**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





___________________




**FORM
      10-Q/A**


**(Amendment
        No. 1)**


___________________




**(Mark
      One)**


**[X]**  **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





**For
      the quarterly period ended March 31, 2005**





**OR**





**[   ]**  **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE
      ACT OF 1934**





**For
      the transition period from ____________ to ____________ .**





**Commission
      File No.: 0-30849**





**WEBEX
      COMMUNICATIONS, INC.**


**(Exact
      name of registrant as specified in its charter)**





**Delaware**
            **77-0548319****(State
                or other jurisdiction of**
            **(I.R.S.
                Employer****incorporation
                or organization)**
            **Identification
                Number)**





**3979
      Freedom Circle**


**Santa
      Clara, California 95054**


**(Address
      of principal executive offices)**





**Telephone:
      (408) 435-7000**


**(Registrant's
      telephone number, including area code)**





Indicate
      by check mark whether the registrant (l) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      at least the past 90 days. Yes [X] No [   ]





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act). Yes x No  ̈





On
      May 2,
      2005, 45,544,959 shares of Registrant's Common Stock, $0.001 par value, were
      outstanding.







Form
          10-Q/A, Amendment No. 1, for quarter ended March 31, 2005





**Explanatory
        Note**
 
 WebEx
        Communications, Inc. (the “Registrant”) files this Quarterly Report on Form
        10-Q/A as Amendment No. 1 to the Registrant’s Quarterly Report on Form 10-Q for
        the fiscal quarter ended March 31, 2005. This Form 10-Q/A is filed with the
        Securities and Exchange Commission solely to correct an inadvertent omission
        of
        a single identical sentence in each of Exhibits 31.1 and Exhibit 31.2 as
        filed
        with the original report on May 10, 2005. The inadvertently-omitted sentence,
        required under rules promulgated by the Securities and Exchange Commission,
        has
        been inserted into each of Exhibits 31.1 and Exhibit 31.2 to this Quarterly
        Report on Form 10-Q/A, Amendment No. 1, in the section of each exhibit
        identified as 4(b). Except for the corrected exhibits, this Quarterly Report
        on
        Form 10-Q/A, Amendment No. 1, is identical to the original
        report. This report speaks as of the original filing date and, except as
        indicated, has not been updated to reflect events occurring subsequent to
        the
        original filing date.


Form
            10-Q/A, amendment no. 1 for quarter ended March 31, 2005


**WEBEX
      COMMUNICATIONS, INC.**


**QUARTERLY
      REPORT ON FORM 10-Q FOR THE PERIOD ENDED**


**MARCH
      31, 2005**





**TABLE
      OF CONTENTS**





**Page
                No.****PART
                I. FINANCIAL INFORMATION****Item
                1**.Financial
                Statements
            3Condensed
                Consolidated Balance Sheets at March 31, 2005 and December 31, 2004
                (Unaudited)
            3Condensed
                Consolidated Income Statements for the three months ended March 31,
                2005
                and 2004 (Unaudited)
            4Condensed
                Consolidated Statements of Cash Flows for the three
                months
              ended March 31, 2005
                and 2004 (Unaudited)
            5Notes
                to Condensed
                Consolidated Financial Statements
            6**Item 2**.Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            13**Item
                3**.Quantitative
                and
                Qualitative Disclosures About Market Risk
            35**Item
                4.**Controls
                and Procedures
            36**PART
                II. OTHER
                INFORMATION**
            37**Item
                2**.Changes
                in Securities, Use of Proceeds and Issuer Purchases of Equity
                Securities
            37**Item
                6**.Exhibits
            37**Signatures**
            39**Exhibit
                Index**
            40








Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


TOC


PART
      I -
      FINANCIAL INFORMATION


**Item
      1.*****Financial
      Statements***


**WEBEX
      COMMUNICATIONS, INC.**





**CONDENSED
      CONSOLIDATED BALANCE
      SHEETS**


(In
      thousands; unaudited)





ASSETS





March
                31,
              2005
            
            
            December
                31,
              2004Current
                assets:Cash
                and cash equivalents
            
            $
            113,859
            
            $
            110,552Short-term
                investments
            
            
            93,390
            
            
            74,586Accounts
                receivable, net of allowances of $5,232 and $5,634, respectively
            
            
            34,525
            
            
            32,438Prepaid
                expenses and other current assets
            
            
            5,139
            
            
            4,817Prepaid
                income taxes
            
            
            —
            
            
            1,739Deferred
                tax
                assets
            
            
            4,666
            
            
            4,665Total
                current assets
            
            
            251,579
            
            
            228,797Property
                and
                equipment, net
            
            
            47,209
            
            
            44,783Goodwill
            
            
            1,822
            
            
            1,822Intangible
                assets, net
            
            
            3,338
            
            
            3,410Deferred
                tax
                assets
            
            
            5,320
            
            
            5,724Other
                non-current assets
            
            
            1,196
            
            
            1,257Total
                assets
            
            $
            310,464
            
            $
            285,793LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            6,672
            
            $
            8,685Accrued
                liabilities
            
            
            23,453
            
            
            20,179Deferred
                revenue
            
            
            11,601
            
            
            9,867Income
                tax payable
            
            
            1,682
            
            
            —Total
                liabilities
            
            
            43,408
            
            
            38,731Commitments
                and contingenciesStockholders'
                equity:Preferred
                stock, $0.001 par value, 5,000,000 shares authorized; no shares issued
                or
                outstanding
            
            
            —
            
            
            —Common
                stock
            
            
            45
            
            
            45Additional
                paid-in capital
            
            
            252,527
            
            
            245,807Deferred
                equity-based compensation
            
            
            (10
            )
            
            (15
            )Accumulated
                other comprehensive income
            
            
            2,687
            
            
            2,268Accumulated
                earnings/(deficit)
            
            
            11,807
            
            
            (1,043
            )Total
                stockholders' equity
            
            
            267,056
            
            
            247,062Total
                liabilities and stockholders' equity
            
            $
            310,464
            
            $
            285,793





See
      accompanying notes to condensed consolidated financial statements.





Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005
 
 TOC


**WEBEX
      COMMUNICATIONS, INC.**





**CONDENSED
      CONSOLIDATED INCOME STATEMENTS**


**(In
      thousands, except per share data; unaudited** )





March
                31,
              2005
            
            
            March
                31,
              2004Net
                revenues
            
            $
            70,855
            
            $
            56,344Cost
                of revenues
            
            
            11,858
            
            
            9,525Gross
                profit
            
            
            58,997
            
            
            46,819Operating
                expenses:Sales and marketing
            
            
            24,103
            
            
            19,924Research and development
            
            
            10,067
            
            
            7,215General and administrative
            
            
            5,782
            
            
            3,407Equity-based compensation*
            
            
            1
            
            
            511Total operating expenses
            
            
            39,953
            
            
            31,057Operating
                income
            
            
            19,044
            
            
            15,762Interest
                and other income, net
            
            
            1,737
            
            
            112Net
                income before income tax
            
            
            20,781
            
            
            15,874Provision
                for income tax
            
            
            7,931
            
            
            5,873Net
                income
            
            $
            12,850
            
            $
            10,001Net
                income per share:Basic
            
            $
            0.29
            
            $
            0.23Diluted
            
            
            0.27
            
            
            0.22Shares
                used in per share calculations:Basic
            
            
            44,968
            
            
            42,954Diluted
            
            
            46,848
            
            
            46,459*Equity-based
                compensation:Sales and marketing
            
            $
            —
            
            $
            51Research and development
            
            
            —
            
            
            27General and administrative
            
            
            1
            
            
            433$
            1
            
            $
            511





See
      accompanying notes to condensed consolidated financial statements.





Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005


TOC


**WEBEX
      COMMUNICATIONS, INC.**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH
      FLOWS**


**(In
      thousands; unaudited)**





**Three
                Months Ended****March
                31, 2005**
            
            
            **March
                31, 2004**Cash
                flows from operating activities:Net
                income
            
            $
            12,850
            
            $
            10,001Adjustments
                to reconcile net income to net cash provided by operating
                activities:Provisions for doubtful accounts and sales allowance
            
            
            2,858
            
            
            1,676Depreciation and amortization
            
            
            3,521
            
            
            2,554Loss from disposal of assets
            
            
            241
            
            
            —Deferred income taxes
            
            
            403
            
            
            —Tax benefit of stock plans
            
            
            2,667
            
            
            2,100Equity-based compensation
            
            
            1
            
            
            511Changes in operating assets and liabilities, net of
                acquisitions:Accounts
                receivable
            
            
            (4,946
            )
            
            (3,129
            )Prepaid
                expenses and other current assets
            
            
            (322
            )
            
            (1,133
            )Other
                non-current assets
            
            
            61
            
            
            554Accounts
                payable
            
            
            (2,013
            )
            
            2,408Accrued
                liabilities
            
            
            979
            
            
            (547
            )Income
                tax payable
            
            
            3,421
            
            
            3,425Deferred
                revenue
            
            
            1,734
            
            
            875Other
            
            
            420
            
            
            (524
            )Net cash provided by operating activities
            
            
            21,875
            
            
            18,771Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (3,821
            )
            
            (19,717
            )Net
                purchases of short-term investments
            
            
            (18,804
            )
            
            (41,909
            )Net
                cash used in investing activities
            
            
            (22,625
            )
            
            (61,626
            )Cash
                flows from financing activities:Net
                proceeds from issuances of common stock
            
            
            7,647
            
            
            9,784Repurchase
                of common stock
            
            
            (3,590
            )
            
            —Net
                cash provided by financing activities
            
            
            4,057
            
            
            9,784Net
                change in cash and cash equivalents
            
            
            3,307
            
            
            (33,071
            )Cash
                and cash equivalents at beginning of the period
            
            
            110,552
            
            
            70,996Cash
                and cash equivalents at end of the period
            
            $
            113,859
            
            $
            37,925Supplemental
                disclosures of non-cash investing and financing
                activities:Decrease in deferred equity-based compensation
            
            $
            (5
            )
            $
            (42
            )Unrealized gain on investments
            
            $
            (205
            )
            $
            41Capitalization of lease incentives
            
            $
            2,295
            
            $
            -Cash
                paid for:Income taxes
            
            $
            1,189
            
            $
            -





See
      accompanying notes to condensed consolidated financial statements.







Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**


TOC


**1.
      Basis of Presentation**





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared by WebEx Communications, Inc. (the "Company" or "WebEx") in accordance
      with the rules and regulations of the Securities and Exchange Commission.
      Certain information and footnote disclosures normally included in consolidated
      financial statements prepared in accordance with generally accepted accounting
      principles have been condensed or omitted in accordance with such rules and
      regulations. In the opinion of management, the accompanying unaudited financial
      statements reflect all adjustments, consisting only of normal recurring
      adjustments, necessary to present fairly the financial position of the Company,
      and its results of operations and cash flows. These financial statements should
      be read in conjunction with the Company's audited consolidated financial
      statements and notes thereto as of and for the year ended December 31, 2004,
      included in the Company's Form 10-K filed with the Securities and Exchange
      Commission on March 16, 2005 .




The
      results of operations for the three months ended March 31, 2005 are not
      necessarily indicative of the results that may be expected for the year ending
      December 31, 2005 or any other future period, and the Company makes no
      representations related thereto .




The
      consolidated financial statements include the accounts of WebEx and its wholly
      owned subsidiaries. All significant intercompany accounts and transactions
      have
      been eliminated in consolidation. Certain amounts reported in previous periods
      have been reclassified to conform to the current period
      presentation.








**2.
      Revenue Recognition**





Revenue
      is derived from the sale of web communications services. Web communications
      services revenue is generated through a variety of contractual arrangements
      directly with customers and with distribution partners, who in turn sell the
      services to customers. The Company sells web communications services directly
      to
      customers through service subscriptions or similar agreements and pay-per-use
      arrangements. Under these arrangements, customers access the application hosted
      on WebEx servers using a standard web browser. Subscription arrangements include
      monthly subscriber user fees, user set-up fees and training. The subscription
      arrangements are considered service arrangements in accordance with Emerging
      Issues Task Force (“EITF”) Issue No. 00-3, *Application
      of AICPA Statement of Position 97-2, Software Revenue Recognition, to
      Arrangements That Include the Right to Use Software Stored on Another Entity’s
      Hardware* ,
      and
      with multiple deliverables under EITF 00-21, *Accounting
      for Revenue Arrangements with Multiple Deliverables.* Under
      EITF 00-21, all deliverables are considered one unit of accounting. During
      the
      initial term of an agreement, the Company may provide training services,
      web-page design and set-up services. WebEx considers all such deliverables
      to be
      combined with service revenues into one unit of accounting, as individual
      delivered items do not have stand-alone value to the customer; therefore, such
      revenue is recognized ratably (i.e. straight-line) over the initial term of
      the
      contract. Committed and fixed fee subscription service revenue is also
      recognized ratably (i.e. straight-line) over the current term of the
      contract. In addition to committed and fixed fee or subscription service
      revenue, WebEx derives revenue from pay-per-use services, usage in excess of
      commitments and other per-minute-based charges that are recognized as such
      services are provided. WebEx refers to these forms of revenue as uncommitted
      revenue.




The
      Company also enters into reselling arrangements with distribution partners,
      which purchase and resell the Company’s services on a revenue sharing,
      discounted or pay-per-use basis. Revenue under these arrangements is derived
      from services provided to end-users and is recognized over the service period
      provided that evidence of the arrangement exists, the fee is fixed or
      determinable and collectibility is reasonably assured. Initial set up fees
      received in connection with these arrangements are recognized ratably (i.e.
      straight-line) over the initial term of the contract. During the initial term,
      the Company provides training services, web-page design and set-up services.
      Service fees are recognized as the services are provided for pay-per-use service
      arrangements and ratably (i.e. straight-line) over the service period for
      services provided on a subscription basis through the reseller. The Company’s
      reseller arrangements may require guaranteed minimum revenue commitments that
      are billed in advance to the reseller. Advance payments received from
      distribution partners are deferred until the related services are provided
      or
      until otherwise earned by WebEx. When the distribution partner bills the
      end-user, WebEx sells the services on a discounted basis to the distribution
      partner, which in turn marks up the price and sells the services to the
      end-user. In such cases, WebEx contracts directly with the distribution partner
      and revenue is recognized based on discounted amounts charged to the
      distribution partner. A significant majority of the revenue derived from our
      distribution partners comes from distribution agreements of this type. When
      WebEx bills the end-user directly, a percentage of the proceeds generated from
      the sale of WebEx services are paid to the distribution partner. In these cases
      revenue is recognized based on amounts charged to the end-user, and amounts
      paid
      to the distribution partner are recorded as sales and marketing expense.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**


Persuasive
      evidence for each arrangement is represented by a signed contract. The fee
      is
      considered fixed or determinable if it is not subject to refund or adjustment.
      Collectibility is considered reasonably assured if WebEx expects that the
      customer will be able to pay amounts under the arrangement as they become due.
      Collectibility of guaranteed minimum revenue commitments by resellers is not
      reasonably assured; thus, revenue from guaranteed minimum commitments is
      deferred until services are provided to an end-user customer or until collected
      from the reseller and forfeited at the end of the commitment period.




Deferred
      revenue includes amounts billed to customers for which revenue has not been
      recognized that generally results from the following: (1) unearned portion
      of
      monthly billed subscription service fees; (2) unearned portion of annual or
      other period billed subscription service fees; (3) deferred set-up fees;
      and (4) advances received from distribution partners under revenue sharing
      arrangements. As of March 31, 2005 and December 31, 2004, accounts receivable
      includes unbilled receivables of $4.2 million and $2.8 million respectively,
      for
      unbilled per-minute-based charges that occurred during the final month of the
      respective quarter.





**3.** **Sales
      Reserve and Allowance for Doubtful Accounts**





WebEx
      records an estimate of sales reserve for losses on receivables resulting from
      customer cancellations or terminations as a reduction in revenue at the time
      of
      sale. The sales reserve is estimated based on an analysis of the historical
      rate
      of cancellations or terminations. The accuracy of the estimate is dependent
      on
      the rate of future cancellations or terminations being consistent with the
      historical rate .




WebEx
      records an allowance for doubtful accounts to provide for losses on receivables
      due to customer credit risk. Increases to the allowance for doubtful accounts
      are charged to general and administrative expense as bad debt expense. Losses
      on
      accounts receivable resulting from customers’ financial distress or failure are
      charged to the allowance for doubtful accounts. The allowance is estimated
      based
      on an analysis of the historical rate of credit losses. The accuracy of the
      estimate is dependent on the future rate of credit losses being consistent
      with
      the historical rate .




