INKTOMI CORP, S-3/A, 1999-07-23

INKTOMI CORP
S-3/A, 1999-07-23
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE>

As filed with the Securities and Exchange Commission on July 23, 1999

Registration No. 333-82687
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---------------

AMENDMENT NO. 1

to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------
INKTOMI CORPORATION
(Exact name of Registrant as specified in its charter)

Delaware 94-3238130
(State or other (IRS Employer
jurisdiction of Identification Number)
incorporation or
organization)

1900 South Norfolk Street, Suite 310
San Mateo, California 94403
(650) 653-2800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------

JERRY M. KENNELLY
Chief Financial Officer
Inktomi Corporation
1900 South Norfolk Street, Suite 310
San Mateo, California 94403
(650) 653-2800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------
Copies to:

DOUGLAS H. COLLOM JOHN L. SAVVA
ROGER E. GEORGE DAVID A. RIVERA
DEBORAH M. CHANG Sullivan & Cromwell
Wilson Sonsini Goodrich & Rosati 1888 Century Park East, 21st Floor
Professional Corporation Los Angeles, California 90067
650 Page Mill Road (310) 712-6600
Palo Alto, California 94304
(650) 493-9300

---------------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE
<TABLE>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Each Class Amount to be Offering Price Aggregate Amount of
of Securities to be Registered Registered Per Share(1) Offering Price(1) Registration fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value.. 3,795,000 Shares $139.13 $527,998,350 $146,784(2)
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended, based on the average of the high and low sales prices as
reported on the Nasdaq National Market on July 8, 1999.

(2) Previously paid.

---------------

The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the SEC, acting pursuant to said Section
8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be +
+changed. These securities may not be sold until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+preliminary prospectus is not an offer to sell nor does it seek an offer to +
+buy these securities in any jurisdiction where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion. Dated July 23, 1999.

3,300,000 Shares

Inktomi Corporation
[INKTOMI LOGO]
Common Stock

------------

Inktomi Corporation is offering 2,051,600 of the shares to be sold in the
offering. The selling stockholders identified in this prospectus are offering
an additional 1,248,400 shares. Inktomi will not receive any of the proceeds
from the sale of the shares being sold by the selling stockholders.

The common stock is quoted on the Nasdaq National Market under the symbol
"INKT". The last reported sale price of the common stock on July 21, 1999 was
$117.88 per share.

See "Risk Factors" beginning on page 4 to read about the risk factors you
should consider before buying shares of the common stock.

------------

Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

------------

<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Initial price to public......................................... $ $
Underwriting discount........................................... $ $
Proceeds, before expenses, to Inktomi........................... $ $
Proceeds, before expenses, to the selling stockholders.......... $ $
</TABLE>

To the extent that the underwriters sell more than 3,300,000 shares of common
stock, the underwriters have the option to purchase up to an additional 495,000
shares from Inktomi at the initial price to public less the underwriting
discount.

------------

The underwriters expect to deliver the shares against payment in New York,
New York on August , 1999.

Goldman, Sachs & Co. Morgan Stanley Dean Witter

Deutsche Banc Alex. Brown

Hambrecht & Quist

Merrill Lynch & Co.

------------

Prospectus dated July , 1999.
<PAGE>

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering, including "Risk Factors" and our supplementary consolidated financial
statements and notes to those statements appearing elsewhere in this
prospectus. All financial information in this prospectus has been restated to
reflect our acquisition of Impulse! Buy Network, Inc. in April 1999.

Inktomi Corporation

We are a leading provider of scalable software applications designed to
significantly enhance the performance and intelligence of large-scale networks,
particularly the Internet. Our applications fall into two broad categories:
network products and portal services. Our Traffic Server application is the
foundation of our network products offerings. Traffic Server is a network cache
platform designed to enable network providers to manage bandwidth resources
more effectively, significantly improve the quality of service for their end
users, and offer new and differentiating value-added services. Companies that
have licensed Traffic Server include America Online, Bell Canada,
BellSouth.net, British Telecommunications, Cable & Wireless USA, CNN Internet
Technologies, Concentric Network, Digex (an Intermedia Communications Company),
Excite@Home and Telenor Nextel. Our current portal services applications
include search, shopping and directory services and are offered to Internet
portal and web site customers. Customers for one or more of our portal services
offerings include America Online, British Telecommunications, C|NET, GeoCities,
Infoseek, LookSmart, Nippon Telegraph and Telephone, Snap!, Wired Digital and
Yahoo!.

We incorporated in California in February 1996 and reincorporated in Delaware
in February 1998. References in this prospectus to "Inktomi", "we", "our" and
"us" refer to Inktomi Corporation, its predecessor and subsidiaries. Our
principal executive offices are located at 1900 S. Norfolk Street, Suite 310,
San Mateo, California 94403. Our telephone number is (650) 653-2800.

Inktomi, the Inktomi logo, Traffic Server and Scaling the Internet are
trademarks or registered trademarks of Inktomi. Each tradename, trademark or
service mark of any other company appearing in this prospectus belongs to the
holder.

Recent Developments

For the quarter ended June 30, 1999, we had revenues of $19.6 million, a 212%
increase over revenues of $6.3 million in the quarter ended June 30, 1998.
Excluding acquisition-related charges of $1.1 million for the purchase of
Impulse! Buy Network, net loss for the quarter was $5.2 million or a loss of
$0.10 per share compared to a net loss of $6.3 million or a loss of $0.15 per
share for the same period in the prior year. With the inclusion of the
acquisition-related charge, net loss for the quarter ended June 30, 1999 was
$6.3 million or a loss of $0.13 per share.

2
<PAGE>

The Offering

The following information is given as of March 31, 1999 and assumes that the
underwriters do not exercise the option granted by Inktomi to purchase
additional shares in the offering. See "Underwriting".

<TABLE>
<C> <S>
Shares offered by Inktomi.................... 2,051,600 shares

Shares offered by the selling stockholders... 1,248,400 shares

Shares to be outstanding after the offering.. 51,603,855 shares

Nasdaq National Market symbol................ "INKT"

Use of proceeds.............................. For general corporate purposes,
including working capital, the
expansion of our core business,
investments in new business
segments and capital
expenditures, and potential
acquisitions of complementary
businesses, products and
technologies.
</TABLE>

We are obligated to issue shares of our common stock upon exercise of options
and warrants outstanding at March 31, 1999, in addition to the shares of common
stock to be outstanding after this offering. These shares, when issued,
include:

. 7,779,020 shares of common stock reserved for issuance under our stock
option and stock purchase plans, of which 6,594,665 shares were issuable
upon exercise of outstanding options.

. 1,437,460 shares of common stock issuable upon exercise of outstanding
warrants.

Summary Financial Information
(in thousands, except per share data)

The "As Adjusted" balance sheet data below reflect the application of the net
proceeds from the sale of 2,051,600 shares of our common stock at an assumed
initial price to public of $117.88 per share, after deducting the estimated
underwriting discount and offering expenses.

<TABLE>
<CAPTION>
February 2,
1996
(inception) Year Ended Six Months Ended
to September 30, March 31,
September 30, ------------------ -----------------
Consolidated Statement of 1996 1997 1998 1998 1999
Operations Data: ------------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Total revenues........... $ 530 $ 5,785 $ 20,438 $ 5,877 $ 25,385
Operating loss........... (3,431) (10,183) (24,958) (9,656) (14,547)
Net loss................. (3,535) (10,377) (24,534) (9,749) (12,972)
Basic and diluted net
loss per share.......... $ (0.94) $ (0.40) $ (0.63) $ (0.26) $ (0.26)
Shares used in
calculating basic and
diluted net loss per
share................... 3,768 25,954 39,130 37,379 48,984
</TABLE>

<TABLE>
<CAPTION>
At March 31, 1999
--------------------
Consolidated Balance Actual As Adjusted
Sheet Data: -------- -----------
<S> <C> <C>
Cash, cash equivalents,
and short-term
investments............ $119,331 $351,395
Working capital......... 108,516 340,580
Total assets............ 154,997 387,061
Debt and capital lease
obligations, less
current portion........ 6,852 6,852
Total stockholders'
equity................. 123,979 356,043
</TABLE>

3
<PAGE>

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. Additional risks and uncertainties not presently known to
us or that we currently deem 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.

We have a history of operating losses, expect to incur future losses, and
cannot be certain that we will become a profitable company.

Inktomi was founded in February 1996 and has a limited operating history. As
of March 31, 1999, we had an accumulated deficit of $51.4 million. We have not
achieved profitability and expect to continue to incur net losses for at least
the next several quarters. We expect to continue to incur significant sales and
marketing, product development and administrative expenses across all lines of
our business, and in particular in our shopping engine business as we continue
to develop and enhance our shopping technology, integrate Impulse! Buy Network
into our operations and initiate new sales and marketing efforts. As a result,
we will need to generate significant revenues to achieve and maintain
profitability. Although our revenues have grown in recent quarters, we cannot
be sure that this growth will continue at the same rate or that we will achieve
sufficient revenues for profitability. If we do achieve profitability, we
cannot be sure that we can sustain or increase profitability on a quarterly or
annual basis in the future.

Our business substantially depends upon the success of our Traffic Server
product.

Our future growth substantially depends on the commercial success of our
Traffic Server network cache product, which we have licensed to only a small
number of customers. We are initially targeting telecommunications carriers and
Internet service providers for our Traffic Server product, although we are
expanding our customer prospects to include Internet hosting providers, OEM
customers and large enterprise customers. Our ability to generate substantial
and sustained revenues from our Traffic Server product is dependent upon
achieving sales penetration in each of these market segments. The market for
large-scale network caching is in its early stages, and we are not sure our
target customers will widely adopt and deploy caching technology throughout
their networks. Even if they do so, they may not choose our Traffic Server
network cache product, because it does not include the features they require,
or for technical, cost, support or other reasons. Although we have tested our
Traffic Server product prior to making it available to customers, we cannot be
sure that we have found and fixed all significant performance errors. If our
target customers do not widely adopt and purchase our Traffic Server product,
our business, financial condition and results of operations will be adversely
affected.

Our business would be harmed if customers choose not to use or promote our
search and directory services.

Revenues from our search and directory services result primarily from the
number of end-user searches that are processed by our search engine and
directory engine and the level of advertising revenue generated by our Internet
portal and other web site customers. Our agreements with customers do not
require them to direct end users to our search or directory services or to use
the search or directory service at all. For example, in January 1999, Microsoft
announced that it had signed an agreement to license online communications
technologies to a third party and in exchange would adopt the search technology
provided by the third party as the primary search engine for the MSN Network,
replacing our search engine. Accordingly, revenues from search and directory

4
<PAGE>

services are highly dependent upon the willingness of customers to promote and
use the search and directory 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 search engine and directory engine, and the ability
and willingness of customers to sell advertisements on the Internet pages
viewed by end users.

Our entry into the online shopping business will require us to develop
significant new capabilities and may not be successful.

Our Internet shopping engine is still under development and is available only
in "preview" versions. We are still developing the business model for our
shopping engine and anticipate that revenues will be generated by revenue-
sharing arrangements with online merchants, and by per-query search fees,
advertising revenue and license, support and maintenance fees from Internet
portals and other web site customers. The success of our shopping engine will
depend on our ability to establish and maintain strong relationships with
customers and online merchants, the ability and willingness of our customers to
promote our shopping services on their web sites, the dollar volume of online
purchases generated by participating merchants, and the level of advertising
revenues generated by customers. In addition, the shopping engine will need to
collect and organize vast amounts of electronic information from online
merchants and publishers of comparative product information. The shopping
engine will also need the capability to track and confirm purchases made by end
users of our customers' services and to generate invoices for our online
merchants to pay revenue-sharing amounts to us. These are highly complex tasks.
Developing these capabilities and other features for the shopping engine will
require significant additional expenses and management and development
resources. Much of this investment is required in advance of generating
revenues, which have not been significant to date and are expected to be modest
for the next few quarters. We cannot be sure that our entry into the online
shopping business will be successful.

The markets in which we operate are highly competitive 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 face competition in the overall network infrastructure
market as well as the network cache, Internet search/directory and online
shopping segments of this market. We have experienced and expect to continue to
experience increased competition from current and potential competitors, many
of which have significantly greater financial, technical, marketing and other
resources.

Competition in the network cache market continues to intensify as new
solutions are coming to market and several companies are forming technology
alliances and OEM relationships to sell their products. We directly compete
with a number of companies that provide caching products and with freeware
caching solutions. In addition, 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 Traffic Server. We also believe that Traffic Server may face
competition from other providers of competing solutions to network
infrastructure problems, including networking hardware and software
manufacturers, content distribution providers, 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.

5
<PAGE>

We compete with a number of companies to provide Internet search and
directory services, many of which have operated services in the market for a
longer period, have greater financial resources, have established marketing
relationships with leading online services and advertisers, and have secured
greater presence in distribution channels. Traditionally, our competitors have
provided search/directory services directly to end users through their own web
sites and have supplied search/directory services to third-party web sites as a
supplement to this business. However, we are facing increased competition from
several newer competitors that are following our business model of providing
Internet search/directory services primarily to Internet portals and other web
site customers. These newer competitors have focused on search result relevance
and ease of use in providing their services. In addition, large media companies
and other Internet-based companies have recently made investments in or
acquired Internet search engine companies, and we believe that other large
media enterprises may enter or expand their presence in the Internet search and
directory market, either directly or indirectly through collaborations or other
strategic alliances.

The market for our shopping engine application is rapidly evolving and
intensely competitive. Our current and potential competitors include other
providers of shopping technologies and services, and various online retailers
and aggregators of merchandise. We believe the principal factors that will draw
end users to an online shopping application include brand availability,
selection, personalized services, convenience, price, accessibility, customer
service, quality of search tools, quality of content, and reliability and speed
of fulfillment for products ordered. We will have little or no control over
many of these factors.

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 and browsers, in a manner that may
discourage users from purchasing products offered by us. Also, current and
potential competitors 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.

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, or in the case of our search
engine business, if there is a decline in usage of any customer's search
service, our revenues would be adversely affected. In addition, potential
customers of Inktomi 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. Also, 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 do not meet performance requirements in our portal services agreements,
customers may cancel our service or choose a different service.

Our search engine, directory engine and shopping engine agreements typically
include specific performance requirements, including the features provided,
reliability, processing speed, size of the Internet database maintained, and
frequency of updating the database. In addition, we believe it is important to
maintain features and functionality that are not explicitly covered in our
agreements, such as high relevance of search and product results. The growing
volume of search queries processed by our search engine and the frequency with
which we update our portal services to

6
<PAGE>

include additional functionality have placed some strain on our operational
capability to meet customer requirements. If we do not meet these requirements,
customers may cancel our service or choose to use a different service.

Circumstances beyond our control may result in service interruptions which
could cause our business to suffer.

We provide our portal services from multiple data centers, all of which are
housed at facilities operated by a single-source hosting provider.
Circumstances outside of our control such as fires, earthquakes, power
failures, telecommunications failures, sabotage, unauthorized intrusions into
our databases and similar events may bring down one or more of our data
centers. For example, in June 1998, lightning struck the facility housing our
data center in Virginia, interrupting service from this center. In addition,
our data center hosting provider has experienced network failures from time to
time, which has also interrupted our service. Service interruptions for any
reason would reduce our revenues and could result in contract cancellations.

Our quarterly operating results may fluctuate significantly, and these
fluctuations may cause our stock price to fall.

We expect that a significant portion of our future revenues will come from
licenses of Traffic Server. We further expect that these revenues will come
from licenses of Traffic Server to a small number of customers. The volume and
timing of orders are difficult to predict because the market for Traffic Server
is in its early stages and the sales cycle varies substantially from customer
to customer. The cancellation or deferral of even a small number of licenses of
Traffic Server 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. We plan to
significantly increase our operating expenses to launch and support our online
shopping business, expand our sales and marketing operations, broaden our
customer support capabilities, establish new data centers, develop new
distribution channels, and fund greater levels of research and development. A
delay in generating or recognizing revenue for the reasons set forth above 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 operating results may fluctuate because the sales cycle for Traffic Server
is long.

To date, our customers have taken a long time to evaluate Traffic Server, and
many people within our customers' organizations have been involved in the
process. Along with our distribution partners, we spend a significant amount of
time educating and providing information to our prospective customers regarding
the use and benefits of Traffic Server. Even after purchase, our customers tend
to deploy Traffic Server slowly and deliberately, depending on the skill set of
the customer, the size of the deployment, the complexity of the customer's
network environment, and the quantity of hardware and the degree of hardware
configuration necessary to deploy Traffic Server. The long sales and
implementation cycles for Traffic Server may cause license revenues and
operating results to vary significantly from period to period.

7
<PAGE>

Our success depends on our ability to expand our sales and support
organizations.

We will need to substantially expand 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 a
sophisticated sales effort targeted at several people within our prospective
customers' organizations. We have recently expanded our direct sales force and
plan to hire additional sales personnel. 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 believe that our future
success 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 expertise in the computer
network and telecommunications industry. Even with this expertise, our
distribution partners generally require a significant amount of training and
support from us. We cannot be sure that we will be successful in signing up
desired distribution partners or that our distribution partners will devote
adequate resources or have the technical and other sales capabilities to sell
our products.

Similarly, the complexity of our products and the difficulty of installing
them require highly trained customer service and support personnel. We
currently have a small customer service and support organization and will need
to increase our staff to support new customers, new product lines (such as the
recent addition of our shopping engine and directory engine) and the expanding
needs of existing customers. 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
Internet.

Our success depends on our ability to manage growing and changing operations.

Our ability to successfully offer products and services and implement our
business plan in a rapidly evolving market requires an effective planning and
management process. We continue to increase the scope of our operations
domestically and internationally and have grown our headcount substantially. At
June 30, 1998, we had a total of 130 employees and at June 30, 1999 we had a
total of 376 employees. This growth has placed, and our anticipated future
operations will continue to place, a significant strain on our management
systems and resources. We expect that we will need to continue to improve our
financial and managerial controls and reporting systems and procedures, enhance
our internal and external security systems, and continue to expand, train and
manage our work force worldwide. Furthermore, we expect that we will be
required to manage multiple relationships with various customers, merchants and
other third parties.

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. 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 other legal theories
based on the nature, content or copying 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 portal services or
facilitated by our Traffic Server product contains errors, third parties could
make claims against us for losses incurred in reliance on this information.
Further, there is the potential for product liability claims to be asserted
against us by end users who purchase goods and services through our shopping
engine. 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.

8
<PAGE>

Internet-related laws could adversely affect our business.

Laws and regulations which apply to communications and commerce over the
Internet are becoming more prevalent. The most recent session of the United
States Congress resulted in Internet laws regarding children's privacy,
copyrights, taxation and the transmission of sexually explicit material. The
European Union recently enacted its own privacy regulations, and is currently
considering copyright legislation that may extend the right of reproduction
held by copyright holders to include the right to make temporary copies for any
reason. The law of the 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 or modification of laws or regulations relating to the Internet, or
interpretations of existing law, could adversely affect our business.

The network infrastructure market is rapidly changing and we must develop and
introduce new products and technologies to remain competitive.

The network infrastructure market is 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 will depend upon our ability to
develop and introduce a variety of new products and product enhancements to
address the increasingly sophisticated needs of our customers. The increasing
scope of our business has led us to allocate additional resources to our
current business opportunities and fewer resources to longer term projects. 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 purchase those of our competitors.

If we are unable to maintain our relationships with customers and the companies
that supply and distribute our products, 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, distribution partners and customers. We believe
these relationships are important in order to validate our technology,
facilitate broad market acceptance of our products, and enhance our sales,
marketing and distribution capabilities. If we are unable to develop key
relationships or maintain and enhance existing relationships, we may have
difficulty selling our products and services.

We have from time to time licensed components from others such as reporting
functions and security features 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, either of
which could involve costs and delays as well as diversion of engineering
resources.

We may not be able to recruit and retain the personnel we need to succeed.

We intend to hire a significant number of additional sales, support,
marketing, and research and development personnel. Competition for these
individuals is intense, and we may not be able to
attract or retain additional highly qualified personnel in the future. Our
future success also depends upon the continued service of our executive
officers and other key sales, marketing and support

9
<PAGE>

personnel. In addition, our products and technologies are complex, and we are
substantially dependent upon the continued service of our existing engineering
personnel, and especially our founders. None of our officers or key employees
is bound by an employment agreement for any specific term. Our relationships
with these officers and key employees are at will. We do not have key person
life insurance policies covering any of our employees.

Any acquisitions that we make could adversely affect our operations or
financial results.

We have purchased two companies during the past twelve months and intend to
continue to invest in or acquire complementary companies, products or
technologies in the future. If we buy a company, we could have difficulty in
assimilating that company's personnel and operations. 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. 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.

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. We
have offices in England, France, Germany, Japan and Korea to market and sell
our products in those countries and surrounding regions. We plan to establish
additional facilities in other parts of the world. The expansion of our
existing international operations and entry into additional international
markets will require significant management attention and financial resources.
We cannot be sure that our investments in establishing facilities in other
countries will produce desired levels of revenue. We currently have limited
experience in developing localized versions of our products and marketing and
distributing our products internationally. In addition, other inherent risks
may apply to international operations, including:

. the impact of recessions in economies outside the United States;

. greater difficulty in accounts receivable collection and longer
collection periods;

. unexpected changes in regulatory requirements;

. difficulties and costs of staffing and managing foreign operations;

. potentially adverse tax consequences; and

. political and economic instability.

