''Are We There Yet . . .?'' Legg Mason Equity Research Report Examines Internet Travel Services.

Business Wire/Hi-Tech Writers

BALTIMORE--(BUSINESS WIRE)--July 26, 2000

Legg Mason Wood Walker, Incorporated has issued its inaugural research report on the Internet travel sector.

Thomas S. Underwood, CFA, Analyst in Legg Mason's Telecommunications Equity Research Group, initiated coverage of a universe of four companies on June 28, 2000.

As he introduced Legg Mason's coverage of this sector, Mr. Underwood explained, "Investors looking for Internet investment opportunities increasingly are seeking profitable companies or companies with sustainable advantages and clear paths to profitability. After evaluating various consumer-oriented businesses on the Internet, we concluded that the potential for major on-line travel companies is enormous.

"The move of travel on-line has empowered customers by cost-effectively delivering the information and comprehensive range of alternatives for an air ticket, a hotel room, or other travel purchase. The business model is enormously scalable for travel companies since no inventory is necessary and fulfillment costs are relatively low and primarily consist of customer service. Additionally, it looks as if the major on-line travel companies all currently have enough cash to continue their aggressive customer acquisition plans and achieve profitability prior to having to raise additional funds," Mr. Underwood said.

Mr. Underwood added, "From an investment perspective, the Internet travel agent business has consolidated rapidly, with three companies accounting for approximately two-thirds of on-line travel agent bookings.

"We estimate that on-line travel could account for $46 billion in gross revenue by 2005, up from $7 billion in 1999," Mr. Underwood said.

The report provides background on the growth of on-line travel, examines key industry drivers, and looks at market shares for air and hotel bookings, inventory differences among businesses, travel intermediary business models, and the quality of intermediary Web sites. Finally, the report provides summaries of four companies currently under coverage by Legg Mason Wood Walker, Incorporated:

Expedia, Inc. (NASDAQ - EXPE(a) $18 3/4), based in Bellevue, Washington, with Strong Buy/Speculative Risk ratings on the shares;

Hotel Reservations Network, Inc. (NASDAQ - ROOM(a) $34 11/16), based in Dallas, Texas, with Buy/Speculative Risk ratings on the shares;

Pegasus Solutions, Inc. (NASDAQ - PEGS(a) $11 5/8), based in Dallas, Texas, with Buy/Speculative Risk ratings on the shares; and

Travelocity.com, Inc. (NASDAQ - TVLY(a) $16 13/16), based in Fort Worth, Texas, with Buy/Speculative Risk ratings on the shares.

Additional Information Available Upon Request. The information contained herein is based on sources believed to be reliable, but we do not guarantee its completeness or accuracy. This release is for information purposes only and is not intended to be an offer to buy or sell the securities referred to herein.

Opinions expressed are subject to change without notice, and past performance is not indicative of future results. From time to time, Legg Mason Wood Walker, Incorporated and/or its employees, including the analysts who have commented herein, may have a position in the securities mentioned.

Expedia, Inc. is a Legg Mason Select List compelling idea.

Legg Mason Wood Walker, Incorporated, a member of NYSE, Inc. and a member SIPC, is the principal securities brokerage subsidiary of Legg Mason, Inc. (NYSE-LM), with approximately 1,200 Financial Advisors in 128 offices along the East Coast from Maine to Florida and across the South to Texas, plus affiliate institutional offices in San Francisco, Chicago, London and Geneva.

Legg Mason, Inc. is a financial services holding company that provides investment advisory, securities brokerage, investment banking and related financial services through its wholly owned subsidiaries.

(a) Legg Mason Wood Walker, Incorporated makes a market in this

security.

Prices are as of the market's close on July 25, 2000.