Net Insight Interim report For the period 1 January - 30 June 2000

The following pages constitute a press release of the figures for For the period 1 January - 30 June 2000 for Net Insight AB.

For more details, please contact:
Bengt Olsson, Chief Executive Officer
Tel: +46 8 685 04 00, Mobil +46 70 544 30 80
E-mail: bengt.olsson@netinsight.net

Carl-Johan Blomberg, Chief Financial Officer
Tel: +46 8 685 04 00, Mobil: +46 70 633 67 11
E- mail: carl.johan.blomberg@netinsight.net

Gunnar Andersson, VP Corporate Communications
Tel: 08-685 04 35, Mobil: 070-590 14 18
E-mail: gunnar.andersson@netinsight.net

Summary

· During the period Net Insight signed three sales agreements
· Twintin real-time chipset launched
· First OEM agreement signed
· The company's operating loss for the period amounted to SEK 96.7 million
· Liquid funds at the end of the period amounted to SEK 260 million
· The company strengthens its board and management team

MARKET PROSPECTS


Net Insight's position has been reinforced due to the significantly increased interest from broadband operators in being able to offer advanced services over the Internet. Whereas it was initially just a matter of connection speeds, the focus is now on services and network content. These services require 100% accessibility and absolute real-time characteristics. This is not feasible in the current packet processing networks where accessibility and quality cannot be guaranteed.

Our successes have contributed to exciting developments in our main segments: broadband for households, city networks and media networks. There has been a marked increase of interest in our video solution since its launch in March, and in the autumn this solution will be demonstrated at trade fairs in Sweden, Europe and the USA. The customer base in the broadband-for-households segment has been given a significant boost through our collaboration with Net to Net Technologies in which we can jointly offer a competitive IP solution for ADSL (copper access). Our latest agreement in the city networks segment confirms our strong position as a leading supplier of multi-service and real-time solutions for broadband.


SIGNIFICANT EVENTS DURING THE PERIOD

Products and launches
Using the Net Insight Nimbra One switch and the newly-developed video card, a broadband video conference of perfect studio quality in real-time (270 Mbps) was staged for the first time in January 2000. The unique aspect of this demonstration was the parallel transfer of video, data and telephony. The video conference was transmitted via opto-fibre between the AGM of Svenska Stadsnätsföreningen [the Swedish city network association] in Gothenburg and a studio in Stockholm. The launch of the video card took place later in March.

The Twintin chipset was launched concurrently in Sweden and the USA, on
26 April this year. Twintin has been developed in collaboration with Toshiba Electronics and signifies a technology breakthrough with major consequences for users in terms of broadband and the Internet. Twintin's capacity facilitates the transmission of real-time video over the network, i.e. TV on the Internet without intermittent stops and interference. Twintin contains a complete DTM switch, and is thus an extreme example of a product embodying DTM technology. The chipset will now be the motor in the Nimbra 200 series which is on its way onto the market. Twintin will also be sold separately, which will make it easier for other players to get to grips with DTM-related production. Twintin will thus be helping to boost acceptance of DTM technology by the market.

More sales and customer agreements
Three new customer agreements were signed in April. The first was the strategically important agreement between RegNet/Norrsken and a dealer for Net Insight network products, Fiberdata. RegNet links together 1.6 million inhabitants in seven counties of mid-Sweden. The agreement led to a decision by Gavle Net in June to use Net Insight's Nimbra One as the backbone of its new city network, a fibre-based broadband network covering the greater part of Gävle urban area.

Also in April, an outline agreement was signed with Millennium Communication Networks AG (MCN), one of Austria's fastest growing network operators, regarding the supply of Nimbra switches for commercial implementations. The first delivery in accordance with the agreement took place at the start of May.

In May, an agreement was signed with Metrocom, one of the leading fibre-network operators in St Petersburg, concerning the purchase of Nimbra switches for the Metrocom city network. Initially, the switches will be used in providing telephony and data services for a major bank, but in the long term their use will be extended to include the domestic market among St Petersburg's population of six million people.

New cooperation agreements
In June an agreement was signed whereby the American company Allied Telesyn International (ATI) will be selling Net Insight's DTM-based products for city networks under ATI's own brand name. This agreement with ATI signals the start of Net Insight's strategy of creating global growth via strategic partnerships. The sale of Net Insight products under alternative brand names (OEM sales) opens up an international market involving powerful players with established sales channels and well-developed customer contacts. OEM sales will enable Net Insight to grow internationally in a quick and cost-effective manner.

