The company reported record revenues for the fourth quarter of  $5.8 million compared to revenues of $4.5 million for the same period last year, representing an increase of 30% year over year. Fourth quarter core business revenues increased 108% from $2.6 million in 1998 to $5.4 million in 1999.  Net loss for the fourth quarter of fiscal year 1999 was $4.0 million or $(0.16) per share, excluding non-cash charges (which are accretion of discount on debt and interest charge on beneficial conversion feature of convertible debt) and stock based compensation charges, compared to a net loss of $5.3 million or $(2.82) per share for the same period last year.  Including non-cash charges (defined above) and stock based compensation charges, net loss for the fourth quarter of fiscal year 1999 was $4.2 million or $(0.17) compared to a net loss of  $5.5 million or $(2.91) per share for the same period last year.

The company reported record revenues for fiscal year 1999 of $22.2 million compared to revenues of $15.3 million for fiscal year 1998, representing an increase of 45% year over year.  Net loss for the fiscal year was  $17.3 million or $(1.54) per share, excluding non-cash charges (defined above) and stock based compensation charges compared to a net loss of $21.8 million or $(12.03) per share for fiscal year 1998.  Including non-cash charges (defined above) and stock based compensation charges, net loss for fiscal year 1999 was $26.9 million or $(2.40), compared to a net loss of  $22.2 million or $(12.26) per share for fiscal year 1998.  For the full year, operating expense growth was held to 6%.

"We are pleased with our continued growth this quarter" said Samir Arora, NetObjects president and chief executive officer.  "We grew our core business in the fourth quarter, which includes Software License Fees and Professional Service Revenue, a record 108 percent.  We continued to grow our customer base and partnerships in the small business and enterprise markets and announced the formation of our new Small Business Online Division, which was accelerated by our acquisition of Sitematic.  We’ve expanded our reach and broadened our product offering, which is reflected in our growth.  Overall, we are proud of our achievements this quarter and pleased with the confidence our customers continue to place in us and our family of products and services,” concluded Arora. 

Corporate News
The Company completed a significant strategic event in early October with its acquisition of Sitematic.  We believe this acquisition positions brings NetObjects into the forefront by positioning it as the first company to offer a unique combination of online and desktop web site applications to small businesses.  This seminal move revolutionizes the ease with which small businesses develop and grow their online business.  In addition to the acquisition of Sitematic, the Company announced the formation of its new Small Business Online Division.  The new division will focus on small businesses that do not yet have an Internet presence and do not have the internal resources or technical knowledge to get their business online.

Partnership News
Concentric Network Corporation  (NASDAQ:CNCX) will distribute NetObjects Fusion to new and existing ConcentricHost customers. Concentric will also be one of the first partners to offer NetObjects small business online, hosted services.

Deutsche Telekom, Strato and One & One, leading Internet Service Providers and hosting providers, are bundling NetObjects Fusion with their hosting services in Germany. 

Vobis, a leading PC manufacturer and retailer in Europe, will bundle NetObjects Fusion with all its PCs sold in Germany.

Novell, Inc. (NASDAQ:NOVL) began shipping NetObjects Fusion as part of the Novell® Small Business Suite, an easy-to-use, scalable, reliable and cost-effective network software solution for the growing small business market.  NetObjects Fusion, as part of the Novell® Small Business Suite will be available worldwide.

Product News
NetObjects launched its eagerly awaited NetObjects Authoring Server Suite 2000 for collaborative intranet site building.  Enhancements to the latest version provide powerful workflow management features that will dramatically streamline intranet site creation and management.  Other new features include; instant messaging, automated task scheduling, versioning, change control, site histories, cross-site linking, cross-site shared assets, mirror publishing; providing increased control, security, ease-of-use and performance for its users.

We reached a significant milestone with the sale of over one million copies of NetObjects Fusion for the quarter. 

About NetObjects
NetObjects, Inc. (NASDAQ: NETO), an IBM affiliate (NYSE:IBM), is a leading provider of e-Business solutions and services that enable small businesses and enterprises to build deploy and maintain web sites on the Internet and corporate intranets.

Through its Small Business and Online Division, NetObjects is revolutionizing the ease with which small businesses develop and grow their online business. The NetObjects Sitematic online e-business building solution and NetObjects Fusion® software deliver complete online and desktop web site applications. The NetObjects Enterprise Division is enabling enterprise intranet teams to work together more efficiently to develop, manage and update business Web sites with its NetObjects Authoring Server Suite.  In addition, NetObjects Professional Services provides intranet and extranet solutions to Fortune 2000 customers and provides training, which encompasses complete web education on NetObjects products, web marketing/ traffic building, site implementation, graphics & companion products.