Our international expenses are generally denominated in local currencies. We
do not currently engage in currency hedging activities. Although exposure to
currency fluctuations to date has been insignificant, future fluctuations in
currency exchange rates may adversely affect results of international
operations.

Our failure to protect our intellectual property rights could adversely affect
our ability to compete.

Our success and ability to compete are substantially dependent upon our
internally developed technology, which we protect through a combination of
patent, copyright, trade secret and trademark law. We generally enter into
confidentiality or license agreements with our employees, consultants and
corporate partners, and generally control access to and distribution of our
software, documentation and other proprietary information. Despite our efforts
to protect our proprietary rights, unauthorized parties may attempt to copy or
otherwise obtain and use our products or technology. Policing unauthorized use
of our products is difficult, and we cannot be sure that the steps we have

10
<PAGE>

taken will prevent misappropriation of our technology, particularly in foreign
countries where the laws may not protect our proprietary rights as fully as in
the United States.

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 grows and the functionality of products in different
industry segments overlaps. Lycos has announced that it is the exclusive
licensee of a patent covering a method of crawling information on the Internet,
and that it may bring actions against companies that it believes are infringing
this patent in the future. We also believe that many of our competitors in the
network cache business and the portal services business have filed or intend to
file patent applications covering aspects of their technology that they may
claim our technology infringes. We cannot be sure that Lycos or other third
parties will not make a claim of infringement against us with respect to our
products and technology. Any claims could cause product shipment delays or
require us to reengineer our products or enter into royalty or licensing
agreements. These royalty or licensing agreements, if required, may not be
available on acceptable terms, if at all.

If our products or the products upon which we depend malfunction because of
Year 2000 problems, our operations may be interrupted and we may be subject to
warranty and product liability claims.

Our software products operate in complex network environments and directly
and indirectly interact with a number of other hardware and software systems.
Despite investigation and testing by us and our partners, our software products
and the underlying systems and protocols running our products may contain
errors or defects associated with Year 2000 date functions. We are unable to
predict to what extent our business may be affected if our software or the
systems that operate in conjunction with our software experience a material
Year 2000 failure. Known or unknown errors or defects that affect the operation
of our software could result in delay or loss of revenue, interruption of
search or shopping services, cancellation of customer contracts, diversion of
development resources, damage to our reputation, increased service and warranty
costs, and litigation costs, any of which could adversely affect our business,
financial condition and results of operations.

Our stock price is volatile.

The market price of our common stock has fluctuated in the past and is likely
to fluctuate in the future. In addition, the securities markets have
experienced significant price and volume fluctuations, and the market prices of
the securities of Internet-related companies have been especially volatile. In
the past, companies that have experienced volatility in the market price of
their stock have been the subject 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.

11
<PAGE>

FORWARD-LOOKING INFORMATION

This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934 (the "Exchange Act"). When used in
this prospectus, the words "anticipate", "believe", "estimate", "will", "may",
"intend" and "expect" and similar expressions identify forward-looking
statements. Although we believe that 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.
Forward-looking statements in this prospectus include, but are not limited to,
those relating to the general rapid expansion of our business, including the
expansion of our network products and portal services, our ability to develop
multiple applications, our planned introduction of new products and services,
the possibility of acquiring complementary businesses, products, services and
technologies and our development of relationships with providers of leading
Internet technologies. Actual results, performance or achievements could differ
materially from those contemplated, expressed or implied by the forward-looking
statements contained in this prospectus. Important factors that could cause
actual results to differ materially from our forward-looking statements are set
forth in this prospectus, including under the heading "Risk Factors". These
factors are not intended to represent a complete list of the general or
specific factors that may affect us. It should be recognized that other
factors, including general economic factors and business strategies, may be
significant, presently or in the future, and the factors set forth in this
prospectus may affect us to a greater extent than indicated. All forward-
looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary statements set forth in
this prospectus. Except as required by law, we undertake no obligation to
update any forward-looking statement, whether as a result of new information,
future events or otherwise.

12
<PAGE>

USE OF PROCEEDS

We estimate that the net proceeds from the sale of 2,051,600 shares of common
stock that we are selling in this offering will be approximately $232.1
million, based on an assumed initial price to public of $117.88 per share and
after deducting the estimated underwriting discount and offering expenses
payable by us. If the underwriters exercise their option to purchase additional
shares in the offering, we estimate the net proceeds will be approximately
$288.2 million. We will not receive any proceeds from the sale of the 1,248,400
shares being sold by the selling stockholders.

We anticipate using the net proceeds from the offering for general corporate
purposes, including working capital, the expansion of our core business,
investments in new business segments and capital expenditures. We expect, if
the opportunity arises, to use an unspecified portion of the net proceeds to
acquire or invest in complementary businesses, products and technologies.
Pending such uses, we will invest the proceeds in investment grade securities.

PRICE RANGE OF COMMON STOCK

Our common stock is quoted on the Nasdaq National Market under the symbol
"INKT". The following table shows the high and low sale prices per share of the
common stock as reported on the Nasdaq National Market for the periods
indicated:

<TABLE>
<CAPTION>
High Low
------- ------
<S> <C> <C>
Fiscal Year 1998
Third Quarter (from June 10, 1998)............................ $ 22.88 $ 9.00
Fourth Quarter................................................ 44.38 19.50
Fiscal Year 1999
First Quarter................................................. 79.25 26.56
Second Quarter................................................ 94.88 52.06
Third Quarter................................................. 159.13 82.00
Fourth Quarter (through July 21, 1999)........................ 145.13 107.56
</TABLE>

On July 21, 1999, the last reported sale price of our common stock on the
Nasdaq National Market was $117.88 per share. As of June 30, 1999, there were
approximately 887 stockholders of record of our common stock.

DIVIDEND POLICY

We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation
and expansion of our business and do not anticipate paying any cash dividends
in the foreseeable future. The covenants under our Loan and Security Agreement
with Silicon Valley Bank prohibit us from paying cash dividends.

13
<PAGE>

CAPITALIZATION

The following table shows our capitalization as of March 31, 1999 on an
actual basis and on an as adjusted basis. The as adjusted column gives effect
to our receipt of the estimated net proceeds from the sale of 2,051,600 shares
of common stock we are offering at an assumed initial price to public of
$117.88 per share. The outstanding share information in the table below
excludes:

. 7,779,020 shares of common stock reserved for issuance under our stock
option and stock purchase plans, of which 6,594,665 shares were subject
to outstanding options; and

. 1,437,460 shares of common stock issuable upon exercise of outstanding
warrants.

<TABLE>
<CAPTION>
March 31, 1999
---------------------
Actual As Adjusted
-------- -----------
(in thousands)
<S> <C> <C>
Debt and capital lease obligations, less current
portion................................................. $ 6,852 $ 6,852
-------- --------
Stockholders' equity:
Preferred Stock: $0.001 par value; authorized:
10,000,000; issued, outstanding and as adjusted:
none.................................................. -- --
Common Stock: $0.001 par value; authorized:
300,000,000; issued and outstanding: 49,552,000,
actual 51,604,000, as adjusted........................ 49 51
Additional paid-in capital............................... 178,789 410,851
Deferred compensation and other.......................... (3,441) (3,441)
Accumulated deficit...................................... (51,418) (51,418)
-------- --------
Total stockholders' equity.............................. 123,979 356,043
-------- --------
Total capitalization................................... $130,831 $362,895
======== ========
</TABLE>

14
<PAGE>

DILUTION

If you invest in our common shares, your interest will be diluted by an
amount equal to the difference between the initial price to public and the net
tangible book value per common share after this offering. We calculate net
tangible book value per common share by dividing the net tangible book value
(total assets less intangible assets and total liabilities) by the number of
outstanding common shares.

Our net tangible book value as of March 31, 1999 was $124.0 million or
approximately $2.50 per share. After the sale of the 2,051,600 shares of common
stock offered by Inktomi at the initial price to public of $117.88 per share
and after deducting the estimated offering expenses payable by us, our net
tangible book value at March 31, 1999 would have been $356.0 million or
approximately $6.90 per share. This represents an immediate increase in net
tangible book value of $4.40 per share to existing stockholders and an
immediate dilution of $110.98 per share to new investors of common stock in
this offering. The following table illustrates this dilution on a per share
basis:

<TABLE>
<S> <C> <C>
Assumed initial price to public per share......................... $117.88
Net tangible book value per share as of March 31, 1999.......... $2.50
Increase per share attributable to new investors................ 4.40
-----
Net tangible book value per share after the offering.............. 6.90
-------
Dilution per share to new investors............................... $110.98
=======
</TABLE>

The outstanding share information in the table above excludes:

. 7,779,020 shares of common stock reserved for issuance under our stock
option and stock purchase plans, of which 6,594,665 shares were subject
to outstanding options; and

. 1,437,460 shares of common stock issuable upon exercise of outstanding
warrants.

15
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our supplementary consolidated financial
statements and the notes to those statements included elsewhere in this
prospectus. The statements of operations data set forth below for the period
from February 2, 1996 (inception) to September 30, 1996 and for the fiscal
years ended September 30, 1997 and 1998 have been derived from our audited
supplementary consolidated financial statements, which have been audited by
PricewaterhouseCoopers LLP, Independent Accountants. The statements of
operations data for the six months ended March 31, 1998 and 1999 and the
balance sheet data at March 31, 1999 are derived from our unaudited
supplementary consolidated financial statements and include all adjustments,
consisting only of normal, recurring adjustments, which we consider necessary
for a fair presentation of that data. The historical results are not
necessarily indicative of results to be expected for any future period.

<TABLE>
<CAPTION>
February 2,
1996
(inception) Year Ended Six Months Ended
to September 30, March 31,
September 30, -------------------- -------------------
1996 1997 1998 1998 1999
------------- --------- --------- -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues:
Network products...... $ -- $ 60 $ 7,962 $ 691 $ 13,702
Portal services....... 530 5,725 12,476 5,186 11,683
-------- --------- --------- -------- ---------
Total revenues...... 530 5,785 20,438 5,877 25,385
Operating Expenses:
Cost of revenues...... 239 1,512 4,888 1,695 4,941
Sales and marketing... 898 7,835 21,940 7,047 21,008
Research and
development.......... 1,482 5,134 13,455 5,015 11,211
General and
administrative....... 1,342 1,487 4,095 1,776 2,772
Acquisition-related
charges.............. -- -- 1,018 -- --
-------- --------- --------- -------- ---------
Total operating
expenses........... 3,961 15,968 45,396 15,533 39,932
-------- --------- --------- -------- ---------
Operating loss.......... (3,431) (10,183) (24,958) (9,656) (14,547)
Interest income
(expense) net.......... (104) (194) 424 (93) 1,575
-------- --------- --------- -------- ---------
Net loss................ $ (3,535) $ (10,377) $ (24,534) $ (9,749) $ (12,972)
======== ========= ========= ======== =========
Basic and diluted net
loss per share......... $ (0.94) $ (0.40) $ (0.63) $ (0.26) $ (0.26)
======== ========= ========= ======== =========
Shares used in
calculating basic and
diluted net loss per
share.................. 3,768 25,954 39,130 37,379 48,984
======== ========= ========= ======== =========
</TABLE>

<TABLE>
<CAPTION>
At March 31, 1999
-----------------
(in thousands)
<S> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents..................................... $ 41,805
Short-term investments........................................ 77,526
Working capital............................................... 108,516
Total assets.................................................. 154,997
Total stockholders' equity.................................... 123,979
</TABLE>

16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for historical information, the discussion in this prospectus contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the forward-looking
statements as a result of a number of factors, including the risks described in
the section titled "Risk Factors" and elsewhere in this prospectus.

Overview

Inktomi was formed in February 1996 to develop and market scalable software
applications designed to significantly enhance the performance and intelligence
of large-scale networks, particularly the Internet. Our applications fall into
two broad categories: network products and portal services. Our network
products offerings currently consist of our Traffic Server network cache and
associated Media Cache Option applications, and our portal services offerings
currently consist of our search engine, shopping engine and directory engine
applications.

Network products revenues are composed of Traffic Server and Media Cache
Option license, consulting, support and maintenance fees. Traffic Server and
Media Cache Option license fees are based on the number of CPUs running the
software and are generally recognized upon shipment of the software.
Consulting, support and maintenance fees are recognized ratably over the
service period.

Portal services revenues are composed of revenues generated through our
search engine, directory engine and shopping engine. We generate revenues from
our search engine and directory engine through a variety of contractual
arrangements, which include per-query search fees, search service hosting fees,
advertising revenue, license fees and maintenance fees. Per-query, hosting and
maintenance fees revenues are recognized in the period earned, and advertising
revenues are recognized in the period that the advertisement is displayed. To
date, revenues from the directory engine have not been significant. We are
still developing the business model for our shopping engine and anticipate that
revenues will be generated by revenue sharing arrangements with online
merchants, and by per-query search fees, advertising revenue and license,
support and maintenance fees from Internet portals and other web site
customers. Revenues from online shopping have not been significant to date and
are expected to be modest for the next few quarters.

In April 1999, we acquired Impulse! Buy Network, a developer of online
merchandizing software, to supplement the functionality of our shopping engine.
We accounted for the acquisition as a pooling of interests. This discussion
reflects our acquisition of Impulse! Buy Network, Inc. We estimate that we will
record acquisition costs of approximately $1.1 million in the quarter ended
June 30, 1999 as a result of the acquisition, primarily for accounting, legal
and other expenses.

We have not achieved profitability on a quarterly or annual basis and expect
to continue to incur net losses for at least the next several quarters. We
expect to continue to incur significant sales and marketing, product
development and administrative expenses across all lines of business, and in
particular in our shopping engine business as we continue to develop and
enhance our shopping technology, integrate Impulse! Buy Network into our
operations and initiate new sales and marketing efforts. As a result, we will
need to generate significant revenues to achieve and maintain profitability.

17
<PAGE>

Results of Operations

The following table shows our results of operations expressed as a percentage
of total revenues. Our historical operating results are not necessarily
indicative of the results of any future period.

<TABLE>
<CAPTION>
Year Six
Ended Months
September Ended
30, March 31,
----------- -----------
1997 1998 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Network products.................................. 1 % 39 % 12 % 54 %
Portal services................................... 99 61 88 46
---- ---- ---- ---
Total revenues.................................. 100 100 100 100
Operating expenses:
Cost of revenues.................................. 26 24 29 19
Sales and marketing............................... 135 107 120 83
Research and development.......................... 89 66 85 44
General and administrative........................ 26 20 30 11
Acquisition-related charges....................... 0 5 0 0
---- ---- ---- ---
Total operating expenses........................ 276 222 264 157
---- ---- ---- ---
Operating loss...................................... (176) (122) (164) (57)
Interest income (expense), net...................... (3) 2 (2) 6
---- ---- ---- ---
Net loss............................................ (179)% (120)% (166)% (51)%
==== ==== ==== ===
</TABLE>

Six Months Ended March 31, 1999 and 1998

Revenues

Total revenues were $25.4 million in the six months ended March 31, 1999, an
increase of $19.5 million or 332% over revenues of $5.9 million in the six
months ended March 31, 1998. Revenue from one customer, consisting of a one-
time license fee, exceeded 10% of our total revenues in the six months ended
March 31, 1999. Two customers represented 31% of revenues in the six months
ended March 31, 1999 compared with 81% in the six months ended March 31, 1998.

Network products revenues totaled $13.7 million in the six months ended March
31, 1999, an increase of $13.0 million over revenues of $0.7 million in the six
months ended March 31, 1998. Most of this increase came from new Traffic Server
licenses.

Portal services revenues totaled $11.7 million in the six months ended March
31, 1999, representing an increase of $6.5 million or 125% over portal services
revenues of $5.2 million in the six months ended March 31, 1998. Most of this
increase came from new search customers and to a lesser extent, from existing
search customers. The increase in portal services revenues was partially offset
by a decrease in revenues recorded from the HotBot site as discussed below.

Historically, a significant portion of portal services revenues has been
derived from the HotBot search service. From our inception through the first
three months of fiscal 1999, HotBot was maintained by us and marketed by Wired
Digital. During this period, we recorded the gross value of advertising
revenues, including barter revenues, generated on the site and recorded amounts
due to Wired Digital as marketing expense. In the second quarter of fiscal
1999, Wired Digital assumed maintenance of the HotBot site. Due to the change
in our status as operator of the HotBot site, we recorded net revenues from
HotBot in the three months ended March 31, 1999.

18
<PAGE>

Expenses

Cost of Revenues. Cost of revenues consists primarily of expenses related to
the operation of our search and shopping services, which are primarily
depreciation and network charges. Cost of revenues was $4.9 million for the six
months ended March 31, 1999, an increase of $3.2 million or 192% from
$1.7 million in the comparable period of fiscal 1998. The increase was due
primarily to increased depreciation and network charges resulting from
expansions of our data center in California during fiscal 1998, and the
addition of a new service facility in Virginia in the third quarter of fiscal
1998. We expect cost of revenues to increase substantially in absolute dollars
in the next few quarters as a result of expanded cluster operation costs.

Sales and Marketing. Sales and marketing expenses consist of personnel and
related costs for our direct sales force and marketing staff and marketing
programs, including trade shows and advertising. Sales and marketing expenses
were $21.0 million for the six months ended March 31, 1999, an increase of
$14.0 million or 198% from $7.0 million in the comparable period in fiscal
1998. This increase was primarily due to an increase in the number of sales and
marketing personnel and expenses incurred in connection with attendance at
trade shows and additional marketing programs. The increase was partially
offset by lower HotBot marketing expenses since we no longer record HotBot
advertising revenues on a gross basis as a marketing expense, as described
above. We expect that sales and marketing expenses will increase substantially
in absolute dollars over the next few quarters as we hire additional sales and
marketing personnel, initiate additional marketing programs to support our
Traffic Server and online shopping engine products, and establish sales offices
in additional domestic and international locations.

Research and Development. Research and development expenses consist primarily
of personnel and related costs for our development and technical support
efforts. Research and development expenses were $11.2 million for the six
months ended March 31, 1999, an increase of $6.2 million or 124% over expenses
of $5.0 million in the comparable period in fiscal 1998. The increase was
primarily due to an increase in the number of research and development
personnel to support expansion of our search engine and network products
businesses, online shopping development, and increases in quality assurance,
technical support and technical publications personnel. We believe significant
investment in research and development is essential to our future success and
expect that research and development expenses will increase in absolute dollars
in future periods. We have not capitalized any software development expenses to
date.

General and Administrative. General and administrative expenses consist
primarily of personnel and related costs for general corporate functions,
including finance, accounting, human resources, facilities and legal. General
and administrative expenses totaled $2.8 million for the six months ended March
31, 1999, an increase of $1.0 million or 56% over expenses of $1.8 million in
the comparable period in fiscal 1998. This increase was due primarily to an
increase in the number of general and administrative personnel.

Interest Income and Expense, Net. Interest income and expense, net includes
income on our cash and short-term investments less expenses related to our debt
and capital lease obligations. Interest income, net totaled $1.6 million of
income in the six months ended March 31, 1999 compared to net expense of
$93,000 in the comparable period in fiscal 1998. Most of this increase was
generated from interest income on proceeds from our June 1998 and November 1998
public offerings of common stock, partially offset by increased interest
charges on debt and capital lease obligations.

19
<PAGE>

Fiscal Years Ended September 30, 1998 and 1997

Revenues

Total revenues were $20.4 million in the year ended September 30, 1998, an
increase of $14.6 million or 253% over the year ended September 30, 1997. Four
customers each represented over 10% and, in the aggregate, 77% of total
revenues for the year ended September 30, 1998. For the year ended September
30, 1997, two customers accounted for approximately 92% of total revenues.

Network products revenues totaled $8.0 million in fiscal 1998. Most of these
revenues represented new Traffic Server license fees. There were minimal
network products revenues in fiscal 1997. Portal services revenues totaled
$12.5 million in fiscal 1998, representing a 118% increase over the prior year.
Most of this increase came from the provision of search services to new
customers and, to a lesser extent, an increase in revenues from existing search
customers.

A significant portion of portal services revenues were derived from the
HotBot search service maintained by us and marketed by Wired Digital. A portion
of the advertising on the HotBot site was exchanged for advertisements on the
Internet sites of other companies. The value of these advertisements was
recognized as barter revenue by us. Barter revenues represented 27% of total
revenues in fiscal 1997 and 9% in fiscal 1998.

Expenses

Cost of Revenues. Cost of revenues was $4.9 million for fiscal 1998, an
increase of $3.4 million or 223% from fiscal 1997. The increase was due
primarily to increased depreciation and network charges resulting from
expansions of our data center in California during fiscal 1998, and the
addition of a new service facility in Virginia in the third quarter of fiscal
1998.

Sales and Marketing. Sales and marketing expenses were $21.9 million in
fiscal 1998, an increase of $14.1 million or 180% from fiscal 1997. This
increase was primarily due to an increase in the number of sales and marketing
personnel in the United States and abroad, increased HotBot marketing expenses
and other customer-related costs, and expenses incurred in connection with
attendance at trade shows and additional marketing programs.

