Data General Reports Financial Results for Third Quarter of Fiscal 1999.

WESTBORO, Mass.--(BUSINESS WIRE)--July 22, 1999--

Data General Corporation today reported a net loss of $3.1 million, or $.06 per share, on revenues of $355.9 million, for its third quarter of fiscal 1999, which ended June 26. The results include a gain of approximately $.06 per share, resulting from the sale of investments.

The company reported a net loss of $155.1 million, or $3.15 per share, on revenues of $351.3 million, for the third quarter of fiscal 1998. The 1998 results included a charge of $135 million, or $2.74 per share, resulting from a corporate restructuring.

Commenting on the third quarter results, Data General President and Chief Executive Officer Ronald L. Skates said, "We continue to see growth from each of our two major businesses, our AViiON server and CLARiiON storage lines. However, as we had planned, our expenses have increased, primarily because of our efforts to create a large direct sales force for our CLARiiON organization. As anticipated, this has had a negative impact on profitability."

Data General announced in May that it would hire more than 450 people over the next 18 months for its CLARiiON organization, the majority of whom will be end user sales people. The company said that the additional expense of this hiring and related marketing efforts during the year and a half period would be more than $100 million.

"As the recognized leader in Fibre Channel storage technology, Data General has a tremendous opportunity in a market that is expected to grow 65 percent annually for the next few years," said Mr. Skates. "By accelerating the expansion of our end-user sales force, we have the opportunity to be a major player in this growing multi-billion dollar market."

Commenting on the CLARiiON business, Mr. Skates said, "Our CLARiiON full Fibre Channel storage products continued to show revenue growth during the quarter and now represent more than 60 percent of our storage business. Overall CLARiiON revenues were up 10 percent year over year. Excluding revenues from Hewlett-Packard, which continued to decline, CLARiiON revenues grew nearly 50 percent. Revenues from direct end-user sales also continued to ramp up."

"Our goal longer-term is to become the premier supplier of storage area networking solutions," said Mr. Skates. "The advent of SANs is changing today's computing model and helping to establish a storage market apart from servers. Fibre Channel is the enabling technology for SANs and with CLARiiON, Data General is the only major storage vendor shipping full end-to-end Fibre Channel storage solutions."

At a major press conference in May, the company unveiled its strategy to provide the industry's first family of full Fibre Channel-based SAN solutions. Its first SAN product, CLARiiON SANbackup, allows organizations to move their mission-critical data from disk to tape without impacting the performance of the enterprise network. Over the course of this calendar year, Data General will deliver a series of SAN solutions, including CLARiiON shared storage, which will allow organizations to share storage on CLARiiON arrays in multi-vendor platform environments including Windows NT and UNIX.

In addition to announcing its plans to build a direct sales force, the company further strengthened its CLARiiON OEM channel with the announcement earlier this month that Unisys will expand its enterprise storage product line by incorporating CLARiiON full Fibre Channel technology. The CLARiiON products will initially be available with the Unisys Aquanta Series of Windows NT servers. Subsequent releases of the CLARiiON product line will be expanded to other Unisys platforms.

Commenting on the AViiON business, Mr. Skates said, "AViiON revenues were again up year over year as we continue to see solid demand from our customers for our high-end Windows NT and NUMA technology based servers."

Noting the IBM - Sequent merger that was announced last week, Mr. Skates stated, "We agree with IBM's statement that 'NUMA will be a defining technology for early 21st century UNIX and NT servers.' We believe our NUMA technology and its price/performance leadership provides excellent opportunities for Data General."

The AViiON NT server line was enhanced with the introduction of the high-end enterprise server, the eight-processor AV 8900, in June. The company also expanded its server line with the introduction of the AV 2300 entry-level server. In addition, the company also unveiled DG/ManageSuite, a comprehensive package of open enterprise management solutions for its AViiON server and CLARiiON storage lines.

During the quarter, Data General announced that, according to International Data Corporation (IDC), the company's AViiON family of servers is the worldwide market share leader in both the Intel-based NT and UNIX categories. Based on 1998 revenues, Data General is the leader in NT servers selling from $25,000 to $250,000 and $100,000 to $250,000, and is also ranked number one in UNIX systems selling between $100,000 and $250,000.

Also, during the third quarter, the company announced the availability of a new and more efficient web-based shopping tool called "Data General Now" that will allow Data General customers to purchase AViiON departmental servers, CLARiiON storage products, PCs, training and services online.

