Mercury Interactive Corporation Securities Litigation 05-CV-03395

Adam Sand D3claration Exhibit 23 Press Release

Mercury Interactive Corporation Reports Preliminary Fourth Quarter Result s

Increasing Revenue and Earnings Estimate s

MOUNTAIN VIEW, CALIF. - January 24, 2005 - Mercury Interactive Corporation (NASDAQ : MERQ), the global leader in business technology optimization (BTO), today announced preliminary financial results for the fourth quarter ended December 31, 2004 .

Mercury expects total revenue for the fourth quarter of 2004 to be in the range of $203 million to $205 million, which exceeds previously provided guidance of $185 million to $195 million . The increase in deferred revenue for the fourth quarter of 2004 is expected to be in the range of $63 million to $66 million, which exceeds previously provided guidance of $40 million to $50 million .

GAAP diluted earnings per share for the fourth quarter of 2004 is expected to be in the range of $0 .34 to $0 .36. Non-GAAP diluted earnings per share for the fourth quarter of 2004 is expected to be in the range of $0 .40 to $0 .42 . In both GAAP and Non-GAAP diluted earnings per share estimations, fully diluted shares were approximated in the range of 97 .7 million to 98 .7 million, which takes into consideration the recent issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share" . Mercury's previously provided guidance of GAAP diluted earnings per share of $0 .28 to $0 .34 and Non-GAAP diluted earnings per share of $0.32 to $0 .38 were both expected to be reduced by $0 .03 to $0.04, due to the inclusion of the EITF .

Non-GAAP results for the fourth quarter of 2004 exclude stock-based compensation and amortization of intangibles and integration and other acquisition related charges in the range of $4 .1 million to $4 .4 million, a non-cash adjustment to excess facility charge of approximately $0 .2 million and net gain on investments of approximately $0 .1 million .

Mercury cautions that these results are preliminary, based on the information currently available, and are subject to the closing of its books and completion of its accounting procedures and determination of final accounting adjustments .

"We are very pleased with our strong performance in the fourth quarter and full year 2004," said Amnon Landan, chairman and CEO at Mercury . "We would like to thank our customers and partners for their continued investment in Mercurys BTO offerings.

Mercury will not host a conference call about today's news release . Mercury will report final fourth quarter and full year 2004 financial results, provide its first quarter 2005 financial outlook and hold its quarterly conference call on Wednesday, February 2, 2005 . Information regarding the conference call is available on Mercury's investor relations page at www rnerc uy rnrnlir .

About Mercury Mercury Interactive (NASDAQ : MERQ), the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology . Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today . Mercury provides software and services to govern the priorities, people, and processes of IT ; deliver and manage applications ; and integrate IT strategy and execution . Customers worldwide rely on Mercury offerings to improve quality and performance of applications and manage IT costs risks and compliance . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, visi t

Forward Looking Statement s This press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury's expected financial performance and results . Mercury's actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . The potential risks and uncertainties include, among other things : 1) the final closing of Mercury's books ; 2) the application of customary accounting procedures and adjustments ; 3) receipt of additional information impacting Mercury's financial results ; 4) further analysis of revenues and expenses; 5) the effect of the timing of the recognition of revenue from products sold under term licenses ; and 6) the additional risks and important factors described in Mercury's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2003, and the Quarterly Report on Form 10-0 for the fiscal quarter ended September 30, 2004, which are available at the SECS website at www.sec .gov . All of the information in this press release is made as of January 24, 2005, and Mercury undertakes no duty to update this information .

Non-GAAP Financial Informatio n Mercury evaluates its operations primarily based on GAAP results . In addition, Mercury's management believes it is useful to assess Mercury's performance based on non-GAAP results, which exclude charges for (i) acquisitions by Mercury (such as in-process research and development, integration and other related charges, stock-based compensation and amortization of intangible assets), (ii) excess facilities gain, and (iii) net gain on investments in non- consolidated companies . These charges are excluded because they are not considered to be ordinary and direct costs of Mercury .

Mercury's management uses the non-GAAP results in its own evaluation of performance and as an additional base line for assessing Mercury's future earnings potential . Mercury's management also uses the non-GAAP results for budget planning purposes on a quarterly basis for determining executive compensation .

Although Mercury's management finds its non-GAAP results useful in evaluating the performance of its business, its reliance on this measure is limited because items excluded from such measures often have a material impact on Mercury's net income and net income per share calculated in accordance with GAAP . Therefore, Mercury's management typically uses its non -GAAP results in conjunction with GAAP results, to address these limitations .

While the GAAP results are more complete, Mercury prefers to allow investors to have this supplemental measure since, with the reconciliation from non- GAAP to GAAP financial information, it may provide additional insight into its financial results . Mercury believes that presenting the non-GAAP results provides investors with an additional tool for evaluating the performance of its business . The non-GAAP financial measures are presented by Mercury in order to give investors further information about historical and expected results and increase their ability to compare financial information from period to period .

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Mercury, Mercury Interactive and the Mercury logo are trademarks or registered trademarks of Mercury Interactive Corporation in the United States and/or other countries . Other product and company names are used herein for identification purposes only, and may be trademarks of their respective companies .

Investor Relations Contacts MichelleAhlmann Mercury (650) 603-5464

Public Relations Contacts Dave Peterso n Mercury (650) 603-5231

Mercury Interactive Corporation Reports Fourth Quarter and 2004 Result s

• Revenue of $ 204 .3 million for the quarter; Growth of 34% versus Q4 2003 • Revenue of $ 685 .5 million for 2004 ; Growth of 35% versus 200 3 • Net Increase in Deferred Revenue of $67 .7 million for the quarter and $133 . 7 million for 2004 • Earnings Per Share for the quarter : $ 0 .36 GAAP ; $ 0 .42 Non-GAA P • Earnings Per Share for the year ended 2004 : $ 0 .83 GAAP ; $ 1 .09 Non-GAA P • Cash Flows from Operations : $ 66 .4 million for the quarter and $212 .8 million for 200 4

Mountain View, CA - Februa ry 2 , 2005 - Mercury Interactive Corporation (NASDAQ : MERO), the global leader in business technology optimization (BTO), today announced financial results for the fourth quarter and year ended December 31, 2004 .

Revenue for the fourth quarter of 2004 was $204 .3 million, an increase of 34 percent compared to $152 .0 million reported in the fourth quarter of 2003 . Revenue for the year ended December 31, 2004 was $685 .5 million, an increase of 35 percent compared to $506 .5 million reported for the year ended December 31, 2003 .

Deferred revenue for the fourth quarter of 2004 increased by $67 .7 million from the third quarter of 2004 to $414 .3 million. Cash generated from operations for the fourth quarter of 2004 was $66 .4 million compared to $66 .9 million in the fourth quarter of 2003 . Cash generated from operations for the year ended December 31, 2004 was $212 .8 million, compared to $180 .5 million for the year ended December 31, 2003 .

"2004 was our most successful year ever," said Amnon Landan, chairman and CEO at Mercury . 'Our customers are expanding their investments in Mercury Optimization Center offerings as they take an enterprise approach to streamlining IT . "

GAAP Results Net income for the fourth quarter of 2004 was $35 .0 million, or $0 .36 per diluted share, compared to $13 .1 million, or $0 .13 per diluted share, for the same period a year ago. Net income for the year ended December 31, 2004 was $84 .6 million, or $0.83 per diluted share, compared to $41 .5 million, or $0 .41 per diluted share, for the year ended December 31, 2003 .

