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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

OR

|  |  |                                                                                          
|- |  | -----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number 0-24339



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INKTOMI CORPORATION

(Exact name of Registrant as specified in its charter)




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|                                  |  |                                                
|--------------------------------- |  | -----------------------------------------------
|Delaware
(State of Incorporation) |  | 94-3238130
(I.R.S. Employer Identification No.)

4100 East Third Avenue
Foster City, California 94404
(Address of principal executive offices)

(650) 653-2800
(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) 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 the past 90 days.

Yes x    No o

The number of shares outstanding of the Registrants Common Stock, $0.001 par
value, as of April 30, 2002 was 145,308,054.

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TABLE OF CONTENTS



|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings.                                                                   
|                              | ITEM 4. Submission of Matters to a Vote of Shareholders                                      
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                    
|EXHIBIT 10.9                 
|EXHIBIT 10.35                
|EXHIBIT 10.37                
|EXHIBIT 10.38                



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##### Table of Contents



INKTOMI CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

TABLE OF CONTENTS

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|Part
          I.  |  | Financial
          Information: |                                                                                                 |                                                                                                                                  
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|                   |  | Item 1.                          | Financial Statements (Unaudited)                                                                |                                                                                                                                   |   
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|                   |  |                                  | a)                                                                                              | Condensed
        Consolidated Statements of Operations for the three months and six months
        ended March 31, 2002 and 2001 |    | 3
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        Balance Sheets as of March 31, 2002 and September 30, 2001                                         |    | 4
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        Consolidated Statements of Cash Flows for the six months ended March 31,
        2002 and 2001                  |    | 5
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|                   |  |                                  | d)                                                                                              | Notes to Condensed
        Consolidated Financial Statements                                                                      |    | 6
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|                   |  | Item 2.                          | Managements
          Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                   | 13
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|                   |  | Item 3.                          | Quantitative
          and Qualitative Disclosures About Market Risk                            |                                                                                                                                   | 30
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|Part
          II. |  | Other
          Information:     |                                                                                                 |                                                                                                                                  
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|                   |  | Item 1.                          | Legal Proceedings                                                                               |                                                                                                                                   | 31
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|                   |  | Item 4.                          | Submission
        of Matters to a Vote of Shareholders                                         |                                                                                                                                   | 31
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|                   |  | Item 6.                          | Exhibits and Reports on Form 8-K                                                                |                                                                                                                                   | 32
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|                   |  | Signature                        |                                                                                                 | 33                                                                                                                               

This report on Form 10-Q and other oral and written statements made by the
Company to the public contain and incorporate forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934. When used in this report, the words
anticipate, believe, expect, intend, may, will and similar
expressions identify forward-looking statements. Forward-looking statements in
this report include, but are not limited to, those relating to the general
direction of our business; our ability to successfully penetrate the enterprise
market; our ability to continue to support the service provider market; our
success generating sales through our alliances and partners; our ability to
introduce new products and services and enhance existing products and services
to meet customer needs; the changing composition and purchasing trends of our
customer base; the composition of our revenues; our expected expenses for
future periods; our ability to improve our sales and distribution capabilities;
our focus on both domestic and international markets; our ability to develop
and maintain productive relationships with providers of leading network
technologies; the possibility of acquiring complementary businesses, products,
services and technologies; and the conditions of markets that impact our
business. Although we believe our plans, intentions and expectations reflected
in these forward-looking statements are reasonable, we can give no assurance
that these plans, intentions or expectations will be achieved. Actual results,
performance or achievements could differ materially from those contemplated,
expressed or implied by the forward-looking statements contained in this
report. Important factors that could cause actual results to differ materially
from our forward-looking statements are set forth in this report under the
headings Factors Affecting Operating Results, Managements Discussion and
Analysis of Financial Condition and Results of Operations and in other reports
filed with the Securities and Exchange Commission. These factors are not
intended to represent a complete list of the general or specific factors that
may affect us. Other factors, including general economic factors and business
strategies, may be significant, presently or in the future, and the factors set
forth in this report may affect us to a greater extent than indicated. You
should not rely on these forward-looking statements, which reflect our position
as of the date of this report. We do not assume any obligation to revise
forward-looking statements.

-2-



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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements

INKTOMI CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)


|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |        |         | 
|--------------------------------------------------------------- | --------------------------------------------- | ------------------------ | -------- | ------------- | ------- | ------------ | ------- | ------ | ------ | ---- | -------- | ------ | ------- | - | -------- | ------ | ------- | 
|                                                                |                                               |                          |          | FOR THE THREE |         | FOR THE SIX 
|                                                                |                                               |                          |          | MONTHS ENDED  |         | MONTHS ENDED
|                                                                |                                               |                          |          | MARCH 31,     |         | MARCH 31,   
|                                                                |                                               |                          |          |               |         |             
|                                                                |                                               |                          |          | 2002          |         | 2001         |         | 2002   |        | 2001
|                                                                |                                               |                          |          |               |         |              |         |        |        |     
|                                                                |                                               |                          |          | (UNAUDITED)   |         | (UNAUDITED) 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                               
|                                                               
|                                                               
|                                                               
|Revenues                                                        |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|                                                                | Licenses                                      |                          | $        | 11,201        |         |              | $       | 17,676 |        |      | $        | 32,260 |         |   | $        | 68,899 |        
|                                                                | Services                                      |                          |          | 6,455         |         |              |         | 8,863  |        |      |          | 13,752 |         |   |          | 23,189 |        
|                                                                | Web search services                           |                          |          | 13,152        |         |              |         | 12,946 |        |      |          | 24,815 |         |   |          | 27,901 |        
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|                                                                |                                               | Total revenues           |          |               | 30,808  |              |         |        | 39,485 |      |          |        | 70,827  |   |          |        | 119,989 | 
|Cost of Revenues                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|                                                                | Licenses                                      |                          |          | 1,125         |         |              |         | 879    |        |      |          | 2,475  |         |   |          | 3,231  |        
|                                                                | Services                                      |                          |          | 2,340         |         |              |         | 6,282  |        |      |          | 5,892  |         |   |          | 12,188 |        
|                                                                | Web search services                           |                          |          | 4,776         |         |              |         | 6,458  |        |      |          | 10,088 |         |   |          | 12,712 |        
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|                                                                |                                               | Total cost of revenues   |          |               | 8,241   |              |         |        | 13,619 |      |          |        | 18,455  |   |          |        | 28,131  | 
|Gross Profit                                                    |                                               |                          | 22,567   |               |         |              | 25,866  |        |        |      | 52,372   |        |         |   | 91,858   |       
|Operating expenses                                              |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|                                                                | Sales and marketing                           |                          |          | 19,162        |         |              |         | 37,665 |        |      |          | 39,785 |         |   |          | 81,986 |        
|                                                                | Research and development                      |                          |          | 13,419        |         |              |         | 22,283 |        |      |          | 27,556 |         |   |          | 43,781 |        
|                                                                | General and administrative                    |                          |          | 4,221         |         |              |         | 6,812  |        |      |          | 9,400  |         |   |          | 12,736 |        
|                                                                | Amortization of intangibles and other assets  |                          |          | 16,709        |         |              |         | 19,308 |        |      |          | 33,418 |         |   |          | 35,516 |        
|                                                                | Restructuring                                 |                          |          | 74,608        |         |              |         |       |        |      |          | 78,620 |         |   |          |       |        
|                                                                | Impairment of intangibles and other assets    |                          |          |              |         |              |         |       |        |      |          | 1,750  |         |   |          |       |        
|                                                                | Acquisition-related costs                     |                          |          |              |         |              |         |       |        |      |          |       |         |   |          | 19,497 |        
|                                                                | Purchased in-process research and development |                          |          |              |         |              |         |       |        |      |          |       |         |   |          | 430    |        
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|                                                                |                                               | Total operating expenses |          |               | 128,119 |              |         |        | 86,068 |      |          |        | 190,529 |   |          |        | 193,946 | 
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|Operating loss                                                  |                                               |                          | (105,552 | )             |         |              | (60,202 | )      |        |      | (138,157 | )      |         |   | (102,088 | )     
|Other income, net                                               |                                               |                          | 1,728    |               |         |              | 2,320   |        |        |      | 5,091    |        |         |   | 6,315    |       
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|Loss before income tax provision                                |                                               |                          | (103,824 | )             |         |              | (57,882 | )      |        |      | (133,066 | )      |         |   | (95,773  | )     
|Income tax provision                                            |                                               |                          | (223     | )             |         |              | (436    | )      |        |      | (422     | )      |         |   | (652     | )     
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|Net loss                                                        |                                               | $                        | (104,047 | )             |         | $            | (58,318 | )      |        | $    | (133,488 | )      |         | $ | (96,425  | )     
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|Earnings per share                                              |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|Basic and diluted net loss per share                            |                                               | $                        | (0.72    | )             |         | $            | (0.46   | )      |        | $    | (0.95    | )      |         | $ | (0.77    | )     
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       
|Shares used in calculating basic and
diluted net loss per share |                                               |                          | 144,073  |               |         |              | 125,731 |        |        |      | 139,890  |        |         |   | 125,188  |       
|                                                                |                                               |                          |          |               |         |              |         |        |        |      |          |        |         |   |          |       

The accompanying notes are an integral part of these condensed consolidated financial statements.

-3-



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##### Table of Contents



INKTOMI CORPORATION




CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)


|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |          |        |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------------------------- | -------- | ----------- | ------- | ------------- | -------- | ------ | ------- | 
|                                     |                                                                                                                                                                         |                                              |                                                            |          | March 31,   |         | September 30,
|                                     |                                                                                                                                                                         |                                              |                                                            |          | 2002        |         | 2001         
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |              
|                                     |                                                                                                                                                                         |                                              |                                                            |          | (Unaudited) |         |               |          |       
|Assets                               |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     | Current assets                                                                                                                                                          |                                              |                                                            |          |             |         |               |          |       
|                                     |                                                                                                                                                                         | Cash and cash equivalents                    |                                                            | $        | 14,537      |         |               | $        | 18,518 |        
|                                     |                                                                                                                                                                         | Short-term investments                       |                                                            |          | 95,397      |         |               |          | 65,995 |        
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total cash and cash equivalents and short-term investments |          |             | 109,934 |               |          |        | 84,513  | 
|                                     |                                                                                                                                                                         | Accounts receivable, net                     |                                                            |          | 17,405      |         |               |          | 22,449 |        
|                                     |                                                                                                                                                                         | Prepaid expenses and other current assets    |                                                            |          | 7,326       |         |               |          | 5,915  |        
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total current assets                                       |          |             | 134,665 |               |          |        | 112,877 | 
|                                     | Restricted cash                                                                                                                                                         |                                              |                                                            | 128,957  |             |         |               | 128,957  |       
|                                     | Investments in equity securities                                                                                                                                        |                                              |                                                            | 1,216    |             |         |               | 1,381    |       
|                                     | Property and equipment, net                                                                                                                                             |                                              |                                                            | 50,824   |             |         |               | 76,101   |       
|                                     | Intangibles and other assets, net                                                                                                                                       |                                              |                                                            | 226,552  |             |         |               | 263,807  |       
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total assets                                               |          | $           | 542,214 |               |          | $      | 583,123 | 
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|Liabilities and Stockholders Equity |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     | Current liabilities                                                                                                                                                     |                                              |                                                            |          |             |         |               |          |       
|                                     |                                                                                                                                                                         | Accounts payable                             |                                                            | $        | 10,863      |         |               | $        | 7,979  |        
|                                     |                                                                                                                                                                         | Accrued liabilities                          |                                                            |          | 52,012      |         |               |          | 58,646 |        
|                                     |                                                                                                                                                                         | Deferred revenue                             |                                                            |          | 27,595      |         |               |          | 34,610 |        
|                                     |                                                                                                                                                                         | Current portion of notes payable             |                                                            |          | 7,500       |         |               |          | 2,500  |        
|                                     |                                                                                                                                                                         | Current portion of capital lease obligations |                                                            |          | 1,699       |         |               |          | 1,470  |        
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total current liabilities                                  |          |             | 99,669  |               |          |        | 105,205 | 
|                                     | Notes payable, less current portion                                                                                                                                     |                                              |                                                            | 2,500    |             |         |               | 4,231    |       
|                                     | Capital lease obligations, less current portion                                                                                                                         |                                              |                                                            | 619      |             |         |               | 1,418    |       
|                                     | Other liabilities                                                                                                                                                       |                                              |                                                            | 37,759   |             |         |               | 288      |       
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total liabilities                                          |          |             | 140,547 |               |          |        | 111,142 | 
|                                     | Commitments
and contingencies (Note 3 and Note 6)                                                                                                                       |                                              |                                                            |          |             |         |               |          |       
|                                     | Stockholders equity                                                                                                                                                    |                                              |                                                            |          |             |         |               |          |       
|                                     | Common Stock, $0.001 par value; 1,500,000 authorized at
March 31, 2002 and September 30, 2001; 145,303 and 129,110
outstanding at March 31, 2002 and September 30, 2001 |                                              |                                                            | 145      |             |         |               | 129      |       
|                                     | Additional paid-in capital                                                                                                                                              |                                              |                                                            | 955,864  |             |         |               | 897,241  |       
|                                     | Deferred compensation                                                                                                                                                   |                                              |                                                            | (15,816  | )           |         |               | (20,824  | )     
|                                     | Accumulated other comprehensive loss                                                                                                                                    |                                              |                                                            | (3,017   | )           |         |               | (2,545   | )     
|                                     | Accumulated deficit                                                                                                                                                     |                                              |                                                            | (535,509 | )           |         |               | (402,020 | )     
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total stockholders equity                                 |          |             | 401,667 |               |          |        | 471,981 | 
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         
|                                     |                                                                                                                                                                         |                                              | Total liabilities and stockholders equity                 |          | $           | 542,214 |               |          | $      | 583,123 | 
|                                     |                                                                                                                                                                         |                                              |                                                            |          |             |         |               |         

The accompanying notes are an integral part of these condensed consolidated financial statements.

