstanding after the offering, we
may issue additional shares of common stock under the following plans and
arrangements:

. 6,750,000 shares issuable under our 1999 Stock Option Plan, consisting
of:

. 3,806,657 shares available for future grants;

. 300,000 shares available for issuance under our 1999 Employee Stock
Purchase Plan; and

. 300,000 shares available for issuance under our 1999 Director Option
Plan.

18
<PAGE>

DILUTION

Our pro-forma net tangible book value (deficit) as of September 30, 1999 was
($22.8) million or ($0.60) per share. Pro-forma net tangible book value
(deficit) per share is determined by dividing the pro-forma number of
38,062,500 outstanding shares of common stock into our pro-forma (deficit),
which is our pro-forma total tangible assets less total liabilities. After
giving effect to the receipt of the estimated net proceeds from this offering,
based upon an assumed initial public offering price of $12.00 per share and
after deducting the estimated underwriting discounts and commissions and
estimated offering expenses, our pro-forma as adjusted net tangible book value
(deficit) as of September 30, 1999 would have been approximately $69.9 million,
or $1.50 per share. This represents an immediate increase in pro-forma net
tangible book value (deficit) of $2.10 per share to existing stockholders and
an immediate dilution of $10.50 per share to new investors purchasing shares at
an assumed initial public offering price of $12.00 per share, initial public
offering price. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............. $12.00
Pro-forma net tangible book value (deficit) per share as of
September 30, 1999........................................ $(0.60)
Increase per share attributable to new investors........... 2.10
------
Pro-forma net tangible book value (deficit) per share after
offering.................................................... 1.50
------
Dilution per share to new investors.......................... $10.50
======
</TABLE>

The following table summarizes as of September 30, 1999, on the pro-forma
basis described above, the number of shares of common stock purchased from us,
the total consideration paid and the average price per share paid by existing
stockholders and by new investors before deducting the estimated underwriting
discounts and commissions and estimated offering expenses:

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ -------------------- Price Per
Number Percent Amount Percent Share
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 38,062,500 81.7% $ 52,261,000 33.9% $1.37
New investors................. 8,500,000 18.3 102,000,000 66.1 12.00
---------- ---- ------------ ---- -----
Total..................... 46,562,500 100% $154,261,000 100% $3.31
========== ==== ============ ==== =====
</TABLE>

We expect to have 46,562,500 shares outstanding after the offering. In
addition to the shares of common stock to be outstanding after the offering, we
may issue up to 7,557,655 additional shares of common stock. For additional
information, please see the description of additional shares contained in
"Capitalization" on page 18.

19
<PAGE>

SELECTED FINANCIAL DATA

You should read the following selected financial data with our financial
statements and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
prospectus. The statements of operations for the years ended December 31, 1996,
1997 and 1998, and the six months ended June 30, 1999, and the balance sheet
data at December 31, 1997, and 1998, and June 30, 1999, are derived from our
financial statements that have been audited by PricewaterhouseCoopers LLP,
independent accountants, included elsewhere in this prospectus. The statement
of operations for the six months ended June 30, 1998 and nine months ended
September 30, 1998 and 1999 and the balance sheet data at September 30, 1999 is
derived from our unaudited financial statements included elsewhere in this
prospectus. The balance sheet data at December 31, 1996 is derived from our
audited financial statements that are not included in this prospectus. The
unaudited financial statements have been prepared on substantially the same
basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, that we consider necessary for
a fair presentation of the balance sheet and results of operations for the
periods. Historical results are not necessarily indicative of the results to be
expected in the future, and results of interim periods are not necessarily
indicative of results for the entire year.

<TABLE>
<CAPTION>
Years Ended Six Months Ended Nine Months Ended
December 31, June 30, September 30,
----------------------- ------------------- -----------------------
1996 1997 1998 1998 1999 1998 1999
------- ------- ------- ----------- ------- ----------- -----------
(unaudited) (unaudited) (unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of
Operations:
Net revenue............. $10,149 $34,603 $72,186 $34,417 $52,834 $51,271 $87,034
Cost of net revenue..... 5,532 20,587 43,132 21,037 34,023 30,890 56,678
------- ------- ------- ------- ------- ------- -------
Gross profit............ 4,617 14,016 29,054 13,380 18,811 20,381 30,356
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Sales and marketing.... 780 2,593 5,747 2,394 4,385 3,895 7,238
General and
administrative........ 696 1,648 3,939 1,326 2,999 2,922 5,085
Stock-based
compensation.......... -- -- -- -- 193 -- 652
------- ------- ------- ------- ------- ------- -------
Total operating
expenses............ 1,476 4,241 9,686 3,720 7,577 6,817 12,975
------- ------- ------- ------- ------- ------- -------
Income from operations.. 3,141 9,775 19,368 9,660 11,234 13,564 17,381
Interest expense, net... 18 82 187 75 144 117 656
------- ------- ------- ------- ------- ------- -------
Net income.............. $ 3,123 $ 9,693 $19,181 $ 9,585 $11,090 $13,447 $16,725
======= ======= ======= ======= ======= ======= =======
Net income per share--
basic(1)............... $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $ 0.35 $ 0.44
------- ------- ------- ------- ------- ------- -------
Weighted average
shares--basic.......... 37,500 38,052 38,063 38,063 38,063 38,063 38,063
------- ------- ------- ------- ------- ------- -------
Net income per share--
diluted(1)............. $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $ 0.35 $ 0.44
------- ------- ------- ------- ------- ------- -------
Weighted average
shares--diluted........ 37,500 38,052 38,063 38,063 38,069 38,063 38,115
------- ------- ------- ------- ------- ------- -------
</TABLE>
- --------
(1) See note 2 of Notes to the financial statements for an explanation of the
calculation of net income per unit--basic and diluted. Net income per
share--basic and diluted has been stated above assuming a one for one
exchange of the units of Somera Communications, LLC for shares of our
common stock.

20
<PAGE>

<TABLE>
<CAPTION>
December 31,
---------------------- June 30, September 30,
1996 1997 1998 1999 1999
------ ------ -------- -------- -------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital............... $1,797 $4,602 $ 9,482 $ 9,975 $ 7,417
Total assets.................. 3,882 9,281 17,009 27,202 29,432
Notes payable--net of current
portion...................... 662 638 1,838 1,957 --
Mandatorily redeemable Class B
units........................ -- -- 51,750 51,750 51,750
Capital lease obligation--net
of current portion........... -- -- -- 541 575
Members' capital (deficit).... 1,251 3,787 (45,136) (42,765) (91,531)
</TABLE>

Commencing with 1997 our fiscal years are on a 52 and 53 week basis. For
presentation purposes we are using a calendar quarter and calendar year end
convention. Our fiscal years 1997 and 1998 ended on December 28, 1997 and
January 3, 1999. The six month periods presented ended on June 28, 1998 and
July 4, 1999 and the nine month periods presented ended on September 27, 1998
and October 3, 1999.

From our inception in July 1995 to December 31, 1995, we were engaged
principally in the commencement of our business operations and recorded
approximately $240,000 of net revenue from product shipments, $122,000 of cost
of net revenue and $61,000 of operating expenses during that period.
Accordingly, as such amounts are not significant, the results for the period
from our inception to December 31, 1995 have not been presented in the tables
above.

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations
should be read in conjunction with the financial statements and related notes
appearing elsewhere in this prospectus. Our actual results could differ
materially from the results contemplated by these forward-looking statements as
a result of factors, including those discussed previously, under "Risk Factors"
or in other parts of in this prospectus.

Overview

We provide telecommunications carriers with a broad range of infrastructure
equipment and related services designed to meet their specific and changing
equipment needs. We generate revenue from sales of new and de-installed
telecommunications infrastructure equipment. Our customers include incumbent
local exchange carriers, long distance carriers, wireless carriers and
competitive local exchange carriers. Incumbent local exchange carriers, or
ILECs, provided local telephone service on an exclusive basis prior to
deregulation. Since deregulation, competitive local exchange carriers, or
CLECs, have competed with ILECs to provide local telecommunications service. We
do not manufacture any of the equipment we sell.

We purchase de-installed equipment primarily from telecommunications
carriers, many of whom are also our customers. We purchase the new equipment we
sell primarily from OEMs and distributors. By using our relationship management
database to track carriers' de-installed equipment we are able to offer our
customers a broad range of equipment. We generally have not entered into long-
term contracts or distribution arrangements with our suppliers, and if we fail
to develop and maintain our relationships with our suppliers, our business will
suffer.

Historically, 70% or more of our annual net revenue has been generated from
the sale of de-installed equipment. We market and sell this equipment through
our industry focused sales teams. A majority of our sales to date have been to
customers located in the United States. Sales to customers outside of the
United States accounted for 10.7% of our net revenue in the nine months ended
September 30, 1999, 19.7% of our net revenue in 1998, 16.5% of our net revenue
in 1997 and 6.8% of our net revenue in 1996. We expect sales to carriers in the
United States to continue to account for the majority of our net revenue for
the foreseeable future. Currently, all of our equipment sales are denominated
in U.S. dollars.

In the first nine months of 1999, no single customer accounted for more than
10% of our net revenue. In 1998, ALLTEL Corporation accounted for 10.2% of our
net revenue, in 1997, Vodafone AirTouch plc accounted for 10.1% of our net
revenue and in 1996, ALLTEL Corporation accounted for 11.4% of our net revenue.
In the nine months ended September 30, 1999, and in the years ended December
31, 1998, 1997 and 1996, no suppliers accounted for more than 10% of our
equipment purchases.

Substantially all of our sales are made on the basis of purchase orders
rather than long-term agreements. As a result, we may commit resources to the
procurement and testing of

22
<PAGE>

products without having received advance purchase commitments from customers.
We anticipate that our operating results for any given period will continue to
be dependent, to a significant extent, on purchase orders. These purchase
orders can be delayed or canceled by our customers without penalty.
Additionally, as telecommunications equipment supplier competition increases,
we may need to lower our selling prices or pay more for the equipment we
procure. Consequently, our gross margins may decrease over time. We generally
recognize revenue, net of estimated provisions for returns and warranty
obligations where significant, when we ship equipment to our customers.

The market for telecommunications equipment is characterized by intense
competition. We believe that our ability to remain competitive depends on
enhancing the existing service levels we provide to our customers, acquiring
access to a broader selection of equipment, developing new customer
relationships and expanding our existing customer penetration levels. Failure
to accomplish these goals could harm our growth prospects and operating
results.

Corporate History

We were organized as a California limited liability company, or LLC, and
commenced operations in July 1995. In July 1998, we undertook a
recapitalization in which outside investors purchased Class B units
representing approximately 37.0% of Somera Communications, LLC for $51.8
million. These Class B units have significant rights and preferences over our
Class A units, including liquidation preferences, redemption rights under
specific circumstances at the option of the holder, and the right of one of
those Class B investors to elect two members to the board of managers of Somera
Communications, LLC. These rights will lapse upon the exchange of the
outstanding limited liability company units for our common stock. We used all
of the proceeds from the sale of the Class B units to repurchase a portion of
the outstanding units from a number of our initial unit holders.

In August 1999, we entered into a credit agreement with a syndicate of
financial institutions led by Fleet National Bank. The credit facility consists
of a term loan facility for $50.0 million and a revolving loan facility for up
to $15.0 million. As of September 30, 1999, $50.0 million in principal was
outstanding under the term loan. Of this $50.0 million, $48.5 million had been
distributed to the unit holders of Somera Communications, LLC, who will become
our stockholders after the exchange of their units prior to this offering. As
of September 30, 1999, $6.4 million had been drawn under the revolving loan
facility. For more information on the Fleet National Bank credit facility,
please see "Certain Transactions."

Prior to the consummation of this offering, we will exchange shares of our
common stock for all of the outstanding units of Somera Communications, LLC and
subsequently assume the operations, assets and liabilities of the limited
liability company.

23
<PAGE>

Results of Operations

Nine Months Ended September 30, 1999 and 1998

Net Revenue. Net revenue consists of sales of new and de-installed
telecommunications equipment, including switching, transmission, access,
wireless, microwave and power products. Net revenue increased to $87.0 million
in the nine months ended September 30, 1999 from $51.3 million in the nine
months ended September 30, 1998. The increase in net revenue was driven by
greater customer demand for our equipment in general rather than significant
increases in the price of the products we sold, our expansion in United States
markets and growth in significant customer accounts. Net revenue attributable
to new equipment sales increased to $26.7 million in the nine months ended
September 30, 1999 from $11.6 million in the nine months ended September 30,
1998. The increase in net revenue attributable to new equipment sales was due
to greater customer demand for new telecommunications equipment and our
offering a broader variety of new equipment to customers. We believe that net
revenue attributable to new equipment sales will continue to increase in
response to customers demand for new telecommunications equipment. Net revenue
attributable to de-installed equipment sales increased to $60.3 million in the
nine months ended September 30, 1999 from $39.7 million in the nine months
ended September 30, 1998. The increase in net revenue attributable to de-
installed equipment sales was due to greater demand among our customers in
connection with the build out and servicing of their existing networks. We
believe net revenue attributable to de-installed equipment will increase as our
customers continue to build out their existing networks.

Cost of Net Revenue. Substantially all of our cost of net revenue consists of
the costs of the equipment we purchase from third party sources. Cost of net
revenue increased to $56.7 million in the nine months ended September 30, 1999
from $30.9 million in the nine months ended September 30, 1998. The increase in
cost of net revenue during this period is primarily attributable to increases
in our volume of new and de-installed equipment sales. Cost of net revenue
attributable to new equipment sales increased to $22.4 million in the nine
months ended September 30, 1999 from $9.3 million in the nine months ended
September 30, 1998. The increase in cost of net revenue attributable to new
equipment was due primarily to increases in the volume of new equipment we sold
rather than increased unit costs of equipment we purchased. We believe these
costs may continue to increase as we purchase additional new equipment to
satisfy customer demand. Cost of net revenue attributable to de-installed
equipment sales increased to $34.3 million in the nine months ended September
30, 1999 from $21.5 million in the nine months ended September 30, 1998. The
increase in cost of net revenue attributable to de-installed equipment was due
primarily to increased volume of de-installed equipment sales and fluctuations
due to large, non-recurring purchases of de-installed equipment. We believe
that the costs of net revenues attributable to de-installed equipment will
continue to increase as our volume of de-installed equipment sales increases in
response to customer demand. Gross profit as a percentage of net revenue, or
gross margin, declined to 34.9% in the nine months ended September 30, 1999
from 39.8% in the nine months ended September 30, 1998. The decline in gross
margins was primarily due to an increase in the proportion of new equipment we
sold, which

24
<PAGE>

generally has lower gross margins than de-installed equipment, fluctuations in
the prices of a number of our purchase transactions, and increased competition
in the procurement of de-installed equipment generally. Gross margin
attributable to new equipment sales decreased to 16.0% in the nine months ended
September 30, 1999 from 19.7% in the nine months ended September 30, 1998. The
decrease in gross margin attributable to new equipment sales was due primarily
to fluctuations in the mix of equipment we sold. We believe these gross margins
will continue to fluctuate depending upon the mix of the new equipment we sell.
Gross margin attributable to de-installed equipment sales decreased to 43.2% in
the nine months ended September 30, 1999 from 45.6% in the nine months ended
September 30, 1998. The decrease in gross margin attributable to de-installed
equipment sales was due primarily to decreased prices of the de-installed
equipment we purchased relating to a number of large, non-recurring purchase
transactions in the nine months ended September 30, 1998. We believe that gross
margins attributable to de-installed equipment sales may continue to fluctuate
depending upon the mix of de-installed equipment we sell and our ability to
make significant discounted purchases.

Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and benefits for sales, marketing and procurement
employees as well as costs associated with advertising and promotions. A
majority of our sales and marketing expenses are incurred in connection with
establishing and maintaining long-term relationships with a variety of
carriers. Sales and marketing expenses increased to $7.2 million in the nine
months ended September 30, 1999 from $3.9 million in the nine months ended
September 30, 1998. This increase was due to higher absolute commission
expenses consistent with increased gross profit upon which our sales
commissions are based, as well as the hiring of additional sales and
procurement personnel, including a new executive vice president of sales and
marketing. We expect that our sales and marketing expenses will continue to
increase as we expand our product and service offerings, increase our hiring of
additional sales personnel and pay commissions consistent with increased gross
profit, although such expenses may vary as a percentage of net revenue.

General and Administrative. General and administrative expenses consist
principally of salary and benefit costs for executive and administrative
personnel, as well as legal, accounting and other professional fees. General
and administrative expenses increased to $5.1 million in the nine months ended
September 30, 1999 from $2.9 million in the nine months ended September 30,
1998. This increase was due primarily to the increase in employees resulting
from the expansion of our operations, as well as recruitment costs. We expect
that general and administrative expenses will increase in the future as we
expand our operations, although such expenses may vary as a percentage of net
revenue.

Stock-based Compensation. The stock-based compensation charges relate to
warrants for common stock granted in exchange for services and options granted
to officers and a director in the nine months ended September 30, 1999. The
warrants, which were fully vested at the date of grant, entitle the holders to
purchase up to 207,655 shares of common stock and resulted in a one-time charge
of approximately $530,000 in the nine months ended September 30, 1999. In July
1999, we issued stock options to two officers and one outside

25
<PAGE>

director resulting in unearned stock-based compensation of $830,000 which will
be amortized over the vesting period, generally four years, of the underlying
options. Amortization of the stock option charge during the nine months ended
September 30, 1999 amounted to $122,000. The remaining charge will be amortized
to net income as follows: $122,000 for the remainder of 1999, $367,000 in 2000,
$148,000 in 2001, $63,000 in 2002 and $8,000 in 2003. There was no stock-based
compensation charge in the nine months ended September 30, 1998.

Interest Expense, Net. Interest expense, net consists of interest expense
associated with debt obligations offset by interest income earned on cash and
cash equivalent balances. Interest expense, net increased to $656,000 in the
nine months ended September 30, 1999 from $117,000 in the nine months ended
September 30, 1998. This increase was due to a higher level of outstanding
principal to satisfy greater working capital needs and to service the term loan
facility.

Years Ended 1998, 1997 and 1996

Net Revenue. Net revenue increased to $72.2 million in 1998 from $34.6
million in 1997 and $10.1 million in 1996. The increase in net revenue from
1997 to 1998 was due to significant increases of sales in both the United
States and Latin American markets, an increase in sales of new equipment and
the growth of several customer accounts. The increase in net revenue from 1996
to 1997 was primarily due to significant increases in sales of de-installed
equipment. The increases in net revenue are only nominally attributable to
increases in the prices we charge for our products. Net revenue attributable to
new equipment sales increased to $17.1 million in 1998 from $3.1 million in
1997. We had no revenue attributable to new equipment sales in 1996. The
increase in net revenue attributable to new equipment sales from 1997 to 1998
was due to significant increases in existing customer demand for new equipment.
The increase in net revenue attributable to new equipment sales from 1996 to
1997 was due to our initiation of sales of new equipment in response to
customer demand. Net revenue attributable to de-installed equipment sales
increased to $55.1 million in 1998 from $31.7 million in 1997 and $10.1 million
in 1996. The increase in net revenue attributable to de-installed equipment
sales from 1997 to 1998 was due to increased customer demand for de-installed
equipment in connection with the buildout and servicing of existing networks
and a broader offering of de-installed equipment. The increase in net revenue
attributable to de-installed equipment sales from 1996 to 1997 was due to
significant increases in customer demand in general.

Cost of Net Revenue. Cost of net revenue increased to $43.1 million in 1998
from $20.6 million in 1997 and $5.5 million in 1996. Substantially all of the
increase in cost of net revenue for each of these periods was due to the
increase in procurement costs associated with increased volumes of equipment we
sold. These increased costs are only nominally attributable to increases in the
costs of the equipment we purchase from third parties because these costs have
remained relatively stable. Cost of net revenue attributable to new equipment
sales increased to $13.8 million in 1998 from $2.5 million in 1997. We had no
costs of net revenue attributable to new equipment sales in 1996. The increase
in cost of net

26
<PAGE>

revenue attributable to new equipment sales is due primarily to increased
volumes of new equipment purchased from third parties to be sold to customers.
Cost of net revenue attributable to de-installed equipment sales increased to
$29.4 million in 1998 from $18.1 million in 1997 and $5.5 million in 1996. The
increase in cost of net revenue attributable to de-installed equipment sales is
due primarily to increased volumes of de-installed equipment purchased from
third parties to be sold to customers. The gross margin decreased to 40.2% in
1998, from 40.5% in 1997 and 45.5% in 1996. The relatively stable gross margin
levels between 1998 and 1997 were due to increased volumes of sales of higher
margin de-installed equipment in 1998, offsetting an increased portion of lower
margin new equipment sales in the same period. The decrease in gross margin in
1997 and 1996 was due to a change in sales mix to include more new equipment
which has lower gross margins than de-installed equipment, and an increase in
the cost of procuring de-installed equipment due to greater secondary market
competition. Gross margin attributable to new equipment sales increased to
19.5% in 1998 from 18.3% in 1997. The increase in gross margin attributable to
new equipment sales is due to primarily to fluctuations in the equipment we
sold. Gross margin attributable to de-installed equipment sales increased to
46.7% in 1998 from 42.7% in 1997 and 45.5% in 1996. The increase in gross
margin attributable to de-installed equipment sales is due primarily to
favorable pricing related to a number of large, non-recurring purchase
transactions in 1998.

Sales and Marketing. Sales and marketing expenses increased to $5.7 million
in 1998 from $2.6 million in 1997 and $780,000 in 1996. The increases for each
of these periods were primarily due to the addition of sales and procurement
personnel, including sales managers, higher absolute commission expenses
consistent with increased gross profit and increased marketing efforts.

General and Administrative. General and administrative expenses increased to
$3.9 million in 1998 from $1.6 million in 1997 and $696,000 in 1996. The
increase from 1998 compared with 1997 was due to a significant increase in
headcount resulting from the expansion of our operations, and due to
approximately $700,000 in financing costs attributable to our recapitalization
in July 1998. The increase from 1997 compared with 1996 was due primarily to
the increase in salaries and benefits payable to executive and administrative
employees resulting from the expansion of our operations.

Interest Expense, Net. Interest expense, net increased to $187,000 in 1998,
from $82,000 in 1997, and $18,000 in 1996. The increases for those periods were
due to higher borrowing levels necessary to fund our working capital
requirements.