Diluted earnings per share was calculated taking into consideration the recent issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share." Net income was adjusted for debt related costs on an 'as if converted basis by $0 .4 million and $1 .4 million for the quarter and year ended December 31, 2004, respectively . Fully diluted shares were 98 .2 million shares for the quarter and 103 .2 million shares for the year ended December 31, 2004 . Previously reported net income and diluted earnings per share have also been restated based on the effect of EITF 04-08 .

Non-GAAP Results Non-GAAP net income for the fourth quarter of 2004 was $40 .5 million, or $0.42 per diluted share, compared to $26 .2 million, or $0 .25 per diluted share, for the same period a year ago . Non-GAAP results for the fourth quarter of 2004, as presented in the attached reconciliation table, exclude stock-based compensation and amortization of intangibles of $4 .1 million, a non-cash reduction to excess facility charge of approximately $0 .2 million, a net loss on investments in non-consolidated companies and warrant of $0 .1 million and related tax expense decrease of $1 .5 million .

Non-GAAP net income for the year ended December 31, 2004 was $110 .6 million, or $1 .09 per diluted share, compared to $86 .1 million, or $0 .85 per diluted share, for the year ended December 31, 2003. Non-GAAP results for the year ended December 31, 2004, as presented in the attached reconciliation table, exclude stock-based compensation and amortization of intangibles of $16 .4 million, in-process research and development of $0.9 million, integration and other acquisition related charges of $3 .1 million, a net non-cash excess facilities charge of $8 .9 million, a gain on sale of available-for-sale securities of $0 .3 million, a net loss on investments in non-consolidated companies and warrant of $0 .6 million and related tax expense increase of $3 .6 million .

Based on the effect of EITF 04-08, non-GAAP net income and fully diluted shares were also adjusted in the calculation of diluted earnings per share by the same amounts GAAP diluted earnings per share were adjusted . In addition, previously reported non-GAAP net income and diluted earnings per share have been restated .

Financial Outlook The following financial outlook is provided based on information as of February 2, 2005 and management assumes no duty to update this guidance .

Management provides the following guidance for the first quarter of 2005:

• Revenue for the first quarter is expected to be in the range of $190 million to $200 millio n • Net increase in deferred revenue for the first quarter is expected to be in the range of $5 million to $15 million • GAAP diluted earnings per share for the first quarter is expected to be in the range of $0 .26 to $0.32 • Non-GAAP diluted earnings per share for the first quarter is expected to be in the range of $0 .28 to $0 .34 • Fully diluted shares outstanding for the first quarter is expected to be in the range of 98 million to 100 million, which takes into consideration the recent issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share .

Non-GAAP guidance for the first quarter of 2005 is adjusted from GAAP guidance by excluding stock-based compensation and amortization of intangible assets of $4 .0 million and a gain on the sale of our idle building of approximately $0 .3 million .

Management provides the following guidance for the full year of 2005 : • New Order Growth (revenue plus change in deferred revenue ) for the full year is expected to be in the range of 20 percent to 25 percent • Revenue growth for the full year is expected to be in the range of 28 percent to 32 percen t • Non-GAAP operating margin for the full year is expected to be in the range of 20 percent to 21 percent • GAAP diluted earnings per share for the full year is expected to be in the range of $1 .36 to $1 .4 6 • Non-GAAP diluted earnings per share for the full year is expected to be in the range of $1 .45 to $1 .5 5 • Cash flow from operations growth for the full year is expected to be in the range of 25 percent to 30 percen t

Non-GAAP guidance for 2005 is adjusted from GAAP guidance by excluding stock-based compensation and amortization of intangible assets of $15 .8 million and a gain on the sale of our idle building of approximately $0 .3 million .

Quarterly Conference Call Mercury will host a conference call to discuss fourth quarter results at 2 :00 p.m. Pacific Time today . A live Webcast of the conference call, together with supplemental financial information, can be accessed through the company's Investor Relations Web site at blip Uwww mrrcixy comlir . In addition, an archive of the Webcast can be accessed through the same link . An audio replay of the call will be available until midnight on February 8, 2005 . The audio replay can be accessed by calling (888) 203-1112 or (719) 457-0820, conference call code : 390468 .

About Mercury Mercury Interactive (NASDAQ : MERQ), the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology . Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today. Mercury provides software and services to govern the priorities, people, and processes of IT ; deliver and manage applications ; and integrate IT strategy and execution . Customers worldwide rely on Mercury offerings to improve quality and performance of applications and manage IT costs risks and compliance . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, please visit www mercurv .cnm .

Forward Looking Statements This press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercurys expected financial performance, as well as Mercury's future business prospects and product and service offerings . Mercury's actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . The potential risks and uncertainties include, among other things : 1) the mix of perpetual and term licenses and the effect of the timing of the recognition of revenue from products sold under term licenses ; 2) Mercury has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurs at the end of a quarter it could negatively impact its operating results for that quarter ; 3) the dependence of Mercury's financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy ; 4) the impact of any acquisitions or business combinations and uncertainties related to the integration of products and services, employees and operations as a result of acquisitions, including the acquisition of Appilog ; 5) the ability to attract and retain key personnel; 6) intense competition for Mercury's products and services ; 7) the impact related to the expensing of stock options and stock purchases under Mercury's employee stock purchase program under Financial Accounting Standards Board's Statement 123R, which is effective for quarters beginning after June 15, 2005 ; and 8) the additional risks and important factors described in Mercury's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2003, and the Quarterly Report on Form 1 O-Q for the fiscal quarter ended September 30, 2004, which are available at the SEC's website at www.sec .gov . All of the information in this press release is made as of February 2, 2005, and Mercury undertakes no duty to update this information .

Non-GAAP Financial Informatio n Mercury evaluates its operations primarily based on GAAP results. In addition, Mercury's management believes it is useful to assess Mercury's performance based on non-GAAP results, which exclude charges for either (i) acquisitions by Mercury (such as in-process research and development, integration and other related charges, stock-based compensation and amortization of intangible assets), (ii) excess facilities charges, (iii) gain on sale of available-for-sale securities ; (iv) losses on investments in non consolidated companies, (v) executive severance (vi) provision for income taxes, or (vii) stock-based compensation related to modification of stock options . These charges are excluded because they are not considered to be ordinary and direct costs of Mercury .

Mercury's management uses the non-GAAP results in its own evaluation of performance and as an additional base line for assessing Mercury's future earnings potential . Mercury's management also uses the non -GAAP results for budget planning purposes on a quarterly basis for determining executive compensation .

Although Mercury 's management finds its non -GAAP results useful in evaluating the pe rformance of its business , its reliance on this measure is limited because items excluded from such measures often have a material impact on Mercury's net income and net income per share calculated in accordance with GAAP . Therefore, Mercury's management typically uses its non -GAAP results in conjunction with GAAP results, to address these limitations.

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Editor's Note Tables Attached : Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Table of Reconciliation from GAAP to Non-GAAP .

Investor Relations Contacts Michelle Ahlmann (Levine) Mercury (650) 603-5464 Public Relations Contacts Dave Peterson Mercury (650) 603-5231

2006, Mercury Interactive Corporation Adam Sand declaration Exhibit 25 Press Releas e

Mercury Interactive Corporation Reports First Quarter Result s

• Revenue of $198 .8 million for the quarter ; Growth of 27% versus Q1 2004 • Net Increase in Deferred Revenue of $2 .6 M • Earnings Per Share : $0 .32 GAAP ; $0 .34 Non -GAAP • Cash Flows from Operations : $72 .1 millio n

Mountain View, CA - April 20, 2005 - Mercury Interactive Corporation (NASDAQ : MERQ), the global leader in business technology optimization (BTO), today announced financial results for the first quarter ended March 31, 2005 .