The
      following presents the detail of the changes in the sales reserve and allowance
      for doubtful accounts for the three months ended March 31, 2005 and 2004 (in
      thousands):




**Three
                Months****March
                31,**
              **2005**
            
            
            **March
                31,**
              **2004**Balance
                at beginning of quarter
            
            $
            5,634
            
            $
            6,837Sales
                reserveBalance at beginning of quarter
            
            
            4,631
            
            
            4,571Deducted
                from
                revenue
            
            
            2,621
            
            
            2,115Amounts
                written off
            
            
            (2,865
            )
            
            (2,004
            )Change
            
            
            (244
            )
            
            111****Balance
                at end of quarter
            
            
            4,387
            
            
            4,682Allowance
                for doubtful accountsBalance at beginning of quarter
            
            
            1,003
            
            
            2,266Charged
                (credited) to bad debt expense
            
            
            237
            
            
            (439
            )Amounts
                written off.
            
            
            (395
            )
            
            (178
            )Change
            
            
            (158
            )
            
            (617
            )Balance
                at end of quarter
            
            
            845
            
            
            1,649Balance
                at end of quarter.
            
            $
            5,232
            
            $
            6,331








Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**


**4.
      Net Income Per Share**





Basic
      net
      income per common share is computed using the weighted-average number of common
      shares outstanding for the period excluding restricted common shares subject
      to
      repurchase, if any. Diluted net income per common share reflects the dilution
      of
      restricted common stock subject to repurchase, if any, and incremental shares
      of
      common stock issuable upon the exercise of stock options computed using the
      treasury stock method.




The
      following table sets forth the computation of basic and diluted net income
      per
      common share for the three months ended March 31, 2005 and 2004 (in thousands
      except per share amounts):








**Three
                Months Ended**
              **March
                31,****2005**
            
            
            **2004**Numerator:Net
                income
            
            $
            12,850
            
            $
            10,001Denominator:Denominator
                for
                basic net income per share
            
            
            44,968
            
            
            42,954Effect
                of dilutive securities:Weighted average options outstanding
            
            
            1,880
            
            
            3,505Denominator
                for
                diluted net income per share
            
            
            46,848
            
            
            46,459Basic
                net income per common share
            
            $
            0.29
            
            $
            0.23Diluted
                net income per common share
            
            $
            0.27
            
            $
            0.22














Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**





The
      following potential common shares have been excluded from the computation of
      diluted net income per share for the three months ended March 31, 2005 and
      2004
      because their inclusion would have been antidilutive (in thousands):








**March
                31,****2005**
            
            
            **2004**Shares
                issuable under stock options
            
            
            4,105
            
            
            1,763





The
      exercise price of antidilutive stock options outstanding as of March 31, 2005
      range from $21.80 to $55.38 and as of March 31, 2004 the range was from $24.79
      to $55.38.








**5.
      Comprehensive Income**





Comprehensive
      income/(loss) includes net income, foreign currency translation adjustments
      and
      unrealized gains on investments as follows (in thousands):




**Three
                Months Ended****March
                31,****2005**
            
            
            **2004**Net
                income
            
            $
            12,850
            
            $
            10,001Other
                comprehensive income (loss), net of tax:Foreign
                currency translation adjustments
            
            
            388
            
            
            (565
            )Unrealized
                gain (loss) on investments
            
            
            (127
            )
            
            41261
            
            
            (524
            )Comprehensive
                income
            
            $
            13,111
            
            $
            9,477








**6.
      Goodwill and Intangible Assets, net**




The
      carrying amount of goodwill as of March 31, 2005 was $1.8 million. In accordance
      with SFAS No. 142, the Company does not amortize goodwill but evaluates it
      at
      least on an annual basis for impairment. The goodwill resulted from the April
      2004 acquisition of CyberBazaar of Bangalore India, an audio conferencing
      company, which was acquired to pursue directly the web conferencing market
      in
      India. The Company completed its annual goodwill impairment test during the
      fourth quarter of 2004 and determined that the carrying amount of goodwill
      was
      not impaired.




Intangible
      assets, net, as of March 31, 2005 and December 31, 2004 consisted of the
      following (in thousands):





**March
                31, 2005**
            
            
            **December
                31, 2004**Intellectual
                property rights
            
            $
            4,326
            
            $
            4,326Trade
                name and domain name
            
            
            630
            
            
            630Customer
                related intangibles
            
            
            672
            
            
            6725,628
            
            
            5,628Less
                accumulated amortization
            
            
            (2,290
            )
            
            (2,218
            )Intangible
                assets, net
            
            $
            3,338
            
            $
            3,410





Amortization
      expense for the three months ended March 31, 2005 and 2004 was $72,000 and
      $40,000, respectively.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**


Intangible
      assets, net consist of purchased intellectual property rights, trade and domain
      names and customer related intangibles. Amortization is recorded using the
      straight-line method over the estimated useful lives of these assets. The
      purchased intellectual property rights have separate components of $1.7 million,
      $0.2 million and $2.4 million that are amortized over three, five and ten years,
      respectively. The trademarks and domain names are amortized over ten years,
      and
      the customer related intangibles have separate components of $0.2 million and
      $0.5 million that are amortized over three and five years, respectively.




Future
      amortization expense of existing intangibles will be as follows (in
      thousands):





**Period
                ending March 31,**
            
            
            **Amortization**
              **expense**2005
                (remaining 9 months)
            
            $
            4802006
            
            
            5832007
            
            
            4632008
            
            
            3732009
            
            
            278Thereafter
            
            
            1,161Total
                amortization expense
            
            $
            3,338








**7.** **Equity-Based
      Compensation** **net**




The
      Company accounts for stock awards to employees and directors in accordance
      with
      the intrinsic value method of Accounting Principles Board Opinion No. 25 (APB
      25), “ *Accounting
      for Stock Issued to Employees”,* and
      related interpretations. Under this method, compensation expense for fixed
      plan
      stock options is recorded on the date of the grant only if the current fair
      value of the underlying stock exceeds the exercise price. Deferred stock-based
      compensation is amortized over the vesting period using the method described
      in
      FASB Interpretation No. 28 (FIN 28) .




The
      Company accounts for stock awards to parties other than employees and directors
      in accordance with the provisions of SFAS 123, “ *Accounting
      for Stock-Based Compensation”* ,
      and
      EITF Issue No. 96-18, “ *Accounting
      for Equity Instruments That are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services”* .
      The
      equity-based compensation expense for options granted to non-employees is
      re-measured for changes in their fair value until the underlying options
      vest .




Had
      all
      awards been accounted for under the fair value method of SFAS 123, reported
      net
      income would have been adjusted to the pro-forma net income amounts appearing
      below (in thousands except per share amounts).








**Three
                Months Ended**
              **March
                31,****2005**
            
            
            **2004**Net
                income as reported
            
            $
            12,850
            
            $
            10,001Add
                back: Stock-based compensation included in determination of net income,
                net of tax
            
            
            (1
            )
            
            301Deduct:
                Stock-based compensation including employees determined under the
                fair-value based method, net of tax
            
            
            (7,338
            )
            
            (6,717
            )Pro-forma
                net income as if the fair value based method had been applied to
                all
                awards
            
            $
            5,511
            
            $
            3,585Pro-forma
                net income per share as if the fair value based method had been applied
                to
                all awards:Basic
            
            $
            0.12
            
            $
            0.08Diluted
            
            $
            0.12
            
            $
            0.08








Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**





**8.
      Commitments and Contingencies**





*Contractual
      Obligations*




WebEx
      leases certain equipment and facilities under non-cancelable operating leases
      expiring through 2014. Future minimum lease payments and purchase obligations
      by
      year and in the aggregate, as of March 31, 2005, are as follows (in thousands):








**Contractual
                  Obligations**
              
              
              **Remaining
                  nine months of 2005**
              
              
              2006
              
              
              2007
              
              
              2008
              
              
              2009
              
              
              2010
                and thereafter
              
              
              TotalOperating
                lease obligations
              
              $
              3,982
              
              $
              4,750
              
              $
              4,659
              
              $
              5,116
              
              $
              4,623
              
              $
              17,973
              
              $
              41,103Purchase
                obligations
              
              
              13,080
              
              
              79
              
              
              8
              
              
              -
              
              
              -
              
              
              -
              
              
              13,167Other
                commitments
              
              
              917
              
              
              458
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,375Total
              
              $
              17,979
              
              $
              5,287
              
              $
              4,667
              
              $
              5,116
              
              $
              4,623
              
              $
              17,973
              
              $
              55,645


WebEx
      leases office facilities under various operating leases that expire through
      2014. In
      April
      2004, WebEx signed a lease to occupy space in a building located in Santa Clara,
      California, that serves as WebEx’s corporate headquarters. The lease term is for
      approximately ten years, and initial occupancy commenced in the third quarter
      of
      2004. The Company took possession of additional space in January 2005 and is
      committed to occupy additional space in 2008, which is included in the future
      minimum rental payments. Future minimum lease payments under this lease began
      in
      January 2005 and total an aggregate of $23.8 million for the life of the lease.
      Under the lease agreement, the landlord provided incentives of $2.2 million
      including the construction of leasehold improvements for no additional payments
      by the Company, and payment of certain operating expenses for the initial 20
      months covered by the lease valued at $786,000. Lease incentives received have
      been accounted for as capitalized assets and are being amortized over the lease
      term. The lease requires a security deposit of $4.0 million, which WebEx
      satisfied through a letter of credit issued under WebEx’s credit line. Rent
      expense is being recognized based on an effective rate of rent per square foot,
      which takes into account scheduled rent increases and the incentives provided
      by
      the lessor, and results in the same amount of rent expense per square foot
      occupied in all periods during the lease term. Total
      future minimum lease payments under other operating leases amount to
      approximately $17.3 million.




Rent
      expense under operating leases was $1.7 million and $1.3 million for the three
      months ended March 31, 2005 and 2004, respectively. Rent expense was reduced
      by
      rental income of $29,000 and $8,000 for the three months ended March 31, 2005
      and 2004, respectively.




At
      March
      31, 2005, WebEx has purchase commitments totaling approximately $13.2 million
      for the usage of telecommunication lines and data services, equipment and
      software purchases and the construction of leasehold improvements at new leased
      facilities. The majority of the purchase commitments are expected to be settled
      in cash within 12 months with the longest commitment expiring August 2007.




In
      December 2004, the Company entered into an agreement with the government of
      Hong
      Kong and Hong Kong University of Science and Technology (HKUST) pursuant to
      which WebEx and the government of Hong Kong were each to pay equal amounts
      to
      fund certain research and development projects to be managed jointly by WebEx
      and HKUST. In December 2004, WebEx paid $500,000 in cash pursuant to the
      agreement, which was fully expensed to research and development expense, and
      has
      future payment obligations under the agreement totaling $1.4 million. The future
      payment obligations are included in other commitments in the table above. WebEx
      will obtain sole ownership of the intellectual property resulting from the
      projects, provided, however that WebEx and HKUST may agree that some of the
      proceeds of products and services arising from the projects will be paid to
      HKUST. The parties have not yet entered into any such agreement regarding
      proceeds. The agreement provides for termination of the agreement and
      modification of the projects, schedule and funding under certain
      circumstances.




Form
            10-Q/A, Amendment No. 1 for quarter ended March 31, 2005
 
 **WEBEX
            COMMUNICATIONS, INC.**
 **March
            31, 2005 and 2004**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**


*Other*




WebEx
      does not currently collect sales tax from customers in the United States and
      believes the services it provides are exempt from sales tax.  No tax
      authorities are attempting to collect such taxes from WebEx.  However,
      it
      is possible in the future that tax authorities in one or more states could
      assert that WebEx is obligated to collect such taxes from its customers and
      remit those taxes to those authorities.  The collection and remittance
      of
      such taxes is not expected to have a material impact on WebEx's financial
      statements.  It is also possible, however, that such authorities could
      seek
      to collect sales taxes for sales of services by WebEx in the past. 
      If such
      a claim were to be asserted against WebEx and WebEx was found liable for such
      back taxes and WebEx was unable to collect such taxes from its customers, WebEx
      could incur an expense equal to the amount of such taxes and any associated
      interest and penalties.  WebEx believes that such taxes, interest and
      penalties, if any, are not estimable at this time.





In
      April
      2004, WebEx acquired CyberBazaar of Bangalore India, an audio conferencing
      company, in order to directly pursue the web conferencing market in India.
      WebEx
      renamed the CyberBazaar entity WebEx Communications India Pvt. Ltd. In the
      fourth quarter of 2004, income tax contingencies outstanding at the date of
      acquisition were determined to be both probable and estimable and an income
      tax
      liability was recorded and goodwill related to the acquisition was increased
      accordingly. Any additional pre-acquistion and post-acquisition tax
      contingencies determined to be both probable and estimable will be recorded
      as
      either an addition to goodwill or income tax expense, respectively.











**9.
      Segment Reporting**





SFAS
      No.
      131, “ *Disclosure
      about Segments of an Enterprise and Related Information”* ,
      establishes standards for the reporting by business enterprises of information
      about operating segments, products and services, geographic areas, and major
      customers. The method for determining what information to report is based on
      the
      way that management organizes the operating segments within WebEx for making
      operational decisions and assessments of financial performance **




WebEx's
      chief executive officer (CEO) is considered to be the chief operating
      decision-maker. The CEO reviews financial information presented on a
      consolidated basis for purposes of making operating decisions and assessing
      financial performance. WebEx has determined that it operates in a single
      operating segment, specifically; web communication services and has no
      significant customers.








**10.
      Recent Accounting Pronouncements**





In
      December 2004, the FASB issued SFAS 123R, *Share-Based
      Payment* ,
      which
      requires the measurement of all share-based payments to employees, including
      grants of employee stock options, using a fair value based method and the
      recording of such expense in the Company’s consolidated income statement. The
      accounting provisions of SFAS 123R are effective for fiscal years beginning
      after June 15, 2005. The Company is required to adopt SFAS 123R in the first
      quarter of 2006. The pro forma disclosures previously permitted under SFAS
      123
      no longer will be an alternative to financial statement recognition. Although
      the Company has not yet determined whether the adoption of SFAS 123R will result
      in amounts that are similar to the current pro forma disclosures under SFAS
      123,
      the Company is evaluating the requirements under SFAS 123R and expects the
      adoption to have a significant adverse impact on its consolidated income
      statement and net income per share.













Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005
 
 TOC


**Item
      2.** ***Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations*** ****




**When
      used in this Report, the words
“anticipates,”“expects,”“intends,”“plans,”“believes,”“seeks,”“estimates” and
      similar expressions are intended to identify forward-looking statements. These
      are statements that relate to future periods and include, but are not limited
      to, statements as to our ability to enhance the quality and variety of real-time
      communications, statements about the features, benefits and performance of
      our
      current service offerings and technology including our belief that use of our
      services allows users to be more productive and efficient, our ability to
      introduce new product offerings and increase revenue from existing products,
      our
      ability to integrate current and emerging technology into our service offerings
      and our ability to find replacements for third party technologies, expected
      expenses including those related to sales and marketing, research and
      development and general and administrative, our ability to collect insurance
      proceeds from our carrier relating to losses from a fire at our Amsterdam
      headquarters in Europe, our beliefs regarding the health and growth of the
      market for our web conferencing services, anticipated increase in our customer
      base, expansion of our service offerings and service functionalities, ability
      to
      reduce operating expenses, expected revenue levels and sources of revenue,
      expected impact, if any, of legal proceedings or changes in laws or regulations
      relating to our business, expected increases in headcount, the adequacy of
      liquidity and capital resources, the sufficiency of our cash reserves to meet
      our capital requirements, expected growth in business and operations, our
      ability to realize positive cash flow from operations, the ability of cash
      generated from operations to satisfy our liquidity requirements, our ability
      to
      continue to realize net earnings, and the effect of recent accounting
      pronouncements. Forward-looking statements are subject to risks and
      uncertainties that could cause actual results to differ materially from those
      projected. These risks and uncertainties include, but are not limited to, our
      dependence on key products and/or services, demand for our products and
      services, our ability to attract and retain customers and distribution partners
      for existing and new services, the impact of distribution partner practices
      on
      our business, our ability to expand and manage our operations internationally,
      our ability to expand and manage our infrastructure to meet both our internal
      corporate needs as well as the demand for our services, our ability to control
      our expenses, our ability to recruit and retain employees particularly in the
      areas of sales, engineering, support and hosting services, the ability of
      distribution partners to successfully resell our services, the economy,
      political tensions or conflict, the strength of competitive offerings, the
      prices being charged by those competitors, the risks discussed below and the
      risks discussed in “Factors that May Affect Results” below. These
      forward-looking statements speak only as of the date hereof. We expressly
      disclaim any obligation or undertaking to release publicly any updates or
      revisions to any forward-looking statements contained herein to reflect any
      change in our expectations with regard thereto or any change in events,
      conditions or circumstances on which any such statement is
      based.**








**Overview**




*Business,
      Principal Products, Locations.* We offer
      several real-time, interactive, multimedia web communications services. These
      services allow end-users to conduct meetings and share software applications,
      documents, presentations and other content on the Internet using a standard
      web
      browser. Integrated telephony and web-based audio and video services are also
      available using standard devices such as telephones, computer web-cameras and
      microphones. Because our services enable users to share voice, data and video
      with others in remote locations, we believe we can enhance the quality and
      variety of real-time communications compared to traditional telephone
      communications. Our services enable users to engage in media-rich, interactive,
      real-time communications without the need to be in the same physical location,
      which we believe allows users to be more productive and efficient.




