Elastic Networks Inc. First Quarter Update.

Business Editors

ALPHARETTA, Ga.--(BUSINESS WIRE)--March 27, 2001

Elastic Networks Inc. (NASDAQ: ELAS), a leader in intelligent, first-mile Ethernet access technologies and products, today reported that it expects to report revenue for the quarter ending March 31, 2001 in the range of $5.5 million to $6.5 million, which is substantially lower than the approximately $16.0 million originally anticipated.

The Company attributed the anticipated revenue shortfall to customer order deferrals during the quarter, and continued weakening economic conditions that are affecting overall telecommunications spending.

"We were disappointed that late in the quarter customers deferred and reduced planned orders," said Guy Gill, President and Chief Executive Officer of Elastic Networks. "In spite of this disappointment, we continue to focus on our long-term strategy of diversifying our customer base and expanding our international presence. Our current view for the second quarter of 2001 is approximately $10 million of revenue, which would be an 18% improvement over the second quarter of 2000."

The Company anticipates that it will release actual results for the first quarter of 2001 on April 26, 2001 and will hold a conference call and live Webcast to discuss first quarter results on that date. At that time the Company will also provide future guidance.

About Elastic Networks Inc.

Elastic Networks is a market leader in intelligent, first-mile Ethernet access technologies and products that enable service providers to rapidly deploy high-speed, multi-media applications. By leveraging its technological differentiation in speed, deployability, and economics, and by building strategic relationships with distributor, chip manufacturing, and data networking partners, Elastic Networks continues to increase the pervasiveness of its technology in markets throughout the world. The Company has offices in Alpharetta, GA, Toronto, and Hong Kong.

For more information about Elastic Networks and its high-speed access and subscriber management solutions, visit www.elastic.com, www.speedupamerica.com, or contact Elastic's U.S. headquarters in Alpharetta, Georgia, directly at [phone]. For investor information e-mail Elastic at [e-mail] or call [phone].

Forward-Looking Statements 

Certain of the statements contained in this release are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the Company seeks the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include, without limitation, (1) that the Company may fail to be competitive with existing and new competitors, (2) that the Company may not maintain or grow its level of revenues, given its currently limited customer base, (3) that the Company's limited number of product offerings may fail to achieve widespread market acceptance, (4) that negative changes in customer demands and requirements regarding our prices, technology and products may occur, (5) that DSL technology may fail to achieve widespread market penetration, (6) that interruptions or disruptions in our product shipments and/or our various arrangements with our distributors, manufacturers or resellers may negatively impact our ability to make sales and/or minimize our costs, (7) that the Company may not adequately respond to technological and regulatory developments impacting the telecommunications industry, (8) that needed financing may not be available to the Company if and as needed, (9) that a decline in the size and potential growth of the MTU, carrier and international markets for our technology may occur, (10) that a significant reversal in the trend toward increased usage of the Internet may occur, (11) that a drastic, negative change in the U.S. economy or market conditions may occur, and (12) that some other unforeseen difficulties may occur from time to time. This list is intended to identify certain of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere herein. These factors are not intended to represent a complete list of all risks and uncertainties inherent in the Company's business, and should be read in conjunction with the more detailed cautionary statements included elsewhere in the Company's most recent filings with the SEC.