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##### Table of Contents



INKTOMI CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


|                                                                                          |  |                                                               |                                           |   |                    |         |         |   |          |         |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------------------------------- | ----------------------------------------- | - | ------------------ | ------- | ------- | - | -------- | ------- | -
|                                                                                          |  |                                                               |                                           |   | For the Six Months
|                                                                                          |  |                                                               |                                           |   | Ended March 31,   
|                                                                                          |  |                                                               |                                           |   |                   
|                                                                                          |  |                                                               |                                           |   | 2002               |         | 2001   
|                                                                                          |  |                                                               |                                           |   |                    |         |        
|                                                                                          |  |                                                               |                                           |   | (Unaudited)       
|Cash flows from operating activities                                                      |  |                                                               |                                           |   |                    |         |         |  
|Net loss                                                                                  |  | $                                                             | (133,488                                  | ) |                    | $       | (96,425 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Restructuring                                                 |                                           |   | 78,620             |         |         |   |         |        
|                                                                                          |  | Amortization of intangibles and other assets                  |                                           |   | 33,418             |         |         |   | 35,516   |        
|                                                                                          |  | Depreciation and amortization                                 |                                           |   | 13,361             |         |         |   | 16,301   |        
|                                                                                          |  | Stock based compensation                                      |                                           |   | 3,521              |         |         |   | 6,664    |        
|                                                                                          |  | Impairment of intangibles and other assets                    |                                           |   | 1,750              |         |         |   |         |        
|                                                                                          |  | Impairment of property and equipment                          |                                           |   | 791                |         |         |   |         |        
|                                                                                          |  | Provision for doubtful accounts                               |                                           |   | (517               | )       |         |   |         |        
|                                                                                          |  | Purchased in-process research and development                 |                                           |   |                   |         |         |   | 430      |        
|Changes in assets and liabilities:                                                        |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Accounts receivable                                           |                                           |   | 5,561              |         |         |   | 19,636   |        
|                                                                                          |  | Prepaid expenses and other assets                             |                                           |   | 2,024              |         |         |   | (8,219   | )      
|                                                                                          |  | Accounts payable                                              |                                           |   | 2,884              |         |         |   | 5,171    |        
|                                                                                          |  | Accrued liabilities and other                                 |                                           |   | (34,374            | )       |         |   | 11,925   |        
|                                                                                          |  | Deferred revenue                                              |                                           |   | (7,015             | )       |         |   | (14,492  | )      
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  |                                                               | Net cash used in operating activities     |   |                    | (33,464 | )       |   |          | (23,493 | )
|Cash flows from investing activities                                                      |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Purchases of property and equipment                           |                                           |   | (2,284             | )       |         |   | (21,752  | )      
|                                                                                          |  | Purchases of short-term investments                           |                                           |   | (128,766           | )       |         |   | (491,401 | )      
|                                                                                          |  | Proceeds from sales of short-term investments                 |                                           |   | 98,316             |         |         |   | 539,967  |        
|                                                                                          |  | Restriction
of cash for lease agreements                      |                                           |   |                   |         |         |   | (9,341   | )      
|                                                                                          |  | Purchases of investments in equity securities                 |                                           |   | (500               | )       |         |   | (4,247   | )      
|                                                                                          |  | Proceeds from sales of investments in equity securities       |                                           |   | 1,220              |         |         |   |         |        
|                                                                                          |  | Loans to related parties                                      |                                           |   | (5,600             | )       |         |   |         |        
|                                                                                          |  | Payments received on loans to related parties                 |                                           |   | 4,252              |         |         |   |         |        
|                                                                                          |  | Acquisition of a company, net of acquired cash                |                                           |   |                   |         |         |   | (23,500  | )      
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  |                                                               | Net cash used in investing activities     |   |                    | (33,362 | )       |   |          | (10,274 | )
|Cash flows from financing activities                                                      |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Payments on notes payable                                     |                                           |   | (1,731             | )       |         |   | (6,087   | )      
|                                                                                          |  | Proceeds on notes payable                                     |                                           |   | 5,000              |         |         |   | 7,500    |        
|                                                                                          |  | Payments on obligations under capital leases                  |                                           |   | (570               | )       |         |   | (1,574   | )      
|                                                                                          |  | Proceeds from issuance of common stock, net of issuance costs |                                           |   | 52,839             |         |         |   |         |        
|                                                                                          |  | Proceeds from exercises of stock options and warrants         |                                           |   | 7,286              |         |         |   | 6,879    |        
|                                                                                          |  | Proceeds from notes receivable for stock                      |                                           |   |                   |         |         |   | 65       |        
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  |                                                               | Net cash provided by financing activities |   |                    | 62,824  |         |   |          | 6,783   |  
|                                                                                          |  | Effect of exchange rates on cash and cash equivalents         |                                           |   | 21                 |         |         |   | (366     | )      
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Decrease in cash and cash equivalents                         |                                           |   | (3,981             | )       |         |   | (27,350  | )      
|                                                                                          |  | Cash and cash equivalents at beginning of period              |                                           |   | 18,518             |         |         |   | 41,879   |        
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Cash and cash equivalents at end of period                    |                                           | $ | 14,537             |         |         | $ | 14,529   |        
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|Supplemental cash flow information                                                        |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Cash paid for interest                                        |                                           | $ | (278               | )       |         | $ | (1,195   | )      
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  
|                                                                                          |  | Taxes paid                                                    |                                           | $ | (336               | )       |         | $ | (652     | )      
|                                                                                          |  |                                                               |                                           |   |                    |         |         |  

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INKTOMI CORPORATION




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1. THE COMPANY AND BASIS OF PRESENTATION

Inktomi Corporation (Inktomi or the Company) was incorporated in California
in February 1996 and reincorporated in Delaware in February 1998. We develop
and market scalable network infrastructure software and services for global
enterprises and service providers, which are designed to significantly enhance
the performance and intelligence of large-scale networks.

We have prepared the condensed consolidated financial statements included
herein pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the condensed consolidated financial
statements reflect all adjustments that are necessary for the fair presentation
of results for the periods shown. The results of operations for such periods
are not necessarily indicative of the results expected for the full fiscal year
or for any future period. These financial statements should be read in
conjunction with our audited consolidated financial statements and notes
thereto included in our annual report on Form 10-K for the year ended September
30, 2001 filed with the SEC on December 31, 2001.

The accompanying condensed consolidated financial statements include the
accounts of Inktomi Corporation and its wholly owned subsidiaries. All
intercompany accounts and transactions have been eliminated. Historical
financial information including weighted average shares outstanding and loss
per share amounts have been restated to reflect all stock splits and
acquisitions accounted for as pooling of interests. Certain prior period
balances have been reclassified to conform to the current period presentation.

In June 2001, we acquired eScene Networks, Inc. (eScene), a developer of
advanced streaming media applications and services. The following unaudited pro
forma information reflects the results of operations for the quarter and six
month periods ended March 31, 2001, as if the acquisition of eScene had
occurred on October 1, 2000, and after giving effect to purchase accounting
adjustments, principally amortization of goodwill and other intangibles. We
have not presented the pro forma financial information for the Adero asset
purchase (December 2000) required under APB No. 16 since we have effectively
ceased the assumed operator role of the acquired Adero division, Content
Bridge, and have recognized the related full impairment of goodwill and other
assets.

These unaudited pro forma results have been prepared for comparative purposes
only and may not be indicative of future operating results (in thousands,
except per share data).

|                                               |  |                |         |                |  |   |          |  
|---------------------------------------------- |  | -------------- | ------- | -------------- |  | - | -------- | -
|                                               |  | For the Three  |         | For the Six   
|                                               |  | Months Ended   |         | Months Ended  
|                                               |  | March 31, 2001 |         | March 31, 2001
|                                               |  |                |         |               
|Pro forma revenues                             |  | $              | 39,549  |                |  | $ | 120,096  |  
|Pro forma net loss                             |  |                | (60,291 | )              |  |   | (100,375 | )
|Pro forma basic and diluted net loss per share |  | $              | (0.48   | )              |  | $ | (0.80    | )

NOTE 2. PUBLIC OFFERING

In November 2001, we completed a public offering of our Common Stock in which
we sold approximately 13.2 million shares raising net proceeds after issuance
costs and underwriters discounts of $52.8 million.

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NOTE 3. RESTRUCTURINGS

Fiscal 2002 Second Quarter Restructuring:

In April 2000, we entered into a lease agreement commencing January 1, 2002 for
381,050 square feet of office space in two mid-rise office buildings in Foster
City, California, known as Parkside Towers. Payments under the lease commenced
on January 1, 2002, when the property was delivered to Inktomi by the developer
and continue over the lease term ending October 31, 2014 for one building and
October 31, 2016 for the second building. Aggregate payments to be made under
the lease are approximately $320.0 million over the remaining lease term.

In the quarter ending March 31, 2002, we completed our assessment of our
current and future anticipated needs for operating facilities and adopted a
plan to consolidate our operating facilities. In accordance with this plan, we
have recorded a restructuring charge of $74.6 million during the quarter ended
March 31, 2002 related to the abandonment of our lease for 381,050 square feet
of office space described above. Lease abandonment costs for this facility were
estimated to include the remaining lease liabilities through the term of the
lease, impairment of leasehold improvements, estimated future leasehold
improvements and brokerage fees offset by estimated sublease income. Estimates
related to sublease costs and income are based on assumptions regarding the
period required to locate sub-lessees and sublease rates which were derived
from market trend information provided by a commercial real estate broker.
These estimates will be reviewed on a periodic basis and to the extent that
these assumptions materially change due to changes in the market, the
ultimate restructuring expense for the abandoned facility would be adjusted.
As of March 31, 2002, approximately $57.9 million of the restructuring accrual
remained outstanding.

The following table sets forth an analysis of the components of the fiscal 2002
second quarter restructuring charge and the payments made against the accrual
through March 31, 2002 (in thousands):

|                                                              |                                  |       |        |           |        |            |         |        |        |   |         |        |        | 
|------------------------------------------------------------- | -------------------------------- | ----- | ------ | --------- | ------ | ---------- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                                              |                                  |       |        | Abandoned |        | Asset      |         |        |        |  
|                                                              |                                  |       |        | Space     |        | Write-offs |         | Total 
|                                                              |                                  |       |        |           |        |            |         |       
|Restructuring Provision:                                      |                                  |       |        |           |        |            |         |        |        |   |         |       
|                                                              | Committed excess facilities      |       | $      | 62,293    |        |            | $       |       |        |   | $       | 62,293 |       
|                                                              | Leasehold improvement impairment |       |        |          |        |            |         | 12,315 |        |   |         | 12,315 |       
|                                                              |                                  |       |        |           |        |            |         |        |        |   |         |       
|                                                              |                                  | Total |        |           | 62,293 |            |         |        | 12,315 |   |         |        | 74,608 | 
|Cash paid                                                     |                                  |       | (4,348 | )         |        |            |        |        |        |   | (4,348  | )     
|Non-cash charges                                              |                                  |       |       |           |        |            | (12,315 | )      |        |   | (12,315 | )     
|                                                              |                                  |       |        |           |        |            |         |        |        |   |         |       
|Accrual balance at March 31, 2002                             |                                  | $     | 57,945 |           |        | $          |        |        |        |   | 57,945  |       
|                                                              |                                  |       |        |           |        |            |         |        |        |   |         |       
|Less: current portion                                         |                                  |       |        |           |        |            |         |        |        |   | 20,372  |       
|                                                              |                                  |       |        |           |        |            |         |        |        |   |         |       
|Accrued restructuring included in other long-term
Liabilities |                                  |       |        |           |        |            |         |        |        | $ | 37,573  |       
|                                                              |                                  |       |        |           |        |            |         |        |        |   |         |       

Fiscal 2002 First Quarter Restructuring:

In the quarter ended December 31, 2001, we announced and substantially
completed a restructuring and a workforce reduction of approximately 115
employees to reduce our operating expenses. All of our functional areas were
affected by the reduction. As a result of this workforce reduction, we incurred
a charge of $4.0 million, including a $1.3 million write-down of computer
equipment. As of March 31, 2002, approximately $0.3 million of this
restructuring accrual remained outstanding as an accrued liability on our
balance sheet.

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The following table sets forth an analysis of the components of the fiscal 2002
first quarter restructuring charge and the payments made against the accrual
through March 31, 2002 (in thousands):

|                                  |                                   |       |        |           |       |               |     |            |     |       |        |       |       |   |        |       |       | 
|--------------------------------- | --------------------------------- | ----- | ------ | --------- | ----- | ------------- | --- | ---------- | --- | ----- | ------ | ----- | ----- | - | ------ | ----- | ----- | 
|                                  |                                   |       |        | Severance |       | Underutilized |     | Asset      |     |       |        |      
|                                  |                                   |       |        | Related   |       | Space         |     | Write-Offs |     | Total
|                                  |                                   |       |        |           |       |               |     |            |     |      
|Restructuring Provision:          |                                   |       |        |           |       |               |     |            |     |       |        |       |       |   |        |      
|                                  | Severance related                 |       | $      | 2,497     |       |               | $   |           |     |       | $      |      |       |   | $      | 2,497 |      
|                                  | Property and equipment impairment |       |        |          |       |               |     |           |     |       |        | 1,300 |       |   |        | 1,300 |      
|                                  | Committed excess facilities       |       |        |          |       |               |     | 215        |     |       |        |      |       |   |        | 215   |      
|                                  |                                   |       |        |           |       |               |     |            |     |       |        |       |       |   |        |      
|                                  |                                   | Total |        |           | 2,497 |               |     |            | 215 |       |        |       | 1,300 |   |        |       | 4,012 | 
|Cash paid                         |                                   |       | (2,372 | )         |       |               |    |            |     |       |       |       |       |   | (2,372 | )    
|Non-cash charges                  |                                   |       |       |           |       |               |    |            |     |       | (1,300 | )     |       |   | (1,300 | )    
|                                  |                                   |       |        |           |       |               |     |            |     |       |        |       |       |   |        |      
|Accrual balance at March 31, 2002 |                                   | $     | 125    |           |       | $             | 215 |            |     | $     |       |       |       | $ | 340    |      
|                                  |                                   |       |        |           |       |               |     |            |     |       |        |       |       |   |        |      

Fiscal 2001 Fourth Quarter Restructuring:

In the quarter ended September 30, 2001, we instituted a restructuring and a
workforce reduction of approximately 35 employees to reduce our operating
expenses. The reduction in workforce primarily affected our employees working
on wireless related products. As a result of this restructuring, we incurred a
charge of approximately $7.3 million in the quarter ended September 30, 2001.
As of March 31, 2002, approximately $2.3 million of this restructuring accrual
remained outstanding as an accrued liability on our balance sheet.