Our
      current business focus is to continue to enhance and market our various web
      communications services, to develop and deploy new services, to expand our
      sales
      and marketing organizations, and to expand our WebEx MediaTone Network. We
      offer
      the following services: WebEx Meeting Center, WebEx Meeting Center Pro, WebEx
      Training Center, WebEx Support Center, WebEx Event Center, WebEx Enterprise
      Edition, WebEx Sales Center, WebEx SMARTtech, WebEx Presentation Studio and
      our
      newest service, MyWebExPC, which was launched in January 2005 .




Our
      corporate and technical operations headquarters are each located in Santa Clara
      County, California, in the cities of Santa Clara and Mountain View,
      respectively. In addition, we have ten non-U.S. subsidiaries through which
      we
      conduct various operating activities related to our business. In each of the
      non-U.S. jurisdictions in which we have subsidiaries, China, Hong Kong, Japan,
      Australia, India, the United Kingdom, France, Germany and the Netherlands,
      we
      have employees or consultants engaged in sales and, in some cases, network
      maintenance activities. In the case of our China subsidiary, our largest
      subsidiary, our employees perform activities including quality assurance testing
      and software development activities, creation of technical documentation,
      background research for our sales personnel, preparation of marketing materials
      and the provisioning of customer web sites. In 2004, we acquired CyberBazaar
      of
      Bangalore India, an audio conferencing company, in order to directly pursue
      the
      web conferencing market in India. We renamed the CyberBazaar entity WebEx
      Communications India Pvt. Ltd. WebEx Communications India Pvt. Ltd, which we
      sometimes refer to as WebEx India, has maintained the CyberBazaar offices and
      a
      significant portion of the CyberBazaar management team and employees present
      at
      the time of the acquisition. The results of WebEx India are included in the
      consolidated financial statements of WebEx subsequent to April 30, 2004, the
      effective date of the acquisition.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


*Revenue
      and Cash-Generation Models.* We sell
      our services directly to customers, which in the first quarter of 2005 accounted
      for approximately 86% of our revenue, or $60.9 million. We also sell our
      services indirectly to customers through those of our distribution partners
      that
      buy and resell our services, which sales in the first quarter of 2005 accounted
      for approximately 14% of our revenue, or $10.0 million. With these types of
      distribution partners, whom we also generally refer to as resellers,
      w e
      sell to
      and contract directly with the distribution partner, and revenue is recognized
      based on net amounts charged to the distribution partner. We also have another
      type of distribution partner—a distribution partner that acts as our sales or
      referral agent. When a sale is made from us to a customer through the efforts
      of
      this kind of distribution partner, the distribution partner receives from us a
      percentage of the proceeds from the sale of WebEx services to the customer,
      and
      we include the revenue received by us within the broad category of revenue
      received from services sold directly to customers. We enter into distribution
      relationships, either reseller or referral agent, so that we can increase total
      revenue by obtaining customers that we could not obtain through our direct
      sales
      efforts.




Historically,
      revenue has been generated based on a monthly, fixed-fee subscription pricing
      model. A customer may subscribe to a certain number of concurrent-user ports
      per
      month, which would enable the customer to have that set number of users
      connected to WebEx meetings at any one time, or to a minimum minutes commitment,
      which would enable the customer to have up to a set number of total minutes
      within the month to utilize our services. Another
      of our fixed-fee offerings is the named host offering, in which a certain named
      individual may host meetings at which up to a certain number of attendees may
      participate. We
      refer
      to the revenue associated with these monthly, fixed-fee subscription
      arrangements, measured as of the end of any month, as committed
      revenue .




In
      addition, there are several situations in which customers are charged per minute
      or usage-based pricing. These include: customer overage fees for port customers,
      usage of minutes in excess of the minimum commitment, most types of telephony
      charges, certain distribution partner arrangements and individual pay-per-use
      services purchased directly from our website. Overage fees are charged when
      a
      customer subscribing to a set number of ports uses more than the subscribed
      number of ports in one or more web conference sessions. Per minute fees are
      assessed when a customer on a minutes pricing model uses more than its monthly
      commitment. Per minute telephone revenue comes when a customer in a web
      conference session elects to have us set up and run the audio portion of the
      conference, rather than the customer conducting its telephone usage
      independently of us. A majority of revenue received from our telecommunications
      partner arrangements is usage, or per-minute, based. Finally, when a customer
      wants to use our services on a one-time basis by visiting our website,
      purchasing the service and paying online by credit card, the pricing is
      per-minute or usage based, except in instances where the online customer instead
      purchases a one-month subscription for a fixed fee. We refer to the revenue
      derived from this per minute or usage-based pricing model, measured as of the
      end of any month, as uncommitted revenue .
      Uncommitted revenue is increasing as a percentage of our total
      revenue.




*Market
      Opportunities, Related Challenges and Our Responses.* **** We
      believe the market for web conferencing services to be healthy and growing.
      Various published articles have cited several trends underlying this projected
      market increase. One trend is the desire of many companies to achieve cost
      savings in the areas of information technology, or IT, spending and employee
      travel. In light of increased IT budget constraints reportedly faced by many
      companies, we believe a cost-saving decision is to hire an external web
      conferencing vendor to meet a company’s web conferencing needs, rather than
      undertaking the capital and personnel spending necessary to construct and
      maintain an internal company web conferencing network. Additionally, companies
      may perceive that web conferencing usage can reduce costs to the extent that
      web
      conferencing displaces the need for individuals within companies to travel
      in
      order to conduct business, conduct training or participate in large-attendee
      events.




Another
      trend favoring the projected growth of the web conferencing market is the
      relative infancy of the web conferencing market. The adoption of web
      conferencing may follow a pattern similar to that which has been observed with
      other computer-related technologies. According to this pattern, the first users
      can be grouped into a category called early adopters—a relatively small
      percentage of potential users who first discover and are able to understand
      and
      make use of a new technology. If the product seems useful, a second wave of
      users may arise which is often many times larger than the number of early
      adopters. In the usual case, this larger number of users materializes because
      of
      workplace usefulness: employers start to understand the utility of the
      technology in the workplace and encourage or require employee usage of the
      technology. Eventually, if the utility of the technology is compelling enough,
      the technology may become a staple of most workplaces and the technology is
      deemed mainstream. Under this adoption pattern, the greatest growth in the
      market occurs during this migration from second wave to mainstream usage. One
      such example of this adoption pattern is usage of the desktop computer during
      the 1980s. Another example is usage of word processing software associated
      with
      the desktop computer during the 1990s. In each instance, time required to
      migrate from the early adoption phase to the mainstream phase exceeded ten
      years.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


With
      some
      technologies, the adoption pattern described above does not materialize fully.
      If a technology has experienced early-adopter or second wave usage but then
      proves not as useful as first believed or touted, or if an alternative
      technology emerges, that technology may never progress to mainstream use. We
      believe that, at present, web conferencing appears to be in either a very late
      early adopter or an early second wave phase. Usage of the technology has
      penetrated many worldwide corporations, but with many of these customers, this
      penetration is in only one or a few divisions or departments of the corporation
      and thus the percentage of employee users is still fairly low. So, there may
      remain ahead for web conferencing the critical transition period from second
      wave to mainstream adoption, where we believe the annual rate of growth of
      usage
      would exceed previous rates of growth. However, there can be no assurance that
      web conferencing will progress to mainstream use, and in fact usage of web
      conferencing could regress.




There
      exist a number of challenges to the projected market growth scenario for web
      conferencing. One is a concern, actual or perceived, about security. As the
      universe of corporate activities that can be conducted in a web conference
      expands, more and more of these activities will embrace sensitive corporate
      or
      government financial data, plans, projects or other proprietary information.
      If
      web conferencing technologies do not have embedded within them adequate security
      protections so that the contents of a web conference will remain private among
      the participants, usage may not grow as projected. Moreover, to the extent
      that
      there occur publicized incidents of security breaches associated with usage
      of a
      web conferencing technology, no matter who the vendor, the security-related
      concerns of would-be users of the technology likely will be increased and this
      could dampen market growth. We have assigned a high priority, in the design
      and
      implementation of our WebEx MediaTone Network, to these security issues.




Another
      challenge to broad adoption of web conferencing services is general acceptance
      of this mode of communication as a normal part of business activity. Individuals
      may not feel comfortable using the technology, or they may prefer traditional
      means of communicating such as the telephone or face-to-face meetings. Broad
      adoption of web conferencing will require users to incorporate the use of this
      technology as part of their normal business activity.




*Industry-Wide
      Factors Relevant to Us.* The web
      communications services market is intensely competitive, subject to rapid change
      and is significantly affected by new product and service introductions and
      other
      market activities of industry participants. Although we do not currently compete
      against any one entity with respect to all aspects of our services, we do
      compete with various companies in regards to specific elements of our web
      communications services. For example, we compete with providers of traditional
      communications technologies such as teleconferencing and videoconferencing,
      applications software and tools companies, and web conferencing services such
      as
      Centra Software, Cisco Systems, Citrix Systems, Genesys, IBM, Microsoft,
      Oracle, Raindance and Macromedia, which in April 2005 announced that it had
      signed a definitive agreement to be acquired by Adobe Systems. In addition
      to
      the above competitors, certain of our distribution partners offer competitive
      web conferencing services.




Competition
      from Microsoft for the general web conferencing market, or from other vendors
      specifically targeted at the low-end market, may adversely affect us. Microsoft
      has become a more active participant in this web communications services market
      since its acquisition of our competitor Placeware in 2003. Microsoft has a
      current product offering which is competitive with ours and which is called
      Microsoft Office Live Meeting. Microsoft Office Live Meeting is being marketed
      together with other Microsoft software products and services under the name
      Microsoft Office System. If Microsoft chose to deploy greater resources toward
      the marketing of the Live Meeting service, Microsoft could become a more
      significant competitor in the web communications market in which we operate.
      Microsoft may attempt to leverage its dominant market position in the operating
      system, productivity application or browser markets, through technical
      integration or bundled offerings, to expand its presence in the web
      communications market, which could make it difficult for other vendors of web
      communications products and services, such as WebEx, to compete. In addition,
      some competitors offer web communications products and services targeted at
      customers who are more price-conscious and are less concerned about
      functionality, scalability, integration and security features. Such offerings
      may make it more difficult for WebEx to compete in that segment of the market
      and may cause some of our existing customers to switch to these competitors.
      Also, such lower-cost offerings may force us to reduce the prices of our
      services in order to attract or retain customers. If we are forced to reduce
      prices, we may be forced to change the extent and type of resources we deploy
      in
      the selling of our services in an effort to maintain operating margins, such
      as
      switching to different and less expensive sales practices.








**Critical
      Accounting Policies** ****





We
      believe that there are a number of accounting policies that are critical to
      understanding our historical and future performance, as these policies affect
      the reported amounts of revenue and the more significant areas involving
      management’s judgments and estimates. These significant accounting policies
      relate to revenue recognition, sales reserves, allowance for doubtful accounts,
      income taxes and goodwill and intangible assets. The policies, and our
      procedures related to these policies, are described in detail below.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


*Revenue
      Recognition.* Revenue
      is derived from the sale of web communications services. Web communications
      services revenue is generated through a variety of contractual arrangements
      directly with customers and with distribution partners, who in turn sell the
      services to customers. We sell web communications services directly to customers
      through service subscriptions and pay-per-use arrangements. Under these
      arrangements, customers access the application hosted on our servers using
      a
      standard web browser. Subscription arrangements include monthly subscriber
      user
      fees and user set-up fees. The subscription arrangements are considered service
      arrangements in accordance with EITF Issue No. 00-3, “ *Application
      of AICPA Statement of Position 97-2, Software Revenue Recognition, to
      Arrangements That Include the Right to Use Software Stored on Another Entity’s
      Hardware”* ,
      and
      with multiple deliverables under EITF 00-21, *“Accounting
      for Revenue Arrangements with Multiple Deliverables”* ,
      which
      became effective during 2003. Under EITF 00-21, all deliverables are considered
      one unit of accounting; therefore, committed revenue is recognized ratably
      (straight-line) over the current term of the contract and variable usage-based
      fees are recognized as usage occurs. During the initial term, we provide
      training services, web-page design and set-up services. In addition to
      subscription services revenue, we derive revenue from pay-per-use services
      and
      telephony charges that are recognized as the related services are provided.




We
      also
      enter into reselling arrangements with certain distribution partners, which
      purchase and resell our services on a revenue sharing, discounted or pay-per-use
      basis. Revenue under these arrangements is derived from our services provided
      to
      end-users and is recognized over the service period provided that evidence
      of
      the arrangement exists, the fee is fixed or determinable and collectibility
      is
      reasonably assured. Initial set up fees received in connection with these
      arrangements are recognized ratably over the initial term of the contract.
      During the initial term, we provide training services, web-page design and
      set-up services. Service fees are recognized as the services are provided for
      pay-per-use service arrangements and ratably over the service period for
      services provided on a subscription basis through the reseller. Our reseller
      arrangements may require guaranteed minimum revenue commitments that are billed
      in advance to the reseller. Advance payments received from reseller distribution
      partners are deferred until the related services are provided or until otherwise
      earned by us. We contract directly with distribution partners who are resellers,
      and revenue is recognized based on net amounts charged to the distribution
      partner.




Persuasive
      evidence for all of our arrangements is represented by a signed contract. The
      fee is considered fixed or determinable if it is not subject to refund or
      adjustment. Collectibility of guaranteed minimum revenue commitments by
      resellers is not reasonably assured; thus revenue from guaranteed minimum
      commitments is deferred until services are provided to an end-user customer
      or
      until collected from the reseller and the reseller forfeits commitment fees
      at
      the end of the commitment period.





*Sales
      Reserves* .
      The
      sales reserve is an estimate for losses on receivables resulting from customer
      credits, cancellations and terminations and is recorded as a reduction in
      revenue at the time of the sale. Increases to sales reserve are charged to
      revenue, reducing the revenue otherwise reportable. The sales reserve estimate
      is based on an analysis of the historical rate of credits, cancellations and
      terminations. The accuracy of the estimate is dependent on the rate of future
      credits, cancellations and terminations being consistent with the historical
      rate. If the rate of actual credits, cancellations and terminations is different
      than the historical rate, revenue would be different from what was
      reported.




*Allowance
      for Doubtful Accounts.* We record an allowance for doubtful accounts
      to provide
      for losses on accounts receivable due to customer credit risk. Increases to
      the
      allowance for doubtful accounts are charged to general and administrative
      expense as bad debt expense. Losses on accounts receivable due to financial
      distress or failure of the customer are charged to the allowance for doubtful
      accounts. The allowance estimate is based on an analysis of the historical
      rate
      of credit losses. The accuracy of the estimate is dependent on the future rate
      of credit losses being consistent with the historical rate. If the rate of
      future credit losses is greater than the historical rate, then the allowance
      for
      doubtful accounts may not be sufficient to provide for actual credit losses.
      If
      we are uncertain whether a loss is appropriately charged to the sales reserve
      or
      the allowance for doubtful accounts, we charge the loss to the sales
      reserve.




