Liberate Announces Financial Results for Quarter Ended November 30, 2004

Liberate Announces Financial Results for Quarter Ended November
30, 2004
Conference Call January 10, 2005, At 2:00 P.M. Pacific Time 


SAN MATEO, Calif., Jan. 10  /PRNewswire-FirstCall/ -- Liberate Technologies
(Pink Sheets: LBRT), a leading provider of software for digital cable systems,
announced financial results for its second fiscal quarter ended November 30,
2004.

Liberate's revenues for its second fiscal quarter were $0.6 million, compared
to $1.2 million for the same quarter of the prior fiscal year.  The net loss
for the quarter was $8.1 million, or $0.08 per share, compared to a loss of
$8.5 million, or $0.08 per share, for the same quarter of the prior fiscal
year.

As of November 30, 2004, Liberate had cash and cash equivalents of $208.0
million, a decrease of $2.0 million during the quarter.  In addition to cash
and cash equivalents, the Company had $10.7 million in restricted cash held as
security for office leases. During the quarter, Liberate collected $4.5 million
of non-refundable payments for contract fees and monthly subscription fees from
customers pursuant to its subscription license agreements. Revenue under such
agreements is being deferred until future obligations for product delivery and
product updates have been met.

Earlier today, Liberate announced it had reached agreement to sell
substantially all of the assets of its North American business to Double C
Technologies, LLC, a joint venture majority owned and controlled by Comcast
Corporation with a minority investment by Cox Communications, Inc., for
consideration of approximately $82 million. The agreement will not become
effective until the dismissal of Liberate's bankruptcy appeal, which Liberate
has agreed to actively pursue. To that end, today Liberate is filing a motion
in the U.S. District Court for Northern California to dismiss the appeal of its
bankruptcy case dismissal.  The agreement is also subject to Liberate
shareholder approval, Hart-Scott-Rodino antitrust approval, and other customary
closing conditions.

"Over the past two years, we have worked hard to restructure the Company and
resolve outstanding liabilities and other uncertainties," said David Lockwood,
Chairman and CEO of Liberate.  "Today's announcement of the purchase of our
North American business by industry leaders Comcast and Cox demonstrates the
strategic importance of the technology we have built and our commitment to
deliver value to shareholders."

Conference Call

Liberate has scheduled a conference call on January 10, 2005, at 2:00 p.m.
Pacific Time to discuss its second quarter fiscal 2005 financial results.  The
call-in number is 888-882-0142. A replay of the call will be available until
January 17, 2005 on either 402-977-9140 or 800-633-8284, reservation code
21226844. The conference call can also be accessed via live webcast at
Liberate's website (http://www.liberate.com/) and will remain available for
replay.

About Liberate Technologies

Liberate Technologies is a leading provider of software for digital cable
systems.  Based on industry standards, Liberate's software enables cable
operators to run multiple services -- including interactive programming guides,
high-definition television, video on demand, personal video recorders and games
-- on multiple platforms.  Headquartered in San Mateo, California, Liberate has
offices in Ontario, Canada, and the United Kingdom.

Liberate and the Liberate design are registered trademarks of Liberate
Technologies.  Other product names used in association with these registered
trademarks are trademarks of Liberate Technologies.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995

Those statements above that involve expectations or intentions (such as those
related to the announced asset sale and future business or financial
performance) are forward-looking statements, within the meaning of the U.S.
securities laws, that involve risks and uncertainties and are not guarantees of
future performance.  Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to, the following: future decisions by governmental, regulatory or judicial
bodies (including with respect to the U.S. District Court for the Northern
District of California dismissal of the appeal of Liberate's bankruptcy
dismissal); uncertainty in the market for interactive television services and
dependence on a limited number of cable network operators; business disruption
resulting from the announcement of the asset sale; uncertainties related to
litigation; and other risks outlined in Liberate's filings with the Securities
and Exchange Commission. Liberate disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

