PictureTel Updates On Corporate Progress; Outlines Corporate Restructuring Successes, Previews New Contracts with IBM and Shell Petroleum

Business Wire, Sept 7, 2000

Business Editors/Hi-Tech Writers

ANDOVER, Mass.--(BUSINESS WIRE)--Sept. 7, 2000

PictureTel(R) Corporation (NASDAQ: PCTL), the world leader in integrated collaboration, today announced a series of important corporate milestones and previewed key contract wins.

PictureTel noted that it is proceeding in line with revenue guidelines outlined in its August 1 analyst call to achieve its Q3 2000 revenue targeted range of $70 to $78 million.

Further, the Corporation underscored its new PictureTel 900 Series' increasing market momentum and previewed the fact that its ASP subsidiary, 1414c, has been awarded two important contracts by IBM Global Managed Videoconferencing and Shell Energy and Petroleum since the August 1st conference call. The Corporation will provide details on these important contract wins in coming weeks.

PictureTel also announced progress on corporate restructuring. PictureTel has successfully reduced staffing levels by nine percent since July 1, 2000 - representing an annualized run-rate saving of $12.5 million. The reduction in force is part of a corporate initiative to flatten the organization. In addition, the Company will be redeploying resources to the sales and marketing efforts in order to improve top-line performance. PictureTel is currently engaged on a national iPower marketing tour, introducing customers, prospects, and channel to the revolutionary new integrated collaboration capabilities of its PictureTel 900 Series. The Corporation shipped its first PictureTel 900 Series products August 14, 2000.

"PictureTel recognizes market requirements," said Lew Jaffe, president, PictureTel Corporation. "We are delighted with the marketplace reception for the new PictureTel 900 Series, and its early momentum. Customer feedback underscores that seeing is truly believing. Further, these new wins for 1414c underscore our competitive advantage in this service-based solution business."

"We are focused on making changes where necessary, on simplifying our organization, and on allocating resources to grow our top-line revenues," Jaffe continued. "We reiterate our commitment to our new mission, 'Sharing Ideas Simply(TM),' and underscore our intent to move rapidly to a focused channel go-to-market strategy in our product business."

About PictureTel

PictureTel Corporation (NASDAQ: PCTL) is the world leader in developing, manufacturing, and marketing a full range of visual- and audio- collaboration platforms. PictureTel also owns 1414c, a communications ASP that greatly simplifies the network complexity inherent in mixed rich media collaboration. PictureTel markets network conferencing servers in addition to the complete range of end-point products and delivers a global capability to service, support, and provide complete solutions for customers needing rich media communications. PictureTel is fundamentally in the business of eliminating the barrier of distance, enabling people to be Anywhere Now(TM).

This release includes projections and other forward-looking statements about the company's revenues, earnings, and other measures of economic performance. Actual results could differ materially from forecasts due to many factors such as, for example, competitive pressures, changes in technology, and the difficulty in forecasting in overseas markets and indirect channels. Additional information concerning risks that could cause actual results to differ is contained in the company's annual report on Form 10-K and its Form 10-Q as filed with the SEC. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

PictureTel is a registered trademark of PictureTel Corporation. PictureTel 900 Series, iPower, and Anywhere Now are trademarks of PictureTel Corporation.

All other terms and products names may be trademark or registered trademarks of their respective owners.