We
      assess, on a quarterly basis, the adequacy of the sales reserve account balance
      and the allowance for doubtful accounts account balance based on historical
      experience. Any adjustments to these accounts are reflected in the income
      statement for the current period, as an adjustment to revenue in the case of
      the
      sales reserve and as a general and administrative expense in the case of the
      allowance for doubtful accounts.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


The
      following presents the detail of the changes in the sales reserve and allowance
      for doubtful accounts for the last eight quarters ended March 31, 2005 (in
      thousands):




**Quarter
                Ended****March
                31,**
              **2005**
            
            
            **December
                31,**
              **2004**
            
            
            **September
                30,**
              **2004**
            
            
            **June
                30,**
              **2004**
            
            
            **March
                31,**
              **2004**
            
            
            **December
                31,**
              **2003**
            
            
            **September
                30,**
              **2003**
            
            
            **June
                30,**
              **2003**Balance
                at beginning of quarter
            
            $
            5,634
            
            $
            5,363
            
            $
            6,261
            
            $
            6,331
            
            $
            6,837
            
            $
            7,351
            
            $
            7,934
            
            $
            7,286Sales
                reserveBalance at beginning of quarter
            
            
            4,631
            
            
            4,447
            
            
            4,995
            
            
            4,682
            
            
            4,571
            
            
            4,618
            
            
            4,866
            
            
            3,710Deducted
                from revenues
            
            
            2,621
            
            
            2,518
            
            
            1,331
            
            
            2,309
            
            
            2,115
            
            
            1,919
            
            
            2,657
            
            
            3,585Amounts
                written off
            
            
            (2,865
            )
            
            (2,334
            )
            
            (1,879
            )
            
            (1,996
            )
            
            (2,004
            )
            
            (1,966
            )
            
            (2,905
            )
            
            (2,429
            )Change
            
            
            (244
            )
            
            184
            
            
            (548
            )
            
            313
            
            
            111
            
            
            (47
            )
            
            (248
            )
            
            1,156Balance at end of quarter
            
            
            4,387
            
            
            4,631
            
            
            4,447
            
            
            4,995
            
            
            4,682
            
            
            4,571
            
            
            4,618
            
            
            4,866Sales
                reserve as a
                percentage of
              gross accounts receivable
            
            
            11.0
            %
            
            12.2
            %
            
            12.8
            %
            
            15.2
            %
            
            16.1
            %
            
            16.2
            %
            
            16.7
            %
            
            17.8
            %Allowance
                for doubtful accountsBalance
                at beginning of quarter
            
            
            1,003
            
            
            916
            
            
            1,266
            
            
            1,649
            
            
            2,266
            
            
            2,733
            
            
            3,068
            
            
            3,576Charged
                (credited) to bad debt  expense
            
            
            237
            
            
            231
            
            
            (258
            )
            
            (135
            )
            
            (439
            )
            
            (268
            )
            
            364
            
            
            122Amounts
                written off
            
            
            (395
            )
            
            (144
            )
            
            (92
            )
            
            (248
            )
            
            (178
            )
            
            (199
            )
            
            (699
            )
            
            (630
            )Change
            
            
            (158
            )
            
            87
            
            
            (350
            )
            
            (383
            )
            
            (617
            )
            
            (467
            )
            
            (335
            )
            
            (508
            )Balance at end of quarter
            
            
            845
            
            
            1,003
            
            
            916
            
            
            1,266
            
            
            1,649
            
            
            2,266
            
            
            2,733
            
            
            3,068Allowance for doubtful accounts as a    percentage
                of gross
                accounts receivable
            
            
            2.1
            %
            
            2.6
            %
            
            2.6
            %
            
            3.8
            %
            
            5.6
            %
            
            8.0
            %
            
            9.9
            %
            
            11.2
            %Balance
                at end of
                quarter.
            
            $
            5,232
            
            $
            5,634
            
            $
            5,363
            
            $
            6,261
            
            $
            6,331
            
            $
            6,837
            
            $
            7,351
            
            $
            7,934Gross
                accounts
                receivable
            
            $
            39,757
            
            $
            38,072
            
            $
            34,694
            
            $
            32,918
            
            $
            29,198
            
            $
            28,251
            
            $
            27,651
            
            $
            27,336Reserve
                as a
                percentage of accounts  receivable
            
            
            13.1
            %
            
            14.8
            %
            
            15.4
            %
            
            19.0
            %
            
            21.7
            %
            
            24.2
            %
            
            26.6
            %
            
            29.0
            %





*Income
      Taxes.* We
      determine deferred tax assets and liabilities at the end of each year based
      on
      the future tax consequences that can be attributed to net operating loss and
      credit carryovers and differences between the financial statement carrying
      amounts of existing assets and liabilities and their respective tax bases,
      using
      the tax rate expected to be in effect when the taxes are actually paid or
      recovered. The recognition of deferred tax assets is reduced by a valuation
      allowance if it is more likely than not that the tax benefits will not be
      realized. The ultimate realization of deferred tax assets depends upon the
      generation of future taxable income during the periods in which those temporary
      differences become deductible. We consider past performance, expected future
      taxable income and prudent and feasible tax planning strategies in assessing
      the
      amount of the valuation allowance. Our forecast of expected future taxable
      income is based over such future periods that we believe can be reasonably
      estimated. Changes in market conditions that differ materially from our current
      expectations and changes in future tax laws in the U.S. and in international
      jurisdictions may cause us to change our judgments of future taxable income.
      These changes, if any, may require us to adjust our existing tax valuation
      allowance higher or lower than the amount we have recorded.




In
      addition, the calculation of tax liabilities involves significant judgment
      in
      estimating the impact of uncertainties in the application of complex tax laws.
      Resolution of these uncertainties in a manner inconsistent with our expectations
      could have a material impact on our results of operations. We account for income
      tax contingencies in accordance with Statement of Financial Accounting Standards
      No. 5, *Accounting
      for Contingencies* .




*Impairment
      of Goodwill and Intangible Assets.* We
      assess
      the impairment of intangible and other long-lived assets whenever events or
      changes in circumstances indicate that their carrying value may not be
      recoverable from the estimated future cash flows expected to result from their
      use and eventual disposition. Amortizable intangible assets subject to




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


this
      evaluation include acquired developed technology, patents, customer contracts
      and relationships, trade name and covenant not to sue. We assess the impairment
      of goodwill annually
      in our fourth quarter and whenever events or changes in circumstances indicate
      that it is more likely than not that an impairment loss has been incurred.
      We
      are required to make judgments and assumptions in identifying those events
      or
      changes in circumstances that may trigger impairment. Some of the factors we
      consider include:





-  Significant
      decrease in the market value of an asset;





-  Significant
      changes in the extent or manner for which the asset is being used or in its
      physical condition;





-  A
      significant change, delay or departure in our business strategy related to
      the
      asset;





-  Significant
      negative changes in the business climate, industry or economic conditions;
      and





-  Current
      period operating losses or negative cash flow combined with a history of similar
      losses or a forecast that indicates continuing losses associated with the use
      of
      an asset.





Our
      impairment evaluation of long-lived assets includes an analysis of estimated
      future undiscounted net cash flows expected to be generated by the assets over
      their remaining estimated useful lives. If the estimated future undiscounted
      net
      cash flows are insufficient to recover the carrying value of the assets over
      the
      remaining estimated useful lives, we will record an impairment loss in the
      amount by which the carrying value of the assets exceeds the fair value. We
      determine fair value based on discounted cash flows using a discount rate
      commensurate with the risk inherent in our current business model. If, as a
      result of our analysis, we determine that our amortizable intangible assets
      or
      other long-lived assets have been impaired, we will recognize an impairment
      loss
      in the period in which the impairment is determined. Any such impairment charge
      could be significant and could have a material adverse effect on our financial
      position and results of operations. Major factors that influence our cash flow
      analysis are our estimates for future revenue and expenses associated with
      the
      use of the asset. Different estimates could have a significant impact on the
      results of our evaluation.




Our
      impairment evaluation of goodwill is based on comparing the fair value to the
      carrying value of our reporting unit with goodwill. If our revenue and cost
      forecasts are not achieved, we may incur charges for goodwill impairment, which
      could have material adverse effect on our income statement.





Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005





**Results
      of Operations**





The
      following table sets forth, for the periods indicated, the statements of
      operations data as a percentage of net revenues.





**Three
                Months Ended**
              **March
                31,****2005**
            
            
            **2004**Net
                revenues
            
            
            100
            %
            
            100
            %Cost
                of revenues
            
            
            17
            
            
            17Gross
                profit
            
            
            83
            
            
            83Operating
                expenses:Sales and marketing
            
            
            34
            
            
            35Research and development
            
            
            14
            
            
            13General and administrative
            
            
            8
            
            
            6Equity-based compensation
            
            
            -
            
            
            1Total
                operating expenses
            
            
            56
            
            
            55Operating
                income
            
            
            27
            
            
            28Interest
                and other income, net
            
            
            2
            
            
            0Provision
                for income tax
            
            
            11
            
            
            10Net
                income
            
            
            18
            %
            
            18
            %





*Net
      revenues.* Net
      revenues increased $14.5 million to $70.9 million for the three months ended
      March 31, 2005 from $56.4 million for the three months ended March 31, 2004,
      representing a 26% increase from 2004 to 2005. The increase for the three months
      ended March 31, 2005 was primarily due to growth in our domestic and
      international subscriber customer base and increased usage of existing and
      new
      products. By the end of March 2005, the number of customers in our subscriber
      base had grown by more than 23% from the end of March 2004.




One
      of
      the measurement tools, or metrics, which we use to help forecast future
      revenues, is what we refer to as our monthly revenue rate, or what we sometimes
      call MRR. We define our monthly revenue rate as the sum of the following: (i)
      committed monthly subscriptions, or the aggregate dollar amount of minimum
      minutes, named hosts and ports that are contractually committed to us, as of
      the
      end of the month, and (ii) average monthly uncommitted revenue for the quarter,
      or the aggregate dollar amounts of per minute or usage-based services such
      as
      overage, telephone, reseller-related and pay-per-use revenues for the quarter;
      divided by three. Our monthly subscription contracts at the end of March 2005
      were approximately $17.5 million and our average monthly-uncommitted revenue
      in
      the quarter ended March 31, 2005 was $7.4 million, and thus our monthly revenue
      rate exiting March 2005 was $24.9 million. Certain one-time revenues, such
      as
      set up fees, and the impact to revenue from changes in the sales reserve balance
      are not included in MRR.




Another
      metric we use to analyze customer losses and to help forecast future revenues
      is
      monthly average lost subscription MRR. Our lost subscription MRR metric is
      somewhat analogous to customer churn in the telecommunications business, except
      that our lost subscription MRR is more inclusive than the churn metric used
      in
      the telecommunications business. Whereas the telecommunications churn metric
      typically includes only revenues lost because of customer terminations, our
      lost
      subscription MRR includes not only revenues lost because of customer
      terminations but also revenues lost because existing customers either have
      reduced their subscription amounts or have elected to terminate their
      subscriptions in favor of purchasing from our partners. We define our lost
      subscription MRR as the quotient obtained from the following: (i) the average
      monthly dollar amount of lost subscription contracts (including in that amount
      reductions in subscription amounts and subscription amounts lost to the partner
      channel) during the quarter, divided by (ii) our total subscriptions at the
      end
      of the last month of the quarter plus the average monthly lost (including
      reduced customer subscriptions and switches to partners) subscription contracts
      for the quarter. We calculate and evaluate lost subscription MRR on a quarterly
      basis. Our lost subscription MRR for the three months ended March 31, 2005
      was
      2.0% per month. The following table shows our MRR, and lost subscription MRR,
      for the five quarters ended March 31, 2005 (in millions):




**Quarter
                Ended****March
                31, 2005**
            
            
            **December
                31, 2004**
            
            
            **September
                30, 2004**
            
            
            **June
                30,**
              **2004**
            
            
            **March
                31, 2004**Uncommitted
                usage - monthly average during the quarter
            
            $
            7.4
            
            $
            6.6
            
            $
            6.0
            
            $
            5.9
            
            $
            5.1Contracted
                subscriptions at the end of the quarter
            
            
            17.5
            
            
            16.7
            
            
            15.9
            
            
            15.1
            
            
            14.1Total
                MRR
            
            $
            24.9
            
            $
            23.3
            
            $
            21.9
            
            $
            21.0
            
            $
            19.2%
                of subscription MRR lost per month
            
            
            2.0
            %
            
            1.9
            %
            
            1.8
            %
            
            1.8
            %
            
            1.8
            %





Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005





*Cost
      of revenues.* Our
      cost
      of revenues consists primarily of costs related to user set-up, network and
      data
      center operations, technical support and training activities, including Internet
      access and telephony communication costs, personnel, licensed software and
      equipment costs, depreciation, and amortization of acquired patents. Cost of
      revenues increased $2.3 million to $11.9 million for the three months ended
      March 31, 2005 from $9.5 million for the three months ended March 31, 2004.
      As a
      percent of revenue, cost of revenues remained constant at 17% for the three
      months ended March 31, 2005 and 2004. The increase in absolute dollars for
      the
      three months ended March 31, 2005 was primarily due to increases in the costs
      for delivering existing and new services to more customers domestically and
      internationally, additions to our technical staff to support our installed
      base
      of customers, and expenditures to expand and improve our worldwide network.
      In
      February 2004, we purchased land and a building containing approximately 125,000
      square feet of commercial grade facility, of which 25,000 square feet consists
      of data infrastructure facility floor space, for $15.9 million. Land totaling
      $9.7 million is not depreciated, and the building totaling $6.2 million is
      being
      depreciated over 10 years. As part of the purchase, we also acquired certain
      items of data infrastructure equipment previously installed and situated on
      the
      property. During 2004 and the three months ended March 31, 2005, we used this
      facility as our network-operating center as well as to expand our primary
      switching center to accommodate growing usage requirements on our WebEx
      MediaTone Network.




*Sales
      and marketing.* Our
      sales
      and marketing expense consists of personnel costs, including commissions, as
      well as costs of public relations, advertising, marketing programs, lead
      generation, travel and trade shows. Sales and marketing expense increased $4.2
      million to $24.1 million for the three months ended March 31, 2005 from $19.9
      million for the three months ended March 31, 2004. The increase for the three
      months ended March 31, 2005 was primarily due to the result of increased
      spending on sales and support personnel, commission expenses associated with
      our
      increased sales volume and additional spending on advertising and marketing
      related programs to build brand awareness and generate leads for our sales
      force. For the three months ended March 31, 2005, we also incurred $1.1 million
      in additional expenses resulting from a fire at our Amsterdam headquarters
      in
      February 2005. We anticipate recovery of some or all of this loss from our
      insurance carrier in either the second or third quarter of this year as the
      claim procedures are completed. Any amounts we do recover will be recorded
      as a
      reduction to sales and marketing expense in the period received.




*Research
      and development.* Our
      research and development expense consists primarily of salaries and other
      personnel-related expenses, depreciation of equipment and supplies. Research
      and
      development expense increased $2.9 million to $10.1 million for the three months
      ended March 31, 2005 from $7.2 million for the three months ended March 31,
      2004. The increase for the three months ended March 31, 2005 was primarily
      related to increases in personnel and equipment related expenses resulting
      from
      an increase in headcount to develop and support existing and new products
      including increases in the number of such personnel in WebEx China.




*General
      and administrative.* Our
      general and administrative expense consists primarily of personnel costs for
      finance, human resources, legal and general management, bad debt expense and
      professional services, such as legal and accounting. General and administrative
      expense increased $2.4 million to $5.8 million for the three months ended March
      31, 2005 from $3.4 million for the three months ended March 31, 2004. The
      increase for the three months ended March 31, 2005 was primarily due to
      increased spending on employee-related expenses, increased professional service
      expenses to help us comply with the new regulations imposed by the
      Sarbanes-Oxley Act of 2002, and an increase in bad debt expense. Bad debt
      expense increased $0.6 million to an expense of $0.2 million in the three months
      ended March 31, 2005 from a credit of $0.4 million in the three months ended
      March 31, 2004. This increase was due to higher projected future credit losses
      based on historical losses.




*Equity-based
      compensation* .
      Our
      equity-based compensation expense represents the amortization of deferred
      equity-based compensation over the vesting period of incentive stock options
      granted to employees and expenses related to issuance of common stock warrants
      and options to individuals who are not employees or directors. Deferred
      equity-based compensation represents the difference between the exercise price
      of the stock options granted to employees and the fair value of common stock
      at
      the time of those grants.  Equity-based
      compensation expense decreased $0.5 million to immaterial expense for the three
      months ended March 31, 2005 from $0.5 million for the three months ended March
      31, 2004. This




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


d ecrease
      was due to the vesting of employee awards and the effects of the fluctuations
      in
      our stock price on the recognition of expense on options granted to
      non-employees. Equity-based compensation expense related to the unvested portion
      of non-employee options is impacted by changes in our stock price and will
      fluctuate accordingly. In connection with the calculation of equity-based
      compensation expense, members of our Board of Directors are treated the same
      as
      employees of WebEx.




*Interest
      and other income, net* .
      Interest and other income, net is comprised of net investment income, interest
      income and expense, and other expenses. Interest and other income, net increased
      $1.6 million to $1.7 million for the three months ended March 31, 2005 from
      $0.1
      million for the three months ended March 31, 2004. The increase for the three
      months ended March 31, 2005 compared to March 31, 2004 was primarily due to
      increased interest income from greater cash and investments balances and from
      gains from currency exchange as a result of non-functional currency transactions
      of our foreign subsidiaries. In the three months ended March 31, 2005, other
      expenses included a gain from foreign currency exchange of $0.8 million, about
      $0.6 million of which related to prior periods, compared to a loss of $0.3
      million in the three months ended March 31, 2004.