Revenue for the first quarter of 2005 was $198 .8 million, an increase of 27 percent compared to $156 .8 million reported in the first quarter of 2004 .

Deferred revenue for the first quarter of 2005 increased by $2 .6 million from the fourth quarter of 2004 to $417 .0 million. Cash generated from operations for the first quarter of 2005 was $72 .1 million compared to $62 .0 million in the first quarter of 2004 .

"Q1 was a strong start for the year," said Amnon Landan, CEO at Mercury . "Customers continue to invest in our solutions and leverage our broad and flexible portfolio of BTO offerings "

GAAP Result s Net income for the first quarter of 2005 was $31 .4 million, or $0 .32 per diluted share, compared to $18 .9 million, or $0 .18 per diluted share, for the same period a year ago .

Diluted earnings per share was calculated taking into consideration the recent issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share ." Net income was adjusted for debt related costs on an 'as if converted basis by $0.4 million for the quarter. Fully diluted shares were 99 .4 million shares for the quarter ended March 31, 2005. Previously reported net income and diluted earnings per share for the first quarter ended March 31 2004 have also been restated based on the effect of EITF 04-08 .

Non-GAAP Results Non-GAAP net income for the first quarter of 2005 was $33 .8 million, or $0 .34 per diluted share, compared to $23 .8 million, or $0 .22 per diluted share, for the same period a year ago . Non-GAAP results for the first quarter of 2005, as presented in the attached reconciliation table, exclude the following items : stock- based compensation and amortization of intangibles related primarily to previous acquisitions of $4 .0 million ; a gain on a sale of a vacant facility of $0.3 million ; a gain on investment of $1 .0 million ; a net loss on investments in non-consolidated companies and warrant of $0 .3 million ; and related tax effect of the items above.

Financial Outlook The following financial outlook is provided based on information as of April 20, 2005 and management assumes no duty to update this guidance .

Management provides the following guidance for the second quarter of 2005 :

• Revenue for the second quarter is expected to be in the range of $205 million to $215 million ; • Net increase in deferred revenue for the second quarter is expected to be in the range of $20 million to $30 million ; • GAAP diluted earnings per share for the second quarter is expected to be in the range of $0 .30 to $0 .34; • Non-GAAP diluted earnings per share for the second quarter is expected to be in the range of $0 .33 to $0 .37 ; an d • Fully diluted shares outstanding for the second quarter is expected to be in the range of 99 million to 101 million, which takes into consideration the issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share ."

Non-GAAP guidance for the second quarter of 2005 is adjusted from GAAP guidance by excluding stock-based compensation and amortization of intangible assets related primarily to previous acquisitions of $3 .9 million .

Management reiterates the full year 2005 guidance as provided on February 2, 2005, except that it increases the following full year 2005 guidance :

• GAAP diluted earnings per share for the full year is expected to be in the range of $1 .41 to $1 .48 • Non-GAAP diluted earnings per share for the full year is expected to be in the range of $1 .50 to $1 .57

Non-GAAP guidance for 2005 is adjusted from GAAP guidance to exclude the following items : stock -based compensation and amortization of intangible assets related primarily to previous acquisitions of $15 .8 million, a gain on investments of $1 .0 million, a net loss on investment in non-consolidated companies and warrant of $03 million and a gain on a sale of vacant facilities of $0 .3 million ; and related tax effect of the items above .

Quarterly Conference Cal l Mercury will host a conference call to discuss first quarter results at 2 .00 p.m . Pacific Time today . A live Webcast of the conference call, together with supplemental financial information , can be accessed through the company's Investor Relations Web site at hitp 11www me-up, cnmlir . In addition , an archive of the Webcast can be accessed through the same link . An audio replay of the call will be available until midnight on April 26, 2005. The audio replay can be accessed by calling (888) 203-1112 or (719) 457-0820, conference call code : 7884690 .

About Mercury Mercury Interactive Corporation (NASDAQ : MERQ), the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology . Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today . Mercury provides software and services to govern the priorities, people and processes of IT ; deliver and manage applications ; and integrate IT strategy and execution . Customers worldwide rely on Mercury offerings to improve quality and performance of applications and manage IT costs, risks and compliance . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, please visit w'aw mernmi core.

Forward Looking Statement s This press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercurts expected financial performance, as well as Mercurys future business prospects and product and service offerings . Mercury's actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . The potential risks and uncertainties include, among other things : 1) the mix of perpetual and term licenses and the effect of the timing of the recognition of revenue from products sold under term licenses ; 2) Mercury has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurs at the end of a quarter it could negatively impact its operating results for that quarter ; 3) the dependence of Mercury's financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy ; 4) the impact of any acquisitions or business combinations and uncertainties related to the integration of products and services, employees and operations as a result of acquisitions ; 5) the ability to attract and retain key personnel ; 6) intense competition for Mercury's products and services; 7) the impact related to the expensing of stock options and stock purchases under Mercury's employee stock purchase program under Financial Accounting Standards Board's Statement 123R (SEAS 123R) which Mercury will be required to adopt for fiscal years beginning after December 31, 2005 ; and 8) the additional risks and important factors described in Mercury's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2004, and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004, which are available at the SEC's website at www .sec .gov . All of the information in this press release is made as of Ap ri l 20, 2005, and Mercury undertakes no duty to update this information .

Non-GAAP Financial Informatio n The Company's management uses the non-GAAP results in its own evaluation of performance and an additional base line for assessing the future earnings potential of the Company. The Company's management also uses the non-GAAP results for budget planning purposes on a quarterly basis and for determining executive compensation .

Non-GAAP results are not to be considered in isolation and are not in accordance with, or a substitute for, GAAP results and may be different from similar measures used by other companies, even if similar terms are used to identify such measures . Although the Company's management finds its non-GAAP results useful in evaluating the performance of its business, its reliance on these measures is limited because items excluded from such measures often have a material impact on the Company's net income and net income per share calculated in accordance with GAAP . Therefore, the Company's management typically uses its non-GAAP results in conjunction with GAAP results, to address these limitations . Investors should also consider these limitations when evaluating the results of the Company .

While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental measure since, with the reconciliation from non-GAAP to GAAP financial information, it may provide additional insight into its financial results . For example, the non-GAAP results provide an indication of the Company's baseline performance before the effects of business combination adjustments and other charges that are considered by management to be outside of the Company's core operational results . The Company believes that presenting the non-GAAP results provides investors with an additional tool for evaluating the performance of the Company's business, particularly on a comparative basis from period to period. The non-GAAP financial measures are presented by the Company in order to give investors further information about historical and expected results and increase their ability to compare financial information from period to period .

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Investor Relations Contacts Michelle Ahlman n Mercury (650) 603-5464

Public Relations Contacts Dave Peterson Mercury (650) 603-5231

Mercury Interactive Corporation Reports Preliminary Second Quarter Result s

Mountain View, CA - July 5, 2005 - Mercury Interactive Corporation (NASDAQ : MERQ), the global leader in business technology optimization (BTO), today announced that based on its preliminary review of its second quarter results, it expects to achieve between $200 .0 million and $205 .0 million in revenues for the second quarter of 2005, compared to the guidance of $205 .0 million to $215.0 million which Mercury gave in its April 20, 2005 press release . Mercury expects that its non-GAAP fully diluted earnings per share for the second quarter will be between $0 .30 and $0 .35, compared to the non-GAAP earnings per share guidance of $0 .33 to $0 .37 in the April 20, 2005 press release . Mercury expects that its change in deferred revenue will be between zero and $10.0 million, below the guidance of $20 .0 million to $30 .0 million in the April 20, 2005 press release . This new range takes into account the expected revaluation of deferred revenue due to foreign exchange movements and a shortfall in new orders in the second quarter . The April 20, 2005 non-GAAP earnings per share guidance for the second quarter had been adjusted to exclude the following GAAP items : stock based compensation and amortization of intangible assets related primarily to previous acquisitions of $3 .9 million . The new non-GAAP earnings per share estimates also exclude $16 .0 million which Mercury expects to incur in the second quarter for the write down of certain technology related to a license from Motive, Inc . and certain other expenses discussed below .

