Bay Networks Becomes New ATM LAN Switching Market Share Leader; Reinforces Adaptive Networking Switching Strategy for ATM.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Sept. 2, 1997--Bay Networks, Inc. (NYSE:BAY) today announced that, according to the Dell'Oro Group CY97 Q2 report, it has taken the lead in ATM (asynchronous transfer mode) LAN (local area networking) market share and worldwide ATM LAN switch port shipments.

According to the Dell'Oro Group report, Bay Networks' market share in backbone ATM LAN switch ports grew from 23.3% to 27.9% during the second quarter of 1997, making Bay Networks the clear market leader in backbone ATM LAN switching, almost 50% greater than their closest competitor, Cisco (18.6%) share and Fore Systems (16.1%). Overall, the ATM LAN market grew 36% from $130M in Q1 to $177M in Q2.

"We were determined as a company to become the market leader in ATM LAN switching and we have accomplished just that," said Lloyd Carney, executive vice president for Bay Networks' Enterprise Business Group. "Bay's market leadership is reflected in the strength of our ATM LAN switching solutions, including the Centillion 100 and System 5000 Multi-LAN/ATM switch platforms, and by the significant investments we have made in ATM as part of our Adaptive Networking switching strategy."

The overall increase in the ATM LAN market reflects the growing trend towards the deployment of ATM as a LAN backbone technology, firmly establishing it as a mainstream solution.

"The Q2 ATM market numbers were surprisingly high, reflecting ATM's growing use as a LAN backbone technology, despite the hype on Gigabit Ethernet," said Tam Dell'Oro, founder of the Dell'Oro Group. "Bay Networks' stunning market share growth in this area is indicative of its sound management decision to be aggressive in this sector. Bay dropped pricing three times during the latter half of 1996, and in December launched a sleek software solution for the System 5000 BH."

Companies in industries such as banking, healthcare and government, for example, are building very large, completely switched networks using ATM as a backbone technology.

"We chose Bay Networks because of the high scalability, resiliency and stability of their products," said Don Stapleton, director of Information Systems, Genesys Health Systems. "ATM has enabled us to build a network with 19 switches supporting about 1200 users, with support for advanced applications, such as video, available when we implement it in the future."

Bay Networks recently announced two new workgroup solutions, the Centillion 50T (C50T) and Centillion 50N (C50N), which began shipping after Q2 and are not reflected in the recent Dell'Oro numbers. The C50T is a 16-port Token Ring workgroup switch with one expansion slot and space for an optional redundant power supply. The C50N is a cost-effective Ethernet/ATM workgroup switch with two full-duplex OC-3c ATM switch ports, 16 10BASE-T Ethernet switch ports, and one expansion slot. The expansion slot on both switches may be fitted with any existing Centillion 100 host switching module, including ATM, Token Ring and Ethernet, and both switches provide the same extensive feature set and the same architecture as the company's Multi-LAN Centillion platforms.

"We anticipate that the recent introductions of our new ATM workgroup switches and enhancements to our popular System 5000 platform and our enterprise-quality multimedia products will enable us to continue to be a LAN ATM leader," added Carney.

About Bay Networks

Bay Networks, Inc. (NYSE:BAY) is a leader in the worldwide networking market, providing a complete line of products that serve corporate enterprises, service providers and telecommunications carriers. The company offers frame and ATM switches, routers, shared media, remote and Internet access solutions, IP services and network management applications, all integrated by Bay Networks' Adaptive Networking strategy. With headquarters in Santa Clara, California, Bay Networks markets its products and services around the world, providing 7x24 support coverage. For additional information visit the company's World Wide Web site at http://www.baynetworks.com or call 800-8-BAYNET.

This release, other than historical financial information, may consist of forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. For instance, factors which could cause results to differ from future events include the rate of adoption of new technology, competitive pricing actions and marketing programs, among others. Readers are referred to the documents filed by Bay Networks with the S.E.C., specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. -0-

NOTE TO EDITORS: Bay Networks is a registered trademark and Centillion 50, Centillion 100 and System 5000 are trademarks of Bay Networks, Inc. Other brand and product names are registered trademarks or trademarks of their respective holders.

CONTACT: Bay Networks, Inc.

Erin Curtis, 408-495-3619

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or

FitzGerald Comms.

Stacy Breines, 408/562-6324

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