LIBERATE WILL FILE A PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS CONCERNING
THE PROPOSED ASSET SALE WITH THE SECURITIES AND EXCHANGE COMMISSION.  INVESTORS
ARE URGED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ON THE PROPOSED ASSET SALE.  YOU WILL BE ABLE TO OBTAIN THE
DOCUMENTS FILED WITH THE SEC FREE OF CHARGE AT THE WEB SITE MAINTAINED BY THE
SEC AT WWW.SEC.GOV.  IN ADDITION, YOU MAY OBTAIN DOCUMENTS FILED WITH THE SEC
BY LIBERATE FREE OF CHARGE BY REQUESTING THEM IN WRITING FROM LIBERATE, 2655
CAMPUS DRIVE, SUITE 250, SAN MATEO, CA 04403, ATTENTION: INVESTOR RELATIONS, OR
BY TELEPHONE AT [phone].   LIBERATE AND ITS DIRECTORS AND EXECUTIVE
OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM
LIBERATE'S STOCKHOLDERS.  A LIST OF THE NAMES OF THOSE DIRECTORS AND EXECUTIVE
OFFICERS AND DESCRIPTIONS OF THEIR INTERESTS IN LIBERATE IS CONTAINED IN
LIBERATE'S PROXY STATEMENT DATED SEPTEMBER 13, 2004, WHICH IS FILED WITH THE
SEC.  STOCKHOLDERS MAY OBTAIN ADDITIONAL INFORMATION ABOUT THE INTERESTS OF THE
DIRECTORS AND EXECUTIVE OFFICERS IN THIS TRANSACTION BY READING THE PROXY
STATEMENT WHEN IT BECOMES AVAILABLE.

                          LIBERATE TECHNOLOGIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)
                                Unaudited

                                                     November 30,   May 31,
                                                         2004        2004

                          Assets

  Current assets:
    Cash and cash equivalents                          $207,987    $215,877
    Accounts receivable, net                              3,561       3,143
    Prepaid expenses and other current assets             1,552       1,817
      Total current assets                              213,100     220,837
  Property and equipment, net                             1,775       1,851
  Deferred costs related to warrants                      1,791       3,583
  Restricted cash                                        10,741      10,869
  Other assets                                               36         268
    Total assets                                       $227,443    $237,408

              Liabilities and Stockholders' Equity

  Current liabilities:
    Accounts payable                                     $2,996      $3,102
    Accrued liabilities                                  18,967      16,384
    Accrued payroll and related expenses                    958         685
    Short-term borrowing from bank                           --         608
    Deferred revenues                                     4,391       6,137
      Total current liabilities                          27,312      26,916
  Long-term excess facilities charges                    20,022      19,140
  Long-term deferred revenues                             8,114          --
  Other long-term liabilities                             2,416       2,416
    Total liabilities                                    57,864      48,472

 Commitments and contingencies
    Stockholders' equity:
    Common stock                                          1,057       1,055
    Contributed and paid-in-capital                   1,502,994   1,503,113
    Deferred stock-based compensation                    (7,384)     (8,453)
    Accumulated other comprehensive loss                 (1,960)     (2,112)
    Accumulated deficit                              (1,325,128) (1,304,667)
      Total stockholders' equity                        169,579     188,936
      Total liabilities and stockholders' equity       $227,443    $237,408


                          LIBERATE TECHNOLOGIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)
                                Unaudited

                                       Three months ended  Six months ended
                                       Nov. 30,  Nov. 30,  Nov. 30, Nov. 30,
                                         2004     2003      2004     2003