27
<PAGE>

Quarterly Results of Operations

The following tables set forth unaudited statement of operations data for
each of the eight quarters in the period ended September 30, 1999, as well as
the percentage of our net revenue represented by each item. In our opinion,
this unaudited information has been prepared on the same basis as the annual
financial statements. This information includes all adjustments (consisting
only of normal recurring adjustments) necessary for fair presentation when read
in conjunction with the financial statements and related notes included
elsewhere in this prospectus. The operating results for any quarter are not
necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------------------------
Dec. June Sept. Dec, June Sept.
31, March 31, 30, 30, 31, March 31, 30, 30,
1997 1998 1998 1998 1998 1999 1999 1999
------- --------- ------- ------- ------- --------- ------- -------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenue............. $12,257 $14,258 $20,159 $16,854 $20,915 $23,248 $29,586 $34,200
Cost of net revenue..... 7,478 8,688 12,349 9,853 12,242 14,609 19,414 22,655
------- ------- ------- ------- ------- ------- ------- -------
Gross profit............ 4,779 5,570 7,810 7,001 8,673 8,639 10,172 11,545
Operating expenses:
Sales and marketing... 864 990 1,404 1,501 1,853 1,967 2,418 2,853
General and
administrative....... 543 525 801 1,596 1,016 1,420 1,579 2,086
Stock-based
compensation......... -- -- -- -- -- -- 193 459
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 1,407 1,515 2,205 3,097 2,869 3,387 4,190 5,398
------- ------- ------- ------- ------- ------- ------- -------
Income from operations.. 3,372 4,055 5,605 3,904 5,804 5,252 5,982 6,147
Interest expense, net... 18 18 57 42 70 59 85 512
------- ------- ------- ------- ------- ------- ------- -------
Net income.............. $ 3,354 $ 4,037 $ 5,548 $ 3,862 $ 5,734 $ 5,193 $ 5,897 $ 5,635
======= ======= ======= ======= ======= ======= ======= =======

As a Percentage of
Net Revenue:
Net revenue............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of net revenue..... 61.0 60.9 61.3 58.5 58.5 62.8 65.6 66.2
------- ------- ------- ------- ------- ------- ------- -------
Gross profit............ 39.0 39.1 38.7 41.5 41.5 37.2 34.4 33.8
Operating expenses:
Sales and marketing... 7.1 7.0 6.9 8.9 8.9 8.5 8.2 8.3
General and
administrative....... 4.4 3.7 4.0 9.4 4.8 6.1 5.3 6.1
Stock-based
compensation......... -- -- -- -- -- -- 0.7 1.4
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 11.5 10.7 10.9 18.3 13.7 14.6 14.2 15.8
------- ------- ------- ------- ------- ------- ------- -------
Income from operations.. 27.5 28.4 27.8 23.2 27.8 22.6 20.2 18.0
Interest expense, net... 0.1 0.1 0.3 0.3 0.4 0.3 0.3 1.5
------- ------- ------- ------- ------- ------- ------- -------
Net income.............. 27.4% 28.3% 27.5% 22.9% 27.4% 22.3% 19.9% 16.5%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

28
<PAGE>

Our net revenue increased in each quarter compared to the same quarter in the
prior year due primarily to increased levels of customer demand for the
equipment we sell in general. Our gross margins declined over the period from
39.0% in the quarter ended December 31, 1997 to 33.8% in the quarter ended
September 30, 1999 due largely to an increase in our percentage of sales of new
products which have lower gross margins than de-installed products. Sales and
marketing expenses have increased in absolute dollars for every quarter since
September 30, 1997 reflecting greater commissions paid on increased gross
profit, the addition of sales personnel and intensified marketing efforts.
General and administrative expenses increased almost every quarter due to the
increase in personnel costs and professional fees required to support our
growth. In the quarter ended September 30, 1998, general and administrative
expenses included approximately $700,000 in costs associated with the July 1998
recapitalization.

Historically, our net revenue and results of operations have been subject to
significant fluctuations, particularly on a quarterly basis, and could
fluctuate significantly from quarter to quarter and from year to year in the
future. Causes of such fluctuations may include the rate and timing of
customers' orders for the equipment we sell, the rate at which
telecommunications carriers de-install equipment, decreases in the prices of
the equipment we sell due to increased secondary market competition, our
ability to locate and obtain equipment, our ability to deploy equipment on a
timely basis, seasonal variations in customer purchasing, write-offs due to
inventory defects and obsolescence, the potentially long sales cycle for our
equipment, delays in the commencement of operations in new markets, costs
relating to possible acquisitions, and general economic conditions and
conditions specific to the telecommunications industry. Historically, we have
seen that our net revenue is subject to seasonal fluctuations because our
customers typically purchase less telecommunications equipment during the third
calendar quarter of each year due to the annual nature of budgetary,
procurement and sales cycles. Significant quarterly fluctuations in our net
revenue will cause significant fluctuations in our cash flows and working
capital.

Liquidity and Capital Resources

Since inception in July 1995, we have financed our operations primarily
through cash flows from operations. Net cash generated by operating activities
was $11.3 million in the nine months ended September 30, 1999, $14.9 million in
1998, $8.0 million in 1997 and $1.8 million in 1996. Substantially all of the
cash generated by operating activities was distributed to the members of Somera
Communications, LLC. In July 1998, we used $51.8 million from the sale of Class
B units to outside investors to repurchase outstanding units from a number of
our initial unit holders.

On August 31, 1999, we entered into a credit agreement with a syndicate of
financial institutions led by Fleet National Bank. The credit agreement
provides for a term loan facility and a revolving loan facility. The term loan
facility was for an aggregate principal amount of $50.0 million. The revolving
loan facility allows us to borrow $15.0 million, with a $5.0 million sublimit
for the issuance of letters of credit. The obligations under the term loan
facility and the revolving loan facility are secured by a first priority lien
on all our tangible and intangible assets. We may prepay loans under the term
loan facility and

29
<PAGE>

revolving loan facility at any time upon prior notice to the lenders. As of
September 30, 1999, $50.0 million was outstanding under the term loan facility
and $6.4 million had been drawn under the revolving loan facility. The proceeds
of our term loan facility were used to make a distribution to the members of
Somera Communications, LLC of $48.5 million in September 1999 and the remaining
$1.5 million was used to pay off a portion of outstanding balances on notes
payable. Additionally, approximately $1.5 million of our revolving loan
facility was used to pay off the current portion of the notes payable. The
remaining amount of notes payable, approximately $500,000 was satisfied from
available cash. Subject to certain voluntary or mandatory reductions by the
Company of the revolving loan facility commitment, the revolving loan facility
will be available for borrowing until August 31, 2004. At our option, loans
under each of the facilities shall bear interest at the prime rate plus an
applicable margin or LIBOR, plus an applicable margin. The applicable margin
with respect to prime rate loans shall be between 0.25% and 1.25% based upon
our debt to earnings ratio. The applicable margin with respect to LIBOR loans
shall be between 1.75% and 2.75% based upon our debt to earnings ratio. We
expect to repay and retire the outstanding balance of the term loan facility
and repay the outstanding balance of the revolving loan facility with the
proceeds of the offering.

As of September 30, 1999, we had approximately $195,000 in cash and cash
equivalents. In addition, we had a credit facility to borrow up to $15.0
million. As of September 30, 1999, we had an outstanding book balance under
this line of credit of $6.4 million. We do not currently plan to pay dividends,
but rather to retain earnings for use in the operation of our business and to
fund future growth.

We anticipate significant increases in working capital in the future
primarily as a result of increased sales of equipment and higher relative
levels of inventory. We will also continue to expend significant amounts of
capital on property and equipment related to the expansion of our corporate
headquarters, distribution center and equipment testing infrastructure to
support our growth.

We believe that cash and cash equivalents, net proceeds from this offering
and anticipated cash flow from operations will be sufficient to fund our
working capital and capital expenditure requirements for at least the next 12
months. We intend to use a portion of the net proceeds of the offering to repay
$50.0 million of the term loan facility and $6.4 million of the revolving loan
facility. Following this offering we anticipate that we will be able to borrow
up to $15.0 million under our revolving loan facility. We have budgeted
$2.0 million of the net proceeds in connection with capital expenditures
however, there are currently no specific projects identified.

Year 2000 Compliance

Many currently installed computer systems and software products are coded to
accept, store or report only two digit entries in date code fields. Beginning
in the year 2000, these date code fields will need to be enabled to distinguish
21st century dates from 20th century dates. As a result, computer systems and
software used by many companies, including us, our vendors and our customers,
will need to be upgraded to comply with these year 2000

30
<PAGE>

requirements. We could be impacted by year 2000 issues occurring in our own
infrastructure or the infrastructure of our suppliers, customers, vendors and
financial service organizations. These year 2000 issues could include
information errors and significant information system failures. Any disruption
in our operations as a result of year 2000 issues could harm our business.

Our State of Readiness

Overview. To address year 2000 readiness, we are implementing a corporate
program to coordinate efforts across all business functions, including
addressing risks associated with business partners and other third-party
relationships. Our internal year 2000 readiness program is divided into four
program areas: internal systems and technology compliance, product compliance,
facilities and safety compliance and supplier and business partner compliance.
We have substantially completed the assessment phase for all areas. We expect
to complete our corrective actions during the fourth quarter of 1999. There can
be no assurance that we will be able to complete corrective action for all four
phases in a timely manner, if at all, or that the process will adequately
address the year 2000 issue.

Internal Systems and Technology Compliance

Core IT Systems. In August 1999, we completed the implementation of the J.D.
Edwards distribution and financial system, which covers most of the major
functional areas of our business. This system is designed to further automate
our business processes and incorporates the Julian dating format to correctly
interpret dates in the year 2000 and beyond. Further, this system, in all
material respects meets the criteria of "A Definition of Year 2000 Conformity
Requirements," published by the British Standards Institute.

Other Information Technology Systems. Our other information technology
systems include telephone and comparable systems and other application
software. We have replaced, upgraded or plan to replace or upgrade those
systems that we assessed as not year 2000 compliant. All system compliance
projects are expected to be completed during the fourth quarter of 1999.

Product Compliance

We do not design or manufacture any products we sell. We purchase all of our
equipment from original equipment manufacturers, distributors and other third
parties. Under our purchase agreements with original equipment manufacturers,
equipment provided under these agreements will be year 2000 compliant. On
purchases from distributors and other third parties, we attempt to assess the
state of compliance of the equipment, however, there can be no assurance that
this can be accurately determined.

Facilities and Safety Compliance

Our facilities and safety technology systems include building systems such as
heating, cooling, fire, sprinkler and security systems. We are working with our
landlords to identify and resolve any year 2000 compliance issues in these
systems.

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<PAGE>

Supplier and Business Partner Compliance

Our suppliers provide equipment and supplies used by us in the conduct of our
business. An assessment of our suppliers is underway to determinate the
potential level of business interruption we could incur if a supplier fails to
properly address the year 2000 issue. Our business partners provide our
financial, payroll and other operational services. We are requesting written
assurance of year 2000 compliance from our suppliers and business partners
whose Year 2000 compliance is important to our business. We will consider using
alternate sources in the cases where these parties will not provide written
assurances.

The Costs to Address Our Year 2000 Issues

Costs incurred in connection with the resolution of year 2000 issues to date
have consisted primarily of the purchase and implementation of our J.D. Edwards
database system and related hardware. In addition, we have incurred internal
labor costs relating to year 2000 compliance planning and assessment. As of
August 31, 1999 we have incurred capital expenditures of approximately $800,000
on year 2000 compliance and expect to incur approximately $200,000 of
additional compliance related expenditures. We do not expect additional
expenditures related to year 2000 compliance to be significant.

Our Contingency Plans

Specific contingency plans are being developed in connection with the
assessment and resolution of the risks we have identified. We have established
preliminary information technology contingency plans and we are continuing to
develop those plans for specific areas of risk associated with the year 2000
issue. We expect to finalize our contingency plans during the fourth quarter of
1999.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes new standards of
accounting and reporting for derivative instruments and hedging activities.
SFAS 133 requires that all derivatives be recognized at fair value in the
balance sheet, and the corresponding gains or losses be reported either in the
statement of operations or as a component of comprehensive income, depending on
the type of hedging relationship that exists. SFAS 133 will be effective for
fiscal years beginning after June 15, 2000. We do not currently hold derivative
instruments or engage in hedging activities.

Qualitative and Quantitative Disclosure About Market Risk

We have reviewed the provisions of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Commodity Instruments and
Disclosure of Quantitative and Qualitative Information about Market Risks
Inherent in Derivative Financial Instruments, Other Financial Instruments and
Derivative Commodity Instruments." We had no holdings of derivative financial
or commodity instruments at September 30, 1999.

32
<PAGE>

All of our revenue and capital spending is denominated in U.S. dollars. As of
September 30, 1999 we were exposed to interest rate risk on our then
outstanding revolving loan facility. The table below presents principal amounts
by expected maturity and the weighed average interest rates of debt obligations
which are sensitive to changes in interest rates.

<TABLE>
<CAPTION>
Expected Maturity Date
--------------------------
1999 2000 2001 2002 2003
----- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Revolving Loan Facility........................... 6,435 -- -- -- --
Weighed Average Interest Rate..................... 9.44% -- -- -- --
</TABLE>

We believe that the fair value of our current revolving loan facility
approximates its carrying value due to its short term nature.

33
<PAGE>

BUSINESS

Industry Background

The telecommunications infrastructure equipment market has experienced
tremendous growth in recent years. This growth has been driven primarily by
increased carrier competition, expanded service offerings, increased demand
among businesses and consumers and technology advancements. Dataquest projects
that worldwide sales of telecommunications infrastructure equipment will grow
from $180 billion in 1998 to $230 billion in 2002.

Telecommunications infrastructure equipment is purchased by a wide variety of
existing and emerging carriers, including:

. Incumbent local exchange carriers, or ILECs, which provided local
telephone service on an exclusive basis prior to deregulation, and
include independent local exchange carriers, and regional bell operating
companies, or RBOCs;
. Long distance carriers, or IXCs;
. Wireless carriers, such as cellular service providers, personal
communications service, or PCS, companies, paging operators and
specialized mobile radio operators, or SMRs, that offer wireless
communications services similar to cellular; and
. Competitive local exchange carriers, or CLECs, which compete with ILECs
to provide local telecommunications service subsequent to deregulation.

These carriers are making substantial capital expenditures on
telecommunications infrastructure equipment to build, upgrade and maintain
their networks. These networks are primarily comprised of switching,
transmission, access, wireless, microwave and power equipment.

Carrier Challenges in the Changing Telecommunications Market

Increased Carrier Competition. Global deregulation has changed the
telecommunications industry and created significant new opportunities for
carriers. For example, in the United States, where each local telephone market
was once served by a single local exchange carrier, deregulation has now
created intense competition by allowing the entry of IXCs, CLECs, wireless
carriers and local exchange carriers from other markets. Carriers are making
substantial expenditures on equipment to establish themselves in new markets.
In this increasingly competitive environment, we believe carriers will continue
to devote significant financial resources to build, upgrade and maintain their
networks.

Expanded Service Offerings. To differentiate themselves, carriers are rapidly
developing and offering to their customers innovative and more affordable
services. Examples of these services include high speed Internet access, one-
rate wireless and long distance plans and other services. To deliver these
expanded services, carriers must invest significant capital to increase their
network capacity and enhance their current networks.

Increased Demand Among Businesses and Consumers. The demand among businesses
and consumers for telecommunications services has increased dramatically in
recent years.

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As competition among carriers has resulted in lower pricing and greater
accessibility, consumers have increased their utilization of and dependence on
new services. For example, the growth in high speed data and Internet
applications, including e-mail, web browsing and e-commerce, and the increased
availability of more flexible mobile networks, such as cellular, PCS and
paging, have increased business and consumer demand for these and other new
services. To meet this demand, carriers must build, upgrade and maintain
reliable networks capable of supporting significantly greater volumes of
traffic as well as new service offerings.

Technology Advancements. Advancements in telecommunications technology enable
carriers to increase capacity, improve service quality and expand their service
offerings. To respond to increased competition and differentiate their service
offerings, carriers are purchasing and deploying new equipment and technologies
from a wide variety of manufacturers.

Impact on Carrier Equipment Needs

The foregoing challenges are fueling demand by existing and emerging carriers
for telecommunications infrastructure equipment and services. Carriers have
invested hundreds of billions of dollars in telecommunications network
infrastructure. To maximize the value of their investments, carriers are
expanding and upgrading their existing networks and utilizing existing and new
technologies and equipment from multiple vendors. In addition, carriers are
seeking cost-effective ways to expand and maintain existing network elements
based on mature technologies.

As carriers build, maintain and upgrade their telecommunications networks,
they often replace existing equipment that still has a significant useful life.
This equipment often is suitable for redeployment in other parts of a carrier's
network to increase network capacity and expand service offerings. While
historically carriers may have scrapped this equipment or let it remain idle,
competitive factors increasingly require carriers to attempt to recapture a
portion of their original investment. While carriers prefer to redeploy this
equipment within their own networks, they are often unable to do so. In cases
where redeployment cannot be achieved, they are seeking third party assistance
to regain a portion of their initial investment.

Carriers not only require large amounts of telecommunications equipment, but
they also need related value-added services to support the buildout and
expansion of their networks. In particular, emerging carriers lack many of the
human and financial resources of existing carriers and need these value-added
services as they aggressively build out their networks to take advantage of
opportunities to capture and retain customers. These emerging carriers seek
creative and cost effective ways to build out their networks through a
combination of services and new and de-installed equipment. Once they have
expanded these networks, they will have the same needs as incumbent carriers to
increasingly expand their service offerings and network coverage. This cycle of
network buildouts, upgrades, expansions and maintenance by carriers will
continue to fuel the trend of increased demand for both new and de-installed
equipment.

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Limitations of Existing Equipment Providers

To satisfy their equipment needs, carriers have traditionally purchased
equipment from original equipment manufacturers, distributors and secondary
market dealers. In this increasingly competitive market, many carriers are
discovering that the traditional equipment providers are unable to fulfill
their complex and changing equipment and service requirements.

Original Equipment Manufacturers. Historically, carriers have relied on
original equipment manufacturers for new telecommunications infrastructure
equipment. Today, some large original equipment manufacturers offer a variety
of products but do not support multi-vendor product lines. In addition, while
some original equipment manufacturers offer limited trade-in programs for
equipment, they typically only cover equipment they manufactured and offer
relatively low valuations. Original equipment manufacturers are also
encountering difficulties in serving increased numbers of carriers as their
direct sales models do not scale well and are not cost effective in today's
environment. As a result, many large original equipment manufacturers are
moving away from the direct sales model and relying more upon value-added
equipment providers to deliver much of their equipment.

Distributors. Telecommunications equipment distributors typically provide a
selection of new equipment from a list of specific manufacturers and serve a
product fulfillment role within defined product lines. While this high-volume,
low margin, transaction-oriented model offers a wider selection of equipment
than original equipment manufacturers, it generally results in limited
flexibility to address changing carrier equipment requirements. Additionally,
the lower margins associated with distributor sales results in a sales force
focused on sales volume and not on creative, customized solutions. Distributors
are not able to support the complexities of effective trade-in, refurbishing
and redeployment programs.

Secondary Market Dealers. While original equipment manufacturers and
distributors have limited involvement in the growing secondary market for
telecommunications equipment, secondary market dealers specialize in this type
of transaction. These dealers buy and sell used equipment in niche markets and
often serve as an outlet for carriers' excess inventories. Generally these
secondary market dealers lack the management, operational and financial
resources necessary to consistently and effectively meet changing equipment
requirements.

Emerging Requirements for Telecommunications Equipment Providers

Due to increased competition, the need to rapidly deliver expanded services,
greater demand and technology advancements, carrier demand for
telecommunications infrastructure equipment and related services has grown
significantly. In today's dynamic environment, carriers are balancing the need
to attract and retain their customers with aggressive network buildout
schedules. As a result, carriers are turning to equipment providers who offer:

. Broad selections of multi-vendor equipment and technologies available
from a single source;
. Rapid responses from flexible, knowledgeable sales and customer service
representatives;

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<PAGE>

. Asset recovery programs that offer higher returns and greater flexibility
across a broader range of de-installed equipment.
. Technical support on a wide variety of products, including product
selection and configuration;
. Other equipment solutions including repair, installation and de-
installation; and
. Value-added materials management services including warehousing, multi-
vendor equipment packaging, which we refer to as kitting, and other
network deployment services.

The Somera Solution

We provide telecommunications carriers with a broad range of infrastructure
equipment and related services designed to meet their specific and changing
equipment needs. We offer our customers a unique combination of new and de-
installed equipment from a variety of manufacturers, allowing them to make
multi-vendor purchases from a single cost-effective source. To further address
our customers' dynamic equipment needs, we offer a suite of customized, value-
added services including asset recovery, inventory management, technical
support and other ancillary services. Our innovative equipment and service
offerings are delivered through our team of more than 75 trained sales and
procurement professionals, who work individually with customers to understand,
anticipate and meet their ongoing equipment requirements. Our sales teams
utilize our relationship management database, our selective inventory and our
distribution center to provide our customers with rapidly deployable equipment
solutions.

The key benefits of our solution include:

. Broad Multi-vendor Equipment Offering. We provide customers with an
effective alternative to traditional telecommunications equipment supply
channels by offering a broad range of new and de-installed equipment from
a variety of manufacturers. We offer infrastructure equipment used in
both wireline and wireless networks including switching, transmission,
access, wireless, microwave and power products. We believe the equipment
we sell provides carriers with a more flexible and cost-effective
alternative to existing suppliers.

. Rapid Responsiveness to Dynamic Customer Needs. We offer our customers
rapid, customized solutions to address their unique equipment needs. We
provide carriers with convenient access to our skilled and dedicated
sales and service professionals who are capable of quickly identifying
and responding to their diverse network needs. We are able to quickly
locate and provide equipment to carriers by using our relationship
management database and maintaining selective inventory.

. Flexible Asset Recovery Programs. We provide innovative and effective
asset recovery programs that enable carriers to cost-effectively build,
upgrade and maintain their networks and to recapture value from their de-
installed equipment. Our asset recovery programs are customized to meet
carriers' specific objectives and include equipment purchases, as well as
trade-in, remarketing and consignment programs that offer carriers a
creative means to recapture a portion of their original equipment
investment.

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. Simplified, Value-added Materials Management Services. We provide
carriers with a comprehensive, cost-effective source for buying and
selling telecommunications infrastructure equipment that simplifies the
management of their equipment inventory and allows them to focus more on
their core business. We also provide carriers with a full range of value-
added services, including technical, materials management and other
network deployment services.

The Somera Strategy

Our objective is to be the premier provider of telecommunications
infrastructure equipment and related services to carriers worldwide. Key
elements of our strategy include:

. Expand Penetration of Telecommunications Carrier Market. Our strategy is
to further penetrate our existing base of over 750 customers and to
identify, target, and develop additional customers. We intend to increase
our sales force and continue our highly interactive dialogue with
carriers to better understand and respond to their specific equipment and
service needs. We believe we have established a track record of providing
high levels of customer service and that our reputation will give us
access to greater customer opportunities in the future. We believe that
our relationship management database provides us with the broad industry
pricing and equipment deployment knowledge necessary to meet our
customers' needs and anticipate market trends.

. Expand Product Lines and Service Capabilities. To continue to meet the
dynamic needs of carriers, we intend to continuously add to the depth and
breadth of our equipment and service offerings. We intend to expand our
product lines by increasing our access to carriers' de-installed
equipment and partnering with additional original equipment manufacturers
and distributors. We will aggressively seek new supply sources to address
under-served equipment segments.

. Increase RBOC Penetration. We intend to expand our relationships with the
RBOCs by increasing our resources dedicated to this market, including
expanding our sales force and obtaining ISO 9000 certification for our
distribution center and testing facilities. We also intend to further
strengthen product expertise in those areas most heavily demanded by
RBOCs. We believe that maintaining strong relationships with the RBOCs
can also offer a significant potential source of de-installed equipment.

. Pursue Opportunities for International Growth. International markets
represent a significant opportunity for future growth. We are currently
generating net revenue in Latin America, Europe and Asia and expect to
continue this international expansion. We intend to add additional sales
management and resources to focus on these markets and plan to open our
first European office in the first six months of 2000. Entry into the
European market gives us the opportunity to expand our current offering
of equipment based on European standards and technology and increases our
ability to serve foreign markets. In addition, we believe that
international expansion by some of our existing customers will provide us
with greater access to these foreign markets.

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. Pursue Selective Acquisitions. The secondary market for
telecommunications equipment is highly fragmented, consisting primarily
of suppliers offering limited products to niche markets. We believe that
these suppliers and other equipment providers, especially those that can
increase the breadth and depth of our equipment and service offerings and
enable us to reach new markets or further penetrate existing markets,
represent potential acquisition opportunities.

Equipment and Services

Equipment

We offer our customers a broad range of telecommunications infrastructure
equipment to address their specific and changing equipment needs. The equipment
we sell includes new and de-installed items from a variety of manufacturers. In
1998, we sold over 6,000 different items, from over 250 different
manufacturers. We offer the original manufacturer's warranty on all new
equipment we sell. On de-installed equipment, we offer our own warranty which
guarantees that the equipment will perform up to the manufacturer's original
specifications.

The new equipment we offer consists of telecommunications equipment purchased
primarily from the OEM or a distributor. The de-installed equipment we offer
consists primarily of equipment removed from carriers' existing
telecommunications networks. These carriers are typically the original owners
of such equipment. This equipment is professionally removed by the carrier or
another third party upon installation of the replacement equipment. In some
instances, we will remove the equipment directly on behalf of the carrier.
Following removal, de-installed equipment is shipped to our distribution
facility where we test and refurbish the equipment as necessary. Our
refurbishment process includes services such as cleaning and testing de-
installed equipment, and repairing and reconfiguring the equipment where
necessary. The refurbishment process is conducted by our in-house technicians,
whom we train, or by third parties. Upon completion of this process, the de-
installed equipment is added to our list of available items and may be sold to
a customer.