*Income
      taxes* .
          We recorded a provision for income taxes of
      $7.9 million
      for the three months ended March 31, 2005 based on our estimated effective
      tax
      rate for full year 2005 of 38.2%. Our effective tax rate for 2005 is higher
      than
      2004 primarily because the 2004 rate included a component for valuation
      allowance and the benefit of equity based compensation. We will continue to
      use
      net operating loss carryforwards to offset U.S. taxable income in 2005; however,
      the utilization is now limited on an annual basis based on Section 382 of the
      Internal Revenue Code. In the fourth quarter of 2005, we will evaluate our
      deferred tax assets and valuation allowance related to the utilization of our
      net operating loss carryforwards. When and if realized, the tax benefit of
      these
      deferred assets will be accounted for as a credit to additional paid-in capital
      rather than a reduction of income tax expense.




*Net
      income* .
      As a
      result of the foregoing, net income increased $2.8 million to $12.9 million
      for
      the three months ended March 31, 2005 from $10.1 million for the three months
      ended March 31, 2004.








**Liquidity
      and Capital Resources**





As
      of
      March 31, 2005, cash, cash equivalents and short-term investments were $207.2
      million, an increase of $22.1 million compared to $185.1 million as of December
      31, 2004.




Net
      cash
      provided by operating activities was $21.9 million for the three months ended
      March 31, 2005, as compared to $18.8 million for the three months ended March
      31, 2004. The increase in net cash provided by operating activities was
      primarily the
      result of net income adjusted for non-cash components, increases in taxes
      payable and deferred revenue ,
      offset
      in part by growth in accounts receivable and decreases in accounts payable.




Net
      cash
      used in investing activities was $22.6 million for the three months ended March
      31, 2005, as compared to $61.6 million for the three months ended March 31,
      2004. The decrease in net cash used in investing activities related primarily
      to
      decreased purchases of short-term investments for the three months ended March
      31, 2005 and decreased spending on purchases of property and equipment as
      compared to the quarter ended March 31, 2004, during which we acquired land
      and
      building for our new switching center. The purchase of property and equipment
      primarily relates to capital expenditures for equipment, hardware and software
      used in our MediaTone Network.




Net
      cash
      provided by financing activities was $4.1 million for the three months ended
      March 31, 2005, as compared to $9.8 million for the three months ended March
      31,
      2004. The decrease in net cash provided by financing activities was primarily
      the result of lower cash received from stock option exercises and employee
      stock
      purchase plan purchases, offset in part by cash used in our share repurchase
      program totaling $3.6 million. Under the share repurchase program, which our
      board of directors authorized in July 2004 for a one-year duration and which
      leaves to management discretion whether and to what extent shares are
      repurchased during that one-year period, a maximum of $40 million in shares
      of
      our common stock may be repurchased on the open market. To date, approximately
      $9.4 million has been used to repurchase our common stock.




As
      of
      March 31, 2005, our material purchase commitments, including usage of
      telecommunication lines and data services, equipment and software purchases,
      and
      construction of leasehold improvements at new leased facilities, totaled $13.2
      million. The
      majority of the purchase commitments are expected to be settled in cash within
      12 months with the
      longest commitment expiring in August 2007.




We
      lease
      office facilities under various operating leases that expire through 2014.
      In
      April 2004, we signed a lease to occupy space in a building located in Santa
      Clara, California, that serves as our corporate headquarters. The lease term
      is
      for approximately ten years, and initial occupancy commenced in the third
      quarter of 2004. We took possession of additional space in January 2005 and
      are
      committed to occupy additional space in 2008, which is included in the future
      minimum rental payments. Future minimum lease payments under this lease began
      in
      January 2005 and total an aggregate of $23.8 million for the life of the lease.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


We
      have a
      revolving credit line with a bank that provides available borrowings up to
      $7.0
      million. Amounts borrowed under the revolving credit line bear interest at
      the
      prime rate and may be repaid and reborrowed at any time prior to the maturity
      date. The credit agreement expires June 15, 2005. The credit agreement is
      unsecured and is subject to compliance with covenants, including a minimum
      quick
      ratio and minimum profitability, with which we are currently in compliance.
      As
      of March 31, 2005, we had no outstanding borrowings under the credit line,
      but
      we did have a $4.0 million letter of credit issued under the line as security
      for our headquarters lease.




We
      expect
      that existing cash resources and cash generated from operations will be
      sufficient to fund our anticipated working capital and capital expenditure
      needs
      for at least the next 12 months. We generated cash from operations in the most
      recent quarter and each of the previous fourteen quarters. We anticipate that
      we
      will continue to generate cash from operations for at least the next 12
      months  and
      that
      existing cash reserves will therefore be sufficient to meet our capital
      requirements during this period. We base our expense levels in part on our
      expectations of future revenue levels. If our revenue for a particular period
      is
      lower than we expect, we may take steps to reduce our operating expenses
      accordingly. If cash generated from operations is insufficient to satisfy our
      liquidity requirements, we may seek to sell additional public or private equity
      securities or obtain additional debt financing. There can be no assurance that
      additional financing will be available at all or, if available, will be
      obtainable on terms favorable to us. If we are unable to obtain additional
      financing, we may be required to reduce the scope of our planned technology
      and
      product development and sales and marketing efforts, which could harm our
      business, financial condition and operating results. Additional financing may
      also be dilutive to our existing stockholders.








**Long
      Term Contracts**





*The
      following table summarizes our significant contractual obligations at March
      31,
      2005, and the effect such obligations are expected to have on our liquidity
      and
      cash flows in future periods (in thousands).*




**Payments
          due by period**
 **Contractual
                    Obligations**
                
                
                **Remaining
                    nine months of 2005**
                
                
                2006
                
                
                2007
                
                
                2008
                
                
                2009
                
                
                2010
                  and thereafter
                
                
                TotalOperating
                  lease obligations
                
                $
                3,982
                
                $
                4,750
                
                $
                4,659
                
                $
                5,116
                
                $
                4,623
                
                $
                17,973
                
                $
                41,103Purchase
                  obligations
                
                
                13,080
                
                
                79
                
                
                8
                
                
                -
                
                
                -
                
                
                -
                
                
                13,167Other
                  commitments
                
                
                917
                
                
                458
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,375Total
                
                $
                17,979
                
                $
                5,287
                
                $
                4,667
                
                $
                5,116
                
                $
                4,623
                
                $
                17,973
                
                $
                55,645





**Factors
      That May Affect Results**




The
      risks
      and uncertainties described below are not the only ones we face. If an adverse
      outcome of any of the following risks actually occurs, our business, financial
      condition or results of operations could suffer.







*Although
      we realized net earnings for each of the fiscal quarters in 2002, 2003 and
      2004,
      and the first fiscal quarter in 2005, there is no assurance that we will be
      able
      to achieve comparable results in the future, and we may experience net losses
      in
      future years or quarters.*




We
      realized net earnings in each of the fiscal quarters in 2002, 2003 and 2004
      and
      the first fiscal quarter in 2005. However, we may experience net losses in
      future years or quarters if the web communications market softens significantly,
      or if existing or future competitors reduce our current market share of the
      web
      communications market or require us to reduce our prices substantially to remain
      competitive. If we incur net losses in the future, we may not be able to
      maintain or increase the number of our employees, our investment in expanding
      our services and network, or our sales, marketing and research and development
      programs in accordance with our present plans, each of which is critical to
      our
      long-term success.





Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005




*Because
      our quarterly results vary and are difficult to predict, we may fail to meet
      quarterly financial expectations, which may cause our stock price to decline.*




Because
      of the emerging nature of the market for web communications services, and
      because of the uncertain impact of competition, our quarterly revenue and
      operating results may fluctuate from quarter to quarter and may vary from
      publicly announced quarterly or annual financial guidance. In addition, because
      we have two different pricing models and the less predictable of the two
      currently represents a greater percentage of our revenue than it has in the
      past, our revenue and operating results will be more difficult to predict.
      The
      two pricing models are what we refer to as, respectively, subscription-based
      and
      usage-based, and the less predictable of the two is the usage-based pricing
      model.





From
      a
      revenue standpoint, our dominant pricing model has been a monthly, fixed-fee
      subscription model. Under this model, a customer may subscribe to a certain
      number of concurrent-user ports per month, which would enable the customer
      to
      have up to that number of users connected to WebEx meetings at any one time,
      or
      to a monthly minimum minutes commitment which would provide the customer with
      up
      to a set number of people minutes per month with which to utilize our services.
      Another of our fixed-fee offerings is the named host offering, in which a
      certain named individual may host meetings at which up to a certain number
      of
      attendees may participate.





In
      addition, there are several situations in which customers are charged per
      minute, or usage-based pricing. These include: customer overage fees, most
      types
      of telephony charges, certain distribution partner arrangements and individual
      pay-per-use purchased directly from our website. Overage fees are charged when
      (i) a customer subscribing to a set number of ports uses more than the
      subscribed number of ports in one or more web conference sessions, or (ii)
      when
      a customer on a minutes pricing model uses more than its monthly commitment.
      Per
      minute telephone revenue comes when a customer in a web conference session
      elects to have us set up and run the audio portion of the conference, rather
      than the customer conducting its telephone usage independent of us. The vast
      majority of revenue received from our telecommunications partner arrangements
      is
      usage, or per-minute, based. Finally, we make available on our website, for
      purchase online by credit card and on a usage-based basis, certain of our
      services.





Historically,
      the majority of our revenue has been fixed fee, but the percentage of our
      revenue which is derived from usage-based pricing models is greater than it
      has
      been in the past. For the quarter ended March 31, 2005, usage-based revenue
      exceeded 30% of our total revenue. The various usage-based revenue sources
      are
      more variable and difficult to predict than our fixed-fee subscription revenue
      sources, given that customer demand may vary from month to month depending
      on a
      number of factors, such as number of business days in a month or vacation
      patterns. Accordingly, to the extent the percent of our revenue derived from
      the
      various per-minute or usage-based sources increases, our overall revenue becomes
      more difficult to predict. Since fixed-fee revenue is what we refer to as
      committed revenue, and the usage-based revenue is what we call uncommitted
      revenue, another way to describe this increasing unpredictability is that our
      uncommitted revenue has grown faster than our committed revenue.





A
      number
      of other factors could also cause fluctuations in our operating results.




Factors
      outside our control include:




-
            our
                distribution partners’ degree of success in distributing our services to
                end-users;




-
            the
                announcement, introduction and market acceptance of new or enhanced
                services or products by our competitors;




-
            changes
                in offerings, sourcing or pricing policies of our competitors and
                our
                distributors;




-
            market
                acceptance of our services;




-
            the
                growth rate of the market for web communications services; and




-
            a
                trend toward lower average per-minute prices in the telecommunications
                sector generally.




Factors
      within our control include:




-
            our
                ability to develop, enhance and maintain our web communications network
                in
                a timely manner;




Form
            10-Q/A, amendment no. 1 for quarter ended March 31, 2005


-
            the
                mix of services we offer, and our introduction of new and enhanced
                services;




-
            our
                ability to attract and retain customers;




-
            the
                amount and timing of operating costs and capital expenditures relating
                to
                expansion of our business and network infrastructure; and




-
            changes
                in our pricing policies.




If
      any of
      these factors impact our business in an unplanned and negative manner during
      a
      particular period, our operating results may be below market expectations,
      in
      which case the market price of our common stock would likely decline. Also,
      factors such as the growth rate of the market for our services, our ability
      to
      maintain and enhance our network services and platform, and our competitors’
      success could impact our longer-term financial performance by reducing demand
      for our services, which would harm our business.







*We
      expect that our operating expenses will continue to increase, and if our revenue
      does not correspondingly increase, our business and operating results will
      suffer.*




We
      expect
      to continue to spend substantial financial and other resources on developing
      and
      introducing new services, on expanding our sales and marketing organization
      and
      our network infrastructure, and on upgrading leased facilities such as our
      corporate headquarters. For example, in 2004 we purchased a building in Mountain
      View, California which now serves as our primary network switching facility,
      and
      also in 2004 we entered into a ten-year lease for space in a building located
      in
      Santa Clara, California which became our corporate headquarters in January
      2005.
      We base our expansion plans and expense levels in part on our expectations
      of
      future revenue levels. If our revenue for a particular quarter is lower than
      we
      expect, we may be unable to reduce proportionately our operating expenses for
      that quarter, in which case our operating results for that quarter would suffer.
      And because our fixed expenses have increased appreciably due to our
      expectations relating to future revenue levels, if our revenue is sufficiently
      below expectation in one or more quarters, we may be unable to effect
      proportionate reductions in our operating expenses in a timely manner and,
      therefore, our operating results could suffer.







*Most
      of our customers do not have long-term obligations to purchase our services;
      therefore, our revenue and operating results could decline if our customers
      do
      not continue to use our services.*




Almost
      all of our customer contracts have initial terms of three to 12 months. These
      contracts are typically automatically renewed except where a customer takes
      action to cancel a contract prior to the end of an initial or renewal term.
      In a
      few customer situations including contracts with the federal government,
      customer contracts can be terminated by the customer during the term of the
      agreement. Our monthly average lost subscription MRR, an internal measurement
      tool we use to evaluate subscription-based revenues we have lost, for the
      quarter ended March 31, 2005 was 2.0%. In addition to cancellation, a customer
      may stop buying our services directly from us and instead start purchasing
      our
      services from one of our resellers. A customer may also change the number of
      ports or types of services that the customer purchases directly from us such
      that the overall subscription revenue to us is lower. The
      reasons why a customer would cancel use of our services have included the
      failure of the customer’s employees to learn about and use our services, the
      failure of the services to meet the customer’s expectations or requirements,
      financial difficulties experienced by the customer, or the customer’s decision
      to use services or products offered by a competitor. We may not obtain a
      sufficient amount of new or incremental business to compensate for any customers
      that we may lose. The loss of existing customers or our failure to obtain
      additional customers would harm our business and operating results.







*Our
      business and operating results may suffer if we fail to establish distribution
      relationships, if our distribution partners do not successfully market and
      sell
      our services or devote greater efforts to the products and services of
      competitors, or if we fail to become a significant participant in the
      telecommunications provider distribution channel.*




As
      of
      March 31, 2005, we had distribution agreements in place with telecommunications
      partners and software vendors and service providers that during the first
      quarter of 2005 accounted for 14% of our revenue, which revenue generally
      consists of initial set-up fees, commitment payments, and service fees. The
      majority of the payments received from these distribution partners are per
      minute or usage-based payments. The minority of payments are fixed-fee payments
      and are initially recorded as deferred revenue because we defer




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


revenue
      related to initial set-up fees received at the beginning of the relationship
      and
      record revenue from subscription services over the course of the service period
      as the distribution partner resells our services. We also do not recognize
      commitment fees as revenue until the commitment fee is paid and fully earned
      by
      the use of services by the reseller’s end user customers or forfeiture of the
      commitment at the end of the commitment period. We cannot anticipate the amount
      of revenue we will derive from these relationships in the future. We must
      continue to establish and extend these distribution partnerships. Establishing
      these distribution relationships can take as long as several months or more.
      It
      typically also takes several months before our distribution arrangements
      generate significant revenue. Our distribution partners are not prohibited
      from
      offering and reselling the products and services of our competitors, and a
      significant majority of our distribution partners currently do so. Such
      distribution partners (i) may choose to devote insufficient resources to
      marketing and supporting our services, (ii) may devote greater resources to
      marketing and supporting the products and services of our competitors including
      specific efforts to persuade the partner’s customers to switch from our services
      to those of our competitors, or (iii) may be persuaded by a competitor of ours
      to sever the partner’s distribution arrangement with us and possibly also become
      the exclusive distribution partner of that competitor. Specifically with regard
      to the telecommunications-provider distribution channel for web conferencing
      services which may prove economically significant in the future, our web
      conferencing competitors may be more successful in partnering with
      telecommunications providers, or telecommunications providers may independently
      enter the web conferencing business, either alone or with web conferencing
      vendors that do not include us. If we fail to establish new distribution
      relationships in a timely manner, if our distribution partners do not
      successfully distribute our services, if we lose existing distribution partners
      for whatever reason or if we fail to become a significant participant in the
      telecommunications-provider distribution channel, our ability to maintain
      current levels of market acceptance of our web communications services will
      suffer and our business and operating results will be harmed.







