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**Wednesday June 18 11:50 AM EDT**
Company Press Release
Source: CompuServe Incorporated

CompuServe Reports Fourth-Quarter 13 Cent Loss Before
Special Charges with Improved Margin and Continued Positive
Operational Cash Flows

COLUMBUS, Ohio, June 18 /PRNewswire/ -- CompuServe
Corporation (Nasdaq:CSRV) today reported a $.13 loss per
share for the fourth quarter ended April 30, 1997, before
pre-tax special charges of $9.2 million ($5.8 million after
taxes, or $.06 per share), on revenues of $208 million. A
lower effective tax rate reduced the recorded tax benefits
and contributed $.03 per share to the fourth-quarter loss.
The total fourth-quarter loss of $.19 per share compares
with the third-quarter loss of $.15 per share on revenues of
$211 million. In the prior-year fourth quarter, the company
lost $.02 per share on revenues of $215 million.

The one-time special charges related to a further
consolidation of Columbus-area office facilities and the
sale or write-down of certain equity investments in
providers of content and technologies. Of the $9.2 million
charge, $7.4 million represented non-cash write-downs.

Earnings before interest, taxes, depreciation and
amortization (EBITDA), and non-cash special charges,
improved to $12.8 million, versus $9.4 million in the third
quarter. The improvement was driven by a four
percentage-point increase in gross margin, from 36
percent in the third quarter to 40 percent in the most
recent quarter. This marked the second successive quarter
of positive operational cash flows.

For the fiscal year ended April 30, 1997, CompuServe lost
$119.8 million, or $1.29 per share, on revenues of $842
million. This compares with earnings for the prior fiscal
year of $49.1 million, or $.66 per share, on revenues of
$793 million.

``Our fourth-quarter results were encouraging in some
respects and disappointing in others,' said Frank L.
Salizzoni, CompuServe chairman and acting CEO.
``Overall, we made progress toward our goal of stabilizing
earnings and returning CompuServe to profitability. We
expect further improvement in earnings and cash flows, our
goal being to reach or exceed the breakeven point in
earnings sometime in the second half of the current 1998
fiscal year.'

Salizzoni said the continued decline in U.S. subscribers to
the company's CompuServe Interactive online/Internet
service, and the resulting impact on fourth-quarter
revenues, were disappointing. ``The decline in our
CompuServe Interactive subscriber base was due in part to
the reduction of U.S. direct marketing during the quarter.
We used this period to reshape marketing programs to
target business, professional, technical and other
sophisticated consumers in the U.S. We increased U.S.
direct marketing in May,' he said.

``On the encouraging side, improved management of our
cost structure resulted in higher gross margin and positive
operational cash flows,' Salizzoni said. ``This creates a
stronger foundation for progress as we re-engage our U.S.
marketing efforts.'

Network Services

CompuServe Network Services added a net 49 corporate
customers during the quarter, including 23 in April, to bring
the division's customer total to 1,200 for complete, fully
integrated Internet, Intranet, and Extranet connectivity
solutions. Revenues from Network Services grew 27
percent over the same quarter last year to $69.5 million,
representing 33 percent of the company's total.

In fiscal year 1997, Network Services added 234
customers and contributed revenues of $257.6 million, up
30 percent over the $198.8 million figure for the prior fiscal

After the close of the fourth quarter, Network Services
signed a five-year renewal contract valued in excess of
$100 million with Vital Processing Services, a joint venture
between long-standing customer VISA(R) U.S.A. and Total
System Services, Inc.(SM). In addition, Network Services
announced the opening of its first office in Mexico to serve
existing and new customers, as well as strategic alliances
that expand its value-added network services into attractive
new markets including Vietnam, Singapore and Argentina.
Through alliances with local partners, CompuServe
Network Services is aggressively extending its global
reach. The division expects to announce its entry into
other high-potential international markets in coming

Interactive Services

Revenues declined to $132.6 million from the third-quarter
figure of $138.5 million, due in part to the reduction of U.S.
direct marketing for CompuServe Interactive during the
fourth quarter. The reduced U.S. direct marketing also
decreased CompuServe Interactive monthly revenue per
member to $14.82 in the quarter, as a higher percentage of
new members subscribed through OEM channels.
Members joining CompuServe Interactive from OEM
channels typically spend less time online than those
brought in by the company's direct marketing programs.