The equipment we sell is grouped into several general categories including
switching, transmission, access, wireless, microwave and power products.

Switching. Switching equipment is used by carriers to manage call traffic and
to deliver value-added service. Switches and related equipment are located in
the central office of a telecommunications carrier and serve to determine
pathways and circuits for establishing, breaking or completing voice and data
communications over the public switched telephone network, or PSTN, and the
Internet. We provide a variety of switching equipment, including switches,
circuit cards, shelves, racks and other ancillary items in support of carrier
upgrades and reconfigurations. Manufacturers of switching equipment whose
products we sell include Alcatel USA, Centigram, Lucent Technologies and Nortel
Networks.

Transmission. Transmission equipment is used by carriers to carry information
to multiple points in a carrier's network. Transmission equipment serves as the
backbone of a

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telecommunications carrier's network and transmits voice and data traffic in
the form of standard electrical or optical signals. We sell a broad range of
transmission products, including channel banks, multiplexors, digital cross-
connect systems, DSX panels and echo cancellers. Manufacturers of transmission
equipment whose products we sell include ADC Telecommunications Inc., Fujitsu
Ltd., Lucent Technologies Inc., NEC Corp., Nortel Networks Inc., Telco Systems,
Inc. and Tellabs Inc.

Access. Access equipment is used by carriers, to provide local telephone
service and Internet access. Access equipment is used in the local loop, or
last mile, portion of the PSTN and connects a home or business to the switch in
a carrier's central office. We provide a variety of access equipment, including
digital loop carriers, channel service units/digital subscriber units,
multiplexors and network interface units. Manufacturers of access equipment
whose products we sell include ADC Telecommunications Inc., Carrier Access
Corp., Lucent Technologies Inc., NEC Corp., Newbridge Networks Corp., Nortel
Networks Inc., Telco Systems, Inc. and VINA Technologies, Inc.

Wireless. Cell sites and other wireless equipment are used by cellular, PCS
and paging carriers to provide wireless telephone and Internet access. This
equipment is used to amplify, transmit and receive signals between mobile users
and transmission sites, including cell sites and transmission towers. We sell a
broad range of wireless equipment including radio base stations, towers,
shelters, combiners, transceivers and other related items. Manufacturers of
wireless and cell site equipment whose products we sell include Allen Telecom
Inc., Telefon AB LM Ericsson, Lucent Technologies Inc., Motorola Inc., Nortel
Networks Inc. and Siemens AG.

Microwave. Microwave systems are used by carriers to transmit and receive
voice, data and video traffic. These systems enable point to point high speed
wireless communications. We provide a variety of microwave systems, including
antennas, dishes, coaxial cables and connectors. Manufacturers of microwave
systems whose products we sell include Alcatel Alsthom S.A., Adaptive Broadband
Corp., Digital Microwave Corp., Digital Transmission Systems Inc., Harris-
Farinon Canada Inc., Nortel Networks Inc. and Glenayre Technologies Inc.

Power. Power equipment is used by carriers to provide direct current, or DC,
power to support their network infrastructure equipment. We sell a broad range
of power equipment, including power bays, rectifiers, batteries, breaker panels
and converters. Manufacturers of power equipment whose products we sell include
C&D Technologies, GEC, Lucent Technologies, Nortel Networks, Peco II and Power
Conversion Products.

Services

Unlike other equipment providers that are product driven, we are customer
focused. Our equipment and service offerings, industry focused sales teams and
internal systems and procedures are all specifically designed to meet the needs
of each carrier market we serve. We train our employees to offer high quality
service and to provide consistent, reliable customer service. We believe these
elements enable us to offer a sales force that can provide rapid, knowledgeable
and creative solutions to our customers.

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To enable carriers to focus on their core business, we offer the following
services in connection with our equipment sales and procurement:

. Asset Recovery Programs. Our innovative asset recovery programs offer
carriers effective solutions to manage their de-installed equipment.
These programs are customized to meet the specific objectives of each
carrier, and include equipment purchases as well as equipment trade-ins,
consignment and re-marketing programs. The programs allow carriers to
easily and rapidly recapture value from de-installed equipment.

. Technical Services. Our technical services include product selection,
equipment configuration, custom integration and technical support. These
services enable carriers to supplement their internal technical
resources.

. Value-added Materials Management Services. Our materials management
services include equipment procurement, multi-vendor equipment packaging,
which we refer to as kitting, warehousing and other inventory management
and deployment services.

. Other Services. Through our extensive network of subcontractor
relationships and partners, we are also capable of providing specialized
transportation services, regional warehousing, repair services,
installation and de-installation services.

Sales, Marketing and Procurement

Our sales organization is located primarily at our corporate headquarters in
Santa Barbara, California and is augmented by our satellite offices in Pasadena
and Los Gatos, California. As of September 30, 1999, we employed more than 75
sales and procurement professionals. We generate leads primarily through direct
marketing, customer referrals and participation in industry tradeshows. Our
sales force is organized by market segment, including specialized teams focused
on the RBOCs, independent local exchange carriers, IXCs, CLECs, and wireless
carriers, including cellular, PCS and SMRs.

Our sales force operates on a named account basis rather than by geography,
which allows us to maintain a consistent, single point of contact for each
customer. Another key feature of our selling effort is the relationships we
establish at various levels in our customers' organizations. This structure
allows us to establish multiple contacts with each customer across their
management, engineering and purchasing operations. For each type of carrier, we
employ dedicated teams with extensive market knowledge to meet the specific
equipment needs of these customers.

Each team member has access to, and is supported by, our relationship
management database. This real time proprietary information system allows each
team to:

. respond to customer requirements by accessing our extensive database of
excess and de-installed equipment located at carriers, manufacturers,
distributors and other third parties worldwide, as well as by accessing
our select inventory;
. access relevant detailed purchase and sale information by customer and
part number;
. access technical and system configuration information;
. trace and track all customer and vendor order activity; and
. project and anticipate customer equipment requirements.

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Each of our teams is directed by a group sales manager who is responsible for
the overall customer relationship and is supported by a number of account
executives, logistics administrators and production controllers. We believe our
dedicated team structure provides consistent high quality customer service
which builds long-term relationships with our customers. Our account executives
have frequent customer contact and oversee customer proposals while our
logistics administrators work with our production controllers as well as our
customers to coordinate sourcing, delivery and any required follow-through
procedures to ensure our customers receive quality, timely customer service.

Our marketing effort focuses on enhancing market awareness of our brand
through industry trade shows, professional sales presentations and brochures,
an informative web site, branded giveaways and special customer events.
Additionally, we advertise in key telecommunications industry publications. We
believe the size and scope of our operations in our highly fragmented industry
gives us both a unique advantage and opportunity to further build and enhance
our brand recognition.

In support of our sales activities, we have teams who are responsible for
procurement of the de-installed equipment we sell. Procurement teams are
organized by market segment, including specialized teams focused on wireless
carriers, wireline carriers, original equipment manufacturers and distributors.
Our procurement specialists are dedicated, on a named account basis, to
purchase de-installed equipment from carriers. We also employ a product
marketing group that develops and maintains our relationships with
manufacturers and distributors to assure the availability of new equipment for
our customers.

As we attempt to expand our sales, marketing and procurement efforts into
international markets, we face a number of challenges, including:

. recruiting skilled sales and technical support personnel;
. creation of new supply and customer relationships;
. difficulties and costs of managing and staffing international operations;
and
. developing relationships with local suppliers;

We cannot be certain that one or more of these factors will not harm our
future international operations.

Customers

We sell equipment to independent local exchange carriers, RBOCs, IXCs, a
broad range of wireless carriers including cellular, PCS, paging and SMRs, and
CLECs. We have over 750 customers who are located primarily in the United
States. In the nine months ended September 30, 1999 no single customer
accounted for more than 10% of our net revenue. In 1998 ALLTEL Corporation
accounted for 10.2% of our net revenue, in 1997 Vodafone AirTouch plc accounted
for 10.1% of our net revenue, and in 1996 ALLTEL Corporation accounted for
11.4% of our net revenue. Sales to customers outside of the United States
accounted for 10.7% of our net revenue in the nine months ended September 30,
1999, 19.7% of our net revenue in 1998, 16.5% of our net revenue in 1997, and
6.8% of our net revenue in 1996. Customers from whom we recognized at least
$2.0 million in net revenue for the twelve months ended September 30, 1999
include leading carriers such as ALLTEL

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<PAGE>

Corporation, AT&T Corporation, GTE Corporation, Liberty Cellular, U.S. Cellular
Corp., Vodafone AirTouch plc and Western Wireless.

The following examples demonstrate how we have helped our customers:

Long Distance Carrier. An international long distance carrier made a
significant investment in several Lucent 4ESS and 5ESS legacy switches
installed throughout the United States. Although these switches were mature
technologies and, in some cases, were discontinued, they still performed well
and the carrier wanted to continue utilizing them. Because these were older
pieces of equipment, obtaining plug-in cards, spare parts and other items
necessary to maintain and expand the switches from the manufacturer was
difficult and expensive. Consequently, the carrier was forced to explore
alternative supply sources. In response to inquiries, we utilized our
relationship management database and network of supply channels to locate and
procure the necessary items on a rapid and cost-effective basis.

CLEC. A CLEC specializing in providing bundled services to businesses and
other carriers had a major customer request which would require the
construction of a multi-site synchronous optical network, or SONET, OC-12 ring.
After completing the initial network expansion design based on new equipment
from an original equipment manufacturer, the carrier determined that the
delivery would not be timely or cost-effective enough to provide a competitive
solution. After the carrier contacted us, we reviewed the engineering
specifications and project schedule. We were able to recommend an alternate
equipment configuration utilizing a combination of available new and de-
installed equipment at 40% less than the price quoted by the OEM. This solution
allowed the carrier to build the SONET ring and meet their customer's
requirement in a cost-effective and timely manner.

Wireless Carrier. A major Latin American wireless carrier had contracted with
a large original equipment manufacturer to replace its existing cellular
network with a new digital network. Design and installation of this new digital
network was to be completed in one year. While the new network was being
installed, the carrier needed to address significant service quality issues it
faced due to capacity constraints on its existing network from rapid subscriber
growth. However, the carrier was reluctant to deploy significant capital on
equipment which would only be in service for one year. By utilizing de-
installed equipment from another carrier's network and refurbishing, testing
and reconfiguring it to meet the specific requirements of the carrier, we were
able to deliver this equipment within 30 days of their order at a significant
discount to the cost of equivalent new equipment. Furthermore, we agreed to
repurchase the de-installed digital network equipment from the implementation
of the carrier's digital network. This cost-effective solution allowed the
carrier to expand capacity to meet demand and generating additional revenues.

Competition

The market for our equipment and service offerings is highly competitive. We
believe that the trends toward greater demand for telecommunications services,
increasing global deregulation and rapid technology advancements characterized
by shortened product lifecycles will continue to drive competition in our
industry for the foreseeable future. Increased competition may result in price
reductions, lower gross margins and loss of our market share.

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<PAGE>

Increased competition in the secondary market for telecommunications
equipment could also heighten demand for the limited supply of de-installed
equipment, which would lead to increased prices for, and reduce the
availability of, this equipment. Any increase in these prices could
significantly impact our ability to maintain our gross margins. Any reduction
in the availability of this equipment could cause us to lose customers.

We currently face competition primarily from original equipment
manufacturers, distributors and secondary market dealers. Many of these
competitors have longer operating histories, significantly greater resources
and name recognition, and a larger base of customers. These competitors are
also likely to enjoy substantial competitive advantages over us, including the
following:

. ability to devote greater resources to the development, promotion and
sale of their equipment and related services;
. ability to adopt more aggressive pricing policies than we can;
. ability to expand existing customer relationships and more effectively
develop new customer relationships than we can, including securing long
term purchase agreements;
. ability to leverage their customer relationships through volume
purchasing contracts, and other means intended to discourage customers
from purchasing products from us;
. ability to more rapidly adopt new or emerging technologies and increase
the array of products offered to better respond to changes in customer
requirements;
. greater focus and expertise on specific manufacturers or product lines;
. ability to implement more effective electronic commerce solutions; and
. ability to form new alliances or business combinations to rapidly acquire
significant market share.

There can be no assurance that we will have the resources to compete
successfully in the future or that competitive pressures will not harm our
business.

Employees

As of September 30, 1999, we had 128 full-time employees. We consider our
relations with our employees to be satisfactory. We have never had a work
stoppage, and none of our employees is represented by a collective bargaining
agreement. We believe that our future success will depend in part on our
ability to attract, integrate, retain and motivate highly qualified personnel,
and upon the continued service of our senior management and key sales
personnel. Competition for qualified personnel in the telecommunications
equipment industry and our geographic location is intense. We cannot assure you
that we will be successful in attracting, integrating, retaining and motivating
a sufficient number of qualified employees to conduct our business in the
future.

Facilities

Our principal executive and corporate offices occupy approximately 19,400
square feet in Santa Barbara, California under a lease agreement that expires
in January 2003 with one three-year extension. Our distribution center occupies
approximately 100,000 square feet in Oxnard, California under a lease agreement
that expires in May 2004. We also have a

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warehouse of approximately 23,000 square feet in Santa Barbara, California
under a lease agreement that expires in March 2005. Additionally, we lease
sales offices of approximately 435 square feet in Los Gatos, California under a
lease agreement that expires in April 2000 and of approximately 455 square feet
in Pasadena, California under a lease agreement that expires in May 2000. We
are currently exploring additional locations to expand our corporate
facilities. We believe that our facilities are adequate for our current
operations and that additional space can be obtained if needed.

Legal Proceedings

From time to time, we may be involved in legal proceedings and litigation
arising in the ordinary course of business. As of the date of this prospectus,
we are not a party to or aware of any litigation or other legal proceeding that
could harm our business.

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MANAGEMENT

Directors and Executive Officers

Our executive officers and directors and their ages as of August 1, 1999, are
as follows:

<TABLE>
<CAPTION>
Name Age Positions
------------------------------------ --- -------------------------------------
<C> <C> <S>
Dan Firestone....................... 37 Chairman of the Board of Directors,
President and Chief Executive Officer
Jeffrey G. Miller................... 36 Executive Vice President, Sales and
Marketing
Gary J. Owen........................ 45 Chief Financial Officer
Gil Varon........................... 38 Director and Vice President, Wireline
Division
Walter G. Kortschak(1).............. 40 Director
Peter Y. Chung(2)................... 31 Director
Barry Phelps(1)(2).................. 52 Director
</TABLE>
- --------
(1) Member of Compensation Committee
(2) Member of Audit Committee

Dan Firestone co-founded Somera Communications in July 1995, has served as
our Chief Executive Officer since 1996, has served as our President since
December 1998, and has also served as our Chairman of the Board since our
inception. From 1994 to the present, Mr. Firestone has also operated SDC
Business Consulting, a private business consulting firm. In 1984, Mr. Firestone
co-founded Century Computer Marketing, a distributor of computer service spare
parts and related products, and served as its Chief Executive Officer until May
1994.

Jeffrey G. Miller has served as our Executive Vice President, Sales and
Marketing since joining Somera Communications in May 1999. From January 1996
until May 1999, Mr. Miller served as Regional Director for North American Sales
and Operations for the Cellular Infrastructure Group of Motorola, Inc. From
1985 until January 1996, Mr. Miller worked in various capacities with AT&T,
including positions in sales management, product management, marketing, and
software development in their long distance, premises equipment, and voice
messaging business segments. Mr. Miller holds a B.S. in business administration
from Miami University and an M.B.A. from Ohio State University.

Gary J. Owen has served as our Chief Financial Officer since joining Somera
Communications in July 1999. From January 1999 until July 1999, Mr. Owen served
as Group Finance Director for Logical Holdings Ltd., a U.K. software
development and services company. From January 1997 to January 1999, Mr. Owen
served as Group Finance Director for IFX Group plc, an international
information services company. From September 1996 to December 1996, Mr. Owen
served as a finance consultant doing project work for Fujitsu
Telecommunications Ltd. From May 1994 to September 1996, Mr. Owen served as
Director, European Operations, for Aurora Electronics, Inc., an electronic
materials management company. From 1986 until May 1994, Mr. Owen served as
Chief Financial Officer of Century Computer Marketing, a distributor of
computer service spare parts and related products. Mr. Owen holds a B.A. in
accounting and finance from Nottingham University, England. Mr. Owen is also a
qualified member of the Institute of Chartered Accountants.

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<PAGE>

Gil Varon co-founded Somera Communications in July 1995, served as our
President from July 1995 until December 1998, has served as our Vice President,
Wireline Division since January 1999, and has served as one of our directors
since our inception. From 1995 until the present, Mr. Varon has also served as
a Senior Sales Manager. From May 1994 to June 1995, Mr. Varon served in sales
and procurement positions for Aurora Electronics, Inc. From 1985 until May
1994, Mr. Varon served as a Group Sales Manager at Century Computer Marketing.

Walter G. Kortschak has served as a director of Somera Communications since
July 1998. Mr. Kortschak is a Managing Partner and Managing Member of various
entities affiliated with Summit Partners, L.P., a private equity capital firm
in Palo Alto, California, where he has been employed since June 1989. Summit
Partners, L.P., and its affiliates manage a number of venture capital funds,
including Summit Ventures V, L.P., Summit V Advisors (QP) Fund, L.P., Summit V
Advisors Fund, L.P., and Summit Investors III, L.P. Mr. Kortschak also serves
as a director of E-Tek Dynamics, Inc., an optical components and modules
company. Mr. Kortschak holds a B.S. in engineering from Oregon State
University, an M.S. in engineering from The California Institute of Technology
and an M.B.A. from the University of California, Los Angeles.

Peter Y. Chung has served as a director of Somera Communications since July
1998. Mr. Chung is a General Partner and Member of various entities affiliated
with Summit Partners, L.P., a private equity capital firm in Palo Alto,
California, where he has been employed since August 1994. Summit Partners,
L.P., and its affiliates manage a number of venture capital funds, including
Summit Ventures V, L.P., Summit V Advisors (QP) Fund, L.P., Summit V Advisors
Fund, L.P., and Summit Investors III, L.P. From August 1989 to July 1992, Mr.
Chung worked in the Mergers and Acquisitions Department of Goldman, Sachs & Co.
Mr. Chung also serves as a director of Ditech Communications Corporation, a
telecommunications equipment company, E-Tek Dynamics, Inc., an optical
components and modules company, and Splash Technology Holdings, Inc., a
developer of color server systems. Mr. Chung holds an A.B. from Harvard
University and an M.B.A. from Stanford University.

Barry Phelps has served as a director of Somera Communications since July
1999. Mr. Phelps is the President and Chief Executive Officer of Netcom
Systems, Inc., a network performance analysis company in Calabasas, California,
where he has been employed since November 1996. Before he became President and
Chief Executive Officer in November 1997, Mr. Phelps served as the Vice
President, Finance and Chief Financial Officer of Netcom Systems. Netcom
Systems was acquired by Bowthorpe plc in July 1999. Prior to joining Netcom
Systems, from February 1992 to November 1996, Mr. Phelps served as Chairman and
Chief Executive Officer of MICOM Communications Corporation, a data
communications equipment company which was acquired by Nortel Networks in June
1996. Mr. Phelps holds a B.S. in mathematics from St. Lawrence University and
an M.B.A. from the University of Rochester.

The executive officers serve at the discretion of the board of directors.
There are no family relationships among any of our directors or executive
officers.

47
<PAGE>

Board Composition

We currently have five authorized directors. In accordance with the terms of
our bylaws, the terms of the directors will be divided into three classes.
Class I director terms will expire at the annual meeting of stockholders to be
held in 2000. Class II director terms will expire at the annual meeting of
stockholders to be held in 2001. Class III director terms will expire at the
annual meeting of stockholders to be held in 2002. The Class I director is Mr.
Chung, the Class II directors are Messrs. Phelps and Varon, and the Class III
directors are Messrs. Firestone and Kortschak. At each annual meeting of
stockholders after the initial classification or special meeting in lieu of the
annual meeting, the successors to directors whose terms will then expire will
be elected to serve from the time of election and qualification until the third
annual meeting following election or special meeting held in lieu of the annual
meeting. Each director is elected at the respective meeting of our stockholders
by a vote of the holders of a plurality of the voting power represented at that
meeting. In addition, our bylaws provide that the authorized number of
directors may be changed by resolution of the board of directors. Any
additional directorships resulting from an increase in the number of directors
will be distributed among the three classes so that, as nearly as possible,
each class will consist of one-third of the total number of directors. This
classification of the board of directors may have the effect of delaying or
preventing a change of control or management of Somera Communications.

Board Committees

Our audit committee, which consists solely of two independent directors,
reviews, acts on and reports to our board of directors on various auditing and
accounting matters, including the selection of our independent accountants, the
scope of our annual audits, fees to be paid to the independent accountants, the
performance of our independent accountants and our accounting practices and
internal controls. Messrs. Chung and Phelps are the members of our audit
committee.

Our compensation committee establishes salaries, incentives and other forms
of compensation for officers and other employees. This committee also
administers our incentive compensation and benefit plans. Messrs. Kortschak and
Phelps are the members of the compensation committee.

Director Compensation

Except for reimbursement of reasonable expenses incurred in connection with
serving as a director and the grant of stock options, our directors are not
compensated for their service as directors. In July 1999, we granted Mr.
Phelps, one of our non-employee directors, an option to purchase 50,000 shares
of common stock at an exercise price of $8.50 per share under our 1999 Unit
Option Plan. These options vest 25% after one year, and ratably thereafter over
a period of three years. Under our 1999 Director Option Plan, each non-employee
director will automatically be granted an option to purchase 30,000 shares of
our common stock on the date on which he or she becomes a director. In addition
to this first option grant, each outside director will automatically be granted
an option to purchase 7,500 shares on each July 1st, if on the date of such
subsequent grant he or she shall have

48
<PAGE>

served on the board for six months from the date of such grant. Both the
initial 30,000 share initial option grant and subsequent 7,500 share option
grant shall vest 25% after one year, and ratably thereafter over a period of
three years. The exercise price for each option granted under the Director Plan
will be the fair market value of our common stock on the date of grant.

Compensation Committee Interlocks and Insider Participation

Our compensation committee consists of Messrs. Kortschak and Phelps. Prior to
the offering, our compensation committee consisted of Messrs. Firestone and
Kortschak.

None of the current members of our compensation committee is an officer or
employee of Somera Communications. No interlocking relationship exists between
our board of directors or compensation committee and the board of directors or
compensation committee of any other company, nor has such an interlocking
relationship existed in the past.

Employment Agreements

Jeffrey G. Miller. Mr. Miller entered into an employment agreement and
commenced his employment with the Company on May 6, 1999. Under the agreement,
we agreed to pay Mr. Miller an annual salary of $225,000 and a bonus of up to
$100,000 based on the achievement of performance milestones. Under this
agreement, Mr. Miller received a signing bonus of $40,000. For the first year
of Mr. Miller's employment, the full performance bonus is guaranteed. In
conjunction with this agreement, we have granted Mr. Miller an option to
purchase 660,093 shares of our common stock at an exercise price of $7.57 per
share with 25% of the shares subject to this option vesting on the first
anniversary of his commencement date, and 1/36th of the remaining shares
vesting monthly thereafter.

As a part of this employment agreement, we have provided Mr. Miller with an
interest-free mortgage loan in the amount of $600,000 for the purpose of Mr.
Miller acquiring a new home. Under the agreement, the loan will be forgiven
over eight years for $50,000 per year for the first four years and $100,000 per
year for the final four years. We will retain a mortgage security interest in
the home during the term of the loan. In the event Somera Communications
experiences a change of control and Mr. Miller is terminated without cause or
constructively terminated within twelve months, the outstanding balance of the
loan will be forgiven. In the event Mr. Miller is terminated without cause by
us, the loan will be due and repayable upon one year after he is first able to
sell his shares following this offering. In addition, he would be entitled to
receive severance equal to one year of his base salary and target bonus and
additional vesting of that number of shares subject to his option that would
have become vested had Mr. Miller remained employed by us for an additional six
months. In the event Mr. Miller leaves our employment voluntarily during the
term of the loan, the loan would be due and repayable within six months of the
date of the termination of his employment.