"The disappointing second quarter results are due primarily to a shortfall in Europe," stated Mercury Chairman and Chief Executive Officer Amnon Landan . "Mercury has a large market opportunity, strong competitive position, and global customer base . We have also been engaged over the past several months in a thorough review of our business operations and are now taking proactive actions to position us to execute in the second half of 2005 . These actions will result in third quarter restructuring charges . "

In response to an informal inquiry of the Securities and Exchange Commission entitled In the Matter of Certain Option Grants , which was initiated by the SEC in November 2004, the Company's Board of Directors has appointed a Special Committee consisting of disinterested members of the Audit Committee to conduct an internal investigation relating to past stock option grants . The Special Committee is being assisted by independent outside legal counsel and accounting experts . Mercury continues to fully cooperate with both of these inquiries .

These inquiries could cause the Company to restate its financial statements for prior periods . Both the SEC inquiry and the Special Committee investigation are ongoing . Mercury is unable to determine at this time whether a restatement will be necessary, and if so, the years affected and the amounts involved . The Company does not believe that a restatement would have an impact on its historical revenues, cash position, or non-stock option related operating expenses .

The Company estimates that it has incurred approximately $1 .0 million of unanticipated expenses in the second quarter of 2005 for both the Special Committee investigation and the SEC inquiry, which are excluded in the non-GAAP earnings per share estimates being provided in this press release .

The Company assumes no duty to update the information contained in this press releas e

Q2 2005 Earnings Conference Cal l Mercury will host a conference call at 2 p .m . Pacific Standard Time on July 28, 2005 . At such time, Mercury will address in greater detail its second quarter results, its restructuring plans for the second half of 2005, and update its guidance for the second half of 2005 .

About Mercury Mercury Interactive Corporation (NASDAQ: MERQ), the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today . Mercury provides software and services to govern the priorities, people and processes of IT, deliver and manage applications ; and integrate IT strategy and execution . Customers worldwide rely on Mercury offerings to improve quality and performance of applications and manage IT costs, risks and compliance. Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, please visit wwwmercurvrem.

Forward Looking Statement s The press release contains 'forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury's expected financial performance for the second quarter of fiscal 2005, as well as Mercury's future business prospects and product and service offerings . Mercurys actual second quarter results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . The potential risks and uncertainties include, among other things : 1) the results of the Special Committee investigation and the informal SEC inquiry ; 2) charges for the write down of certain technology assets in the second quarter, and second quarter costs incurred by Mercury in connection with the Special Committee investigation and the SEC inquiry ; 3) second quarter 2005 revenues, expenses and earnings per share ; 4) the mix of perpetual and term licenses in the second quarter and the effect of the timing of the recognition of revenue from products sold under term licenses ; 5) Mercury has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurred at the end of the second quarter it could negatively impact its operating results for that quarter ; 6) the expected effect of foreign exchange movements; 7) the amount of restructuring charges to be incurred by Mercury in the third quarter ; 8) dependence of Mercurys financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy ; 9) the impact related to the expensing of stock options and stock purchases under Mercury's employee stock purchase program under Financial Accounting Standards Board's Statement 123 ; and 10) the additional risks and important factors described in Mercury's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2004, and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, which are available at the SEC's website at www eer nnv . All of the information in this press release is made as of July 5, 2005, and Mercury undertakes no duty to update this information .

Non-GAAP Financial Informatio n The Company's management uses the non-GAAP results in its own evaluation of performance and as an additional baseline for assessing the future earnings potential of the Company . The Company's management also uses the non-GAAP results for budget planning purposes on a quarterly basis and for determining executive compensation .

While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental measure since, with the reconciliation from non-GAAP to GAAP financial information ; it may provide additional insight into its financial results . For example, the non-GAAP results provide an indication of the Company's baseline performance before the effects of business combination adjustments and other charges that are considered by management to be outside of the Company's core operational results . The Company believes that presenting the non-GAAP results provides investors with an additional tool for evaluating the performance of the Company's business, particularly on a comparative basis from period to period . The non-GAAP financial measures are presented by the Company in order to give investors further information about historical and expected results and increase their ability to compare financial information from period to period .

Mercu ry Interactive Corporation 379 N . Whisman Roa d Mountain View, CA 9404 3 Tel : (650) 603-5200 Fax : (650) 603-5300 www morn iry nom

Investor Relations Contacts Michelle Ahlman n Mercury (650) 603-546 4

Public Relations Contacts Dave Peterso n Mercury (650) 603-5231

Mercury Interactive Corporation Reports Second Quarter Results * Revenue of $207 .1 million; Growth of 30% versus Q2 2004 * Net decrease in Deferred Revenue of $1 .5 million * Earnings Per Share: $0.19 GAAP (Subject to reduction after likely restatement) ; $0.37 Non-GAAP * Cash Flow from Operations : $47.7 millio n

MOUNTAIN VIEW, Calif ., July 28 /PRNewswire-FirstCall/ -- Mercury Interactive Corporation , the global leader in business technology optimization (BTO), today announced financial results for the second quarter ended June 30, 2005 .

Revenue for the second quarter of 2005 was $207 .1 million, an increase of 30 percent compared to $159.0 million reported in the second quarter of 2004 .

Deferred revenue for the second quarter of 2005 decreased by $1 .5 million from the first quarter of 2005 to a balance of $415 .5 million . The deferred revenue balance was impacted approximately by a $7 .6 million decrease resulting from foreign exchange fluctuations as compared to the prior quarter . Cash generated from operations for the second quarter of 2005 was $47 .7 million compared to $41 .1 million in the second quarter of 2004 .

"We did not meet all of our targets in Q2, primarily due to a shortfall in Europe," said Amnon Landan, chairman and CEO at Mercury . "We have already taken proactive action to capitalize on our market opportunities in Europe . Demand for our solutions continues to be robust and I believe Mercury is one of the best positioned companies in the enterprise technology market ."

Likely Restatement Related to Stock-Based Compensatio n

As previously disclosed, in response to an informal inquiry initiated by the SEC, Mercury's Board of Directors established a Special Committee consisting of disinterested members of the Audit Committee t o

Page 1 O 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva) . All rights reserved . conduct an internal investigation relating to past stock option grants . The Special Committee is being assisted by independent outside legal counsel and accounting experts . The Special Committee has not yet completed its work or reached final conclusions . The Special Committee has, however, reached a preliminary conclusion that the actual date of determination for certain past stock option grants differed from the stated grant date for such awards, which would result in additional charges to Mercury for stock- based compensation expenses . The Special Committee is continuing its investigation . Based on the Special Committee's preliminary determination, Mercury believes, but has not yet concluded, that (i) such charges are likely to be material and (ii) accordingly, it is highly likely that Mercury will need to restate its historical GAAP financial statements, including those contained in this press release, and adjust the GAAP guidance in this press release to take into account additional charges for stock-based compensation expenses. Any such charges would have the effect of decreasing GAAP earnings and retained earnings figures contained in Mercury's historical GAAP financial statements and this press release. Mercury does not believe that the restatement, if required, would have an impact on its historica l revenues, cash position, non- stock option related operating expenses or non-GAAP information included in this press release .

