DRAGONWAVE ANNOUNCES FINANCIAL RESULTS FOR
FOURTH QUARTER AND FULL FISCAL YEAR 2012

OTTAWA, Canada, May 3, 2012 — DragonWave Inc. (TSX: DWI; NASDAQ: DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the fourth quarter and full fiscal year 2012, ended February 29, 2012. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.

Revenue for the fourth quarter of fiscal year 2012 was $9.2 million, compared with $11.8 million in the third quarter of fiscal year 2012 and $15.1 million in the fourth quarter of fiscal year 2011. Revenue from customers within North America was $4.8 million, compared with $8.2 million in the third quarter of this fiscal year and $10.2 million in the fourth quarter of fiscal year 2011. DragonWave had 2 customers who each contributed more than 10% of revenue in the fourth quarter.

Gross margin for the fourth quarter of fiscal year 2012 was 13%, compared with 41% in the third quarter of fiscal year 2012 and 29% in the fourth quarter of fiscal year 2011. The gross margins in the fourth quarters of fiscal years 2012 and 2011 reflect the inclusion of inventory impairment provisions of $1.7 million and $2.0 million respectively.

Net and comprehensive loss applicable to shareholders in the fourth quarter of fiscal year 2012 was $13.4 million or ($0.38) per basic and diluted share. This compares to a net and comprehensive loss applicable to shareholders of $8.0 million or ($0.23) per basic diluted share in the third quarter of fiscal year 2012 and net loss of $8.9 million or ($0.25) per basic and diluted share in the fourth quarter of fiscal year 2011.

"Earlier today, in a separate press release, we announced a transformational event for DragonWave — the amended agreement between DragonWave and Nokia Siemens Networks for DragonWave to acquire the Nokia Siemens Networks' microwave transport business and associated operational support system and support functions," said DragonWave President and CEO Peter Allen. "In addition, through this strategic partnership, DragonWave becomes the preferred strategic supplier of packet microwave solutions and related products to Nokia Siemens Networks, and the companies will jointly coordinate technology development activities.

"Nokia Siemens Networks is a leading global supplier of complete solutions for broadband mobile networks. The company is demonstrating strong momentum with numerous new LTE customer wins," continued Mr. Allen. "Industry-best high-capacity packet microwave backhaul from DragonWave will form a key component and strategic advantage of NSN's complete solution for broadband mobile networks."

Cash, cash equivalents, restricted cash, and short-term investments totaled $53.0 million at the end of the fourth quarter of fiscal year 2012, compared to $60.2 million at the end of the third quarter, and $89.7 million at the end of the fourth quarter of fiscal year 2011.

Revenue for the full fiscal year 2012 was $45.7 million, compared with $118.0 million for the prior fiscal year. Net and comprehensive loss applicable to shareholders for the full fiscal year 2012 was $33.5 million or ($0.94) per basic and diluted share.

DragonWave expects revenue for the first quarter of fiscal year 2013 to be in the range of $12 million to $14 million.

The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time today, May 3, 2012.

The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm

DragonWave has filed its Form 40-F with the U.S. Securities and Exchange Commission (SEC). A copy of the Form 40-F is available on the DragonWave investor website at http://investor.dragonwaveinc.com/.

DragonWave shareholders may request a printed copy of the complete audited financial statements, free of charge, at http://investor.dragonwaveinc.com/contactus.cfm, or by regular mail at Shareholder Services, DragonWave Inc., 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9.

DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com.

Certain statements in this release, including the estimate of the revenue range for the first quarter of fiscal year 2013 and the statements regarding the transactions involving Nokia Siemens Networks (the "NSN Transactions"), constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop revenue estimates include DragonWave's expectations regarding: the network deployment plans of its existing and new customers, and the volume and timing of orders, shipments and revenue recognition. The NSN Transactions are subject to closing conditions, including no material adverse effect. Material factors and assumptions relating to the NSN Transactions include the parties' beliefs regarding the industry and markets in which the parties operate; successful completion of the proposed transaction; and expectations regarding potential synergies and prospects for the business if the transaction is closed. The NSN Transactions are subject to risks, including: the risks that the parties will not proceed with the transactions for any reason; that the ultimate terms of the transactions will differ from those that are currently contemplated; that if the transactions are completed, that expected synergies will not materialize; that unexpected costs will be incurred to integrate the business; or that end-customer demand will not meet expectations. In particular, the completion of the NSN Transactions is subject to a number of terms and conditions, including, without limitation, no occurrence of a material adverse effect. These conditions to the transaction may not be satisfied, in which case the NSN Transactions could be modified, restructured or terminated. Material risks and uncertainties following closing of the NSN Transactions are described under the heading "Risks and Uncertainties" in the MD&A dated May 3, 2012 and material risks and uncertainties related to acquisitions generally are described on pages 20 and 21 of the Company's Annual Information Form, dated May 4, 2011. Readers are cautioned not to place undue reliance on forward-looking statements. These statements are provided to assist external stakeholders in understanding DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Actual results, performance, achievements or developments of DragonWave may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors, in addition to those detailed above, that may cause the actual results, performance, achievements or developments of DragonWave to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in DragonWave's Annual Information Form dated May 4, 2011 and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively, and include the following:

DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether because of new information, future events or otherwise, except as expressly required by law.