"Data General's value proposition is based on a high-touch selling model. `Data General Now' will not only better serve our current customers but will be an excellent prospecting tool for our own direct sales force and our selling partners," said Mr. Skates.

For the first nine months of fiscal 1999, Data General reported net income of $15.1 million, or $.30 per share on a diluted basis. The results include a gain of $7.5 million, or $.15 per diluted share, resulting from a settlement with the Internal Revenue Service related to taxes paid during the company's 1983 through 1991 fiscal years, and an additional gain of $9 million or $.18 per share, from the sale of investments.

For the same period last year, the company reported a net loss of $156.1 million or $3.19 per share. This includes the charge of $135 million, or $2.76 per share related to the worldwide corporate restructuring.

Revenues for the first three quarters of fiscal 1999 totaled $1.08 billion, compared to $1.08 billion for the first nine months of 1998.

Statements concerning the company's business outlook, anticipated profitability, revenues or expenses, and product line growth, together with other statements made in this press release which are not historical facts, are "forward-looking statements," as that term is defined under the Federal Securities Laws. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, fluctuations in customer demand, order patterns and inventory levels, changes and delays in product development plans and schedules, customer acceptance of new products, changes in pricing or other actions by competitors, ability to hire sales personnel and the rate at which they achieve full productivity, general economic conditions, as well as other risks detailed in the company's filings with the Securities and Exchange Commission, including Data General's Report on Form 10-K for the 1998 fiscal year which ended September 26, 1998. and second quarter 10-Q.

NOTE - Information on Data General, its products and services, can be accessed on the Internet at http://www.dg.com. Additional information on the CLARiiON Advanced Storage Division can be accessed at http://www.clariion.com.

AViiON and CLARiiON are registered trademarks of Data General Corporation.

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                       DATA GENERAL CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (In millions except per share amounts)

                    Quarter Ended               Nine Months Ended
                  June 26,     June 27,         June 26,    June 27,
                   1999          1998             1999        1998
Revenues:
    Product        $259.7      $253.8            $786.2      $784.7
    Service          96.2        97.5             290.6       293.7

    Total revenues  355.9       351.3           1,076.8     1,078.4

Costs and expenses:
    Cost of product
    revenues
    (Note 1)        180.4       244.3             541.7       624.2
    Cost of service
    revenues         60.3        59.9             182.5       183.2
    Research and
    development      28.8        31.7              86.3        88.0
    Selling,
    general, and
    administrative   90.9        84.7             263.7       254.2
    Restructuring
    charge            ---        82.4               ---        82.4

    Total costs
    and expenses    360.4       503.0           1,074.2     1,232.0

Income (loss)
 from operations     (4.5)     (151.7)              2.6      (153.6)

Interest income       2.6         3.2               8.7        10.1
Interest expense      3.6         3.6              10.9        10.8
Other income
(expense), net        3.0        (2.0)              9.0          .2

Income (loss)
before income taxes  (2.5)     (154.1)              9.4      (154.1)
Income tax provision
(benefit)              .6         1.0              (5.7)        2.0

Net income (loss)   $(3.1)    $(155.1)            $15.1     $(156.1)

Basic income (loss)
per share          $(0.06)     $(3.15)            $0.30      $(3.19)

Weighted average
shares outstanding-
Basic                50.6        49.2              50.2        48.9


Diluted income
(loss) per share   $(0.06)     $(3.15)            $0.30      $(3.19)

Weighted average
shares outstanding-
Diluted              50.6        49.2              51.2        48.9


     Note 1: Included in the quarter and nine-month period ended June
27, 1998, is a restructuring related charge of $52.6


                       DATA GENERAL CORPORATION
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In millions)

                              June 26,         Sept. 26,
                                 1999              1998

Assets:

Current assets:


  Cash and temporary
  cash investments        $     133.6       $     158.2
      Marketable
       securities               135.5             160.4
      Receivables, net          292.6             307.4
      Inventories               126.7             141.6
      Other current assets       30.4              28.4

      Total current assets      718.8             796.0

Property, plant,
 and equipment, net             198.9             180.5
Other assets                    100.4              88.6
                          $   1,018.1        $  1,065.1

Liabilities and stockholders' equity:


Current liabilities:
      Accounts payable    $     120.3        $    160.9
      Other current
       liabilities              249.2             269.8

        Total current
        liabilities             369.5             430.7

Long-term debt                  212.8             212.8
Other liabilities                24.8              36.6

Stockholders' equity            411.0             385.0
                          $   1,018.1        $  1,065.1