*Our
      total revenue may suffer if we are unable to manage our distribution
      relationships successfully to prevent the undercutting of our direct sales
      efforts.* **




We
      sell
      our services directly to customers and also indirectly through our distribution
      partners. We enter into distribution relationships so that we can obtain
      additional customers through distribution partners that we could not obtain
      through our direct sales efforts. Under our agreements with our distribution
      partners, either the distribution partner or WebEx bills the end-user customers.
      When the distribution partner bills the end-user, we sell the services on a
      discounted basis to the distribution partner, which in turn marks up the price
      and sells the services to the end-user. In such cases, we contract directly
      with
      the distribution partner, whom in this type of distribution arrangement we
      refer
      to as a reseller, and revenue is recognized on amounts charged to the
      distribution partner. A significant majority of the revenue derived from our
      distribution partners comes from distribution agreements of this type. We also
      have distribution arrangements where we, rather than the distribution partner,
      bill the end user. When we bill the end-user, a percentage of the proceeds
      generated from the sale of WebEx services is paid to the distribution partner,
      whom in this type of distribution arrangement we sometimes call a referral
      agent. Revenue is recognized based on amounts charged to the end-user and
      amounts paid to the distribution partner are recorded as sales expense. In
      either case, the revenue received by us when a sale is made by a distribution
      partner is not as great as it would have been had the sale been made by us
      directly, for the same volume of WebEx services. To the extent that sales of
      our
      services by our distribution partners are sales that, absent the existence
      of
      the distribution arrangement, would be made by our direct sales force, our
      sales
      revenue may decrease. Additionally, to the extent our existing customers
      discontinue direct agreements with us in order to purchase our services from
      distribution partners who are resellers, our revenue may decrease.







*We
      expect to depend on sales of our standalone WebEx Meeting Center service for
      a
      significant percentage of our revenue for the foreseeable future.*




Our
      standalone WebEx Meeting Center service, the service which generates our largest
      sales revenue, accounted for less than 45% of our revenue for the quarter ended
      March 31, 2005. We have developed and are selling other services, such as our
      Event Center, Training Center, Support Center, Sales Center and Enterprise
      Edition services, our SMARTtech service, and our audio conferencing service
      offered through our subsidiary in India. We currently offer our newest service,
      MyWebExPC, for free on an introductory and limited usage basis, although in
      the
      future we intend to offer two versions of this service and to charge a fee
      for
      use of the current version at that time. Our services other than Meeting Center
      may not provide significant revenue in the future. If we are not successful
      in
      developing, deploying and selling services other than our standalone Meeting
      Center service, and if sales of our standalone Meeting Center service decline
      or
      do not increase, our operating results will suffer.






Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


*If
      our services fail to function when used by large numbers of participants,
      whether because of the large number of participants or because of separate
      quality-related issues, we may lose customers and our business and reputation
      may be harmed.*




Our
      business strategy requires that our services be able to accommodate large
      numbers of meetings and users at any one time. Our data network monitoring
      system measures the capacity of our data network by bandwidth use. The goal
      of
      our network capacity planning is to have our average daily peak usage be less
      than 50% of our data network capacity. From time to time daily peak usage
      exceeds 50% of data network capacity. However, since mid-2002 we have been
      able
      to maintain average daily peak usage at under 50% of our data network capacity
      by adding capacity whenever there is a trend toward increased average daily
      peak
      usage. During the quarter ended March 31, 2005, the average of our daily peak
      usages, as a percentage of our data network capacity, was less than 50% of
      our
      total capacity. In addition to our data network, we also maintain an integrated
      telephony network for which capacity planning is necessary. If we fail to
      increase capacity in our data and telephony networks consistent with the growth
      in usage of each, the performance of these networks could be adversely impacted.
      In addition, we may encounter performance or other service-quality problems
      when
      making upgrades and modifications to either or both of these networks. If our
      services do not perform adequately because of capacity-related or other
      quality-related problems with either or both of our data and telephony networks,
      particularly our data network, we may lose customers and be unable to attract
      new customers and our operating results would be harmed.







*If
      our marketing, branding and lead-generation efforts are not successful, our
      business may be harmed.*




We
      believe that continued marketing and brand recognition efforts will be critical
      to achieve widespread acceptance of our web communications services. Our
      marketing and advertising campaigns or branding efforts may not be successful
      given the expense required. For example, certain sales promotion initiatives,
      such as free introductory or free trial use, may dampen short-term sales even
      as
      such initiatives attempt to cultivate participants’ desire to purchase and use
      our services, in that a customer who might have otherwise purchased our services
      will instead receive free use of our services for the trial period of time.
      In
      addition, failure to adequately generate and develop sales leads could cause
      our
      future revenue growth to decrease. Also, our inability to generate and cultivate
      sales leads into large organizations, where there is the potential for
      significant use of our services and where any future marketplace standardization
      of our service might emerge, could harm our business. There is no assurance
      that
      we will identify, and if we identify be able to secure, the number of strategic
      sales leads necessary to help generate standardized marketplace acceptance
      of
      our services, or to maintain rates of revenue growth we have experienced in
      the
      past. If our marketing, branding or lead-generation efforts are not successful,
      our business and operating results will be harmed.







*We
      rely on our China subsidiary, which exposes us to risks of economic instability
      in China, risks related to political tension between China and the United
      States, and risks arising from an inability to enforce our intellectual property
      rights.*




We
      have
      relied, and for the foreseeable future we plan to continue to rely, on our
      subsidiary WebEx China to conduct a significant portion of our quality assurance
      testing and software development activities, and also a number of other
      activities including lead research for our sales personnel, creation of
      technical documentation, preparation of marketing materials and the provisioning
      of customer websites. We have five facilities in China, located in each of
      Hefei, Hangzhou, Shanghai, Shenzhen and Suzhou. Our China subsidiary employed,
      as of March 31, 2005, approximately 804 of our worldwide employees. Our reliance
      on WebEx China for a significant portion of our quality assurance, software
      development and other activities exposes us to a variety of economic and
      political risks including, but not limited to, technology-development
      restrictions, potentially costly and pro-employee labor laws and regulations
      governing our employees in China, and travel restrictions. Further, our
      per-employee productivity is lower in China than it is the United States. We
      also face foreign exchange risk in that we have significant payment obligations
      that must be made in Chinese currency including employee salaries and lease
      payments, which are currently not offset by sales revenue in China. The Chinese
      currency, or yuan, is a currency whose rate of exchange with other currencies
      is
      controlled by the Chinese government, and any removal of that control could
      result in a significant appreciation of the yuan relative to the U.S. dollar
      and
      thereby increase the negative effect of the foreign exchange risk we face in
      China. In addition, political and economic tensions between the United States
      and China could harm our ability to conduct operations in China, which could
      increase our operating costs and harm our business and operations. If we lost
      the services of our WebEx China subsidiary, we would incur increased costs,
      which would harm our operating results and business. Finally, because a
      substantial amount of our research and development activity takes place in
      China, our business may be harmed if we encounter difficulties enforcing our
      intellectual property rights there.








*Our
      international business activities expose us to foreign exchange risk, foreign
      country economic conditions and the challenges of managing a global business
      operation, any of which if not managed successfully could harm our financial
      condition.* **




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


A
      small,
      but growing, part of our sales and support activities, and a significant portion
      of our customer provisioning and research and development activities, are
      conducted outside of the United States. These services are generally priced
      in
      the local currency. As a result, our financial results could be affected by
      factors such as changes in foreign currency exchange rates or weak economic
      conditions in foreign markets. We do not currently engage in hedging activities
      or other actions to decrease fluctuations in operating results due to changes
      in
      foreign currency exchange rates, although we may do so when the amount of
      revenue obtained from sources outside the United States becomes significant. We
      conduct sales, marketing, network and customer support operations in countries
      outside of the United States, and we currently have subsidiaries in each of
      the
      following countries: China, Hong Kong, Japan, Australia, India, the United
      Kingdom, France, Germany and the Netherlands. Our future results could be
      materially adversely affected by a variety of challenges generally associated
      with managing a global business including, among others, the
      following:




-
            staffing
                and managing international operations including multiple non-U.S.
                subsidiary structures;




-
            handling
                the various accounting, tax and legal complexities arising from our
                international operations;




-
            properly
                designing, testing andmaintaining
                internal controls over financial reporting in our non-U.S. subsidiaries,
                as required under the Sarbanes-Oxley Act of 2002 and related laws
                and
                regulations;




-
            understanding
                cultural differences affecting non-U.S. employee relations or sales
                transactions;
                and




-
            addressing
                political, economic or social instabilities that may arise from time
                to
                time in a specific non-U.S. country or
                region.




The
      cost
      of meeting these and other challenges, or our failure to address adequately
      one
      or more of such challenges, could have a material adverse impact on our costs,
      expenses, and financial condition .








*We
      could incur unexpected costs resulting from claims relating to use of our
      services.*




Many
      of
      the business interactions supported by our services are critical to our
      customers’ businesses. Although it is not standard practice for us to do so, in
      some situations we do make warranties in our customer agreements as to service
      uptime, or the percentage of time that our network will be operational and
      available for customer use. Accordingly, any failure by us to fulfill such
      warranty obligation, or more generally any failure in a customer’s business
      interaction or other communications activity that is caused or allegedly caused
      by our services, could result in a claim for damages against us, regardless
      of
      our responsibility for the failure, and cause us to incur unexpected costs.







*The
      software underlying our services is complex, and our business and reputation
      could suffer if our services fail to perform properly due to defects or similar
      problems with our underlying software.*




Complex
      software, such as the software underlying our services, often contains defects.
      We may be forced to delay commercial release of new services or new versions
      of
      existing services until problems are corrected and, in some cases, may need
      to
      implement enhancements to correct defects or bugs that we do not detect until
      after deployment of our services. If we do detect a defect or bug in our
      software before we introduce new versions of our services, we might have to
      limit our services for an extended period of time while we resolve the problem.
      In addition, problems with the software underlying our services could result
      in:




-
            damage
                to our reputation;




-
            damage
                to our efforts to build brand awareness;




-
            loss
                of customers, or loss of or delay in revenue;




-
            delays
                in or loss of market acceptance of our services; and




-
            unexpected
                expenses and diversion of resources to remedy errors.







Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


*If
      our services do not work with the many hardware and software platforms used
      by
      our customers and end-users, our business may be harmed.*




We
      currently serve customers and end-users that use a wide variety of constantly
      changing hardware and software applications and platforms. If our services
      are
      unable to support these platforms, they may fail to gain broad market
      acceptance, which would cause our operating results to suffer. Our success
      depends on our ability to deliver our services to multiple platforms and
      existing, or legacy, systems and to modify our services and underlying
      technology as new versions of applications are introduced. In addition, the
      success of our services depends on our ability to anticipate and support new
      standards, especially web standards.







*We
      license third-party technologies, and if we cannot continue to license these
      or
      alternate technologies in a timely manner and on commercially reasonable terms,
      our business could suffer.*




We intend to continue to license technologies from third parties, including
      applications used in our research and development activities and technology,
      which is integrated into our services. For example, we license database,
      operating system, server and enterprise marketing automation software, billing
      software, font-rendering technology and voice-over-Internet protocol (VOIP)
      technology. These third-party technologies, and any that we may utilize in
      the
      future, may not continue to be available to us on commercially reasonable terms.
      In addition, we may fail to successfully integrate any licensed technology
      into
      our services, our marketing communications operations or our online sales
      operations. This in turn could increase our costs and harm our business and
      operating results.







*Our
      recent growth has placed a strain on our infrastructure and resources, and
      if we
      fail to manage our future growth to meet customer and distribution partner
      requirements, both within the U.S. and internationally, our business could
      suffer.*




We
      have
      experienced a period of rapid expansion in our personnel, facilities, and
      infrastructure that has placed a significant strain on our resources. For
      example, our worldwide headcount increased from 1,334 at March 31, 2004 to
      1,889
      at March 31, 2005. We expect to continue to increase our personnel during the
      remainder of 2005. Our expansion has placed, and we expect that it will continue
      to place, a significant strain on our management, operational and financial
      resources. In addition, we have recently completed the physical transfer of
      our
      network switching operations center to a new building and, separately, we are
      continuing periodically to update our information technology infrastructure
      to
      meet increased requirements for capacity, flexibility and efficiency resulting
      from the growth of our business. In the event these recently-deployed or
      recently-updated systems or technologies do not meet our requirements or are
      not
      deployed in a successful or timely manner, our business may suffer. Any failure
      by us to manage our growth effectively could disrupt our operations or delay
      execution of our business plan and could consequently harm our business.







*Breaches
      of our physical or technical security systems may result in violations of our
      confidentiality and security obligations to our customers, damage to our systems
      and our reputation, and may endanger the safety of our
      employees* *.*





Our
      customers and end-users may use our services to share confidential and sensitive
      information, the security of which is critical to their business. Third parties
      may attempt to breach our security or that of our customers. We may be liable
      to
      our customers for any breach in security, and any breach could harm our
      reputation and cause us to lose customers. In addition, computers are vulnerable
      to computer viruses, physical or electronic break-ins and similar disruptions,
      which could lead to interruptions, delays or loss of data. A breach of the
      physical security of our facilities may endanger the safety of our employees.
      We
      may be required to expend significant capital and other resources to further
      protect against security breaches or to resolve problems caused by any breach,
      including litigation-related expenses if we are sued .






*Changes
      in our executive management team may be disruptive to our
      business.*





From
      time
      to time there are changes in our executive management team, including the hiring
      and departure of executives, and the reorganization of responsibilities and
      personnel. For example, in recent months we have had executive management
      replacements in our marketing and product management organizations, two
      important areas of our business. Such changes may be disruptive to our business,
      because the executives and employees reporting to them require time to become
      fully productive in their new roles and new organizations. Planned changes
      in
      the company’s organization or management may not achieve the expected benefits.
      In addition, the departure of executives may create temporary voids in
      leadership in critical areas of the company. Because of these risks,
      organizational and management changes may have an adverse impact on our
      financial performance. We do not have long-term employment agreements or life
      insurance policies on any of our senior executives.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005




*If
      we
      are unable to attract, integrate and retain qualified personnel, our business
      could suffer.*




Our
      future success will depend on our ability to attract, train, retain and motivate
      highly skilled engineering, technical, managerial, sales and marketing and
      customer support personnel. We expect to continue to increase our personnel
      during the remainder of 2005. As the U.S. economy in general and the technology
      sector in particular continue to grow, we could encounter increasing difficulty
      hiring qualified personnel. If we encounter difficulty hiring, integrating
      and
      retaining a sufficient number of qualified personnel in the future, the quality
      of our web communications services and our ability to develop new services,
      obtain new customers and provide a high level of customer service could all
      suffer, and consequently the health of our overall business could suffer. If
      in
      our hiring we hire employees from our competitors, we face a risk that a
      competitor may claim that we have engaged in unfair hiring practices, which
      could cause us to incur costs in defending ourselves against such claims,
      regardless of their merits. Also, our competitors appear to value certain
      specialized skills possessed by certain of our technical and sales employees,
      having hired or attempted to hire such individuals in recent quarters. If the
      rate at which such employees are hired away increases appreciably, our business
      and operations could be harmed. In addition, the recent Financial Accounting
      Standards Board (FASB) rule announcement concerning equity compensation
      accounting for financial reporting purposes will add, we believe, complexity
      and
      uncertainty to our efforts to attract and retain qualified personnel. If, in
      an
      effort to attract and retain personnel, we do not undertake sufficient
      reductions in our current equity compensation practices, our compensation
      expense will increase appreciably under the new FASB rule and our stock price
      may be negatively affected, thus depriving us of an equity-related motivation
      to
      attract and keep workers, which would hurt our business. On the other hand,
      if
      due to the FASB rule change we curtail our equity compensation practices too
      much and fail to continue to offer compensation packages that are competitive
      with those being offered by other public or privately-held technology companies,
      we may have trouble retaining or recruiting key technical or management talent
      or we may have to pay higher salaries to obtain or retain such talent, which
      would also hurt our business.







