Sybase Reports Record Operating Profit in 2006 Fourth Quarter

DUBLIN, Calif. — January 25, 2007 — Sybase, Inc. (NYSE: SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the fourth quarter and year ended December 31, 2006.

Financial Highlights:

* Q406 total revenue increases 15%; license revenue rises 10%
* Q406 operating margins reach record highs of 20% (GAAP) and 25% (pro forma)
* 2006 full-year GAAP EPS increases 12%; pro forma EPS increases 21%
* Annual cash flow from operations increases 26% to record high of $214.3 million

2006 Fourth Quarter Results
Total revenue increased 15% year over year to $256.5 million from $223.0 million in the fourth quarter of 2005. Total license revenue increased 10% to $100.4 million, and services revenue grew 5% to $137.8 million. Messaging revenue related to the acquisition of Mobile 365 was $18.2 million, covering the period from November 8, 2006 through December 31, 2006.

Pro forma operating income for the quarter increased 26% to $63.4 million, representing a 25% operating margin. This compares with pro forma operating income of $50.2 million, or a 23% operating margin, in the 2005 fourth quarter.

Pro forma net income for the quarter increased 15% to $48.4 million, or earnings per diluted share (EPS) of $0.52. This compares with pro forma net income of $42.0 million, or EPS of $0.45 for the fourth quarter of 2005.

Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the quarter increased 16% to $50.2 million, representing a 20% operating margin.

GAAP net income was $26.4 million, or GAAP EPS of $0.28, for the quarter. This compares with GAAP net income of $28.4 million, or GAAP EPS of $0.31, for the 2005 fourth quarter. Included in the 2006 fourth quarter GAAP-based results is an increase in the company’s effective tax rate to 53%, up from 40% in the fourth quarter of 2005. The increase in the effective tax rate is associated with acquisition-related, one-time effects from the liquidation of foreign entities and the effect of stock compensation deductions. In addition, 2006 fourth quarter GAAP-based results include the impact of $3.7 million associated with implementation of FAS 123R and $1.6 million for amortization of purchased intangibles related to the acquisition of Mobile 365.

Full-year 2006 Results
Total revenues increased 7% to $876.2 million, and license revenues rose 12% to $326.8 million. Pro forma operating income increased 17% to $174.6 million, representing a 20% operating margin. Pro forma net income increased 19% to $140.3 million, or EPS of $1.52. This compares with pro forma net income of $117.8 million, or EPS of $1.26, for 2005.

GAAP operating income for the year increased 10% to $133.8 million, representing a 15% operating margin.

GAAP net income increased 11% to $95.1 million, or GAAP EPS of $1.03, compared with GAAP net income of $85.6 million, or GAAP EPS of $0.92, for 2005. Included in the 2006 GAAP-based results is an increase in the company’s effective tax rate to 41%, up from 37% in 2005. In addition, 2006 GAAP-based results include the impact of $13.6 million associated with implementation of FAS 123R and $1.6 million for amortization of purchased intangibles related to the acquisition of Mobile 365.

Pro forma amounts exclude the amortization of certain purchased intangibles, stock-based compensation, and restructuring costs, and the tax effect of these and related items. Accompanying this release is a reconciliation of pro forma and GAAP amounts for the 2006 fourth quarter and 12-month period ended December 31, 2006.

“We are pleased to complete our strongest year since I have been at Sybase,” stated John Chen, chairman, CEO, and president of Sybase. “We exceeded our targets for revenue and EPS, reached our highest-ever full-year net income, and achieved record annual cash flow from operations.

“Growth was driven largely by robust demand for our flagship ASE database and IQ analytics server, which grew 30% and 22%, respectively, over the same quarter a year ago.”

Added Mr. Chen, “We released Information Anywhere Suite in December, and early market feedback is extremely positive. This Suite integrates Afaria with OneBridge to deliver the most complete enterprise mobility platform. We are confident the features and functionality of this Suite will enable our mobile segment to grow faster than the overall mobility market.

“With the addition of our newly acquired mobile messaging business, Sybase 365, we are now the world’s largest mobile enterprise software and services provider. Sybase is strongly positioned to exceed our one-billion-dollar revenue target in 2007,” concluded Mr. Chen.

Balance Sheet and Other Data
At December 31, 2006, Sybase reported $643.7 million in cash and cash investments, including restricted cash of $6.0 million. In the fourth quarter, the company generated $50.4 million in cash flow from operations, an increase of 31% compared to the fourth quarter of 2005. Full-year 2006 cash flow from operations increased 26% to $214.3 million, an historical high, compared with $170.0 million in 2005.

Sybase repurchased $14.5 million worth of its stock during the 2006 fourth quarter. Stock repurchased in 2006 totaled $59.8 million. As of December 31, 2006, $249.8 million remained authorized in the company’s current share repurchase program.

Days sales outstanding (DSO) for the 2006 fourth quarter was 77. Excluding the impact of Sybase 365, DSO for the 2006 fourth quarter was 58.

