ePresence Provides Fourth-Quarter Update; Company Takes Action to Reduce Operating Costs.

Business Editors/High-Tech Writers

WESTBORO, Mass.--(BUSINESS WIRE)--Dec. 23, 2002

ePresence, Inc. (NASDAQ:EPRE), a market leader in delivering Security and Identity Management (SIM) solutions, today revised its financial guidance for the fourth quarter of 2002. The revision is a result of an unanticipated shortfall in the performance of the Company's services business.

Anticipated Consolidated Results

Including financial results for ePresence's majority-owned subsidiary, Switchboard Incorporated (NASDAQ:SWBD), consolidated revenues for the fourth quarter of 2002 are expected to be in the range of $8.6 million to $9.2 million. For the fourth quarter of 2002, the Company's consolidated net loss is expected to be in the range of $(0.85) per share to $(0.87) per share. ePresence's consolidated net loss is expected to include $15.9 million in charges related to its services business consisting of approximately $1.1 million for severance and related costs and a write-off of $14.8 million for impairment of goodwill. Excluding the charges, the Company's consolidated net loss is expected to be in the range of $(0.14) per share to $(0.16) per share. This compares with previous guidance of a net loss of between $(0.10) and $(0.13) per share.

In line with its previous guidance, ePresence expects to end the fourth quarter with a consolidated balance of cash and marketable securities of approximately $105 million, with approximately $52 million held by ePresence.

Anticipated Services Business Results

Services revenues for the fourth quarter of 2002 are expected to be in the range of $5.3 million to $5.7 million. ePresence expects to report a cash loss from its services business in the range of $(0.11) to $(0.13) per share, compared with previous guidance of a cash loss of $(0.07) to $(0.09) per share. The cash loss excludes the aforementioned $15.9 million in anticipated charges, depreciation, amortization, non-cash compensation and ePresence's pro-rata portion of Switchboard's anticipated fourth-quarter loss.

"Market conditions worsened in the fourth quarter for our services business as clients unexpectedly shut down their discretionary IT spending for the year," stated Bill Ferry, chairman and chief executive officer. "Recently, several clients delayed work on projects slated for the fourth quarter into 2003. Therefore, we are lowering our guidance for the fourth quarter."

Continued Ferry, "We have taken action to cut costs, which includes an approximate 20% overall headcount reduction. This reduction is focused principally on our marketing and general and administrative functions, and the elimination of several senior management and executive-level positions. We are also transitioning to a sales model with greater focus on channel partners in order to lower our cost of sales and capitalize on the strength of our relationships with industry leaders such as Microsoft, Hewlett-Packard and other large services firms. Looking ahead, we are continuing to evaluate opportunities for the strategic deployment of our capital including the acquisition of software and/or services companies that would strengthen ePresence's solutions portfolio."

The Company expects to report its fourth-quarter results and provide an update on its strategic plan for 2003 on February 4, 2003.

About ePresence

ePresence, Inc. (NASDAQ:EPRE) is a market leader in delivering Security and Identity Management (SIM) solutions that help companies reduce cost, enhance security, improve customer service and increase revenues. Our highly focused solutions leverage technologies such as enterprise directories, metadirectories, single sign-on and provisioning systems and have enabled numerous Fortune 1000-class companies to efficiently and securely provide personalized access to digital resources, thus maximizing the ROI of their IT-based initiatives. ePresence is headquartered in Westboro, Massachusetts and can be reached at [phone] or online at www.epresence.com.

ePresence and the ePresence logo are servicemarks of ePresence, Inc. in the United States and other countries.

Forward-looking Statements 

The Company noted that each of the above statements about the Company's business and financial outlook, future and strategic plans, operations and performance, including its statements regarding the Company's long-term business prospects as well as others using the terms "expect," "anticipate," "target," "plan," "believe," "will," and other similar terms and any other statements in this press release which are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and are subject to differ materially from actual results based on various important factors, including, without limitation, the impact of the broad economic slowdown and the uncertainty of current economic conditions which has affected the demand for technology services, lengthened the sales cycles and caused decreased technology spending for many of the Company's customers and potential customers; the uncertainty of current global political conditions; the impact of the Company's strategic initiatives to grow its business while reducing costs; market acceptance of the ePresence name and the identification of the name with the Company's Secure Identity Management business; the Company's ability to enter and manage strategic alliances; the impact of the Company's termination of international operations; the Company's ability to leverage available resources to acquire businesses that would strengthen its solutions portfolio; the Company's ability to integrate and assimilate acquisitions; increased competition; acceptance of the Company's solutions in the marketplace; the success of transitioning the Company to a sales model with greater channel focus; the success of the Company's marketing efforts; the Company's ability to attract and retain qualified personnel; the impact of Switchboard's financial results on the Company's consolidated results and the volatility of securities markets including fluctuations in the value of the Switchboard securities held by ePresence. For further information on these and other risks, uncertainties, and factors, please review the Company's amended Form 10-K for 2001, filed with the SEC on September 20, 2002; its amended Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on September 25, 2002; its Form 10-Q for the quarter ended June 30, 2002, filed with the SEC on September 24, 2002 and its Form 10-Q for the quarter ended September 30, 2002, filed with the SEC on November 14, 2002. The forward-looking statements made in this press release relate only to events as of the date on which the statements are made and the Company undertakes no obligation to update these forward-looking statements.