GAAP Results

Net income for the second quarter of 2005 was $18 .6 million, or $0.19 per diluted share, compared to $11 .6 million, or $0 .11 per diluted share, for the same period a year ago . Such net income and earnings per share for the 2005 and 2004 periods do not take into account the effects of the likely restatement referred to above.

Diluted earnings per share was calculated taking into consideration the issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share ." Net income was adjusted for debt related costs on an 'as if converted basis by $0 .4 million for the quarter . Fully diluted shares were 99 .8 million shares for the quarter ended June 30, 2005 . Previously reported net income and diluted earnings per share for the second quarter ended June 30, 2004 have also been restated based on the effect of EITF 04-08 .

Non-GAAP Results

Non-GAAP net income for the second quarter of 2005 was $36.7 million, or $0 .37 per diluted share, compared to $22 .0 million, or $0 .21 per diluted share, for the same period a year ago . Non-GAAP results for the second quarter of 2005, as presented in the attached reconciliation table, exclude the following items: stock-based compensation and amortization of intangibles related primarily to previous acquisitions of $3 .9 million (such stock-based compensation would be further increased as a result of the likel y

Page 2 © 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva). All rights reserved. restatement referred to above) ; the impairment of Allerez intangible asset of $0 .6 million ; the impairment of certain technology related to a license from Motive, Inc . of $15.4 million; expenses incurred from the special committee investigation and the SEC inquiry of $0 .9 million ; and related tax effect of the items above.

Financial Outloo k

The following financial outlook is provided based on information as of July 28, 2005 and management assumes no duty to update this guidance .

Management provides the following guidance for the third quarter of 2005:

* Revenue for the third quarter is expected to be in the range of $205 million to $215 million ;

* Non-GAAP operating margin for the third quarter is expected to be in the range of 17 percent to 18 percent;

* GAAP diluted earnings per share for the third quarter is expected to be in the range of $0 .17 to $0 .22 (such diluted earnings per share forecast does not take into account the effects of the likely restatement referred to above) ;

* Non-GAAP diluted earnings per share for the third quarter is expected to be in the range of $0 .31 to $0.35; and

* Fully diluted shares outstanding for the third quarter is expected to be in the range of 99 million to 101 million, which takes into consideration the issuance of EITF 04-08, "Effect of Contingently Convertible Debt on Diluted Earnings per Share" (such fully diluted shares outstanding forecast does not take into account the effects of the likely restatement referred to above) .

Non-GAAP guidance for the third quarter of 2005 is adjusted from GAAP guidance to exclude the following items : stock-based compensation and amortization of intangible assets related primarily to previous acquisitions of $3 .9 million (such stock-based compensation would be further increased as a

Page 3 02006 Dow Jones Reuters Business Interactive LLC (trading as Factiva ). All rights reserved. result of the likely restatement referred to above) ; expenses expected to be incurred from the special committee investigation and the SEC inquiry of approximately $6 .5 million ; restructuring and severance charges of $4 .2 million to $5.2 million ; and related tax effects of the items above .

Management updates the full year 2005 guidance as provided on February 2, 2005 :

* New order growth (revenue plus change in deferred) for the full year is expected to be in the range of 13 percent to 16 percent ;

* Revenue growth for the full year is expected to be in the range of 23 percent to 27 percent ;

* Non-GAAP operating margin for the full year is expected to be in the range of 19 percent to 20 percent ; and

* Management will not provide full year cash from operations guidance at this time .

Management updates the full year 2005 guidance as provided on April 20, 2005 :

* GAAP diluted earnings per share for the full year is expected to be in the range of $1 .01 to $1 .07 (such diluted earnings per share forecast does not take into account the effects of the likely restatement referred to above) ; and

* Non-GAAP diluted earnings per share for the full year is expected to be in the range of $1 .45 to $1 .50 .

Non-GAAP guidance for 2005 is adjusted from GAAP guidance to exclude the following items : stock- based compensation and amortization of intangible assets related primarily to previous acquisitions of $15 .6 million (such stock-based compensation would be further increased as a result of the likely restatement referred to above) ; a gain on investments of $1 .0 million ; a net loss on investment in non- consolidated companies and warrant of $0 .3 million; a gain on a sale of vacant facilities of $0 .3 million ; the impairment of Allerez intangible asset of $0 .6 million; the impairment of certain technology related to a license from Motive, Inc . of $15.4 million ; expenses expected to be incurred from the special committee investigation and the SEC inquiry of approximately $13 .5 million ; restructuring and severance charges of $4.2 million to $5 .2 million ; and related tax effect of the items above.

Quarterly Conference Call

Mercury will host a conference call to discuss second quarter results at 2 :00 p.m. Pacific Time today . A

Page 4 02006 Dow Jones Reuters Business Interactive LLC (trading as Factiva). All rights reserved. live Webcast of the conference call, together with supplemental financial information, can be accessed through the company's Investor Relations Web site at http ://www .mercury.com/ir . In addition, an archive of the Webcast can be accessed through the same link . An audio replay of the call will be available until midnight on August 3, 2005 . The audio replay can be accessed by calling 888-203-1112 or 719-457- 0820, conference call code : 4140628 .

About Mercury

Mercury Interactive Corporation, the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today. Mercury provides software and services for IT Governance, Application Delivery, and Application Management . Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, please visit http ://www .mercury.com/ .

Forward Looking Statements

The press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury's expected financial performance, as well as Mercury's future business prospects and product and service offerings . Mercury's actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . The potential risks and uncertainties include, among other things : 1) the results of the Special Committee investigation and the informal SEC inquiry ; 2) charges for the write down of certain technology assets and costs incurred by Mercury in connection with the Special Committee investigation and the SEC inquiry; 3) the mix of perpetual and term licenses and the effect of the timing of the recognition of revenue from products sold under term licenses ; 4) Mercury has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurred at the end of a quarter it could negatively impact its operating results for that quarter ; 5) the expected effect of foreign exchange movements ; 6) the amount of restructuring charges to be incurred by Mercury ; 7) dependence of Mercury's financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy ; 8) the impact related to the expensing of stock options and stock purchases under Mercury's employee stock purchase program under Financial Accounting Standards Board's Statement 123 including, without limitation, the impact of the likely restatement referred to above ; 9) the impact of any acquisitions or business combinations an d

Page 5 O 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva) . All rights reserved. uncertainties related to the integration of products and services, employees and operations as a result of acquisitions; 10) the ability to attract and retain key personnel ; 11) intense competition for Mercury's products and services; and 12) the additional risks and important factors described in Mercury's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2004, and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, which are available at the SEC's website at http ://www.sec.gov/ . All of the information in this press release is made as of July 28, 2005, and Mercury undertakes no duty to update this information .

Non-GAAP Financial Informatio n

The Company' s management uses the non -GAAP results in its own evaluation of performance and as an additional baseline for assessing the future earnings potential of the Company . The Company's management also uses the non-GAAP results for budget planning purposes on a quarterly basis and for determining executive compensation.

While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental measure since, with the reconciliation from non-GAAP to GAAP financial information ; it may provide additional insight into its financial results . For example, the non-GAAP results provide an indication of the Company's baseline performance before the effects of business combination adjustments and other charges that are considered by management to be outside of the Company's core operational results . The Company believes that presenting the non-GAAP results provides investors with an additional tool for evaluating the performance of the Company's business, particularly on a comparative basis from period to period. The non-GAAP financial measures are presented by th e Company in order to give investors further information about historical and expected results and increase their ability to compare financial information from period to period .

