From:	 Rhett Glauser <rhett@lineo.com>
To:	 corbet@eklektix.com
Subject: Lineo restructures
Date:	 Fri, 7 Sep 2001 16:23:00

FOR IMMEDIATE RELEASE

LINEO RESTRUCTURES TO FOCUS RESOURCES ON CORE BUSINESS
OF EMBEDDED OPERATING SYSTEMS AND DEVELOPMENT TOOLS

SALT LAKE CITY - Sept. 7, 2001 - Lineo®, Inc., a leading innovator of
embedded systems and real-time solutions, today announced a restructuring
that includes a reduction in force and the expected spin out of peripheral
technology projects. This restructuring allows Lineo to focus on its core
competency of developing advanced embedded operating systems and development
tools that help developers and OEMs integrate open standards with proprietary
technology. Lineo will continue to develop its Embedix and RTXC operating
system platforms, providing developers with solutions for DSP, 8-, 16-,
32-bit and multi-core deployments.

"From its inception, Lineo's core business has been the development of
embedded operating systems and tools," said Bryan Sparks, chairman and
CEO of Lineo, Inc. "In anticipation of a growth year for the technology
market, Lineo spent the past 18 months adding peripheral services, stacks
and solutions - even hardware solutions - to our offerings. While the
technology market has softened, demand for embedded operating systems
remains high and we are responding by focusing on our robust Embedix and
RTXC operating system tools and solutions." 

The restructuring includes the reduction of 60 employees. Lineo expects
to spin out an additional 100 employees in conjunction with technology
projects outside of Lineo's core embedded operating system and development
tools business, leaving Lineo with approximately 110 employees to advance
its core business.

Lineo will continue to provide operating system extensions, board support
packages and tools that address various vertical market segments, but
will rely on partners and third-parties to complete the development stacks
for those vertical solutions. Lineo's embedded system offerings are especially
robust in the areas of smart handheld devices, residential gateways, routers,
VPNs and digital television.  

"Lineo technologies, tools and professional services create a bridge between
open standards and proprietary embedded system deployment," added Sparks.
"This restructuring will actually focus more Lineo resources on the core
business of developing those bridging technologies and solutions."

This restructuring follows Lineo's recent announcements of an additional
$20 million in strategic investments in Lineo by Hitachi and Sun Microsystems,
as well as separate design wins with Sharp, Motorola and MP3.com.

About Lineo
Lineo®, Inc. provides embedded operating systems, development tools and
real-time solutions that allow OEMs to reduce system requirements, per-unit
costs and time-to-market. The company's key product lines include: Embedix™
(embedded Linux system software), uClinux™ (embedded Linux for MMU-less
processors), RTXC™ (general purpose and DSP real-time operating system),
RTXC™ Quadros™ (a real-time operating system for multi-processor devices)
and SecureEdge™ (Linux-based Internet appliances including VPN Internet
routers, network attached storage and firewalls). Contact Lineo at www.lineo.co
m, via e-mail to info@lineo.com or by calling (801) 426-5001.

# # #

Lineo is a registered trademark and Embedix, uClinux, SecureEdge, RTXC
and RTXC Quadros are trademarks of Lineo, Inc. All other products, services,
companies and publications are trademarks or registered trademarks of
their respective owners.

Press only, contact:
Rhett Glauser
Lone Peak Communications
Tel: 801-852-8066
rhett@lonepeak360.com