The following table sets forth an analysis of the components of the fiscal 2001
fourth quarter restructuring charge and the payments made against the accrual
through March 31, 2002 (in thousands):

|                                  |                                   |       |        |           |       |               |        |            |       |       |      |     |     |   |        |       |       | 
|--------------------------------- | --------------------------------- | ----- | ------ | --------- | ----- | ------------- | ------ | ---------- | ----- | ----- | ---- | --- | --- | - | ------ | ----- | ----- | 
|                                  |                                   |       |        | Severance |       | Underutilized |        | Asset      |       |       |      |    
|                                  |                                   |       |        | Related   |       | Space         |        | Write-offs |       | Total
|                                  |                                   |       |        |           |       |               |        |            |       |      
|Restructuring Provision:          |                                   |       |        |           |       |               |        |            |       |       |      |     |     |   |        |      
|                                  | Severance related                 |       | $      | 2,201     |       |               | $      |           |       |       | $    |    |     |   | $      | 2,201 |      
|                                  | Committed excess facilities       |       |        |          |       |               |        | 4,375      |       |       |      |    |     |   |        | 4,375 |      
|                                  | Property and equipment impairment |       |        |          |       |               |        |           |       |       |      | 706 |     |   |        | 706   |      
|                                  |                                   |       |        |           |       |               |        |            |       |       |      |     |     |   |        |      
|                                  |                                   | Total |        |           | 2,201 |               |        |            | 4,375 |       |      |     | 706 |   |        |       | 7,282 | 
|Cash paid                         |                                   |       | (2,059 | )         |       |               | (2,202 | )          |       |       |      |     |     |   | (4,261 | )    
|Non-cash charges                  |                                   |       |       |           |       |               |       |            |       |       | (706 | )   |     |   | (706   | )    
|                                  |                                   |       |        |           |       |               |        |            |       |       |      |     |     |   |        |      
|Accrual balance at March 31, 2002 |                                   | $     | 142    |           |       | $             | 2,173  |            |       | $     |     |     |     | $ | 2,315  |      
|                                  |                                   |       |        |           |       |               |        |            |       |       |      |     |     |   |        |      

Fiscal 2001 Third Quarter Restructuring:

In the quarter ended June 30, 2001, we announced and substantially completed a
restructuring and a workforce reduction of approximately 200 employees to
reduce our operating expenses. All of our functional areas were affected by the
reduction. As a result of this workforce reduction, we incurred a charge of
$5.2 million. As of March 31, 2002, approximately $0.1 million of this
restructuring accrual remained outstanding as an accrued liability on our
balance sheet.

The following table sets forth an analysis of the components of the fiscal 2001
third quarter restructuring charge and the payments made against the accrual
through March 31, 2002 (in thousands):

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|                                  |                                   |       |        |           |       |            |      |         |     |       |      |     |       |   |        |       |       | 
|--------------------------------- | --------------------------------- | ----- | ------ | --------- | ----- | ---------- | ---- | ------- | --- | ----- | ---- | --- | ----- | - | ------ | ----- | ----- | 
|                                  |                                   |       |        | Severance |       | Asset      |      | Other   |     |       |      |    
|                                  |                                   |       |        | Related   |       | Write-Offs |      | Charges |     | Total
|                                  |                                   |       |        |           |       |            |      |         |     |      
|Restructuring Provision:          |                                   |       |        |           |       |            |      |         |     |       |      |     |       |   |        |      
|                                  | Severance related                 |       | $      | 3,999     |       |            | $    |        |     |       | $    |    |       |   | $      | 3,999 |      
|                                  | Professional fees                 |       |        |          |       |            |      |        |     |       |      | 601 |       |   |        | 601   |      
|                                  | Committed excess facilities       |       |        |          |       |            |      |        |     |       |      | 416 |       |   |        | 416   |      
|                                  | Property and equipment impairment |       |        |          |       |            |      | 198     |     |       |      |    |       |   |        | 198   |      
|                                  |                                   |       |        |           |       |            |      |         |     |       |      |     |       |   |        |      
|                                  |                                   | Total |        |           | 3,999 |            |      |         | 198 |       |      |     | 1,017 |   |        |       | 5,214 | 
|Cash paid                         |                                   |       | (3,999 | )         |       |            |     |         |     |       | (909 | )   |       |   | (4,908 | )    
|Non-cash charges                  |                                   |       |       |           |       |            | (198 | )       |     |       |     |     |       |   | (198   | )    
|                                  |                                   |       |        |           |       |            |      |         |     |       |      |     |       |   |        |      
|Accrual balance at March 31, 2002 |                                   | $     |       |           |       | $          |     |         |     | $     | 108  |     |       | $ | 108    |      
|                                  |                                   |       |        |           |       |            |      |         |     |       |      |     |       |   |        |      

NOTE 4. IMPAIRMENT OF INTANGIBLES AND OTHER ASSETS

During the three months ended December 31, 2001, we evaluated the remaining
goodwill associated with our asset purchase from Adero in December 2000 and
recorded a $1.8 million charge to write-off the remaining net book value of
this intangible asset as there will be no further revenue streams related to
this asset.

NOTE 5. CALCULATION OF NET LOSS PER SHARE

Shares of Common Stock used in computing basic and diluted net loss per share
(EPS) are based on the weighted average shares of Common Stock outstanding in
each period. Basic net loss per share is calculated by dividing net loss by the
average number of outstanding shares of Common Stock during the period. Diluted
net loss per share is calculated by adjusting the average number of outstanding
shares of Common Stock assuming conversion of all potentially dilutive stock
options and warrants under the treasury stock method. Excluded from the
computation of diluted earnings per share for the quarter and six months ended
March 31, 2002 and 2001, are options and warrants to acquire 24.4 million
shares and 13.3 million shares, respectively, of Common Stock as their effects
would be anti-dilutive.

NOTE 6. LEGAL PROCEEDINGS

On August 2, 2001, an amended complaint was filed by Network Caching
Technology, L.L.C. in the United States District Court for the Northern
District of California against Inktomi as well as other providers of caching
technologies including Novell, Inc., Akamai Technologies, Inc., Volera, Inc.,
and Cacheflow, Inc. Plaintiff alleges that certain products marketed by Inktomi
and the other defendants violate one or more patents owned by plaintiff. The
complaint seeks compensatory and other damages and injunctive relief. We were
served the complaint on August 7, 2001. We subsequently filed a response
denying the allegations and asserting a number of defenses. At this time it is
too early to estimate any potential losses from this action and whether this
action may have a material impact on the results of operations. We intend to
vigorously defend against this action.

NOTE 7. RELATED PARTY TRANSACTIONS

In March 2000, we provided a relocation loan to an officer of the Company
totaling $1.5 million. The officer left the Company in June 2001 and the loan
was repaid in full in March 2002.

In March 2002 we began separation and severance discussions with an officer of
the Company. As of March 31, 2002, we had accrued $3.1 million related to this
severance as a general and administrative expense. The severance agreement
totaling $3.1 million, which was executed by the parties in April 2002,
provides for a general release of the Company in exchange for, among other
things, the release of the officers loan obligation of $1.7 million. Any
proceeds, up to $1.0 million, from the sale of Company stock by the officer
this calendar year will offset the final amount owed to the officer.

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As of March 31, 2002, we had loans outstanding to our Chief Executive Officer
totaling approximately $2.9 million. In April 2002, we loaned an additional
$2.0 million to our Chief Executive Officer. These loans are represented by
full recourse promissory notes accruing interest at the rate of 6% per annum.
Each loan, plus any accrued unpaid interest, will become due the earlier of
either two years from the grant date of the individual loan or the date that
our Chief Executive Officer is no longer with the Company. All after tax proceeds of
compensatory bonuses and 50% of after tax proceeds from sales of Company stock
must be used to pay down the loans outstanding. The first loans will become
due in December 2003. These loans are included in intangibles and other
assets, net. These loans were made pursuant to a $5 million revolving line of
credit approved by our Board of Directors in December 2001.

During the quarter and six month periods ended March 31, 2002, we recognized
revenues of approximately $1.8 million and $4.4 million, respectively, on
contracts, development, and licensing arrangements with customers in which we
are equity shareholders. During the quarter and six month periods ended March
31, 2001, we recognized net revenues of approximately $1.6 million and $22.4
million, respectively, on contracts and licensing arrangements with customers
in which we are equity shareholders. During the three months ended December 31,
2000, we also recognized installment basis revenue from Adero on an agreement
consummated in December 1999. Prices and terms on these contracts and
arrangements were comparable to those given to other similarly situated
customers

NOTE 8. COMPREHENSIVE NET LOSS

Comprehensive loss includes foreign currency translation gains and losses and
unrealized gains and losses on debt and equity securities that have been
excluded from net loss and reflected instead in stockholders equity. The
components of comprehensive loss are as follows (in thousands):

|                                                 |  |                            |          |                          |  |      |         |      |  |   |          |   |  |   |          |  
|------------------------------------------------ |  | -------------------------- | -------- | ------------------------ |  | ---- | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                 |  | For the Three Months Ended |          | For the Six Months Ended
|                                                 |  | March 31,                  |          | March 31,               
|                                                 |  |                            |          |                         
|                                                 |  | 2002                       |          | 2001                     |  | 2002 |         | 2001
|                                                 |  |                            |          |                          |  |      |         |     
|Net loss                                         |  | $                          | (104,047 | )                        |  | $    | (58,318 | )    |  | $ | (133,488 | ) |  | $ | (96,425  | )
|Unrealized loss on available-for-sale securities |  |                            | (554     | )                        |  |      | (16,884 | )    |  |   | (493     | ) |  |   | (85,514  | )
|Foreign currency translation loss                |  |                            | (1,015   | )                        |  |      | (46     | )    |  |   | 22       |   |  |   | (366     | )
|                                                 |  |                            |          |                          |  |      |         |      |  |   |          |   |  |   |          |  
|Comprehensive net loss                           |  | $                          | (105,616 | )                        |  | $    | (75,248 | )    |  | $ | (133,959 | ) |  | $ | (182,305 | )
|                                                 |  |                            |          |                          |  |      |         |      |  |   |          |   |  |   |          |  

NOTE 9. STOCK OPTION EXCHANGE PROGRAM

In February 2001, the Inktomi Board of Directors approved a stock option
exchange program. Under this program, all employees (including executive
officers and outside directors) were given the opportunity to cancel one or
more stock options previously granted to them in exchange for one or more new
stock options to be granted at least six months and one day from the date the
old options are cancelled, provided the individual is still employed or
providing service on such date. The participation deadline for the program was
February 28, 2001. The number of shares subject to the new options were equal
to the number of shares subject to the old options, and the exercise price of
the new options was the fair market value of Inktomi Common Stock on the date
they were granted. The new options have the same vesting schedule as the old
options and are immediately exercisable as to vested shares when granted
(however, new options granted to executive officers and outside directors lost
three months of vesting and were subject to a trading blackout of three months
following the grant). The exchange resulted in the voluntary cancellation of
options to purchase approximately 12.8 million shares of Common Stock with
exercise prices ranging from $12.25 to $211.00 per share. Approximately 10.6
million replacement options were granted on August 29, 2001 at an exercise
price of $4.21 per share of Common Stock.

Stock options granted during the six month period prior to implementation of
the option exchange program that were not cancelled as part of the program are
subject to variable plan accounting beginning in the fiscal quarter ended March
31, 2001. During the six months prior to implementation of the program, Inktomi
granted approximately 2.8 million options, at an average price of $23.65 per
option, that are subject to

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variable plan accounting. Also subject to variable plan accounting are 1.4
million options, at an average price of $7.18 per option, that were granted to
participants of the program during the six months following implementation of
the program. These options are subject to variable plan accounting. Under
variable plan accounting, we are required to record a non-cash compensation
charge for the options until the options are exercised, forfeited or cancelled
without replacement. The compensation charge will be based on any excess of the
closing stock price at the end of the reporting period or date of exercise,
forfeiture or cancellation without replacement, if earlier, over the fair
market value of our Common Stock on the options issuance date. The resulting
compensation charge to earnings will be recorded as the underlying options
vest. Depending upon movements in the market value of our Common Stock, this
accounting treatment may result in significant compensation charges in future
periods. As of March 31, 2002, we have recorded no compensation charges
related to this program.

NOTE 10. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2001, the Financial Accounting Standards Board (FASB) Emerging
Issues Task Force (EITF) reached a consensus on EITF Issue 01-09, Accounting
for Consideration Given by a Vendor to a Customer or a Reseller of the Vendors
Products,which is a codification of EITF 00-14, 00-22 and 00-25. This issue
presumes that consideration from a vendor to a customer or reseller of the
vendors products to be a reduction of the selling prices of the vendors
products and, therefore, should be characterized as a reduction of revenue when
recognized in the vendors income statement and could lead to negative revenue
under certain circumstances. Revenue reduction is required unless consideration
relates to a separate identifiable benefit and the benefits fair value can be
established. We implemented EITF Issue 01-09 in our second quarter ended March
31, 2002 and this implementation to date has not had an impact on our financial
position and results of operations.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 (SFAS 142), Goodwill and Other Intangible Assets, which is effective for
fiscal years beginning after December 15, 2001. SFAS 142 requires, among other
things, the discontinuance of goodwill amortization. In addition, the standard
includes provisions upon adoption for the reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of
existing recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the testing for impairment of existing
goodwill and other intangibles. We intend to adopt SFAS 142 on October 1, 2002,
the beginning of our fiscal 2003. We are currently assessing, but have not yet
determined, the impact of SFAS 142 on our financial position and results of
operations.

In October 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-lived Assets. The objectives of SFAS 144 are to address
significant issues relating to the implementation of SFAS 121, Accounting for
the Impairment of Long-lived Assets to be Disposed of, and to develop a single
accounting model, based on the framework established by SFAS 121, for
long-lived assets to be disposed of by sale, whether previously held and used
or newly acquired. Although SFAS 144 supercedes SFAS 121, it retains some
fundamental provisions of SFAS 121. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years. We intend to adopt SFAS 144 on
October 1, 2002, the beginning of our fiscal 2003.We are currently assessing,
but have not yet determined, the impact of SFAS 144 on our financial position
and results of operations.

