F I N A N C I A L

For Immediate Release
Contact:   John M. Bogdan, Chief Financial Officer
ON Technology Corporation
(617) 692-3160

ON TECHNOLOGY ANNOUNCES REVENUES AND EARNINGS FOR ITS FIRST QUARTER OF 1998

Cambridge, Ma., April 21, 1998 - ON Technology (Nasdaq: ONTC) today announced revenues and earnings for its first quarter ended March 31, 1998. Revenues for the first quarter were $4,175,000 a decrease of 29% from revenues for the quarter ended March 31, 1997, after adjusting for the impact of the Company's decision to exit the virus business and sell certain product lines to Elron Software. When compared to total revenues reported for the quarter ended March 31, 1997, the decrease was 67%. Net loss for the quarter was ($2,181,000) or ($0.18) per share, after adjusting for the gain on the sale of assets to Elron Software, which compares to net income of $7,000 or $0.00 per share for the same period last year, after excluding non-recurring charges for acquired incomplete research and development of $15,898,000 or ($1.35) per share related to the acquisitions of csd Software GmbH and Purview Technologies, Inc. Net income reported for the quarter was $4,337,000 or $0.35 per share which compares to a net loss of ($15,891,000) or ($1.35) per share reported for the same period last year.

"During the first quarter, ON Command CCM our leading enterprise desktop management system, continued to close new accounts while sales of our Groupware products declined year to year as expected" said Herman DeLatte, ON Technology's Chief Executive Officer. "The completion of the Elron transaction gives ON Technology additional liquidity which will support our continued investment in product development, attracting new enterprise customer accounts, and growing our strategic alliances."

Highlights in Q1 include:

  • Successfully signing up 18 new ON Command CCM customers including GTE Internetworking, Racal Electronics, and Northwest Hospital District in Stockholm (NVSO).

  • Demonstrating support together with Intel for the Wired for Management(WfM) Initiative at Gartner Group's Conference on Lowering Total Cost of Ownership.

  • Launching ON Command CCM V3.1, which supports new "OS Push" Capability and Data Sharing with Microsoft SMS and Tally NetCensus.

  • Securing final stockholder approval and completing the Elron Software transaction.

On February 11, 1998, ON Technology announced that it had received shareholder approval to sell its Network Management and Network Security Business along with the related marketing systems and organization to Elron Software, Inc., a wholly owned subsidiary of Elron Electronics Industries (NASDAQ:ELRNF) for $12 million in cash with the possibility of an additional performance bonus up to $1.5 million. Assets sold in the transaction included the ON Guard Firewall, the ON Guard Internet Manager, ON's SofTrack marketing license, and the Editor's Choice Network Management catalog. Included in the transaction was the transfer of approximately 100 employees from ON Technology to Elron Software.

ON Technology now consists of two business units. Desktop Management, which develops and markets ON Command CCM™ (Comprehensive Client Manager), the Company's open and scalable enterprise desktop management solution; and Groupware, which develops and markets Meeting Maker, ON Technology's leading real-time enterprise scheduling solution, and Notework and DaVinci e-mail products.

ON Technology Corporation is a publicly held company based in Cambridge, Massachusetts. Founded in 1985, ON Technology provides open and scalable solutions that result in financial, operational and strategic benefits for enterprise networks. More information about ON Technology can be found at www.on.com.

Forward Looking Statement: Statements contained herein that are not historical statements (including but not limited to, statements concerning estimates of future revenues, operating expenses and product introductions) constitute forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The following risk factors, among other factors (including the accuracy of the Company's internal estimates of revenue and operating expense level), may cause the Company's actual results to differ materially from the results stated in such forward-looking statements: variability of the Company's quarterly operating results; rapid technological change in the software industry; competition; product development; inclusion of groupware applications and certain client management software features in system software and applications suites; dependence on key customers; potential acquisitions; marketing products through distributors and resellers; protection of proprietary technology; international revenue; dependence on key personnel; possible volatility of stock price; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.

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