Research and Development. Research and development expenses were $13.5
million in fiscal 1998, an increase of $8.3 million or 162% over fiscal 1997.
The increase was primarily due to an increase in the number of research and
development personnel to support expansion of our portal services and network
products businesses, initial online shopping development, and increases in
quality assurance, technical support and technical publications personnel.

General and Administrative. General and administrative expenses totaled $4.1
million in fiscal 1998, an increase of $2.6 million or 175% over fiscal 1997.
This increase was due primarily to an increase in the number of general and
administrative personnel and increased legal and accounting costs incurred in
connection with business activities.

Acquisition-Related Charges. In the fourth quarter of fiscal 1998, we
acquired C\\2\\B Technologies, a developer of online shopping software. The
transaction was accounted for as a pooling of interests. We incurred expenses
of $1.0 million related to the transaction. The charge included C\\2\\B
Technologies' financial advisory fees, facilities consolidation costs, and
legal and accounting fees. Of the total charge, $0.7 million of the expenses
were paid in fiscal 1998.

Interest Income and Expense, Net. Interest income, net totaled $0.4 million
of income in fiscal 1998, compared to a net expense of $0.2 million in fiscal
1997. Most of this increase was

20
<PAGE>

generated from interest income on proceeds from our June 1998 initial public
offering and prior preferred stock issuances, partially offset by increased
interest charges on debt and capital lease obligations.

Quarterly Results of Operations

The following table presents our operating results for each of the six
quarters in the period ended March 31, 1999. The information for each of these
quarters is unaudited and has been prepared on the same basis as the audited
supplementary consolidated financial statements appearing elsewhere in this
prospectus. In the opinion of management, all necessary adjustments, consisting
only of normal recurring adjustments, have been included to present fairly the
unaudited quarterly results when read in conjunction with our audited
supplementary consolidated financial statements appearing elsewhere in this
prospectus. These operating results are not necessarily indicative of the
results of any future period.

<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------
Dec. Mar. Jun. Sep. Dec. Mar.
31, 31, 30, 30, 31, 31,
1997 1998 1998 1998 1998 1999
------- ------- ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Network products....... $ 70 $ 621 $ 3,062 $ 4,209 $ 5,509 $ 8,193
Portal services........ 2,352 2,834 3,233 4,057 5,264 6,419
------- ------- ------- ------- ------- -------
Total revenues........ 2,422 3,455 6,295 8,266 10,773 14,612
Operating expenses:
Cost of revenues....... 794 901 1,276 1,917 2,269 2,672
Sales and marketing.... 3,015 4,032 6,574 8,319 9,600 11,408
Research and
development........... 2,263 2,752 3,682 4,758 4,923 6,288
General and
administrative........ 816 960 1,109 1,210 1,275 1,497
Acquisition-related
charges............... -- -- -- 1,018 -- --
------- ------- ------- ------- ------- -------
Total operating
expenses............. 6,888 8,645 12,641 17,222 18,067 21,865
------- ------- ------- ------- ------- -------
Operating loss.......... (4,466) (5,190) (6,346) (8,956) (7,294) (7,253)
Interest income
(expense), net......... (60) (33) 91 426 653 922
------- ------- ------- ------- ------- -------
Net loss................ $(4,526) $(5,223) $(6,255) $(8,530) $(6,641) $(6,331)
======= ======= ======= ======= ======= =======
</TABLE>

Our operating results may fluctuate significantly in the future as a result
of a variety of factors, many of which are outside of our control. These
factors include demand for our products and services, the timing of sales of
our products and services, the loss of customers, changes in the growth rate of
Internet usage, delays in introducing new products and services, new product
introductions by competitors, changes in our pricing policy or the pricing
policies of our competitors, changes in the mix of products and services sold,
changes in the mix of sales channels through which products and services are
sold, changes in the mix of international and domestic revenues, costs related
to acquisitions of technology or businesses, and economic conditions generally
as well as those specific to the Internet and related industries.

We expect that a significant portion of our future revenues will be generated
by licenses of Traffic Server. We further expect that these revenues will come
from orders placed by a small number of customers. The volume and timing of
these orders are difficult to predict because the market for Traffic Server is
in its early stages and the sales cycle varies substantially from customer to
customer. The cancellation or deferral of even a small number of licenses of
Traffic Server would reduce expected revenues, which would adversely affect our
quarterly financial performance. To the extent significant sales occur earlier
than expected, operating results for subsequent quarters may not compare
favorably with operating results from earlier quarters.

21
<PAGE>

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments totaled $119.3 million at
March 31, 1999, up from $49.0 million at fiscal year-end September 30, 1998.
Most of the increase came from the November 1998 public offering of common
stock, partially offset by cash used in operations and the purchase of property
and equipment.

We used $13.0 million in cash for operations in the six months ended March
31, 1999, an increase of $5.5 million from the $7.5 million used in the
comparable period in fiscal 1998. The increase in cash used in operations was
primarily due to an increase in our net loss to $13.0 million from $9.7 million
in the first six months of fiscal 1999 and fiscal 1998, respectively, as well
as increases in accounts receivable and other assets, partially offset by
increased depreciation and larger increases in accounts payable and deferred
revenue in the six months ended March 31, 1999.

We have made significant investments in equipment since inception. This
equipment consists largely of computer servers, workstations and networking
equipment. We invested $7.5 million in the six months ended March 31, 1999 as
compared to $0.6 million in the six months ended March 31, 1998. These
investments were made primarily to expand our search engine service capacity.

We have used debt and capital leases to partially finance our operations and
capital purchases and plan to continue this practice until we begin generating
cash from operations. At March 31, 1999 we had $13.8 million in loans and
capitalized lease obligations outstanding. The bank loans include covenants
requiring minimum liquidity, tangible net worth and profitability over time.

We raised $91.6 million, net of issuance costs, from equity sales in the
first six months of fiscal 1999. This includes $89.9 million from the sale of
common stock and $1.7 million from stock option and warrant exercises.

Our capital requirements depend on numerous factors, including market
acceptance of our products, the resources we devote to developing, marketing,
selling and supporting our products, the timing and extent of establishing
international operations, extent and timing of investments, acquisition costs,
and other factors. We expect to devote substantial capital resources to hire
and expand our sales, support, marketing and product development organizations,
to expand marketing programs, to establish additional facilities worldwide and
for other general corporate activities.

Year 2000 Compliance

Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. As a result, software
that records only the last two digits of the calendar year may not be able to
distinguish whether "00" means 1900 or 2000. This may result in software
failures or the creation of erroneous results.

We utilize a significant number of computer software programs and operating
systems across our company. These programs and operating systems include both
proprietary and third party applications used in our Traffic Server network
cache product, our search, directory and online shopping services, and our
internal systems. To the extent that these applications are unable to
appropriately process dates in the calendar year 2000, some level of
modification or replacement may be necessary.

We initiated our year 2000 compliance program in early 1998 by conducting a
preliminary review of our Traffic Server and search engine software code and by
performing preliminary tests on these applications to determine Year 2000
compliance. We also began making inquiries of the vendors of our essential
internal business systems to assess their Year 2000 readiness. Since this time,
we have increased the scope of our business operations, developed new versions
of our Traffic Server

22
<PAGE>

and search engine software, acquired and enhanced our online shopping engine
software, and developed and released the first version of our directory engine
software. This expansion led us to hire a full time Year 2000 project
coordinator in early 1999 to manage our Year 2000 efforts. Under his direction,
we have developed a comprehensive Year 2000 compliance plan covering each of
our software products, our search, directory and shopping services operations,
and our internal business systems.

We have recently completed a code review and testing of a current version of
our Traffic Server software to ensure Year 2000 readiness. Based on this review
and testing, we believe that this version of our Traffic Server software, when
configured and used in accordance with its documentation, correctly functions
when used with Year 2000 date codes. We have initiated a similar code review
and testing process for the most current version of our Traffic Server software
and expect to complete the testing process by October 1999. Although we have
reviewed the software code and tested earlier versions of our Traffic Server
software and believe them to be Year 2000 compliant, we do not currently intend
to perform our suite of tests on these versions. We are recommending that our
customers upgrade to our later Traffic Server versions.

We have reviewed the software code for our search engine software and
performed limited testing on this application. We believe we have identified
all instances where date specific information is required. Based on this
limited review and testing, we believe our search engine correctly functions
when used with Year 2000 date codes. We are in the process of developing a
suite of tests to more thoroughly evaluate our search engine software for Year
2000 compliance and expect to complete these tests by October 1999.

We initiated development of our directory engine software in 1998 and focused
on Year 2000 compliance throughout the development process. We are currently in
the process of developing a suite of tests to evaluate our directory engine
software for Year 2000 compliance and expect to complete these tests by October
1999.

We acquired the software that serves as the foundation for our shopping
engine application. We are currently in the process of reviewing the software
code to identify areas in need of updating for Year 2000 compliance. We are
also in the process of developing a suite of tests to more thoroughly evaluate
our shopping engine software for Year 2000 compliance. We expect to complete
our software review and all testing by October 1999.

Our Traffic Server software runs on several hardware platforms and associated
operating systems, including those provided by Sun, Compaq and Silicon
Graphics, and those based on Intel-architecture. Our Traffic Server software is
therefore dependent upon the correct processing of dates by these systems. We
have reviewed information made publicly available by our hardware platform
partners regarding Year 2000 compliance. Based on this review, we do not
believe the underlying systems that operate in conjunction with our Traffic
Server software contain material Year 2000 deficiencies in their latest
releases. Most of our customers have deployed Traffic Server running on Sun
workstations. As part of the testing and evaluation process for Traffic Server,
we are also testing whether the combination of Traffic Server running on Sun
workstations operating the Solaris operating system is Year 2000 compliant.
Based on our tests, we believe that a current version of Traffic Server running
on Sun workstations operating the Solaris 7 operating system correctly
recognizes and functions when used with Year 2000 date codes. We are currently
testing the latest version of Traffic Server running on Sun workstations and
expect to complete this testing by October 1999. We intend to test the
combination of Traffic Server with other selected hardware and associated
operating system platforms.

Our software applications operate in accordance with several external
Internet protocols, such as HTTP and NNTP, and are therefore dependent upon the
correct processing of dates by these

23
<PAGE>

protocols. We have researched the date handling capabilities of these protocols
and do not believe they contain material Year 2000 deficiencies.

Our search engine, directory engine and shopping engine software run
primarily on Sun workstations operating the Solaris operating system. We are
currently in the process of upgrading the workstations that run our software to
versions of the Solaris operating system that Sun has declared to be Year 2000
compliant. We currently expect to complete this upgrade by October 1999. We
have also taken an inventory of the equipment and systems under our control
that are involved in providing search, directory and shopping services to our
customers and have identified those components that we believe need to be
upgraded. We have developed an action plan to upgrade these components and
currently expect to complete this upgrade by October 1999.

We provide our search, directory and shopping services from multiple computer
clusters, all of which are housed at facilities operated by a single-source
hosting provider. Our computer clusters are reliant on security, climate
control and Internet connectivity, all of which is provided and maintained by
the hosting provider. We have contacted our hosting provider to obtain
affirmative documentation as to their Year 2000 readiness. Our hosting provider
is currently investigating its Year 2000 readiness and upgrading its systems as
necessary. We are awaiting a final response from the hosting provider.

We use multiple software systems for our internal business purposes,
including accounting, e-mail, development, human resources, customer service
and support, and sales, most of which have been purchased in the last 18
months. We have recently completed an inventory of our internal systems and are
reviewing the web sites of the vendors of these systems to determine whether
they have been declared to be Year 2000 compliant. We are in the process of
contacting those vendors that have not publicly declared their systems to be
Year 2000 compliant to obtain affirmative documentation.

We have several different desktop, laptop and server hardware configurations
of BIOS, CMOS and embedded systems. We have contacted the vendors of each of
these systems in order to confirm Year 2000 readiness. We are awaiting final
responses from several vendors.

To date, the costs incurred to perform the assessment of our Year 2000
readiness have not been material, and have consisted primarily of the cost of
our project manager and labor costs for our quality assurance, software
development and information technology personnel. We expect that our personnel
will continue to spend time assessing our Year 2000 readiness and updating and
upgrading our software and systems where necessary. Despite investigation and
testing by us and our partners, our software products and the underlying
systems and protocols running our products may contain errors or defects
associates with Year 2000 date functions. We are unable to predict to what
extent our business may be affected if our software or the systems that operate
in conjunction with our software experience a material Year 2000 failure. Known
or unknown errors or defects that affect the operation of our software could
result in delay or loss of revenue, interruption of search or shopping
services, cancellation of customer contracts, diversion of development
resources, damage to our reputation, increased service and warranty costs, and
litigation costs, any of which could adversely affect our business, financial
condition and results of operations.

24
<PAGE>

BUSINESS

Overview

We are a leading provider of scalable software applications designed to
significantly enhance the performance and intelligence of large-scale
networks, particularly the Internet. Our applications fall into two broad
categories: network products and portal services. Our Traffic Server
application is the foundation of our network products offerings. Traffic
Server is a network cache platform designed to enable network providers to
manage bandwidth resources more effectively, significantly improve the quality
of service for their end users, and offer new and differentiating value-added
services. Companies that have licensed Traffic Server include America Online,
Bell Canada, BellSouth.net, British Telecommunications, Cable & Wireless USA,
CNN Internet Technologies, Concentric Network, Digex (an Intermedia
Communications Company), Excite@Home and Telenor Nextel. Our current portal
services applications include search, shopping and directory services and are
offered to Internet portal and web site customers. Customers for one or more
of our portal services offerings include America Online, British
Telecommunications, C|NET, GeoCities, Infoseek, LookSmart, Nippon Telegraph
and Telephone, Snap!, Wired Digital and Yahoo!.

Industry Background

International Data Corporation estimates that there were approximately 159
million users of the Internet at the end of 1998 and that the number of users
will grow to 410 million by the end of 2002. The dramatic growth in the number
of Internet users and the availability of powerful new tools for the
development and distribution of Internet content have led to a proliferation
of useful information and services on the Internet, including electronic
commerce, online magazines, e-mail services, specialized news feeds,
interactive games, and educational and entertainment applications. Although
primarily text and graphics-based today, information and services available on
the Internet are increasingly incorporating multimedia components such as
video and audio clips. The availability of richer content and services is
attracting greater numbers of Internet users, fueling a cycle of growth where
more users demand more information, and more information attracts more users.

To accommodate and manage increasing traffic, network providers must
continually expand and upgrade their networks as well as improve connectivity
to other regional networks. Similarly, Internet portals and other providers of
online services such as search, electronic commerce, e-mail and chat must
scale and enhance their services to keep pace with the growth in user demand
and available information. The technical challenges and on-going investments
associated with maintaining and upgrading the systems required to provide
these services are substantial. Continued increases in the volume, variety and
richness of information will magnify these challenges.

To date, network providers have attempted to meet increasing demand by
installing additional telephone lines, fiber optic cable, routers and
switches, and by deploying data compression and multiplexing technologies.
These equipment-based approaches focus exclusively on expanding bandwidth
capacity by increasing the number of lines over which data can be transmitted
or increasing the volume of data that can be transported over existing lines.
However, these approaches do not address the fundamental architectural
shortcomings of these networks. As a result, they have not generated and
cannot generate sufficient bandwidth to keep pace with the anticipated growth
in traffic. Moreover, these approaches are labor-intensive, slow and costly to
implement and do not enable the provision of differentiated levels of service.

Other approaches employed by network providers, such as client and proxy
server-based caching, are designed to enhance the efficiency of data
distribution by reducing the amount of redundant network traffic. Web browsers
and proxy servers each contain caches that store data, eliminating the need to
traverse the entire network to reacquire data. Browser-based caches,

25
<PAGE>

however, are small and only address the needs of individual users. Proxy
server-based caches can serve large workgroups, but generally are not scalable
beyond several hundred users and can themselves become network bottlenecks.

Internet portals and other online service providers have primarily addressed
the growth in user demand and available information by deploying larger
computing systems to run their services. At times, this growth has
substantially outpaced their ability to deploy these systems, forcing service
providers to limit the availability or functionality of their services or to
reduce the number of users utilizing the service. Deploying larger computing
systems is expensive and difficult to accomplish on an incremental basis.
Limiting the availability or functionality of the service and reducing the
number of users can result in lost revenue and can alienate end users.

We believe that in order for the Internet to scale cost-effectively, network
and service providers must deploy a new layer of high-performance software
throughout the network infrastructure. This software must efficiently leverage
the Internet's existing and future network hardware infrastructure to
intelligently manage and distribute increasingly more and richer content.

The Inktomi Solution

We develop and market scalable software applications designed to
significantly enhance the performance and intelligence of large-scale networks,
particularly the Internet. Utilizing our coupled cluster architecture and
dataflow and concept induction technologies, our network products and portal
services are specifically designed to address the challenges posed by the
explosive growth in the number of network users, documents and services, and
the resultant increase in traffic volume and electronic commerce. Our
architecture and technology enable us to provide applications with the
following benefits:

Scalability. Our coupled cluster software architecture enables multiple
workstations collaborating via high-speed connections to function as one
extremely powerful computer. The architecture is designed to scale without
limit and without significant deterioration in performance as additional
workstations are added to the cluster. Furthermore, the architecture
facilitates the "hot" addition of incremental workstations, without any
negative impact on existing cluster operations.

Efficiency. Our dataflow technology enables a single workstation to
efficiently process up to thousands of operations simultaneously, as compared
to traditional software architectures that can only process up to tens or
hundreds of operations simultaneously before experiencing significant
performance degradation. This technology greatly improves the performance of
each workstation within the cluster which increases the efficiency of data
throughput.

High System Availability. Our coupled cluster software architecture enables
our applications to be fault-tolerant. If any workstation within the cluster
fails, the cluster management software reassigns the task load among the
remaining workstations running the application. When the failed workstation is
restored, tasks are intelligently reassigned to the newly functioning
workstation. Since each workstation has its own buses, power supply and disk
drives, system availability is maintained because the failure of an individual
workstation generally does not cause the failure of the entire cluster.

Price/Performance. Clusters consist of relatively inexpensive, commodity
workstations and require a significantly smaller initial hardware investment
than mainframe or large SMP-based systems of comparable computing power. When a
coupled cluster system requires additional capacity, one or more workstations
can be added on an incremental, "pay-as-you-go" basis. In contrast, when a
mainframe or large SMP-based system reaches full capacity, the existing system
must be replaced with a larger system or an additional system must be added
with similar

26
<PAGE>

capabilities. Each of these alternatives requires a substantial capital outlay
and still may not achieve the same performance capabilities as a cluster-based
system.

Interoperability. Our software architecture is designed to interoperate with
standard central processing unit (CPU) architectures and operating systems. Our
approach is distinguished from that of hardware vendors that may seek to
preserve the market for their network equipment by supporting only their
proprietary operating systems or closed CPU architectures. Our architecture
extends the useful life of customer hardware investments by seamlessly
supporting different generations of workstations in any given cluster.

Manageability. Our coupled cluster software architecture was designed from
the outset to manage large clusters of workstations easily from a single
management station. The architecture enables cluster managers to monitor and
configure the entire system, either on-site or remotely, through a standard Web
browser interface.

Strategy

Our strategy is to be the leading provider of scalable software applications
specifically designed to address the distributed data management challenges
posed by rapidly growing global information networks. Key elements of our
strategy are:

Leverage Core Technology to Develop Multiple Applications. The core of our
clustering technology was initially developed by some of our key employees at
the University of California at Berkeley in 1994, and has been designed from
the start to serve as the foundation for a variety of scalable software
applications. Since that time, we have substantially modified and enhanced the
initial technology and developed additional core technologies such as our
dataflow and concept induction technologies to complement the clustering
technology. In addition, we have invested significant time and resources in
creating a structured product development process and have successfully
recruited computer scientists, engineers and software developers with expertise
and advanced degrees in the areas of massively parallel computing, coupled
cluster computing, software dataflow operations and mathematics. We believe
that our technology, personnel and development process will enable us to
enhance our existing products and to develop new scalable software applications
to meet the needs of network and online service providers.

Target Traffic Server at Large Network Providers. We are initially targeting
telecommunications carriers and Internet service providers for our Traffic
Server network cache platform. Traffic Server is a high-performance caching
solution that is designed to be sufficiently scalable to handle massive and
growing network traffic volumes. Network providers are spending billions of
dollars domestically and internationally to increase bandwidth through the
deployment of expensive network hardware intended to speed data transfer and
increase capacity. Despite this investment, demand for bandwidth continues to
outpace the ability of network providers to increase capacity. We believe that
Traffic Server provides a more compelling value proposition for these customers
because it reduces redundant traffic, thereby increasing available bandwidth at
a substantially lower cost.

Establish Traffic Server as the de Facto Standard. We intend to establish and
maintain Traffic Server as the leading cache solution for large-scale networks.
We have initially targeted network providers that operate the largest and most
complex networks, and have designed Traffic Server to serve as a platform that
easily integrates into their existing network infrastructures. We believe that
adoption of Traffic Server by these leading providers will validate our
technology and facilitate broad market acceptance, as well as further our
objective of establishing Traffic Server in the corporate marketplace. In
addition, we believe that, in the absence of standardized approaches to network
caching, the opportunity currently exists for us to establish Traffic Server as
the platform of

27
<PAGE>

choice through its adoption and implementation by high profile network
providers. We believe that achieving this status would provide us with a
significant competitive advantage and intend to continue to pursue aggressively
those customers we believe will enable Traffic Server to be recognized as the
standard network caching solution.