NOTE 11. SEGMENT INFORMATION

Effective September 30, 1999, we adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. SFAS No. 131 established
standards for reporting information about operating segments in annual
financial statements and requires selected information about operating segments
in interim financial reports issued to stockholders. It also established
standards for related disclosures about products and services, and geographic
areas. Operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly
by the chief

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operating decision maker, or decision making group, in deciding how to allocate
resources and in assessing performance. Our chief operating decision-maker is
our Chief Executive Officer. Our reportable segments are organized primarily by
technology. Each of these segments is managed separately because they offer and
distribute distinct technologies and services with different methods of
delivery and customer bases.

We have two reportable operating segments: Software Products and Portal
Services. Software Products revenues are composed of license, consulting,
support and upgrade fees in connection with the Traffic Server network cache
platform, Content Delivery Suite software solutions, Media Products, enterprise
search products, Personal Edge, Traffic Core, Traffic Edge, Traffic Controller
and Inktomi Media Publisher. Portal Services revenues are composed of revenues
generated through our Web search services and Commerce Engine. We completed
the sale of our Commerce Division in March 2001 and therefore, Portal Services
revenues for the six months ended March 31, 2002 consisted of only Web search
services revenues.

We evaluate performance and allocate resources to our operating segments based
on a variety of factors, including revenues, operating profit, market
potential, customer commitments and strategic direction.

Acquisition-related costs, purchased in-process research and development,
amortization of intangibles and other assets, impairment of intangibles and
other assets, restructuring, and amortization of deferred compensation expense
are not included in managements evaluation of performance by the operating
divisions, as they are primarily organizational in nature. The accounting
policies of the reportable segments are the same as those described in the
summary of significant accounting policies in our annual report on Form 10-K
for the year ended September 30, 2001, as filed on December 31, 2001. We do not
track assets by operating segments.

Financial information about segments (in thousands):

|                        |  |                                           |         |          |  |           |        |           |  |                |         |                |  |             |   |  |  |              |         |   |  |   |        |   |  |   |          |  
|----------------------- |  | ----------------------------------------- | ------- | -------- |  | --------- | ------ | --------- |  | -------------- | ------- | -------------- |  | ----------- | - |  |  | ------------ | ------- | - |  | - | ------ | - |  | - | -------- | -
|                        |  | For the Three Months Ended March 31, 2002
|                        |  |                                          
|                        |  |                                           |         |          |  |           |        |           |  | Amortization   |         | Impairment     |  |             |   |  |  |              |         |   |  |   |        |  
|                        |  |                                           |         |          |  |           |        |           |  | of Intangibles |         | of Intangibles |  |             |   |  |  | Amortization |         |   |  |  
|                        |  | Software                                  |         | Portal   |  | and Other |        | and Other |  |                |         |                |  | of Deferred |   |  |  |             
|                        |  | Products                                  |         | Services |  | Assets    |        | Assets    |  | Restructuring  |         | Compensation   |  | Total      
|                        |  |                                           |         |          |  |           |        |           |  |                |         |                |  |            
|                        |  | (Unaudited)                              
|Revenues                |  | $                                         | 17,656  |          |  | $         | 13,152 |           |  | $              |        |                |  | $           |  |  |  | $            |        |   |  | $ |       |   |  | $ | 30,808   |  
|Operating income (loss) |  | $                                         | (17,026 | )        |  | $         | 4,334  |           |  | $              | (16,709 | )              |  | $           |  |  |  | $            | (74,608 | ) |  | $ | (1,543 | ) |  | $ | (105,552 | )

|               |  |                                           |         |          |  |           |        |             |  |                |         |              |  |              |   |              |  |   |   |  |  |   |        |   |  |   |         |  
|-------------- |  | ----------------------------------------- | ------- | -------- |  | --------- | ------ | ----------- |  | -------------- | ------- | ------------ |  | ------------ | - | ------------ |  | - | - |  |  | - | ------ | - |  | - | ------- | -
|               |  | For the Three Months Ended March 31, 2001
|               |  |                                          
|               |  |                                           |         |          |  |           |        |             |  |                |         |              |  | Purchased    |   |              |  |   |   |  |  |   |        |   |  |  
|               |  |                                           |         |          |  |           |        |             |  | Amortization   |         | In-process   |  |              |   |              |  |   |   |  |  |   |        |  
|               |  |                                           |         |          |  |           |        |             |  | of Intangibles |         | Research     |  | Acquisition- |   | Amortization |  |   |   | 
|               |  | Software                                  |         | Portal   |  | and Other |        | and         |  | Related        |         | of Deferred  |  |              |   |             
|               |  | Products                                  |         | Services |  | Assets    |        | Development |  | Charges        |         | Compensation |  | Total       
|               |  |                                           |         |          |  |           |        |             |  |                |         |              |  |             
|               |  | (Unaudited)                              
|Revenues       |  | $                                         | 24,579  |          |  | $         | 14,906 |             |  | $              |        |              |  | $            |  |              |  | $ |  |  |  | $ |       |   |  | $ | 39,485  |  
|Operating loss |  | $                                         | (29,865 | )        |  | $         | (7,798 | )           |  | $              | (19,308 | )            |  | $            |  |              |  | $ |  |  |  | $ | (3,231 | ) |  | $ | (60,202 | )

|                        |  |                                         |         |          |  |           |        |           |  |                |         |                |  |             |        |   |  |              |         |   |  |   |        |   |  |   |          |  
|----------------------- |  | --------------------------------------- | ------- | -------- |  | --------- | ------ | --------- |  | -------------- | ------- | -------------- |  | ----------- | ------ | - |  | ------------ | ------- | - |  | - | ------ | - |  | - | -------- | -
|                        |  | For the Six Months Ended March 31, 2002
|                        |  |                                        
|                        |  |                                         |         |          |  |           |        |           |  | Amortization   |         | Impairment     |  |             |        |   |  |              |         |   |  |   |        |  
|                        |  |                                         |         |          |  |           |        |           |  | of Intangibles |         | of Intangibles |  |             |        |   |  | Amortization |         |   |  |  
|                        |  | Software                                |         | Portal   |  | and Other |        | and Other |  |                |         |                |  | of Deferred |        |   |  |             
|                        |  | Products                                |         | Services |  | Assets    |        | Assets    |  | Restructuring  |         | Compensation   |  | Total      
|                        |  |                                         |         |          |  |           |        |           |  |                |         |                |  |            
|                        |  | (Unaudited)                            
|Revenues                |  | $                                       | 46,012  |          |  | $         | 24,815 |           |  | $              |        |                |  | $           |       |   |  | $            |        |   |  | $ |       |   |  | $ | 70,827   |  
|Operating income (loss) |  | $                                       | (27,413 | )        |  | $         | 6,565  |           |  | $              | (33,418 | )              |  | $           | (1,750 | ) |  | $            | (78,620 | ) |  | $ | (3,521 | ) |  | $ | (138,157 | )

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|               |  |                                         |         |          |  |           |         |             |  |                |         |              |  |              |      |              |  |   |         |   |  |   |        |   |  |   |          |  
|-------------- |  | --------------------------------------- | ------- | -------- |  | --------- | ------- | ----------- |  | -------------- | ------- | ------------ |  | ------------ | ---- | ------------ |  | - | ------- | - |  | - | ------ | - |  | - | -------- | -
|               |  | For the Six Months Ended March 31, 2001
|               |  |                                        
|               |  |                                         |         |          |  |           |         |             |  |                |         |              |  | Purchased    |      |              |  |   |         |   |  |   |        |   |  |  
|               |  |                                         |         |          |  |           |         |             |  | Amortization   |         | In-process   |  |              |      |              |  |   |         |   |  |   |        |  
|               |  |                                         |         |          |  |           |         |             |  | of Intangibles |         | Research     |  | Acquisition- |      | Amortization |  |   |         |  
|               |  | Software                                |         | Portal   |  | and Other |         | and         |  | Related        |         | of Deferred  |  |              |      |             
|               |  | Products                                |         | Services |  | Assets    |         | Development |  | Charges        |         | Compensation |  | Total       
|               |  |                                         |         |          |  |           |         |             |  |                |         |              |  |             
|               |  | (Unaudited)                            
|Revenues       |  | $                                       | 85,027  |          |  | $         | 34,962  |             |  | $              |        |              |  | $            |     |              |  | $ |        |   |  | $ |       |   |  | $ | 119,989  |  
|Operating loss |  | $                                       | (24,929 | )        |  | $         | (15,052 | )           |  | $              | (35,516 | )            |  | $            | (430 | )            |  | $ | (19,497 | ) |  | $ | (6,664 | ) |  | $ | (102,088 | )

At March 31, 2002, less than 10% of our tangible long-term assets were located
outside the United States.

The following table sets forth revenue information for geographic areas: (in
thousands):

|               |  |                      |        |                    |  |      |        |      |  |   |        |  |  |   |         | 
|-------------- |  | -------------------- | ------ | ------------------ |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------- | 
|               |  | For the Three Months |        | For the Six Months
|               |  | Ended March 31,      |        | Ended March 31,   
|               |  |                      |        |                   
|               |  | 2002                 |        | 2001               |  | 2002 |        | 2001
|               |  |                      |        |                    |  |      |        |     
|               |  | (Unaudited)          |        | (Unaudited)       
|              
|              
|              
|              
|              
|              
|              
|              
|United States  |  | $                    | 25,076 |                    |  | $    | 26,189 |      |  | $ | 58,975 |  |  | $ | 77,688  | 
|International  |  |                      | 5,732  |                    |  |      | 13,296 |      |  |   | 11,852 |  |  |   | 42,301  | 
|               |  |                      |        |                    |  |      |        |      |  |   |        |  |  |   |         | 
|Total Revenues |  | $                    | 30,808 |                    |  | $    | 39,485 |      |  | $ | 70,827 |  |  | $ | 119,989 | 
|               |  |                      |        |                    |  |      |        |      |  |   |        |  |  |   |         | 

NOTE 12. SUBSEQUENT EVENTS

In April 2002, we completed a restructuring and
reduced our
workforce by approximately 50 employees. As a result of this workforce
reduction, we expect to incur a one-time charge of approximately $2.2 million
for severance and other related costs in the quarter ended June 30, 2002.




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

This Report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including, without limitation, statements regarding our
expectations, beliefs, intentions or future strategies that are signified by
the words expects, anticipates, intends, believes, may, will or
similar language. All forward-looking statements included in this document are
based on information available to us on the date hereof, and we assume no
obligation to update any such forward-looking statements. Actual results could
differ materially from those projected in any such forward-looking statements.
In evaluating our business, prospective investors should carefully consider the
information set forth below under the caption Factors Affecting Operating
Results set forth herein. We caution investors that our business and financial
performance are subject to substantial risks and uncertainties.

Overview

Inktomi Corporation is a leading provider of scalable network infrastructure
solutions. Inktomi develops, markets, licenses and supports a range of software
applications and services that enhance the performance and intelligence of
large-scale networks, enabling enterprises and network service providers to
publish, distribute, manage and retrieve content quickly and efficiently.

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Licenses revenues are composed of license and upgrade fees in connection with
our software products, which includes our content networking products and our
enterprise search products. Our content networking products include our
Traffic Server network cache platform, our Content Delivery Suite software
solutions, our Media Products, Traffic Core, Traffic Edge, Traffic Controller,
Inktomi Media Publisher, and our recently introduced Personal Edge product.
License fees are generally based on the number of CPUs or nodes running the
software, or on network traffic throughput across our products, depending on
customer deployment, and are generally recognized upon shipment of the software
assuming all other revenue recognition criteria have been met. License fees for
our enterprise search products are based on the capacity of documents purchased
that can be indexed and searched by a customer.

Services revenues are composed of revenues generated through consulting and
support fees related to our software products and for some historical periods
through fees generated from our Commerce Engine. Consulting and support fees
are recognized ratably over the service period as the services are performed.
We completed the sale of our Commerce Division in March 2001 and therefore,
services revenues for the six months ended March 31, 2002, consisted of only
consulting and support fees.

Web search services revenues consisting of revenues from our Web search and
paid inclusion businesses are generated through a variety of contractual
arrangements, which include general service fees, per-query search fees,
various forms of click through fees and search service hosting fees.
Subscription fees and other fixed periodical fees are recognized ratably over
the contract period. Per-query fees and click through fees are recognized
based on the activity in the period.

Over the past several quarters, the business climate in general and our target
service provider market in particular, have experienced dramatic declines.
This has adversely impacted our ability to generate revenues or maintain the
significant revenue growth we achieved in fiscal 2000. We have undertaken a
number of initiatives to adjust to this business environment including
instituting a strategy of developing and marketing products and services for
the enterprise market, reducing expenses through strong cost cutting measures
and work force reductions, and retooling our sales organization. We believe
that gaining traction from these efforts will take the next several quarters
and will be subject to a number of risks and uncertainties.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States, which require
management to make estimates and assumptions. On an on-going basis, we evaluate
our estimates and assumption, including those related to revenue recognition,
impairment of long-lived assets, allowance for doubtful accounts and contingent
liabilities related to lease obligation. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates under
different assumptions or conditions. The Company believes that the following
critical accounting policies may involve a higher degree of judgment and
complexity.

Revenue Recognition

Licenses revenues are composed of license and upgrade fees in connection with
our software products including Traffic Server network cache platform, Content
Delivery Suite software solutions, Media Products, Traffic Core, Traffic Edge,
Traffic Controller, Inktomi Media Publisher, enterprise search products and our
recently introduced product, Personal Edge. License fees are generally based on
the number of CPUs or nodes running the software, or on network traffic
throughput across our products, depending on customer deployment, and are
generally recognized upon shipment of the software assuming all other revenue
recognition criteria have been met. License fees for our enterprise search
products are based on the capacity of documents purchased that can be indexed
and searched by a customer.

We recognize revenues from software licenses when the licensed product is
delivered, collection is reasonably assured, the fee for each element of the
transaction is fixed or determinable, persuasive evidence

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of an arrangement exists, and vendor-specific objective evidence exists to
allocate the total fee to any undelivered elements of the arrangement.

Fees from licenses sold together with support and upgrade rights, consulting
and implementation services are generally recognized upon delivery provided
that that above criteria have been met, payment of the license fees is not
dependent upon the performance of the services and the services are not
essential to the functionality of the licensed software. Services are unbundled
from these arrangements based on the price sold separately, or in some
instances for support and upgrades, substantive renewal rates using the
residual method.