  Revenues:
    License and royalty                  $(490)   $(697)    $(271)  $(1,621)
    Service                              1,122    1,885     2,051     4,354
      Total revenues                       632    1,188     1,780     2,733
  Cost of revenues:
    License and royalty                     18      208        34       359
    Service                                893    1,368     2,272     2,811
      Total cost of revenues               911    1,576     2,306     3,170
      Gross loss                          (279)    (388)     (526)     (437)
  Operating expenses:
    Research and development             3,757    3,647     7,599     7,314
    Sales and marketing                    703    1,004     1,304     2,433
    General and administrative           3,057    4,479     6,808     8,660
    Amortization of deferred costs
     related to warrants                    --    1,027        --     1,831
    Restructuring costs                     --      881        --     1,361
    Amortization and impairment of
     goodwill and intangible assets         --       --        --        22
    Impairment of deferred costs
     related to warrants                    --    4,969        --     4,969
    Amortization of deferred stock-based
     compensation                           --       --        --        10
    Excess facilities charges and
     related asset impairment            1,206      593     5,622       593
      Total operating expenses           8,723   16,600    21,333    27,193
      Loss from operations              (9,002) (16,988)  (21,859)  (27,630)
  Interest income, net                     624      573     1,171     1,190
  Other income (expense), net              343     (173)      282      (548)
    Loss from continuing operations
     before income tax provision        (8,035) (16,588)  (20,406)  (26,988)
  Income tax provision                      97       --       135       103
    Loss from continuing operations     (8,132) (16,588)  (20,541)  (27,091)
  Loss from discontinued operations         --     (992)       --    (3,075)
  Gain on sale of discontinued
   operations                               --    9,037        80     9,037
    Net loss                           $(8,132) $(8,543) $(20,461) $(21,129)
  Basic and diluted income
   (loss) per share:
    Continuing operations               $(0.08)  $(0.16)   $(0.19)   $(0.26)
    Discontinued operations, basic         $--    $0.08       $--     $0.06
    Discontinued operations, diluted       $--    $0.07       $--     $0.06
  Basic and diluted net loss per share  $(0.08)  $(0.08)   $(0.19)   $(0.20)
  Shares used in computing basic and
    diluted net loss per share         105,742  104,515   105,683   104,248
  Shares used in computing diluted
   net gain per share from
   discontinued operations             105,742  108,304   105,683   108,395


                          LIBERATE TECHNOLOGIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)
                                Unaudited

                                                  Three months ended
                                        Nov. 30  Aug. 31,  May 31,  Feb. 29,
                                         2004     2004      2004      2004

  Revenues:
    License and royalty                 $(490)     $219     $1,412     $(54)
    Service                             1,122       929      2,765    1,756

      Total revenues                      632     1,148      4,177    1,702

  Cost of revenues:
    License and royalty                    18        16         32      206
    Service                               893     1,379        957    1,549

      Total cost of revenues              911     1,395        989    1,755

      Gross margin                       (279)     (247)     3,188     (53)

  Operating expenses:
    Research and development            3,757     3,842      3,989    5,022
    Sales and marketing                   703       601       (129)     703
    General and administrative          3,057     3,751      1,260    3,667
    Amortization of deferred costs
     related to warrants                   --        --         --       --
    Restructuring costs                    --        --        (41)      86
    Excess facilities charges and
     related asset impairment           1,206     4,416      3,429       --

      Total operating expenses          8,723    12,610      8,508    9,478

      Loss from operations             (9,002)  (12,857)    (5,320)  (9,531)
  Interest income, net                    624       547        530      504
  Other income (expense), net             343       (61)      (106)   1,184

    Loss from continuing operations
     before income tax provision       (8,035)  (12,371)    (4,896)  (7,843)
  Income tax provision (benefit)           97        38        157     (122)

    Loss from continuing operations    (8,132)  (12,409)   (5,053)   (7,721)
  Loss from discontinued operations        --        --        --        --
  Gain on sale of discontinued
   operations                              --        80       252       249

    Net loss                          $(8,132) $(12,329)  $(4,801)  $(7,472)
  Basic and diluted income (loss)
   per share:
    Continuing operations              $(0.08)   $(0.12)   $(0.05)   $(0.07)
      Discontinued operations, basic      $--       $--       $--       $--
      Discontinued operations, diluted    $--       $--       $--       $--

  Basic and diluted net loss per
   share                               $(0.08)   $(0.12)   $(0.05)   $(0.07)
  Shares used in computing basic net
   loss per share                     105,742   105,623   105,495   105,204


   Contact:

   Greg Wood
   Chief Financial Officer
   Liberate Technologies
   [phone]
   

DATASOURCE: Liberate Technologies



CONTACT:  Greg Wood, Chief Financial Officer of Liberate Technologies,

[phone] or  



Web site:  http://www.liberate.com/ 

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