Gary J. Owen. Mr. Owen entered into an employment agreement with the Company
on July 16, 1999 and commenced his employment with the Company on July 26,
1999. Under the agreement, we have agreed to pay Mr. Owen an annual salary of
$200,000 and a bonus of up to $25,000 based on the achievement of performance
milestones. Under this

49
<PAGE>

agreement, Mr. Owen received a signing bonus of $15,000. For the first year of
Mr. Owen's employment, $12,500 of the performance bonus is guaranteed. In
conjunction with this agreement, we have granted Mr. Owen an option to purchase
405,000 shares of our common stock at an exercise price of $8.50 per share with
25% of the shares subject to this option vesting on the first anniversary of
his commencement date, and 1/36th of the remaining shares vesting monthly
thereafter.

As a part of his employment agreement, we have provided Mr. Owen with a six-
month interest-free mortgage loan in the amount of approximately $1.4 million
for the purpose of Mr. Owen acquiring a new home. We will retain a mortgage
security interest in the home during the term of the loan. As a part of his
employment relationship, a portion of the loan may be forgiven over time at the
discretion of our president. In the event Mr. Owen is terminated without cause
by us, he would be entitled to receive severance payments in an amount up to
twelve months of his base salary and target bonus. In addition, he would be
entitled to receive additional vesting of that number of shares subject to his
option that would have become vested had Mr. Owen remained employed by us for
an additional six months. In the event of a change of control of Somera
Communications, 50% of the shares subject to Mr. Owen's option, together with
any subsequent options granted to him, will vest and become immediately
exercisable.

Dan Firestone. Our compensation committee adopted a bonus plan for Mr.
Firestone that provides him with incentive compensation based on performance
milestones. Under this bonus plan, Mr. Firestone is eligible to receive a
bonus, in addition to his base salary, of up to 250% of his base salary based
on the company's achievement of performance milestones.

Executive Compensation

The following table sets forth all compensation paid or accrued during 1998
to our chief executive officer and our other most highly compensated executive
officer whose salary and bonus for 1998 was more than $100,000. The table also
sets forth compensation on an annualized basis for our chief executive officer
and our other executive officers whose salaries, excluding bonuses if any, for
1999 will exceed $100,000 when calculated on an annualized basis.

Summary Compensation Table

<TABLE>
<CAPTION>
1998 Annual Compensation
------------------------------
Other Annual 1999 Annual
Name and Principal Positions Salary Bonus Compensation Salary
- ----------------------------------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Dan Firestone, Chairman of the
Board, President and Chief
Executive Officer................. $109,936 $219,872 $3,250 $360,000
Gil Varon, Director and Vice
President, Wireline Division...... 43,978 169,792 1,600 100,000
Jeffrey G. Miller, Executive Vice
President, Sales and Marketing.... -- -- -- 225,000
Gary J. Owen, Chief Financial
Officer........................... -- -- -- 200,000
</TABLE>

50
<PAGE>

Option Grants

We did not grant stock options to any of our executive officers in 1998. In
1999, Somera Communications, LLC granted options to purchase Class A units
under its 1999 Unit Option Plan. Following the completion of this offering, no
further options will be granted under the 1999 Unit Option Plan and all
outstanding options under this plan will be assumed by and converted into
options to purchase common stock under the 1999 Stock Option Plan. In May 1999,
Somera Communications, LLC granted an option to Mr. Miller to purchase 660,093
Class A units at an exercise price of $7.57 per unit under our 1999 Unit Option
Plan. In July 1999, Somera Communications, LLC granted an option to Mr. Owen to
purchase 405,000 Class A units at an exercise price of $8.50 per unit under our
1999 Unit Option Plan. In July 1999, Somera Communications, LLC granted an
option to Mr. Firestone to purchase 375,000 Class A units at an exercise price
of $8.50 per unit under our 1999 Unit Option Plan.

The following table provides information relating to those stock options
granted to our executive officers in the current fiscal year as described
above.

<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Number of Percent of Exercise Price Appreciation for Option
Securities Total Options Price Term(4)
Underlying Granted to Per ------------------------------
Name and Principal Options Employees in Share($) Expiration
Positions Granted (#) 1999(%) (1) (2) Date (3) 0%($) 5%($) 10%($)
- ------------------ ----------- ------------- -------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dan Firestone, Chairman
of the Board and Chief
Executive Officer...... 375,000 12.7 8.50 7/13/09 1,312,500 4,142,526 8,484,341
Gary J. Owen, Chief
Financial Officer...... 405,000 13.7 8.50 7/13/09 1,417,500 4,473,928 9,163,088
Jeffrey G. Miller,
Executive Vice
President, Sales and
Marketing.............. 660,093 22.4 7.57 5/15/09 2,924,212 7,905,759 15,548,431
</TABLE>
- --------

(1) Options were granted at an exercise price equal to the deemed fair market
value of the Company's common stock on the date of the grant, as determined
by the board.

(2) Exercise price may be paid (i) in cash, (ii) by check, (iii) by promissory
note, (iv) by delivery of already-owned shares of the Company's common
stock subject to certain conditions, (v) by delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price or (vi) by any combination of the
foregoing methods of payment under applicable law.

(3) Twenty-five percent (25%) of the shares issuable upon exercise of options
granted under the Company's 1999 Unit Option Plan generally become vested
on the first anniversary of the vesting commencement date and the balance
generally vests at the rate of 1/48th of such shares for each month
thereafter. A portion of each of these options will accelerate upon a
change of control or termination of the optionee's employment. See "--
Employment Agreements" for further descriptions of these employee benefits.

(4) Assumes an initial public offering price of $12.00 per share.

51
<PAGE>

Employee Benefits Plans

1999 Stock Option Plan

Our 1999 Stock Option Plan was adopted and approved by our board in September
1999. It provides for the grant of incentive stock options to employees and
nonstatutory stock options and share purchase rights to employees, directors
and consultants. We have reserved for issuance under our 1999 Stock Option Plan
a total of 6,750,000 shares of common stock. As of September 30, 1999, no
options were outstanding under this plan. However, following the consummation
of this offering, all options granted under the 1999 Unit Option Plan will be
assumed and converted into options to purchase an equivalent number of shares
of our common stock under the 1999 Stock Option Plan. Following this assumption
and conversion, 3,806,657 shares of our common stock will remain available for
future option grants. The number of shares of common stock reserved for
issuance under this plan will be subject to an annual increase on each
anniversary beginning January 1, 2000 equal to the lesser of:

. 2,500,000 shares;
. 4% of the outstanding shares on each anniversary date; or
. an amount determined by the board of directors.

The 1999 Stock Option Plan is currently administered by the compensation
committee of our board of directors. Options and stock purchase rights granted
under the 1999 Stock Option Plan will vest as determined by the relevant
administrator, and if not assumed or substituted by a successor corporation
will accelerate and become fully vested in the event we are acquired. The
exercise price of options and stock purchase rights granted under the 1999
Stock Option Plan will be determined by the relevant administrator, although
the exercise price of incentive stock options must be at least equal to the
fair market value of our common stock on the date of grant. Options granted
under the 1999 Stock Option Plan generally vest over a four-year period. The
board of directors may amend, modify or terminate the 1999 Stock Option Plan at
any time as long as such amendment, modification or termination does not impair
vesting rights of plan participants. The 1999 Stock Option Plan will terminate
in 2009, unless terminated earlier by the board of directors.

1999 Unit Option Plan

Our 1999 Unit Option Plan was approved by our board of directors in May 1999.
We adopted the 1999 Unit Option Plan when we were a limited liability company.
We have reserved 3,400,000 Class A units under the 1999 Unit Option Plan. As of
October 20, 1999, options to purchase a total of 2,943,343 Class A units at a
weighted average exercise price of $9.53 per share were outstanding and 456,657
Class A units remained available for future option grants. Following the
completion of this offering, no further options will be granted under the 1999
Unit Option Plan and all outstanding options under this plan will be assumed by
and converted into options to purchase common stock under the 1999 Stock Option
Plan.

1999 Employee Stock Purchase Plan

Our 1999 Employee Stock Purchase Plan was adopted and approved by our board
in September 1999. Our Purchase Plan, which is intended to qualify under
Section 423 of the

52
<PAGE>

Internal Revenue Code, provides our employees with an opportunity to purchase
our common stock through accumulated payroll deductions. This plan will become
effective upon the closing of this offering. A total of 300,000 shares of
common stock have been reserved for issuance under the Purchase Plan, none of
which have been issued. The number of shares reserved for issuance under the
Purchase Plan will be subject to an annual increase on each anniversary
beginning January 1, 2000 equal to the lesser of:

. the number of shares issued under the Purchase Plan in the prior year; or
. an amount determined by the board of directors.

The Purchase Plan will be administered by the compensation committee of our
board of directors. The Purchase Plan grants each eligible employee an option
to purchase common stock through payroll deductions up to a maximum of $25,000
for all purchases ending within the same calendar year and 5,000 shares for
each purchase period thereafter. Employees are eligible to participate if they
are employed by us for at least 20 hours per week and more than five months in
any calendar year. Unless the board of directors or its committee determines
otherwise, each offering period will run for six months. The first offering
period will commence on the date of this prospectus and end on or about August
14, 2000, and new offering periods thereafter will commence on the first
trading day on or after February 15th or August 15th. In the event we are
acquired, each outstanding option may be assumed or an equivalent option
substituted by the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, the offering period
then in progress will be shortened by setting a new exercise date to precede
the date of the acquisition. The price at which common stock will be purchased
under the Purchase Plan is equal to 85% of the fair market value of the common
stock on the first or last day of the applicable offering period, whichever is
lower. Employees may end their participation at any time during the offering
period, and participation automatically ends on termination of employment.
Generally, the board of directors may amend, modify or terminate the Purchase
Plan at any time as long as the amendment, modification or termination does not
impair the rights of plan participants. The Purchase Plan will terminate in
2009, unless terminated earlier in accordance with its provisions.

1999 Director Option Plan

Our 1999 Director Option Plan was adopted and approved by our board in
September 1999. Our Director Plan provides for the grant of non-statutory stock
options to non-employee directors. The Director Plan has a term of ten years
unless terminated earlier by the board of directors. A total of 300,000 shares
of our common stock, plus an annual increase equal to the number of shares
needed to restore the number of shares of common stock that are available for
grant under the Plan to 300,000 shares, have been reserved for issuance under
the Director Plan. As of the date of this prospectus, no options have been
granted under the Director Plan.

Our Director Plan provides that each new outside director shall automatically
be granted an option to purchase 30,000 shares of our common stock on the date
that outside director first becomes a director. In addition to this first
option grant, each outside director shall

53
<PAGE>

automatically be granted an option to purchase 7,500 shares on each July 1st,
if on the date of the subsequent grant he or she shall have served on the board
for six months from the date of such grant. Options granted under the Director
Plan vest at a rate of 25 percent of the shares subject to the option on each
anniversary of its grant date, provided this director continues to serve as an
outside director on these vesting dates. Options granted under the Director
Plan are exercisable by the outside director only while the individual remains
one of our directors. The exercise price for each first option and subsequent
option grant shall be 100% of the fair market value per share of our common
stock on the date of grant.

In the event of our merger or the sale of substantially all of our assets,
each outstanding option shall be assumed or an equivalent option substituted by
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the option, or following assumption or substitution
the director is terminated, each option granted to an outside director under
the Director Plan shall become fully vested and exercisable for a period of
thirty days after which period the option shall terminate. Options granted
under the Director Plan must be exercised within three months of the end of the
optionee's tenure as one of our directors, or within 12 months after the
director's termination by death or disability.

401(k) Plan

We provide a tax-qualified employee savings and retirement plan, commonly
known as a 401(k) plan, which covers our eligible employees. Under our 401(k)
plan, employees may elect to reduce their current annual compensation, on a
pre-tax basis, up to the lesser of 15% or the statutorily prescribed limit,
which is $10,000 in calendar year 1999, and have the amount of the reduction
contributed to the 401(k) plan. The 401(k) plan is intended to qualify under
Sections 401(a) and 401(k) of the Internal Revenue Code so that contributions
by our employees to the 401(k) plan and income earned on plan contributions are
not taxable to employees until withdrawn from the 401(k) plan and so that
contributions will be deductible by us when made. The trustee of the 401(k)
plan invests the assets of the 401(k) plan in the various investment options as
directed by the participants.

Limitation of Liability and Indemnification Matters

Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:

. any breach of their duty of loyalty to the corporation or its
stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
. any transaction from which the director derived an improper personal
benefit.

This limitation of liability does not apply to liabilities arising under
federal and state securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.

54
<PAGE>

Our certificate of incorporation and bylaws provide that we shall indemnify
our directors and executive officers and may indemnify other officers,
employees and other agents to the fullest extent permitted by law. We believe
that indemnification by our bylaws covers at least negligence on the part of
indemnified parties. Our bylaws also permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in their capacity, regardless of whether the bylaws would
permit indemnification.

We have entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, provide for indemnification of our directors
and executive officers for expenses (including attorneys' fees), judgments,
fines and settlement amounts incurred by any director or executive officer in
any action or proceeding, including any action by or on our behalf, arising out
of the individual's services as our director or executive officer, or the
director or executive officer of any subsidiaries or any other company or
enterprise to which the person provides services at our request. We believe
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.

At present, there is no pending litigation or proceeding involving any of our
directors, officers or employees for which indemnification is sought. We are
not aware of any threatened litigation that may result in claims for
indemnification. We currently have liability insurance for our directors and
officers and intend to extend that coverage for public securities matters.

55
<PAGE>

CERTAIN TRANSACTIONS

Summit Financing

On July 23, 1998, Summit Ventures V, L.P., Summit V Advisors (QP) Fund, L.P.,
Summit V Advisors Fund, L.P., Summit Investors III, L.P., which we refer to
collectively as the Summit funds, and several other investors invested an
aggregate of $51.8 million in Somera Communications, LLC in exchange for
14,070,000 Class B units. These Class B units will be exchanged for 14,070,000
shares of common stock upon the effectiveness of the registration statement
with respect to this offering. Based upon an assumed initial public offering
price of $12.00, the value of these shares will be $168.8 million. The parties
also entered into related agreements which provided for registration rights,
liquidation preferences, transfer restrictions, and specified other rights.
These related agreements specify that the Class B investors have the
authority to elect two individuals to the board of managers of Somera
Communications, LLC. Currently, two Class B representatives, Messrs. Kortschak
and Chung, are members of the board of directors of Somera Communications, Inc.
The right of the Class B investors to designate managers of Somera
Communications, LLC, and directors of Somera Communications, Inc., as well as
the transfer restrictions, will terminate upon this offering, although we
expect Messrs. Kortschak and Chung to continue to serve as directors.

Distribution Involving Officers, Directors and Five Percent Owners

On August 31, 1999, we entered into a credit agreement, consisting of a term
loan facility and a revolving loan facility with a syndicate of financial
institutions led by Fleet National Bank. As of September 30, 1999, $50.0
million was outstanding under the term loan facility and $6.4 million has been
drawn under the revolving loan facility. We used the proceeds from the term
loan facility to make a distribution to our members in the aggregate amount of
$48.5 million, including $11.8 million to Dan Firestone, $11.9 million to Gil
Varon, and $17.5 million to the Summit funds. We plan to use a portion of the
net proceeds of this offering to repay all outstanding amounts under the term
loan facility and revolving loan facility. For additional information on the
terms of the Fleet credit facility, please see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," and for additional information regarding repayment of the
facility, please see "Use of Proceeds." Since our inception in July 1995, we
have made distributions to members. For the period beginning January 1, 1998
and through October 26, 1999, and including the Fleet distribution described
above, we have distributed approximately $20.2 million to Mr. Firestone, $20.2
million to Mr. Varon and $24.6 million to the Summit funds. In addition, we
anticipate making additional distributions to members until the time that we
convert from a limited liability company to a Delaware corporation. We estimate
that during this period we will make additional distributions of approximately
$408,000 to Mr. Firestone, $410,000 to Mr. Varon and $598,000 to the Summit
funds.

Loan From Officers and Related Parties

From July 1996 through November 1998, we borrowed an aggregate of $3.5
million from Dan Firestone, Gil Varon, Robert Firestone, who is Dan Firestone's
father, and Voyage

56
<PAGE>

Partners, a partnership whose partners include Dan Firestone and Gil Varon,
under a series of promissory notes that carried annual interest rates that
varied between eight and thirteen percent. These notes were fully repaid in
September 1999.

Miller Loan Agreement

We have provided Jeffrey G. Miller, our executive vice president of sales and
marketing, with a $600,000 interest-free mortgage loan. This loan was made in
conjunction with his employment agreement dated May 6, 1999 to assist with Mr.
Miller's relocation to the Santa Barbara, California area and his purchase of a
home. If Mr. Miller remains employed with us, this loan will be forgiven over
an eight-year period. As of September 30 , 1999, approximately $579,000 was
outstanding on this loan. For additional information regarding this loan,
please see "Management--Employment Agreements".

Owen Loan Agreement

We have provided Gary Owen, our chief financial officer, with a $1.4 million
six-month interest-free mortgage loan. This loan was made in conjunction with
his employment agreement dated July 16, 1999 to assist with Mr. Owen's
relocation to the Santa Barbara, California area and his purchase of a home. As
a part of his employment relationship, a portion of the loan may be forgiven
over time at the discretion of our president. As of October 22, 1999 the entire
outstanding balance of the loan was outstanding. For additional information
regarding this loan, please see "Management--Employment Agreements."

Promoters of Somera Communications

Mr. Firestone and Mr. Varon are each promoters for purposes of the federal
securities laws. All material transactions with such persons are described in
this section or elsewhere in this prospectus. Please see "Management" and Note
4 to the financial statements.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to beneficial
ownership of our common stock as of September 30, 1999, as adjusted to reflect
the sale of our common stock in this offering, by:

. each person who beneficially owns more than 5% of the common stock;
. each of our executive officers;
. each of our directors; and
. all executive officers and directors as a group.

Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to shares. Unless otherwise indicated below, to our knowledge, the
persons and entities named in the table have sole voting and sole investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable. Shares of common stock subject to options that
are currently exercisable or exercisable within 60 days of September 30, 1999
are deemed to be outstanding and to be beneficially owned by the person holding
the options for the purpose of computing the percentage ownership of that
person, but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Unless otherwise indicated, the
address for each listed stockholder is c/o Somera Communications, 5383
Hollister Avenue, Santa Barbara, California 93111.

The applicable percentage of ownership for each stockholder is based on
38,062,500 shares of common stock outstanding as of September 30, 1999,
together with applicable options for that stockholder.
<TABLE>
<CAPTION>
Number of Shares of Percentage of Ownership
Common Stock ------------------------------
Name of Beneficial Owner Beneficially Owned Before Offering After Offering
- --------------------------- ------------------- --------------- --------------
<S> <C> <C> <C>
Dan Firestone.............. 9,285,036 24.4% 19.9%
Jeffrey G. Miller.......... -- * *
Gary J. Owen............... -- * *
Gil Varon.................. 9,375,000 24.6 20.1
Walter G. Kortschak(1)..... -- -- --
c/o Summit Partners
499 Hamilton Avenue, Suite
200
Palo Alto, CA 94301
Peter Y. Chung(2).......... -- -- --
c/o Summit Partners
499 Hamilton Avenue, Suite
200
Palo Alto, CA 94301
Barry Phelps............... -- -- --
Summit Funds(3)............ 13,757,333 36.1 29.5
c/o Summit Partners
499 Hamilton Avenue, Suite
200
Palo Alto, CA 94301
All executive officers and
directors as a group
(7 persons)............... 18,660,036 49.0 40.1
</TABLE>

58
<PAGE>

- --------
* Represents beneficial ownership of less than 1%

(1) Mr. Kortschak, one of our directors, is a managing member of Summit
Partners, LLC, which is the general partner of Summit Partners, V, which is
the general partner of each of Summit Ventures V, Summit V Advisors Fund,
(QP) and Summit V Advisors Fund. Mr. Kortschak is also a general partner of
Summit Investors III. Summit Partners, LLC, through an investment
committee, has voting and dispositive power with respect to the shares
owned by the Summit funds. Mr. Kortschak does not have voting or
dispositive power with respect to the shares owned by the Summit funds and
disclaims beneficial ownership of these shares.

(2) Mr. Chung, one of our directors, is a member of Summit Partners, LLC, which
is the general partner of Summit Partners V, which is the general partner
of each of Summit Ventures V, Summit V Advisors Fund, (QP) and Summit V
Advisors Fund. Summit Partners, LLC, through an investment committee, has
voting and dispositive power with respect to the shares owned by the Summit
funds. Mr. Chung does not have voting or dispositive power with respect to
the shares owned by the Summit funds and disclaims beneficial ownership of
these shares.
(3) Consists of 12,618,986 shares of common stock owned by Summit Ventures V,
723,116 shares of common stock owned by Summit V Advisors Fund, (QP),
220,978 shares of common stock owned by Summit V Advisors Fund, and
194,253 shares of common stock owned by Summit Investors III.

59
<PAGE>

DESCRIPTION OF CAPITAL STOCK

General

Upon the completion of this offering, we will be authorized to issue
200,000,000 shares of common stock, $0.001 par value, and 20,000,000 shares of
undesignated preferred stock, $0.001 par value.

Common Stock

As of September 30, 1999, there were 38,062,500 shares of common stock
outstanding which were held of record by 22 stockholders.

The holders of common stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably dividends, if any, as may be declared from time to
time by the board of directors out of funds legally available for that purpose.
In the event of our liquidation, dissolution or winding up, the holders of
common stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior distribution rights of preferred
stock, if any, then outstanding. The holders of common stock have no preemptive
or conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock.

Preferred Stock

The board of directors has the authority, without action by the stockholders,
to designate and issue preferred stock in one or more series and to designate
the rights, preferences and privileges of each series, any or all of which may
be greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of the preferred stock. However, the effects
might include, among other things, restricting dividends on the common stock,
diluting the voting power of the common stock, impairing the liquidation rights
of the common stock and delaying or preventing a change of control without
further action by the stockholders. Immediately prior to the closing no shares
of preferred stock will be outstanding, and we have no present plans to issue
any shares of preferred stock.

Warrants

As of September 30, 1999, we had an outstanding warrant to purchase 95,155
shares of our common stock at an exercise price of $7.57 per share, and a
outstanding warrant to purchase 112,500 shares of our common stock at an
exercise price of $8.50 per share. Each of the warrants has a two-year term.
Each of the warrants has a net exercise provision under which the holder may,
in the exercise price in cash, surrender the warrant and receive a net amount
of shares, based on the fair market value of our stock at the time of the
exercise of the warrant, after deducting the aggregate exercise price.

60
<PAGE>

Registration Rights

As of September 30, 1999, the holders of 38,062,500 shares of our common
stock or their transferees are entitled to have us register their shares under
the Securities Act. These rights are provided under the terms of an agreement
between us and the holders of these securities. Subject to limitations in the
agreement, if we register any of our common stock either for our own account or
for the account of other security holders, these holders will be entitled to
include their shares of common stock in that registration, subject to the
ability of the underwriters to limit the number of shares included in the
offering. We will be responsible for paying all registration expenses,
including reasonable legal fees, and the holders selling their shares will be
responsible for paying all other selling expenses.

Delaware Anti-takeover Law and Certain Charter and Bylaw Provisions

Provisions of Delaware law and our amended and restated certificate of
incorporation and bylaws summarized below could make it more difficult to
acquire us by means of a tender offer, a proxy contest or otherwise and to
remove our incumbent officers and directors. These provisions are expected to
discourage coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control to first negotiate with us. We
believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us outweighs the disadvantages of discouraging these
proposals because, among other things, negotiations could result in improved
acquisition terms.

Board of Directors

Our board of directors will be divided into three classes of directors
serving staggered three year terms. Our bylaws authorize our board of directors
to fill vacant directorships or increase the size of the board of directors.
Accordingly, even if a stockholder brings a successful proxy fight, the
stockholder would likely only be able to elect a minority of our board of
directors at any single annual meeting.