Become the Technology Provider of Choice to Online Service Providers. We
believe that we can leverage our scalable software architecture to develop and
provide multiple services to Internet portals and other online service
providers. In the early days of the Internet, online service providers
primarily focused on providing a single service to end users, such as search,
e-mail, online magazines and interactive games. As the Internet has matured,
many online service providers have expanded their service offerings and
fostered online communities in an effort to attract and retain increasing
numbers of end users. The goal of these Internet portals and other online
service providers has been to build brand and user loyalty and to diversify and
enhance their sources of direct and indirect revenue. However, the addition of
new services and the significant increase in the size and complexity of the
Internet requires substantial on-going investments and technological expertise
in order to maintain and upgrade the quality of the services provided. We
believe these factors will lead many companies to outsource services such as
their search and online shopping capabilities rather than develop and maintain
them in-house. Already, companies such as America Online, Wired Digital and
Yahoo! have elected to use our search technology and companies such as
Infoseek, LookSmart and Snap! have elected to use our shopping platform, not
only because of the performance and scalability advantages these technologies
provide, but also because these technologies allow them to retain the critical
flexibility to customize the user interface. As we continue to develop and
enhance our technology and back-end service offerings, we believe that
companies will increasingly outsource these services to us.

Develop Direct and Indirect Distribution Channels. Our sales strategy is to
pursue opportunities with large accounts through our direct sales force, and to
penetrate various targeted market segments through multiple indirect
distribution channels. We have established a direct sales force covering the
United States and Canada as well as a direct sales force in England, France and
Germany to address the European market. We intend to increase the size of our
direct sales force and to establish additional sales offices domestically and
internationally. We plan to complement our direct sales force by establishing
multiple indirect distribution channels including OEMs, resellers, systems
integrators and joint marketing partners. These channels are intended to
increase geographic sales coverage and to address mid-tier Internet service
providers and, eventually, large corporate customers.

Pursue Strategic Investments and Acquisitions. The Internet infrastructure
market is rapidly changing and intensely competitive. The growth of the
Internet is creating business opportunities for companies to sell products and
services to network and online service providers to enable them to provide new
and improved services to their end users. In order to leverage our internal
development capabilities to take advantage of these rapidly developing
opportunities, we intend to acquire and invest in complementary businesses,
products and technologies. For example, within the past twelve months, we have
acquired two companies to accelerate our entry into the online shopping
business. We believe this strategy will enable us to meet the increasingly
sophisticated needs of our customers, rapidly expand our product offerings and
take advantage of new market opportunities.

Products and Customers

28
<PAGE>

Network Products

Our Traffic Server application is the foundation of our network products
offerings. Traffic Server is a network cache platform designed to enable
network providers to manage bandwidth resources more effectively, significantly
improve the quality of service for their end users, and offer new and
differentiating value-added services. We are targeting Traffic Server to
organizations that provide Internet access, hosting and broadband services, as
well as those of enterprise networks, both domestically and internationally.
Our customers include America Online, Ameritech Interactive Media Services,
Bell Canada, BellSouth.net, Cable & Wireless USA, Chello Broadband N.V., CNN
Internet Technologies, Concentric Network, Digex (an Intermedia Communications
Company), Excite@Home, Exodus Communications, ICG PST (a subsidiary of ICG
Communications, Inc.), Nippon Telegraph and Telephone, and Telenor Nextel.

At the core of Traffic Server is a highly scalable, high-performance cache
server that is designed to reduce Internet congestion and increase overall
network efficiency. Information available on traditional data networks is
stored in a single source location. An end user interested in particular
information establishes contact with the source computer on the network and
initiates a request for the information. Once contact is established with the
source computer, the information is compiled and sent over the network to the
end user's computer. Multiple end users initiating multiple requests leads to
redundant transmission of the same information over the network, resulting in
network congestion and data access and information delivery bottlenecks.
Redundant traffic strains the network and consumes bandwidth.

[GRAPHIC OF NETWORK WITHOUT CACHE]

29
<PAGE>

Traffic Server is based on the premise that it is cheaper to store
information than to move it. Traffic Server stores or "caches" local copies of
frequently accessed information in dedicated storage systems in proximity to
the user. Requests for information are managed by Traffic Server, which
determines if the requested information is located in the cache. If so, the
information is accessed directly from the cache, thereby avoiding the need to
traverse the entire network. If the information is not located in the cache,
the information is accessed and retrieved from the source computer. The
information is then stored in the cache and is thus made available to
subsequent users. In this way, Traffic Server intelligently eliminates
redundant traffic and smoothes traffic patterns, thereby leveraging and
enhancing existing bandwidth within the network. In addition, Traffic Server is
designed to be particularly effective in alleviating information delivery
bottlenecks during peak periods of network usage and bursts in traffic volume
driven by news and other significant events, thereby significantly enhancing
the online experience for the end user.

[GRAPHIC OF NETWORK WITH CACHE]

Once installed in a network, Traffic Server acts as an intermediary between
end-user clients and information residing on the network, interacting with
nearly all data flows over the network. This enables Traffic Server to function
as a platform for a wide variety of value-added services that network providers
can offer their end users. These services today include advanced media
streaming, distributed web hosting and content distribution, interactive
applications and software-on-demand, content filtering, and content
transformation for devices such as set-top boxes and wireless telephones. We
have formed strategic alliances with several companies to develop and deliver
products enabling each of these services. For example, we teamed with
RealNetworks to develop the Traffic Server Media Cache Option, the industry's
first streaming media cache. The Media Cache Option is a software plug-in
component to Traffic Server that integrates the audio and video streaming
capabilities of the RealNetworks G2 server into Traffic Server. This allows our
customers who choose to implement the Media Cache Option with Traffic Server to
cache media files and stream them to end users in a way that gives users the
highest-quality media experience possible for their connection speed. We have
also designed Traffic Server as an open platform with flexible application
programming interfaces (APIs) in order to enable other third-party software
developers to easily integrate the functionality of their products with Traffic
Server.

30
<PAGE>

Traffic Server has been designed to integrate quickly and easily into
existing network infrastructures. Traffic Server runs on standard off-the-shelf
workstations, including workstations made by Sun, Compaq and Silicon Graphics,
and workstations based on Intel-architecture, running on standard operating
systems, including Solaris, Compaq Tru64, UNIX, IRIX, FreeBSD and Windows NT.
Traffic Server interoperates with standard Internet equipment, is compatible
with standard Web browsers and supports an array of popular Internet protocols,
including HTTP, FTP, RTSP, NNTP, ICP and SNMP. We license Traffic Server based
on the number of CPUs running the software. Upgrade subscriptions, support and
maintenance, and add-on components such as the Media Cache Option are priced
separately.

Portal Services

Our second primary business focus is on providing infrastructure services to
Internet portals and other online service providers. We believe the significant
increase in the size and complexity of the Internet together with the
technological challenges and investments associated with developing and
maintaining robust online services provide an incentive for portals and other
online service providers to outsource many critical services rather than
develop and maintain these services in-house. By outsourcing these critical
services, portals and other online service providers can concentrate on
administering key aspects of their online business, including branding,
advertising sales, end-user marketing and publicity, and business development.
Currently, our portal services offerings consist of Internet search services,
shopping services and directory services. These services can be deployed
independently or collectively as a single, integrated product offering.

Search Engine. We entered the Internet search engine market in May 1996 with
the launch of HotBot, a search service powered by our search engine and
marketed by Wired Digital. HotBot has garnered broad media acclaim and won
numerous awards. In addition to the Wired Digital relationship, we have entered
into search agreements with over 30 customers, including Aeneid Corporation,
America Online, British Telecommunications, Chello Broadband N.V., C|NET,
4Anything.com, GeoCities, Goto.com, Nippon Telegraph and Telephone, Snap! and
Yahoo!.

The Inktomi search engine enables our customers to provide a variety of
online search services to end users. We use the Inktomi search engine to
provide information search services to our customers, who in turn incorporate
these services into their online offerings to end users. We provide and manage
all hardware, software and operational aspects of the Inktomi search engine and
the associated database of Internet content. We also provide the customer with
a programming interface and software tools to enable the customer to custom
design its search service user interface. The user interface communicates with
the Inktomi search engine via a communication protocol, called the Inktomi Data
Protocol. Separating the user interface enables this portion of the service to
reside in a different physical location from the Inktomi search engine and to
run on the customer's choice of computing equipment. In addition, the customer
can customize the user interface as to look and feel and functionality and can
change the user interface at any time without affecting the operation of the
Inktomi search engine. This turn-key model allows us to serve multiple
customers while continuing to concentrate on developing our core search engine
technology.

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<PAGE>

The Inktomi search engine consists of a crawler, an indexer and search engine
servers. The crawler and indexer are software programs that collect and
organize information, and store that information on the cluster of search
engine servers. The search engine servers are a collection of workstations that
are linked together as a coupled cluster through the use of Inktomi's software.
The search engine servers provide powerful full-text query operations,
including full Boolean support, date restrictions and the recognition of
multimedia files and other embedded objects. Search results are relevance-
ranked using state-of-the-art text indexing and concept induction methods.
Advanced searching features allow end users to specify the number and types of
responses to a search query and to submit specific documents not currently
indexed to the Inktomi database.

[GRAPHIC OF SEARCH ENGINE APPLICATION]

We spend substantial time and resources enhancing our core search engine
technology and developing new functionality and service offerings for our
customers. In addition to our core search services, we have developed and offer
premium search services whereby we crawl, index and host specific sets of
content designated by the customer. The content can be the customer's own
content or specified third-party content, and can be searched by end users as a
distinct database or seamlessly integrated with and searched as part of the
master Inktomi Internet database. In addition, we offer custom data blending
services whereby we tag content selected by a customer in our database and
promote, demote or eliminate this content from the list of results returned in
response to designated search queries. In each of these cases, the customer can
offer a customized and differentiated search experience for its end users.

We generate search service revenues through a variety of contractual
arrangements, which include per-query search fees, search service hosting fees,
advertising revenue sharing plans, license fees and maintenance fees. Our
search services revenues result primarily from the number of end-user searches
that are processed by the Inktomi search engine and the level of advertising
revenue generated by customers.

Shopping Engine. We entered the online shopping market in December 1998 by
releasing the initial version of the Inktomi shopping engine, a high-
performance shopping application designed to handle the complex challenges of
bringing online consumers and merchants together and facilitating transactions
between them. We are developing the Inktomi shopping engine as a platform to
provide a comprehensive shopping experience for online consumers, enabling them
to quickly and easily locate products of interest, compare features and prices
among products, and locate and purchase these products through participating
online merchants. Similar to our search engine application, we
do not provide shopping services through our own branded online shopping site;
rather, we make the shopping engine available to Internet portals and other web
site customers who can, in turn, provide online shopping services through their
sites to end users. We currently have entered into agreements

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<PAGE>

to provide the Inktomi shopping engine platform to over 20 leading Internet
portal and other web site customers, including Infoseek, LookSmart and Snap!.

The Inktomi shopping engine is designed to provide portals and other web site
customers with a complete infrastructure to enable their end users to purchase
goods and services online. We are developing the Inktomi shopping engine to
function the way consumers already shop by seamlessly integrating all aspects
of the online shopping process, from expert advice and word of mouth
comparisons, to bargain hunting and comparison shopping. Through the Inktomi
shopping engine, online consumers today can access more than four million
products across 14 categories of products and services, and quickly and easily
purchase these products online through participating merchants. For shoppers
who generally know what product they want but not the brand or model, the
Inktomi shopping engine enables end users to access consumer reviews and
product guides to make an evaluation among several alternatives.

Similar to our search engine application, we provide and manage all hardware,
software and operational aspects of the Inktomi shopping engine and the
associated databases of product libraries, product reviews and purchasing
locations. This includes collecting, organizing, storing and updating vast
quantities of electronic product information, and presenting this information
for display to end users. We also provide our customers with a programming
interface and software tools to enable them to maintain and customize the look
and feel of their shopping service user interface. Access to the back-end
shopping engine is provided through the Inktomi Data Protocol.

[GRAPHIC OF SHOPPING ENGINE APPLICATION]

We intend to devote significant resources to enhancing the functionality of
the Inktomi shopping engine. We plan to augment the Inktomi shopping engine to
include access to purchase venues other than our product database, such as
auction sites, classified advertising and local merchants who may not even have
an online presence. We also plan to promote more advanced comparison shopping
by enabling virtual community forums in which shoppers can interact with other
shoppers who have similar interests to share experiences with specific products
and brands.

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<PAGE>

Directory Engine. In June 1999, we launched our directory engine, the first
customizable, automated solution for the creation and maintenance of Internet
directories. Traditionally, Internet directories have relied on human editors
alone to systematically review web pages and categorize them into a directory
structure. As the number of documents on the Internet continues to grow, this
manual process will become more cumbersome and expensive as more editors are
required to examine and categorize more documents. The Inktomi directory engine
addresses this problem by automating the production of Internet directories to
deliver better scalability and more efficient directory management. We
currently have entered into agreements to provide the Inktomi directory engine
to several new and existing portal services customers, including Aeneid
Corporation, GoProfit.com, Goto.com and Knight-Ridder.

The Inktomi directory engine uses our new concept induction technology to
automatically analyze and categorize millions of documents. Concept induction
incorporates sophisticated algorithms that can be trained to associate certain
web pages with specific categories within any desired classification scheme.
This is done through complex statistical analyses of word and phrase structures
against a prespecified set of training documents. Once trained to recognize
specific categories of classification, the algorithms can analyze a massive
number of unrelated documents and sort them into initial classification
schemes.

As with our other portal services, we provide the Inktomi directory engine to
Internet portal and other web site customers on a private label basis and
manage all of the back-end hardware and operations. We provide our customers
with software tools to develop the front-end user interface and with access to
the directory engine through the Inktomi Data Protocol. The Inktomi directory
engine is flexible and supports a range of deployment options. We have
developed our own master Internet directory that currently contains thousands
of categories and over one million documents. Customers can integrate the
master directory into their web sites "as is" or can customize the master
directory using the Inktomi directory management system. Using this system,
customers can add or delete categories and individual documents, rearrange
subject hierarchies, and map taxonomy structures between existing or third
party directories. The intuitive Java interface for the Inktomi directory
management system supports hundreds of simultaneous editors, allowing large
organizations to leverage their in-house expertise or online user communities
to constantly evolve and expand the directory.

[GRAPHIC OF DIRECTORY ENGINE APPLICATION]

We have developed our suite of portal services to enable customers to
incorporate their own content and communities to create unique online services
that enhance end-user loyalty and revenue opportunities. The suite of portal
services is engineered to tightly integrate data and functionality across
applications. The Inktomi directory engine is the first Internet-scale
directory to integrate full-

34
<PAGE>

text searching of documents, allowing users to alternately navigate by topic or
keyword search. Because documents are crawled using the Inktomi search engine,
the directory offers a high degree of freshness as well as powerful search
tools. The Inktomi search engine, in turn, can now integrate concept
recognition into keyword searches for added relevance and ease of use. For
example, a general search on the word "chips" interactively prompts the user to
refine her search by selecting among topics such as "computer chips", "poker
chips" and "potato chips". Additionally, the Inktomi shopping engine product
database has been mapped into the Inktomi master directory, allowing our
customers to integrate online shopping offerings that match an end user's
topics of interest.

Technology

Our coupled cluster software architecture and dataflow and concept induction
technologies have been designed to serve as the foundation for a variety of
scalable network products. Our coupled cluster software architecture enables
multiple workstations to function together as one extremely powerful computer,
our dataflow technology enhances the operating efficiency of individual
workstations within the cluster and our concept induction technology enables
the automatic classification of content. Certain key employees of Inktomi
initiated their work on cluster computing at the University of California at
Berkeley in 1994 under a grant from the U.S. Department of Defense Advanced
Research Projects Agency to develop networks of workstations with the
performance capabilities of supercomputers, but at substantially lower cost. We
have licensed aspects of this early work, which we have significantly modified
and enhanced. We developed our dataflow and concept induction technologies
internally.

Our coupled cluster software architecture provides the foundation for the
scalability, high availability, fault tolerance and price/performance
characteristics of our applications. Our coupled cluster architecture is based
on sophisticated parallel processing techniques that disaggregate tasks and
assign them to individual workstations (or nodes) within the cluster. In order
to maximize performance, nodes within a cluster are connected to each other
through a high-speed local area network. We have developed complementary
proprietary software that enables the cluster to be managed as if it were a
single node, ensuring consistent configurations and reducing both
administrative costs and the possibility of error. The management software also
enables centralized monitoring (via a standard Web browser) of the full cluster
through any individual node. In the event of a node failure, that node's
responsibilities and IP address are automatically reassigned to other nodes. In
addition, nodes may be added or swapped without interrupting the operations of
the cluster and any changes are automatically recognized and incorporated by
the management software. These two features contribute to enhanced scalability,
significantly greater system availability and reduced administrative costs.

Our dataflow technology provides a framework for building applications that
focus on input/output (I/O) and data movement. It bypasses the operating system
to directly handle management tasks such as CPU scheduling, network I/O and
memory allocation. We have designed our dataflow technology from the ground up
to address the unique problems of accessing data over variable-speed Internet
connections. This technology is capable of supporting thousands of simultaneous
operations per node, thus maintaining high CPU and memory utilization despite
hundreds of slow network connections. This capability greatly improves the
performance of individual nodes as they are able to process several operations
while waiting for responses to earlier commands or queries, thereby
substantially eliminating idle time.

Our concept induction technology provides the foundation for the
classification of content. The technology incorporates sophisticated algorithms
that can be trained to associate certain web pages with specific categories
within any desired classification scheme. This is done through complex
statistical analyses of word and phrase structures against a prespecified set
of training documents. Once trained to recognize specific categories of
classification, the algorithms can analyze a massive number of unrelated
documents and sort them into initial classification schemes. Concept induction

35
<PAGE>

technology can be used for a number of functions, including automatic directory
services for search engines, recognition of like content for comparison
shopping services, and pre-programmed directory services for content providers.

In addition to our core coupled cluster software architecture and dataflow
and concept induction technologies, we have developed technologies in several
important related areas, including information retrieval, secure remote cluster
management and object databases for network caches. We intend to continue to
develop new technologies, as well as enhance and extend our core technology, in
order to bring new scalable software applications to market.

Sales and Marketing

Our sales strategy is to pursue opportunities with large accounts through a
direct sales force, and to penetrate various targeted market segments through
multiple indirect distribution channels.

We maintain direct sales personnel domestically in Atlanta, Boston, Chicago,
Dallas, Denver, McLean (Virginia), New York, and San Mateo (California). Our
direct sales force is organized into individual account teams, each consisting
of a sales representative and a systems engineer. We generate leads from
contacts made through seminars, conferences, trade shows, customers and an
ongoing public relations program. We qualify the leads and assign an account
team to major prospective customers. The account team initiates the sales
process, which generally involves multiple presentations to information
technology and business professionals within the prospective customer's
organization. In addition, sales of the Traffic Server application generally
include a pilot implementation, successful completion and testing of which is a
prerequisite to full-scale deployment. We intend to increase the size of our
direct sales force and to establish additional sales offices domestically and
internationally.

In order to achieve broad distribution of our products and services, we have
established multiple indirect distribution channels, including OEMs, resellers,
systems integrators and joint marketing partners. These channels are intended
to increase geographic sales coverage and to address mid-tier Internet service
providers and large corporate customers.

We believe it is important to have a strong international presence and intend
to translate and localize our products and services to address international
markets. We employ a mix of channels similar to our U.S. model through the use
of OEMs, resellers and systems integrators. We have established a subsidiary in
England and sales offices in France and Germany to address the European market
and subsidiaries in Japan and Korea to support channel partners in the Asia-
Pacific region. We intend to hire additional sales and marketing personnel in
these offices and to establish additional offices to support our international
operations.

We conduct a variety of programs worldwide to stimulate market demand for our
products, including public relations activities, advertising, trade shows and
collateral development. These programs are focused on our target markets and
are designed to create awareness and generate sales leads.

Customer Service and Support

We believe that a high level of customer service and support is critical to
the successful marketing and sale of our products. We are developing a
comprehensive service and support organization to manage customer accounts and
expect to provide an increasing level of support as our network products and
portal services are deployed across a range of customers, both domestically and
internationally. We currently provide support for our products and services
from our

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<PAGE>

California, Virginia and England locations. We plan to establish additional
service and support sites internationally commensurate with customer needs.

We provide a base level of technical support to our customers through
maintenance and support agreements. The base level of support includes
assistance with installation, configuration and initial set-up of the
application, run-time support, and software maintenance releases. For
additional fees, a customer may choose to receive software upgrades, training
and support during extended hours. We generally provide our base level of
support via e-mail, our web site, fax and telephone.

We also provide a variety of professional services to our customers. These
services include customer network evaluation and implementation guidance,
assistance with installation, configuration and initial set-up of the
application at the customer's facility, and cluster growth and other scaling
recommendations. We expect to expand the variety of these services as necessary
to meet the growing needs of our customers.

The complexity of our products and the difficulty of installing them require
highly trained customer service and support personnel. We currently have a
small customer service and support organization and will need to increase our
staff to support new customers, new product lines and the expanding needs of
existing customers. Hiring customer service and support personnel is very
competitive in our industry due to the limited number of people available with
the necessary technical skills and understanding of the Internet.