Editor's Note

Page 6 O 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva) . All rights reserved . Tables Attached : Condensed Consolidated Statements of Operations , Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows , Table of Reconciliation from GAAP to Non- GAAP .

MERCURY INTERACTIVE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATION S (in thousands, except per share data) (unaudited )

Three months ended Six months ended June 30, June 30 , 2005 2004 2005 200 4 Revenues : License fees $79,389 $59,942 $150,100 $117,51 5 Subscription fees 45,348 34,628 91,300 70,53 5 Total product revenues 124,737 94,570 241,400 188,05 0 Maintenance fees 59,848 48,143 116,422 95,03 2 Professional service fees 22,477 16,334 48,002 32,77 1 Total revenues 207,062 159,047 405,824 315,85 3 Costs and expenses : Cost of license and subscription 11,715 9,883 22,584 19,70 2 Cost of maintenance 4,520 3,952 8,762 7,54 4 Cost of professional services 23,013 14,855 44,085 28,39 8 Cost of revenue-amortization o f intangible assets 2,506 2,402 5,012 5,00 7 Marketing and selling 88,588 76,248 175,507 150,21 1 Research and development 22,759 17,763 41,589 35,04 9 General and administrative 17,932 12,024 35,270 24,26 9 * Stock-based compensation 55 183 172 392 Integration and other relate d charges -- 1,131 -- 2,11 0 Amortization of intangibl e assets 1,353 1,342 2,706 2,67 7 Loss on intangible and othe r assets 15,998 -- 15,99 8 Excess facilities charge -- 9,178 -- 9,17 8 Total costs and expenses 188,439 148,961 351,685 284,53 7 * Income from operations 18,623 10,086 54,139 31,31 6 Other income, net 4,889 3,352 8,135 6,59 6 * Income before provision for incom e taxes 23,512 13,438 62,274 37,91 2 * Provision for income taxes 4,883 1,827 12,206 7,39 3 * Net income $18,629 $11,611 $50,068 $30,51 9 * Net income per share (basic) $0 .21 $0 .13 $0 .58 $0 .3 3 * Adjusted net income per shar e (diluted) $0 .19 $0 .11 $0 .51 $0 .2 9 Weighted average common share s (basic) 86,767 92,448 86,247 91,94 9

Reconciliation of Net Income to Adjusted Net Income fo r Diluted Net Income per Share Calculation : * Net incom e $18,629 $11,611 $50,068 $30,519 Debt expense, net of ta x 360 359 717 71 7 * Adjusted net income for diluted net income per share calculation $18,989 $11,970 $50,785 $31,23 6

* The amounts reflected for this line, for all periods presented, do not take into account the effects of the likely restatement .

MERCURY INTERACTIVE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET S (in thousands) (unaudited)

June 30, December 31 , 2005 200 4 ASSET S Current assets : Cash and cash equivalents $717,914 $182,868 Short-term investments 173,155 447,45 3 Trade accounts receivable, net 181,225 224,01 1 * Deferred tax assets, net 10,140 10,14 0 Prepaid expenses and other assets 61,611 76,38 2 Total current assets 1,144,045 940,85 4

Long-term investments 421,573 508,12 0 Property and equipment, net 79,268 78,41 5 Investments in non-consolidated companies 12,899 13,03 1 Debt issuance costs, net 9,404 11,25 8 Goodwill 395,439 395,43 9 Intangible assets, net 30,086 38,45 2 Restricted cash and investment 6,373 6,00 0 Interest rate swap 1,465 4,83 2 Other assets 23,256 23,54 9 Total assets $2,123,808 $2,019,95 0

LIABILITIES AND STOCKHOLDERS' EQUIT Y Current liabilities : Accounts payable $13,774 $20,00 8 Accrued liabilities 114,342 128,99 7 * Income taxes, net 78,760 65,57 8 Short-term deferred revenue 319,925 312,11 5 Total current liabilities 526,801 526,69 8 Convertible notes 801,104 804,48 3 Long-term deferred revenue 95,545 102,20 5 * Long-term deferred tax liabilities, net 606 3,19 2 Other long-term payables, net 3,851 2,38 6

Stockholders' equity : Common stock 17 4 170 * Additional paid-in capital 655,64 8 599,976 Treasury stock (348,249 ) (348,249 ) Notes receivable from issuance o f common stock (2,851 ) (4, 173) Unearned stock-based compensation (395 ) (608) Accumulated other comprehensive loss (5,546 ) (13, 182) * Retained earnings 397,12 0 347,052 Total stockholders' equity 695,90 1 580, 98 6 Total liabilities an d stockholders' equity $2,123,808 $2,019,95 0

* The amounts reflected for this line, for all periods presented, do not take into account the effects of the likely restatement .

MERCURY INTERACTIVE CORPORATION CONDENSED CONSOL IDATED STATEMENTS OF CASH FLOW S (in thousands ) (unaudited )

Three months ended Six mont hs ended June 30, June 30 , 2005 2004 2005 200 4 Cash flows from operatin g activities : * Net income $18,629 $ 11,611 $50,068 $30,51 9 Adjustments to reconcil e net income to net cas h provided by operatin g activities : Depreciation and amortization 6,051 5,177 11,875 10,09 2 Sales reserve 1,142 (479) 1,746 (242 ) Unrealized loss (gain ) on interest rate swap 10 62 (11) 1 8 Amortization of intang ibl e assets 3,859 3,744 7,718 7,68 4 * Stock-based compensation 55 183 172 39 2 Loss (gain) on investment s in non-consolidate d companies (141) -- (4) 45 5 Loss on intangible and ot he r assets 15,998 -- 15,998 - - Loss (gain) on disposal s of assets (1) -- (302) 27 5 Gain on sale of available-for-sal e investment (4) (336) (4) (336 ) Gain on investment -- -- (994) -- Unrealized loss (gain) o n

Page 9 02006 Dow Jones Reuters Business Interactive LAC (trading as Factiva ). All rights reserved. warrant 166 (60) 303 (392 ) Facilities impairment -- 9,178 9,17 8 * Tax benefit from employe e stock options 1,592 -- 1,59 2 * Deferred income taxes (1,302) (1,707) (2,585) (2,992 ) Changes in assets an d liabilities, net of effec t of acquisitions : Trade account s receivable (3,671) (21,959) 36,768 (4,306 ) Prepaid expenses an d other assets (10,258) (7,073) (5,139) (8,580 ) Accounts payable (3,138) (325) (5,925) 64 6 Accrued liabilities 7,975 14,650 (13,523) 5,12 8 Income taxes 6,504 (788) 13,200 5,23 9 Deferred revenue 4,445 26,662 8,983 46,65 7 Other long-term payables 1,393 1,001 1,466 2,05 7 Net cash provided b y operating activities 47,712 41,133 119,810 103,08 4

Cash flows from investin g activities : Maturities of investments 797,123 117,324 1,104,132 280,90 5 Purchases of held-to - maturity investments ( 783,101) (145,346) (1,080,548) (332,592 ) Proceeds from sale o f available-for-sal e investments 35,617 342,981 394,093 599,68 1 Purchases of available - for-sale investments -- (322,768) (62,375) (657,797 ) Decrease in restricte d cash, net 5,840 -- 5,840 -- Distribution from investme n t in non-consolidated compa ny 958 -- 958 -- Proceeds from return o n investment in non - consolidated company -- -- 350 1,52 5 Purchases of investment s in non-consolidate d company (375) (750) (1,125) (1,500 ) Cash paid in conjunctio n with the acquisition o f Kintana -- (93) -- (163 ) Net proceeds from sale o f assets and vacant facilit ies 3 103 4,861 2,64 0 Acquisition of property an d equipment, net (3,481) (8,748) (11,168) (19,280 ) Net cash provided b y (used in) investin g activities 52,584 (17,297) 355,018 (126,581 )

Cash flows from financin g activities : Proceeds from issuance o f common stock under stoc k option and employee stoc k purchase plans 14,944 24,375 56,320 66,91 8

Page 10 O 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva) . All rights reserved . Collection of note s receivable from issuanc e of common stock -- 1,287 650 1,43 6 Net cash provided b y financing activities 14,944 25,662 56,970 68,35 4

Effect of exchange rat e changes on cash 2,784 219 3,248 8

Net increase in cash an d cash equivalents 118,024 49,717 535,046 44,86 5 Cash and cash equivalent s at beginning of period 599,890 123,119 182,868 127,97 1 Cash and cash equivalent s at end of period $717,914 $172,836 $717,914 $172,83 6

* The amounts reflected for this line, for all periods presented, do not take into account the effects of the likely restatement .

