Gary Levine
Chief Financial Officer 
CSP Inc.
Tel: (978) 663-7598 ext. 1200 
Fax: (978) 663- 0150
glevine@cspi.com

BILLERICA, MA, May 9, 2005 - CSP Inc. (Nasdaq:CSPI), a provider of IT Solutions, systems integration services and dense cluster computing systems, today reported financial results for the second quarter of fiscal 2005 ended March 31, 2005.

For the second quarter of fiscal 2005, CSP Inc., reported that sales increased 56 percent to $19.0 million from $12.2 million in the year-earlier quarter. CSP's second-quarter net income increased by 57 percent to $750,000 or $0.20 per diluted share as compared to $478,000 or $0.13 per diluted share, for the second quarter of fiscal 2004.

For the first six months ended March 31, 2005, the Company reported sales of $33.3 million, an increase of 39 percent from sales of $24.0 million for the first six months of fiscal 2004. For the six-month period of fiscal 2005, the Company reported a 295 percent increase in net income to $987,000 or $0.26 per diluted share as compared to $250,000 or $0.07 per diluted share for the same period in the prior year.

"CSP reported outstanding top-and bottom-line results in the second quarter," stated Chairman, President and Chief Executive Officer Alexander R. Lupinetti. "This performance is the result of our success in attracting new customers across our businesses with innovative products and solutions."

Systems

"Our MultiComputer Group's excellent second-quarter performance reflects shipments of equipment from previous contract wins for our open system multicomputers," said Lupinetti. "During the second quarter, we made the first shipment of StarGate 2923 and FastCluster 2942 open system Multicomputers as part of the major international contract win we announced last quarter. These Multicomputers will be used for sonar applications."

"We also completed the shipments of our FastCluster 2942 blades to Lockheed Martin for the Development and Demonstration phase of the U.S. Navy's Advanced Hawkeye program (now designated the Hawkeye E-2D) for qualification, reliability and flight testing. The Hawkeye E-2D is a tactical battle management, airborne early warning, and command and control aircraft. Going forward, we will receive royalty payments each time Lockheed Martin builds and ships prototypes."

Services and Systems Integration

"Business also was very strong at our MODCOMP division, where we are seeing robust demand for our integration consulting services for complex IT environments," Lupinetti said. "We experienced shortened sales cycles, and were able to close business that we had expected to receive in subsequent quarters."

"We had a great quarter for new business at MODCOMP's German and U.S. subsidiaries. In Germany, large companies are turning to MODCOMP for servers and storage outsourcing and maintenance as well as network security infrastructure services. MODCOMP's U.S.-based Systems and Solutions Division (SSD), which provides best-of-breed solutions for integrated IT environments, continues to gain market share in a robust demand environment. We also made progress in hiring additional salespeople at SSD to capitalize on growth opportunities in that market."

Going Forward

"We expect that MODCOMP will continue to grow with the market demand. In addition, our open source multicomputers are well positioned in the competitive defense marketplace and we will continue to record revenue from existing contracts," concluded Lupinetti.

Safe Harbor
The Company wishes to take advantage of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. Such forward-looking statements may include, but are not limited to, those relating to the Company's ability to receive royalty payments as part of the Advanced Hawkeye program, hiring additional salespeople at its Systems and Solutions Division, the ability of its MODCOMP division to thrive in a strong demand environment, and the Company's expectation that it will continue to record revenue from existing contracts. The Company cautions that numerous factors could cause actual results to differ materially from any forward-looking statements made by the Company. Such risks include general economic conditions, market factors, competitive factors and pricing pressures, and others described in the Company's filings with the SEC. Please refer to the section on forward-looking statements included in the Company's filings with the Securities and Exchange Commission.

About CSP Inc.

Based in Billerica, Massachusetts and founded in 1968, CSP Inc. (NASDAQ: CSPI) and its subsidiaries develop and market best-of-breed IT solutions, image processing software, systems integration services, and high-performance computer systems. Our Systems segment includes the MultiComputer Division, which supplies high-performance Linux cluster systems for a broad array of defense applications, including radar, sonar and surveillance signal processing. The Company's MODCOMP, Inc. subsidiary, also part of our Service and Systems Integration segment founded in 1970 and which includes our fiscal 2003 acquisition of Technisource, is a leading provider of IT solutions and systems integration services. MODCOMP works with third parties to develop customized solutions in the global IT markets and has offices in the U.S., U.K. and Germany.

More information about CSP is available on the company's Web site at www.cspi.com

To learn more about MODCOMP, Inc., consult www.modcomp.com

More information about Scanalytics, Inc., is available at www.scanalytics.com

Also see the Financial Table, Consolidated statements of operations and Consolidated balance sheet.