Research and Development

We believe that strong product development capabilities are essential to our
strategy of enhancing our core technology, developing additional applications
incorporating that technology, and maintaining the competitiveness of our
product and service offerings. We have invested significant time and resources
in creating a structured process for undertaking all product development
projects. This process involves all functional groups and all levels within
Inktomi and is designed to provide the framework for defining and addressing
the steps, tasks and activities required to bring product concepts and
development projects to market successfully. In addition, we have actively
recruited and hired key computer scientists, engineers and software developers
with expertise and degrees in the areas of massively parallel computing,
coupled cluster computing, software dataflow operations and mathematics, and
have complemented these individuals by hiring senior management with extensive
backgrounds in the network infrastructure, enterprise software and Internet
industries. Through this mix of personnel, we strive to create and maintain an
environment of rapid innovation and product development.

Since inception, we have focused our research and development efforts on
developing and enhancing our coupled cluster software architecture and dataflow
technology and on applying these technologies to our search engine and Traffic
Server network cache products. More recently, we have devoted significant
efforts to developing the initial versions of our shopping engine and directory
engine and to creating our concept induction technology to tightly integrate
our search engine, shopping engine and directory engine applications together.
We are currently working on adding features and functionality across each of
our current applications and developing value-added service modules for use in
conjunction with Traffic Server. Our research and development expenses totaled
$11.2 million for the six month period ended March 31, 1999, $13.5 million for
the year ended September 30, 1998, $5.1 million for the year ended September
30, 1997 and $1.5 million for the period from February 2, 1996 (inception) to
September 30, 1996.

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<PAGE>

Competition

In the market for network cache solutions, we compete on the basis of
performance, scalability, data throughput, ease of integration and
manageability. Competition in the network cache market continues to intensify
as new solutions are coming to market and several companies are forming
technology alliances and OEM relationships to sell their products. We compete
primarily against several companies including CacheFlow, Cisco Systems,
InfoLibria, Microsoft, Netscape, Network Appliance, Novell, and Spyglass. We
also compete against freeware caching solutions including CERN, Harvest and
Squid. 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 Traffic
Server. We believe that Traffic Server may face competition from other
providers of competing solutions to network infrastructure problems, including
networking hardware and software manufacturers, content distribution providers,
traditional hardware manufacturers, telecommunications providers, cable
TV/communications providers, software database companies, and large diversified
software and technology companies. Cisco Systems, Microsoft and Netscape
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 market for providing outsourced search and directory services, we
compete on the basis of performance, OEM customization, scalability, price,
relevance of results and user response time. We compete with a number of
companies to provide Internet search and directory services, many of which have
operated services in the market for a longer period, have greater financial
resources, have established marketing relationships with leading online
services and advertisers, and have secured greater presence in distribution
channels. Traditionally, our competitors have provided search/directory
services directly to end users through their own web sites and have supplied
search/directory services to third party web sites as a supplement to this
business. However, we are facing increased competition from several newer
competitors that are following our business model of providing Internet
search/directory services primarily to Internet portals and other web site
customers. These newer competitors have focused on search result relevance and
ease of use in providing their services. We currently compete with companies
including AltaVista, Ask Jeeves, Direct Hit Technologies, Excite@Home, Google,
Infoseek, LookSmart, Lycos, Netscape Open Directory and Northern Light. In
addition, large media companies such as The Walt Disney Company and NBC
Enterprises, and other Internet-based companies such as America Online and
Excite@Home have recently made investments in or acquired Internet search
engine companies, and we believe that other large media enterprises may enter
or expand their presence in the Internet search and directory market, either
directly or indirectly through collaborations or other strategic alliances.

The market for shopping engine applications is rapidly evolving and intensely
competitive. Our current and potential competitors include other providers of
shopping technologies and services including Jango.com, owned by Excite@Home,
Junglee, owned by Amazon.com, and mySimon.com; and various online retailers and
aggregators of merchandise including Amazon.com, Bottom Dollar, owned by
WebCentric, eBay, InfoSpace.com and Yahoo!. We believe the principal factors
that will draw end users to an online shopping application include brand
availability, selection, personalized services, convenience, price,
accessibility, customer services, quality of search tools, quality of content,
and reliability and speed of fulfillment for products ordered. We have little
or no control over many of these factors.

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<PAGE>

Proprietary Rights

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. 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 other legal theories
based on the nature, content or copying 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 portal services or
facilitated by our Traffic Server product contains errors, third parties could
make claims against us for losses incurred in reliance on this information.
Further, there is the potential for product liability claims to be asserted
against us by end users who purchase goods and services through our shopping
engine. Although we carry general liability insurance, our insurance may not
cover potential claims of this type or may not be adequate to protect us from
all liability that may be imposed.

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 grows and the functionality of products in different
industry segments overlaps. Lycos has announced that it is the exclusive
licensee of a patent covering a method of crawling information on the Internet,
and that it may bring actions against companies that it believes are infringing
this patent in the future. We also believe that many of our competitors in the
network cache business and the portal service business have filed or intend to
file patent applications covering aspects of their technology that they may
claim our technology infringes. We cannot be sure that Lycos or other third
parties will not make a claim of infringement against us with respect to our
products and technology. Any claims, with or without merit, could be time-
consuming to defend, result in costly litigation, divert management's attention
and resources, cause product shipment delays or require us to reengineer our
products or enter into royalty or licensing agreements. These royalty or
licensing agreements, if required, may not be available on acceptable terms, if
at all. A successful claim of product infringement against us and our failure
or inability to license the infringed or similar technology at a reasonable
cost could adversely affect our business.

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<PAGE>

Employees

We had 376 full-time employees as of June 30, 1999. None of our employees is
represented by a labor union. We have not experienced any work stoppages and
consider relations with our employees to be good.

Facilities

We lease approximately 48,000 square feet in a single office building located
in San Mateo, California. Approximately 16,400 square feet is leased under a
sublease that expires February 2000. This 16,400 square feet becomes the
subject of an extension directly with the master landlord upon expiration of
the sublease. This extension expires in October 2002. Approximately 32,300
square feet of this San Mateo space is leased under a lease that expires in
October 2003.

We have executed a lease for approximately 177,000 square feet of office
space in Foster City, California. This lease expires 11 years after
commencement, which is anticipated to be in August 1999. This lease provides us
with an option to expand into a total of approximately 241,000 square feet
after five years and provides an option to purchase the site from months 13
through 59.

We also lease space in Atlanta, Boston, Chicago, Dallas, Denver, McLean
(Virginia), London, Munich, Paris, Seoul and Tokyo. The McLean, Virginia lease
covers approximately 6,200 square feet and expires in August 2003, the London
lease covers approximately 3,500 square feet and expires in June 2009, and the
Tokyo lease covers approximately 3,500 square feet and expires in April 2001.
The remaining leases are executive office leases and have terms of 12 months or
less.

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MANAGEMENT

Executive Officers and Directors

The following table shows information about the executive officers and
directors of Inktomi as of June 30, 1999:

<TABLE>
<CAPTION>
Name Age Position
---------------------------- --- --------------------------------------------
<C> <C> <S>
David C. Peterschmidt(1).... 51 Chairman of the Board, President and Chief
Executive Officer
Dr. Eric A. Brewer.......... 32 Chief Scientist and Director
Paul Gauthier............... 26 Chief Technology Officer
Jerry M. Kennelly........... 48 Vice President of Finance, Chief Financial
Officer and Secretary
Dennis L. McEvoy............ 51 Vice President of Development and Support
Richard B. Pierce........... 41 Vice President of Marketing
Timothy Stevens............. 32 Vice President of Corporate and Legal
Affairs, General Counsel and Assistant
Secretary
Vince Vannelli.............. 40 Vice President of Worldwide Field Operations
Frank Gill(3)............... 55 Director
Fredric W. Harman(1)(2)(3).. 39 Director
John A. Porter(1)(2)(3)..... 55 Director
Alan F. Shugart(2).......... 68 Director
</TABLE>
- --------
(1) Member of Nominating Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee

David C. Peterschmidt has served as President, Chief Executive Officer and a
director of Inktomi since July 1996. He was appointed Chairman of the Board in
December 1997. From 1991 until joining Inktomi, he served as Chief Operating
Officer and Executive Vice President of Sybase, Inc., a database company. From
1988 to 1991, Mr. Peterschmidt was a consultant with The Kappa Group, a
management consulting firm, where he provided senior level sales and marketing
training to a variety of companies. From 1987 to 1988, he served as Vice
President of Sales and Marketing for System Industries, Inc., a manufacturer of
storage subsystems for Digital Equipment Corporation computers. Mr.
Peterschmidt also served as a Captain in the United States Air Force for nine
years, where he was Lead Contract Negotiator on the B1 Bomber Program with
Rockwell International, Inc. He is currently a director of Portal Software,
Inc. Mr. Peterschmidt holds a Bachelor of Arts degree in Political Science from
the University of Missouri and a Masters of Business Administration from
Chapman College.

Dr. Eric A. Brewer has served as a director of Inktomi since its inception in
February 1996. From February 1996 to December 1997, Dr. Brewer was Chief
Technology Officer of Inktomi and was appointed Chief Scientist in December
1997. From May 1996 to July 1996, he served as interim President and Chief
Executive Officer of Inktomi. Dr. Brewer has been a professor in the Computer
Science Division at the University of California, Berkeley since July 1994. Dr.
Brewer served as a research assistant at the Massachusetts Institute of
Technology from September 1989 to August 1994. From June 1986 to November 1992,
Dr. Brewer was a software engineer at CADAM, Inc. Dr. Brewer holds a Bachelor
of Science degree in Computer Science from the University of California,
Berkeley and a doctorate degree in Computer Science from the Massachusetts
Institute of Technology.

Paul Gauthier served as Vice President of Research and Development of Inktomi
from February 1996 until his appointment as Chief Technology Officer in
December 1997. From May 1995 to August 1995, Mr. Gauthier served as an intern
at Digital Equipment Corporation's Systems Research

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Center. Mr. Gauthier served as a programmer analyst for Seimac Limited from May
1994 to July 1994. From July 1989 to April 1994, Mr. Gauthier served as
Technical Director for Worthington Software Company. Mr. Gauthier served as a
programmer at Dymaxion Research from June 1987 to July 1989. Mr. Gauthier holds
a Bachelor of Science degree, with honors, in Computer Science from Dalhousie
University.

Jerry M. Kennelly joined Inktomi as Vice President of Finance and Chief
Financial Officer in October 1996. From June 1990 until joining Inktomi, Mr.
Kennelly worked for Sybase, Inc. in a number of senior financial positions.
Most recently, he served as Vice President of Corporate Finance. From November
1988 to May 1990, Mr. Kennelly served as the Controller for U.S. Operations at
Oracle Corporation. From December 1980 to October 1988, he served as World Wide
Sales and Marketing Controller at Tandem Computers, Inc. Mr. Kennelly holds a
Bachelor of Arts degree in Political Economy from Williams College and a
Masters degree in Accounting from the New York University Graduate School of
Business Administration. He is also a Certified Public Accountant.

Dennis L. McEvoy joined Inktomi as a consultant in March 1997 and became Vice
President of Development and Support in June 1997. From October 1996 to
February 1997, Mr. McEvoy served as Executive Vice President of Products and
Services at Verity, Inc., a provider of information search, retrieval and push
software for corporate intranets and the Internet. From October 1994 to
September 1996, he served in several executive management positions at Sybase,
Inc., most recently as President, Enterprise Business Group. Prior to joining
Sybase, in January 1989, Mr. McEvoy co-founded and served as President and
Chief Executive Officer of Cooperative Solutions, Inc., a client/server
software company focused on development tools and production software for
mission-critical applications. Cooperative Solutions was acquired by Bachman
Information Systems, Inc. in August 1993, whereupon Mr. McEvoy joined Bachman
as a Vice President and served in this capacity until August 1994. From
December 1974 to June 1988, Mr. McEvoy worked at Tandem Computers, Inc., most
recently as Vice President, Software Division. Mr. McEvoy holds a Bachelor of
Science degree in Mathematics from Carnegie-Mellon University.

Richard B. Pierce joined Inktomi as its Vice President of Marketing in
November 1996. From December 1981 until joining Inktomi, Mr. Pierce worked at
Intel Corporation where he held a variety of marketing, strategic planning and
operations management positions. Most recently, he was marketing director of
Intel's mobile and handheld products group. Mr. Pierce holds a Bachelor of
Science degree in Electrical Engineering from Purdue University.

Timothy Stevens joined Inktomi as its Vice President of Corporate and Legal
Affairs and General Counsel in July 1997. Prior to joining Inktomi, Mr. Stevens
was an attorney with Wilson Sonsini Goodrich & Rosati, where he served as
primary outside counsel for more than thirty private and public companies,
specifically in the areas of venture capital and corporate financing, public
offerings, mergers and acquisitions, and securities and intellectual property
law. Mr. Stevens holds Bachelor of Science degrees in Finance and Management
from the University of Oregon and a Juris Doctor degree from the University of
California, Davis.

Vince Vannelli joined Inktomi as Vice President of Worldwide Field Operations
in January 1998. Prior to joining Inktomi, Mr. Vannelli was most recently the
Vice President and General Manager for U.S. Operations for Hitachi Data
Systems, Inc., a computer services and equipment company. Mr. Vannelli worked
for Hitachi for eight years, first as a District Sales Manager in Northern
California, then as the Regional Manager of the Mid-Atlantic states, then as
the Eastern Division manager. Following these assignments, Mr. Vannelli
returned to California to assist the Chief Executive Officer of Hitachi in re-
engineering worldwide sales and marketing; then after a brief period running
the Western Division, was named Vice President and General Manager for U.S.
Operations. Prior to working for Hitachi, Mr. Vannelli was employed by IBM
Corporation for eight years in a

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<PAGE>

variety of sales and sales management roles. Mr. Vannelli holds Bachelor of
Science and Masters degrees in Industrial Engineering from Stanford University.

Frank Gill joined Inktomi as a director in December 1998. Mr. Gill is a 23-
year veteran of Intel Corporation where he held a variety of positions in sales
and marketing, product development, and manufacturing operations. At the time
of his retirement in June 1998, he was Executive Vice President of Intel. Mr.
Gill joined Intel in 1975 as district sales manager and was promoted to a
variety of managerial positions over the next decade rising to head the North
American sales and marketing organization in 1985. In 1988, his
responsibilities expanded to encompass worldwide sales and marketing operations
and he was made a Senior Vice President of Intel in 1989. In 1990, Mr. Gill
became General Manager of Intel's Systems Group responsible for the design,
manufacture, and marketing of all Intel module and system level products. With
the increasing importance of the Internet, in 1995 Mr. Gill was appointed
General Manager of the newly created Internet and Communications Group with
responsibility to guide Intel's strategy, product development, marketing, and
"industry enabling" activities within the Internet, networking, media and
communications space. He was promoted to Executive Vice President of Intel in
1996. In addition to serving as a director of Inktomi, Mr. Gill is a director
of Logitech International S.A., Sequent Computer Systems, Inc., Tektronix,
Inc., TelCom Semiconductor, Inc. and other privately held companies. Mr. Gill
holds a Bachelor of Science degree in Electrical Engineering from the
University of California at Davis.

Fredric W. Harman joined Inktomi as a director in April 1997. Since July
1994, Mr. Harman has served as a Managing Member of the general partners of
venture capital funds affiliated with Oak Investment Partners. From April 1991
to June 1994, he served as a general partner of Morgan Stanley Venture Capital,
L.P. Mr. Harman is a director of ILOG, S.A. and several privately held
companies. Mr. Harman holds Bachelor of Science and Masters degrees in
Electrical Engineering from Stanford University and a Masters of Business
Administration from Harvard University.

John A. Porter joined Inktomi as a director in March 1997. Mr. Porter is
currently actively involved in a variety of private investment and business
ventures. He is a director of MCI WorldCom Inc., a full-service
telecommunications provider and, through its wholly owned subsidiary UUNet,
Inc., the largest Internet service provider in the United States. Mr. Porter
previously served on the Board of Directors of WorldCom from 1989 until its
merger with MCI, serving as Chairman of the Board from 1989 to 1993 and as Vice
Chairman from 1993 to 1996. Mr. Porter also has served as Chairman of the Board
and Chief Executive Officer of Industrial Electric Manufacturing, Inc., a
switch gear manufacturer, since 1995, and Chairman of the Board of Phillips &
Brooks Gladwin, Inc., a full-service provider of public communications
equipment and national outsourced services, since 1989. He is also a director
of Uniroyal Technologies, Inc.

Alan F. Shugart joined Inktomi as a director in December 1997. Mr. Shugart
has been Chief Executive Officer of Al Shugart International since September
1998. From 1979 to 1998, Mr. Shugart was Chief Executive Officer of Seagate
Technology, Inc., a manufacturer of hard disk drives and related components.
From 1979 until September 1991 and from October 1992 to September 1998, Mr.
Shugart also served as Chairman of the Board of Seagate. He held the position
of President of Seagate from September 1991 until September 1997 and Chief
Operating Officer of Seagate from September 1991 until March 1995. Mr. Shugart
is currently a Director of Valence Technology, Inc., SanDisk Corporation,
Cypress Semiconductor Corp. and other privately held companies.

43
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table shows information known to Inktomi about the beneficial
ownership of its common stock as of June 30, 1999, and as adjusted to reflect
the sale of common stock offered hereby by each stockholder known by Inktomi to
own beneficially more than 5% of the common stock, each executive officer of
Inktomi, each director of Inktomi, and all directors and executive officers as
a group. As of June 30, 1999, there were 50,282,912 shares of common stock
outstanding.

The following table assumes that the underwriters' do not exercise their
option to purchase additional shares in the offering. Beneficial ownership is
determined in accordance with the rules of the SEC. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options or warrants held by that
person that are currently exercisable or will become exercisable within 60 days
after June 30, 1999 are deemed outstanding, while these shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
Unless otherwise indicated in the footnotes below, the persons and entities
named in the table have sole voting and investment power as to all shares
beneficially owned, subject to community property laws where applicable.

<TABLE>
<CAPTION>
Shares of
Common Stock Shares of Common
Beneficially Owned Stock to be Beneficially
Before Sale Under Owned After Sale
This Prospectus Shares Under This Prospectus
--------------------- to be ------------------------------
Name Number Percentage Sold Number Percentage
---- ---------- ---------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Entities affiliated with
Oak Investment
Partners(1)............ 3,302,954 6.6% 600,000 2,702,954 5.2%
525 University Avenue,
Suite 1300
Palo Alto, CA 94301
Fredric W. Harman(2).... 3,332,954 6.6 600,000 2,732,954 5.2
525 University Avenue,
Suite 1300
Palo Alto, CA 94301
Dr. Eric A. Brewer(3)... 4,059,532 8.0 -- 4,059,532 7.7
Inktomi Corporation
1900 S. Norfolk Street,
Suite 310
San Mateo, CA 94403
Paul Gauthier(4)........ 3,748,757 7.4 300,000 3,448,757 6.5
Inktomi Corporation
1900 S. Norfolk Street,
Suite 310
San Mateo, CA 94403
David C.
Peterschmidt(5)........ 1,912,614 3.7 125,000 1,787,614 3.3
Jerry M. Kennelly(6).... 591,097 1.2 75,000 516,097 1.0
Dennis L. McEvoy(7)..... 551,621 1.1 75,000 476,621 *
Richard B. Pierce(8).... 825,625 1.6 48,400 777,225 1.5
Timothy Stevens(9)...... 186,832 * 10,000 176,832 *
Vince Vannelli(10)...... 450,994 * 15,000 435,994 *
Frank Gill(11).......... 96,800 * -- 96,800 *
John A. Porter(12)...... 163,334 * -- 163,334 *
Alan F. Shugart(13)..... 130,000 * -- 130,000 *
All directors and
executive officers as a
group (12
persons)(14)........... 16,050,160 29.7 1,248,400 14,801,760 26.4
</TABLE>
- --------
* Less than 1% of the outstanding shares of common stock.
(1) Includes 3,264,152 shares held by Oak Investment Partners VII, Limited
Partnership and 38,802 shares held by Oak VII Affiliates Fund, Limited
Partnership. Oak Investment Partners VII, Limited Partnership, is selling
all 600,000 shares in this offering.

