Gensym Announces New Indirect Sales Strategy for Its Expert Operations Business Unit.

Business/Technology Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 4, 2001

Move designed to help reduce operating expenses 

and return company to profitability in 2001

Gensym Corporation (Nasdaq: GNSM), a leader in adaptive software products for modeling, simulating and managing e-business infrastructure, today announced that it is adopting an indirect sales strategy for its expert operations business unit. Gensym will use its network of distribution and OEM partners to sell its software and services to leading companies around the world. The company will continue to directly support its installed base of expert operations customers.

Moving to an indirect sales model and eliminating approximately 60 full-time positions from the expert operations unit and across the company - more than half from outside the United States - will enable Gensym to reduce its annual operating expenses by approximately $10 million. The restructuring will allow the company to aggressively pursue its strategy of developing out-of-the-box software products for the e-infrastructure market while positioning itself for a return to profitability in 2001.

Based on current unaudited information, Gensym anticipates that its fourth-quarter 2000 revenues will be in the $7 million dollar range, which would meet the company's expectations and be consistent with the revenues of the first and second quarters of 2000. The company is scheduled to release full financial results for the fourth quarter on February 1, 2001.

"The steps we are taking are essential to executing the business strategy we set forth in April 2000," said Patrick Courtin, chairman and CEO of Gensym. "Although we are eliminating positions as part of our ongoing efforts to reduce our losses and move towards profitability, we will continue to serve our partners in the expert operations market with innovative products. We continue to invest in G2(R), our core platform, to serve both the expert operations and e-infrastructure markets with products such as Optegrity(TM), launched in December, for abnormal condition management applications.

"A key goal of these actions is to create profitability for our expert operations business unit. Therefore, we are moving to an indirect sales model with domain-expert OEMs and VARs as our sales channels," said Courtin. "We will continue to provide direct support to our installed base of manufacturing customers.

"In the e-infrastructure business unit, we are confident we are pursuing the right strategy. In early 2000, we announced that our primary focus was on developing out-of-the-box network products and working with OEM partners to bring our solutions to a broad customer base. Our relationships with Nokia, Ericsson and Motorola are examples of strong OEM relationships we have established, while our ongoing business with industry leaders such as CSC and Cable & Wireless demonstrates our effectiveness in meeting the needs of service providers in the e-infrastructure marketplace. This strategy has begun to deliver results, as shown by increasing sales of our e-SCOR product for supply-chain modeling and our new NetSleuth(TM) network management product, which debuted in the fourth quarter and is available exclusively via our Web site," Courtin said.

About Gensym

Gensym Corporation (www.gensym.com) is a leading provider of adaptive software products that model, simulate and manage e-business infrastructure. Since 1986, Gensym has sold more than 13,000 product licenses to organizations in communications, manufacturing, aerospace, transportation, government and other industries. Gensym is making e-business infrastructure work(TM).

This document contains certain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipates", "designed to", "will", "are confident that" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, risks related to the company's ongoing transition from a provider of customized software solutions and services to a developer of out-of-the-box software products and technology platforms; fluctuations in customer demand; intensity of competition from other solutions vendors; timing and acceptance of new products; delays or difficulties in programs designed to increase sales and restore profitability and general economic and industry conditions, as well as other risks included in Form 10-Q for the quarter ended September 30, 2000, as filed with the Securities and Exchange Commission and available on the Web at http://www.gensym.com. Gensym Corp. assumes no obligation to update the information contained in this news release.

Gensym and G2 are registered trademarks and Optegrity and making e-business infrastructure work are trademarks of Gensym Corporation.