As of April 30, 1997, CompuServe had 5,373,000 direct
and licensed subscribers, up from 5,341,000 as of January
31, 1997. Global subscribers to the company's
CompuServe Interactive online service declined to
2,767,000 at the end of the quarter from 2,892,000 at the
third-quarter close, as the U.S. acquisition efforts were

CompuServe Interactive subscribers in the U.S. declined
127,000 to 1,527,000, compared with 1,654 ,000 at the
end of the third quarter.

European CompuServe Interactive subscribers grew to
892,000, up 19,000 from the prior quarter's 873,000 figure,
maintaining CompuServe Interactive's substantial lead
among global online services in Europe. CompuServe
Interactive subscribers in other international geographies
totaled 348,000, down 17,000 from 365,000 at the end of
the third quarter.

SPRYNET, CompuServe's Internet-only access service,
continued to grow with 280,000 subscribers at the end of
this quarter, versus 270,000 for the previous quarter.

CompuServe's Japanese licensee, NIFTY, continued
growth with 2,326,000 subscribers at the end of the
quarter, up from 2,179,000 at the end of the third quarter.


During the fourth quarter, CompuServe Interactive with the
new CompuServe 3.0 software interface introduced in fall
1996 received PC Magazine's Editors' Choice award as the
best online service. NetGuide magazine voted
CompuServe Interactive the best online service for
business information. CompuServe Interactive was also
rated the top online service for reliable access in
independent tests conducted by Inverse. CompuServe
Network Services was rated the top new international
carrier in a Communications Week International business
user survey.

Strategy Progress

``Our strategy is to aggressively manage costs while
building on CompuServe's strengths -- our global network
and Network Services business; our leadership position in
Europe and other international markets; our SPRYNET
Internet access service; and, very importantly, our strong
following among people whose needs are not adequately
met by mass-consumer online services,' Salizzoni said.

``We believe the U.S. online/Internet market has reached
the stage where one-size-fits-all approaches will become
more difficult to sustain and successful segmentation will
be rewarded. CompuServe is taking this step by focusing
on more sophisticated and demanding U.S. consumers,'
he said. ``Historically, this attractive segment has been
our stronghold, but until now we were not focusing sharply
on it.'

During the fourth quarter, CompuServe:

Announced the worldwide upgrade of its network
access speed to 33.6 kilobits-per-second from
28.8Kpbs, and also began offering 56Kbps and
ISDN access throughout the U.S., and ISDN
access in 25 major international locations.
Activated a state-of-the-art data center facility,
using the Microsoft Commercial Internet System
(``Normandy') architecture, that allows CompuServe
Interactive subscribers to get to CompuServe's data
center or the Internet up to 50 percent faster than
before, and to post or retrieve information up to 10
times faster than before.
Launched, in Europe, its first business and
consumer offerings based on Internet (HTML)
standards and accessible by anyone using the
Internet. As previously announced, CompuServe
plans to introduce Web-based products and
services in the U.S. and Europe by the end of
calendar-year 1997, while continuing to enhance
the company's proprietary CompuServe Interactive
online service and global network.
Entered a strategic alliance in Germany that
enables Internet access provider's
160,000 subscribers to access CompuServe
Interactive content for an additional monthly fee.

Since the end of the fourth quarter, the company
announced that it reshaped the CompuServe Interactive
service in the U.S. to meet the requirements of more
sophisticated online users, by organizing more than 3,000
content areas and capabilities into 21 communities
including Business, Professions, News, Investing, Travel,
Shopping and others. CompuServe also launched a U.S.
marketing campaign with a direct mail effort to 4 million
current and prospective users, to be followed starting in
late June with national advertising.

Founded in 1969, CompuServe Incorporated provides the
world's most comprehensive online/Internet access
through its two brands, CompuServe Interactive and
SPRYNET. Through CompuServe, its Japanese licensee
NIFTY- Serve and its affiliates around the world, more than
5 million home and business users in more than 185
countries are connected online and to the Internet.
CompuServe Network Services, a leading network
integrator, provides more than 1,200 companies around the
world with complete, fully integrated, Internet, Intranet, and
Extranet connectivity solutions. With world headquarters in
Columbus, Ohio, the CompuServe organization includes
offices in the United Kingdom, Germany, France,
Switzerland and the Netherlands.

Except for historical information contained herein, the
matters set forth in this press release are forward-looking
statements that are subject to risks and uncertainty which
could cause actual results to differ materially. CompuServe
cannot assure, for example, that its strategy and related
marketing programs will produce the anticipated results, or
that earnings will continue to improve and reach or exceed
the breakeven point during the 1998 fiscal year.

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