44
<PAGE>

(2) Includes 3,264,152 shares held by Oak Investment Partners VII, Limited
Partnership and 38,802 shares held by Oak VII Affiliates Fund, Limited
Partnership. Also includes an option held by Mr. Harman to purchase 30,000
shares of common stock. The option is fully exercisable although as of
June 30, 1999, 24,600 of the shares issuable upon exercise of the option
were subject to a right of repurchase by Inktomi at cost in the event Mr.
Harman ceases to be a Director of Inktomi. Oak Investment Partners VII,
Limited Partnership, is selling all 600,000 shares in this offering.
Mr. Harman is a Managing Partner of the general partners of the Oak
Partners entities. He disclaims beneficial ownership of the shares held by
the Oak Partners entities except to the extent of his proportionate
partnership interest.
(3) Includes 3,558,664 shares held by Dr. Brewer and his wife. Also includes
Dr. Brewer's pro rata interest in a warrant held by Inktomi LLC, which pro
rata interest equals 350,868 shares. All of these shares and warrants are
fully vested and are not subject to repurchase by Inktomi. Also includes
options held by Dr. Brewer to purchase 150,000 shares of common stock. The
options are fully exercisable although as of June 30, 1999, 147,000 shares
issuable upon exercise of the options were subject to a right of
repurchase at cost in the event Dr. Brewer ceases to be an employee of
Inktomi.
(4) Includes 3,222,889 shares held by Mr. Gauthier. Also includes Mr.
Gauthier's pro rata interest in a warrant held by Inktomi LLC, which pro
rata interest equals 350,868 shares. All of these shares and warrants are
fully vested and are not subject to repurchase by Inktomi. Also includes
options held by Mr. Gauthier to purchase 175,000 shares of common stock.
The options are fully exercisable although as of June 30, 1999, 170,500
shares issuable upon exercise of the options were subject to a right of
repurchase at cost in the event Mr. Gauthier ceases to be an employee of
Inktomi.
(5) Includes 212,214 shares held by David C. Peterschmidt and Roxanne N.
Peterschmidt, Trustees of the Peterschmidt Family Trust U/D/T Dtd
12/30/91. Also includes 1,300,400 shares issuable upon exercise of stock
options that are fully vested. Also includes options held by Mr.
Peterschmidt to purchase 400,000 shares of common stock. The options are
fully exercisable although as of June 30, 1999 388,000 shares issuable
upon exercise of the options were subject to a right of repurchase at cost
in the event Mr. Peterschmidt ceases to be an employee of Inktomi.
(6) Includes 13,334 shares held by Jerry Kennelly, as trustee for Christopher
Kennelly, 13,334 shares held by Jerry Kennelly, as trustee for Michael
Kennelly, and 409,429 shares held by Mr. Kennelly. As of June 30, 1999,
165,333 of the shares held by Mr. Kennelly were subject to a right of
repurchase by Inktomi at cost in the event Mr. Kennelly ceases to be an
employee of Inktomi. The right of repurchase lapses at the rate of 8,000
shares per month and lapses in full upon consummation of an acquisition of
Inktomi. Also includes options held by Mr. Kennelly to purchase
155,000 shares of common stock. The options are fully exercisable although
as of June 30, 1999, 150,500 shares issuable upon exercise of the option
were subject to a right of repurchase at cost in the event Mr. Kennelly
ceases to be an employee of Inktomi.
(7) Includes 396,621 shares held by Mr. McEvoy and his wife. As of June 30,
1999, 186,105 of the shares held by Mr. McEvoy and his wife were subject
to a right of repurchase by Inktomi at cost in the event Mr. McEvoy ceases
to be an employee of Inktomi. The right of repurchase lapses at the rate
of approximately 7,158 shares per month, and as to all shares upon
consummation of an acquisition of Inktomi. Also includes options held by
Mr. McEvoy to purchase 155,000 shares of common stock. The options are
fully exercisable although as of June 30, 1999, 150,500 shares issuable
upon exercise of the options were subject to a right of repurchase at cost
in the event Mr. McEvoy ceases to be an employee of Inktomi.

(8) Includes 88,888 shares held by UTMA: Richard B. Pierce Custodian for
Garrett Dean Pierce, 88,888 shares held by UTMA: Audrey Jean Brandt
Custodian for Adrianna Jean Brandt Pierce, 137,700 shares held by Richard
and Audrey Pierce Family Limited Partnership #1, 38,300 shares held by
Richard and Audrey Pierce Family Limited Partnership #2, 90,900 shares
held by Richard B. Pierce and Audrey J. Brandt-Pierce, Trustees of the
Pierce Charitable Remainder Unitrust dated November 6, 1998, 45,500 shares
held by Richard B. Pierce and Audrey J. Brandt-Pierce, Trustees of the
Pierce Charitable Remainder Unitrust #2 dated June 18, 1999, and 135,449
shares held by The Richard Pierce and Audrey Brandt-Pierce Family Trust.
As of June 30, 1999, 126,667 of the shares held by the Pierce entities
were subject to a right of repurchase by Inktomi at cost in the event Mr.
Pierce ceases to be an employee of Inktomi. The right of repurchase lapses
at the rate of 6,666 shares per month. Also includes options held by
Mr. Pierce to purchase 200,000 shares of common stock. The options are
fully exercisable although as of June 30, 1999, 194,000 shares issuable
upon exercise of the options were subject to a right of repurchase at cost
in the event Mr. Pierce ceases to be an employee of Inktomi.
(9) Includes 116,832 shares held by Mr. Stevens and his wife. At June 30,
1999, 69,333 of the shares held by Mr. Stevens and his wife were subject
to a right to repurchase by Inktomi at cost in the event Mr. Stevens
ceases to be an employee of Inktomi. The right of repurchase lapses at the
rate of 2,667 shares per month, and as to all shares upon consummation of
an acquisition of Inktomi. Also includes options held by Mr. Stevens to
purchase 70,000 shares of common stock. The options are fully exercisable
although as of June 30, 1999, 68,200 of the shares issuable upon exercise
of the options were subject to a right of repurchase at cost in the event
Mr. Stevens ceases to be an employee of Inktomi.
(10) Includes 275,994 shares held by Mr. Vannelli. As of June 30, 1999, 264,000
of the shares held by Mr. Vannelli were subject to a right of repurchase
by Inktomi at cost in the event Mr. Vannelli ceases to be an employee of
Inktomi. The right of repurchase lapses at the rate of 8,000 shares per
month. Also includes options held by Mr. Vannelli to purchase 175,000
shares of common stock. The options are fully exercisable although as of
June 30, 1999,

45
<PAGE>

170,500 shares issuable upon exercise of the options were subject to a
right of repurchase at cost in the event Mr. Vannelli ceases to be an
employee of Inktomi.
(11) Consists of an option held by Mr. Gill to purchase 96,800 shares of common
stock. The option is fully exercisable although as of June 30, 1999,
80,667 of the shares issued upon exercise of the option were subject to a
right of repurchase by Inktomi at cost in the event Mr. Gill ceases to be
a Director of Inktomi.
(12) Includes 133,334 shares held by Integra Holdings, L.P. Mr. Porter is a
general partner of Integra Holdings, L.P. He disclaims beneficial
ownership of the shares held by Integra Holdings, L.P. except to the
extent of his proportionate partnership interest. Also includes an option
held by Mr. Porter to purchase 30,000 shares of common stock. The option
is fully exercisable although as of June 30, 1999, 24,600 shares issuable
upon exercise of the option were subject to a right of repurchase at cost
in the event Mr. Porter ceases to be a Director of Inktomi.
(13) Consists of options held by Mr. Shugart to purchase 130,000 shares of
common stock. The options are fully exercisable although as of June 30,
1999, 66,267 of the shares issuable upon exercise of the options were
subject to a right of repurchase by Inktomi at cost in the event Mr.
Shugart ceases to be a Director of Inktomi.
(14) Includes 701,736 shares issuable upon exercise of warrants and options to
purchase 3,067,200 shares, which options are fully exercisable as of June
30, 1999.

46
<PAGE>

DESCRIPTION OF CAPITAL STOCK

General

Inktomi is authorized to issue 300,000,000 shares of common stock, $0.001 par
value, and 10,000,000 shares of undesignated preferred stock, $0.001 par value.
The following description of our capital stock does not purport to be complete
and is subject to and qualified in its entirety by our Certificate of
Incorporation and Bylaws and by the provisions of applicable Delaware law.

Common Stock

As of June 30, 1999, there were 50,282,912 shares of common stock outstanding
which were held of record by approximately 887 stockholders.

The holders of common stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available for that
purpose. In the event of a liquidation, dissolution or winding up of Inktomi,
the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
preferred stock, if any, then outstanding. The common stock has no preemptive
or conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of common stock are fully paid and nonassessable, and the shares of common
stock to be issued upon the closing of this offering will be fully paid and
nonassessable.

Preferred Stock

The Board of Directors has the authority, without action by the stockholders,
to designate and issue preferred stock in one or more series and to designate
the rights, preferences and privileges of each series, any or all of which may
be greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the Board of Directors determines the
specific rights of the holders of such preferred stock. However, the effects
might include, among other things, restricting dividends on the common stock,
diluting the voting power of the common stock, impairing the liquidation rights
of the common stock and delaying or preventing a change in control of Inktomi
without further action by the stockholders. We have no present plans to issue
any shares of preferred stock.

Warrants

At June 30, 1999, there were warrants outstanding to purchase a total of
1,036,516 shares of common stock. Warrants to purchase 6,668 shares at $3.75
per share will expire in August 2001, warrants to purchase 835,402 shares at
$0.17 per share will expire in April 2002, warrants to purchase 55,556 shares
at $8.78 per share will expire in June 2002, and warrants to purchase 138,890
shares at $17.55 per share will expire in June 2002.

47
<PAGE>

VALIDITY OF COMMON STOCK

The validity of the shares of common stock offered hereby has been passed
upon for Inktomi by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Palo Alto, California. As of the date of this prospectus, investment
partnerships composed of individuals associated with Wilson Sonsini Goodrich &
Rosati and attorneys who are members of or are employed by Wilson Sonsini
Goodrich & Rosati beneficially own an aggregate of 20,912 shares of Inktomi's
common stock. The validity of the shares of common stock offered hereby will be
passed upon for the underwriters by Sullivan & Cromwell, Los Angeles,
California.

EXPERTS

The consolidated financial statements as of September 30, 1997 and 1998 and
for the period from February 2, 1996 (date of incorporation) through September
30, 1996 and for each of the two years in the period ended September 30, 1998
incorporated by reference from the Annual Report on Form 10-K of Inktomi
Corporation for the year ended September 30, 1998 and the supplementary
financial statements for such periods included in this prospectus have been
incorporated or included herein in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, which reports are given on
the authority of that firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

This prospectus constitutes a part of a registration statement on Form S-3
filed by us with the SEC under the Securities Act. This prospectus does not
contain all of the information set forth in the registration statement, parts
of which are omitted in accordance with the rules and regulations of the SEC.
For further information about Inktomi and the shares of common stock offered,
reference is made to the registration statement. Statements contained in this
prospectus concerning the provisions of any document are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the SEC.

We file annual, quarterly and special reports, proxy statements, and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference facilities at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's following Regional Offices: Suite
1400, Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois
60661; and 13th Floor, Seven World Trade Center, New York, New York 10048.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public at the SEC's
web site at http://www.sec.gov. Additional information about us may be found on
our web site at http://www.inktomi.com. Information contained on our web site
does not constitute part of this prospectus.

48
<PAGE>

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. The most recent information that we
file with the SEC automatically updates and supersedes more dated information.
We incorporate by reference the documents listed below, and any future filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
until the offering is completed.

The documents we incorporate by reference are:

1. Our Annual Report on Form 10-K for the fiscal year ended September 30,
1998;

2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;

3. Our Quarterly Report on Form 10-Q for the quarter ended December 31,
1998;

4. Our Current Report on Form 8-K dated May 13, 1999 relating to the
acquisition of Impulse! Buy Network, Inc.;

5. Our Current Report on Form 8-K dated December 29, 1998 relating to
Inktomi's stock split;

6. Our Current Report on Form 8-K dated November 6, 1998 relating to the
pooling of interests resulting from our acquisition of C\\2\\B
Technologies, Inc.;

7. Our Current Report on Form 8-K dated October 9, 1998, as amended
November 2, 1998, relating to the acquisition of C\\2\\B Technologies,
Inc.; and

8. The description of our common stock contained in our registration
statement onForm 8-A as filed with the SEC on May 22, 1998.

You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: General Counsel, Inktomi Corporation,
1900 South Norfolk Street, Suite 310, San Mateo, CA 94403; telephone number
(650) 653-2800.

49
<PAGE>

INKTOMI COPORATION

INDEX TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants.......................................... F-2
Supplementary Consolidated Balance Sheets.................................. F-3
Supplementary Consolidated Statements of Operations........................ F-4
Supplementary Consolidated Statements of Changes in Stockholders' Equity... F-5
Supplementary Consolidated Statements of Cash Flows........................ F-7
Notes to Supplementary Consolidated Financial Statements................... F-8
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of
Inktomi Corporation

In our opinion, the accompanying supplementary consolidated balance sheets and
the related supplementary consolidated statements of operations, changes in
stockholders' equity and cash flows present fairly, in all material respects,
the financial position of Inktomi Corporation and its subsidiaries at September
30, 1997 and 1998, and the results of their operations and cash flows for the
period from February 2, 1996 (date of inception) to September 30, 1996, and for
the two years ended September 30, 1997 and 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As described in Note 1, on April 30, 1999, Inktomi Corporation acquired
Impulse! Buy Network, Inc. in a transaction accounted for as a pooling of
interests. The accompanying supplementary consolidated financial statements
give retroactive effect to the acquisition of Impulse! Buy Network, Inc.
Generally accepted accounting principles proscribe giving effect to a
consummated business combination accounted for by the pooling of interests
method in financial statements that do not include the date of consummation.
These financial statements do not extend through the date of consummation;
however, they will become the historical consolidated financial statements of
Inktomi Corporation and its subsidiaries after financial statements covering
the date of consummation of the business combination are issued.

PricewaterhouseCoopers LLP
San Francisco, California
October 16, 1998, except as
to the pooling of interests
with Impulse! Buy Network,
Inc. which is as of April
30, 1999

F-2
<PAGE>

INKTOMI CORPORATION

SUPPLEMENTARY CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
September 30, September 30, March 31,
1997 1998 1999
------------- ------------- -----------
(Unaudited)
Assets
<S> <C> <C> <C>
Current assets
Cash and cash equivalents............. $ 7,044 $ 29,267 $ 41,805
Short-term investments................ -- 19,690 77,526
-------- -------- --------
Total cash, cash equivalents and
short-term investments.............. 7,044 48,957 119,331
Accounts receivable, net.............. 830 5,089 11,739
Prepaid expenses and other current
assets............................... 171 588 1,612
-------- -------- --------
Total current assets................. 8,045 54,634 132,682
Property and equipment, net............ 6,913 17,516 20,597
Other assets........................... 199 211 1,718
-------- -------- --------
Total assets......................... $ 15,157 $ 72,361 $154,997
======== ======== ========

Liabilities and Stockholders' Equity

Current liabilities
Current portion of notes payable...... $ 2,490 $ 3,832 $ 4,655
Current portion of capital lease
obligations.......................... -- 2,054 2,340
Accounts payable...................... 1,028 4,938 6,871
Accrued liabilities................... 1,148 6,764 6,878
Deferred revenue...................... 715 1,370 3,422
-------- -------- --------
Total current liabilities............ 5,381 18,958 24,166
Notes payable......................... 5,029 4,236 3,499
Capital lease obligations, less
current portion...................... -- 4,646 3,353
-------- -------- --------
Total liabilities.................... 10,410 27,840 31,018
Commitments (Note 6)
Stockholders' equity
Convertible preferred stock, $0.001
par value; Authorized: 17,080 at
September 30, 1997, 10,000 authorized
at September 30, 1998 and at March
31, 1999 (unaudited); Issued and
outstanding: 14,938 at September 30,
1997, none at September 30, 1998 and
March 31, 1999 (unaudited)........... 15 -- --
Common stock, $0.001 par value;
Authorized:
100,000 at September 30, 1997 and
September 30, 1998, and 300,000 at
March 31, 1999 (unaudited);
Outstanding: 11,924 at September 30,
1997, 47,476 at September 30, 1998
and 49,552 at March 31, 1999
(unaudited).......................... 12 47 49
Additional paid-in capital............ 17,723 86,106 178,789
Deferred compensation and other....... 909 (3,186) (3,441)
Accumulated deficit................... (13,912) (38,446) (51,418)
-------- -------- --------
Total stockholders' equity........... 4,747 44,521 123,979
-------- -------- --------
Total liabilities and stockholders'
equity.............................. $ 15,157 $ 72,361 $154,997
======== ======== ========
</TABLE>

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

F-3
<PAGE>

INKTOMI CORPORATION

SUPPLEMENTARY CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
For the Year For the Six
For the Period from Ended September Months Ended
Inception (February 2, 30, March 31,
1996) through ------------------ -----------------
September 30, 1996 1997 1998 1998 1999
---------------------- -------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues
Network products....... $ -- $ 60 $ 7,962 $ 691 $ 13,702
Portal services........ 530 5,725 12,476 5,186 11,683
------- -------- -------- ------- --------
Total revenues...... 530 5,785 20,438 5,877 25,385
Operating expenses
Cost of revenues....... 239 1,512 4,888 1,695 4,941
Sales and marketing.... 898 7,835 21,940 7,047 21,008
Research and
development........... 1,482 5,134 13,455 5,015 11,211
General and
administrative........ 1,342 1,487 4,095 1,776 2,772
Acquisition related
costs................. -- -- 1,018 -- --
------- -------- -------- ------- --------
Total operating
expenses........... 3,961 15,968 45,396 15,533 39,932
------- -------- -------- ------- --------
Operating loss.......... (3,431) (10,183) (24,958) (9,656) (14,547)
Interest income
(expense), net......... (104) (194) 424 (93) 1,575
------- -------- -------- ------- --------
Net loss............ $(3,535) $(10,377) $(24,534) $(9,749) $(12,972)
======= ======== ======== ======= ========
Basic and diluted net
loss per share......... $ (0.94) $ (0.40) $ (0.63) $ (0.26) $ (0.26)
======= ======== ======== ======= ========
Shares used in
calculating basic and
diluted net loss per
share.................. 3,768 25,954 39,130 37,379 48,984
======= ======== ======== ======= ========
</TABLE>

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

F-4
<PAGE>

INKTOMI CORPORATION

SUPPLEMENTARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from Inception (February 2, 1996) through
March 31, 1999
(in thousands)

<TABLE>
<CAPTION>
Convertible
Preferred
Stock Common Stock Additional Deferred
------------- ------------- Paid-in Compensation Accumulated
Shares Amount Shares Amount Capital & Other Deficit Total
------ ------ ------ ------ ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transfer of technology.. -- $-- -- $-- $ -- $(3,133) $ -- $ (3,133)
Issuance of common stock
for cash, notes, or
services, including for
exercise of options and
warrants............... 4,934 5 390 591 986
Issuance of preferred
stock.................. 10,072 10 4,012 4,022
Net loss................ (3,535) (3,535)
------ ---- ------ ---- ------- ------- -------- --------
Balance, September 30,
1996................... 10,072 10 4,934 5 4,402 (2,542) (3,535) (1,660)
Issuance of common stock
for cash, notes, or
services, including for
exercise of options and
warrants .............. 6,990 7 3,346 (69) 3,284
Issuance of preferred
stock, net of issuance
costs of $109.......... 4,786 5 9,672 9,677
Issuance of preferred
stock upon conversion
of note payable........ 80 200 200
Forgiveness of note
payable related to
transfer of
technology............. 3,133 3,133
Issuance of preferred
stock warrants......... 490 490
Stock compensation in
connection with
issuance of stock
options................ 103 (103) --
Net loss................ (10,377) (10,377)
------ ---- ------ ---- ------- ------- -------- --------
Balance, September 30,
1997................... 14,938 $ 15 11,924 $ 12 $17,723 $ 909 $(13,912) $ 4,747
</TABLE>

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

F-5
<PAGE>

INKTOMI CORPORATION

SUPPLEMENTARY CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY--(Continued)
For the Period from Inception (February 2, 1996) through
March 31, 1999
(in thousands)

<TABLE>
<CAPTION>
Convertible
Preferred
Stock Common Stock Additional Deferred
--------------- ------------- Paid-in Compensation Accumulated
Shares Amount Shares Amount Capital & Other Deficit Total
------- ------ ------ ------ ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30,
1997................... 14,938 $ 15 11,924 $12 $ 17,723 $ 909 $(13,912) $ 4,747
Issuance of preferred
stock, net of issuance
costs of $1,128........ 3,298 3 12,884 12,887
Issuance of common stock
for cash, notes, or
services, including for
exercise of options and
warrants............... 9,476 9 48,632 (1,653) 46,988
Exercise of preferred
stock warrants......... 1,225 1 4,071 4,072
Conversion of preferred
stock to common stock.. (19,461) (19) 26,076 26 (7) --
Stock compensation in
connection with
issuance of stock
options................ 2,394 (2,078) 316
Foreign currency
translation............ (49) (49)
Stock compensation in
connection with
issuance of stock
options by Impulse! Buy
Network................ 409 (315) 94
Net loss................ (24,534) (24,534)
------- ----- ------ --- -------- ------- -------- --------
Balance, September 30,
1998................... -- -- 47,476 47 86,106 (3,186) (38,446) 44,521
Issuance of common stock
in public offering net
of issuance costs
of $680................ 1,333 1 88,865 88,866
Issuance of common stock
for cash, notes, or
services, including for
exercise of options and
warrants............... 743 1 2,682 2,683
Stock compensation in
connection with
issuance of stock
options by Impulse! Buy
Network................ 1,136 (843) 293
Amortization of stock
compensation........... 327 327
Repayment of shareholder
loans.................. 488 488
Foreign currency
translation............ 23 23
Unrealized loss on short
term investments....... (250) (250)
Net loss................ (12,972) (12,972)
------- ----- ------ --- -------- ------- -------- --------
Balance, March 31, 1999
(Unaudited)............ -- $ -- 49,552 $49 $178,789 $(3,441) $(51,418) $123,979
======= ===== ====== === ======== ======= ======== ========
</TABLE>