Services revenues are composed of revenues generated through consulting and
support fees related to our software products. Consulting and support fees are
recognized ratably over the period which the services are performed.

In instances where the criteria for recognizing license revenues separate from
the consulting or implementation revenues have not been met, both the licenses
and consulting fees, excluding the maintenance and support elements, are
recognized using contract accounting. When management can make reliable
estimates on the extent of consulting services required for full functionality,
the revenue for the licenses and consulting fees is recognized on a
percentage-of -completion based on labor hours incurred compared to total
estimated hours. When management cannot make reliable estimates on the extent
of consulting services required for full functionality, the revenue for the
licenses and consulting is deferred until the consulting services are
completed. We classify revenue from these arrangements as licenses and services
revenues, respectively, based upon the estimated fair value of each element.

Web search services revenues consisting of revenues from our web search and
paid inclusion business are generated through a variety of contractual
arrangements, which include general service fees, per-query search fees,
various forms of click through fees and search service hosting fees.
Subscription fees and other fixed periodical fees are recognized ratably over
the contract period. Per-query fees and click through fees are recognized based
on the activity in the period

Impairment of Long-Lived Assets

We review our long-lived assets, including property and equipment, goodwill and
other intangibles, for impairment whenever events or changes in circumstances
indicate that the carrying amount of such an asset may not be recoverable.
Events or changes in circumstances that we consider as impairment indicators
include, but are not limited to the following



| |  |  | significant underperformance relative to expected historical
or projected future operating results;      
| | - |  | ---------------------------------------------------------------------------------------------------------
|
| |  |  | significant changes in the manner of use of the acquired
assets or the strategy for our overall business;
|
| |  |  | significant adverse economic and industry trends;                                                        
|
| |  |  | significant decline in our stock price for a sustained period; and                                       
|
| |  |  | our net book value relative to our market capitalization.                                                

When we determine that the carrying amount of the long-lived asset may not be
recoverable based upon the existence of one or more of the above indicators of
impairment, we measure any impairment based on a projected discounted cash flow
method using a discount rate commensurate with the risk inherent in our current
business model. Significant judgment is required in the development of
projected cash flows for these purposes including assumptions regarding the
appropriate level of aggregation of cash flows, their term and discount rate as
well as the underlying forecasts of expected future revenue and expense.

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Effective October 1, 2002, we will adopt SFAS No. 142, Goodwill and Other
Intangible Assets, which requires, among other things, that goodwill and other
intangibles determined to have an indefinite life are no longer to be amortized
but are to be tested for impairment at least annually. In addition, the
standard includes provisions upon adoption for assessing the impairment of
goodwill at the reporting unit level as compared to the enterprise level under
the current rules. We are currently evaluating the effects of the changes under
SFAS No. 142 on our consolidated financial statements.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. Management
regularly reviews the adequacy of the allowance after considering the size of
the accounts receivable balance, historical bad debts, customers expected
ability to pay and our collection history with each customer. Management
reviews significant individual invoices that are past due to determine whether
an allowance should be made based on the factors described above. The allowance
for doubtful accounts represents our best estimate, but changes in
circumstances discussed above may result in a change to the amount of the
allowance.

Accounting for Leases

In August 2000, we entered into a synthetic lease agreement for the land and
facilities of our corporate headquarters, known as Bayside, in Foster City,
California. Under the lease terms, we are required to pay lease payments for
five years to the lessor. The payments are calculated based on a floating
interest rate applied against a $114 million principal value. The agreement
was assigned to a third party lessor under the terms of a lease finance
structure. This structure also required the creation and maintenance of a cash
collateral account that limits the liquidity of $119.6 million of our cash,
which is classified as long-term on our balance sheet. During the term of the
lease, we have the option to buy the building for $114 million or to extend the
lease. If we elect not to purchase the building or extend the lease term, we
have guaranteed to compensate the lessor for the difference between the market
value of the building and $114 million, limited upwards to a maximum amount of
$101 million (residual value guarantee). The agreement qualifies for operating
lease accounting treatment, and as such the buildings are not included on our
balance sheet.

This agreement is subject to specific financial covenants that are reported to
the lessor quarterly and relate to tangible net worth, fixed charge ratio,
EBITDA, and minimum net cash balances. As of March 31, 2002, we were in
compliance with all covenants. In the event that we are in default of these
financial covenants, the lessor has the right to demand payment of the $114
million principle value which is being held as long-term restricted cash and
transfer the ownership of the building to us at fair market value, which may
trigger the recognition of a loss in our financial statements.

In April 2000, we entered into a lease agreement commencing January 1, 2002 for
381,050 square feet of office space in two mid-rise office buildings in Foster
City, California, known as Parkside Towers. Payments under the lease commenced
on January 1, 2002, when the property was delivered to Inktomi by the developer
and continue over the lease term ending October 31, 2014 for one building and
October 31, 2016 for the second building. Aggregate payments to be made under
the lease are approximately $320.0 million over the remaining lease term.

In the quarter ending March 31, 2002, we completed our assessment of our
current and future anticipated needs for operating facilities and adopted a
plan to consolidate our operating facilities. In accordance with this plan, we
have recorded a restructuring charge of $74.6 million during the quarter ended
March 31, 2002 related to the abandonment of our lease for 381,050 square feet
of office space described above. Lease abandonment costs for this facility were
estimated to include the remaining lease liabilities through the term of the
lease, impairment of leasehold improvements, estimated future leasehold
improvements and brokerage fees offset by estimated sublease income. Estimates
related to sublease costs and income are based on assumptions regarding the
period required to locate sub-lessees and sublease rates which were derived
from market trend information provided by a commercial real estate broker.
These estimates will be reviewed on a periodic basis and to the extent that
these assumptions materially change due to

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changes in the market, the ultimate restructuring expense for the abandoned
facility would be adjusted. As of March 31, 2002, approximately $57.9 million
of the restructuring accrual remained outstanding.

RESULTS OF OPERATIONS

Revenues

Total revenues were $30.8 million and $70.8 million in the quarter and six
month periods ended March 31, 2002. This represents a decrease of $8.7 million
or 22% in the quarter ended March 31, 2002, and a decrease of $49.2 million or
41% in the six month period ended March 31, 2002, over the comparable periods
in fiscal 2001. The weakness in revenue for the quarter was due largely to a
reduction in our content networking license sales. For the quarter ended March
31, 2002, two separate customers each exceeded 10% of total
revenues. One of these customers also exceeded 10% of total revenues for the
six month period ended March 31, 2002. No customer exceeded 10% of total
revenues for the comparable periods in fiscal 2001.

We market and sell our products to customers located in the United States and
abroad, both through our direct sales force and through our channel partners.
Historically, the percentage of sales to customers located outside of the
United States has varied substantially, reflecting the early stage build out of
our international markets and operations. We expect this variation to continue
for the foreseeable future. We have generated most of our revenues through
direct sales efforts, except in Asia where our revenues have been principally
generated through our channel partners.

Licenses revenues were $11.2 million and $32.3 million in the quarter and six
month periods ended March 31, 2002. This represents a decrease of $6.5 million
or 37% in the quarter ended March 31, 2002, and a decrease of $36.6 million or
53% in the six month period ended March 31, 2002, over the comparable periods
in fiscal 2001. The period to period decreases were primarily due to lower
demand for our content networking products, particularly to network service
provider customers, as well as declines in our search enterprise license
revenues, the result of contracting IT budgets. During the quarter, we were
impacted by the absence of a large content networking license deal. We expect
large content networking deals to occur less frequently going forward as our
service provider customers and prospects continue to defer or downsize
purchases in reaction to difficult economic conditions.

Services revenues were $6.5 million and $13.8 million in the quarter and six
month periods ended March 31, 2002. This represents a decrease of $2.4 million
or 27% in the quarter ended March 31, 2002, and a decrease of $9.4 million or
41% in the six month period ended March 31, 2002, over the comparable periods
in fiscal 2001. The period to period decreases were primarily due to decreases
in fees generated from our Commerce Engine, which was sold in March 2001. In
order to maintain or grow the level of our services revenues, we will need to
win new consulting engagements, renew support agreements that are due to expire
during the next fiscal year and enter into new support agreements with new
service provider and enterprise customers.

Web search services revenues were $13.2 million and $24.8 million in the
quarter and six month periods ended March 31, 2002. This represents an increase
of $0.2 million or 2% in the quarter ended March 31, 2002, and a decrease of
$3.1 million or 11% in the six month period ended March 31, 2002, over the
comparable periods in fiscal 2001. The period to period fluctuations were
primarily due to weakness in the Internet portal market, particularly smaller
or poorly funded companies, offset by growth in our Index Connect and Search
Submit paid inclusion services. In the future, we expect revenues from our
paid inclusion services to continue to become a greater percentage of our total
Web search services revenues. We have received notice from one of our major
portal customers that they do not intend to renew their Web search services
agreement with us when it expires in August 2002. We expect that this will
decrease revenues in our Web search services business beginning in the quarter
ending September 30, 2002.

During the quarter and six month periods ended March 31, 2002, we recognized
revenues of approximately $1.8 million and $4.4 million, respectively, on
contracts, development, and licensing arrangements with customers in which we
are equity shareholders. During the quarter and six month periods ended March
31,

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2001, we recognized net revenues of approximately $1.6 million and $22.4
million, respectively, on contracts and licensing arrangements with customers
in which we are equity shareholders. During the three months ended December 31,
2000, we also recognized installment basis revenue from Adero on an agreement
consummated in December 1999. Prices and terms on these contracts and
arrangements were comparable to those given to other similarly situated
customers.

Cost of Revenues

Cost of revenues were $8.2 million and $18.5 million in the quarter and six
month periods ended March 31, 2002, a decrease of $5.4 million or 39% and $9.7
million or 34% over the comparable periods in fiscal 2001.

Licenses cost of revenues generally consist of royalties or license fees
associated with licensed technologies used in our software applications.
License cost of revenues were $1.1 million and $2.5 million in the quarter and
six month periods ended March 31, 2002, an increase of $0.2 million or 28% and
a decrease of $0.8 million or 23% over the comparable periods in fiscal 2001.
The increase in license cost of revenues in the quarter ended March 31, 2002 as
compared to the same period in fiscal 2001 was the result of an increased
fixed royalty obligation associated with our renewal of one of our primary licensed
technology contracts in the latter part of calendar 2001. The decrease in
license cost of revenues for the six month period ended March 31, 2002 as
compared to the same period in fiscal 2001 was due to decreased license sales
in fiscal 2002. Licenses cost of revenues do not necessarily fluctuate
proportionately with license revenue due to guaranteed minimum royalty
obligations we have with certain licensed technologies.

Services cost of revenues generally consist of expenses associated with our
consulting services and our technical support department as well as
depreciation and network and hosting charges associated with the operation of
our former Commerce business. Services cost of revenues were $2.3 million and
$5.9 million in the quarter and six month periods ended March 31, 2002, a
decrease of $3.9 million or 63% and $6.3 million or 52% over the comparable
periods in fiscal 2001. The period to period decreases were primarily
attributable to the divestiture of our Commerce business in March 2001 and
lower expenses associated with our consulting services and our technical
support departments.

Web search cost of revenues generally consist of expenses related to the
operation of our Web search business, primarily depreciation, network and
hosting charges, and distribution costs associated with our paid inclusion
products. Web search services cost of revenues were $4.8 million and $10.1
million in the quarter and six month periods ended March 31, 2002, a decrease
of $1.7 million or 26% and $2.6 million or 21% over the comparable periods in
fiscal 2001. The period to period decreases were primarily the result of lower
depreciation and hosting charges, offset by an increase in distribution costs
for our paid inclusion products.

Expenses

Operating expenses include cost of revenues, sales and marketing expenses,
research and development expenses, general and administrative expenses,
amortization of intangibles and other assets, restructuring costs, impairment
of intangibles and other assets, acquisition-related costs and purchased
in-process research and development. Research and development, sales and
marketing and general and administrative expenses primarily consist of
personnel and related costs.

In connection with stock option grants and our business acquisitions, certain
options granted have been considered to be compensatory. Compensation
associated with such options was $1.5 million and $3.5 million for the quarter
and six month periods ended March 31, 2002, a decrease of $1.7 million or 53%
and $3.2 million or 48% over the comparable periods in fiscal 2001. As of March
31, 2002, we had unamortized deferred compensation of $15.8 million which will
be charged to operations as the underlying options vest.

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Sales and Marketing Expenses

Sales and marketing expenses consist of personnel and related costs for our
direct sales force and marketing staff as well as expenses related to our
marketing programs, including trade shows, demand creation activities, and
advertising. Sales and marketing expenses were $19.2 million and $39.8 million
in the quarter and six month periods ended March 31, 2002, a decrease of $18.5
million or 49% and $42.2 million or 51% over the comparable periods of fiscal
2001. The period to period decreases were primarily due to a decrease in the
number of sales and marketing personnel, decreased sales commissions, and
decreased advertising expenses.

Research and Development Expenses

Research and development expenses consist primarily of personnel and related
costs for our development efforts. Our current research and development efforts
are focused on adding features and functionality across each of our current
applications, modifying and adapting our products and services for use with
enterprise networks, developing our products and services for use with
enterprise networks, and adapting our products to work with additional products
and platforms. Research and development expenses were $13.4 million and $27.6
million in the quarter and six month periods ended March 31, 2002, a decrease
of $8.9 million or 40% and $16.2 million or 37% over the comparable periods of
fiscal 2001. The period to period decreases were primarily due a decrease in
the number of research and development personnel, including Commerce personnel,
as well as decreased outside consulting costs. We believe significant
investments in research and development are essential to our future success and
expect that research and development expenses will continue to be significant
in future periods.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel and related
costs for general corporate functions, including accounting, facilities,
finance, human resources and legal. General and administrative expenses were
$4.2 million and $9.4 million in the quarter and six month periods ended March
31, 2002, a decrease of $2.6 million or 38% and $3.3 million or 26% over the
comparable periods of fiscal 2001. The period to period decreases were due
primarily to a decrease in the number of general and administrative personnel,
decreased facility costs, and a reduction in our allowance for doubtful
accounts, offset by a severance charge for an officer of the Company.