MERCURY INTERACTIVE CORPORATIO N TABLE OF RECONCILIATION FROM GAAP TO NON-GAAP (in thousands, except per share data ) (unaudite d )

Three mon ths ended Six months ende d June 30, June 30 , 2005 2004 2005 200 4 GAAP Net Income t o Non-GAAP Net Income : * GAAP net income $18,629 $11,611 $50,068 $30,51 9 Bonus program (Performant) -- 1,131 -- 2,11 0 Excess facilities charge 9,178 -- 9,17 8 Gain on sale of vacant facility -- - (328) - - Gain on sale of available - for-sale investment (4) (336) (4) (336 ) Gain on investment -- -- (994 ) Net loss (gain) on investment s in non-consolidated companie s and warrant 25 (60) 299 6 3 Stock-based compensation an d amortization of intangibl e assets (Freshwater) -- 334 10 87 8 Stock-based compensation an d amortization of intangibl e assets (Performant) 173 297 346 60 0 Stock-based compensation an d amortization of intangibl e assets (Kintana) 3,137 3,160 6,279 6,33 2 * Stock-based compensation an d amortization of intangibl e assets (other) 112 136 271 26 6 Amortization of intangibl e

Page 11 O 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva). All rights reserved . assets (Appilog) 492 984 Loss on other asse t (Motive) 15,35 0 15, 35 0 Loss on intangible asse t (Allerez) 64 8 648 - Special Committe e investigation and SE C inquiry costs 902 902 - * Provision for income taxes (2,746 ) (3,492) (3,280) (3,871 ) Non-GAAP net income $36,71 8 $21,959 $70,551 $45,73 9

Non-GAAP Net Income t o Adjusted Non-GAAP Net Inc om e for Dilute d EPS Calculation : Non-GAAP net income $36,71 8 $21,959 $70,551 $45,739 Debt expense, net of tax 360 359 717 71 7 Adjusted Non-GAAP net inco me for diluted EP S calculation $37,07 8 $22,318 $71, 268 $46,45 6

GAAP Diluted EPS to Non-GAAP Diluted EPS : * GAAP net income per share - diluted $0 .19 $0 .11 $0 .51 $0 .29 Bonus program (Performant) -- 0 .01 0 .02 Excess facilities charge -- 0 .09 0 .0 9 Gain on sale of vacan t facility -- -- (0 .00) (1 ) -- Gain on sale of available- for-sale investment (0 .00)(1) (0 .00)(1) (0 .00)(1) (0 .00)(1) Gain on investment -- -- (0 .01) -- Net loss (gain) o n investments in non - consolidated companie s and warrant 0 .00(1 ) (0 .00)(1) 0 .00(1) 0 .00(1 ) Stock-based compensatio n and amortization o f intangible asset s (Freshwater) -- 0 .00(1) 0 .00(1) 0 .0 1 Stock-based compensatio n and amortization o f intangible asset s (Performant) 0 .00(1 ) 0 .00(1) 0 .00(1) 0 .01 Stock-based compensatio n and amortization o f intangible assets (Kintana) 0 .0 3 0 .03 0 .06 0 .0 6 * Stock-based compensatio n and amortization o f intangible assets (other) 0 .00(1 ) 0 .00(1) 0 .00(1) 0 .00(1) Amortization of intangibl e assets (Appilog) 0 .00(1 ) 0 .01 -- Loss on other asset (Motive) 0 .1 5 0 .15 -- Loss on intangible asse t (Allerez) 0 .0 1 0 .01 -- Special Committe e investigation and SEC

Page 12 O 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva) . All rights reserved . inquiry costs 0 .01. -- 0 .0 1 * Provision for income taxes (0 .03) (0 .03) (0 .03) (0 .04 ) Non-GAAP net income pe r share-diluted $0 .37(2) $0 .21 $0 .72(2) $0 .43(2 )

(1) Amount is less than $0 .00 5 (2) Amount does not foot due to roundin g

GAAP Operating Margin t o Non-GAAP Operating Margin : * GAAP operating margin 9 .0% 6 .3% 13 .3% 9 .9 % Bonus program (Performant) -- 0 .7% -- 0 .7 % Excess facilities charge -- 5 .8% -- 2 .9 % Stock-based compensatio n and amortization o f intangible asset s (Freshwater) -- 0 .2% 0 .00(1) 0 .3 % Stock-based compensation an d amortization of intangibl e assets (Performant) 0 .1% 0 .2% 0 .1% 0 .2 % Stock-based compensation an d amortization of intangibl e assets (Kintana) 1 .5% 2 .0% 1 .5% 2 .0 % * Stock-based compensation and amortization of intangibl e assets (other) 0 .1% 0 .1% 0 .1% 0 .1 % Amortization of intangibl e assets (Appilog) 0 .2% -- 0 .2% -- Loss on other asset (Motive) 7 .4% -- 3 .8% -- Loss on intangible asse t (Allerez) 0 .3% -- 0 .2% -- Special Committee investigatio n and SEC inquiry costs 0 .4% -- 0 .2% -- Non-GAAP operating margin 19 .0% 15 .3% 19 .4% 16 .00( 2 )

(1) Amount is less than 0 .05% (2) Amount does not foot due to roundin g

* The amounts reflected for this line, for all periods presented, do not take into account the effects of the likely restatement .

Web site : http://www . mercury.com/

Document PRN0000020050728e17s008e q

Mercury Provides Update on Restatement

• Concludes Restatement Required • Restatement Not Expected Before November 200 5 • Mercury Receives Notice From Trustee on Convertible Note s

Mountain View , CA - August 29, 2005 - Mercury Interactive Corporation (Nasdaq : MERQE) previously disclosed that it had created a Special Committee, comprised of disinterested members of the Audit Committee of the Board of Directors, in response to an informal inquiry initiated by the Securities and Exchange Commission . Based on the Special Committee's preliminary investigation, the Company had previously stated that it was highly likely that it would need to restate its historical financial statements but had not reached a definitive conclusion .

Mercury has now concluded that its previously issued financial statements for the fiscal years 2002, 2003 and 2004, which are included in the Company's Annual Report on Form 10- K for the year ended December 31, 2004, the Quarterly Reports on Form 10-Q filed with respect to each of these fiscal years and the financial statements included in the Company's Quarterly Report on Form 10- 0 for the first quarter of fiscal year 2005, should no longer be relied upon and will be restated . In addition, the restatement will affect financial statements for prior fiscal years, and the Company will also require a revision of the previously reported financial information included in its press release of July 28, 2005 and its Current Report on Form 8-K dated August 17, 2005 .