Stockholder Meetings

Under our amended and restated certificate of incorporation and bylaws, the
board of directors, the chairman of the board and the president may call
special meetings of stockholders but the stockholders may not call a special
meeting.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our bylaws establish advance notice procedures with respect to stockholder
proposals and the nomination of candidates for election as directors, other
than nominations made by or at the direction of the board of directors or a
committee thereof.

Delaware Anti-Takeover Law

We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from

61
<PAGE>

engaging in a "business combination" with an "interested stockholder" for a
period of three years following the date the person became an interested
stockholder, unless (with some exceptions) the "business combination" or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the interested stockholder. Generally, an "interested stockholder" is a person
who, together with affiliates and associates, owns (or within three years prior
to the determination of interested stockholder status, did own) 15% or more of
a corporation's voting stock. The existence of this provision would be expected
to have an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held
by stockholders.

Undesignated Preferred Stock

The authorization of undesignated preferred stock makes it possible for the
board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change our control.
These and other provisions may have the effect of deferring hostile takeovers
or delaying changes in control or management.

Transfer Agent and Registrar

The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services LLC.

Nasdaq National Market Listing

We have applied to list our common stock on the Nasdaq National Market under
the symbol "SMRA."

62
<PAGE>

SHARES AVAILABLE FOR FUTURE SALE

Sales of substantial amounts of our common stock in the public market
following the offering could cause the market price of our common stock to fall
and could affect our ability to raise capital on terms favorable to us.

Of the 46,562,500 shares to be outstanding after the offering, assuming that
the underwriters do not exercise their over-allotment option, only the
8,500,000 shares of common stock sold in this offering will be freely tradable
without restriction in the public market unless the shares are held by
"affiliates," as that term is defined in Rule 144(a) under the Securities Act
of 1933. For purposes of Rule 144, an "affiliate" of an issuer is a person
that, directly or indirectly through one or more intermediaries, controls, or
is controlled by or is under common control with, the issuer. The remaining
shares of common stock to be outstanding after the offering are "restricted
securities" under the Securities Act of 1933 and may be sold in the public
market upon the expiration of the holding periods under Rule 144, described
below, subject to the volume, manner of sale and other limitations of Rule 144.

In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares for at least one year, including an "affiliate," is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of:

. 1% of the then outstanding shares of our common stock (approximately
465,625 shares immediately following the offering); or
. the average weekly trading volume during the four calendar weeks
preceding filing of notice of the sale of shares of common stock.

Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about
us. A stockholder who is deemed not to have been an "affiliate" of ours at any
time during the 90 days preceding a sale, and who has beneficially owned
restricted shares for at least two years, would be entitled to sell shares
under Rule 144(k) without regard to the volume limitations, manner of sale
provisions or public information requirements.

In addition, as of September 30, 1999, there were outstanding warrants to
purchase 207,655 shares of common stock and options to purchase 2,943,343
shares of common stock, of which no options were fully vested. An additional
3,806,657 shares are reserved for issuance under our 1999 Stock Option Plan. We
intend to register the shares of common stock issuable or reserved for issuance
under the 1999 Stock Option Plan as soon as practicable following the date of
this prospectus.

Holders of 38,062,500 shares of common stock are entitled to registration
rights with respect to these shares for resale under the Securities Act of
1933. If these holders, by exercising their registration rights, cause a large
number of shares to be registered and sold in the public market, these sales
could the market price for our common stock to fall. These registration rights
may not be exercised prior to the expiration of 180 days from the date of this
prospectus. See "Description of Capital Stock--Registration Rights."

63
<PAGE>

Lock-up Arrangements

Our directors and officers, along with stockholders who hold all shares of
our common stock have agreed not to sell or otherwise dispose of any shares of
common stock for a period of 180 days after the date of this prospectus without
prior written consent.

64
<PAGE>

UNDERWRITING

Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, the underwriters named
below, for whom Lehman Brothers Inc., Dain Rauscher Wessels, a division of Dain
Rauscher Incorporated and Thomas Weisel Partners LLC are acting as
representatives, have each agreed to purchase from us the respective number of
shares of common stock shown opposite its name below:

<TABLE>
<CAPTION>
Number
of
Underwriters Shares
------------ --------
<S> <C>
Lehman Brothers Inc. ..........................................
Dain Rauscher Wessels..........................................
Thomas Weisel Partners LLC.....................................
--------
Total..........................................................
========
</TABLE>

The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement and that, if any of the shares of
common stock are purchased by the underwriters under the underwriting
agreement, all of the shares of common stock that the underwriters have agreed
to purchase under the underwriting agreement, must be purchased. The conditions
contained in the underwriting agreement include the requirement that the
representations and warranties made by us to the underwriters are true, that
there is no material change in the financial markets and that we deliver to the
underwriters customary closing documents.

The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the public offering price
set forth on the cover page of this prospectus, and to dealers, who may include
the underwriters, at this public offering price less a selling concession not
in excess of $ per share. The underwriters may allow, and the dealers may
reallow, a concession not in excess of $ per share to brokers and dealers.
After the offering, the underwriters may change the offering price and other
selling terms.

We have granted to the underwriters an option to purchase up to an aggregate
of 1,275,000 additional shares of common stock, exercisable solely to cover
over-allotments, if any, at the public offering price less the underwriting
discounts shown on the cover page of this prospectus. The underwriters may
exercise this option at any time until 30 days after the date of the
underwriting agreement. If this option is exercised, each underwriter will be
committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares of common stock
proportionate to the underwriter's initial commitment as indicated in the table
above and we will be obligated, under the over-allotment option, to sell the
shares of common stock to the underwriters.

We have agreed that, without the prior consent of Lehman Brothers, we will
not, directly or indirectly, offer, sell or otherwise dispose of any shares of
common stock or any

65
<PAGE>

securities that may be converted into or exchanged for any shares of common
stock for a period of 180 days from the date of this prospectus. All of our
executive officers and directors and stockholders holding all of the shares of
our capital stock, including all of the holders of the warrants, have agreed
under lock-up agreements that, without prior written consent, they will not,
directly or indirectly, offer, sell or otherwise dispose of any shares of
common stock or any securities that may be converted into or exchanged for any
shares of common stock for the period ending 180 days after the date of this
prospectus. See "Shares Available for Future Sale".

Prior to the offering, there has been no public market for the shares of
common stock. The initial public offering price has been negotiated between the
representatives and us. In determining the initial public offering price of the
common stock, the representatives considered, among other things and in
addition to prevailing market conditions:

. our historical performance and capital structure;
. estimates of our business potential and earning prospects;
. an overall assessment of our management; and
. the above factors in relation to market valuations of companies in
related businesses.

We have applied to list our common stock on the Nasdaq Stock Market's
National Market under the symbol "SMRA."

We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
the representations and warranties contained in the underwriting agreement, and
to contribute to payments that the underwriters may be required to make for
these liabilities.

Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the common stock.

The underwriters may create a short position in the common stock in
connection with the offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

The representatives also may impose a penalty bid on underwriters and selling
group members. This means that, if the representatives purchase shares of
common stock in the open market to reduce the underwriters' short position or
to stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members that sold
those shares as part of the offering.

66
<PAGE>

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of these purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
an offering.

Neither we nor any of the underwriters makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the common stock. In addition, neither we nor
any of the underwriters makes any representation that the representatives will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.

Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
the sale is made.

Purchasers of the shares of common stock offered in this prospectus may be
required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition to the offering price listed on the cover
page of this prospectus.

The underwriters have informed us that they do not intend to confirm sales to
accounts over which they exercise discretionary authority in excess of 5% of
the shares of common stock offered by them.

At our request, the underwriters have reserved up to 425,000 shares of the
common stock offered by this prospectus for sale to our officers, directors,
employees and their family members and to our business associates at the
initial public offering price set forth on the cover page of this prospectus.
These persons must commit to purchase no later than the close of business on
the day following the date of this prospectus. The number of shares available
for sale to the general public will be reduced to the extent these persons
purchase the reserved shares.

A prospectus may be available in electronic format on an Internet website
maintained by Fidelity Investments, which is expected to act as one of the
dealers in the offering.

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since
December 1998, Thomas Weisel Partners has been named as a lead or co-manager on
76 filed public offerings of equity securities, of which 49 have been
completed, and has acted as a syndicate member in an additional 38 public
offerings of equity securities. Thomas Weisel Partners does not have any
material relationship with us or any of our officers, directors or controlling
persons, except with regard to its contractual relationship with us pursuant to
the underwriting agreement entered into in connection with this offering.

67
<PAGE>

LEGAL MATTERS

Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California, will pass upon
the validity of the issuance of the shares of common stock offered by this
prospectus. Cooley Godward LLP will pass upon certain legal matters in
connection with this offering for the Underwriters. Jeffrey D. Saper, a member
of Wilson Sonsini Goodrich & Rosati, P.C., serves as our Secretary. As of the
date of this prospectus, a member of Wilson Sonsini Goodrich & Rosati, P.C.,
owns a warrant exercisable into 112,500 shares of our common stock.

EXPERTS

The audited financial statements of Somera Communications LLC at December 31,
1997 and 1998 and June 30, 1999 and for the years ended December 31, 1996, 1997
and 1998 and six months ended June 30, 1999 included in this prospectus have
been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

68
<PAGE>

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act of 1933 with respect to the
shares to be sold in this offering. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules to the registration statement. For further information with respect
to us and the shares to be sold in this offering, we refer you to the
registration statement.

You may read and copy all or any portion of the registration statement at the
Commission's public reference room at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices at 5670
Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
Commission or call the Commission at 1-800-SEC-0330 for further information on
the operation of the public reference rooms. Our Commission filings, including
the registration statement, will also be available to you on the Commission's
Internet site, http://www.sec.gov.

We intend to send to our stockholders annual reports containing audited
consolidated financial statements and quarterly reports containing unaudited
financial statements for the first three quarters of each fiscal year.

69
<PAGE>

SOMERA COMMUNICATIONS, LLC

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Balance Sheets............................................................. F-3
Statements of Operations................................................... F-4
Statement of Members' Capital (Deficit).................................... F-5
Statements of Cash Flows................................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Members of
Somera Communications, LLC

In our opinion, the accompanying balance sheets and the related statements of
operations, of members' capital (deficit) and of cash flows present fairly, in
all material respects, the financial position of Somera Communications, LLC at
December 31, 1997, 1998 and June 30, 1999 and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998 and the six months ended June 30, 1999, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

San Jose, California
September 9, 1999

To the Members of
Somera Communications, LLC

The accompanying financial statements included herein reflect the approval by
the Company's members of the Company's 3 for 2 split of the Company's Class A
and Class B units as described in Note 10. The above opinion is in the form
that will be signed by PricewaterhouseCoopers LLP upon the effectiveness of
such event assuming that from September 9, 1999 to the effective date of such
event, no other events shall have occurred that would affect the accompanying
financial statements.

PricewaterhouseCoopers LLP
San Jose, California

October 26, 1999

F-2
<PAGE>

SOMERA COMMUNICATIONS, LLC

BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, Pro-forma
--------------- June 30, September 30, September 30,
1997 1998 1999 1999 1999 (Note 9)
------ -------- -------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents............. $1,419 $ 1,930 $ 482 $ 195 $ 195
Accounts receivable, (net
of allowance for
doubtful accounts of
$197, $249, $458 and
$684 at December 31,
1997, 1998, June 30,
1999 and September 30,
1999, respectively)..... 6,095 10,237 14,989 17,611 17,611
Inventories, net......... 1,456 4,067 9,994 9,048 9,048
Other current assets..... 169 186 229 301 301
------ -------- -------- -------- --------
Total current assets... 9,139 16,420 25,694 27,155 27,155
Property and equipment,
net....................... 131 547 1,380 1,596 1,596
Deferred tax asset......... -- -- -- -- 17,000
Other assets............... 11 42 128 681 681
------ -------- -------- -------- --------
Total assets........... $9,281 $ 17,009 $ 27,202 $ 29,432 $ 46,432
====== ======== ======== ======== ========
Liabilities, Mandatorily
Redeemable Class B Units
and Members' Capital
(Deficit)/Stockholders'
Deficit
Current liabilities:
Accounts payable......... $4,130 $ 5,901 $ 11,660 $ 10,600 $ 10,600
Borrowings under
revolving loan
facility................ -- -- 779 6,435 6,435
Accrued commissions...... 262 496 950 1,270 1,270
Other accrued
liabilities............. 145 541 651 1,178 1,178
Capital lease
obligations--current
portion................. -- -- 179 255 255
Notes payable to related
parties--current
portion................. -- -- 1,300 -- --
Notes payable--current
portion................. -- -- 200 -- --
------ -------- -------- -------- --------
Total current
liabilities........... 4,537 6,938 15,719 19,738 19,738
Capital lease
obligations--net of
current portion......... -- -- 541 575 575
Notes payable--net of
current portion......... 638 1,838 1,638 -- --
Notes payable to related
parties--net of current
portion................. 319 1,619 319 -- --
Term debt................ -- -- -- 48,900 48,900
------ -------- -------- -------- --------
Total liabilities...... 5,494 10,395 18,217 69,213 69,213
------ -------- -------- -------- --------
Commitments (Note 5)
Mandatorily redeemable
Class B units............. -- 51,750 51,750 51,750 --
------ -------- -------- -------- --------
Members' Capital
(Deficit)/Stockholders'
Deficit
Class A Units............ 3,443 (51,359) (49,793) (79,658) --
Class B Units............ 344 6,223 7,028 (11,165) --
Common stock: $0.001 par
value
Shares authorized: pro
forma 200,000
(unaudited)
Shares issued and
outstanding
38,063 pro forma
(unaudited)............. -- -- -- -- 38
Additional paid in
capital................... -- -- -- -- (39,111)
Retained earnings.......... -- -- -- -- 17,000
Unearned stock based
compensation.............. -- -- -- (708) (708)
------ -------- -------- -------- --------
Total members' capital
(deficit)/stockholders'
deficit............... 3,787 (45,136) (42,765) (91,531) (22,781)
------ -------- -------- -------- --------
Total liabilities and
members' capital
(deficit)/stockholders'
deficit............... $9,281 $ 17,009 $ 27,202 $ 29,432 $ 46,432
====== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>

SOMERA COMMUNICATIONS, LLC

STATEMENTS OF OPERATIONS
(in thousands, except per unit data)

<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended
Year Ended December 31, June 30, September 30,
-------------------------- -------------------- -----------------------
1996 1997 1998 1998 1999 1998 1999
-------- -------- -------- ----------- -------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue................. $ 10,149 $ 34,603 $ 72,186 $ 34,417 $ 52,834 $ 51,271 $ 87,034
Cost of net revenue......... 5,532 20,587 43,132 21,037 34,023 30,890 56,678
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 4,617 14,016 29,054 13,380 18,811 20,381 30,356
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Sales and marketing....... 780 2,593 5,747 2,394 4,385 3,895 7,238
General and
administrative........... 696 1,648 3,939 1,326 2,999 2,922 5,085
Stock based compensation.. -- -- -- -- 193 -- 652
-------- -------- -------- -------- -------- -------- --------
Total operating
expenses............... 1,476 4,241 9,686 3,720 7,577 6,817 12,975
-------- -------- -------- -------- -------- -------- --------
Income from operations.. 3,141 9,775 19,368 9,660 11,234 13,564 17,381
Interest expense, net....... 18 82 187 75 144 117 656
-------- -------- -------- -------- -------- -------- --------
Net income............ $ 3,123 $ 9,693 $ 19,181 $ 9,585 $ 11,090 $ 13,447 $ 16,725
======== ======== ======== ======== ======== ======== ========
Net income per unit--basic.. $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $ 0.35 $ 0.44
-------- -------- -------- -------- -------- -------- --------
Weighted average units--
basic...................... 37,500 38,052 38,063 38,063 38,063 38,063 38,063
-------- -------- -------- -------- -------- -------- --------
Net income per unit--
diluted.................... $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $ 0.35 $ 0.44
-------- -------- -------- -------- -------- -------- --------
Weighted average units--
diluted.................... 37,500 38,052 38,063 38,063 38,069 38,063 38,115
-------- -------- -------- -------- -------- -------- --------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>

SOMERA COMMUNICATIONS, LLC

STATEMENT OF MEMBERS' CAPITAL (DEFICIT)
(in thousands)

<TABLE>
<CAPTION>
Mandatorily
Redeemable
Class A Units Class B Units Class B Units
------------------ ----------------- ----------------
Total
Unearned Members'
Stock Based Capital
Number Value Number Value Compensation (Deficit) Number Value
------- --------- ------ --------- ------------ --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1,
1996................... 10,099 $ 68 -- $ -- -- $ 68 -- $ --
Capital contributed..... 23,651 367 3,750 46 -- 413 -- --
Net income.............. -- 2,811 -- 312 -- 3,123 -- --
Distributions to
members................ -- (2,118) -- (235) -- (2,353) -- --
------- --------- ------ --------- ------- --------- ------- --------
Balances, December 31,
1996................... 33,750 1,128 3,750 123 -- 1,251 -- --
Capital contributed..... 563 300 -- -- -- 300 -- --
Net income.............. -- 8,738 -- 955 -- 9,693 -- --
Distributions to
members................ -- (6,723) -- (734) -- (7,457) -- --
------- --------- ------ --------- ------- --------- ------- --------
Balances, December 31,
1997................... 34,313 3,443 3,750 344 -- 3,787 -- --
Conversion of Class B
units to Class A
units.................. 2,501 344 (2,501) (344) -- -- -- --
Proceeds from issuance
of new units........... -- -- -- -- -- -- 14,070 51,750
Repurchase of members'
units.................. (12,821) (51,750) (1,249) -- -- (51,750) -- --
Net income.............. -- 11,590 -- 7,591 -- 19,181 -- --
Distributions to
members................ -- (14,986) -- (1,368) -- (16,354) -- --
------- --------- ------ --------- ------- --------- ------- --------
Balances, December 31,
1998................... 23,993 (51,359) -- 6,223 -- (45,136) 14,070 51,750
Net income.............. -- 6,991 -- 4,099 -- 11,090 -- --
Distributions to
members................ -- (5,618) -- (3,294) -- (8,912) -- --
Warrants issued in
exchange for services.. -- 193 -- -- -- 193 -- --
------- --------- ------ --------- ------- --------- ------- --------
Balances, June 30,
1999................... 23,993 $ (49,793) -- $ 7,028 -- $ (42,765) 14,070 $ 51,750
Net income.............. -- 3,552 -- 2,083 -- 5,635 -- --
Distribution to
members................ -- (34,584) -- (20,276) -- (54,860) -- --
Unearned employee stock-
based compensation..... -- 830 -- -- (830) -- -- --
Amortization of unearned
Stock-based
Compensation........... -- -- -- -- 122 122 -- --
Warrants issued in
exchange for Services.. -- 337 -- -- -- 337 -- --
------- --------- ------ --------- ------- --------- ------- --------
Balances, September 30,
1999 (unaudited)....... 23,993 $ (79,658) -- $ (11,165) $ (708) $ (91,531) 14,070 $ 51,750
======= ========= ====== ========= ======= ========= ======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>

SOMERA COMMUNICATIONS, LLC

STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended
Year Ended December 31, June 30, September 30,
-------------------------- -------------------- -----------------------
1996 1997 1998 1998 1999 1998 1999
------- ------- -------- ----------- -------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income............ $ 3,123 $ 9,693 $ 19,181 $ 9,585 $ 11,090 $ 13,447 $ 16,725
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization......... 25 54 137 46 94 85 175
Provision for doubtful
accounts............. 49 145 52 113 209 168 450
Provision for write-
downs of
inventories.......... 35 10 12 327 539 484 789
Warrants issued in
exchange for
services............. -- -- -- -- 193 -- 530
Training costs
financed by capital
lease................ -- -- -- -- 65 -- 65
Amortization of stock-
based compensation... -- 122
Changes in operating
assets and
liabilities:
Accounts receivable.. (2,159) (4,038) (4,194) (4,104) (4,961) (3,487) (7,824)
Inventories.......... (927) (529) (2,623) (1,598) (6,466) (1,906) (5,770)
Other current
assets.............. (310) 141 (17) (209) (43) (325) (115)
Accounts payable..... 1,736 2,352 1,771 2,899 5,759 1,638 4,699
Accrued commissions.. 112 150 234 257 454 349 774
Other accrued
liabilities......... 76 66 396 91 110 295 637
------- ------- -------- ------- -------- --------- --------
Net cash provided by
operating
activities......... 1,760 8,044 14,949 7,407 7,043 10,748 11,257
------- ------- -------- ------- -------- --------- --------
Cash flows from
investing activities:
Acquisition of
property and
equipment............ (124) (85) (553) (233) (272) (368) (459)
Decrease (increase) in
other assets ........ (13) 5 (31) (65) (86) (70) (639)
------- ------- -------- ------- -------- --------- --------
Net cash used in
investing
activities......... (137) (80) (584) (298) (358) (438) (1,098)
------- ------- -------- ------- -------- --------- --------

Cash flows from
financing activities:
Proceeds from term
loan................. -- -- -- -- -- -- 48,900
Payments on line of
credit............... (32) -- -- -- -- -- --
Proceeds from issuance
of mandatorily
redeemable class B
units................ 413 300 51,750 -- -- 51,750 --
Proceeds from
revolving loan
facility............. -- -- -- -- 779 -- 6,435
Repurchase of members'
capital.............. -- -- (51,750) -- -- (51,750) --
Proceeds
from/(repayment of)
notes payable........ 662 295 2,500 1,500 -- 1,500 (3,457)
Distributions to
members.............. (2,353) (7,457) (16,354) (8,063) (8,912) (12,652) (63,772)
------- ------- -------- ------- -------- --------- --------
Net cash used in
financing
activities......... (1,310) (6,862) (13,854) (6,563) (8,133) (11,152) (11,894)
------- ------- -------- ------- -------- --------- --------
Net increase (decrease)
in cash and cash
equivalents........... 313 1,102 511 546 (1,448) (842) (1,735)
Cash and cash
equivalents, beginning
of year............... 4 317 1,419 1,419 1,930 1,419 1,930
------- ------- -------- ------- -------- --------- --------
Cash and cash
equivalents, end of
year.................. $ 317 $ 1,419 $ 1,930 $ 1,965 $ 482 $ 577 $ 195
======= ======= ======== ======= ======== ========= ========

Supplemental
disclosures of cash
flow information:
Cash paid during the
period for interest.. $ 14 $ 98 $ 201 $ 81 $ 175 $ 144 $ 370
======= ======= ======== ======= ======== ========= ========
Fixed assets acquired
under capital lease.. $ -- $ -- $ -- $ -- $ 655 $ -- $ 765
======= ======= ======== ======= ======== ========= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Note 1--Formation and Business of the Company:

Somera Communications, LLC (the "Company") was formed as a Limited Liability
Company in 1995 under the laws of the State of California. The Company is a
provider of telecommunications infrastructure equipment and services to
telecommunications carriers. The Company provides customers with a combination
of new and de-installed equipment.

Note 2--Summary of Significant Accounting Policies:

Basis of Presentation

Commencing with fiscal 1997, the Company's fiscal years are on a 52 or 53
week basis. The 1997 and 1998 years which ended on December 28, 1997 and
January 3, 1999 were 52 and 53 week periods, respectively. The six month
periods presented ended on June 28, 1998 and July 4, 1999 respectively and the
nine month periods presented ended on September 27, 1998 and October 3, 1999
respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

Revenue Recognition

All of the Company's revenue is derived from the sale of products. Revenue is
recognized upon shipment of product by the Company provided that, at the time
of shipment, there is evidence of contractual arrangement with the customer,
the fee is fixed and determinable and collection of the resulting receivable is
probable. Reserves for equipment returns and warranty obligations are recorded
at the time of shipment and are based on the historical experience of the
Company.

