Bay Networks to Acquire Network Management Start-Up Netsation Corp.; Web-Based Automated Configuration Tool Aimed at Simplifying Network Configuration.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Feb. 3, 1998--

Acquisition Will Enhance Market-Leading Optivity(TM) Network

Management System

Bay Networks,(R) Inc. (NYSE:BAY) today announced that it has signed a definitive agreement to acquire network management start-up Netsation Corp., a privately held leader in multi-vendor network management, based near Research Triangle Park, N.C., for $11.6 million in cash.

The integration of Netsation's award-winning Network Configurator tool and Bay Networks' award-winning Optivity network management system will extend the company's leadership and number one market share position in network management. The acquisition also furthers Bay Networks' Adaptive Networking strategy targeted at providing solutions that reduce the complexity and increase the effectiveness of real-world, IP-optimized, heterogeneous networks.

Featuring a flexible and efficient Web-based interface solution that automates the reconfiguration of heterogeneous, multi-device networks, Network Configurator reduces the complexity typically associated with multi-device configuration. The platform-independent solution allows enterprise network managers and service providers to dramatically streamline their router and switch configuration efforts. Combined with Bay Networks' industry-leading Optivity management solution, Network Configurator provides customers with critical functionality that takes into account the inherently multi-vendor nature of enterprise networks.

Consistent with standard accounting practice for technology-related acquisitions, Bay Networks expects to recognize in its third fiscal quarter a substantial portion of the acquisition price as a one-time charge for in-process technology. Upon the closing of the transaction, Netsation CEO Sean Harrison will report to Clive Foreman, vice president and general manager of Bay Networks' Network Management Division. Netsation's employees will continue to operate in Research Triangle Park.

"In keeping with our Adaptive Networking strategy and ongoing investment in network management, the Web-based management capability we will provide our customers will effectively eliminate the constraints of distance and time for network managers," said David House, chairman, CEO, and president, Bay Networks. "The two companies' common vision makes this acquisition an excellent strategic investment focused on enabling customers to reduce total cost of ownership through innovation."

"In its relatively short existence, Netsation has established itself as a technology and market leader in network configuration management," said Harrison. "The combination of Network Configurator and Bay Networks' Optivity management system sets the stage for significant value-added configuration management solutions for both service provider and enterprise customers."

Configuration Management Challenge

Traditional network configuration tools have two major limitations: first, they are unique to each type of device being configured, and second, they are single-device-centric, meaning they cannot perform network-system level (multi-device) configuration validation and management.

With current tools, the process of configuring a network is difficult, error-prone, time-consuming, and expensive. For most enterprises and service providers, the continual demand for growth in network services and facilities is vastly outpacing the network manager's ability to reliably configure and deploy additional equipment. The problem grows exponentially with the size of the network and diversity of equipment.

Network-System Configuration Solution

Using Web-based technology, Netsations's Network Configurator, combined with Optivity NETarchitect, delivers a network configuration and policy management solution which will enable network managers to configure network devices and networking services through a consistent, platform-independent interface.

Additionally, configuration information will now be easily replicated, or "cookie-cuttered," across multiple device instances, allowing for automatic cross-device configuration deployment and validation. These network-system capabilities will significantly reduce the time and resources involved in configuring networks. The network manager's ability to deploy and manage additional equipment and services will increase, while configuration errors, and hence network outages, will decrease.

About Netsation Corp.

Founded in 1996, Netsation has focused on providing network managers an efficient solution for configuring and managing heterogeneous networks and has established itself as a technology leader in this area. The initial product offering, Network Configurator, provides a Java/Web-based, platform-independent, scaleable client-server application that facilitates high-productivity enterprise and service provider network management by providing a network-system (multi-device) common configuration solution.

About Bay Networks

Bay Networks - Where Information Flows(TM). 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, Calif., 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. -0-

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 that 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-

Bay Networks is a registered trademark, and Optivity and NETarchitect are trademarks of Bay Networks, Inc. Other brand and product names are registered trademarks or trademarks of their respective holders.

CONTACT: Bay Networks

Ellen Roeckl, 408/495-3083 (Public Relations)

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Sandra Toms, 408/495-1181 (Investor Relations)

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