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Press Release

May 01, 2008

Immersion Corporation Reports First Quarter 2008 Financial Results

SAN JOSE, Calif., May 01, 2008 (BUSINESS WIRE) -- Immersion Corporation (NASDAQ:IMMR), a leading developer and licensor of touch feedback technology, today announced its first quarter 2008 financial results. Revenues were $8.2 million for the quarter ended March 31, 2008 or 27 percent higher when compared to revenues of $6.4 million for the first quarter of 2007.

Net loss for the first quarter was $(2.6) million compared to a net income of $115.8 million for the first quarter of 2007. Net income for the first quarter of 2007 included $134.9 million of litigation conclusions and patent license. Loss per share was $(0.08) for the quarter compared to $3.91 diluted earnings per share for the first quarter of 2007.

As of March 31, 2008, Immersion had cash, cash equivalents, and short-term investments totaling $140.0 million compared to $138.1 million as of December 31, 2007.

"I believe haptics is at a tipping point, fast becoming an imperative for the ideal intuitive user interface," said Immersion president and CEO Clent Richardson. "I'm pleased and excited to be joining Immersion to take our products and technology to the next level of adoption and proliferation and, in so doing, deliver more value to our shareholders, customers, and end users. We are adding high quality, experienced sales, marketing, and support people to further our plans for international growth and to help our customers around the world take advantage of and quickly implement haptics in their new products."

Immersion will host a conference call with company management on Thursday, May 1, 2008 from 5:00 to 6:00 p.m. Eastern time to discuss operating results for the first quarter ended March 31, 2008. To listen to the call, dial +1 800.374.2366 approximately five minutes prior to the start of the call and enter confirmation number 29315507. The call will be archived and available for replay until May 8, 2008 by dialing +1 800.642.1687 and entering confirmation number 29315507. The call will also be simulcast on the Internet through Immersion Corporation's Web site, An audio replay of the call will be archived and available at for replay until May 1, 2009.

About Immersion (

Founded in 1993, Immersion Corporation is a recognized leader in developing, licensing, and marketing digital touch technology and products. Using Immersion's advanced touch feedback technology (, electronic user interfaces can be made more productive, compelling, entertaining, or safer. Immersion's technology is deployed across automotive, entertainment, industrial controls, medical training, mobility, and three-dimensional simulation markets. Immersion's patent portfolio includes over 700 issued or pending patents in the U.S. and other countries.

Forward-Looking Statements

This press release contains "forward-looking statements" that involve risks and uncertainties as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Immersion Corporation and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements.

All statements, other than the statements of historical fact, are statements that may be deemed forward-looking statements, including any projections of earnings, revenues, profitability targets or other financial matters; any statements of the plans, strategies, and objectives of management for future operations; any statements regarding consumer or market acceptance of touch feedback products in general; future development of force feedback products; proposed products or services; any statements regarding future economic conditions or performance; and statements of belief or assumptions underlying any of the foregoing. Immersion's actual results might differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with Immersion's business, which include but are not limited to delay in or failure to achieve commercial demand for Immersion's expanded technology offerings; a delay in or failure to achieve the acceptance of force feedback as a critical user experience in new and existing markets for our business segments; and risks and uncertainties associated with ongoing and prospective litigation.

For a more detailed discussion of these factors and other factors that could cause Immersion's actual results to vary materially, interested parties should review the risk factors listed in Immersion's most current Form 10-K, which is on file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release reflect Immersion's beliefs and predictions as of the date of this release. Immersion disclaims any obligation to update these forward-looking statements as a result of financial, business, or any other developments occurring after the date of this release.

Immersion and the Immersion logo are trademarks of Immersion Corporation in the U.S. and other countries.

                        Immersion Corporation
           Condensed Consolidated Statements of Operations
               (In thousands, except per share amounts)

                                                     Three Months
                                                    Ended March 31,
                                                    2008       2007
                                                 ---------- ----------
   Royalty and license                           $   3,461  $   2,211
   Product sales                                     3,851      3,590
   Development contracts and other                     843        613
                                                 ---------- ----------
          Total revenues                             8,155      6,414
                                                 ---------- ----------

Costs and expenses:
   Cost of product sales (exclusive of
    amortization of intangibles shown separately
    below)                                           2,086      1,543
   Sales and marketing                               3,442      2,703
   Research and development                          3,229      2,543
   General and administrative                        4,263      3,259
   Amortization of intangibles                         235        254
   Litigation conclusions and patent license             -   (134,900)
                                                 ---------- ----------
          Total costs and expenses                  13,255   (124,598)
                                                 ---------- ----------

Operating income (loss)                             (5,100)   131,012
Interest and other income (expense), net             1,507        (45)
                                                 ---------- ----------

Income (loss) before provision for income taxes     (3,593)   130,967

Benefit (provision) for income taxes                 1,008    (15,129)
                                                 ---------- ----------

Net income (loss)                                $  (2,585) $ 115,838
                                                 ========== ==========

Basic net income (loss) per share                $   (0.08) $    4.57
                                                 ---------- ----------

Shares used in calculating basic net income
 (loss) per share                                   30,478     25,343
                                                 ---------- ----------

Fully diluted net income (loss) per share        $   (0.08) $    3.91
                                                 ---------- ----------

Shares used in calculating fully diluted net
 income (loss) per share                            30,478     29,677
                                                 ---------- ----------

(1) Restated to increase income tax provision by $6.6 million

                        Immersion Corporation
                Condensed Consolidated Balance Sheets
                            (In thousands)

                                               March 31,  December 31,
                                                 2008         2007
                                              (Unaudited)     (1)
                                              ----------- ------------
  Cash and cash equivalents                   $   137,981 $    86,493
  Short-term investments                            2,034      51,619
  Accounts receivable, net                          3,281       5,494
  Inventories, net                                  4,042       3,674
  Deferred income taxes                             3,620       3,351
  Prepaid expenses and other current assets         4,271       3,036
                                              ----------- ------------
       Total current assets                       155,229     153,667

  Property and equipment, net                       2,124       2,112
  Deferred tax assets, net                          4,013       4,031
  Intangibles and other assets, net                 8,834       8,558
                                              ----------- ------------

TOTAL ASSETS                                  $   170,200 $   168,368
                                              =========== ============

  Accounts payable                            $     2,196 $     1,657
  Accrued compensation                              2,151       1,828
  Income taxes payable                                 15         534
  Other accrued liabilities                         2,285       2,095
  Deferred revenue and customer advances            5,773       4,478
                                              ----------- ------------
       Total current liabilities                   12,420      10,592

  Long-term liabilities and deferred revenue       16,698      15,989
                                              ----------- ------------
TOTAL LIABILITIES                                  29,118      26,581

STOCKHOLDERS' EQUITY                              141,082     141,787
                                              ----------- ------------

STOCKHOLDERS' EQUITY                          $   170,200 $   168,368
                                              =========== ============

(1) Derived from Immersion's annual audited consolidated financial

SOURCE: Immersion Corporation

Immersion Corporation
Stephen Ambler, +1 408-467-1900

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