*Interruption
      or malfunction of our internal business processing systems, including a new
      system we installed during 2004 and a comprehensive database system upgrade
      to
      be implemented during 2005, could disrupt the services we provide our customers
      and could harm our business* *.*




Our
      business, with its approximately 11,600 subscription customers and large number
      of daily transactions, is substantially dependent on the continuous and
      error-free functioning of our automated business processing systems covering
      such areas as order-entry, billing, contract management and collection
      activities. During 2004, we completed deployment of and are now utilizing an
      internally-developed, proprietary business processing system to capture and
      record, for billing and financial statement generation purposes, customer usage
      of our various services. Because
      we likely would have to rely on our own know-how and experience, rather than
      that of an outside vendor, to identify, diagnose and repair any bugs,
      start-up problems or other malfunctions relating to the new system, any such
      malfunction could cause delays or errors in transaction processing, which could
      negatively affect customer relationships and could harm our business .
      Actual
      malfunction-related costs that could have negative effects on our business
      include (i) a modestly longer collection cycle as a result of delayed invoicing
      or invoice presentation issues, and (ii) our having to deploy additional
      resources internally to complete the processing of certain sales transactions.
      In addition, during 2005 we will be installing an enhanced version of our
      internal database system for financial reporting, human resource management
      and
      other enterprise resource planning functions. Any
      material interruption or malfunction associated with the installation or
      operation of the new database system, including bugs or start-up problems
      relating to the new system, could result in delays or errors in our financial
      accounting, financial reporting and other internal control activities, which
      could cause us to fail to meet legal and compliance requirements applicable
      to
      public companies, which in turn could harm our business .







*Interruptions
      in either our internal or outsourced computer and communications systems could
      reduce our ability to provide our revenue-generating services and could harm
      our
      business and reputation.*




The
      success of our web communications services depends on the efficient and
      uninterrupted operation of our internal and outsourced computer and
      communications hardware, software and services. In 2004 we completed
      installation of an updated version of our server management system, which system
      monitors and reports on the status of our various servers through which our
      real-time web communications services are delivered to customers. Any system
      failure, including the malfunction of the new server management system, that
      causes an interruption in our web communications services or a decrease in
      their
      performance, could harm our relationships with our customers and distribution
      partners. In




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


addition,
      some of our communications hardware and software are hosted at third-party
      co-location facilities. These systems and operations are vulnerable to damage
      or
      interruption from human error, telecommunications failures, physical or remote
      break-ins, sabotage, computer viruses and intentional acts of vandalism. In
      addition, third party co-location facilities may discontinue their operations
      due to poor business performance. Because a substantial part of our central
      computer and communications hardware and network operations are located in
      the
      San Francisco Bay Area, an earthquake or other natural disaster could impair
      the
      performance of our entire network. In the event of damage to or interruption
      of
      our internal or outsourced systems, if we are unable to implement our disaster
      recovery plans or our efforts to restore our services to normal levels in a
      timely manner are not successful, our business would be harmed. In addition,
      business interruption insurance may not adequately compensate us for losses
      that
      may occur. Finally,
      in 2004 we purchased approximately nine acres of real property in Mountain
      View,
      California on which resides a building which we use primarily as a switching
      center facility to accommodate growing usage requirements on our WebEx MediaTone
      Network. Any malfunction or service interruption we suffer relating to our
      network switching operations to the new building could disrupt our
      communications services, could harm our relationships with our customers and
      distribution partners, and could harm our business.







*We
      might have liability for content or information transmitted through our
      communications services.*




Claims
      may be asserted against us for defamation, negligence, copyright, patent or
      trademark infringement and other legal theories based on the nature and content
      of the materials transmitted through our web communications services. Defending
      against such claims could be expensive, could be time-consuming and could divert
      management’s attention away from running our business. In addition, any
      imposition of liability could harm our reputation and our business and operating
      results, or could result in the imposition of criminal penalties.







*Our
      success depends upon the patent protection of our software and technology.*




Our
      success and ability to compete depend to a significant degree upon the
      protection of our underlying software and our proprietary technology through
      patents. We regard the effective protection of patentable inventions as
      important to our future opportunities. We currently have 23 issued patents,
      including eight we acquired in connection with our 2003 acquisition of certain
      assets of Presenter, Inc. and five we purchased in 2004 from NCR Corporation.
      Our patents are in several areas including peer-to-peer connections to
      facilitate conferencing, document annotation, optimizing data transfer,
      graphical user interface for extracting video presentations, and remote
      collaboration systems involving multiple computers. We currently have over
      30
      patent applications pending in the United States including eight patent
      applications assigned to us in the Presenter asset acquisition transaction.
      We
      may seek additional patents in the future. Our current patent applications
      cover
      different aspects of the technology used to deliver our services and are
      important to our ability to compete. However, it is possible that:




-
            any
                patents acquired by or issued to us may not be broad enough to protect
                us;




-
            any
                issued patent could be successfully challenged by one or more third
                parties, which could result in our loss of the right to prevent others
                from exploiting the inventions claimed in those patents and subjecting
                us
                to claims for seeking to enforce such patents;




-
            current
                and future competitors may independently develop similar technology,
                duplicate our services or design around any of our patents;




-
            our
                pending patent applications may not result in the issuance of patents;
                and




-
            effective
                patent protection, including effective legal-enforcement mechanisms
                against those who violate our patent-related assets, may not be available
                in every country in which we do business.







*We
      also rely upon trademarks, copyrights and trade secrets to protect our
      technology, which may not be sufficient to protect our intellectual property.*




We
      also
      rely on a combination of laws, such as copyright, trademark and trade secret
      laws, and contractual restrictions, such as confidentiality agreements and
      licenses, to establish and protect our technology. Our trademarks include:
      WebEx
      (word and design), WebEx bifurcated ball logo design, WebEx.com, MyWebEx,
      MyWebExPC, Bringing the




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


Meeting
      to You, MediaTone, Meeting Center, WebEx Meeting Center, Event Center, WebEx
      Event Center, We’ve Got To Start Meeting Like This, Presentation Studio, WebEx
      Connect, WebEx Global Watch, WebEx Contact Center, WebEx Access Anywhere, Power
      Panels and All Time Collaboration. Federal trademark applications acquired
      from
      Presenter consist of the trademarks iPresenter, iPresentation and Instant
      Presentation. We also refer to trademarks of other corporations and
      organizations in this document. Also, our software is automatically protected
      by
      copyright law. These forms of intellectual property protection are critically
      important to our ability to establish and maintain our competitive position.
      However,




-
            third
                parties may infringe or misappropriate our copyrights, trademarks
                and
                similar proprietary rights;




-
            laws
                and contractual restrictions, particularly those existing within
                or
                applied within non-U.S. jurisdictions such as China, may not be sufficient
                to prevent misappropriation of our technology or to deter others
                from
                developing similar technologies;




-
            effective
                trademark, copyright and trade secret protection, including effective
                legal-enforcement mechanisms against those who violate our trademark,
                copyright or trade secret assets, may be unavailable or limited in
                foreign
                countries;




-
            other
                companies may claim common law trademark rights based upon state
                or
                foreign laws that precede the federal registration of our marks;
                and




-
            policing
                unauthorized use of our services and trademarks is difficult, expensive
                and time-consuming, and we may be unable to determine the extent
                of any
                unauthorized use.





Reverse
      engineering, unauthorized copying or other misappropriation of our proprietary
      technology could enable third parties to benefit from our technology without
      paying us for it, which would significantly harm our business.







*We
      may face intellectual property infringement claims that could be costly to
      defend and result in our loss of significant rights.*




We
      may be
      subject to legal proceedings and claims, including claims of alleged
      infringement of the copyrights, trademarks and patents of third parties. Our
      services may infringe issued patents. In addition, we may be unaware of filed
      patent applications which have not yet been made public and which relate to
      our
      services. From time to time, we have received notices alleging that we infringe
      intellectual property rights of third parties. In such cases, we investigate
      the
      relevant facts, respond to the allegations and, where case facts and other
      conditions warrant, consider settlement options. Intellectual property claims
      that may be asserted against us in the future could result in litigation.
      Intellectual property litigation is expensive and time-consuming and could
      divert management’s attention away from running our business. Intellectual
      property litigation could also require us to develop non-infringing technology
      or enter into royalty or license agreements. These royalty or license
      agreements, if required, may not be available on acceptable terms, if at all,
      in
      the event of a successful claim of infringement. Our failure or inability to
      develop non-infringing technology or license proprietary rights on a timely
      basis would harm our business.







*We
      may engage in future acquisitions or investments that could dilute the ownership
      of our existing stockholders, cause us to incur significant expenses, fail
      to
      complement our existing revenue models or harm our operating results.*




We
      may
      acquire or invest in complementary businesses, technologies or services. For
      example, in 2004 we acquired CyberBazaar, an audio conferencing company in
      India
      which we have since renamed WebEx Communications India Pvt. Ltd. Integrating
      any
      newly acquired businesses, employees, technologies or services may be expensive
      and time-consuming. To finance any material acquisitions, it may be necessary
      for us to significantly deplete our cash reserves or to raise additional funds
      through public or private financings. Additional funds may not be available
      on
      terms that are favorable to us and, in the case of equity financings as with
      acquisitions made with our stock, may result in dilution to our stockholders.
      We
      may be unable to complete any acquisitions or investments on commercially
      reasonable terms, if at all. Even if completed, we may be unable to operate
      any
      acquired businesses profitably or successfully integrate the employees,
      technology, products or services of any acquired businesses into our existing
      business. To illustrate, in connection with the CyberBazaar acquisition in
      2004,
      we added the former CyberBazaar workforce to our worldwide employee headcount,
      we continue to offer the former CyberBazaar audio conferencing services and
      we
      plan to eventually integrate our WebEx audio conferencing and network technology
      into the WebEx India operation. However, if we fail to integrate the




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


former
      CyberBazaar employees and other employees hired after the acquisition into
      our
      company, or otherwise fail to successfully manage these new operations as our
      new WebEx India subsidiary in India, or if we fail to successfully upgrade
      the
      former CyberBazaar audio conferencing assets or expand our worldwide network
      into India, the acquisition may not meet our financial expectations. If we
      are
      unable to integrate any newly acquired entities or technologies effectively,
      including those related to our CyberBazaar acquisition, our operating results
      could suffer. Future acquisitions by us, or deterioration of the businesses
      we
      have acquired, could also result in large and immediate write-downs, or
      incurrence of debt and contingent liabilities, any of which would harm our
      operating results.







*We
      must compete successfully in the web communications services market.*




The
      market for web communications services is intensely competitive, subject to
      rapid change and is significantly affected by new product and service
      introductions and other market activities of industry participants. Although
      we
      do not currently compete against any one entity with respect to all aspects
      of
      our services, we do compete with various companies in regards to specific
      elements of our web communications services. For example, we compete with
      providers of traditional communications technologies such as teleconferencing
      and videoconferencing, applications software and tools companies, and web
      conferencing services such as Centra Software, Cisco Systems, Citrix Systems,
      Genesys, IBM, Microsoft, Oracle, Raindance and Macromedia, which in April 2005
      announced that it had signed a definitive agreement to be acquired by Adobe
      Systems. In addition to the above competitors, certain of our distribution
      partners offer competitive web conferencing services. Other companies could
      choose to extend their products and services to include competitive interactive
      communication offerings in the future. Many of our current and potential
      competitors have longer operating histories, significantly greater financial,
      technical and other resources and greater name recognition than we do. Our
      current and future competitors may be able to respond more quickly to new or
      emerging technologies and changes in customer requirements. In addition, current
      and potential competitors have established, and may in the future establish,
      cooperative relationships with third parties and with each other to increase
      the
      availability of their products and services to the marketplace. Competitive
      pressures could reduce our market share or require us to reduce the price of
      our
      services, either of which could harm our business and operating results. For
      example, we offer VOIP to customers seeking that option for the audio portion
      of
      their web conferencing service activity, which puts us in competition with
      increasing numbers of low cost providers of VOIP products and services of
      ever-increasing quality. One or more of these competitors may offer a
      sufficiently low-cost, feature-attractive, audio-centric VOIP offering that,
      though not a web conferencing offering, might divert business away from us,
      or
      one or more of these competitors might themselves leverage their experience
      in
      the VOIP segment of web communications to develop and market a web-conferencing
      product or service of their own. Finally, our revenues and market share could
      also be reduced if, during this time period where the market is still relatively
      new and competitors are still emerging, we do not capitalize on our current
      market leadership by timely developing and executing corporate strategies that
      will increase the likelihood that our services will be accepted as the market
      standard in preference to the offerings of our current and future competitors.





*Competition
      from Microsoft for the general web conferencing market or from other vendors
      specifically targeted at the low-end market may adversely affect our operating
      results.*




Microsoft
      has become a more active participant in the web communications services market
      since its acquisition of our competitor Placeware in 2003. Microsoft has a
      current product offering which is competitive with ours and which is called
      Microsoft Office Live Meeting. Microsoft Office Live Meeting is being marketed
      together with other Microsoft software products and services under the name
      Microsoft Office System. Microsoft in March 2005 announced certain improvements
      to the Live Meeting service and other product developments, and also an
      acquisition related to the areas of communication and collaboration. Microsoft’s
      investment of development and marketing resources in products or services that
      compete directly with WebEx and Microsoft’s integrations of competitive
      functionality with other communication and collaboration offerings may have
      an
      adverse impact on WebEx’s business. Microsoft may attempt to leverage its
      dominant market position in the operating system, productivity application
      or
      browser markets, through technical integration or bundled offerings, to expand
      its presence in the web communications market, which could make it difficult
      for
      other vendors of web communications products and services, such as WebEx, to
      compete. In addition some competitors offer web communications products and
      services targeted at customers who are more price-conscious and are less
      concerned about functionality, scalability, integration and security features.
      Such offerings may make it more difficult for us to compete in that segment
      of
      the market and may cause some of our existing customers to switch to these
      competitors. If we are unable to deliver competitive offerings for that segment
      of the market, our operating results may suffer. Also, such lower-cost offerings
      may force us to reduce the prices of our services in order to attract or retain
      customers, which in turn also may affect the extent and type of resources we
      deploy in the selling of our services in an effort to maintain operating
      margins. Such forced price reductions, as well as costs or lost sales associated
      with a transitioning to different and less expensive sales practices, could
      have
      a negative effect on our operating results.





Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005




*Our
      future success depends on the broad market adoption and acceptance of web
      communications services.*




The
      market for web communications services is relatively new and rapidly evolving.
      Market demand for communications services over the Web is uncertain. If the
      market for web communications services does not continue to grow, our business
      and operating results will be harmed. Factors that might influence broad market
      acceptance of our services include the following, all of which are beyond our
      control:




-
            willingness
                of businesses and end-users to use web communications services for
                websites;




-
            the
                continued growth and viability of the Web as an instrument of commerce;




-
            the
                willingness of our distribution partners to integrate web communications
                services for websites in their service offerings; and




-
            the
                ongoing level of security and reliability for conducting business
                over the
                Web.







*Our
      success depends on the continued growth of web usage and the continued growth
      in
      reliability and capacity of the Internet.*




Because
      customers access our network through the Web, our revenue growth depends on
      the
      continued development and maintenance of the Internet infrastructure. This
      continued development of the Web would include maintenance of a reliable network
      with the necessary speed, data capacity and security, as well as timely
      development of complementary products and services, including high-speed modems
      and other high-bandwidth communications technologies, for providing reliable,
      high-performance Internet access and services. The success of our business
      will
      rely on the continued improvement of the Web as a convenient and reliable means
      of customer interaction and commerce, as well as an efficient medium for the
      delivery and distribution of information by businesses to their employees.
      If
      increases in web usage or the continued growth in reliability and capacity
      of
      the Internet fail to materialize, our ability to deliver our services may be
      adversely affected and our operating results could be harmed.







*We
      face risks associated with government regulation of the Internet, and related
      legal uncertainties.*




Currently,
      a relatively small number of existing laws or regulations specifically apply
      to
      the Internet, other than laws generally applicable to businesses. Many
      Internet-related laws and regulations, however, are pending and may be adopted
      in the United States, in individual states and local jurisdictions and in other
      countries. These laws may relate to many areas that impact our business,
      including encryption, network and information security, the convergence of
      traditional communication services, such as telephone services, with Internet
      communications, taxes and wireless networks. For example, media reports have
      surfaced from time to time concerning possible future regulation, and perhaps
      also taxation, of VOIP products and services similar to the manner in which
      current telephony services are currently regulated and taxed. These types of
      regulations could differ between countries and other political and geographic
      divisions both inside and outside the United States. Non-U.S. countries and
      political organizations may impose, or favor, more and different regulation
      than
      that which has been proposed in the United States, thus furthering the
      complexity of regulation. In addition, state and local governments within the
      United States may impose regulations in addition to, inconsistent with, or
      stricter than federal regulations. The adoption of such laws or regulations,
      and
      uncertainties associated with their validity, interpretation, applicability
      and
      enforcement, may affect the available distribution channels for, and the costs
      associated with, our products and services. The adoption of such laws and
      regulations may harm our business. In addition to the effect of such potential
      future laws and regulations, existing laws and regulations in both domestic
      and
      non-U.S. jurisdictions could be interpreted to apply to our web communications
      business, in which case our regulatory compliance obligations and associated
      financial burdens could increase. An example of a non-U.S. law or regulation
      that we are expending resources, both infrastructure-related and legal-related,
      to comply with are the various privacy statutes enacted by the European Union.
      Examples of U.S. laws and regulations that we may have to expend greater
      resources to comply with are various U.S. state sales tax laws and regulations
      that may be held by the applicable authorities to apply to the sale of our
      web
      communications services.