Income Taxes

The Company is treated as a partnership for federal and state income tax
purposes. Consequently, federal income taxes are not payable, or provided for,
by the Company. Members are taxed individually on their share of the Company's
earnings. The Company's net income or loss is allocated among the members in
accordance with the regulations of the Company.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments which potentially expose the Company to a concentration
of credit risk principally consist of cash and cash equivalents and accounts
receivable. The

F-7
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Company places its temporary cash with two high credit quality financial
institutions in the United States. The Company performs ongoing credit
evaluations of its customers' financial condition and generally requires no
collateral.

During the year ended December 31, 1996 one customer accounted for 11.4% of
net revenue. During the year ended December 31, 1997 one customer accounted for
10.1% of net revenue. During the year ended December 31, 1998 one customer
accounted for 10.2% of net revenue and 12.0% of the total accounts receivable
at December 31, 1998. No individual customer accounted for more than 10% of net
revenue in the six months ended June 30, 1999.

During the six months ended June 30, 1999 one supplier accounted for 11.0% of
new and de-installed equipment purchases.

Financial Instruments

The carrying amounts of certain of the Company's financial instruments,
including cash and cash equivalents, accounts receivable, borrowing under
revolving loan facility, accounts payable and notes payable approximate fair
value due to their short-term maturities.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly
liquid instruments purchased with an original or remaining maturity of three
months or less, at the date of purchase, to be cash equivalents.

Inventories

Inventories, which are comprised of finished goods held for resale, including
de-installed equipment, are stated at the lower of cost (determined on an
average cost basis) or net realizable value. Costs may include refurbishment
costs associated with repairing and reconfiguring de-installed equipment held
for resale. Inventories are stated net of provisions for obsolete and slow
moving items.

Property and Equipment

Property and equipment are recorded at cost and are stated net of accumulated
depreciation. Depreciation is recorded using the straight-line method over the
estimated useful lives of the assets. These lives vary from three to seven
years.

Leasehold improvements are amortized over the shorter of the estimated useful
life of the asset or remaining lease term on a straight-line basis.

F-8
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Expenditures for maintenance and repairs are charged to expense as incurred.
Additions, major renewals and replacements that increase the property's useful
life are capitalized. Gains and losses on dispositions of property and
equipment are included in net income.

During 1999 the Company adopted the provisions of Accounting Standards
Executive Committee ("AcSEC") Statement of Position ("SOP") 98-1 "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use." Any
costs capitalized are depreciated on a straight-line basis over the lesser of
the estimated useful life of three years or the term of the lease.

Stock-based Compensation

The Company uses the intrinsic value method of Accounting Principles Board
Opinion No. 25 or APB 25, "Accounting for Stock Issued to Employees," in
accounting for its employee stock options, and presents disclosure of pro forma
information required under Statement of Financial Accounting Standards No. 123
or SFAS 123, "Accounting for Stock-Based Compensation."

F-9
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Net Income Per Unit

Basic net income per unit is computed by dividing the net income for the
period by the weighted average number of units outstanding during the period.
Diluted net income per unit is computed by dividing the net income for the
period by the weighted average number of units and equivalent units outstanding
during the period. Equivalent units, composed of units issuable upon the
exercise of options and warrants, are included in the diluted net income per
unit computation to the extent such units are dilutive. A reconciliation of the
numerator and denominator used in the calculation of basic and pro-forma
diluted net loss per unit follows (in thousands, except per unit data):

<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended
Year Ended December 31, June 30, September 30,
----------------------- ------------------- -----------------------
1996 1997 1998 1998 1999 1998 1999
------- ------- ------- ----------- ------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Numerator
Net income $ 3,123 $ 9,693 $19,181 $ 9,585 $11,090 $13,447 $16,725
------- ------- ------- ------- ------- ------- -------
Denominator
Weighted average
units--basic......... 37,500 38,052 38,063 38,063 38,063 38,063 38,063
Dilutive effect of
options and warrants
to purchase units.... -- -- -- -- 6 -- 52
------- ------- ------- ------- ------- ------- -------
Weighted average
units--diluted....... 37,500 38,052 38,063 38,063 38,069 38,063 38,115
------- ------- ------- ------- ------- ------- -------
Net income per unit--
basic................ $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $ 0.35 $ 0.44
======= ======= ======= ======= ======= ======= =======
Net income per unit--
diluted.............. $ 0.08 $ 0.25 $ 0.50 $ 0.25 $ 0.29 $ 0.35 $ 0.44
======= ======= ======= ======= ======= ======= =======
</TABLE>

Comprehensive Income

The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 130 or SFAS No. 130, "Reporting Comprehensive Income." SFAS 130
establishes standards for reporting comprehensive income and its components in
financial statements. Comprehensive income, as defined, includes all changes in
equity during a period from non-owner sources. There was no difference between
the Company's net income and its total comprehensive income for the years ended
December 31, 1996, 1997 and 1998 and for the six months ended June 30, 1998
(unaudited) and June 30, 1999, and for the nine months ended September 30, 1998
(unaudited) and September 30, 1999 (unaudited).

F-10
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Unaudited Interim Results

The accompanying interim financial statements as of September 30, 1999 and
for the periods ended June 30, 1998, September 30, 1998 and September 30, 1999
are unaudited. The unaudited interim financial statements have been prepared on
the same basis as the annual financial statements and, in the option of
management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly in all material respects the Company's
financial position as of September 30, 1999 and its results of operations and
its cash flows for the six months ended June 30, 1998 and for the nine months
ended September 30, 1998 and 1999. The financial data and other information
disclosed in these notes to financial statements related to this period are
unaudited.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 or SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 establishes new standards of
accounting and reporting for derivative instruments and hedging activities.
SFAS 133 requires that all derivatives be recognized at fair value in the
statement of financial position, and that the corresponding gains or losses be
reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that
exists. SFAS 133 will be effective for fiscal years beginning after June 15,
2000. The Company does not currently hold derivative instruments or engage in
hedging activities.

Note 3--Balance Sheet Accounts (in thousands):

<TABLE>
<CAPTION>
December 31,
-------------- June 30, September 30,
1997 1998 1999 1999
------ ------ -------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Property and equipment, net

Computer and telephone equipment ..... $ 142 $ 486 $ 1,265 $1,520
Office equipment and furniture........ 32 124 191 195
Warehouse equipment................... 28 73 75 90
Leasehold improvements................ 8 80 159 181
------ ------ ------- ------
210 763 1,690 1,986
Less accumulated depreciation and
amortization......................... (79) (216) (310) (390)
------ ------ ------- ------
$ 131 $ 547 $ 1,380 $1,596
====== ====== ======= ======
</TABLE>

F-11
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Depreciation and amortization expense for the years ended December 31, 1996,
1997 and 1998, the six months ended June 30, 1998 and 1999 and the nine months
ended September 30, 1998 and 1999 amounted to $25,000, $54,000, $137,000,
$46,000 (unaudited), $94,000, $85,000 (unaudited) and $175,000 (unaudited),
respectively.

Included in computer and telephone equipment is an amount of approximately
$655,000 and $830,000 (unaudited) representing assets held under capital lease
as of June 30, 1999 and September 30, 1999 respectively. These represent costs
incurred to date in respect of software, hardware and related costs arising
from the implementation of the Company's new accounting system. No depreciation
or amortization has been charged on these amounts for the six months ended June
30, 1999 and for the nine months ended September 30, 1999 as the implementation
was not complete.

Note 4--Notes Payable:

Notes payable to related parties include amounts payable to two of the
Company's members. At December 31, 1997 and 1998, June 30, 1999, the aggregate
amount of notes payable to these members was $319,000, $619,000, $619,000,
respectively. These notes bear interest at rates of 10% and 13% per annum.

Also included in notes payable to related parties is an amount of $1,000,000
issued in March 1998 to an outside partnership, of which a member is a general
partner. This amount remains outstanding at December 31, 1998 and June 30,
1999. This note bears interest at 10% per annum and is due in March 2000.

Notes payable bear interest at rates varying between 8% and 13% per annum,
and all notes mature at dates between 2000 and 2002. Repayment terms are
interest only with principal due on maturity date. The notes are unsecured.

Repayments due on notes payable in each of the next three years are as
follows (in thousands):

<TABLE>
<CAPTION>
Year Ending December 31,
<S> <C>
2000................................................................ $2,500
2001................................................................ 585
2002................................................................ 372
-------
3,457
Less: current portion............................................... (1,500)
-------
Notes payable--net of current portion............................... $1,957
=======
</TABLE>

F-12
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

On October 8, 1997, the Company entered into a revolving line of credit
facility of $2,500,000. There were no borrowings on this facility during each
of the years ended December 31, 1997 and 1998. On January 12, 1999, the Company
replaced this facility with a new revolving line of credit with the same bank.
The facility includes a fixed amount of $2,000,000 plus an amount based on a
percentage of eligible accounts receivable and inventory with a maximum amount
of $17,000,000 available. The facility matures on January 31, 2001 and bears
interest at LIBOR plus 2% (7.75% at June 30, 1999). Any drawings on this
facility are collateralized by all assets of the Company. There was $779,000
outstanding on this facility at June 30, 1999.

Note 5--Commitments:

The Company is obligated under several operating leases for both office and
warehouse space. The lease terms range in length from five years to seven
years. Rent expense, net of sublease income, for the years ended December 31,
1996, 1997 and 1998 and for the six months ended June 30, 1998 and 1999 was
$60,000, $131,000, $297,000, $127,000 (unaudited) and $234,000, respectively.

On June 1, 1999, the Company entered into a five year lease for new warehouse
space. The lease terms include two options to renew for three years and rentals
of $38,000 are due on a monthly basis.

Future minimum lease payments, under noncancelable operating and capital
leases at June 30, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- ---------
<S> <C> <C>
1999....................................................... $ 91 $ 466
2000....................................................... 273 926
2001....................................................... 272 918
2002....................................................... 182 918
2003....................................................... -- 706
Thereafter................................................. -- 451
----- -------
Total minimum lease payments............................. 818 $ 4,385
=======
Less amount representing interest........................ (98)
-----
Present value of capital lease obligations............... 720
Less current portion..................................... (179)
-----
Capital lease obligations--net of current portion...... $ 541
=====
</TABLE>

Under the terms of the lease agreements, the Company is also responsible for
internal maintenance, utilities and a proportionate share (based on square
footage occupied) of

F-13
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

property taxes. The Company is also exposed to credit risk in the event of
default of the subleasee, because the Company is still liable to meet its
obligations under the terms of the original lease agreement.

Note 6--Members' Capital (Deficit):

Members' capital includes two classes of units--Class A and Class B. At
December 31, 1997 there were 34,313,000 Class A and 3,750,000 Class B units
outstanding. At December 31, 1998 and June 30, 1999 there were 23,993,000 Class
A units and 14,070,000 Class B units outstanding. Each unit represents the
members proportionate allocation of net income or net loss.

On July 23, 1998, the Company authorized the issuance and sale of an
aggregate of 14,070,000 Class B units, which represented approximately 37.0% of
the outstanding units. Consideration of $51,750,000 was received in cash for
the sale of these units. The Company then authorized the repurchase of an
aggregate of 12,821,000 Class A units and an aggregate of 1,249,000 Class B
units for an aggregate amount of $51,750,000. Each of the remaining 2,501,000
Class B units were exchanged for one Class A unit.

The Class A units participate in the net income of the company based on their
percentage ownership. In addition, the holder of each Class A unit is entitled
to one vote per unit. The Class B units outstanding at June 30, 1999 differ
from the Class A units as follows:

(a) On a change in ownership the Class B unit holders may elect to redeem
all or any part of the Class B units at an amount equal to the greater
of:

(i) the original cost thereof; or

(ii) an amount equal to the number of Class B units to be redeemed
multiplied by the maximum consideration payable with respect to
any unit in such a change of ownership.

(b) In the event of the bankruptcy of the Company, all of the Class B units
are subject to immediate redemption at a price equal to the original
cost thereof.

(c) The Class B units convert automatically on the closing of a firm
commitment underwritten public offering of the Company's (or a
corporate successor's) equity securities resulting in proceeds to the
Company or such corporate successor (net of underwriting discounts and
commissions and related offering expenses) of at least $30 million at a
price per share to the public of at least 200% of the original cost of
each Class B unit.

(d) In a winding up or liquidation of the Company, the Class B units are
paid out in preference to the Class A units up to the amount of the
original cost of the Class B units.

F-14
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

The members' liability is limited to the total balance held in the members'
capital account.

In May 1999, the Company effected a 2,500-for-1 split of the then outstanding
Class A and Class B units. The effect of this split has been retroactively
reflected throughout the financial statements.

Warrants

In May 1999, warrants exercisable into 95,155 Class A units were issued in
consideration for recruitment services. The warrants become fully exercisable
upon a merger or consolidation of the Company or upon completion of the
Company's initial public offering. The warrants are exercisable at $7.57 per
unit and have a two year term. The fair value of the warrants of approximately
$193,000 has been recorded as an expense in the six months ended June 30, 1999.
This was estimated using the Black-Scholes model and the following assumptions:
dividend yield of 0%; volatility of 40%; risk free interest rate of 5.58% and a
term of two years.

Unit Option Plan

In May 1999 the Company adopted the 1999 unit option plan (the "Plan") under
which 2,003,000 Class A units were reserved for issuance of stock options to
employees, directors, or consultants under terms and provisions established by
the Board of Managers. Under the terms of the Plan, incentive options may be
granted to employees, and nonstatutory options may be granted to employees,
directors and consultants, at prices no less than 100% and 85%, respectively,
of the fair market value of the Class A units at the date of grant, as
determined by the Board of Members. Options granted under the Plan vest at a
rate of 25% after one year with the remaining vesting evenly over the next
three years. The options expire ten years from the date of grant.

Activity under the Plan is set forth below:

<TABLE>
<CAPTION>
Options Outstanding
-----------------------------------------
Weighted
Average Remaining
Available Price per Exercise Contractual
for Grant Units Unit Price Life
--------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Units reserved at plan
inception, May 1999.... 2,003,000
Options granted on May
15, 1999............... (660,093) 660,093 $ 7.57 $7.57 9.61
--------- --------- ---------- ----- ----
Balances, June 30,
1999................... 1,342,907 660,093 $ 7.57 $7.57
Options granted on July
13, 1999............... (830,000) 830,000 8.50 8.50 9.78
--------- --------- ---------- ----- ----
Balances, September 30,
1999 (unaudited)....... 512,907 1,490,093 $7.57-8.50 $8.09 9.7
========= ========= ========== ===== ====
</TABLE>

F-15
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

At June 30, 1999 no options outstanding were exercisable. The weighted
average fair value of options granted during the six months ended June 30, 1999
was $1.84 per unit.

Pro-forma Unit Compensation

The Company has adopted the disclosure-only provisions of SFAS 123 for option
grants to employees. Had compensation cost been determined based on the fair
value at the grant date for the awards in 1999 consistent with the provisions
of SFAS 123, the Company's net income for 1999 would have been as follows (in
thousands, except per unit data):

<TABLE>
<CAPTION>
Six Months
Ended June 30,
1999
--------------
<S> <C>
Net income--as reported....................................... $11,090
Net income--as adjusted....................................... $11,052
Net income per unit--basic as reported........................ $ 0.29
Net income per unit--basic as adjusted........................ $ 0.29
Net income per unit--diluted as reported...................... $ 0.29
Net income per unit--diluted as adjusted...................... $ 0.29
</TABLE>

The Company calculated the fair value of each option grant on the date of
grant using the Black-Scholes option pricing model as prescribed by SFAS 123
using the following assumptions:

<TABLE>
<CAPTION>
Six Months
Ended June 30,
1999
--------------
<S> <C>
Risk-free interest rate....................................... 5.65%
Expected life (in years)...................................... 5
Dividend yield................................................ 0%
Expected volatility........................................... 0%
</TABLE>

As the determination of fair value of all options granted after such time as
the Company becomes a public entity will include an expected volatility factor
in addition to the factors described in the preceding paragraph, the above
results may not be representative of future periods.

Note 7--401(k) Savings Plan:

In February 1998, the Company adopted a 401(k) Savings Plan (the "Savings
Plan") which covers all employees. Under the Savings Plan, employees are
permitted to contribute up to 15% of gross compensation not to exceed the
annual IRS limitation for any plan year ($10,000 in 1999). The Company matches
25% of employee contributions for all employees who receive less than 50% of
their total compensation in the form of commissions. The Company made matching
contributions of $15,000, $5,000 (unaudited), $8,000, $10,000 (unaudited) and
$14,000 (unaudited) for the year ended December 31, 1998, for the six

F-16
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

months ended June 30, 1998 and 1999 and for the nine months ended September 30,
1998 and 1999, respectively.

Note 8--Geographic Information:

The Company has adopted Statement of Financial Accounting Standards No. 131,
or SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information," effective for fiscal years beginning after December 31, 1997.
SFAS 131 supersedes Statement of Financial Accounting Standards No. 14, or SFAS
14, "Financial Reporting for Segments of a Business Enterprise." SFAS 131
changes current practice under SFAS 14 by establishing a new framework on which
to base segment reporting and also requires interim reporting of segment
information. The Company markets products and related services to customers in
the United States, Canada, Europe and Latin America.

Operating segments are identified as components of an enterprise about which
separate discrete financial information is available that is evaluated by the
chief operating decision maker or decision making group to make decisions about
how to allocate resources and assess performance. The Company's chief operating
decision maker is the chief executive officer. To date the Company has reviewed
its operations in principally two segments. The chief operating decision
assesses performance based on the gross profit generated by each segment.

The Company does not report operating expenses, depreciation and
amortization, interest expense, capital expenditures or identifiable net assets
by segment. All segment revenues are generated from external customers.

<TABLE>
<CAPTION>
New De-installed Total
------- ------------ -------
<S> <C> <C> <C>
Year ended December 31, 1996
Revenue..................................... $ -- $10,149 $10,149
------- ------- -------
Gross profit................................ $ -- $ 4,617 $ 4,617
------- ------- -------
Year ended December 31, 1997
Revenue..................................... $ 3,072 $31,531 $34,603
------- ------- -------
Gross profit................................ $ 562 $13,454 $14,016
------- ------- -------
Year ended December 31, 1998
Revenue..................................... $17,098 $55,088 $72,186
------- ------- -------
Gross profit................................ $ 3,341 $25,713 $29,054
------- ------- -------
Six Months ended June 30, 1999
Revenue..................................... $14,021 $38,813 $52,834
------- ------- -------
Gross profit................................ $ 2,148 $16,663 $18,811
------- ------- -------
Nine Months ended September 30, 1999
(unaudited)
Revenue..................................... $26,672 $60,362 $87,034
------- ------- -------
Gross profit................................ $ 4,281 $26,075 $30,356
------- ------- -------
</TABLE>

F-17
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Net revenue information by geographic area is as follows (in thousands):
<TABLE>
<CAPTION>
Net
Revenue
-------
<S> <C>
Year ended December 31, 1996:
United States..................................................... $ 9,454
Canada............................................................ 392
Latin America..................................................... 302
Other............................................................. 1
-------
Total........................................................... $10,149
=======
Year Ended December 31, 1997:
United States..................................................... $28,907
Canada............................................................ 409
Latin America..................................................... 5,204
Other............................................................. 83
-------
Total........................................................... $34,603
=======
Year Ended December 31, 1998:
United States..................................................... $57,958
Canada............................................................ 895
Latin America..................................................... 13,051
Other............................................................. 282
-------
Total........................................................... $72,186
=======
Six Months Ended June 30, 1999:
United States..................................................... $45,760
Canada............................................................ 1,178
Latin America..................................................... 5,547
Other............................................................. 349
-------
Total........................................................... $52,834
=======
</TABLE>

All long lived assets are maintained in the United States.

Note 9--Unaudited Pro-forma Balance Sheet Data:

Prior to the effectiveness of the public offering by Somera Communications,
Inc., a Delaware Corporation ("Somera Delaware"), the unit holders of the
Company will exchange all of their outstanding units for shares of common stock
of Somera Delaware and the corporation will succeed the limited liability
company. Due to the reclassification of the Company as a C Corporation the
members deficit will be reclassified as additional paid in capital.
Additionally, as a result of this reorganization the Company will become a
taxable entity and a deferred tax asset, arising from the difference in the tax
and book basis of the Company's net assets, of approximately $17,000,000 will
be recorded in net income. The effects of the

F-18
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

reorganization, which include the one for one exchange of all outstanding units
Class A and B, for common shares in Somera Delaware, the reclassification of
the members deficit as additional paid in capital and the creation of the
deferred tax asset have been presented as a separate column in the Company's
balance sheet assuming that the reorganization had occurred at September 30,
1999.

Note 10--Subsequent Events:

Distribution to Members

In July 1999 the Company paid a distribution to members of approximately
$6,359,000.

Loan to Officer

On July 12, 1999 the Company entered into a mortgage loan agreement under
which it advanced $600,000 to an officer of the Company. The mortgage loan has
a term of eight years, is interest free and is secured on the principal
residence of the officer. Under the terms of the mortgage loan the amount
advanced will be forgiven as to $50,000 on each of the first four anniversaries
of the note and $100,000 on each of the fifth through eighth anniversaries.

The loan can be forgiven in full in the event that the officer's employment
is either terminated without cause or is constructively terminated within 12
months of a change in control of the Company. If the officer's employment with
the Company ceases for any other reason, including death or disability, the
remaining balance becomes repayable to the Company. The term of repayment is
dependent upon the reason for the officer's employment ceasing and ranges from
six to eighteen months from the date of termination of employment.

As a result of the above, the Company will record a compensation charge equal
to the amount forgiven for each period the loan is outstanding.

Option Grants and Warrant Issuance

On July 13, 1999, the Company issued stock options to two officers and one
outside director resulting in unearned stock-based compensation of $830,000
which will be recorded and amortized over the vesting period, generally four
years of the underlying options. The charge will be amortized to net income as
follows: $244,000 for the remainder of 1999, $367,000 on 2000, $148,000 in
2001, $63,000 in 2002 and $8,000 in 2003. In addition, the Company issued a
warrant to purchase 112,500 shares of common stock in exchange for services.
The warrants were immediately vested and will result in a one-time charge of
$337,000 to be recorded in the Company's third quarter results.

F-19
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Term Loan and Revolving Loan Facility

On August 31, 1999, the Company signed an agreement under which a syndicate
of banks provided a $50,000,000 term loan and $15,000,000 revolving loan
facility.

The term loan matures on August 31, 2004 and the Company is required to make
quarterly payments of principal and interest. The term loan and revolving
credit facility are secured by all of the Company's assets.

Distribution to Members and Repayment of Notes Payable

On August 31, 1999, the Company paid a distribution of $48,500,000 to its
members. In addition, the Company repaid the notes payable described in Note 4
to these financial statements.

Stock Split

On September 9, 1999 the Company approved a 3 for 2 split of its Class A and
B units which will be effected prior to any exchange of outstanding units for
shares of common stock of Somera Delaware. All unit data and unit option plan
information have been restated to reflect the effect of the forward split.

On September 9, 1999 the Board of Managers resolved to take all actions
necessary to assist Somera Delaware in the preparation, execution and filing
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, a Registration Statement on Form S-1 relating to the public
offering by Somera Delaware of up to $127,075,000 of its authorized but
unissued shares of Common Stock.

On October 19, 1999 the Board of Managers increased the number of units
issuable under the unit option plan to a total of 3,400,000 units. The Board of
Managers also approved grants of 1,453,250 unit options to employees at an
exercise price of $11.00 per unit, which represents the fair market value of
the units. The unit options shall vest and become exercisable 25% at the end of
the first year and thereafter at the rate of 1/48th per month.