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

F-6
<PAGE>

INKTOMI CORPORATION

SUPPLEMENTARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
For the For the
For the Period from Year Ended Six-months Ended
Inception (February 2, September 30, March 31,
1996) through ------------------ -----------------
September 30, 1996 1997 1998 1998 1999
---------------------- -------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net loss.............. $(3,535) $(10,377) $(24,534) $(9,749) $(12,972)
Adjustments to
reconcile net loss to
net cash used in
operating activities
Depreciation and
amortization......... 336 1,393 3,763 1,548 4,467
Provision for doubtful
accounts............. 50 30 551 -- 795
Non-cash expenses..... 390 145 570 -- --
Stock based
compensation......... -- -- 410 51 620
Changes in operating
assets and
liabilities
Accounts receivable.. (178) (732) (4,811) (356) (7,445)
Prepaid expenses and
other assets........ (86) (285) (139) (287) (2,531)
Accounts payable..... 389 227 2,436 326 1,933
Deferred revenue..... -- 715 656 79 2,052
Accrued liabilities
and other........... 458 689 5,655 938 114
------- -------- -------- ------- --------
Net cash used in
operating
activities......... (2,176) (8,195) (15,443) (7,450) (12,967)
Cash flows from
investing activities:
Purchases of short-
term investments..... -- -- (32,771) -- (78,767)
Proceeds from the sale
of short-term
investments.......... -- -- 13,091 -- 20,681
Purchase of property
and equipment........ (2,227) (6,002) (6,882) (633) (7,548)
Proceeds from sale of
equipment............ -- -- 928 928 --
------- -------- -------- ------- --------
Net cash used in
investing
activities......... (2,227) (6,002) (25,634) 295 (65,634)
Cash flows from
financing activities:
Proceeds from notes
payable.............. 500 9,786 2,845 -- 286
Payments on notes
payable.............. (300) (2,267) (2,296) (286) (200)
Payments on
obligations under
capital leases....... -- -- (336) (120) (1,007)
Proceeds from
shareholder loans.... -- -- -- -- 488
Proceeds from issuance
of Preferred Stock,
net.................. 3,632 10,167 16,186 13,295 --
Proceeds from exercise
of stock options and
warrants............. 32 777 4,962 4,298 1,683
Proceeds from issuance
of Common Stock...... 45 2,362 41,988 885 89,866
Proceeds from issuance
of warrants.......... 910 -- -- --
------- -------- -------- ------- --------
Net cash provided by
financing
activities......... 4,819 20,825 63,349 18,072 91,116
------- -------- -------- ------- --------
Effect of exchange
rates on cash and cash
equivalents........... -- -- (49) (4) 23
Increase in cash and
cash equivalents...... 416 6,628 22,223 10,913 12,538
Cash and cash
equivalents at
beginning of period... -- 416 7,044 7,044 29,267
------- -------- -------- ------- --------
Cash and cash
equivalents at end of
period................ $ 416 $ 7,044 $ 29,267 $17,957 $ 41,805
======= ======== ======== ======= ========
Supplemental cash flow
information:
Technology acquired for
notes payable......... $ 3,133 $ -- $ -- $ -- $ --
======= ======== ======== ======= ========
Accounts payable
related to purchase of
property and
equipment............. $ -- $ 413 $ 1,473 $ -- $ --
======= ======== ======== ======= ========
Foregiveness of note
payable related to
technology acquired... $ -- $ 3,133 $ -- $ -- $ --
======= ======== ======== ======= ========
Preferred stock issued
as compensation for
services received..... $ 390 $ -- $ -- $ -- $ --
======= ======== ======== ======= ========
Exercise of Common
Stock options in
exchange for note
receivable............ $ -- $ 93 $ 666 $ -- $ --
======= ======== ======== ======= ========
Stock options issued as
compensation for
services rendered..... $ -- $ 93 $ 36 $ -- $ --
======= ======== ======== ======= ========
Conversion of note
payable into Preferred
Stock................. $ -- $ 200 $ -- $ -- $ --
======= ======== ======== ======= ========
Assets acquired under
capital lease......... $ -- $ -- $ 6,939 $ 525 $ --
======= ======== ======== ======= ========
Common stock issued in
exchange for prepaid
advertising........... $ -- $ -- $ 285 $ -- $ --
======= ======== ======== ======= ========
Cash paid for
interest.............. $ -- $ -- $ -- $ 203 $ 901
======= ======== ======== ======= ========
</TABLE>

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

F-7
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

(1) Significant Accounting Policies:

Organization:

Inktomi Corporation ("Inktomi" or the "Company") was incorporated in February
1996 to develop and market scalable software applications designed to
significantly enhance the performance and intelligence of large-scale networks.
From February 1996 to May 1996, Inktomi's operations consisted primarily of
start-up activities, including research and development of Inktomi's core
coupled cluster software architecture and dataflow technology, personnel
recruiting and capital raising. In May 1996, Inktomi released the first
commercial application based on its core technology, a search engine that
enables customers to provide a variety of Internet search services to end
users. In December 1997, Inktomi began licensing Traffic Server, Inktomi's
second application, a large-scale network cache designed to address capacity
constraints in high-traffic network routes. In September 1998, Inktomi
initiated its third application through its acquisition of C\\2\\B Technologies
Inc. ("C\\2\\B"), a developer of online shopping technology. The Company issued
3,782,628 shares of its Common Stock in exchange for all of the outstanding
shares of C\\2\\B. C\\2\\B recognized no revenues since inception, raised $5.9
million through various stock issuances, and recorded losses of $1.7 million
and $5.0 million for the years ended September 30, 1997 and 1998 respectively.
The transaction was accounted for as a pooling of interests. Financial results
for all periods have been restated to reflect combined operations.

On April 30 1999, Inktomi acquired Impulse! Buy Network, Inc. ("Impulse!
Buy"), a developer of online merchandising software. Under the terms of the
merger agreement, Inktomi acquired all outstanding shares of capital stock and
assumed all outstanding warrants, stock options and stock purchase rights of
Impulse! Buy in exchange for 899,967 shares of Inktomi common stock. The
transaction was accounted for as a pooling of interests. The Company will
record acquisition costs of approximately $1.1 million in the quarter ended
June 30, 1999 as a result of the acquisition, primarily for accounting, legal
and other expenses. Impulse! Buy revenues since inception, have not been
significant. Impulse! Buy raised $4.3 million through various stock issuances
in 1997 and 1998 and had net losses of $2.2 million and $2.6 million in the
period ended September 30, 1998 and the six months ended March 31, 1999
(unaudited), respectively. Pursuant to APB No. 16, Business Combinations, these
financial statements present the supplementary consolidated financial
statements of both the Company and Impulse! Buy.

Stock Splits:

In May 1998, Inktomi's Board of Directors and stockholders approved a 2:3
reverse stock split of the Company's common stock.

In December 1998, Inktomi's Board of Directors approved a two-for-one stock
split (in the form of a 100% stock dividend) of the Company's common stock.

Historical weighted average shares outstanding and loss per share amounts
have been restated to reflect both stock splits.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts

F-8
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ from
those estimates.

Principles of Consolidation:

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Inktomi Limited, a United Kingdom subsidiary
formed in October 1997. All intercompany balances and transactions have been
eliminated in the supplemental consolidated financial statements.

Cash and Cash Equivalents:

Cash and cash equivalents are stated at cost, which approximates fair value.
The Company includes in cash equivalents all highly liquid investments which
mature within three months of their purchase date. Cash equivalents consist
primarily of commercial paper, other debt instruments and money market funds.

Short-Term Investments:

Short-term investments are comprised primarily of debt securities and are
classified as available-for-sale investments. The carrying value of such
investments is adjusted to fair value with a resulting adjustment to
stockholders' equity. The amortized cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to maturity, both of which
are included in interest income. Realized gains and losses are recorded using
the specific identification method. All investments have maturity dates from
three to nine months.

Property and Equipment:

Property and equipment is stated at cost and is depreciated using the
straight-line method over the estimated useful lives of the related assets,
generally three years. Any gains or losses on the disposal of property and
equipment are recorded in the year of disposition.

Software Development Costs:

Software development costs have been accounted for in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed. Under the
standard, capitalization of software development costs begins upon the
establishment of technological feasibility which, for the Company, is upon
completion of a working model. To date, all such amounts have been
insignificant, and accordingly, the Company has charged all software
development costs and research and development costs to expenses.

Income Taxes:

Income taxes are accounted for in accordance with SFAS No. 109, Accounting
for Income Taxes, which requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the difference
between the

F-9
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized. Income tax expense is the tax
payable for the period and the change during the period in deferred tax assets
and liabilities.

Impairment of Long-lived Assets:

The Company evaluates the recoverability of its long-lived assets in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 121 requires
recognition of impairment of long-lived assets in the event the net book value
of such assets exceeds the future undiscounted cash flows attributable to such
assets. The Company will assess the impairment of long-lived assets when events
or changes in circumstances indicate that the carrying value of an asset may
not be recoverable.

Revenue Recognition:

Inktomi generates search services revenues (included in portal services
revenues) through a variety of contractual arrangements, which include per-
query search fees, search service hosting fees, advertising revenue, license
fees and/or maintenance fees. Per-query, hosting and maintenance fees revenues
are recognized in the period earned, and advertising revenues are recognized in
the period that the advertisement is displayed. A significant portion of the
Company's search advertising revenues are from a search service that is
maintained by the Company and marketed by Wired Digital, Inc. ("Wired").
Revenues from this agreement are recorded in full and amounts allocable to the
partner for marketing costs are included in sales and marketing expenses.

A portion of the advertising on the Wired search site is exchanged for
advertisements on the web sites of other companies. These revenues and
marketing expenses are recorded at the fair value of services provided or
received, whichever is more determinable in the circumstances. Revenue from
barter transactions is recognized as income when advertisements are delivered
on the Wired site, and expense from barter transactions is recognized when
advertisements are delivered on the other companies' web sites. Barter revenues
and expenses were approximately $133,000, $1,580,000, $1,810,000, $865,000 and
nil for the period from February 2, 1996 (date of inception) through September
30, 1996, the years ended September 30, 1997 and 1998, and the unaudited six-
month periods ended March 31, 1998 and 1999, respectively.

Network products revenues represent primarily license, maintenance, upgrade
and distribution fees for the Company's Traffic Server product. License and
distribution fees are typically recognized when the software is delivered and
all significant obligations have been met. Maintenance and upgrade revenues are
recognized ratably over the life of support and upgrade agreements.

Computation of Historical Net Loss Per Share:

Basic and diluted net loss per share is computed using the weighted average
number of common and common equivalent shares outstanding during the period.
Common equivalent shares, comprising the incremental common shares issuable
upon the conversion of preferred stock and the exercise of stock options and
warrants have not been included as such shares are anti-dilutive.

F-10
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

Foreign Currencies

The balance sheets of the Company's U.K. subsidiary are translated into U.S.
dollars at year end rates of exchange. Revenues and expenses are translated at
average rates for the year. The resulting translation adjustments are included
in stockholders' equity.

Exchange gains and losses arising from transactions denominated in a foreign
currency other than the functional currency of the entity involved are included
in other expense. Such exchange gains (losses) have been immaterial to date.

Business Risk and Concentration of Credit Risk:

The Company operates in the Internet industry, which is new, rapidly evolving
and intensely competitive.

Financial instruments which potentially subject the Company to concentrations
of credit risk consist primarily of temporary cash investments (including money
market accounts) short term investments, and accounts receivable. The Company
places its cash, cash equivalents, and short-term investments with two major
financial institutions and such deposits exceed federally insured limits.

The Company performs ongoing credit evaluations, does not require collateral,
and maintains reserves for potential credit losses on customer accounts when
deemed necessary. For the period from February 2, 1996 (date of inception)
through September 30, 1996, one customer accounted for 90% of total revenue.
For the year ended September 30, 1997, three customers accounted for
approximately 79%, 6% and 13%, respectively, of all revenue generated by the
Company, and 62%, 37% and 0% of accounts receivable at September 30, 1997,
respectively. For the year ended September 30, 1998, four customers represented
35%, 16%, 14% and 12%, respectively, of all revenue generated by the Company,
and 10%, 0%, 22% and 8% of accounts receivable at September 30, 1998,
respectively. For the unaudited six-month period ended March 31, 1998, two
customers accounted for 20% and 61% of all revenue generated by the Company.
For the unaudited six-month period ended March 31, 1999, two customers
accounted for 10% and 21% of all revenue generated by the Company and 0% and
47% of accounts receivable at March 31, 1999.

F-11
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

Recently Issued Accounting Pronouncements:

In June 1997, the Financial Accounting Standards Board issued SFAS 130,
Reporting Comprehensive Income. SFAS 130 establishes standards for reporting
comprehensive income and its components in a financial statement. Comprehensive
income as defined includes all changes in equity (net assets) during a period
from non-owner sources. Examples of items to be included in comprehensive
income, which are excluded from net income, include foreign currency
translation adjustments and unrealized gains/losses on available-for-sale
securities. The components of comprehensive income are as follows (in
thousands):

<TABLE>
<CAPTION>
For the Period For the Year For the Six
from Inception Ended September Months Ended
(February 2, 30, March 31,
1996) through ------------------ -----------------
September 30, 1996 1997 1998 1998 1999
------------------ -------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net loss................ $(3,535) $(10,377) $(24,534) $(9,749) $(12,972)
Unrealized loss on
available for sale
securities............. -- -- -- -- (250)
Foreign currency
translation gains and
(losses)............... -- -- (49) (4) 23
------- -------- -------- ------- --------
Comprehensive net loss.. $(3,535) $(10,377) $(24,583) $(9,753) $(13,199)
======= ======== ======== ======= ========
</TABLE>

During 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosure About Segments of an Enterprise and Related Information, effective
for the fiscal year ended September 30, 1999. The Company is currently
determining the disclosures that may be required under this pronouncement.

In April 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. SOP 98-1 provides guidance for determining whether
computer software is internal-use software and on accounting for the proceeds
of computer software originally developed or obtained for internal use and then
subsequently sold to the public. It also provides guidance on capitalization of
the costs incurred for computer software developed or obtained for internal
use. Inktomi believes that the adoption of SOP 98-1 will not have a material
impact on its consolidated financial statements. SOP 98-1 will be effective for
Inktomi's consolidated financial statements for the fiscal year ending
September 30, 2000.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 is
effective for transactions entered into after March 31, 2000 and requires that
all derivative instruments be recorded on the balance sheet at fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and the type of hedge transaction.
The ineffective portion of all hedges will be recognized in earnings. Inktomi
is currently assessing the impact of this new statement but does not expect any
material effect on its consolidated financial position, liquidity or results of
operation.

F-12
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

Unaudited Interim Financial Information

In the opinion of management, the unaudited interim financial statements as
of March 31, 1998 and 1999 and for the two six month periods then ended have
been prepared on the same basis as the annual financial statements and 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 interim
period.

(2) Property and Equipment:

Property and equipment consists of (in thousands):

<TABLE>
<CAPTION>
September 30,
-------------- March 31,
1997 1998 1999
------ ------- -----------
(Unaudited)
<S> <C> <C> <C>
Computer equipment............................. $8,047 $21,386 $28,466
Furniture and fixtures......................... 449 1,253 1,914
Leashold improvements.......................... 66 289 96
------ ------- -------
8,562 22,928 30,476
Less accumulated depreciation and amortization... 1,649 5,412 9,879
------ ------- -------
$6,913 $17,516 $20,597
====== ======= =======
</TABLE>

The Company recognized losses for the abandonment of leasehold improvements
with net book values of $46,000 and $605,000 due to corporate relocations in
May 1997 and March 1999, respectively. Assets acquired under capitalized lease
obligations are included in computer equipment and furniture and fixtures and
totaled $0 and $6,939,000 (including equipment previously purchased), with
related amortization of $0 and $336,000 as of September 30, 1997 and 1998,
respectively.

(3) Income Taxes

The principal items accounting for the difference between the income tax
benefits computed using the United States statutory rate and the provision for
income taxes are as follows (in thousands):

<TABLE>
<CAPTION>
For the Period
from Inception
(February 2, Year Ended Six Months
1996) through September 30, Ended March 31,
September 30, ---------------- ----------------
1996 1997 1998 1998 1999
-------------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Federal tax benefit at
statutory rate......... $(1,201) $(3,528) $(8,341) $(3,314) $(4,411)
State taxes, net of
federal tax effect..... (215) (527) (1,427) (569) (757)
Research and
experimentation
credits................ (58) (76) (469) (175) (171)
Unutilized net operating
losses................. 1,474 (4,131) 10,237 4,058 5,339
------- ------- ------- ------- -------
$ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
</TABLE>

F-13
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

Net deferred tax assets comprise (in thousands):

<TABLE>
<CAPTION>
September 30,
----------------- March 31,
1997 1998 1999
------- -------- ----------
(Unaudited)
<S> <C> <C> <C>
Net operating loss carryforwards............ $ 4,006 $ 13,276 $ 16,226
Research and experimentation credit
carryforwards.............................. 132 1,087 1,180
Other liabilities and reserves.............. 84 731 1,458
Property and equipment...................... (210) (667) (301)
Acquired technology......................... 593 173 88
Deferred revenue............................ 357 524 1,371
Valuation allowance......................... (4,962) (15,124) (20,022)
------- -------- --------
Net deferred tax assets................... $ -- $ -- $ --
======= ======== ========
</TABLE>

Due to the uncertainty surrounding the realization of the favorable tax
attributes in future tax returns, the Company has placed a valuation allowance
against its otherwise recognizable net deferred tax assets.

At March 31, 1999 (unaudited), the Company had the following carryforwards
available to reduce future taxable income and income taxes (in thousands):

<TABLE>
<CAPTION>
March 31, 1999
---------------
Federal State
------- -------
(Unaudited)
<S> <C> <C>
Net operating loss carryforwards............................ $58,631 $32,818
Research and experimentation credit carryforwards........... 661 519
</TABLE>

The federal and state net operating loss carryforwards expire through 2019
and 2004, respectively, and the research and experimentation credits expire
through 2004.

For federal and state tax purposes, the Company's net operating loss and
research and experimentation credit carryforwards could be subject to certain
limitations on annual utilization if certain changes in ownership were to
occur, as defined by federal and state tax laws.

F-14
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

(4) Notes Payable and Line of Credit (in thousands):

<TABLE>
<CAPTION>
September 30,
---------------- March 31,
1997 1998 1999
------- ------- -----------
(Unaudited)
<S> <C> <C> <C>
Bank line (1).................................. $ -- $ 198 $ 484
Bank equipment notes (2)....................... 1,750 3,389 4,660
Bank term note (3)............................. 1,833 1,167 889
Other bank note (4)............................ -- 490 --
Notes payable (5).............................. 3,397 2,444 1,861
Other notes payable (6)........................ 539 380 260
------- ------- -------
7,519 8,068 8,154
Less current portion........................... (2,490) (3,832) (4,655)
------- ------- -------
$ 5,029 $ 4,236 $ 3,499
======= ======= =======
</TABLE>
- --------
(1) The Company has a $2,500,000 revolving bank line of credit collateralized
by substantially all assets. Amounts borrowed under the line require
monthly payments at prime (8.5% at September 30, 1998) and any unpaid
principal and interest will be due on May 1, 1999. The Company also has
$5,000,000 of additional unused availability under an equipment loan
facility with the same bank. Borrowings under the facility are repayable in
36 equal monthly installments plus interest at 0.25% over prime (8.75% at
September 30, 1998). The master bank credit agreement requires the Company
to comply with certain financial covenants related to working capital,
tangible net worth, debt service coverage and liquidity coverage. Pursuant
to the agreement, the Company may not distribute cash dividends. As of
September 30, 1998, the Company was in compliance with the covenants.
(2) The bank equipment notes include two loans. The first loan for $1,750,000
has monthly payments of interest only until May 1998 and then payable in
equal monthly payments of $48,611 plus interest at 0.5% over prime (9.0% at
September 30, 1998) through April 2001. The second loan for $2,000,000 has
monthly payments of $55,556 plus interest at 0.25% over prime (8.75% at
September 30, 1998) through June 2001. The notes have collateralization and
covenant requirements consistent with the bank line of credit as described
above.
(3) The bank term note is payable in equal monthly payments of $55,556 plus
interest at 0.5% over prime (9.0% at September 30, 1998) through June 2000.
The note has collateralization and covenant requirements consistent with
the bank line of credit as described above.
(4) The other bank note consists of a term note obtained by C\\2\\B
Technologies Inc., an Inktomi subsidiary. The maturity of this note was
accelerated with the change of control of C\\2\\B Technologies in September
1998. The note was payable in full in November 1998 and required payment
with interest at prime (8.5% at September 30, 1998).
(5) The two notes payable are payable in equal monthly payments of $102,895 and
$4,741 which includes interest of 5.7% and 5.6% through September 2000 and
November 2000, respectively. The notes are collateralized by all equipment
purchased with the proceeds from the notes.
(6) Other notes payable are payable in equal monthly payments totaling $19,680
through March 2000, with a final balloon payment of $60,000. The notes
payments include interest of 18.0%. The notes are collateralized by all
equipment purchased with the proceeds from the notes.

