Red Hat, Inc. to Acquire Embedded Linux Developer WireSpeed

Research Triangle Park

United States, June 14, 2000

Expands Red Hat's Unmatched Custom Development and Consulting Expertise

Red Hat, Inc. (NASDAQ:RHAT), the leader in open source Internet infrastructure solutions, announced today that it has signed a definitive agreement to purchase privately-held WireSpeed Communications Corporation. Under the terms of the agreement, Red Hat will issue 1,531,232 shares of Red Hat common stock in exchange for all of the outstanding securities of Huntsville, Alabama-based WireSpeed. Red Hat may issue additional shares based upon the future performance of WireSpeed. The transaction will be valued based on an average closing price of Red Hat's common shares for the five-day period ended June 15, 2000. The acquisition will be accounted for as a purchase and is expected to be completed by July 31, 2000, subject to customary closing conditions.

International Data Corp. (IDC) research predicts that by 2002, there will be more than 55 million handheld and notebook-style information appliance devices and that by 2005, shipments of these appliances will exceed shipments of PCs. Connecting these devices to the Internet and private networks will be essential. WireSpeed is a leading developer of network and telecommunications components for embedded systems software. WireSpeed's clients include semiconductor, Internet device and industrial control leaders, including companies like Hewlett-Packard, Interphase, NETsilicon, STMicroelectronics and Time Domain Corporation. WireSpeed will become part of Red Hat's Client Services Group---the industry's largest source of custom Open Source development expertise in embedded, networked and post-PC devices. Matthew Szulik remains president and CEO of Red Hat.

"The addition of WireSpeed's embedded development expertise helps Red Hat continue to meet the tremendous demand for embedded development," said Matthew Szulik, president and CEO of Red Hat, Inc. "Wirespeed's expertise in telecommunications and networking for embedded systems also strengthens Red Hat's position as the technology and market leader for Open Source Internet Infrastructure solutions ranging from powerful servers to the smallest embedded devices."

In January, 2000, Red Hat acquired Cygnus Solutions, Inc., a top provider of Open Source software, development tools, engineering services and developer support for a variety of desktops, client/server systems, real-time operating systems (RTOS) and embedded, post-PC platforms. Red Hat's Client Services Group provides custom engineering services to top companies worldwide, helping them quickly create and deploy next-generation Internet infrastructure solutions, including appliances, handhelds and other post-PC and deeply embedded devices. With the addition of Cygnus and WireSpeed, Red Hat's Client Services Group now delivers more than 100 next-generation software developers.

"Red Hat has a tremendous vision, expertise and market lead in creating a whole new generation of powerful, reliable devices running Open Source solutions," said Andrew Bailey, President of WireSpeed. "The combination of WireSpeed and Red Hat will help companies bring a new paradigm of post-PC, Open Source computing to market more quickly."

About WireSpeed
WireSpeed is a leading developer of communications software for embedded systems. Harnessing the power of Linux, WireSpeed's customized solutions act as a catalyst for expediting the growth and innovation of next-generation Linux-based networked products. WireSpeed's expertise complements existing in-house resources and allows companies to focus on core competencies, accelerating time-to-market and reducing development costs. WireSpeed ports Linux to various architectures (traditional microprocessor and DSP) and crafts network drivers to get customer devices connected to ATM, xDSL, Ethernet, or analog networks. WireSpeed provides solutions for many industry leaders in the semiconductor, Internet device and industrial control markets.

About Red Hat, Inc.

Red Hat, the world's leading open source and Linux provider, is headquartered in Raleigh, NC with satellite offices spanning the globe. Red Hat is leading Linux and open source solutions into the mainstream by making high quality, low cost technology accessible. Red Hat provides operating system software along with middleware, applications and management solutions. Red Hat also offers support, training and consulting services to its customers worldwide and through top-tier partnerships. Red Hat's open source strategy offers customers a long term plan for building infrastructures that are based on and leverage open source technologies with focus on security and ease of management. Learn more: http://www.redhat.com

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Forward-Looking Statements

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