11:15 EST Wednesday, January 14, 2009

Gross Margins Projected to Increase by 25% to Approximately 75%; Net Income Expected to be in the Range of $2 to $3 Million; Cash Generation of Approximately $2 Million

SAN MATEO, Calif., Jan. 14 /PRNewswire-FirstCall/ -- Avistar Communications Corporation (Nasdaq: AVSR), a leader in desktop video communications, today announced the company's initial financial guidance for the fiscal year ending December 31, 2009.

The company currently expects revenue to increase by more than 75% as compared to the full year 2008. Total costs and expenses, excluding income from settlement and licensing activities and stock compensation expense, are anticipated to decline by an additional 15%, as the company continues to migrate from hardware component sales to a software-only product offering, and a full year of cost savings from initiatives implemented during 2008 are realized.

"Combining the revenue expansion that we project with a targeted margin improvement of approximately 25 points, and reduced operating expenses, provides a basis for adjusted EBITDA guidance, as described below, of $5 to $6 million, as well as net income of approximately $2 to $3 million in 2009.

Additionally, cash generated from operations is expected to be approximately $2 million by year-end, although we are not planning to generate positive cash from operations in the first quarter," said Simon Moss, CEO of Avistar.

"These performance goals build on the momentum that Avistar has recorded during 2008, where the company has posted sequential progress, consistently, since the first quarter. And while many companies view the recessionary economic environment of 2009 as foreboding and with austerity plans, we believe that the challenging market will create a compelling 'call to action' for the implementation of the type of collaborative technologies that we provide and excel at.

In the past, companies could afford to be hesitant in adopting forms of unified visual communications solutions, but we expect necessary reductions in travel and entertainment expense now will require alternative approaches to maintain and enhance relationships within and across organizations and supply chains."

Moss continued, "Avistar is also fortunate that our diversified go-to- market strategy of developing a robust indirect reseller and distribution network has dramatically reduced our historical 'top line' dependence on a few large, global financial institutions -- operating in a vertical market that has taken the brunt of the recent economic downturn.

Our multiyear arrangements with both our indirect channel partners and our technology/OEM partners (IBM amongst them), provide us the additional advantage of increased visibility on our quarterly and annual revenue objectives. With the execution of existing contractual commitments, we believe we have visibility on greater than one half of our 2009 revenue target.

These contractual commitments may result in some lumpy cash flow based on contractual terms, which we have factored into our forecasting. We consider this to be a decent place to be, and we look forward to updating the market on our continuing progress as we perform throughout 2009."

Moss concluded, "We believe our turnaround is more or less complete. It was difficult but we have made great progress and our employees have done a great job during a hugely challenging market and economic environment. In 2009, we now focus on increasing value.

The key to this design is simple -- increase shareholder value with an operational model that pays for itself and grows organically through positioning world class product into our growing distribution channels. Then prudently manage a very significant upside in our technology and IP licensing business without any of the capital requirement- driven urgency of the past.

Given our new organizational and productivity structure, our technology and IP licensing efforts are now designed to generate significant profit and bottom line value rather than any funding of operations. It's an interesting model in that it leverages not only our heritage but also our thoroughbred of great technology design that is the foundation of our products and IP in the first place."

About Avistar Communications Corporation

Avistar (Nasdaq: AVSR) is a leader in desktop video communications, providing proven business-class technology. Avistar's desktop videoconferencing installations include more than 100,000 committed desktop seats worldwide, bringing together business users any time and any place.

Companies such as IBM Corp., Sony Corp., LifeSize Communications, Inc., and Polycom Inc. use Avistar technology to power their unified communications solutions. Avistar works with leading-edge technology partners and resellers including CityIS, Beyondis, and Fontel in more than 40 countries. For more information, go to http://www.avistar.com.

For more information, visit http://www.avistar.com or visit the Avistar blog at avistarblog.blogspot.com.