Invest in the Future.

As an investor, you have a unique opportunity to get behind a technology that is just beginning to reach its full potential. Just as touch input changed the way that billions of devices receive input from humans, touch feedback will change the way devices convey information back to us.  From mobile phones to wearables, game consoles to automobiles, haptic feedback is enriching the way that people interact with digital technology.  And the best is yet to come as content on mobile, video, games and social networks, become richer, more realistic and more personal with haptics.  At Immersion, we’re changing the digital world.

Feb 12, 2001

Immersion Corporation Reports Record Fourth Quarter Net Revenues of $5.2 Million, an Increase of 75% Over Q4 1999

Immersion Corporation Reports Record Fourth Quarter Net Revenues of $5.2 Million, an Increase of 75% Over Q4 1999 SAN JOSE, Calif. Feb. 12, 2001--Immersion Corporation, (Nasdaq:IMMR), the pioneering developer of sensory interaction technology, announced today that fourth quarter 2000 total revenues were $5.2 million, as compared with $3.0 million in the fourth quarter of 1999, an increase of 75%. The fourth quarter 2000 revenue was comprised of $3.0 million in product revenue, which was $1.4 million or 90% higher than the fourth quarter of 1999; $1.2 million in development contract revenue, which was $732,000 or 164% higher than the fourth quarter of 1999; and $1.0 million in royalty revenue, which was $82,000 or 9% more than the fourth quarter of 1999. The fourth quarter of 1999 royalty revenue included the recognition of a $588,000 lump-sum royalty fee. Excluding the lump-sum payment, royalty revenue in the fourth quarter of 2000 increased by 187% as compared to the fourth quarter of 1999. The pro forma net loss, excluding amortization of intangibles and deferred stock compensation and acquisition related charges, was $3.8 million for the fourth quarter of 2000 or $0.21 per diluted share compared to $1.8 million for the fourth quarter of 1999 or $0.15 per diluted share.

Total revenues for the year ended December 31, 2000 increased to $15.3 million from $10.9 million for the year ended December 31, 1999, an increase of 39%. Revenue for the year ended December 31, 2000 was comprised of $8.2 million in product sales, which was $2.1 million or 35% higher than the product sales for the year ended December 31, 1999; $3.9 million in development contract revenue, which was $1.2 million or 46% higher than the development contract revenue for the year ended December 31, 1999; and $3.2 million in royalty revenue, which was $1.0 million or 44% higher than the royalty revenue for the year ended December 31, 1999. Pro forma net loss, excluding amortization of intangibles and deferred stock compensation and acquisition related charges, was $13.6 million for the year ended December 31, 2000 or $0.77 per diluted share compared to $6.9 million for the year ended December 31, 1999 or $0.88 per diluted share.

"We're very pleased with our fourth quarter financial results and the progress we made during the quarter in our various business groups," said Victor Viegas, CFO at Immersion. "We're encouraged by the success of Logitech's iFeel products, which incorporate our TouchSense(TM) technology and the interest it has created, as well as the recent addition of Kensington, our third mouse provider partner. Our fourth quarter was important to us for a number of other reasons, including: the addition of Bob O'Malley as President and CEO; the incorporation of our technology in the highly anticipated computer game, Black and White, from Electronic Arts; the addition of our third automotive development relationship; BMW's first public showing of their iDrive controller at the Convergence Autoshow, a TouchSense(TM) enabled interface that is expected to be standard equipment in BMW's upcoming 7 Series automobile; and finally the release of three new 3-D products."

About Immersion Corporation (www.immersion.com)

Founded in 1993, Immersion Corp. develops and licenses advanced hardware and software technologies that let people use their sense of touch to better interact with the digital world around them. Immersion's haptic technology can be applied to virtually every digital experience including personal computing, entertainment, medical training, automotive interfaces, and three-dimensional simulation. Immersion's patented TouchSense(TM) technologies can dramatically improve computer users' performance and productivity by unlocking their sense of touch and allowing them to feel what they see and do on the computer screen. Immersion and its wholly owned subsidiaries hold over 95 issued patents worldwide.

Statements made in this press release other than statements of historical fact are forward-looking statements, including those that reflect management's current forecast of certain aspects of Immersion's future. Forward-looking statements made in this press release are based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking statements include the statement that BMW is expected to include touch-enabled controls as standard equipment in its upcoming 7 Series automobile. The company's actual results might differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with the company's business which include, but are not limited to, the ability of Immersion to integrate its touch interaction technology into BMW's automobiles and the success of BMW's automobiles incorporating Immersion's touch interaction technology.

Risks and uncertainties related to Immersion's business are further outlined in Immersion's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its registration statement on Form S-3 filed Jan. 3, 2001. These reports and the registration statement are filed with the Securities and Exchange Commission. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. Immersion does not undertake a duty to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

Immersion will host a conference call with live Internet broadcast on Monday, February 12, 2001, at 5:00 p.m. EST. Immersion is scheduled to discuss operating results for the fourth quarter ended December 31, 2000 and the 2001 outlook. A question and answer session will follow. To listen to the call, dial 212/346-6392, reservation number 16836327. To listen to the webcast, log on to the Internet at http://www.immersion.com. The call will be archived and available for replay until February 16, 2001, by dialing 800/633-8284, reservation number 16836327.

Note to Editors: Additional background information on Immersion Corporation is available through our Web Site at http://www.immersion.com.

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

                               Three Months          Twelve Months
                            Ended December 31,     Ended December 31,
                             2000       1999        2000       1999

Revenues:
  Royalty revenue         $  1,028     $  946    $  3,186    $  2,211
  Product sales              3,005      1,584       8,176       6,063
  Development 
   contracts and 
   other                     1,179        447       3,901       2,668
                             --      --       --       --
      Total revenues         5,212      2,977      15,263      10,942
                             --      --       --       --

Costs and expenses:
  Cost of product 
   sales                     1,689        836       4,496       2,964
  Sales and marketing        3,287      1,308      10,990       3,547
  Research and 
   development               2,284      1,576       7,250       5,518
  General and 
   administrative            1,974      1,227       7,855       5,250
  Amortization of 
   intangibles and 
   deferred stock 
   compensation              1,593        509       5,053       1,385
  Acquisition related 
   charges                      11         --       3,481       1,190
                             --      --       --       --

      Total costs 
       and expenses         10,838      5,456      39,125      19,854
                             --      --       --       --

Operating loss              (5,626)    (2,479)    (23,862)     (8,912)
Interest and other 
 income/(expense), 
 net                           242        184       1,690        (558)
                            ---      --      ---      ---

Net loss                $   (5,384) $  (2,295) $  (22,172)  $  (9,470)
                           =======    =======     =======     =======

Basic and diluted net 
 loss per share         $    (0.29) $   (0.19) $    (1.25)  $   (1.21)
                             --      --       --       --

Shares used in 
 calculating basic 
 and diluted net 
 loss per share             18,331     11,915      17,719       7,852
                             --      --       --       --


                         Immersion Corporation
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                          December 31,    December 31,
                                              2000          1999 (1)
                                          (Unaudited)

ASSETS
  Cash and cash equivalents               $   23,474      $   46,606
  Short-term investments                       2,360           4,781
  Accounts receivable, net                     3,675           1,362
  Inventories                                  1,709             949
  Prepaids and other current assets            1,306           1,160
                                               --           --

         Total current assets                 32,524          54,858

  Property and equipment, net                  3,606           1,316
  Purchased intangibles and other 
   assets, net                                14,864           4,813
  Other investments                            6,500              --
                                               --           --

         TOTAL ASSETS                     $   57,494      $   60,987
                                              ======          ======

LIABILITIES
  Accounts payable                        $    1,720      $    1,372
  Accrued compensation                         1,042             478
  Other accrued liabilities                    1,145             505
  Deferred revenue and customer 
   advances                                      932           1,736
  Current portion of long-term debt              120             110
                                               --           --

         Total current liabilities             4,959           4,201

   Long-term debt                              4,192           3,784
   Other long-term liabilities                     0              39
                                               --           --

         Total liabilities                     9,151           8,024

STOCKHOLDERS' EQUITY                          48,343          52,963
                                               --           --

TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY                      $   57,494      $   60,987
                                              ======          ======

(1) Derived from the Company's audited consolidated financial
    statements filed on Form 8-K dated January 3, 2001.