Assets
Current Assets
	Cash and cash equivalents	52,798		77,819
	Restricted cash	177		714
	Short term investments	—		11,181
	Trade receivables	9,850		11,579
	Inventory	26,994		28,204
	Other current assets	5,501		5,306
	Future income tax asset	69		553

		95,389		135,356
Long Term Assets
	Property and equipment	5,280		7,560
	Future income tax asset	1,308		808
	Intangible assets	6,217		14,929
	Goodwill	11,927		11,927

		24,732		35,224
Total Assets		120,121		170,580

Liabilities
Current Liabilities
	Accounts payable and accrued liabilities	12,720		15,967
	Deferred revenue	723		1,453
	Contingent royalty	372		622
	Contingent consideration	1,884		14,622

		15,699		32,664
Long Term Liabilities
	Contingent royalty	1,292		3,290
	Other long term liabilities	1,063		1,999

		2,355		5,289
Commitments
Shareholders' equity
	Capital stock	172,264		171,570
	Contributed surplus	4,606		2,642
	Deficit	(65,448	)	(31,967	)
	Accumulated other comprehensive loss	(9,695	)	(9,618	)

Total Shareholder's equity		101,727		132,627
	Non-controlling interests	340		—

Total Equity		102,067		132,627
Total Liabilities and Shareholder's equity		120,121		170,580

Shares issued & outstanding		35,586,206		35,421,893

CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)

Expressed in US $000's e and per share amounts

		Three months ended						Year ended

		February 29, 2012			February 28, 2011			February 29, 2012			February 28, 2011
REVENUE			9,150			15,105			45,656			118,010
	Cost of sales		8,006			10,697			29,255			67,460

Gross profit			1,144			4,408			16,401			50,550

EXPENSES
	Research and development		5,400			5,952			24,023			19,056
	Selling and marketing		3,585			3,964			15,307			17,303
	General and administrative		4,735			3,332			16,528			11,785
	Government assistance		—			(144	)		(902	)		(390	)

			13,720			13,104			54,956			47,754

Income (loss) before amortization of intangible assets and other items			(12,576	)		(8,696	)		(38,555	)		2,796
	Amortization of intangible assets		(373	)		(472	)		(1,986	)		(893	)
	Accretion expense		(38	)		(271	)		(650	)		(393	)
	Interest income		39			37			393			233
	Investment gain		46			(161	)		67			7
	Impairment of intangible assets		—			—			(8,315	)		—
	Gain on change in estimate of contingent liabilities		623			—			15,146			—
	Foreign exchange gain		218			536			100			678

Income (loss) before income taxes			(12,061	)		(9,027	)		(33,800	)		2,428
	Income tax expense (recovery)		1,354			(145	)		(104	)		421

Net Income (loss)			(13,415	)		(8,882	)		(33,696	)		2,007
	Net Loss Attributable to Non-Controlling Interest		47			—			215			—

Net Income (loss) applicable to shareholders			(13,368	)		(8,882	)		(33,481	)		2,007
	Foreign currency translation differences for foreign operations		2			—			77			—

Comprehensive Income (Loss) applicable to shareholders			(13,370	)		(8,882	)		(33,558	)		2,007
Income (loss) per share
	Basic		(0.38	)		(0.25	)		(0.94	)		0.06
	Diluted		(0.38	)		(0.25	)		(0.94	)		0.05
Weighted Average Shares Outstanding
	Basic		35,573,810			35,208,606			35,506,689			35,812,507
	Diluted		35,573,810			35,208,606			35,506,689			36,741,961

			Three months ended						Year ended

			February 29, 2012			February 28, 2011			February 29, 2012			February 28, 2011
Operating Activities
Net Income (Loss)				(13,415	)		(8,882	)		(33,696	)		2,007
Items not affecting cash
		Amortization of property and equipment		857			796			3,370			2,895
		Amortization of intangible assets		373			445			1,986			893
		Accretion expense		38			271			650			393
		Non cash royalty amortization		(67	)		(140	)		(490	)		(266	)
		Impairment of intangible assets		—			—			8,315			—
		Gain on change in estimate of contingent liabilities		(623	)		—			(15,146	)		—
		Stock-based compensation		415			451			1,964			1,410
		Unrealized foreign exchange loss		(92	)		(156	)		38			134
		Non cash future income tax expense (recovery)		1,416			235			(42	)		358
		Inventory impairment		1,741			2,097			2,020			3,285

				(9,357	)		(4,883	)		(31,031	)		11,109
Changes in non-cash working capital items				3,203			(1,052	)		(3,437	)		(12,301	)

				(6,154	)		(5,935	)		(34,468	)		(1,192	)

Investing Activities
	Acquisition of property and equipment			(147	)		(631	)		(1,090	)		(3,839	)
	Acquisition of intangible assets			(1,095	)		(330	)		(1,589	)		(867	)
	Acquisition of Axerra Networks Inc., net of cash acquired			—			—			—			(8,700	)
	Purchase of short term investments			—			(11,513	)		(22,432	)		(135,480	)
	Maturity of short term investments			2,123			47,431			33,613			132,378

				881			34,957			8,502			(16,508	)

Financing Activities
	Share repurchase			—			—			—			(10,738	)
	Initial formation contribution by non-controlling interest in DW-HFCL			—			—			555			—
	Issuance of common shares net of issuance costs			55			762			505			1,115

				55			762			1,060			(9,623	)

Effect of foreign exchange on cash and cash equivalents				89			156			(115	)		(134	)
Net decrease in cash and cash equivalents				(5,129	)		29,940			(25,021	)		(27,457	)
Cash and cash equivalents at beginning of period				57,927			47,879			77,819			105,276

Cash and cash equivalents at end of period				52,798			77,819			52,798			77,819

Cash paid during the period for interest				—			—			—			194


Investor Contact:		Media Contact:
John Lawlor VP, Investor Relations DragonWave Inc. jlawlor@dragonwaveinc.com Tel: 613-895-7000		Nadine Kittle Marketing Communications DragonWave Inc. nkittle@dragonwaveinc.com Tel: 613-599-9991 ext 2262