Immersion Corporation Reports Fourth Quarter 2006 Financial Results

Immersion Corporation Reports Fourth Quarter 2006 Financial Results

Immersion Corporation (NASDAQ:IMMR), a leading developer and licensor of touch feedback technology, today announced its fourth quarter 2006 financial results. Revenues were $8.6 million for the quarter ended December 31, 2006 compared to revenues of $6.9 million for the fourth quarter of 2005. Net loss on a Generally Accepted Accounting Principles (GAAP) basis for the fourth quarter of 2006 was $2.0 million, or $0.08 loss per share, an improvement of 33 percent compared to a net loss on a GAAP basis of $3.0 million, or $0.12 loss per share, for the fourth quarter of 2005. Net loss for the three months ended December 31, 2006 included stock-based compensation expense of $796,000, equal to $0.03 loss per share. Net loss for the three months ended December 31, 2005 did not include any stock-based compensation expense. As of December 31, 2006, Immersion had cash and cash equivalents totaling $32.0 million as compared to $29.0 million as of September 30, 2006.

Revenues were $27.9 million for the year ended December 31, 2006 compared to revenues of $24.3 million for the year ended December 31, 2005. Net loss on a GAAP basis for the year ended December 31, 2006 was $10.4 million, or $0.42 loss per share, an improvement of 20 percent compared to a net loss on a GAAP basis of $13.1 million, or $0.54 loss per share, for the year ended December 31, 2005.

In a separate press release issued today, Immersion and Sony Computer Entertainment announced that the companies have agreed to conclude their patent litigation at the U.S. Court of Appeals for the Federal Circuit and have entered into a new business agreement to explore the inclusion of Immersion technology in PlayStation format products.

“The fourth quarter and 2006 total revenues were at new record levels for Immersion,” said Immersion CEO Victor Viegas. “In our medical business, revenue increased 62% over the fourth quarter of 2005 and 47% for the year, led by the sales of our medical simulator products.”

Immersion achieved another major milestone in its Mobility business in December 2006 with the launch of the first commercial phone with a VibeTonz®-enabled touchscreen, the Samsung SCH-W559 from China Unicom. Since that time, Samsung has released another VibeTonz-enabled touchscreen phone in China, and in February at the 3GSM World Congress in Barcelona, announced a new VibeTonz-enabled touchscreen model for Europe, the Samsung Ultra Smart F700. The VibeTonz System supplies tactile feedback in response to touchscreen presses, allowing onscreen buttons to seem as though they press and release.

“Our VibeTonz system can act as an enabling platform for cost-effectively improving the mobile-device user experience by enriching music, video, messaging, games, and now touchscreens,” concluded Viegas.

Immersion will host a conference call with company management on Thursday, March 1, 2007, at 5:00 p.m. Eastern time to discuss operating results for the fourth quarter and year ended December 31, 2006. A question and answer session will follow. To listen to the call, dial +1 800.374.2366 approximately five minutes prior to the start of the call and enter confirmation number 6600266. The call will be archived and available for replay until March 9, 2007, by dialing +1 800.642.1687 and entering confirmation number 6600266. The call will also be simulcast on the Internet through Immersion Corporation’s Web site, http://www.immersion.com. An audio replay of the call will be archived and available at www.immersion.com for replay until March 1, 2008.

About Immersion (www.immersion.com)

Founded in 1993, Immersion Corporation is a recognized leader in developing, licensing, and marketing digital touch technology and products. Using Immersion’s advanced touch feedback technology (www.immersion.com/corporate/products/), electronic user interfaces can be made more productive, compelling, entertaining, or safer. Immersion’s technology is deployed across automotive, entertainment, industrial controls, medical training, mobility, and three-dimensional simulation markets. Immersion’s patent portfolio includes over 600 issued or pending patents in the U.S. and other countries.

Forward-Looking Statements

This press release contains “forward-looking statements” that involve risks and uncertainties as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Immersion Corporation and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements.