Micron Electronics Drives Toward Profitabilty with Data Center Consolidations

Business Wire, July 18, 2001

Business Editors/Technology Writers

NAMPA, Idaho--(BUSINESS WIRE)--July 18, 2001

Company Expects EBITDA Profitability Within 12 Months,

Has Three Times Cash Needed to Reach Cash-Flow Positive

Intensifying the company's focus on achieving profitability, Micron Electronics, Inc. (Nasdaq:MUEI) Chairman and CEO Joel Kocher today announced to employees plans to further hone the high-efficiency business model of its Web hosting subsidiary, HostPro Inc., with the consolidation of two of the company's smaller data centers, located in Moses Lake, Wash. and Boca Raton, Fla. Kocher said the facility closures are possible because of operating efficiencies the company expects to gain from its pending acquisition of Interland, Inc. (Nasdaq:ILND) scheduled to be completed in August 2001.

"As we move full-speed-ahead toward completion of our acquisition of Interland, we are continuing to identify substantial synergies and cost savings. Combining the companies, we will double our volume, allowing us to streamline operations and absorb fixed costs over a much larger base of customers. We believe the new combined company will become EBITDA positive within 12 months after the acquisition closes and free cash flow positive by three quarters following that. Current projections indicate that we will launch our new combined company with cash balances of $200 million or more, making us the only well funded pure-play publicly held hosting company. This strong cash position will provide more than adequate resources to fund operations until we reach profitability.

"It is important to note that HostPro's model is built on the efficiency and scalability of the shared hosting and scalable managed services market -- which generates higher revenues and profit margins -- and requires far less data center space. This model is substantially different from those of Exodus and other enterprise-focused players. With virtually no debt to service, our actions today will further enhance our business model as our competitors stagger under their debt burdens from overbuilding," said Kocher.

In its third quarter earnings announcement on June 21, 2001, the company projected that its net cash utilization for the combined companies will be between $65 million and $75 million before becoming cash flow positive. The company stated it believes that the combined company is more than fully funded, with about three times that amount currently available on a pro forma basis.

About Micron Electronics

Micron Electronics, Inc. (Nasdaq:MUEI) is the parent company of HostPro, Inc., a leading provider of infrastructure, Web site, and hosted software applications to small and medium businesses around the world. HostPro manages more than 147,000 hosted Web sites and more than 79,700 paid hosting accounts. More information about Micron Electronics can be found at www.micronelectronics.com. More information about HostPro can be found at www.hostpro.com.

Forward-looking Statements

Except for the historical information contained in this press release, statements in this press release may be considered forward-looking statements. These forward-looking statements include, but are not limited to: the expected growth opportunities of the Web hosting market; the expected growth of HostPro's business, including expectations for more rapid growth when the economy improves; the timing and approval of the merger by Micron Electronics' and Interland's shareholders; the successful completion of the merger; Micron Electronics' expected cash resources as of the time of the merger and thereafter; and Micron Electronics' expectations regarding its future financial results. Actual results may differ materially from those contained in the forward-looking statements in this press release. Factors that could affect these forward-looking statements include but are not limited to: the ability to achieve expected operating efficiencies in connection with the Interland merger, the ability to operate within budgeted expense levels both before and after the Interland merger, risks associated with integrating newly acquired technologies and products and unanticipated costs of such integration, the ability of the combined company to expand its customer base as planned, general economic conditions, the impact of competition, quarterly fluctuations in operating results, the loss of customers with failing businesses, customer acceptance of new products and services, the retention of key employees of Micron Electronics, HostPro and Interland, investments in new business opportunities and the impact of liabilities that could carry over from Micron Electronics' discontinued operations and the failure of the Interland merger to close due to the failure of the stockholders of Micron Electronics or Interland to approve the merger. Certain of these and other risks associated with Micron Electronics' business are discussed in more detail in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release.