F-20
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

Note 11--Pro-forma net income per unit

Prior to the effectiveness of the initial public offering of its common
stock, the Company's operations, assets and liabilities will be assumed by
Somera Communications Inc, a "C" Corporation. As a result the future earnings
of the Company will be liable to both federal and state income taxes. The pro
forma effect of such income taxes on the Company's net income and net income
per unit, assuming a 40% effective tax rate is presented in the table below:

<TABLE>
<CAPTION>
Nine months
Year ended December 31, ended September 30,
------------------------- -----------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Net income as reported..... $ 3,123 $ 9,983 $19,181 $13,447 $16,725
Income tax expense--pro
forma..................... (1,249) (3,877) (7,672) (5,626) (6,690)
------- ------- ------- ------- -------
Net income as adjusted..... 1,874 5,816 11,509 7,821 10,035
======= ======= ======= ======= =======
Weighted average units--
basic..................... 37,500 38,052 38,063 38,063 38,063
======= ======= ======= ======= =======
Weighted average units--
diluted................... 37,500 38,052 38,063 38,063 38,115
======= ======= ======= ======= =======
Net income per unit as
reported--basic........... $ 0.08 $ 0.25 $ 0.50 $ 0.35 $ 0.44
======= ======= ======= ======= =======
Net income per unit as
reported--diluted......... $ 0.08 $ 0.25 $ 0.50 $ 0.35 $ 0.44
======= ======= ======= ======= =======
Net income per unit as
adjusted--basic........... $ 0.05 $ 0.15 $ 0.30 $ 0.21 $ 0.26
======= ======= ======= ======= =======
Net income per unit as
adjusted--diluted......... $ 0.05 $ 0.15 $ 0.30 $ 0.21 $ 0.26
======= ======= ======= ======= =======
</TABLE>

F-21
<PAGE>

SOMERA COMMUNICATIONS, LLC

Notes To Financial Statements--(Continued)

Information as of and for the periods ended June 30, 1998
and September 30, 1998 and 1999 is unaudited

During the nine months ended September 30, 1999, the Company has made
distributions in excess of its earnings to the members. The pro forma per unit
data below, gives effect to the increase in the number of units, which when
multiplied by an assumed initial offering price of $12 per share of the
Company's common stock, would have been sufficient to replace the capital in
excess of the earnings being withdrawn.

<TABLE>
<CAPTION>
Nine months
Year ended ended
December 31, September 30,
1998 1999
------------ -------------
(unaudited)
<S> <C> <C>
Net income as reported........................ $19,181 $16,725
======= =======
Weighted average units as reported--basic..... 38,063 38,063
Pro forma units issued to replace capital
deficit...................................... 4,087 4,087
------- -------
Weighted average units as adjusted--basic..... 42,150 42,150
------- -------
Weighted average units as reported--diluted... 38,063 38,115
Pro forma units issued to replace capital
deficit...................................... 4,087 4,087
------- -------
Weighted average units as adjusted--diluted... 42,150 42,202
------- -------
Net income per unit as reported--basic........ $0.50 $0.44
======= =======
Net income per unit as reported--diluted...... $0.50 $0.44
======= =======
Net income per unit as adjusted--basic........ $0.45 $0.40
======= =======
Net income per unit as adjusted--diluted...... $0.45 $0.40
======= =======
</TABLE>

F-22
<PAGE>

In the center of page, an oval containing the Company logo.
<PAGE>

8,500,000 Shares

[SOMERA LOGO]

Common Stock

-------------

PROSPECTUS
, 1999

-------------

Lehman Brothers

Dain Rauscher Wessels
a division of Dain Rauscher Incorporated

Thomas Weisel Partners LLC
<PAGE>

Part II

Information Not Required In Prospectus

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than the
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of the securities being registered. All amounts are estimates
except the SEC registration fee, the NASD filing fee and the Nasdaq/National
Market System listing fee.

<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 35,327
NASD Filing Fee.................................................... 13,208
Nasdaq National Market Listing Fee................................. *
Printing Costs..................................................... *
Legal Fees and Expenses............................................ 400,000
Accounting Fees and Expenses....................................... *
Blue Sky Fees and Expenses......................................... *
Transfer Agent and Registrar Fees.................................. *
Miscellaneous...................................................... *
--------
Total.......................................................... $ *
========
</TABLE>
- --------
* To be filed by amendment

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended. Article IX of
our Amended and Restated Certificate of Incorporation (Exhibit 3.2 hereto) and
Article VI of our current Bylaws (Exhibit 3.3 hereto) provide for
indemnification of our directors, officers, employees and other agents to the
maximum extent permitted by Delaware law. In addition, we have entered into
Indemnification Agreements (Exhibit 10.1 hereto) with our officers and
directors. The Underwriting Agreement (Exhibit 1.1) also provides for cross-
indemnification among Somera Communications, Inc. and the Underwriters with
respect to certain matters, including matters arising under the Securities Act.

Item 15. Recent Sales of Unregistered Securities.

Since August 1996, the company has issued and sold the following securities:

1. In April 1997, the company issued an aggregate of 563,000 of its Class A
units to 3 investors for an aggregate cash consideration of $300,000.

2. On July 23, 1998, the company issued an aggregate of 14,070,000 of its
Class B units to 8 accredited investors for an aggregate cash
consideration of $51,750,000.

3. On May 6, 1999, the company issued a warrant to purchase 95,155 of its
Class A units with an exercise price of $7.57 per share to a party in
partial consideration for the rendering of professional services to the
company.

II-1
<PAGE>

4. On July 13, 1999, the company issued a warrant to purchase 112,500 of
its Class A units with an exercise price of $8.50 per unit to a party in
partial consideration for the rendering of professional services to the
company.

5. From May 1999 to October 1999, the company issued an aggregate of
2,943,343 Class A units to employees and an independent director
pursuant to the company's 1999 unit option plan with an aggregate
exercise price of $28,050,059.

The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or with respect to
issuances to employees, directors and consultants, Rule 701 promulgated under
Section 3(b) of the Securities Act as transactions by an issuer not involving a
public offering or transactions pursuant to compensatory benefit plans and
contracts relating to compensation as provided under Rule 701. The recipients
of securities in each such transaction represented their intentions to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates and warrants issued in such transactions. All
recipients either received adequate information about us or had adequate
access, through their relationships with us, to information about us.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits

<TABLE>
<C> <S>
1.1** Form of Underwriting Agreement.
3.1** Certificate of Incorporation of Somera Communications, Inc., a
Delaware corporation, as currently in effect.
3.2** Form of Amended and Restated Certificate of Incorporation of Somera
Communications, Inc. to be filed immediately following the closing of
the offering made under this registration statement.
3.3** Bylaws of Somera Communications, Inc., as currently in effect.
4.1** Specimen common stock certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
10.1** Form of Indemnification Agreement between Somera Communications, Inc.
and each of its directors and officers.
10.2** 1999 Stock Option Plan and form of agreements thereunder (as adopted
September 3, 1999).
10.3** 1999 Employee Stock Purchase Plan (as adopted September 3, 1999).
10.4** 1999 Director Option Plan and form of agreements thereunder (as
adopted September 3, 1999).
10.5** Loan Agreement by and between Somera Communications and Fleet National
Bank, dated August 31, 1999.
10.6** Security Agreement by and between Somera Communications and Fleet
National Bank, dated August 31, 1999.
10.7** Employment Agreement between Somera Communications and Jeffrey Miller,
dated May 6, 1999.
10.8 Form of Amended and Restated Employment Agreement between Somera
Communications and Gary Owen.
10.9** Lease dated January 20, 1998 between Santa Barbara Corporate Center,
LLC and Somera Communications.
10.10** First Amendment to Lease, dated February 2, 1998, between Santa
Barbara Corporate Center, LLC and Somera Communications.
10.11** Second Amendment to Lease, dated February 1, 1999, between Santa
Barbara Corporate Center, LLC and Somera Communications.
10.12** Industrial/Commercial Lease, dated May 12, 1999, between Sunbelt
Properties and Somera Communications.
</TABLE>

II-2
<PAGE>

<TABLE>
<C> <S>
10.13** Sublease, dated January 30, 1999, between GRC International, Inc. and
Somera Communications.
10.14 Form of Registration Agreement, between Somera Communications, Inc.
and certain of its stockholders.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Wilson Sonsini Goodrich & Rosati, P.C. (included in Exhibit
5.1).
24.1** Powers of Attorney (included on signature page to Registration
Statement).
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be supplied by amendment.
** Previously filed.

(b) Financial Statement Schedules.

<TABLE>
<CAPTION>
Schedule
--------
<C> <S>
II - Valuation and Qualifying
Accounts
</TABLE>

Item 17. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 3 to the registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Santa Barbara, State of California on October 27, 1999.

By:
*
----------------------------------
Daniel A. Firestone
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 3 to the registration statement has been signed by the following
persons in the capacities indicated on October 27, 1999:

<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----

<S> <C> <C>
* President, Chief Executive October 27, 1999
_____________________________________ Officer and Chairman of the
Daniel A. Firestone Board (Principal Executive
Officer)

/s/ Gary J. Owen Chief Financial Officer October 27, 1999
_____________________________________ (Principal Financial and
Gary J. Owen Accounting Officer)

* Director October 27, 1999
_____________________________________
Gil Varon

* Director October 27, 1999
_____________________________________
Walter G. Kortschak

* Director October 27, 1999
_____________________________________
Peter Y. Chung

* Director October 27, 1999
_____________________________________
Barry Phelps
</TABLE>

*By: /s/ Gary J. Owen
- --------------------------------
Gary J. Owen
(Attorney-In-Fact)

II-4
<PAGE>

SCHEDULE II

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Members
of Somera Communications, LLC:

Our audits of the financial statements referred to in our report dated
September 9, 1999 appearing in this Registration Statement on Form S-1 also
included an audit of the financial statement schedule listed in Item 16 of this
Form S-1. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related financial statements.

PricewaterhouseCoopers LLP

San Jose, California
September 9, 1999
<PAGE>

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and Ending
of Period Expenses Deductions of Period
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1996
Allowance for sales returns...... $ 1 $ 79 $ 41 $ 39
Allowance for doubtful accounts.. 3 49 -- 52
Allowance for write-downs of
inventory....................... -- 163 128 35

Year Ended December 31, 1997
Allowance for sales returns...... $ 39 $249 $138 $150
Allowance for doubtful accounts.. 52 145 -- 197
Allowance for write-downs of
inventory 35 370 360 45

Year Ended December 31, 1998
Allowance for sales returns...... $150 $424 $289 $285
Allowance for doubtful accounts.. 197 201 149 249
Allowance for write-downs of
inventory....................... 45 634 622 57

Six Months Ended June 30, 1999
Allowance for sales returns...... $285 $276 $211 $350
Allowance for doubtful accounts.. 249 209 -- 458
Allowance for write-downs of
inventory....................... 57 615 76 596

</TABLE>

<PAGE>

Exhibit Index

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1** Form of Underwriting Agreement.
3.1** Certificate of Incorporation of Somera Communications, Inc., a
Delaware corporation, as currently in effect.
3.2** Form of Amended and Restated Certificate of Incorporation of Somera
Communications, Inc. to be filed immediately following the closing of
the offering made under this registration statement.
3.3** Bylaws of Somera Communications, Inc., as currently in effect.
4.1** Specimen common stock certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1** Form of Indemnification Agreement between Somera Communications, Inc.
and each of its directors and officers.
10.2** 1999 Stock Option Plan and form of agreements thereunder (as adopted
September 3, 1999).
10.3** 1999 Employee Stock Purchase Plan (as adopted September 3, 1999).
10.4** 1999 Director Option Plan and form of agreements thereunder (as
adopted September 3, 1999).
10.5** Loan Agreement by and between Somera Communications and Fleet National
Bank, dated August 31, 1999.
10.6** Security Agreement by and between Somera Communications and Fleet
National Bank, dated August 31, 1999.
10.7** Employment Agreement between Somera Communications and Jeffrey Miller,
dated May 6, 1999.
10.8 Form of Amended and Restated Employment Agreement between Somera
Communications and Gary Owen.
10.9** Lease dated January 20, 1998 between Santa Barbara Corporate Center,
LLC and Somera Communications.
10.10** First Amendment to Lease, dated February 2, 1998, between Santa
Barbara Corporate Center, LLC and Somera Communications.
10.11** Second Amendment to Lease, dated February 1, 1999, between Santa
Barbara Corporate Center, LLC and Somera Communications.
10.12** Industrial/Commercial Lease, dated May 12, 1999, between Sunbelt
Properties and Somera Communications.
10.13** Sublease, dated January 30, 1999, between GRC International, Inc. and
Somera Communications.
10.14 Form of Registration Agreement, between Somera Communications, Inc.
and certain of its stockholders.
23.1 Consent of PricewaterhouseCoopers LLP
23.2* Consents of Wilson Sonsini Goodrich & Rosati, P.C. (included in
Exhibit 5.1)
24.1** Powers of Attorney (included on signature page to Registration
Statement)
27.1** Financial Data Schedule
</TABLE>
- --------
* To be supplied by amendment.
** Previously filed.

<PAGE>

FORM OF AMENDED AND RESTATED

SOMERA COMMUNICATIONS, LLC

GARY OWEN EMPLOYMENT AGREEMENT

This amended and restated Agreement is made by and between Somera
Communications, LLC (the "Company") and Gary Owen ("Executive") as of October
__, 1999.

1. Duties and Scope of Employment.
------------------------------

(a) Positions; Commencement Date; Duties. Executive's employment with
------------------------------------
the Company pursuant to this Agreement shall commence on July 26, 1999 (the
"Commencement Date"). As of the Commencement Date, the Company shall employ the
Executive as the Chief Financial Officer of the Company. The period of
Executive's employment hereunder is referred to herein as the "Employment Term."
During the Employment Term, Executive shall render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, as shall reasonably be assigned to him
by the Chief Executive Officer of the Company (the "CEO").

(b) Obligations. During the Employment Term, Executive shall devote
-----------
his full business efforts and time to the Company. Executive agrees, during the
Employment Term, not to actively engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without the prior
approval of the CEO; provided, however, that Executive may serve in any
capacity with any civic, educational or charitable organization without the
approval of the CEO.

2. Employee Benefits.
-----------------

(a) General. During the Employment Term, Executive shall be eligible
-------
to participate in the employee benefit plans and insurance maintained by the
Company that are applicable to other senior management to the full extent
provided for under those plans. Promptly following the date hereof, the Company
shall provide Executive with information regarding such plans and insurance.
The Company reserves the right to cancel or change its benefits plans and
programs it offers to its employees at any time.

(b) Relocation Expense Reimbursement. The Company will reimburse
--------------------------------
Executive for the following reasonable relocation costs:

(i) Two "house-hunting" trips to Santa Barbara, California,
including airfare, hotel accommodations and related costs for the family;

(ii) Transaction costs associated with buying Executive's new
residence (closing costs, inspections, title insurance, brokerage and related
fees, etc.);
<PAGE>

(iii) Transaction costs associated with selling Executive's old
residence (closing costs, inspections, title insurance, brokerage and related
fees, etc.);

(iv) Moving household furnishings, personal effects (including
packing and unpacking of household furnishings and personal effects);

(v) Up to three months temporary storage of household
furnishings and personal effects if necessary; and

(vi) Purchase of replacement household electrical appliances (110
volts), not to exceed $5,000.

The Company shall pay Executive an additional cash amount to offset fully
any income tax liability incurred by Executive under the Internal Revenue Code
of 1986, as amended or any similar or successor statute with respect to such
relocation costs, such that the after-tax cost to Executive with respect to such
relocation costs shall be zero dollars ($0).

(c) Temporary Living Expenses; Travel. The Company will pay for
---------------------------------
Executive's temporary living costs until the earlier of (i) such time as the
Executive permanently relocates to Santa Barbara, California, or (ii) four
months from the Commencement Date. Such costs will include out of pocket living
expenses such as rent, meals, automotive rental and one round trip airfare per
month for the Executive to return to England.

(d) Relocation Bridge Loan. In connection with the transfer of
----------------------
Executive's principal place of employment to Santa Barbara, California, the
Company shall provide Executive with an six month (6) month interest-free
mortgage loan in an amount to be determined by the president of the Company
for purposes of Executive's acquisition of a new principal residence (the
"Loan"). The Executive should repay the Loan upon receipt of the proceeds on
the sale of Executives residence in England. Notwithstanding the foregoing, up
to $300,000 of the Loan shall be forgiven over eight (8) years with $25,000
per year for the first four (4) years and $50,000 per year for the final four
(4) years. The Loan shall be subject to, and governed by, the terms and
conditions of a loan agreement and mortgage between the Executive and the
Company attached hereto as Exhibit A (the "Loan Agreement"). The Company shall
retain a mortgage security interest in the residence during the term of the
Loan. The Loan is intended to satisfy the Requirements of Proposed Treasury
Regulation Section 1.7872-5T(c)(1) and the Executive and the Company agree to
execute such documents as are necessary to comply therewith.

(e) Tax Assistance. The Company will pay or reimburse Executive for
--------------
expenses incurred by Executive in connection with his 1999 tax planning and
filing.

3. At-Will Employment. Executive and the Company understand and
------------------
acknowledge that Executive's employment with the Company constitutes "at-will"
employment. Subject to the Company providing severance benefits as specified
herein, Executive and the Company acknowledge that this employment relationship
may be terminated at any time, upon written notice to the other party, with or
without good cause or for any or no cause, at the option either of the Company
or Executive.

-2-
<PAGE>

4. Compensation.
------------

(a) Base Salary. While employed by the Company, the Company shall pay
-----------
the Executive as compensation for his services a base salary at the annualized
rate of $200,000 (the "Base Salary"). Such salary shall be paid periodically in
accordance with normal Company payroll practices and subject to the usual
required withholding. The Base Salary shall be reviewed annually for possible
raises, as determined by the Board in its discretion, in light of the Company's
performance and Executive's performance of his duties.

(b) Bonuses.
-------

(i) Signing Bonus. As of the Effective Date, the Company
-------------
agrees to pay Executive a one-time signing bonus in the amount of $15,000,
less applicable tax withholding.

(ii) Target Bonus. Executive shall be eligible to receive an
------------
annual target bonus, paid in equal quarterly installments, equal to $25,000
(the "Target Bonus"). The Target Bonus shall be based upon performance
criteria specified by the CEO from time to time. The Executive shall be
guaranteed the initial minimum $12,500 Target Bonus for the first annual
period. Notwithstanding the foregoing, the Company's obligation to make any
quarterly installment payment, whether during the first or any subsequent
annual period, shall be dependent upon Executive's employment with the Company
through the end of such quarter. For purposes of the Target Bonus, the annual
period shall commence on the Commencement Date (or anniversary thereof) and
continue for a one year period.

(i) Membership Unit Option. The Company will recommend to the
----------------------
Board of Managers (the "Board") that the Executive receive a nonstatutory
membership unit option to purchase 405,000 Class A units of the Company's then
issued and outstanding membership units at a price equal to the fair market
value as reasonably determined by the Board prior to the Commencement Date
(the "Unit Option"). The Unit Option shall be for a term of ten years (or
shorter upon termination of employment or consulting relationship with the
Company) and, subject to accelerated vesting as set forth elsewhere herein,
shall be vested with respect to twenty-five percent (25%) as of the first
anniversary of the Commencement Date and shall thereafter vest at the rate of
1/36th of the remaining seventy-five percent (75%) on the first day of each
month following the first anniversary of the Commencement Date. Such vesting
shall be conditioned upon Executive's continued employment or consulting
relationship with the Company as of each vesting date. Except as specified
otherwise herein, the Unit Option shall be subject to the terms, definitions
and provisions of the Company's 1999 Unit Plan (the "Unit Plan") and the
standard form of unit option agreement thereunder to be entered into by and
between Executive and the Company (the "Option Agreement"), both of which
documents are to be approved by the Board.

-3-
<PAGE>

(d) Severance.
---------

(i) Termination Without Cause. In the event that Executive's
-------------------------
employment with the Company is involuntarily terminated by the Company without
"Cause" or is "Constructively Terminated" (both as defined below), then (i)
Executive's Unit Option shall have its vesting accelerated as to (A) if such
termination occurs prior to the first anniversary of the Commencement Date
twenty-five percent (25%) of the units subject to the Unit Option, or (B) if
such termination occurs following the first anniversary of the Commencement Date
that number of units subject to the Unit Option that would have become vested
had Executive remained employed by the Company for an additional six (6) months;
(ii) Executive shall receive a lump-sum payment equal to nine (9) months of his
Base Salary and Target Bonus, less applicable withholding, promptly following
such termination of employment; provided, however, that Executive shall receive
a lump-sum payment equal to twelve (12) months of his Base Salary and Target
Bonus, less applicable withholding, if Dan Firestone is not the Chief Executive
Officer of the Company at the time of such termination; and (iii) Executive and
his covered dependents shall receive coverage under the Company's health and
other welfare benefit plans for a period of nine (9) months, or, if and to the
extent ineligible under the terms of such plans, Executive shall receive an
amount equal to the Company's costs of providing such benefits.

For the purposes of this Agreement, "Cause" is defined as: (i) an act of
dishonesty made by Executive in connection with his responsibilities as an
employee of the Company, (ii) Executive's conviction of, or plea of nolo
----
contendere to, a felony, (iii) Executive's gross misconduct, or (iv) Executive's
- ----------
breach or failure to perform his employment duties as established by the CEO
periodically and failure to cure such breach within thirty (30) days after
receipt of written notice of breach from the Company.

For this purpose, "Constructive Termination" is defined as the resignation
of Executive within sixty (60) days following (i) the assignment to Executive of
duties incommensurate with his status as Chief Financial Officer, or any
material reduction of the Executive's duties, authority, responsibilities or
title, relative to the Executive's duties, authority, responsibilities or title
as in effect immediately prior to such reduction, except if agreed to in writing
by the Executive; (ii) a material reduction by the Company in the Base Salary,
as in effect immediately prior to such reduction; or (iii) the relocation of the
Executive to a facility or a location more than fifty (50) miles from the
Executive's then present location, without the Executive's written consent.

For the purposes of this Agreement, "Change of Control" is defined as:

(1) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the total voting
power represented by the Company's then outstanding voting securities; or

(2) The consummation of a merger or consolidation of the Company with
any other entity, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity)

-4-
<PAGE>

at least fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or

(e) the consummation of the sale or disposition by the Company of all
or substantially all the Company's assets.

5. Change of Control Vesting Acceleration. In the event of a Change of
--------------------------------------
Control, a number of membership units equal to 50% of Executive's entire Unit
Option as of the Commencement Date, together with 50% of the units or shares of
any additional option grants Executive may receive from the Company while
employed hereunder, shall vest and become exercisable.

6. Total Disability of Executive. Upon Executive's becoming permanently
-----------------------------
and totally disabled (as defined in accordance with Internal Revenue Code
Section 22(e)(3) or its successor provision) during the term of this Agreement,
employment hereunder shall automatically terminate, all payments of compensation
by the Company to Executive hereunder shall immediately terminate (except as to
amounts already earned) and all vesting of the Executive's unit options shall
immediately cease.

7. Death of Executive. If Executive dies while employed by the Company
------------------
pursuant to this Agreement, all payments of compensation by the Company to
Executive hereunder shall immediately terminate (except as to amounts already
earned, which shall be paid to Executive's estate) and all vesting of the
Executive's unit options shall immediately cease.

8. Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" shall include any
person, firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Executive following termination without cause. Any attempted assignment,
transfer, conveyance or other disposition (other than as aforesaid) of any
interest in the rights of Executive to receive any form of compensation
hereunder shall be null and void.

9. Notices. All notices, requests, demands and other communications
-------
called for hereunder shall be in writing and shall be deemed given if (i)
delivered personally, (ii) one (1) day after being sent by Federal Express or a
similar commercial overnight service, or (iii) three (3) days after being mailed
by registered or certified mail, return receipt requested, prepaid and addressed
to the parties or their successors in interest at the following addresses, or at
such other addresses as the parties may designate by written notice in the
manner aforesaid:

If to the Company: Somera Communications, LLC
5383 Hollister Avenue, Suite 100
Santa Barbara, CA 93111

-5-
<PAGE>

Attn: Chief Executive Officer

If to Executive: Gary Owen
c/o Somera Communications, LLC
5383 Hollister Avenue, Suite 100
Santa Barbara, CA 93111

10. Severability. In the event that any provision hereof becomes or is
------------
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

11. Proprietary Information Agreement. Executive agrees to enter into the
---------------------------------
Company's standard Proprietary Information Agreement (the "Proprietary
Information Agreement") upon commencing employment hereunder.

12. Entire Agreement. This Agreement, the Unit Plan, the Option
----------------
Agreement, and the Proprietary Information Agreement represent the entire
agreement and understanding between the Company and Executive concerning
Executive's employment relationship with the Company, and supersede and replace
any and all prior agreements and understandings concerning Executive's
employment relationship with the Company.

