Court Appointed Lead Counsel Milberg Weiss to Expand Scope of Class Action Suit Against BMC Software Inc., and Its Directors Alleging Misrepresentations and Insider Trading.

Business Editors/Financial Analysts

SAN DIEGO--(BUSINESS WIRE)--July 17, 2000

Court-appointed Lead Counsel Milberg Weiss today announced that it has been ordered by the United States District Court for the Southern District of Texas to file a consolidated amended complaint on or before Aug. 14, 2000. As part of their consolidated amended complaint, the court-appointed lead plaintiffs will expand the scope of a class action previously filed on behalf of purchasers of BMC Software Inc. ("BMC") (Nasdaq:BMCS) common stock. The original Class Period spanned between July 29, 1999 and Jan. 4, 2000. The consolidated amended complaint will include allegations concerning defendants' continuing misrepresentations throughout January - July 2000.

Lead Plaintiffs continue to allege that BMC and certain of its officers and directors have violated the Securities Exchange Act of 1934 by, among other things, disseminating false and misleading statements about strong sales of BMC's existing software products, the successful integration of its acquisitions of Boole & Babbage and New Dimension Software earlier in 1999, strong demand for its mainframe MIPS software (notwithstanding a slowdown in sales of IBM mainframe computers and customer deferrals of orders or purchases due to Y2K concerns) which would result in 25%-30% EPS growth for BMC during FY 2000-FY 2001 and 3Q and 4Q 2000 EPS of $.52-$.55 and $.58-$.64, respectively. During the Class Period, BMC insiders and controlling shareholders sold 1,085,015 shares of their BMC stock at as high as $78.83 for $63.1 million in proceeds.

On Jan. 5, 2000, just two days after BMC's stock hit its all-time high, BMC partially revealed the true condition of the company's operations, disclosing that, due to problems integrating BMC's, Boole & Babbage's and New Dimension's sales forces, sales execution problems in Europe and the U.S., and weakness in demand for mainframe MIPS software products, its 3Q 2000 results would be much worse than earlier forecast. BMC's stock fell from $85-1/8 on Jan. 4, 2000 to $47, an almost 50% drop in one day. Following the Jan. 5, 2000 partial disclosure, plaintiffs' complaint will allege that defendants continued to falsely assure the market about the demand for BMC's mainframe MIPS software products, claiming that they saw no slowing in mainframe capacity demand and that the company's mainframe business remained very strong. Then, on July 5, 2000, BMC shocked the market when it finally announced the truth, that despite its contentions in 1999 that BMC enjoyed continued strong demand for its mainframe MIPS software and its reassurances in 2000 that the company's mainframe business remained "very strong," weak demand for mainframe software had in fact existed throughout fiscal Q1 2001. Defendants also disclosed that BMC's revenue for Q1 2001 would be less than half of analysts' estimates, and EPS estimates for the quarter were below consensus analysts' estimates. BMC's stock immediately plummeted to just $22 per share.

Court-appointed lead counsel Milberg Weiss has been actively engaged in commercial litigation, emphasizing securities and antitrust class actions, for more than 30 years. The firm has offices in New York, San Diego, San Francisco, Los Angeles, and Boca Raton. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact lead counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900, or via e-mail at [e-mail].