Micromuse Reports 50% Adjusted -Non-GAAP- Earnings Per Share Growth for Second Quarter Fiscal 2005 and Announces 6 Million Share Stock Repurchase Program

Business Wire, April 27, 2005

SAN FRANCISCO -- Micromuse Inc. (Nasdaq: MUSE), the leading provider of ultra-scalable, realtime business and service assurance software, announced today that second quarter 2005 net revenues were $37.9 million, compared with $38.2 million in the second quarter of 2004, a decrease of 1%. Adjusted (or non-GAAP) net income (before amortization of intangibles from acquisitions, restructuring expenses, non-cash deferred compensation expense, and restatement and related litigation expenses) was $4.7 million or 17% higher than the $3.6 million recorded in last year's second quarter. Adjusted (or non-GAAP) earnings per share for the quarter were $0.06, or 50% higher than the comparable adjusted earnings per share of $0.04 in the second quarter a year ago. Net income for the second quarter of 2005 was $4.1 million, compared with $0.6 million in the second quarter a year ago, a more than seven-fold increase. Earnings per share for the quarter were $0.05, compared with $0.01 in the second quarter a year ago, a five-fold increase.

Cash and cash equivalents, short-term investments and long-term investments were $193.3 million as of March 31, 2005.

"We are very pleased with our second quarter results," said Ian Halifax, CFO of Micromuse. "Our results benefited from solid execution across the organization. We are encouraged by the current momentum of the business, including the award of the Company's largest-ever contract with the Atlas consortium, the announcement of our acquisition of Quallaby Corporation and significant additions to the customer base in our enterprise business. Revenues for the third quarter of fiscal 2005 are estimated to be in the $38-$40 million range, with adjusted (non-GAAP) EPS of $0.04-$0.05, and GAAP EPS of $0.02-$0.03, the difference being primarily due to amortization of intangibles from acquisitions. This guidance excludes the impact of the Quallaby acquisition, which is expected to close later this quarter."

Stock Repurchase Program

Micromuse announced today that its Board of Directors has approved the repurchase of up to 6 million shares of its common stock over the next twelve months. Purchases may be made, from time to time, in the open market and will be funded from available working capital. The number of shares to be purchased and the timing of purchases will be based on several factors, including the price of Micromuse's stock, general business and market conditions, and other investment opportunities.

Q2 2005 Conference Call, Webcast, and Replay Information

Micromuse will host a conference call and simultaneous webcast on Wednesday, April 27, 2005 at 2:00 PM PT, 5:00 PM ET to announce adjusted and GAAP results for the second quarter of fiscal year 2005. The live call will be available to the general public by dialing 866-814-1933 (domestic) or 703-639-1365 (international). A live webcast of the conference call will be available at http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker =MUSE&script=2100 or via a link from the Micromuse web site at http://www.micromuse.com/. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.You may also need to remove an extra space in the URL if one exists.)

A replay of this conference call will be available by dialing 800-475-6701 (domestic) or 320-365-3844 (international) and entering access code 780274. The replay will be available from Wednesday, April 27, 2005 at 7:15 PM PT until Wednesday, May 4, 2005 at 11:59 PM PT. The replay will also be available as an archived audio file at http://www.micromuse.com/.> About Micromuse

Micromuse Inc. (Nasdaq: MUSE) is the leading provider of ultra-scalable, realtime business and service assurance software solutions. The Netcool(R) software suite provides organizations with the assurance that their IT systems are supporting and driving profits 24 hours a day. Unlike traditional infrastructure management systems, Netcool solutions provide realtime end-to-end visibility and accurate troubleshooting from a business perspective. Such business intelligence allows organizations to respond to problems quickly, streamline workflow processes and improve business uptime. Micromuse customers include BT, Cable & Wireless, Deutsche Telekom, EarthLink, ITC^DeltaCom, J.P. Morgan Chase, MCI, T-Mobile, and Verizon. Headquarters are located at 139 Townsend Street, San Francisco, Calif. 94107; (415) 538-9090. The Web site is at www.micromuse.com.

Micromuse and Netcool are registered trademarks of Micromuse Ltd. All other trademarks and registered trademarks in this document are the properties of their respective owners.

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements we make are based on current expectations, and are subject to a number of risks and uncertainties. Actual results could differ materially.