Data Return Announces Cost Reduction Plan; Expected Savings of $2.4 Million Per Quarter; Workforce Reduced by 18%.

Business Editors

DALLAS--(BUSINESS WIRE)--May 11, 2001

Data Return Corporation (Nasdaq: DRTN), a leading global provider of managed hosting services, today took steps toward completing its plan to achieve cost savings of $2.4 million per quarter.

Due to operational savings achieved through process automation as well as the effects of the slower economy, the Company reduced its workforce by 18%. The Company anticipates realizing savings from the restructuring beginning in the second quarter of fiscal 2002.

"These were difficult decisions," said Robert Prosen, Data Return Chief Operating Officer "However, given the realities of the current economy and our previous practice of hiring slightly ahead of demand, these were necessary steps. Our industry-leading automation of business and technical processes will allow us to continue providing the high levels of service quality our customers expect. We anticipate that these steps will have a significant impact as we move toward EBITDA breakeven during the current fiscal year."

As a result of this workforce reduction, Data Return is anticipating a one-time restructuring charge of $1.0 million to $1.5 million in the first fiscal quarter, ending June 30, 2001. Excluding the effects of this one-time charge, Data Return remains comfortable with its first quarter business outlook.

About Data Return

Recognized by Microsoft as the Windows 2000 Global Hosting Partner of the Year, Data Return specializes in providing high-availability managed hosting services for companies whose applications are based on Microsoft technologies. These services are utilized by many leading enterprises including Microsoft, Compaq Computer Corporation, RadioShack.com, Texas Instruments, H&R Block and The World Bank. Data Return also provides managed infrastructure services for the rapidly growing market of Application Service Providers (ASPs). Data Return strategic investors and Global Alliance Partners include Microsoft, Compaq Computer Corporation and Level 3 Communications. For more information, visit www.datareturn.com.

This press release contains forward-looking information. Statements made in this press release that state Data Return's or management's intentions, plans, beliefs, expectations or predictions of future events, including those contained in the section titled "Business Outlook" are forward-looking statements. Actual results may differ materially due to a number of risks, including changes in external competitive market factors, changes in or an inability to execute Data Return's business strategy, unanticipated changes in the hosting industry, the economy in general and changes in the use of the Internet. Data Return cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in Data Return's Quarterly Report on Form 10-Q for the Quarter Ended December 31, 2000 and are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. The forward-looking statements contained herein represent the judgment of Data Return as of the date of this release, and Data Return disclaims any intent or obligation to update or revise such forward-looking statements to reflect any change in Data Return's expectations with regard thereto or any change in events, conditions or circumstances on which such statements are based.

Data Return is trademark of Data Return Corporation. All other trademarks are the property of their respective holders.