Amortization of Intangibles and Other Assets

Amortization of intangibles and other assets primarily relates to amortization
of goodwill acquired through our purchase acquisitions of Ultraseek Corporation
and eScene Networks and through our asset purchase from Adero. Amortization of
intangibles and other assets totaled $16.7 million and $33.4 million in the
quarter and six month periods ended March 31, 2002, a decrease of $2.6 million
or 13% and $2.1 million or 6% over the comparable periods of fiscal 2001. The
period to period decreases were primarily due to our impairment of our Adero
goodwill in the quarter ended December 31, 2001, offset partially by our
acquisition of eScene in June 2001.

Impairment of Intangibles and Other Assets

During the three months ended December 31, 2001, we evaluated the remaining
goodwill associated with our asset purchase from Adero in December 2000 and
recorded a $1.8 million charge to write-off the remaining net book value of
this intangible asset as there will be no further revenue streams related to
this asset.

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Restructuring Costs

Restructuring costs totaled $74.6 million and $78.6 million in the quarter and
six month periods ended March 31, 2002. There were no restructuring costs in
the comparable periods of fiscal 2001.

In the quarter ended December 31, 2001, in light of a continuing economic
slowdown, we announced and substantially completed a restructuring and a
workforce reduction of approximately 115 employees to reduce our operating
expenses. All functional areas were affected by the reduction. As a result of
this workforce reduction, we incurred a charge of $4.0 million, mainly related
to severance and impairment of property and equipment. Please refer to Note 3
of the financial statements for further detail on this restructuring.

In April 2000, we entered into a lease agreement commencing January 1, 2002 for
381,050 square feet of office space in two mid-rise office buildings in Foster
City, California, known as Parkside Towers. Payments under the lease commenced
on January 1, 2002, when the property was delivered to Inktomi by the developer
and continue over the lease term ending October 31, 2014 for one building and
October 31, 2016 for the second building. Aggregate payments to be made under
the lease are approximately $320.0 million over the remaining lease term.

In the quarter ending March 31, 2002, we completed our assessment of our
current and future anticipated needs for operating facilities and adopted a
plan to consolidate our operating facilities. In accordance with this plan, we
have recorded a restructuring charge of $74.6 million during the quarter ended
March 31, 2002 related to the abandonment of our lease for 381,050 square feet
of office space described above. Lease abandonment costs for this facility were
estimated to include the remaining lease liabilities through the term of the
lease, impairment of leasehold improvements, estimated future leasehold
improvements and brokerage fees offset by estimated sublease income. Estimates
related to sublease costs and income are based on assumptions regarding the
period required to locate sub-lessees and sublease rates which were derived
from market trend information provided by a commercial real estate broker.
These estimates will be reviewed on a periodic basis and to the extent that
these assumptions materially change due to changes in the market, the
ultimate restructuring expense for the abandoned facility would be adjusted.
As of March 31, 2002, approximately $57.9 million of the restructuring accrual
remained outstanding.

Acquisition-Related Costs

As a result of our Fast Forward Networks acquisition in October 2000, we
recorded acquisition-related costs of $19.5 million in the three months ended
December 31, 2000, primarily for investment banking fees, accounting, legal and
other expenses. As of March 31, 2002, no accrued liabilities relating to
FastForward acquisition-related costs remained outstanding.

Purchased In-Process Research and Development

A portion of the purchase price we paid for various assets of Adero have been
allocated to developed technology and in-process research and development
(IPRD). We identified and valued the developed technology and IPRD by
conducting extensive interviews, analyzing data provided by the acquired
companies concerning developmental products, considering the stage of
development of such products and the time and resources needed to complete
them, and assessing the expected income generating ability of the products,
target markets and associated risks. The income approach, which includes an
analysis of the markets, cash flows, and risks associated with achieving such
cash flows, was the primary technique utilized in valuing the developed
technology and IPRD. Based on our analysis of these variables, we recorded a
one-time purchased IPRD charge of $0.4 million in the three months ended
December 31, 2000 because technological feasibility had not been established
and no future alternative uses existed.

Other Income, Net

Other income, net generally includes interest on our cash and cash equivalents,
short-term investments and long-term restricted cash, interest expenses related
to our debt, capital lease obligations and realized gains

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or losses on disposal of assets. Other income, net totaled $1.7 million and
$5.1 million in the quarter and six month periods ended March 31, 2002, a
decrease of $0.6 million or 26% and $1.2 million or 19% over the comparable
periods of fiscal 2001. The period to period decreases were primarily the
result of decreased interest income, offset by a $2.8 million
gain relating principally to
the settlement of accruals from previous one-time charges and a $0.8 million
reversal of an accrual related to our former Commerce division.

Income Tax Provision

Our income taxes totaled $0.2 million and $0.4 million in the quarter and six
month periods ended March 31, 2002, a decrease of $0.2 million or 49% and $0.2
million and 35% over the comparable periods in fiscal 2001. Our income taxes
primarily are a result of our international operations. Our effective income
tax rate may change during the remainder of fiscal 2002 if operating results
differ significantly from current projections. We expect income taxes to
remain minimal until we begin to generate taxable income.

Liquidity and Capital Resources

Cash and cash equivalents and short-term investments totaled $109.9 million at
March 31, 2002, an increase of $25.4 million or 30% from $84.5 million at
September 30, 2001. At March 31, 2002 and September 30, 2001, our long-term
restricted cash was $129.0 million.

In November 2001, we completed a public offering of our Common Stock in which
we sold approximately 13.2 million shares raising net proceeds after issuance
costs and underwriters discounts of $52.8 million.

For the six months ended March 31, 2002, net cash used in operations of $33.5
million was primarily attributable to our net loss for the period and a net
change in assets and liabilities, offset partially by restructuring costs,
amortization of intangibles and other assets, depreciation and amortization,
stock based compensation, impairment of property and equipment, and impairment
of intangibles and other assets. For the six months ended March 31, 2001, net
cash used in operations of $23.5 million was primarily
attributable to our net loss for the period, offset partially by a
net change in assets and liabilities, amortization of intangibles and
other assets, depreciation and amortization, stock based
compensation, and purchased in-process research and development.

For the six months ended March 31, 2002, net cash used in investing activities
of $33.4 million was primarily attributable to net purchases of short-term
investments. For the six months ended March 31, 2001, net cash used in
investing activities of $10.3 million was attributable to purchases of property
and equipment, the restriction of cash for lease agreements, net purchases of investments in equity securities and a business
acquisition, partially offset by net sales of short-term investments.

For the six months ended March 31, 2002, net cash provided by financing
activities of $62.8 million was primarily attributable to proceeds raised
relating to our public offering and exercises of stock options and warrants.
For the six months ended March 31, 2001, net cash provided by financing
activities of $6.8 million was primarily attributable to exercises of stock
options and warrants.

From time to time, we have used debt and leases to partially finance capital
purchases. At March 31, 2002, we had $12.3 million in total loans and
capitalized lease obligations outstanding. Our underlying assets collateralize
the loans, and the underlying equipment obtained through the lease agreements
collateralizes each capitalized lease. Approximately $10.0 million of our debt
at March 31, 2002 was in the form of bank loans. The bank loans include certain
covenants requiring minimum liquidity, tangible net worth and profitability
over time, and do not allow us to distribute cash dividends. As of March 31,
2002, we were in compliance with all financial covenants.

In April 2000, we entered into a lease agreement commencing January 1, 2002 for
381,050 square feet of office space in two mid-rise office buildings in Foster
City, California, known as Parkside Towers. Payments under the lease commenced
on January 1, 2002, when the property was delivered to Inktomi by the developer
and continue over the lease term ending October 31, 2014 for one building and
October 31, 2016 for the second building. Aggregate payments to be made under
the lease are approximately $320.0 million over the remaining lease term.

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In the quarter ending March 31, 2002, we completed our assessment of our
current and future anticipated needs for operating facilities and adopted a
plan to consolidate our operating facilities. In accordance with this plan, we
have recorded a restructuring charge of $74.6 million during the quarter ended
March 31, 2002 related to the abandonment of our lease for 381,050 square feet
of office space described above. Lease abandonment costs for this facility were
estimated to include the remaining lease liabilities through the term of the
lease, impairment of leasehold improvements, estimated future leasehold
improvements and brokerage fees offset by estimated sublease income. Estimates
related to sublease costs and income are based on assumptions regarding the
period required to locate sub-lessees and sublease rates which were derived
from market trend information provided by a commercial real estate broker.
These estimates will be reviewed on a periodic basis and to the extent that
these assumptions materially change due to changes in the market, the
ultimate restructuring expense for the abandoned facility would be adjusted.
As of March 31, 2002, approximately $57.9 million of the restructuring accrual
remained outstanding.

In August 2000, we entered into a synthetic lease agreement for the land and
facilities of our corporate headquarters, known as Bayside, in Foster City,
California. Under the lease terms, we are required to pay lease payments for
five years to the lessor. The payments are calculated based on a floating
interest rate applied against a $114 million principal value. The agreement
was assigned to a third party lessor under the terms of a lease finance
structure. This structure also required the creation and maintenance of a cash
collateral account that limits the liquidity of $119.6 million of our cash,
which is classified as long-term on our balance sheet. During the term of the
lease, we have the option to buy the building for $114 million or to extend the
lease. If we elect not to purchase the building or extend the lease term, we
have guaranteed to compensate the lessor for the difference between the market
value of the building and $114 million, limited upwards to a maximum amount of
$101 million (residual value guarantee). The agreement qualifies for operating
lease accounting treatment, and as such the buildings are not included on our
balance sheet.

This agreement is subject to specific financial covenants that are reported to
the lessor quarterly and relate to tangible net worth, fixed charge ratio,
EBITDA, and minimum net cash balances. As of March 31, 2002, we were in
compliance with all covenants. In the event that we are in default of these
financial covenants, the lessor has the right to demand payment of the $114
million principle value that is being held as long-term restricted cash and
transfer the ownership of the building to us at fair market value, which may
trigger the recognition of a loss in our financial statements.

Our capital and liquidity requirements depend on numerous factors, including
market acceptance of our products, economic conditions impacting our revenue
generation, the resources we devote to developing, marketing, selling and
supporting our products, the timing and extent of establishing international
operations, the resources we commit to facilities, the timing and extent of our
investments, the value of our investments in equity securities and real estate,
acquisition costs, and the ability to raise capital and other factors. We
believe that we have adequate cash resources to fund operations for at least
the next twelve months.

Factors Affecting Operating Results

Interested persons should carefully consider the risks described below in
evaluating us. Additional risks and uncertainties not presently known to us or
that we currently consider immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial condition
or results of operations could be materially adversely affected. In that case,
the trading price of our Common Stock could decline.

OUR FUTURE GROWTH DEPENDS ON THE COMMERCIAL SUCCESS OF EACH OF OUR CONTENT
NETWORKING PRODUCTS AND OUR ABILITY TO TRANSITION OUR PRODUCTS AND STRATEGIES
TO SERVE ENTERPRISE CUSTOMERS.

Our future growth substantially depends on the commercial success of our
content networking products including Traffic Server, Content Delivery Suite,
Media Products, Personal Edge, Traffic Core, Traffic Edge, Traffic Controller
and Inktomi Media Publisher. The markets for these products are in their early

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stages and we cannot be sure that our target customers will widely adopt and
deploy these technologies throughout their networks. Demand for our products
has fluctuated significantly over the past few quarters as our core
telecommunications and network service provider customers and prospects have
deferred and downsized purchases, and as the Content Delivery Network market
has declined. We expect this business environment to continue for the
foreseeable future, and expect we will need to continue to modify and enhance
our products for multiple market segments including, in particular, the
enterprise market. We are targeting new and adapted products primarily towards
enterprise customers and we expect revenues from these products to be modest
over the next several quarters. We cannot be sure we will be successful in our
development efforts or that our products will gain market traction. Our future
success substantially depends on our ability to generate substantial and
sustained revenues from our content networking products in each of our market
segments and substantially increase the number of new and repeat customer
transactions.

OUR BUSINESS WOULD BE HARMED IF CUSTOMERS CHOOSE NOT TO USE OR PROMOTE OUR WEB
SEARCH SERVICES.

Revenues from our Web search services result primarily from the number of
end-user searches processed by our Search Engine. Our agreements with customers
do not require them to direct end-users to our search services or to use our
search services exclusively or at all. Accordingly, revenues from search
services are highly dependent upon the willingness of customers to promote and
use the search services we provide, the ability of our customers to attract
end-users to their online services, the volume of end-user searches that are
processed by our Web search services, and the ability of customers to monetize
traffic from their Web site search pages. Some of our customers have selected
competing search and directory services to operate in combination with our
services, which has reduced the number of queries available for us to serve and
may erode future revenue growth opportunities. The technological barriers for
customers to implement additional services or to replace our services are not
substantial. The market for Internet search is maturing and many smaller and
medium size portals are not profitable, suffer from declining revenue growth
and have limited access to capital to fund operational needs. Many of our
smaller search services customers have elected not to renew their contracts and
our market opportunity from portals has become more limited. As a result, our
Web search revenues are dependent on a relatively few number of major
customers. Economic conditions may lead such customers of our Web search
services to stop paying for such services, to only pay for such services at
highly reduced rates or to leave our services in favor of competitors offering
Web search services bundled with other offerings. In order for us to increase
revenues from our Search Engine business, we will need to attract new
customers, develop and deliver new search services, products and features to
existing and future customers, establish deeper strategic relationships with
our customers, and increase the adoption of our Index Connect and Search Submit
paid inclusion services for content publishers. We expect that over time our
paid inclusion services for content publishers will comprise a greater
percentage of total Web search services revenues. Should our large portal
customers develop or acquire their own paid inclusion services or utilize those
of our competitors, our business would be harmed. Our paid inclusion revenue
is dependent upon the distribution channel afforded us through the portal
customers serving our search queries. Should any significant portal customers
reduce or stop utilizing our search services or if such portals decline to
participate in our paid inclusion offerings our paid inclusion revenues would
decline.

GROWTH OF SALES OF OUR ENTERPRISE SEARCH PRODUCTS IS DEPENDENT ON THE
ACCEPTANCE OF SUCH PRODUCTS FOR ENTERPRISE WIDE UTILIZATION.

