FOR IMMEDIATE RELEASE

LINEO SPINS OFF HARDWARE BUSINESSES TO FOCUS ON EMBEDDED SOFTWARE SOLUTIONS
FOR KEY VERTICAL MARKETS

The Latest on Hardware Spin-Offs, Executive Changes and Financing

SALT LAKE CITY - Dec. 17, 2001 - Lineo(r), Inc., a leading innovator of
operating systems, host development environments and vertical solutions for
the embedded market, today announced the results of recent changes,
including the removal of hardware businesses and changes to the executive
team, along with another round of investment. Collectively, these changes
have increased Lineo's focus on its core business of providing embedded
operating systems, tools, host development environments and professional
services that create solutions for target vertical markets, including the
handheld, residential gateway and digital television products.


"Lineo has undertaken a series of well-executed changes over the past
several months as part of an ongoing program to focus on core software
offerings to the embedded market," said Matthew Harris, Lineo CEO. "The
changes were also implemented in response to current economic conditions. In
September, we cut headcount and we advanced plans to spin-off those portions
of our business with a significant hardware element. This has left Lineo in
a position to do what it does best:  provide market-leading tools, OS and
vertical solutions to silicon partners and OEM customers. Lineo is now
solely focused on meeting the needs of these core partners and customers.
Our sharpened focus has resulted in accelerated growth in design wins."

The spin-offs include the removal of several Lineo hardware products,
including: Availix (high-availability hardware systems / Paris), uCdimm
(microcontroller hardware / Toronto) and SnapGear (residential gateway
hardware / Brisbane).  Lineo maintains a sales presence in Canada and
France.

Matthew Harris is Lineo CEO. Former CEO Bryan Sparks continues as a Lineo
board member and advisor to the company. The rest of the executive team
consists of Alford Frost as SVP marketing; Tim Bird as CTO; Barbara Clickner
as SVP engineering; Craig Shank as SVP strategic operations; Rich Larsen as
SVP sales and services; Mark Novakovich as VP finance; Raj Sidana as VP
services and Michael Nilson as VP human resources and administration.

Lineo recently received almost $3 million in additional financing from
internal investors.

About Lineo
Lineo(r), Inc. provides embedded systems and real-time solutions covering
the full spectrum of embedded development, including operating system
software, host development environments, professional services and vertical
solutions. Lineo distributes solutions allowing OEMs to create smart
embedded devices and systems while helping OEMs to reduce system
requirements, per-unit costs and time-to-market. Lineo's key product lines
include: Embedix(r) SDK (a fully featured and integrated embedded developer
tool chain), Embedix(r) (embedded Linux system software for MMU-less and
MMU-full processors), Embedix BridgeWorks(tm) (operating systems and tools
for multiprocessor device support and legacy code migration) and RTXC(tm)
Quadros(tm) (a highly configurable microprocessor and DSP real-time
operating system). Contact Lineo at http://www.lineo.com, via e-mail to
info@lineo.com or by calling (801) 426-5001.

# # #

Lineo and Embedix are registered trademarks of Lineo, Inc. Embedix
BridgeWorks and Quadros are trademarks of Lineo, Inc. Linux is a registered
trademark owned by Linus Torvalds. All other products, services, companies
and publications are trademarks or registered trademarks of their respective
owners.

Press only, contact: Rhett Glauser, Lone Peak Communications, 801-356-0650,
rhett@lonepeak360.com