Be Incorporated Reports Third Quarter Results

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Be Incorporated
Guillaume Perrotin, 650/462-4100

Be Incorporated Reports Third Quarter Results
Anticipates BeIA Revenues In 2001

MENLO PARK, Calif.– October 18, 2000 — Be Incorporated (Nasdaq:BEOS) today reported financial results for the quarter ended September 30, 2000.

The Company reported a net loss for the quarter of $0.12 per share excluding non-cash expenses associated with the amortization of deferred compensation. The Company had previously reported a comparable net loss of $0.13 per share for the second quarter of this year and a net loss of $0.16 per share for the third quarter of last year. Including non-cash expenses associated with the amortization of deferred compensation, net loss per share for the third quarter this year was $0.13 per share.

Revenues for the quarter were $68,000. Revenues were primarily attributable to shipments during the quarter of BeOS, the desktop version of our operating system, under publisher agreements with Gobe Software, Hitachi, Koch Media and Apacabar. “Our modest level of revenues is consistent with our announcement earlier this year to focus on BeIA, a complete solution for Internet appliances, and our decision to make a personal edition of BeOS available for free,” stated Steve Sakoman, chief operating officer.

“The financial results for the quarter are in line with our expectations as we prepare to participate in the Internet appliance market. We made significant progress during the quarter with our appliance partners. During the quarter, it was announced BeIA would serve as the foundation of a new Internet appliance from FIC called Genesis 2000. We have also announced how Compaq would market Internet appliances equipped with BeIA,” added Mr. Sakoman.

“We continue to build the capacity and capability of our organization to take advantage of this rapidly emerging opportunity. We recently announced strategic Internet appliance relationships with Metricom, for high-speed wireless Internet access, and with Arima, a leading Original Device Manufacturer in Taiwan, to jointly develop and market Internet appliances. We have agreed to collaborate with M-Systems to provide flash disk integration within Internet appliance software platforms using BeIA. In addition, P.C. Berndt has joined our management team as chief financial officer,” concluded Mr. Sakoman.

“We will continue to prudently manage our expenses as we take the actions necessary to allow us to fully participate in the Internet appliance market. Independent market research firms, including IDC, eTForecasts and Jupiter, have forecasted dramatic increases in Internet appliance shipments next year. We anticipate recognizing revenue in 2001 from shipments of BeIA-enabled Internet appliances. As our balance sheet indicates, we have more than adequate cash reserves to maintain our current level of expenditures well into 2001. In addition, the Company is considering various capital strategies for the future,” stated Mr. Berndt

Jean-Louis Gassée, president and chief executive officer, commented, “As we move from Internet appliance development into commercialization, we now realize there will be revenue opportunities for Be, not only in software, but in services and programs, as well as the appliances themselves. We plan to actively participate in each of those revenue opportunities.”

Forward-Looking Statements

Statements contained in this Press Release that are not historical facts are “forward-looking statements” including without limitation statements regarding the size and breadth of the Internet appliance market; the development of related revenue opportunities; future market penetration and market acceptance of BeIA; the shipment dates of Be’s products and the dates when Be may recognize the revenues associated with such shipments; and the future operating results of Be Incorporated. Actual events or results may differ materially as a result of risks facing Be Incorporated or actual results differing from the assumptions underlying such statements. Such risks and assumptions include, but are not limited to, risks related to the speed of development and establishment of the Internet appliance market and the related revenue opportunities; the demand for, and our ability to meet the product and service needs of Internet appliance customers; market acceptance and market penetration of Be’s products and services; our ability to establish and maintain strategic relationships; the availability of third party software and hardware for use with Be’s products; and the benefit of Be’s products to OEMs, Internet appliance manufacturers and other customers. All forward-looking statements are expressly qualified in their entirety by the “Risk Factors” and other cautionary statements included in Be Incorporated’s Annual Report on Form 10-K for the year ended December 31, 1999, and other public filings with the Securities and Exchange Commission.

About Be®

Founded in 1990, Be Incorporated creates software platforms that enable rich media and Web experiences on personal computers and Internet appliances. Be’s headquarters are in Menlo Park, California, and its European office is in Paris, France. It is publicly traded on the Nasdaq National Market under the symbol BEOS. Be can be found on the Web at

                            BE INCORPORATED 
               (in thousands, except per-share amounts) 

                               Three Months Ended    Nine Months Ended 
                                  September 30,         September 30, 
                                2000       1999        2000      1999 
                                  (Unaudited)            (Unaudited) 

Net revenues                $     68   $    775    $    464  $  1,621 
Cost of revenues                 216        372         770       696 
                            --------   --------    --------  -------- 
Gross profit (loss)             (148)       403        (306)      925 

Operating expenses: 
 Research and development      2,088      2,005       6,079     5,675 
 Sales and marketing           1,422      2,179       5,576     6,520 
 General and administrative      880        961       2,669     2,520 
 Amortization of deferred 
  stock compensation             507      1,596       2,197     4,974 
                            --------   --------    --------  -------- 
Total operating expenses       4,897      6,741      16,521    19,689 
                            --------   --------    --------  -------- 
Loss from operations          (5,045)    (6,338)    (16,827)  (18,764) 

Other income, net                274        284         937       417 
                            --------   --------    --------  -------- 
Net Loss                    $ (4,771)  $ (6,054)   $(15,890) $(18,347) 
                            ========   ========    ========  ======== 
Net loss attributable to 
 common stockholders        $ (4,771)  $ (6,082)   $(15,890) $(18,639) 
                            ========   ========    ========  ======== 
Basic and diluted net 
 loss per share             $  (0.13)     (0.22)   $  (0.45) $  (1.56) 
                            ========   ========    ========  ======== 
Shares used to compute 
 basic and diluted net 
 loss per share               35,722     27,853      35,406    11,921 
                            ========   ========    ========  ======== 
Net loss per share excluding 
 amortization of deferred 
 compensation               $  (0.12)  $  (0.16)   $  (0.39) $  (1.15) 
                            ========   ========    ========  ======== 

                            BE INCORPORATED 
                            (in thousands) 

                                       September 30,    December 31, 
ASSETS                                    2000             1999 
                                       (Unaudited)       (Audited) 
                                          ----              ---- 
Current assets: 
 Cash, cash equivalents 
    and short term investments         $ 18,021         $ 29,129 
 Accounts receivable, net                    30              167 
 Prepaid expenses and other                 819              730 
                                      -------------    ------------- 
Total current assets                     18,870           30,036 

Property and equipment, net                 419              562 
Other assets                              1,127            1,722 
                                      -------------    ------------- 

Total Assets                           $ 20,416         $ 32,310 
                                      =============    ============= 

Current Liabilities: 
 Accounts payable                      $    177         $    860 
 Accrued expenses                         1,151            1,550 
 Technology license obligations             310              777 
 Deferred revenue                            80               99 

Total current liabilities                 1,718            3,286 
Technology license obligations              556              597 
Total stockholders' equity               18,142           28,427 
                                       -------------    ------------ 

Total Liabilities and 
 Stockholders' Equity                  $ 20,416         $ 32,310 
                                      =============    =============