Our revenue growth is dependent, among other things, upon the growth of sales
of our search software products to enterprises. Such revenues are derived from
software license fees and fees derived from support and upgrades of such
software. A number of factors could cause sales of our enterprise search
products to slow or decline. We face intense competition from companies with
more experience in the marketplace and who offer a broad set of integrated
products and services to our target customers. In addition, these companies
have deeper strategic relationships and have established well developed
channels to sell and distribute their products and services. We historically
have sold our enterprise search products primarily at the departmental level
within large enterprises, through a direct sales force. To expand our market
opportunities, we will need to enhance our product and service offerings,
effectively market our products as enterprise wide search and navigation
solutions, develop channel and licensing programs to extend our

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reach, and partner with companies offering complementary products to offer
collectively a broader set of integrated products.

WE MAY BE UNABLE TO GENERATE SUFFICIENT DEMAND FOR OUR MEDIA PRODUCTS AND OUR
CONTENT NETWORKING PRODUCTS THAT SUPPORT MEDIA DISTRIBUTION DUE TO MARKET
FACTORS, SOME OF WHICH ARE OUTSIDE OUR CONTROL.

The streaming media market is in its early stages and sales of our products
into this market to date have been modest and fluctuated from quarter to
quarter. The amount of streaming content available over public networks and
enterprise networks must increase substantially for some of our potential
customers to justify their purchase of our Media Products and our content
networking products that support media distribution. These products are complex
which may limit their market acceptance and deployment. Growth in sales in the
service provider space depends on the increased availability and usage of
broadband access to the Internet. We cannot be sure that broadband access to
the Internet will grow fast enough or be utilized by enough persons to create a
sustainable marketplace. In addition, successful business models for the
delivery of streaming media content must be developed in order for there to be
sufficient and sustainable demand in the service provider marketplace. As we
focus on the enterprise content networking market, enterprises building out
their content networks must realize the value of live and on-demand webcasts,
training seminars and other media applications in order for wide adoption of
our products. There can be no assurances that enterprises will adopt streaming
or on-demand media solutions for the operation of their business or networks,
or that our solutions will meet their requirements. Some of our products rely
in part on continued access to third party technology that enables them to
effectively recognize and stream media. Failure to maintain our current
arrangements to use these third party technologies may adversely affect the
appeal of these products.

OUR SUCCESS IN THE ENTERPRISE MARKETPLACE DEPENDS ON OUR ABILITY TO NAVIGATE A
SET OF MARKET AND DEVELOPMENT CHALLENGES.

Our shifting focus towards marketing our products to the enterprise market
introduces new challenges to our business. The enterprise market for content
networking products and applications is in its early stage and the market may
develop more slowly than expected. Large entities with broad applications or
infrastructure suites may pursue our targeted enterprise market with integrated
offerings that preclude the utilization of standalone software applications
such as the ones we are offering. The network infrastructure based business
model for enterprise content delivery for which our software products support
may prove to be an unattractive business model. Enterprises may base their
network infrastructure purchases on available point applications for which we
have limited offerings and limited ability to develop. If this happens, we will
need to expend resources to develop or acquire additional point applications to
drive growth in the enterprise market. In addition, the point applications that
we currently offer may not provide an effective foothold within the enterprise
to up-sell our infrastructure software. The enterprise marketplace is composed
of numerous diverse organizations including large and small businesses,
non-profit organizations, government entities and educational institutions and
districts. Each of these organizations has diverse and specific demands for
their networks and unique buying patterns. Our ability to successfully
penetrate the enterprise market is dependent on our products ability to meet
these specific demands directly or through alliances and partnerships.

THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE AND RAPIDLY CHANGING AND
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED
COMPANIES WITH GREATER RESOURCES.

We compete in markets that are new, intensely competitive, highly fragmented
and rapidly changing. We have experienced and expect to continue to experience
increased competition from current and potential competitors in each of our
market segments, many of which are bringing new solutions to market,
establishing technology alliances and OEM relationships with larger companies,
and focusing on specific segments of our target markets. In some cases, our
competitors are implementing aggressive pricing and other strategies that are
focused in the short term on building customer bases, name recognition in the

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market and capturing market share. This may cause some price pressure on our
products and services in the future.

We directly or indirectly compete against multiple companies with our software
infrastructure products, including Akamai, CacheFlow, Cisco Systems,
InfoLibria, Microsoft, Netscape, Network Appliance, Novell, RealNetworks and
Volera. We are aware of numerous other major software developers as well as
smaller entrepreneurial companies that are focusing significant resources on
developing and marketing products and services that will compete with our
products. We also believe that we may face competition from other providers of
competing solutions to network infrastructure problems, including networking
hardware and software manufacturers, traditional hardware manufacturers,
telecommunications providers, cable TV/communications providers, software
database companies, and large diversified software and technology companies.
Many of these companies provide or have announced their intentions to provide a
range of software and hardware products based on Internet protocols and to
compete in the broad Internet/intranet software market as well as in specific
market segments in which we compete.

In the search software market, our primary competitors include AltaVista,
Autonomy, Convera, FAST Search, Google, Hummingbird, Lotus, Microsoft and
Verity. Other well-funded and brand recognizable companies have announced their
intention to enter the search software market. We also indirectly compete in
this market with Oracle, SAP, and other database vendors that offer information
search and retrieval capabilities with their core database products, and Web
platform companies such as Netscape.

We compete with a number of companies to provide Internet search and directory
services and technology. In the Web services marketplace, our primary
competitors include a variety of established and newer companies, including
AltaVista, Ask Jeeves, FAST Search and Transfer, Google, Overture, LookSmart,
and Northern Light. These companies and other competitors have focused on
search result relevance, database size metrics and ease of use to differentiate
their services. In addition, several large media and other Internet-based
companies have made investments in, or acquired, Internet search engine
companies and may seek to develop or customize their products and services to
deliver to our target customers.

Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements than we can. In addition, our
current and potential competitors may bundle their products with other software
or hardware, including operating systems, browsers and network hardware in a
manner that may discourage users from purchasing products offered by us. Also,
current and potential competitors have or may have greater name recognition,
more extensive customer bases and access to proprietary content. Increased
competition could result in price reductions, fewer customer orders, fewer
search queries served, reduced gross margins and loss of market share.

OUR SOFTWARE PRODUCTS COMPETE IN A MARKET THAT IS RAPIDLY CHANGING AND WE MUST
DEVELOP, ACQUIRE, AND INTRODUCE NEW PRODUCTS AND TECHNOLOGIES TO GROW OUR
REVENUES AND REMAIN COMPETITIVE.

The markets that we target for our software products are characterized by rapid
technological change, frequent new product introductions, changes in customer
requirements and evolving industry standards. The introduction of products
embodying new technologies and the emergence of new industry standards could
render our existing products obsolete. Our future success and revenue growth
will depend upon our ability to develop, acquire and introduce a variety of new
products and product enhancements to address the increasingly sophisticated
needs of our customers, particularly in the content networking and enterprise
markets. We have experienced delays in releasing new products and product
enhancements and may experience similar delays in the future. Material delays
in introducing new products and enhancements may cause customers to forego
purchases of our products or to purchase those of our competitors.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND THESE
FLUCTUATIONS MAY CAUSE OUR STOCK PRICE TO FALL.

In the short-term, we expect that a substantial portion of our revenues will
come from licenses to a relatively small number of customers, which is
consistent with our historical performance to date. The

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volume and timing of orders are difficult to predict because the markets for
our products are in their early stages and the sales cycle varies substantially
from customer to customer. In addition, many customers in our target markets
are scrutinizing their capital spending budgets in light of the current
economic conditions, and other customers have limited access to capital to fund
operational needs. These companies are shifting their buying patterns as a
result, taking a more cautious and measured approach to their network build-out
plans. Historically, customer orders during a quarter, excluding our search
related products and services, have consisted of a small number of
multi-million dollar deals and several other smaller orders ranging from $0.1
million to $0.5 million. The cancellation, deferral or reduction of even a
small number of licenses of any of our products would reduce our expected
revenues, which would adversely affect our quarterly financial performance. To
the extent significant sales occur earlier than expected, operating results for
later quarters may not compare favorably with operating results from earlier
quarters.

Our operating expenses are largely based on anticipated revenue trends and a
high percentage of our expenses are fixed in the short term. Despite our recent
workforce reductions, we expect to continue to make appropriate investments to
develop and market products for the enterprise and content networking markets,
broaden our customer support capabilities, develop new distribution channels,
and fund greater levels of research and development. A delay in generating or
recognizing revenue for the reasons already discussed or for any other reason
could cause significant variations in our operating results from
quarter-to-quarter and could result in substantial operating losses.

Due to these factors, we believe that quarter-to-quarter comparisons of our
operating results are not a good indication of our future performance. It is
likely that in some future quarter, our operating results may be below the
expectations of public market analysts or investors, and the price of our
Common Stock may fall.

OUR FUTURE REVENUE GROWTH DEPENDS ON OUR ABILITY TO IMPROVE THE EFFECTIVENESS
AND BREADTH OF OUR SALES, DISTRIBUTION AND SUPPORT ORGANIZATIONS.

We will need to improve the effectiveness and breadth of our direct and
indirect sales operations, both domestically and internationally, in order to
increase market awareness and sales of our products. Our products and services
require sophisticated sales efforts targeted at several people within our
prospective customers organizations. Competition for qualified sales personnel
is intense, and we might not be able to hire the kind and number of sales
personnel we are targeting. In addition, we will need to effectively train and
educate our sales force if we are to be successful in our sales related
initiatives including selling into the enterprise market, building out our lead
management system, completing the deployment of our inside sales force, and
improve our overseas sales efforts.

Our future revenue growth is dependent upon establishing and maintaining
productive relationships with a variety of distribution partners, including
OEMs, resellers, systems integrators and joint marketing partners. We seek to
sign up distribution partners that have a substantial amount of technical and
marketing expertise. Even with this expertise, our distribution partners
generally require a significant amount of training and support from us and this
training often takes several quarters before our distribution partners develop
the expertise and skills necessary to effectively sell our products. We may be
adversely affected if our distribution partners fail to ship products in a
timely manner or according to agreed upon schedules. We have entered into OEM
relationships with prominent network hardware providers to bundle our software
products into their hardware offerings. Several risks arise in connection with
these relationships including conflicts with our other sales channels,
unpredictable product support obligations and reliance on such third parties
for sales results.

We require highly trained customer service and support personnel. We currently
have a relatively small customer service and support organization and will need
to continue to train our staff to support new customers, new product lines, the
expanding needs of existing customers and the internationalization of our
business. Competition for customer service and support personnel is intense in
our industry due to the limited number of people available with the necessary
technical skills and understanding of the relevant industries including the
Internet, telecommunications, networking and media.

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THE LOSS OF A KEY CUSTOMER COULD ADVERSELY AFFECT OUR REVENUES AND BE PERCEIVED
AS A LOSS OF MOMENTUM IN OUR BUSINESS.

We have generated a substantial portion of our historical revenues from a
limited number of customers. We expect that a small number of customers will
continue to account for a substantial portion of revenues for the foreseeable
future. As a result, if we lose a major customer for any reason, including
non-renewal of a customer contract or a failure to meet performance
requirements, or in the case of our Web search business if there is a decline
in usage of any customers search service, our revenues would be adversely
affected. Our potential customers and public market analysts or investors may
perceive any such loss as a loss of momentum in our business, which may
adversely affect future opportunities to sell our products and services and
cause our stock price to decline. We cannot be sure that customers that have
accounted for significant revenues in past periods, individually or as a group,
will continue to generate revenues in any future period.

IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH PARTNERS, COMPANIES THAT
SUPPLY AND DISTRIBUTE OUR PRODUCTS, AND CUSTOMERS WE MAY HAVE DIFFICULTY
SELLING OUR PRODUCTS AND SERVICES.

We believe that our success in penetrating our target markets depends in part
on our ability to develop and maintain strategic relationships with key
hardware and software vendors, system integrators, Internet technology and
service providers, distribution partners and customers. We believe these
relationships are important in order to validate our technology, facilitate
broad market acceptance of our products, enhance our product and service
offerings, and expand our sales, marketing and distribution capabilities. If we
are unable to develop these key relationships or maintain and enhance existing
relationships across all of our product and service offerings, we may have
difficulty generating revenues.

We have from time to time licensed components from others such as reporting
functions, security features, and internalization capabilities, and
incorporated them into our products and services. If these licensed components
are not maintained, it could impair the functionality of our products and
services and require us to obtain alternative products from other sources or to
develop this software internally. In either case, this could involve costs and
delays as well as diversion of engineering resources.

THE LEGAL ENVIRONMENT IN WHICH WE OPERATE IS UNCERTAIN AND CLAIMS AGAINST US
COULD CAUSE OUR BUSINESS TO SUFFER.

Our products and services operate in part by making copies of material
available on the Internet and other networks and making this material available
to end-users from a central location or local systems. In addition, our Web
search services collect end-user information, which we use to deliver services
to our customers and our customers use to deliver services to their users. This
creates the potential for claims to be made against us (either directly or
through contractual indemnification provisions with customers) for defamation,
negligence, copyright or trademark infringement, personal injury, invasion of
privacy or under other legal theories based on the nature, content, copying,
dissemination, collection or use of these materials. These claims have been
threatened against us from time to time and have been brought, and sometimes
successfully pressed, against online service providers. It is also possible
that if any information provided through any of our products or services
contains errors, third parties could make claims against us for losses incurred
in reliance on this information. Although we carry general liability insurance,
our insurance may not cover potential claims of this type or be adequate to
protect us from all liability that may be imposed.

INTERNET-RELATED LAWS COULD ADVERSELY AFFECT OUR BUSINESS.

Laws and regulations that apply to communications and commerce over the
Internet are becoming more prevalent. The United States Congress has enacted
Internet laws regarding childrens privacy, copyrights, taxation and the
transmission of sexually explicit material. The European Union has enacted its
own privacy regulations as well as legislation governing e-commerce, copyrights
and caching. The law of the

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Internet, however, remains largely unsettled, even in areas where there has
been some legislative action. It may take years to determine whether and how
existing laws such as those governing intellectual property, privacy, libel and
taxation apply to the Internet. In addition, the growth and development of the
market for online commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on companies conducting business online. The adoption,
implementation or modification of laws and regulations relating to the
Internet, or interpretations of existing law, could adversely affect our
business.

