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October 14, 1998

TRICORD LOOKS FOR STRATEGIC HELP IN TRANSITION PERIOD

By CBR Staff Writer

Tricord Systems Inc, the Plymouth, Minnesota company that abandoned the Intel server market in favor of next-generation storage management software, has reported third-quarter results that reflect its belt-tightening transition. The company posted a net loss for the quarter of $234,000 on revenue down 61.3% at $2.6m, compared to a loss of $1.0m a year ago. Nine-month net loss was $1.5m on revenue down 69.3% at $3.3m, against a loss of $10.7m last year. All the revenue booked in the quarter was server-related as that business continues to dwindle down to nothing. Revenue from the new software products isn’t expected to materialize until the second half of 1999. In the meantime, Tricord said it is looking for any and all opportunities to stay in solid financial health. Possibilities include deals with strategic partners and OEMs offering either development help or cash, straight investments in the company, pre-paid royalties against the new products or even and outright merger. The company said it’s in talks with various parties at the present time, but that nothing has been signed. On the bright side, the burn rate has been kept very low over the past nine months, even as revenues disappear, with cash at September 30 of $3.3m compared to $3.7m at December 31, 1997. But Tricord warns that as, revenues erode further during the fourth quarter and beginning of next year, the burn rate will certainly increase. Meanwhile, the company’s stock is barely hanging on at the Nasdaq market, which has warned that if its shares don’t show a closing bid price of at least $1.00 for ten consecutive trading days by December 10, it will be de-listed. Tricord’s storage management software uses a distributed file system technology for the transparent sharing of data on network-attached storage devices. It provides a single data image for files spanning multiple storage nodes interconnected on a system area network. The company is convinced that the technology will prove itself a better alternative than offerings from competitors such as Veritas Corp. Nine-month results included a one-time gain of $195,000, while year-ago results for the nine-month period include total charges of $3.3m from inventory write-downs and other actions and a one-time gain of $1.0m.

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