Phoenix Technologies Announces Plan To Create Separate Semiconductor IP Company

Wayne Cantwell Promoted To Lead New Company

SAN JOSE, Calif., Oct. 7, 1999 - Phoenix Technologies Ltd. (Nasdaq:PTEC) - a worldwide leader in system-enabling software solutions for connected computers - today announced it plans to incorporate its growing Semiconductor Intellectual Property ("IP") Division. Wayne Cantwell, currently Senior Vice President and General Manager, will lead these efforts as President of the new entity. Phoenix is in the process of selecting an investment banking firm to explore strategic alternatives to maximize the inherent value of the semiconductor IP operations. As part of this initiative, the Company will be taking a $4.9 million non-cash charge in its fourth quarter ended September 30, 1999.

"As a market leader in communication core IPs, this is an exciting opportunity to unlock the inherent value in the Semiconductor IP Division and increase Phoenix shareholder value" said Al Sisto, CEO of Phoenix Technologies. "This frees up Phoenix's management and other resources to focus on our core business of system-enabling software solutions as well as our ebetween Internet opportunity."

"Phoenix has spent a significant amount of time and energy developing its semiconductor IP business and growing this business to its current strong position. We will now be able to reap the rewards of those efforts by running the division as a separate business unit," said Wayne Cantwell.

Phoenix's $4.9 million charge is in addition to the $7 to $9 million anticipated restructure charge that was announced in July. This additional change is directly related to a reduced emphasis on certain technologies acquired as a part of the Sand Microelectronics, Inc. acquisition. The Company anticipates reporting a total fourth quarter restructure charge of approximately $13.5 million.

About Phoenix
Phoenix products and services play a critical role linking computing and communications technologies for OEMs and Internet service and content providers, benefiting the information consumer. The company's system enabling software is designed into more than 70 million PCs sold annually and in millions of other devices. Phoenix's ebetween division provides consumers with convenient, user-friendly access to valuable Internet content and services that enhance the on-line experience. Phoenix also provides information platform manufacturers with the most robust range of embedded communications solutions in the industry. Founded in 1979, Phoenix is an international company headquartered in San Jose, Calif. Information about Phoenix and its products is available at www.phoenix.com

Phoenix Technologies andebetween are trademarks and Phoenix is a registered trademark of Phoenix Technologies. All other trademarks are the property of their respective owners.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above include forward-looking statements that involve risk and uncertainties. These forward-looking statements include, but are not limited to, the completion of the incorporation and the ability of that restructuring to realize shareholder value. The Company cautions readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include the following: the future performance of the business unit, and financial results from products currently in development or to be developed; protection of the intellectual property rights of the business unit and risk of infringement claims against its intellectual property;; the response of third parties, including those with significantly greater resources than Phoenix, to the contemplated business model; the fact that the business unit's markets are characterized by rapidly changing technology, evolving industry standards and frequent introductions of new products and enhancements, and the Company's ability to respond to such changes; and difficulties that the Company may experience in completing the development of products, services and technologies. These and other factors that could cause actual results to differ materially from those in the forward-looking statements are also discussed in the Company's filings with the Securities and Exchange Commission, including its recent filings on Form 10-K and Form 10-Q.