Letter to Shareholders	Consumers	Marketers	Shareholders	Form 10-K	NEXT

Think Again.
To Our Shareholders and Fellow Defenders

e have a simple philosophy at NetZero that guides every decision we make: offer
quality service to consumers; provide powerful tools to marketers; and build long-term
value for shareholders. By adhering to these three basic tenets, we have rapidly
become one of the leading providers of free Internet access services in the world.

     It is important for our shareholders to understand that NetZero is far more than a free ISP - we
have constructed a sophisticated business model designed for mass-scale and profitability. We are
executing this model by developing cutting-edge technologies that enable us to offer innovative
services to both consumers and advertisers; building a highly recognized brand; and implementing
aggressive and efficient distribution programs that will extend the reach of the NetZero franchise.
To understand why we are so optimistic about the future of NetZero, it is important to first
understand how far we have come in such a short period of time.

     It has been a fast ride. We founded the company in July 1997, launched our services in October
1998 and completed a successful IPO in September 1999. During our fiscal year ended June 2000, we
more than quadrupled our registered user base to nearly 5 million, grew revenues 12-fold to $55.5
million and improved our quarterly gross margin percentage to 4.7% in the June 2000 quarter from
-98% just a year earlier. The company also raised more than $300 million from our $184 million IPO
and a $144 million strategic investment from QUALCOMM in April 2000, ending our 2000 fiscal year
with total cash and short-term investments of nearly $250 million. All of this was achieved while we
were delivering two major software upgrades to our users, completing three strategic acquisitions,
filing patent requests for 57 different technologies, signing major advertisers such as General Motors
and building NetZero - "Defenders of the Free World" - into a highly recognized, world-class brand.

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