ANY ACQUISITIONS WE MAKE COULD ADVERSELY AFFECT OUR OPERATIONS OR FINANCIAL
RESULTS.

We have purchased six companies since September 1998 and may invest in or
acquire complementary companies, products and technologies in the future. If we
buy a company, we could have difficulty in assimilating that companys
personnel and operations and maintaining acceptable standards, controls,
procedures and policies. In addition, the key personnel of the acquired company
may decide not to work for us. Also, we could have difficulty in integrating
the acquired technology or products into our operations. There could be
potential unknown liabilities associated with the purchased company. These
difficulties could disrupt our ongoing business, distract our management and
employees and increase our expenses. Furthermore, we may have to incur debt or
issue equity securities to pay for any future acquisitions, the issuance of
which could be dilutive to our stockholders.

WE MAY NOT BE ABLE TO RECRUIT AND RETAIN THE PERSONNEL WE NEED TO SUCCEED.

Our primary asset is the intellectual capabilities of our employees. We are
therefore dependent on recruiting and retaining a strong team of personnel
across all functional areas. Competition for these individuals is intense, and
we may not be able to attract or retain the highly qualified personnel
necessary for our success. Our employment relationships are generally at-will.
We have had key employees leave us in the past and we can make no assurance
that one or more will not leave us in the future. If any of our key employees
were to leave us, we could face substantial difficulty in hiring qualified
successors and could experience a loss in productivity while any such successor
obtains the necessary training and experience. Many of our key employees have
reached or will soon reach the four-year anniversary of their hiring date and
will be fully vested in their initial stock option grants. While our key
employees are typically granted additional stock options to provide additional
incentive to remain with us, the initial option grant is typically the largest
and an employee may be more likely to leave us upon completion of the vesting
period for the initial option grant. In light of current market conditions, we
may undertake programs to retain our employees that may be viewed as dilutive
to our shareholders. We do not have key person life insurance policies covering
any of our employees other than our Chief Executive Officer.

OUR EFFORTS TO INCREASE OUR PRESENCE IN MARKETS OUTSIDE OF THE UNITED STATES
MAY BE UNSUCCESSFUL AND COULD RESULT IN LOSSES.

We market and sell our products in the United States and internationally,
principally Europe and Asia. Historically, the percentage of sales to customers
located outside of the United States has varied from quarter to quarter,
reflecting the limited build-out of our international operations. We have
limited experience in developing localized versions of our products and
marketing and distributing our products internationally. We are more dependent
on third party reseller for international sales. Should our third party
reseller partners not promote our products for any reason our international
sales could suffer. In addition, other inherent risks may apply to
international markets and operations, including:



| |  |  | the impact of recessions in economies outside the United States;                           
| | - |  | -------------------------------------------------------------------------------------------
|
| |  |  | greater difficulty in accounts receivable collection and longer collection periods;        
|
| |  |  | the impact of changes in foreign currencies, in particular the EUs conversion to the Euro;

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| |  |  | unexpected changes in regulatory requirements;                     
| | - |  | -------------------------------------------------------------------
|
| |  |  | difficulties and costs of staffing and managing foreign operations;
|
| |  |  | potentially adverse tax consequences; and                          
|
| |  |  | political and economic instability.                                

We also have limited experience operating in foreign countries and managing
multiple offices with facilities and personnel in disparate locations. We may
not be able to manage our resources effectively, coordinate our efforts,
supervise and train our personnel or otherwise successfully manage our
resources. The laws and cultural requirements in foreign countries can vary
significantly from those in the United States. The inability to integrate our
business in these jurisdictions and to address cultural differences may
adversely affect the success of our international operations.

INTELLECTUAL PROPERTY CLAIMS AGAINST US COULD CAUSE OUR BUSINESS TO SUFFER.

Substantial litigation regarding intellectual property rights exists in the
software industry. We expect that software products may be increasingly
vulnerable to third party infringement claims as the number of competitors in
our industry segments grow and the functionality of products in different
industry segments overlaps. We believe that many companies have filed or intend
to file patent applications covering aspects of their technology that they may
claim our technology infringes. Some of these companies have sent copies of
their patents to us for informational purposes. We cannot be sure that these
parties will not make a claim of infringement against us with respect to our
products and technology. In August 2001, Network Caching Technology L.L.C.
(NCT) initiated an action against us that our caching products violate one or
more patents owned by NCT. The complaint seeks compensatory and other damages
and injunctive relief. This case, and any future actions initiated against us,
will be time consuming and expensive to defend, will direct managements
attention and resources, and could cause product shipment delays or require us
to reengineer our products or enter into royalty or licensing agreements. The
royalty or licensing agreements, if required, may not be available on
acceptable terms, if at all.

ANTI-TAKEOVER PROVISIONS CONTAINED IN OUR CHARTER AND UNDER DELAWARE LAW COULD
IMPAIR A TAKEOVER ATTEMPT.

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law prohibiting, under some circumstances, publicly held Delaware
corporations from engaging in business combinations with some stockholders for
a specified period of time without the approval of the holders of substantially
all of our outstanding voting stock. Such provisions could delay or impede the
removal of incumbent directors and could make more difficult a merger, tender
offer or proxy contest involving us, even if such events could be beneficial,
in the short term, to the interests of the stockholders. In addition, such
provisions could limit the price that some investors might be willing to pay in
the future for shares of our Common Stock. These provisions, in addition to
provisions contained in our charter, may have the effect of deterring hostile
takeovers or delaying changes in our control or management.

OUR STOCK PRICE IS VOLATILE.

The market price of our Common Stock has been and may continue to be subject to
wide fluctuations. Our stock price may fluctuate in response to a number of
events and factors, such as quarterly variations in operating results,
announcements of technological innovations, new products or changing customer
relationships by us or our competitors, announcements of technological
alliances and partnerships, changes in financial estimates and recommendations
by securities analysts, the operating and stock price performance of other
companies that investors may deem comparable, and news reports relating to
trends in our markets. In addition, the stock market in general, and the market
prices for technology-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating

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performance of such companies. These broad market and industry fluctuations may
adversely affect the price of our stock, regardless of our operating
performance. In the past, companies that have experienced volatility in the
market price of their stock have been the subjects of securities class action
litigation. If we were the subject of securities class action litigation, it
could result in substantial costs and a diversion of managements attention and
resources.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to interest rate risk primarily in our investment portfolio and
synthetic lease. We do not use derivative financial instruments to hedge
interest rate risk. The primary objective of our investment activities is to
preserve the principal while maximizing yields without significantly increasing
risk. This is accomplished by placing our marketable securities investments
with high quality issuers principally in United States government and corporate
debt securities with terms of less than two years.

Under the synthetic lease finance structure, we are required to pay lease
payments for five years from August 24, 2000. The payments are calculated based
on a floating interest rate applied against a $114 million
principle value. We have the option of choosing interest rates, which
are fixed for various terms not to exceed 12 months. Upon
expiration of those various rate terms, a new interest rate will be
selected for the corresponding underlying principle value.

The following table presents the amounts of our cash equivalents, short-term
investments and synthetic lease, that are subject to interest rate risk by year
of expected maturity/expiration of the selected interest rate terms
on the synthetic lease and average interest rates as of
March 31, 2002 (in thousands):

|                        |                       |   |         |      |         |   |         |      |       |  |        |      |   |   |         |  | 
|----------------------- | --------------------- | - | ------- | ---- | ------- | - | ------- | ---- | ----- |  | ------ | ---- | - | - | ------- |  | 
|                        |                       |   | FY 2002 |      | FY 2003 |   | FY 2004 |      | Total
|                        |                       |   |         |      |         |   |         |      |      
|                        |                       |  
|Cash & Cash Equivalents |                       | $ | 14,537  |      |         |   |        |      |       |  |       |      |   | $ | 14,537  | 
|                        | Average Interest Rate |   |         | 1.39 | %       |   |         |     |       |  |        |     |   |   |         |  | 
|Short-term Investments  |                       |   | 56,209  |      |         |   | 26,166  |      |       |  | 13,022 |      |   |   | 95,397  | 
|                        | Average Interest Rate |   |         | 1.74 | %       |   |         | 2.71 | %     |  |        | 3.10 | % |   |         |  | 
|Restricted Cash         |                       |   | 128,957 |      |         |   |        |      |       |  |       |      |   |   | 128,957 | 
|                        | Average Interest Rate |   |         | 1.66 | %       |   |         |     |       |  |        |     |   |   |         |  | 
|Synthetic Lease         |                       | $ | 67,374  |      |         | $ | 46.626  |      |       |  |       |      |   | $ | 114,000 | 
|                        | Average Interest Rate |   |         | 2.04 | %       |   |         | 2.64 | %     |  |        |      |   |   |         |  | 

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Foreign Currency Risk

We have foreign operations both in Europe and Asia. We currently transact
substantially all of our revenues abroad in United States currency. We are
exposed to fluctuations in foreign exchange rates for our expenditures and thus
our consolidated financial results could be affected by a change in foreign
exchange rates.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings.

On August 2, 2001, an amended complaint was filed by Network Caching
Technology, L.L.C. in the United States District Court for the Northern
District of California against Inktomi as well as other providers of caching
technologies including Novell, Inc., Akamai Technologies, Inc., Volera, Inc.,
and Cacheflow, Inc. Plaintiff alleges that certain products marketed by Inktomi
and the other defendants violate one or more patents owned by plaintiff. The
complaint seeks compensatory and other damages and injunctive relief. We were
served the complaint on August 7, 2001. We subsequently filed a response
denying the allegations and asserting a number of defenses. At this time it is
too early to estimate any potential losses from this action and whether this
action may have a material impact on the results of operations. We intend to
vigorously defend against this action.




Item 4. Submission of Matters to a Vote of Shareholders

At the Annual Meeting of Stockholders of the Company held on March 20, 2002,
the following proposals were adopted by the margins indicated below. There were
143,449,520 shares of Common Stock entitled to vote at the meeting and a total
of 120,669,452 shares were represented at the meeting.



|1. |  | To elect a Board of Directors to hold office until their successors are
elected and qualified.
|-- |  | ----------------------------------------------------------------------------------------------

|                      |  |     |             |          |  |  |            | 
|--------------------- |  | --- | ----------- | -------- |  |  | ---------- | 
|NUMBER OF SHARES      |  | FOR |             | WITHHELD
|                      |  |     |             |         
|Dr. Eric A. Brewer    |  |     | 102,809,412 |          |  |  | 17,860,040 | 
|David C. Peterschmidt |  |     | 119,056,852 |          |  |  | 1,612,600  | 
|Frank C. Gill         |  |     | 119,264,915 |          |  |  | 1,404,537  | 
|Greg Myers            |  |     | 119,906,596 |          |  |  | 762,856    | 
|Alan F. Shugart       |  |     | 119,246,483 |          |  |  | 1,422,969  | 



|2. |  | To amend Inktomis 1998 Employee Stock Purchase Plan to increase the
number of shares available for annual issuance by an aggregate of 800,000
shares to 2,000,000 shares;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |  |                  |             | 
|--------------- |  | ---------------- | ----------- | 
|                |  | NUMBER OF SHARES
|                |  |                 
|For             |  |                  | 115,797,530 | 
|Against         |  |                  | 4,461,472   | 
|Abstain         |  |                  | 230,240     | 
|Broker Non-Vote |  |                  |            | 



|3. |  | To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for fiscal 2002.
|-- |  | -------------------------------------------------------------------------------------------------------

|                |  |                  |             | 
|--------------- |  | ---------------- | ----------- | 
|                |  | NUMBER OF SHARES
|                |  |                 
|For             |  |                  | 119,126,991 | 
|Against         |  |                  | 1,311,276   | 
|Abstain         |  |                  | 231,185     | 
|Broker Non-Vote |  |                  |            | 

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Item 6. Exhibits and Reports on Form 8-K

|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|EXHIBIT |  |                                                                                                                                                                                                                                  |  |  |  | 
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                      |  |  |  | 
|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|10.9    |  | First Amendment to First Amended and Restated Lease Agreement dated May 31, 2001 by and
between Parkside Towers Co-Tenancy et. al, and Inktomi.                                                                                 
|       
|       
|       
|       
|       
|       
|       
|       
|10.35   |  | Release and Waiver dated April 19, 2002 between Edward Hally and Inktomi.                                                                                                                                                       
|       
|       
|       
|       
|       
|       
|       
|       
|10.37   |  | Promissory Notes dated February 27, 2002, March 20, 2002, April 3, 2002, April 11, 2002,
April 17, 2002, April 22, 2002 and April 29, 2002, respectively, executed by David
Peterschmidt for the benefit of Inktomi Corporation.
|       
|       
|       
|       
|       
|       
|       
|       
|10.38   |  | Loan Modification Agreement between Inktomi and Silicon Valley Bank dated December 19, 2001.                                                                                                                                    



---

|(b) |  | REPORTS ON FORM 8-K
|--- |  | -------------------

None in the quarter ending March 31, 2002

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
undersigned, thereunto duly authorized.



| |  | Inktomi Corporation
| |  | -------------------



|Date: May 13, 2002 | By: | /s/ JERRY M. KENNELLY
Jerry M. Kennelly,
Executive Vice President and Chief Financial Officer
(duly authorized officer and principal financial
officer)
|------------------ | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------

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|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|EXHIBIT |  |                                                                                                                                                                                                                                  |  |  |  | 
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                      |  |  |  | 
|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|10.9    |  | First Amendment to First Amended and Restated Lease Agreement dated May 31, 2001 by and
between Parkside Towers Co-Tenancy et. al, and Inktomi.                                                                                 
|       
|       
|       
|       
|       
|       
|       
|       
|10.35   |  | Release and Waiver dated April 19, 2002 between Edward Hally and Inktomi.                                                                                                                                                       
|       
|       
|       
|       
|       
|       
|       
|       
|10.37   |  | Promissory Notes dated February 27, 2002, March 20, 2002, April 3, 2002, April 11, 2002,
April 17, 2002, April 22, 2002 and April 29, 2002, respectively, executed by David
Peterschmidt for the benefit of Inktomi Corporation.
|       
|       
|       
|       
|       
|       
|       
|       
|10.38   |  | Loan Modification Agreement between Inktomi and Silcon Valley Bank dated December 19, 2001.                                                                                                                                     

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