13. Arbitration and Equitable Relief.
--------------------------------

(a) Except as provided in Section 13(c) below, Executive agrees that
any dispute or controversy arising out of, relating to, or in connection with
this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof shall be settled by arbitration to be held in
Santa Barbara County, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the "Rules"). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.

(b) The arbitrator shall apply California law to the merits of any
dispute or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. Executive hereby expressly
consents to the personal jurisdiction of the state and federal courts located in
California for any action or proceeding arising from or relating to this
Agreement and/or relating to any arbitration in which the parties are
participants.

(c) Executive understands that nothing in Section 13 modifies
Executive's at-will status. Either the Company or Executive can terminate the
employment relationship at any time, with or without cause.

(d) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 13, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT, OR THE

-6-
<PAGE>

INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION
THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF
ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT;
BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD
FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL
INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION;
NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC
ADVANTAGE; AND DEFAMATION.

(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR
STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE
SECTION 201, et seq;

(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

14. Legal Fee Reimbursement. The Company agrees to pay Executive's
-----------------------
reasonable legal fees associated with entering into this Agreement upon
receiving invoices for such services.

15. No Oral Modification, Cancellation or Discharge. This Agreement may
-----------------------------------------------
only be amended, canceled or discharged in writing signed by Executive and the
Company.

16. Withholding. The Company shall be entitled to withhold, or cause to
-----------
be withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.

17. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of California.

18. Effective Date. This Agreement is effective July 13, 1999.
--------------

19. Acknowledgment. Executive acknowledges that he has had the
--------------
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

-7-
<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below:

SOMERA COMMUNICATIONS, LLC

_____________________________
Dan Firestone
Chief Executive Officer

EXECUTIVE

_____________________________
Gary Owen
<PAGE>

Exhibit A
---------

Loan Agreement

<PAGE>

EXHIBIT 10.14
-------------

FORM OF
SOMERA COMMUNICATIONS, INC.
REGISTRATION AGREEMENT
----------------------

THIS REGISTRATION AGREEMENT is made as of _______, 1999, by and among
Somera Communications, Inc., a Delaware corporation (the "Company"), the Persons
-------
listed as Investors on the Schedule of Investors attached hereto (collectively,
---------------------
the "Investors") and the Persons listed as Other Stockholders on the Schedule of
--------- -----------
Other Stockholders attached hereto (collectively, the "Other Stockholders").
- ------------------ ------------------
Unless otherwise provided in this Agreement, capitalized terms used herein shall
have the meanings set forth in paragraph 8 hereof.

WHEREAS, the Investors and the Other Stockholders and Somera
Communications, LLC, a California limited liability company ("Somera"), are
------
parties to that certain Registration Agreement, dated as of July 23, 1999 (the

"Existing Registration Agreement");
-------------------------------

WHEREAS, in connection with the initial public offering of the
Company's Common Stock registered under the Securities Act and as contemplated
in the Existing Registration Agreement, the Company will become the corporate
successor to Somera resulting from the conversion of Somera from a limited
liability company to a corporation;

WHEREAS, effective upon the consummation of such initial public
offering, this Agreement will become effective and will supersede and replace
the Existing Registration Agreement; and

WHEREAS, effective upon the consummation of such initial public
offering, the Investors and the Other Stockholders will cause the Existing
Registration Agreement to be terminated and superseded and replaced by this
Agreement.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Demand Registrations.
--------------------

(a) Requests for Registration. At any time that is at least 180 days
-------------------------
after the date the Company has completed an initial public offering of its
securities registered under the Securities Act, the holders of a majority of the
Investor Registrable Securities and the holders of a majority of the Other
Registrable Securities may each request registration under the Securities Act of
all or any portion of their Registrable Securities on Form S-1 or any similar
long-form registration statement ("Long-Form Registrations") or Form S-2 or S-3
-----------------------
or any similar short-form registration statement ("Short-Form Registrations"),
------------------------
if the Company is eligible to use any such short form. All registrations
requested pursuant to this paragraph 1(a) are referred to herein as "Demand
------
Registrations." Each request for a Demand Registration shall specify the
- -------------
approximate number of Registrable Securities requested to be registered and the
anticipated per share price range for such offering. Within ten days after
receipt of a request for a Demand Registration, the Company shall give written
notice of such
<PAGE>

requested registration to all other holders of Registrable Securities and,
subject to paragraph 1(d) below, shall include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice.

(b) Long-Form Registrations. The holders of Investor Registrable
-----------------------
Securities and the holders of Other Registrable Securities shall each be
entitled to request one Long-Form Registration in which the Company shall pay
all Registration Expenses; provided that the aggregate offering value of the
-------- ----
Registrable Securities requested to be registered in any Long-Form Registration
must equal at least $10,000,000. A registration shall not count as one of the
permitted Long-Form Registrations until it has become effective (subject to the
next sentence) and unless the holders of Registrable Securities are able to
register and sell at least 75% of the Registrable Securities requested to be
included in such registration. Notwithstanding the foregoing, if a Long-Form
Registration is withdrawn by the holders of Registrable Securities who requested
such registration prior to the time it has become effective for reasons other
than the disclosure of information concerning the Company that is materially
adverse to the Company or its stock price (which disclosure is made by the
Company after the date that such registration is requested pursuant to paragraph
1(a) above), such Long-Form Registration shall count as a permitted Long-Form
Registration for such requesting holders unless the holders of Registrable
Securities who requested such registration reimburse the Company for all of the
Registration Expenses incurred by the Company prior to such withdrawal.

(c) Short-Form Registrations. In addition to the Long-Form
------------------------
Registrations provided pursuant to paragraph 1(b) above, the holders of Investor
Registrable Securities and the holders of Other Registrable Securities shall
each be entitled to request two (2) Short-Form Registrations in which the
Company shall pay all Registration Expenses; provided that the aggregate
-------- ----
offering value of the Registrable Securities requested to be registered in any
Short-Form Registration must equal at least $10,000,000. A registration shall
not count as one of the permitted Short-Form Registrations until it has become
effective (subject to the next sentence) and unless the holders of Registrable
Securities are able to register and sell at least 75% of the Registrable
Securities requested to be included in such registration. Notwithstanding the
foregoing, if a Short-Form Registration is withdrawn by the holders of
Registrable Securities who requested such registration prior to the time it has
become effective for reasons other than the disclosure of information concerning
the Company that is materially adverse to the Company or its stock price (which
disclosure is made by the Company after the date that such registration is
requested pursuant to paragraph 1(a) above), such Short-Form Registration shall
count as a permitted Short-Form Registration for such requesting holders unless
the holders of Registrable Securities who requested such registration reimburse
the Company for all of the Registration Expenses incurred by the Company prior
to such withdrawal. Demand Registrations shall be Short-Form Registrations
whenever the Company is permitted to use any applicable short form. After the
Company has become subject to the reporting requirements of the Securities
Exchange Act, the Company shall use its best efforts to make Short-Form
Registrations on Form S-3 available for the sale of Registrable Securities.

(d) Priority on Demand Registrations. The Company shall not include in
--------------------------------
any

2
<PAGE>

Demand Registration any securities which are not Registrable Securities without
the prior written consent of the holders of a majority of the Investor
Registrable Securities included in such registration (in the case of an Investor
Demand Registration) or the holders of a majority of the Other Registrable
Securities included in such registration (in the case of an Other Demand
Registration). If a Demand Registration is an underwritten offering and the
managing underwriters advise the Company in writing that in their opinion the
number of Registrable Securities and, if permitted hereunder, other securities
requested to be included in such offering exceeds the number of Registrable
Securities and other securities, if any, which can be sold in an orderly manner
in such offering within a price range acceptable to the holders of a majority of
the Investor Registrable Securities included in such registration (in the case
of an Investor Demand Registration) or the holders of a majority of the Other
Registrable Securities included in such registration (in the case of an Other
Demand Registration), the Company shall include in such registration prior to
the inclusion of any securities which are not Registrable Securities the number
of Registrable Securities requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, pro rata among the respective holders thereof on the basis of the
number of Registrable Securities requested to be included therein.

(e) Selection of Underwriters. If any Demand Registration is an
-------------------------
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Investor
Registrable Securities (in the case of an Investor Demand Registration) or the
holders of a majority of the Other Registrable Securities (in the case of an
Other Demand Registration).

(f) Restrictions on Demand Registrations. The Company shall not be
------------------------------------
obligated to effect any Demand Registration within 180 days after the effective
date of the Company's initial public offering of common stock under the
Securities Act or within 90 days after the effective date of a previous Demand
Registration. The Company may postpone for up to 90 days (or up to 60 days in
the case of clause (ii) below) the filing or the effectiveness of a registration
statement for a Demand Registration if the Company's Board of Directors
determines in its reasonable good faith judgment that such Demand Registration
would reasonably be expected to have (i) a material adverse effect on (or
require premature disclosure of) any proposal or plan by the Company or any of
its Subsidiaries to engage in any acquisition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction or (ii) a material adverse effect on the
Company's business or stock price; provided that in such event, the holders of
-------- ----
Registrable Securities initially requesting such Demand Registration shall be
entitled to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Company shall pay all Registration Expenses in connection with
such registration. The Company may delay a Demand Registration hereunder only
once in any twelve-month period.

2. Piggyback Registrations.
-----------------------

(a) Right to Piggyback. Whenever the Company proposes to register any
------------------
of its securities under the Securities Act (other than pursuant to a Demand
Registration or a registration

3
<PAGE>

on Form S-4 or S-8 or any successor or similar forms) and the registration form
to be used may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company shall give prompt written notice to all
----------------------
holders of Registrable Securities of its intention to effect such a registration
and, subject to paragraphs 2(c) and 2(d) below, shall include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the receipt
of the Company's notice.

(b) Piggyback Expenses. The Registration Expenses of the holders of
------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations whether or not such registration is consummated.

(c) Priority on Primary Registrations. If a Piggyback Registration is
---------------------------------
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company shall include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, any other securities
requested to be included in such registration.

(d) Priority on Secondary Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration on behalf of holders of the Company's
securities (other than the holders of Investor Registrable Securities or Other
Registrable Securities), and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration and the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of securities requested to
be included therein and (ii) second, any other securities requested to be
included in such registration.

(e) Withdrawal by the Company. If, at any time after giving written
-------------------------
notice of its intention to register any of its securities (whether on its own
behalf or at the request of any holders of the Company's securities other than
Registrable Securities) as set forth in paragraph 2(a) and prior to the
effective date of such registration statement filed in connection with such
registration, the Company's Board of Directors shall determine in its good faith
judgment for any reason not to register such securities (or if the holders of
such other securities request that such registration be withdrawn), the Company
may, at its election, give written notice of such determination to each holder
of Registrable Securities and thereupon shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection therewith
as provided herein).

(f) Selection of Underwriters. If any Piggyback Registration is an
-------------------------
underwritten

4
<PAGE>

offering, the selection of investment banker(s) and manager(s) for the offering
must be approved by the holders of a majority of the Investor Registrable
Securities (which approval shall not be unreasonably withheld so long as such
investment banker(s) and manager(s) are of recognized national standing and can
reasonably be expected to provide the requisite degree of analytical, research
and other support to the Company and the investing public following such
offering).

(g) Other Registrations. If the Company has previously filed a
-------------------
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least 90 days has elapsed from the effective date of such
previous registration.

3. Holdback Agreements.
-------------------

(a) No holder of Registrable Securities shall effect any public sale
or distribution (including sales pursuant to Rule 144) of equity securities of
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the 180-day period
beginning on the effective date of the Company's initial public offering of its
common stock under the Securities Act or during the seven days prior to and the
90-day period beginning on the effective date of the next registered public
offering of the Company's common stock (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.

(b) The Company (i) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of the Company's initial public offering
of its common stock under the Securities Act or during the 90-day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise agree
in writing to a shorter period, and (ii) shall use commercially reasonable
efforts to cause each holder of at least 2% (on a fully-diluted basis) of its
common stock, or any securities convertible into or exchangeable or exercisable
for common stock, purchased from the Company at any time after the date of the
Existing Registration Agreement (other than in a registered public offering) to
agree not to effect any public sale or distribution (including sales pursuant to
Rule 144) of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree in writing to a shorter
period.

4. Registration Procedures. Whenever the holders of Registrable
-----------------------
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall

5
<PAGE>

use its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:

(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; provided
--------
that before filing a registration statement or prospectus or any amendments or
- ----
supplements thereto, the Company shall (if requested) furnish to the counsel
selected by the holders of a majority of the Investor Registrable Securities and
the counsel selected by the holders of a majority of the Other Registrable
Securities covered by such registration statement copies of all such documents
proposed to be filed, which documents shall be subject to the review and comment
of such counsel;

(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of either
(i) not less than 120 days or, if such registration statement relates to an
underwritten offering, such longer period as in the opinion of counsel for the
underwriters a prospectus is required by law to be delivered in connection with
sales of Registrable Securities by any underwriter or dealer (with any such
period being extended during any period in which a stop order is in effect or
during any period described in subparagraph (e) below) or (ii) such shorter
period as will terminate when all of the securities covered by such registration
statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such registration
statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all such securities have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement and the prospectus used
in connection therewith;

(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller (including any underwriter) reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; provided that the Company shall not
-------- ----
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;

6
<PAGE>

(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;

(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;

(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;

(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other customary actions as the
holders of a majority of the Investor Registrable Securities being sold or the
holders of a majority of the Other Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including effecting a stock split or
a combination of shares);

(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all necessary financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

(k) permit any holder of Registrable Securities which holder, in its
sole and

7
<PAGE>

exclusive judgment, might be deemed to be an underwriter or a controlling person
of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;

(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common securities included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;

(m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities in the United States or any political
subdivisions thereof as may be necessary to enable the sellers thereof to
consummate the disposition of such Registrable Securities; and

(n) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters.

5. Registration Expenses.
---------------------

(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions payable with respect to Registrable Securities, which shall be paid
by the holders of such Registrable Securities) and other Persons retained by the
Company (all such expenses being herein called "Registration Expenses"), shall
---------------------
be borne as provided in this Agreement, except that the Company shall, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed or on the NASD automated quotation system.

(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities
included in such registration.

(c) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.

8
<PAGE>

6. Indemnification.
---------------

(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by, or
relating to any action or proceeding arising out of or based upon, any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities; except with respect to any information supplied by any
underwriter for use in such registration statement, prospectus or other offering
document and except that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this paragraph 6(a) shall not inure to the
benefit of the underwriter (or to the benefit of any Person controlling such
underwriter) from whom the Person asserting any such losses, claims, damages,
liabilities or expenses purchased common securities to the extent that any such
loss, claim, damage, liability or expense of the underwriter or controlling
Person results from an untrue statement or omission in the preliminary
prospectus which was corrected in the prospectus if a copy of the prospectus was
not sent or given to such Person as required by the Securities Act.

(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
-------- ----
shall be individual, not joint and several, for each holder and shall be limited
to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.

(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such prompt
-------- ----
notice shall not impair any Person's right to indemnification

9
<PAGE>

hereunder to the extent such failure has not prejudiced the indemnifying party)
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.

(d) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. Each
indemnifying party also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
the indemnification provided for herein is unavailable for any reason.

7. Participation in Underwritten Registrations. No Person may
-------------------------------------------
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.

8. Definitions.
-----------

(a) "Investor Demand Registration" means a Demand Registration
----------------------------
requested by the holders of a majority of the Investor Registrable Securities
pursuant to paragraph 1 above.

(b) "Investor Registrable Securities" means (i) any common stock of
-------------------------------
the Company received by the Investors in connection with the conversion of
Somera from a limited liability company to a corporation, (ii) any securities
issued or issuable with respect to the common stock referred to in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization or other reorganization and (iii) any
other shares of common stock held by Persons holding securities described in
clauses (i) and (ii) above.

(c) "Other Demand Registration" means a Demand Registration requested
-------------------------
by the holders of a majority of the Other Registrable Securities pursuant to
paragraph 1 above.

(d) "Other Registrable Securities" means (i) any common stock of the
----------------------------
Company received by the Other Stockholders in connection with the conversion of
Somera from a limited liability company to a corporation, (ii) any securities
issued or issuable with respect to the common stock referred to in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization or other reorganization and (iii) any
other shares of common

10
<PAGE>

stock held by Persons holding securities described in clauses (i) and (ii)
above.

(e) "Person" means an individual, a partnership, a corporation,
------
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

(f) "Registrable Securities" means, collectively, the Investor
----------------------
Registrable Securities and the Other Registrable Securities. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force) or repurchased by the Company or any Subsidiary.
In addition, (i) as to any particular Registrable Securities held by any Person,
such securities shall cease to be Registrable Securities when the aggregate
number of Registrable Securities held by such Person (as "person" is defined in
Rule 144(a)(2) under the Securities Act (or any similar rule then in force))
does not exceed one percent of the number of shares of common stock then
outstanding as shown by the most recent report or statement published by the
Company and such Person has held such securities for at least two years (taking
into account any "tacking" that may be permitted under Rule 144 in the opinion
of counsel for any such Person) and (ii) as to any particular Registrable
Securities held by any of the Summit Investors, such securities shall cease to
be Registrable Securities when they have been distributed by any of the Summit
Investors to their partners (but this clause (ii) shall only apply to the
Registrable Securities so distributed and only if the holders of a majority of
the Investor Registrable Securities held by the Summit Investors advise the
Company in writing of their desire to exclude the securities so distributed from
the definition of "Registrable Securities" hereunder).

(g) "Summit Investors" means, collectively, Summit Ventures V, L.P.,
----------------
Summit V Advisors (QP) Fund, L.P., Summit V Advisors Fund, L.P. and Summit
Investors III, L.P.

9. Miscellaneous.
-------------

(a) No Inconsistent Agreements. Except as provided for herein, the
--------------------------
Company shall not hereafter enter into any agreement with respect to its
securities which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.

(b) Remedies. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.

(c) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, the holders of a majority of the Investor
Registrable Securities and the holders of a

11
<PAGE>

majority of the Other Registrable Securities.

(d) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.

(e) Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

(f) Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.

(g) Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.

(h) Governing Law. All issues and questions concerning the
-------------
construction, validity, interpretation and enforcement of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
California, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California.

(i) Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), upon machine-generated acknowledgment of receipt after transmittal by
facsimile or five days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Company at the address
indicated below, to each Investor at the address indicated on the Schedule of
-----------
Investors attached hereto and to each Other Stockholder at the address indicated
- ---------
on the Schedule of Other Stockholders attached hereto:
------------------------------

12
<PAGE>

To the Company:
--------------

Somera Communications, Inc.
5383 Hollister Avenue, Suite 100
Santa Barbara, California 93111
Attn: Chief Executive Officer
Telephone: (805) 681-3322
Facsimile: (805) 681-3319

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

* * * * *

13
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Registration
Agreement as of the date first written above.

SOMERA COMMUNICATIONS, INC.

By:
--------------------------------
Its:
-------------------------------

SUMMIT VENTURES V, L.P.

By: Summit Partners V, L.P.
its General Partner

By: Summit Partners, LLC
its General Partner

By:
------------------------------
Managing Member

SUMMIT V ADVISORS FUND, L.P.

By: Summit Partners V, L.P.
its General Partner

By: Summit Partners, LLC
its General Partner

By:
------------------------------
Managing Member

SUMMIT V ADVISORS (QP) FUND, L.P.

By: Summit Partners V, L.P.
its General Partner

By: Summit Partners, LLC
its General Partner

By:
------------------------------
Managing Member

<PAGE>

SUMMIT INVESTORS III, L.P.

By:
------------------------------
Authorized Signatory

RANDOLPH STREET PARTNERS

By:
------------------------------
Its:
------------------------------

RANDOLPH STREET PARTNERS 1998 DIF, LLC

By:
------------------------------
Its:
------------------------------

[Signature Page to Registration Agreement]

<PAGE>

SUNAPEE SECURITIES, INC.

By:
------------------------------
Gary B. Wilkinson

Title: Treasurer

SQUAM LAKE INVESTORS III, L.P.

By: GPI, Inc., its General Partner

By:
------------------------------
Gary B. Wilkinson

Title: Treasurer

<PAGE>

------------------------------
Daniel A. Firestone

------------------------------

Gil Varon

------------------------------
Robert Feinberg

------------------------------
Steve Feinberg

------------------------------
Ron Zamir

------------------------------
Michael Wolfe

------------------------------
Jessica Giwoff

------------------------------
Julie Lubin

------------------------------
Andrew Cranmer

------------------------------
Robyn Parr

------------------------------
Richard Smith

[Signature Page to Registration Agreement]

<PAGE>

SCHEDULE OF INVESTORS
- ---------------------

Summit Ventures V, L.P.
c/o Summit Partners
499 Hamilton Avenue, Suite 200
Palo Alto, California 94301
Attn: Walter G. Kortschak
Peter Y. Chung
Telephone: (650) 321-1166
Facsimile: (650) 321-1188

Summit V Advisors Fund, L.P.
c/o Summit Partners
499 Hamilton Avenue, Suite 200
Palo Alto, California 94301
Attn: Walter G. Kortschak
Peter Y. Chung
Telephone: (650) 321-1166
Facsimile: (650) 321-1188

Summit V Advisors (QP) Fund, L.P.
c/o Summit Partners
499 Hamilton Avenue, Suite 200
Palo Alto, California 94301
Attn: Walter G. Kortschak
Peter Y. Chung
Telephone: (650) 321-1166
Facsimile: (650) 321-1188

Summit Investors III, L.P.
c/o Summit Partners
499 Hamilton Avenue, Suite 200
Palo Alto, California 94301
Attn: Walter G. Kortschak
Peter Y. Chung
Telephone: (650) 321-1166
Facsimile: (650) 321-1188

Sunapee Securities, Inc.
c/o Bain & Company, Inc.
Two Copley Place
Boston, Massachusetts 02166
Attn: Gary Wilkinson
Telephone: (617) 572-3268
Facsimile: (617) 572-3266

<PAGE>

Squam Lake Investors III, L.P.
c/o Bain & Company, Inc.
Two Copley Place
Boston, Massachusetts 02166
Attn: Gary Wilkinson
Telephone: (617) 572-3268
Facsimile: (617) 572-3266

Randolph Street Partners II
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jack S. Levin, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200

Randolph Street Partners 1998 DIF, LLC
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jack S. Levin, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200

with a copy to:
- --------------
(which shall not constitute notice to the Investors):

Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jack S. Levin, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200

19
<PAGE>

SCHEDULE OF OTHER STOCKHOLDERS
------------------------------

Daniel A. Firestone
5383 Hollister Ave. #230
Santa Barbara, California 93111
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Gil Varon
3463 State Street #502
Santa Barbara, California 93105
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Robert Feinberg
5383 Hollister Ave. #100
Santa Barbara, California 93111
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Steve Feinberg
3463 State Street #465
Santa Barbara, California 93111
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Ron Zamir
5383 Hollister Ave. #230
Santa Barbara, California 93111
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Michael Wolfe
23 S. Hope Ave. #A202
Santa Barbara, California 93105
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Jessica Giwoff
3463 State Street #411
Santa Barbara, California 93105
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

<PAGE>

Julie Lubin
5383 Hollister Ave. #230
Santa Barbara, California 93111
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Andrew Cranmer
2220 S. Beverly Glen
Los Angeles, California 90064
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Robyn Parr
3463 State Street #320
Santa Barbara, California 93105
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

Richard Smith
23 S. Hope Ave. #A131
Santa Barbara, California 93105
Telephone: (805) 681-3322
Telecopy: (805) 681-3319

with a copy to:
- --------------
(which shall not constitute notice to the Existing Members)

Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street
Thirtieth Floor
Los Angeles, California 90017
Attention: Eric H. Schunk, Esq.
Telephone: (213) 892-4000
Facsimile: (213) 629-5963

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our reports dated September 9, 1999 relating to the financial statements and
financial statement schedule of Somera Communications LLC, which appear in such
Registration Statement. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Registration
Statement.

/s/ PricewaterhouseCoopers LLP

San Jose, California

October 26, 1999