Forward Guidance
For the first quarter ending March 31, 2007, management anticipates revenues ranging from $230.0 million to $235.0 million. Pro forma fully diluted EPS for the first quarter is expected to range from $0.25 to $0.26. GAAP EPS for the first quarter is estimated to range from $0.16 to $0.17, which includes an estimate of $2.7 million for amortization of intangibles related to the acquisition of Mobile 365 in November 2006.

For full-year 2007, management estimates revenues of approximately $1.025 billion. Fully diluted pro forma EPS is estimated at approximately $1.52. GAAP EPS is estimated at approximately $1.12, which includes an estimate of $10.8 million for amortization of intangibles related to the acquisition of Mobile 365.

Management anticipates full-year 2007 cash flow from operations to range from $190 million to $200 million.

Accompanying this release is a reconciliation of projected pro forma and GAAP amounts for the 2007 first quarter and full year.

2006 Fourth Quarter Company Highlights

* Completed acquisition of Mobile 365, creating a new subsidiary Sybase 365, now headed by president Marty Beard.
* Delivered two new versions of core components of the newly released Information Anywhere Suite: OneBridge 5.5, which extends enterprise email and applications to mobile workers; and Afaria 5.5, interoperable with the OneBridge release, supporting more than 130 mobile devices, simplifying the evaluation process for businesses and providing administrators and users with enhanced security, management and email capabilities.
* Acquired iFoundry Systems to enhance Sybase’s mobile leadership in short-range wireless interconnect protocol stacks and providing professional engineering services to mobile device OEMs, ODMs and chipset manufacturers to enable these technologies on their platforms.
* Sybase 365 announced deployment of France’s first and largest Multimedia Messaging Service (MMS) loyalty program for Air France, in partnership with BETC EuroRSCG, France’s premier advertising agency, and French mobile marketing agency, MobileTrend.
* Announced the general availability of the Data Integration Suite 1.0, a flexible and scalable solution that combines essential data integration techniques.
* Delivered Sybase® Risk Analytics Platform 3.0, an enhanced solution for capital markets with an operations console that manages data workflows, synchronizes data and the presentation of the data to users and improves system management, monitoring and performance.
* Released Sybase iAnywhere Advantage Database Server 8.1, further strengthening its database portfolio and providing a high-performance embedded client/server data management system.

Conference Call and Webcast Information
The Sybase 2006 fourth quarter conference call and simultaneous Webcast is scheduled to begin at 7:30 a.m., Pacific Time/10:30 a.m. Eastern Time on Thursday, January 25, 2007. To access the live Webcast, please visit www.fulldisclosure.com or Sybase’s Website at www.sybase.com at least 20 minutes prior to the call to download any necessary audio or plug-in software. A telephone replay will be available approximately two hours after the conference call ends and will be available until 10:00 p.m. Pacific Time on February 1, 2007. To access the replay, please dial (888) 203-1112 for domestic access and (719) 457-0820 for international callers; the access code for the telephone replay is #3335634. Additionally, the archived Webcast will be available through April 25, 2007 at http://www.sybase.com/about_sybase/investorrelations.

About Sybase, Inc.
Sybase is the largest global enterprise software company exclusively focused on managing and mobilizing information from the data center to the point of action. Sybase provides open, cross-platform solutions that securely deliver information anytime, anywhere, enabling customers to create an information edge. The world’s most critical data in commerce, finance, government, healthcare, and defense runs on Sybase. For more information, visit the Sybase Website at http://www.sybase.com.

Forward-Looking Statements
Certain statements in this release concerning Sybase, Inc. and its prospects and future growth are forward-looking and involve a number of uncertainties and risks. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to, the performance of the global economy and growth in software industry sales; market acceptance of the company’s products and services; customer and industry analyst perception of the company and its technology vision and future prospects; the success of certain business combinations engaged in by the company or by competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; and other factors described in Sybase, Inc.’s reports filed with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2005 and Form 10-Q for the quarters ended March 31, 2006, June 30, 2006, and September 30, 2006.

Sybase, Adaptive Server Enterprise (ASE), Sybase IQ, [Sybase 365], Afaria, OneBridge, Information Anywhere Suite, Sybase Risk Analytics, iAnywhere Advantage Database, and Financial Fusion are trademarks of Sybase, Inc. or its subsidiaries. All other names may be trademarks of the companies with which they are associated.

* Reconciliation to Pro forma Condensed Consolidated Statements of Operations
* Condensed Consolidated Balance Sheets
* Condensed Consolidated Statements of Income - Pro Forma without purchase accounting, cost of restructure, and stock compensation expense
* Condensed Consolidated Statements of Income
* Consolidated Statements of Cash Flows
* Consolidated Statement of Operations by Segment - Pro Forma without purchase accounting, cost of restructure, and stock compensation expense
* Consolidated Statements of Operations by Segment
* Reconciliation of projected GAAP-based EPS to projected pro forma EPS

Contact Information

Lorna Fernandes

Sybase Public Relations

Sybase, Inc.

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