Yet another step towards a global dealer network was taken in April when Net Insight and ABB AG signed a cooperation agreement regarding the sales and implementation of Net Insight network solutions to ABB AG's customers in Austria and eastern Europe.

Directed share issue and share split
A directed share issue for a total of SEK 230 million was carried out in January/February 2000. The share issue was subscribed by Brummer & Partners Zenith hedge fund, the Fourth AP fund, and SPP Kapitalförvaltning.

In accordance with a decision from the AGM, a 5:1 split of the Net Insight B-shares was carried out on 15 May. After the split, there was a total of 38 729 300 shares with a nominal value of SEK 0.04.

Organization and Staff
At the AGM on 26 April, Lars Berg, Bo Dimert and Lage Jonasson were elected as new members of the board. Lars Berg was previously head of telecom activities for Mannesman in Germany and has many years of experience of the telecom industry both as CEO and president for Telia, and as excutive vice president for Ericsson. Bo Dimert's most recent post was executive vice president for Ericsson and president and CEO for Ericsson in the USA, having previously held posts in IBM and Digital Equipment. Lage Jonasson is the CEO of Nordiska Fondkommission and has participated in Net Insight's activities from its inception.

In May, Carl-Johan Blomberg was engaged as CFO. He joins Net Insight from Hotellus International AB where he had the position of Senior Vice President and CFO; previously, he was corporate treasurer at Pharmacia & Upjohn. In June, Lars Borgwing was engaged as head of Net Insight US operations based in Boston while Anders Persson was appointed development manager to be based at the offices in Stockholm. Lars Borgwing was previously with Standish Corporation, and his experience prior to that includes 13 years at Skanska. Anders Persson spent many successful years with the Ericsson group, his most recent post being General Manager at Ericsson Radio Access.

The number of employees has increased during the period from 90 to 96.


SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD


Strategic technological cooperation
In July, Net Insight and Tality, an electronics design company in the Cadence group, entered into an agreement whereby Tality, a world-leading supplier of design software and services, will be supplying network companies with products based on DTM technology. This cooperation with Tality is in line with the company's strategy of growth via strategic partnerships and is also a boost to Net Insight's own product development.

New markets
Through an OEM agreement with the Japanese Allied Telesis KK, Net Insight is now also making a move into the rapidly growing Japanese market. Allied Telesis KK is a global supplier of network equipment and will be distributing Net Insight city network products within Japan. The agreement is in the form of an exclusive contract concerning the Net Insight Nimbra products for the Japanese market. In Japan, Allied Telesis expects that the sales on the Japanese market will exceed SEK 250 million over the next three years. This distributor agreement supplements an earlier OEM agreement between Net Insight and Allied Telesyn International, in which Allied Telesyn uses its global distribution network to sell Net Insight Nimbra products throughout the world.

During the summer, an agreement was also signed with Net to Net Technologies regarding cooperation on development and marketing of a joint IP solution for ADSL (copper access to end user). The Net Insight/Net to Net IP solution is complete, simple and cost-effective, while also serving as a future-proof platform for advanced real-time services. For Net Insight, the agreement means a consolidation and broadening of the company's customer base.

Sales
Norrtälje Energy and Ålcom has decided to use Net Insights family of MSPP
(Multi Service Provisioning Platform) in a regional network reaching from Åland in the
middle of the Baltic Sea, thru the city of Norrtälje and further to Stockholm, the capital of
Sweden. The initial order is for eight nodes, and the deal is done via the network integrator
Fiberdata of Sweden.



FINANCIAL STATUS

Income and costs
The company's sales income for the period amounted to SEK 0.5. During the first six months, there has been a continued focus on product development and commercialization of the company's products. In addition, development of an international marketing organization has been prioritized. The parent company's administration expenses include the costs of the new share issue and consultancy costs of a non-recurring nature amounting to SEK 6.2 million. The total costs for the period amounted to SEK 96.9 million, SEK 50.0 million of which were for the second quarter.

Investments in fixed assets
Investments in fixed assets in the period amounted to SEK 0.6 million.

Cash positions and funding
During the period a new share issue was carried out, which, together with options redeemed during the period, provided company with funds to the tune of SEK 260.4 million. Liquid assets in the form of cash and bank balances in the group at the end of the period amounted to SEK 260.1
million.


Forthcoming report from Net Insight

· Interim report January - September 31-10-2000

The full interim report including tables is available to download from the enclosed link.