Scheduled maturities of long-term debt at September 30, 1998 are as follows:

<TABLE>
<S> <C>
Years ending:
September 30, 1999.................................................. $3,832
September 30, 2000.................................................. 3,338
September 30, 2001.................................................. 898
------
$8,068
======
</TABLE>

The carrying value of notes payable approximated fair value as the related
interest rates approximate market rates.

F-15
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

(5) Accrued Liabilities:

Accrued liabilities comprise (in thousands):

<TABLE>
<CAPTION>
September 30,
------------- March 31,
1997 1998 1999
------ ------ -----------
(Unaudited)
<S> <C> <C> <C>
Accrued payroll, vacation and bonuses.............. $1,079 $3,815 $3,823
Other accrued liabilities.......................... 69 2,949 3,055
------ ------ ------
Total accrued liabilities........................ $1,148 $6,764 $6,878
====== ====== ======
</TABLE>

(6) Commitments:

The Company has entered into noncancellable operating leases for office space
and equipment and capital leases for equipment with original terms ranging from
six to 60 months. The future minimum lease payments under these leases at March
31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
Operating Capital
Leases Leases
--------- -------
<S> <C> <C>
Six months ending September 30, 1999....................... $ 3,580 $1,581
Years ending September 30:
2000..................................................... 8,159 3,099
2001..................................................... 8,581 1,982
2002..................................................... 8,282 --
2003..................................................... 8,492 --
2004 and thereafter...................................... 52,166 --
------- ------
Total minimum lease payments............................... $89,260 $6,662
=======
Less amount representing interest.......................... 969
------
Present value of minimum lease payments.................... 5,693
Less current portion....................................... 2,340
------
$3,353
======
</TABLE>

In October 1998, the Company signed a lease for new office space located in
Foster City, California. This lease is anticipated to commence on June 8, 1999,
for a duration of 11 years thereafter. During the term of the lease, Inktomi is
to occupy a total of 177,147 square feet, incurring a minimum lease obligation
of $79,928,000. In connection with this lease agreement, Inktomi paid a cash
security deposit of $1,308,000 in October 1998 and provided a supplemental
deposit in the form of a letter of credit in the amount of $4,844,000 in
January 1999.

(7) Stockholders' Equity:

In June 1998, all 19.5 million shares of Preferred Stock were converted into
26.0 million shares of common stock of the Company.

In June 1998, the stockholders of the Company approved an amendment to the
Company's certificate of incorporation authorizing 10,000,000 shares of
undesignated preferred stock of which the Board of Directors has the authority
to issue and to determine the rights, preferences and privileges.

F-16
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

In June 1998, the Company raised $42.0 million, net of issuance costs, from
an initial public offering of 4,712,994 shares of common stock and other stock
offerings.

In November 1998, the Company completed a secondary offering of its common
stock in which it sold 1,332536 shares raising $88.9 million, net of issuance
costs and underwriters' discounts.

(8) Deferred Compensation and Other:

Deferred compensation and other includes (in thousands):

<TABLE>
<CAPTION>
September 30,
--------------- March 31,
1997 1998 1999
------ ------- -----------
(Unaudited)
<S> <C> <C> <C>
Deferred compensation.......................... $ (103) $(2,496) $(3,012)
Warrants issued and options granted to
consultants................................... 1,226 239 239
Shareholder loans.............................. (214) (880) (392)
Cumulative foriegn exchange adjustment......... -- (49) (26)
Unrealized losses on short term investments.... -- -- (250)
------ ------- -------
Total deferred compensation and other
equity...................................... $ 909 $(3,186) $(3,441)
====== ======= =======
</TABLE>

(9) Warrants:

In 1997 and 1998, the Company issued warrants to a customer and financial
providers to purchase common stock. At March 31, 1999 (unaudited) the following
warrants were outstanding:

<TABLE>
<CAPTION>
Common Stock Exercise Price Expiration Dates
------------ -------------- -----------------------
<S> <C> <C> <C>
Common stock............. 835,402 $ 137,841 April 2002
Common stock............. 407,612 $1,213,426 May 1999 to August 2001
Common stock............. 194,446 $2,925,024 June 2002
</TABLE>

At March 31, 1999 (unaudited), 1,243,014 warrants were exercisable.

(10) Stock Options:

Pursuant to the Inktomi Corporation 1998 Stock Plan, its 1996 Equity
Incentive Plan, the C\\2\\B Technologies Inc. 1997 Stock Plan (the "Plans") as
amended and the Impulse! Buy Network 1997 Stock Option Plan (the "Impulse
Plan"), employees, directors and consultants of the Company may be granted
options to purchase shares of Common Stock. At September 30, 1998, 2,000,000
shares of Common Stock were reserved under the 1998 plan and 111,023 shares
were authorized under the Impulse Plan. At September 30, 1998, shares were no
longer available for issuance from the 1996 and 1997 plans. Options granted
under the Plans and the Impulse Plan include incentive stock options and
nonqualified stock options. Stock options granted under the Plans generally
vest over 36 to 50 months and are also immediately exercisable but subject to
repurchase at cost in the event that the individual ceases to be an employee or
provide services to the Company. Repurchase rights lapse on the original
vesting schedule. Prior to the adoption of the Plans and the Impulse Plans, the
Company granted nonqualified stock options to purchase Common Stock to certain
employees and consultants. Options have a term of generally 10 years.

F-17
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

A summary of the activity under the Plans and the Impulse Plan is set forth
below (in thousands, except per share amounts):

<TABLE>
<CAPTION>
Exercise Aggregate Weighted
Price Per Exercise Average
Shares Share Price Exercise Price
------ ------------ --------- --------------
<S> <C> <C> <C> <C>
Outstanding at February 2,
1996....................... -- -- $ -- --
Granted..................... 4,722 $0.11-$0.45 897 $ 0.19
Canceled.................... (360) $0.11-$0.45 (68) $ 0.19
------ --------
Outstanding at September 30,
1996....................... 4,362 $0.11-$0.45 829 $ 0.19
Granted..................... 4,290 $0.33-$1.95 1,244 $ 0.29
Exercised................... (4,434) $0.11-$1.38 (975) $ 0.22
Canceled.................... (348) $0.45 (80) $ 0.23
------ --------
Outstanding at September 30,
1997....................... 3,870 $0.11- $1.95 1,018 $ 0.26
Granted..................... 3,406 $3.33-$53.75 36,720 $10.80
Exercised................... (1,480) $0.11-$10.50 (1,288) $ 0.87
Canceled.................... (371) $0.45-$18.00 (223) $ 0.60
------ --------
Outstanding at September 30,
1998....................... 5,425 $0.11-$53.75 36,227 $ 6.69
Granted (unaudited)......... 1,821 $1.20-$67.50 92,193 $50.60
Exercised (unaudited)....... (253) $0.23- $0.86 (1,136) $ 4.49
Canceled (unaudited)........ (398) $0.23-$24.50 (712) $ 1.79
------ --------
Outstanding at March 31,
1999 (unaudited)........... 6,595 $0.06-$67.50 $126,572 $19.21
====== ========
</TABLE>

At March 31, 1999 there were 5,558,104 shares which were no longer subject to
vesting.

The following table summarizes information with respect to stock options
outstanding at March 31, 1999 (unaudited):

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------- -----------------------
Weighted
Average
Remaining Weighted Weighted
Range of Number Contractual Average Number Average
Exercise Outstanding Life Exercise Exercisable Exercise
Prices at 3/31/99 (Years) Price at 3/31/99 Price
-------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.06-$0.69 2,297 7.03 $ 0.25 2,297 $ 0.25
$0.98-$24.46 1,395 8.81 $ 5.08 1,323 $ 5.29
$24.50-$67.50 2,903 10.59 $41.04 2,898 $41.04
</TABLE>

In connection with the completion of the Company's initial public offering
and the acquisition of Impulse! Buy, certain options granted in 1997, 1998 and
the unaudited six-month period ended March 31, 1999 have been considered to be
compensatory. Compensation associated with such options for the years ended
September 30, 1997, September 30, 1998 and the unaudited six-month period ended
March 31, 1999 amounted to $103,000, $2,803,000 and $1,051,000 respectively. Of
these amounts, $410,000 and $620,000 were charged to operations for the year
ended September 30, 1998 and the unaudited six-month period ended March 31,
1999, respectively and $3,012,000 will be charged to operations during the
remaining period to 2002.

F-18
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

The following information concerning the Plans and the Impulse Plan is
provided in accordance with SFAS No. 123, Accounting for Stock-Based
Compensation. The Company accounts for the Plans and the Impulse Plan in
accordance with Accounting Principles Board (APB) Opinion No. 25 and related
interpretations.

The fair value of each employee and director stock option grant has been
estimated on the date of grant using the minimum value method for grants in the
period February 2, 1996 (date of inception) to September 30, 1996, the year
ended September 30, 1997. For the year ended September 30, 1998, the fair value
has been estimated using the Black-Scholes Option Pricing Model. The weighted
average fair values for the period ended September 30, 1996, and the years
ended September 30, 1997 and 1998, were $0.04, $0.09, and $10.50, respectively.
The following assumptions were used in determining the fair value of options
granted:

<TABLE>
<CAPTION>
September 30,
-----------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Risk-free interest rates................. 6.48%-6.60% 6.00%-6.47% 5.47%-6.60%
Expected life............................ 5 years 5 years 5 years
Dividends................................ 0% 0% 0%
Volatility............................... 0% 0% 140%
</TABLE>

The following comprises the pro forma information pursuant to the provisions
of SFAS No. 123 (in thousands):

<TABLE>
<CAPTION>
September 30,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Net loss--Historical............................ $(3,535) $(10,377) $(24,534)
Net loss--Pro Forma............................. $(3,575) $(10,752) $(26,054)
</TABLE>

These pro forma amounts may not be representative of the effects on pro forma
net income (loss) for future years as options vest over several years and
additional awards are generally made each year.

(11) Related Party Transaction:

In April 1998, the Company provided a loan to a corporate officer to exercise
Common Stock options. The loan totaled $666,000 and is repayable to the Company
in April 2002, plus interest at a rate of 5.69%. The loan is collateralized by
the underlying Common Stock purchased. As of March 31, 1999, $488,000 had been
repaid.

(12) 401(k) Profit Sharing Plan:

In May 1996, the Company established a 401(k) Profit Sharing Plan (the
"401(k) Plan") which covers substantially all employees. Under the 401(k) Plan,
employees are permitted to contribute up to 20% of gross compensation not to
exceed the annual 402(g) limitation for any plan year. Discretionary
contributions may be made by the Company. No contributions have been made by
the Company during the period ended September 30, 1998 and the unaudited six
month period ended March 31, 1999.

F-19
<PAGE>

INKTOMI CORPORATION

NOTES TO SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 1998 and 1999 and for the two six month
periods then ended are unaudited)

(13) Earnings Per Share ("EPS"):

The following is a reconciliation of the numerator and denominator used to
determine basic and diluted EPS (in thousands, except per share amounts):

<TABLE>
<CAPTION>
For the Period For the Year For the Six
from Inception Ended September Months Ended
(February 2, 30, March 31,
1996) through ------------------ -----------------
September 30, 1996 1997 1998 1998 1999
------------------ -------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Numerator--Basic and
Diluted EPS
Net loss.............. $(3,535) $(10,377) $(24,534) $(9,749) $(12,972)
======= ======== ======== ======= ========
Denominator--Basic and
Diluted EPS
Weighted average
Common Stock
outstanding.......... 3,768 25,954 39,130 37,379 48,984
======= ======== ======== ======= ========
Basic and diluted loss
per common share....... $ (0.94) $ (0.40) $ (0.63) $ (0.26) $ (0.26)
======= ======== ======== ======= ========
Common stock equivalents
not included as they
would be anti-
dilutive............... 17,887 23,217 6,824 30,200 8,032
======= ======== ======== ======= ========
</TABLE>

(14) Subsequent Events:

In May 1999, a warrant holder elected to exercise its warrant to purchase
400,944 shares of Common Stock. As a result of a net exercise, the Company
issued 392,117 shares of Common Stock to the warrant holder.

In July 1999, the Board of Directors authorized management of the Company to
file a Registration Statement with the Securities and Exchange Commission
covering the proposed sale of additional shares of its Common Stock to the
public.

F-20
<PAGE>

UNDERWRITING

Inktomi, the selling stockholders and the underwriters for the offering (the
"Underwriters") named below have entered into an underwriting agreement with
respect to the shares being offered. Subject to certain conditions, each
Underwriter has severally agreed to purchase the number of shares indicated in
the following table. Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities Inc., Hambrecht & Quist LLC and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are the representatives of the Underwriters.

<TABLE>
<CAPTION>
Underwriters Number of Shares
- ------------ ----------------
<S> <C>
Goldman, Sachs & Co. ..........................................
Morgan Stanley & Co. Incorporated..............................
Deutsche Bank Securities Inc. .................................
Hambrecht & Quist LLC..........................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................
---------
Total........................................................ 3,300,000
=========
</TABLE>
----------------

If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional 495,000
shares from Inktomi to cover such sales. They may exercise that option for 30
days. If any shares are purchased pursuant to the option, the Underwriters will
severally purchase shares in approximately the same proportion as set forth in
the table above.

The following tables show the per share and total underwriting discounts and
commissions to be paid to the Underwriters by Inktomi and the selling
stockholders. Such amounts are shown assuming both no exercise and full
exercise of the Underwriters' option to purchase 495,000 additional shares.

<TABLE>
<CAPTION>
Paid by the Company
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ $
Total.............................................. $ $
<CAPTION>
Paid by the Selling Stockholders
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ $
Total.............................................. $ $
</TABLE>

Shares sold by the Underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial price to public. Any such
securities dealers may resell any shares purchased from the Underwriters to
certain other brokers or dealers at a discount of up to $ per share from
the initial price to public. If all the shares are not sold at the initial
price to public, the representatives may change the offering price and the
other selling terms.

U-1
<PAGE>

Inktomi and the selling stockholders have agreed with the Underwriters not to
dispose of or hedge any of their common stock or securities convertible into or
exchangeable for shares of common stock during the period from the date of this
prospectus continuing through the date 90 days after the date of this
prospectus, except with the prior written consent of the representatives. This
agreement does not apply to any existing employee benefit plans or shares
issued by Inktomi in connection with acquisitions.

In connection with the offering, the Underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock while
the offering is in progress.

The Underwriters also may impose a penalty bid. This occurs when a particular
Underwriter repays to the Underwriters a portion of the underwriting discount
received by it because the representatives have repurchased shares sold by or
for the account of such Underwriter in stabilizing or short covering
transactions.

These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.

As permitted by Rule 103 under the Exchange Act, certain Underwriters and
selling group members that are market makers ("passive market makers") in the
common stock may make bids for or purchases of common stock in the Nasdaq
National Market until a stabilizing bid has been made. Rule 103 generally
provides that:

. a passive market maker's net daily purchases of the common stock may not
exceed 30% of its average daily trading volume in such securities for
the two full consecutive calendar months, or any 60 consecutive days
ending within the 10 days, immediately preceding the filing date of the
registration statement of which this prospectus forms a part,

. a passive market maker may not effect transactions or display bids for
common stock at a price that exceeds the highest independent bid for the
common stock by persons who are not passive market makers, and

. bids made by passive market makers must be identified as such.

Inktomi estimates that the total expenses for the offering, excluding
underwriting discounts and commissions, will be approximately $700,000.

Inktomi and the selling stockholders have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

U-2
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 2
Risk Factors............................................................. 4
Forward-Looking Information.............................................. 12
Use of Proceeds.......................................................... 13
Price Range of Common Stock.............................................. 13
Dividend Policy.......................................................... 13
Capitalization........................................................... 14
Dilution................................................................. 15
Selected Consolidated Financial Data..................................... 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 17
Business................................................................. 25
Management............................................................... 41
Principal and Selling Stockholders....................................... 44
Description of Capital Stock............................................. 47
Validity of Common Stock................................................. 48
Experts.................................................................. 48
Where You Can Find Additional Information................................ 48
Information Incorporated by Reference.................................... 49
Index to Supplementary Consolidated Financial Statements................. F-1
Underwriting............................................................. U-1
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

3,300,000 Shares

Inktomi Corporation

Common Stock

---------------

[INKTOMI LOGO]

---------------

Goldman, Sachs & Co.

Morgan Stanley Dean Witter

Deutsche Banc Alex. Brown

Hambrecht & Quist

Merrill Lynch & Co.

Representatives of the Underwriters

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table shows the costs and expenses, payable by Inktomi in
connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee, the NASD filing fee and the Nasdaq
National Market listing fee.

<TABLE>
<CAPTION>
Amount to
be Paid
---------
<S> <C>
SEC registration fee............................................... $146,784
NASD filing fee.................................................... 30,500
Nasdaq National Market listing fee................................. 17,500
Printing expenses.................................................. 250,000
Legal fees and expenses............................................ 100,000
Accounting fees and expenses....................................... 80,000
Blue Sky fees and expenses......................................... 15,000
Transfer Agent and Registrar fees.................................. 10,000
Miscellaneous expenses............................................. 50,216
--------
Total............................................................ $700,000
========
</TABLE>

Item 15. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.

Article X of Inktomi's Amended and Restated certificate of incorporation
provides for the indemnification of directors to the fullest extent permitted
under Delaware law.

Article VI of Inktomi's bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of the corporation to the fullest
extent permitted under the General Corporation Law of Delaware.

Inktomi has entered into indemnification agreements with its directors and
executive officers, in addition to indemnification provided for in Inktomi's
bylaws, and intends to enter into indemnification agreements with any new
directors and executive officers in the future.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling Inktomi
pursuant to the foregoing provisions, Inktomi has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.

At present, there is no pending litigation or proceeding involving a
director, officer, employee, or other agent of Inktomi in which indemnification
is being sought, nor is Inktomi aware of any threatened litigation that may
result in a claim for indemnification by any director, officer, employee, or
other agent of Inktomi.

II-1
<PAGE>

Item 16. Exhibits

<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1+ Underwriting Agreement
4.1* Specimen Common Stock Certificate
5.1+ Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public Accountants
(relating to consolidated financial statements and supplementary
consolidated financial statements of Inktomi Corporation)
23.2+ Consent of Counsel (included in Exhibit 5.1)
24.1+ Power of Attorney (See II-3)
27.1+ Financial Data Schedules
</TABLE>
- --------
* Incorporated by reference to Exhibit 4.1 previously filed with Inktomi's
Registration Statement on Form S-1 (No. 333-50247).

+ Previously filed.

Item 17. Undertakings

Inktomi undertakes:

1. That, for the purpose of determining any liability under the
Securities Act, each filing of Inktomi's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act, (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of these
securities at that time shall be deemed to be the initial bona fide
offering thereof.

2. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of Inktomi pursuant to the foregoing provisions, or otherwise,
Inktomi has been advised that in the opinion of the SEC this
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Inktomi
of expenses incurred or paid by a director, officer, or controlling person
of Inktomi in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in connection
with the securities being registered, Inktomi will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.

3. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

4. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
Inktomi certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment
to the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Mateo, State of California, on
the 22nd day of July, 1999.

Inktomi Corporation

/s/ Jerry M. Kennelly
By: _________________________________
Jerry M. Kennelly, Vice President
of Finance
and Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to registration statement has been signed by the following persons in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ David C. Peterschmidt President, Chief Executive July 22, 1999
______________________________________ Officer and Chairman of
David C. Peterschmidt the Board of Directors
(Principal Executive
Officer)

/s/ Jerry M. Kennelly Vice President of Finance July 22, 1999
______________________________________ and Chief Financial
Jerry M. Kennelly Officer (Principal
Financial and Accounting
Officer)

* Director July 22, 1999
______________________________________
Frank Gill

* Director July 22, 1999
______________________________________
Alan F. Shugart

* Director July 22, 1999
______________________________________
Eric A. Brewer
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* Director July 22, 1999
______________________________________
John A. Porter

* Director July 22, 1999
______________________________________
Fredric W. Harman
</TABLE>

/s/ Jerry M. Kennelly

*By: ___________________________

Jerry M. Kennelly as

Attorney-In-Fact

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1+ Underwriting Agreement
4.1* Specimen Common Stock Certificate
5.1+ Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public Accountants
(relating to consolidated financial statements and supplementary
consolidated financial statements of Inktomi Corporation)
23.2+ Consent of Counsel (included in Exhibit 5.1)
24.1+ Power of Attorney (See II-3)
27.1+ Financial Data Schedules
</TABLE>
- --------
* Incorporated by reference to Exhibit 4.1 previously filed with the Inktomi's
Registration Statement on Form S-1 (No. 333-50247).

+ Previously filed.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated October 16, 1998, relating to the
financial statements of Inktomi Corporation which appears in Inktomi
Corporation's 1998 Annual Report on Form 10-K and to the use in this
Registration Statement on Form S-3 of our report dated October 16, 1998,
except as to the pooling of interests with Impulse! Buy Network, Inc. which is
as of April 30, 1999, relating to the supplementary financial statements
appearing in such Registration Statement. We also consent to the references to
us under the headings "Experts" and "Selected Financial Data" in such
Registration Statement.

/s/ PricerwaterhouseCoopers LLP

San Francisco, California

July 22, 1999