*Current
      and future economic and political conditions may adversely affect our business.*




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


Current
      economic and political conditions, including the effects of the war in Iraq,
      uncertainty about Iraq’s political future, continuing tensions throughout the
      Middle East and the supply and price of petroleum products continue to impact
      the U.S. and global economy, and any negative development in one of these
      geopolitical areas could cause significant worldwide economic harm. Any
      sustained increase in the price of petroleum products above present levels
      would
      likely negatively impact the U.S. and world economies generally, which in turn
      could hurt our business. Any significant downturn in the U.S. economy, whether
      due to the effect of increasing interest rates or otherwise, could cause
      existing or potential customers to decide not to purchase our services, which
      in
      turn would hurt our business. To the extent that changes in laws, regulations
      or
      taxes in the U.S. diminish the economic benefits of arrangements by U.S.
      companies with non-U.S. subsidiaries or suppliers, our business would be
      adversely affected. As with our operations in China, our operations in India
      could be significantly disrupted if U.S. relations with India deteriorate,
      or if
      India becomes involved in armed conflict or otherwise becomes politically
      destabilized. Moreover, depending on severity, a significant terrorist attack
      anywhere in the world and particularly one within the United States could have
      a
      significantly negative effect on both the domestic and global economies. If
      economic conditions worsen as a result of economic, political or social turmoil
      or military conflict, or if there are further terrorist attacks in the United
      States or elsewhere, our customers may not be able to pay for our services
      and
      our distribution partners may cease operations, which may harm our operating
      results.







*We
      may experience electrical system failures whether accidentally or intentionally
      caused, which could disrupt our operations and increase our expenses.*




California
      has experienced, and could in the future experience energy shortages and
      blackouts. As was made evident by the well-publicized August 2003 blackout
      which
      simultaneously affected several eastern U.S. states for a period exceeding
      24
      hours, a similarly widespread, long-lasting power outage could occur in northern
      California. As with the eastern U.S. power supply, an important source of
      electrical power to northern California consists of a multi-state grid situated
      in the western United States. An accidental interruption of, or criminal
      disruption to, a key supply or distribution component of the power grid could
      cause a significant power outage in northern California. If power outages or
      energy price increases occur in the future in northern California or other
      locations where we maintain operations, such events could disrupt our
      operations, prevent us from providing our services, harm our reputation, and
      result in a loss of revenue and increase in our expenses, all of which could
      substantially harm our business and results of operations.







*Changes
      to financial accounting standards may affect our results of operations and
      cause
      us to change our business practices* *.*




We
      prepare our financial statements to conform with generally accepted accounting
      principles, or GAAP, in the United States. These accounting principles are
      subject to interpretation by the American Institute of Certified Public
      Accountants, the Securities and Exchange Commission and various bodies formed
      to
      interpret and create appropriate accounting policies. A change in those policies
      can have a significant effect on our reported results and may affect our
      reporting of transactions completed before a change is announced. Changes to
      those rules or the questioning of current practices may adversely affect our
      reported financial results or the way we conduct our business. For example,
      accounting policies affecting many aspects of our business, including rules
      relating to employee equity compensation programs, have recently been revised
      or
      are under review. ****** The
      Financial Accounting Standards Board (FASB) during the fourth quarter of 2004
      adopted final rules which will change the way companies account for equity
      compensation in their financial statements. FASB has stated that the new
      accounting standard would become effective for fiscal years that commence after
      June 2005. This change in accounting standards will require us to report as
      a
      compensation expense options granted to and shares purchased by our employees
      pursuant to our stock option and employee stock purchase plans. If we do not
      change our current equity compensation practices, the new accounting rule could
      have a negative effect on our reported net income. Accordingly, we have begun
      to
      change our equity compensation practices. In March 2005 we amended our employee
      stock purchase plan to reduce the length of the offering period and the maximum
      number of shares that can be purchased during an offering period. Also because
      of the pending FASB rule, we are evaluating our existing stock option grant
      program in relation to its future effect on our reported net income, including
      in that evaluation the possibility of reducing the number of stock options
      we
      grant in the future to employees. The new FASB rule, we believe, will add
      complexity and uncertainty to our management of employee compensation practices.
      On the one hand, if we underestimate the effect of the new rule on the
      technology labor market and reduce equity-based compensation too much, we may
      be
      forced to increase cash compensation to make up for our having reduced
      equity-based compensation opportunities, which would increase our expenses.
      Also, if we reduce equity-based compensation too much and thereby fail to offer
      compensation packages that are competitive with those being offered by other
      public or privately-held technology companies, we may have trouble retaining
      or
      recruiting key technical or management talent. On the other hand, if we
      overestimate the effect of the new FASB rule on the technology labor market
      and
      do not sufficiently curtail our current equity compensation practices, our
      compensation expense will increase appreciably and our stock price may be
      negatively affected, thus depriving us of an equity-related motivation to
      attract and keep workers which in turn would hurt our business.





Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005




*While
      we believe that we currently have adequate internal controls over financial
      reporting, we are exposed to risks from recent legislation requiring companies
      to evaluate those internal controls* *.*




Section
      404 of the Sarbanes-Oxley Act of 2004 requires our management to report on,
      and
      our independent auditors to attest to, the effectiveness of our internal control
      structure and procedures for financial reporting. We completed an evaluation
      of
      the effectiveness of our internal controls for the fiscal year ended December
      31, 2004, and we have an ongoing program to perform the system and process
      evaluation and testing necessary to continue to comply with these requirements.
      We expect to continue to incur increased expense and to devote additional
      management resources to Section 404 compliance. In the event that our chief
      executive officer, chief financial officer or independent registered public
      accounting firm determine that our internal controls over financial reporting
      are not effective as defined under Section 404, investor perceptions of our
      company may be adversely affected and could cause a decline in the market price
      of our stock .







*Our
      stock price has been and will likely continue to be volatile because of stock
      market fluctuations that affect the prices of technology stocks. A decline
      in
      our stock price could result in securities class action litigation against
      us
      that could divert management’s attention and harm our business.*




Our
      stock
      price has been and is likely to continue to be highly volatile. For example,
      between January 1, 2005 and April 30, 2005, our stock price has traded as high
      as $23.75 on March 3, 2005 and as low as $19.25 on April 15, 2005. Our stock
      price could fluctuate significantly due to a number of factors, including:




-
            variations
                in our actual or anticipated operating results;




-
            sales
                of substantial amounts of our stock;




-
            announcements
                by or about us or our competitors, including technological innovation,
                new
                products, services or acquisitions;




-
            litigation
                and other developments relating to our patents or other proprietary
                rights
                or those of our competitors;




-
            conditions
                in the Internet industry;




-
            changes
                in laws, regulations, rules or standards by governments, regulatory
                bodies, exchanges or standards bodies; and





-  
      changes in securities analysts’ estimates of our performance, or our failure to
      meet analysts’ expectations.




Many
      of
      these factors are beyond our control. In addition, the stock markets in general,
      and the Nasdaq National Market and the market for Internet technology companies
      in particular, continue to experience significant price and volume fluctuations.
      These fluctuations often have been unrelated or disproportionate to the
      operating performance of these companies. These broad market and industry
      factors may decrease the market price of our common stock, regardless of our
      actual operating performance. In the past, companies that have experienced
      volatility in the market prices of their stock have been the objects of
      securities class action litigation. If we were to be the object of securities
      class action litigation, we could face substantial costs and a diversion of
      management’s attention and resources, which could harm our
      business.






TOC


**Item
      3.*****Quantitative
      and Qualitative Disclosures About Market Risk***





*Foreign
      Currency Risk.* A small,
      but growing, part of our business is conducted outside the United States. An
      increasing percentage of this international business is priced in the local
      currency. As a result, our financial results could be affected by factors such
      as changes in foreign currency exchange rates or weak economic conditions in
      foreign markets. When the amount of revenue or expense from sources outside
      the
      United States becomes more significant, we may engage in hedging activities
      or
      other actions to decrease fluctuations in operating results due to changes
      in
      foreign currency exchange rates.




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


*Interest
      Rate Risk.* We do
      not use derivative financial instruments or market risk sensitive instruments.
      Instead, we invest in highly liquid investments with short maturities.
      Accordingly, we do not expect any material loss from these investments and
      believe that our potential interest rate exposure is not material.












TOC


**Item
      4.*****Controls and Procedures*******




(a) *Evaluation
      of disclosure controls and procedures.* We
      maintain “disclosure controls and procedures,” as such term is defined in Rule
      13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that
      are designed to ensure that information required to be disclosed by us in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized, and reported within the time periods specified in Securities and
      Exchange Commission rules and forms, and that such information is accumulated
      and communicated to our management, including our Chief Executive Officer and
      Chief Financial Officer, as appropriate, to allow timely decisions regarding
      required disclosure. In designing and evaluating our disclosure controls and
      procedures, management recognized that disclosure controls and procedures,
      no
      matter how well conceived and operated, can provide only reasonable, not
      absolute, assurance that the objectives of the disclosure controls and
      procedures are met. Additionally, in designing disclosure controls and
      procedures, our management necessarily was required to apply its judgment in
      evaluating the cost-benefit relationship of possible disclosure controls and
      procedures. The design of any disclosure controls and procedures also is based
      in part upon certain assumptions about the likelihood of future events, and
      there can be no assurance that any design will succeed in achieving its stated
      goals under all potential future conditions.





Based
      on
      their evaluation as the end of the period covered by this Quarterly Report
      on
      Form 10-Q, our Chief Executive Officer and Chief Financial Officer have
      concluded that, subject to the limitations noted above, our disclosure controls
      and procedures were effective to ensure that material information relating
      to
      us, including our consolidated subsidiaries, is made known to them by others
      within those entities, particularly during the period in which this Quarterly
      Report on Form 10-Q was being prepared.





(b) *Changes
      in internal control over financial reporting.* There
      was no significant change in our internal control over financial reporting
      (as
      defined in Rule 13a-15(f) under the Exchange Act) identified in connection
      with
      the evaluation described in Item 4(a) above that occurred during our last fiscal
      quarter that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.





Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005


TOC





**PART
      II — OTHER INFORMATION**








**Item
      2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
      Securities*****.***





**(c)**  **Issuer
      Purchases of Equity Securities.**





The
      following table sets forth purchases of WebEx securities by WebEx during the
      first quarter of 2005:








**ISSUER
      PURCHASES OF EQUITY SECURITIES**




**(a)**
            
            
            **(b)**
            
            
            **(c)**
            
            
            **(d)****Total
                Number of Shares (or Units)**
            
            
            **Average
                Price Per**
            
            
            **Total
                Number of Shares (or Units) Purchased as Part of Publicly Announced**
            
            
            **Maximum
                Number (or Approximate Dollar Value) of Shares (or Units) that May
                Yet Be
                Purchased Under the****Period**
            
            
            **Purchased
                (#)(1)**
            
            
            **Share
                (or Unit) ($)**
            
            
            **Plans
                Or Programs (#)**
            
            
            **Plans
                Or Programs**January
                1, 2005 to January 31, 2005
            
            
            --
            
            
            --
            
            
            --
            
            $
            34,174,000February
                1, 2005 to February 28, 2005
            
            
            156,400
            
            $
            22.954
            
            
            156,400
            
            $
            30,584,000March
                1, 2005 to March 31, 2005
            
            
            --
            
            
            --
            
            
            --
            
            $
            30,584,000Total
            
            
            156,400
            
            $
            22.954
            
            
            156,400
            
            $
            30,584,000




(1)  Consists
      of repurchases of shares pursuant to the Company’s share repurchase program
      publicly announced on July 29, 2004 pursuant to which the Company’s Board of
      Directors authorized the repurchase of up to $40,000,000 of the Company’s common
      stock over a 12 month period ending July 22, 2005.










TOC





**Item
      6. Exhibits** ***.***





**Exhibits:**





**Exhibit**
              **Number**
            **Description**3.1*
            Amended
                and Restated Certificate of Incorporation3.2**
            Amended
                and Restated Bylaws4.1*
            Form
                of Common Stock Certificate10.1***
            Registrant’s
                2000 Employee Stock Purchase Plan (as amended on March 31,
                2005)10.2***
            Registrant’s
                2005 Executive Cash Bonus Plan Summary31.1
            Certification
                of the Chief Executive Officer Pursuant to Rule
                13a-14(a)/15d-14(a)31.2
            Certification
                of the Chief Financial Officer Pursuant to Rule
                13a-14(a)/15d-14(a)32.1+
            Certification
                of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As
                Adopted
                Pursuant To Section 906 of The Sarbanes-Oxley Act of
                200232.2+
            Certification
                of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As
                Adopted
                Pursuant To Section 906 of The Sarbanes-Oxley Act of
                2002




Form
            10-Q/A, Amendment No. 1, for quarter ended March 31, 2005


__________




*  Incorporated
      by reference from Exhibits 3.3 and 4.1 of Amendment No. 1 to the Registrant's
      Registration Statement on Form S-1 (File No. 333-33716) filed with the
      Securities and  Exchange Commission on June 21, 2000.





**  Incorporated
      by reference from Exhibit 3.2 of Registrant's Annual Report on Form 10-K (File
      No. 0-30849) for the fiscal year ended December 31, 2000 filed with the
      Securities


and Exchange Commission on April 2, 2001.





***
      Previously filed.





+  The
      certifications filed as Exhibits 32.1 and 32.2 are not deemed “filed” for
      purpose of Section 18 of the Exchange Act and are not to be incorporated by
      reference into any filing of the Company under the Securities Act of 1933 or
      the
      Securities Exchange Act of 1934, whether made before or after the date hereof
      irrespective of any general incorporation language contained in any such filing,
      except to the extent that the registrant specifically incorporates it by
      reference.














Form
              10-Q/A, Amendment No. 1, for quarter ended March 31,
              2005


TOC





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this Form 10-Q/A, Amendment No. 1,  to be signed
      on its
      behalf by the undersigned thereunto duly authorized.


**WEBEX
                COMMUNICATIONS, INC.**Date: August
                29,
                2005
              By:
              /s/ MICHAEL
                T.
                EVERETTMichael
                T. EverettChief
                  Financial
                  Officer
                (Duly
                  Authorized
                  Officer and Principal Financial
                  officer)
  **WEBEX
                COMMUNICATIONS, INC.**Date: August
                29,
                2005
              By:
              /s/ DEAN
                MACINTOSHDean
                MacIntoshVice President,
                  Finance
                (Duly
                    Authorized
                    Officer and Principal Financial
                    officer)







Form
              10-Q/A, amendment no. 1 for quarter ended March 31, 2005


TOC





**EXHIBIT
      INDEX**


**Exhibit**
              **Number**
            **Description**3.1*
            Amended
                and Restated Certificate of Incorporation3.2**
            Amended
                and Restated Bylaws4.1*
            Form
                of Common Stock Certificate10.1***
            Registrant’s
                2000 Employee Stock Purchase Plan (as amended on March 31,
                2005)10.2***
            Registrant’s
                2005 Executive Cash Bonus Plan Summary31.1
            Certification
                of the Chief Executive Officer
                Pursuant to Rule 13a-14(a)/15d-14(a)31.2
            Certification
                of the Chief Financial Officer
                Pursuant to Rule 13a-14(a)/15d-14(a)32.1+
            Certification
                of Chief Executive Officer Pursuant
                to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
                The
                Sarbanes-Oxley Act of 200232.2+
            Certification
                of Chief Financial Officer Pursuant
                to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
                The
                Sarbanes-Oxley Act of 2002


__________





*  Incorporated
      by reference from Exhibits 3.3 and 4.1 of Amendment No. 1 to the Registrant's
      Registration Statement on Form S-1 (File No. 333-33716) filed with the
      Securities and


Exchange Commission on September 21, 2000.





**  Incorporated
      by reference from Exhibit 3.2 of Registrant's Annual Report on Form 10-K (File
      No. 0-30849) for the fiscal year ended December 31, 2000 filed with the
      Securities and


Exchange Commission on April 2, 2001.




***
      Previously filed.





+  The
      certifications filed as Exhibits 32.1 and 32.2 are not deemed “filed” for
      purpose of Section 18 of the Exchange Act and are not to be incorporated by
      reference into any filing of the Company under the Securities Act of 1933 or
      the
      Securities Exchange Act of 1934, whether made before or after the date hereof
      irrespective of any general incorporation language contained in any such filing,
      except to the extent that the registrant specifically incorporates it by
      reference.