Red Hat Completes Acquisition of Embedded Systems Developer WireSpeed

Research Triangle Park

United States, July 28, 2000

Red Hat Adds WireSpeed's Expertise in Telecommunications and Networking to Embedded Systems Business

Red Hat, Inc. (NASDAQ:RHAT), the leader in open source Internet infrastructure solutions, completed the acquisition of privately-held WireSpeed Communications Corporation Inc., a leading developer of network and telecommunications components for embedded systems software. The transaction was valued at $30.5 million based on an average closing price of Red Hat's common shares for a five-day period ended June 15, 2000. Under the terms of the transaction, Red Hat issued 1,525,365 shares of Red Hat common stock in exchange for all of the outstanding securities of Huntsville, Alabama-based WireSpeed. The acquisition has been accounted for as a purchase.

WireSpeed will scale Red Hat's embedded systems business, which is enabling top companies worldwide to quickly create and deploy next-generation Internet infrastructure solutions, including appliances, handhelds and other post-PC and deeply embedded devices. 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.

Matthew Szulik, president and chief executive officer, said, "The addition of WireSpeed extends our strategy of providing expertise in embedded, networked and handheld devices that connect to one other over the Internet. In working closely with companies such as Hitachi and Fujitsu to develop next-generation computing devices, we are finding that there is a rapidly increasing demand for embedded systems software, particularly in telecommunications and networking."

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, including companies like Hewlett-Packard, Interphase, NETsilicon, STMicroelectronics and Time Domain Corporation.

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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