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SIERRA ON-LINE REPORTS ANTICIPATED THIRD QUARTER RESULTS

 OAKHURST, Calif., Dec. 16 /PRNewswire/ -- Sierra On-Line Inc. (NASDAQ: SIER) today announced that, because of a changing retail environment and increased competition in the marketplace, it is reducing capitalized software development costs for certain current titles and deferring fewer costs related to software development. In addition, the company is increasing the marketing and operational costs associated with The Sierra Network. As a result, the company anticipates reporting a net loss of $0.10 to $0.20 per share in the current quarter ending Dec. 31, 1992, and will report a smaller loss in the following quarter.
 The anticipated loss results from actions taken by the company to maintain its leadership position in a highly competitive, dynamic marketplace. Following careful review of its markets, Sierra has recognized that the increase in the number of new titles and emerging formats in the entertainment and educational software industries have significantly reduced the shelf-life for products in these categories.
 To address the new market conditions, Sierra has reduced capitalization of software development costs for certain current products that have been discontinued or have experienced shortened shelf-life; expensed development costs of certain products for new markets and new platforms where market acceptance is less predictable; and will amortize new titles over a shorter life. The company currently anticipates that, in fiscal 1993, amortization expense will exceed new capitalization of software development costs.
 Sierra also announced that The Sierra Network, its on-line, multiuser, interactive gaming network, continues to experience strong membership sign-ups. Recent successful marketing programs have resulted in a membership base exceeding 27,000, including full-time and trial players. As a consequence of expanded marketing programs and higher-than-estimated operational costs for The Sierra Network, it is estimated that The Sierra Network will post an operating loss ranging from $3.5 million to $4.5 million for this fiscal year.
 Ken Williams, president and chief executive officer, said, "Although losses continue at The Sierra Network, management still believes that break-even is achievable somewhere around 50,000 paying subscribers. While we are not there yet, our targeted goal for fiscal 1994 is break-even, and we are being aided by our marketing efforts and favorable press."
 Williams added, "Although retailers have been cautious in their ordering, our core business has remained strong, and our Christmas releases have been well received. Reliable data on industry pull- through will not be available until after the first of the year, but what we have seen so far is encouraging. For instance, the Software Etc. bestseller list for the week ended Dec. 8, 1992, showed four of our products: Front Page Sports, King's Quest VI and Aces of the Pacific were their top three selling entertainment products; and The Island of Dr. Brain made the top 10 on their educational list, confirming our sense that our new Sierra Discovery Series is beginning to catch on."
 Sierra On-Line Inc., along with its wholly owned subsidiaries, Dynamix Inc. and Bright Star Technology Inc., publishes entertainment and educational software for IBM PCs and PC-compatibles and Apple Macintosh computers.
 -0- 12/16/92
 /CONTACT: Richard Gelhaus, executive VP-Finance & Operations, of Sierra On-Line, 209-683-2598; or Eugene G. Heller of Silverman, Heller Associates, 310-208-2550, for Sierra On-Line/
 (SIER)


CO: Sierra On-Line Inc. ST: California IN: CPR SU: ERP

JL-JB -- LA045 -- 7934 12/16/92 17:46 EST
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Date:Dec 16, 1992
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