Mercury intends to complete the restatements and make the required amended Form 10-K and Form 10-Q filings and to file its Form 10-Q for the second quarter of fiscal year 2005 as soon as practicable following completion of the Special Committee investigation, the Company's review and restatement of its historical financials and completion of the audit process. The Company does not expect that it will be able to complete this process and make the required filings before November 2005 .

The errors resulting in the required restatement relate to the Special Committee's conclusion that the actual dates of determination for certain past stock option grants differed from the originally selected grant dates for such awards . Because the prices at the originally selected grant dates were lower than the price on the actual dates of determination, the Company will incur additional charges to its stock-based compensation expense which were not included in the above-referenced financial statements . The Company has determined that the amounts of these charges are material but has not yet determined the final amount of the additional charges to be incurred .

Additionally, Mercury is evaluating Management's Report on Internal Control Over Financial Reporting set forth in Item 9a on page 53 of the Company's 2004 Annual Report . Although Mercury has not yet completed its analysis of the impact of this situation on its internal controls over financial reporting, it has determined that it is highly likely that Mercury had a material weakness in internal control over financial reporting as of December 31, 2004 . A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected . The existence of one or more material weaknesses as of December 31, 2004 would preclude Mercury from concluding that its internal controls over financial reporting were effective as of year end, If Mercury were to conclude that a material weakness existed, it would expect to receive an adverse opinion on internal control over financial reporting from its independent registered public accounting firm .

As previously disclosed, Mercury does not believe that any restatement will have an impact on its historical revenues, cash position or non-stock option related operating expenses . Any charges will have the effect of decreasing the earnings and retained earnings figures contained in Mercury's historical financial statements .

Notice From Trustee on Convertible Note s

Mercury today also disclosed that it has received from the trustee for the Company's $500 million aggregate principal amount of Zero Coupon Senior Convertible Notes due 2008 and the Company's $300 million aggregate principal amount of 4 .75% Convertible Subordinated Notes due 2007 (together, the "Notes") a notice of default on the Notes . Asa result of the Company's failure to file with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, the Company has violated indenture provisions that require Mercury to furnish such information promptly to the trustee .

Under the indentures relating to the Notes, the Company has until October 25, 2005 to cure its breach by filing with the Securities and Exchange Commission and providing to the trustee its Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 . If Mercury does not cure its breach within that period, either the trustee for the Notes or the holders of at least 25% of the aggregate principal amount of the outstanding Notes could, by giving the Company an additional notice, accelerate the maturity of the Notes, causing the outstanding principal amount plus accrued interest to be immediately due and payable .

"Given the continued strength of Mercury's financial position, we are disappointed to have received the notice," said Doug Smith, chief financial officer at Mercury . "Mercury has the available cash and investment securities to fully retire any and all amounts of the Notes should they accelerate, as well as to provide for the Company's working capital needs ."

As of August 26, 2005, all required interest and principal payments have been timely made on the Notes . If the maturity of the Notes is accelerated, the Company intends to fully repay all such amounts due . As of June 30, 2005, the Company had approximately $1 .32 billion of cash and investments .

About Mercury Mercury Interactive Corporation (NASDAQ : MERQE), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology . Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today . Mercury provides software and services for IT Governance, Application Delivery, and Application Management . Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, please visit www mercury .cctrn .

Forward Looking Statement s The press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury's expected financial performance, as well as Mercury's future business prospects and product and service offerings . Mercury's actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . Potential risks and uncertainties include, among other things : 1) the results of the Special Committee investigation, 2) expectations as to the timing of the completion of the Special Committee investigation, the Company's review, restatement and filing of its historical financial statements and the filing of its Form 10-Q for the second quarter of fiscal year 2005, 3) the impact related to the expensing of stock options and stock purchases under Mercury's employee stock purchase program under Financial Accounting Standards Board's Statement 123 including, without limitation, the impact of the restatement, 4) the possibility that the trustee for the Notes or the holders of at least 25% of the outstanding principal amount of the Notes may, if the requisite restatements and SEC filings have not been made by October 25, 2005, cause acceleration of repayment of the entire principal amount and accrued interest on the Notes, 5) the nature and scope of the ongoing SEC inquiry, 6) the possibility that the Nasdaq Listing Qualifications Panel may not grant the Company's request for an extension to regain compliance with Nasdaq listing qualifications or the Company's failure to regain compliance within any extension period, in which case the Company's common stock would be delisted from the Nasdaq National Market, 7) the possibility that the Company determines that the Company had a material weakness in internal control over financial reporting, and 8) the additional risks and important factors described in Mercury's SEC reports, including the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, which is available at the SEC's website at littp ://www .sec .gov . All of the information in this press release is made as of August 29, 2005, and Mercury undertakes no duty to update this information .

###

Investor Relations Contacts Kathy Hawke s Mercury (650) 603-5200

Public Relations Contacts Dave Peterso n Mercury (650) 603-5200

Press Release

Mercury Interactive Corporation Reports Preliminary Third Quarter Result s

Mountain View, CA - October 4, 2005 - Mercury Interactive Corporation (NASDAQ : MERQE), the global leader in business technology optimization (BTO), today announced that based on its preliminary review of its third quarter results, it expects to achieve between $198 .0 million and $203 .0 million in revenues for the third quarter of 2005, compared to the guidance of $205 .0 million to $215 .0 million which Mercury gave in its July 28, 2005 press release .

As it reported in its August 29, 2005 press release, Mercury is effecting a restatement which will not be completed before November 2005 and therefore Mercury is not able to give GAAP fully diluted earnings per share or non-GAAP fully diluted earnings per share at this time . However, had Mercury been making a determination on GAAP fully diluted earnings per share and non-GAAP fully diluted earnings per share consistent with the assumptions made in its July 28, 2005 press release (without taking into account the effects of the required restatement), Mercury believes that the third quarter results would be at or slightly below the low end of the GAAP fully diluted earnings per share range and within the non-GAAP fully diluted earnings per share range that it announced in its July 28, 2005 press release .

"The disappointing third quarter results are due primarily to the delayed timing of several large transactions as well as our continued transition in Europe" stated Amnon Landan, Chairman and Chief Executive Officer at Mercury . "We remain focused on improving execution and are cautious about the fourth quarter . We believe the actions initiated in the third quarter will position us to capitalize on our significant market opportunity and strong competitive position ."

Update on Status of SEC Inquiry The Company also reported that the previously disclosed informal inquiry from the Securities and Exchange Commission (SEC) has been converted to a formal investigation . The Company believes that the focus of this formal investigation is substantially the same as the informal inquiry . Mercury has and will continue to cooperate with the SEC on the investigation .

Q3 2005 Earnings Conference Call Mercury will host a conference call to discuss Q3 2005 Earnings on November 2, 2005 . At such time, Mercury will address in greater detail its third quarter results and update its guidance for the remainder of 2005 . Information regarding the call will be available on the Investor Relations Page of the Company's website at httn*//www memurv rom/ir in mid-October.

About Mercu ry Mercury Interactive Corporation (NASDAQ : MERGE), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology . Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today . Mercury provides software and services for IT Governance, Application Delivery, and Application Management . Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information please visit www mer'ur; com .

Forward Looking Statement s This press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury's expected financial performance for the third quarter of fiscal 2005, as well as Mercury's future business prospects and product and service offerings. Mercury's actual third quarter results may differ materially from the results predicted or from any other forwardaooking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . The potential risks and uncertainties include, among other things: 1) third quarter 2005 revenues, expenses and earnings per share ; 2) the mix of perpetual and term licenses in the third quarter and the effect of the timing of the recognition of revenue from products sold under term licenses ; 3) the results of the Special Committee investigation ; 4) results of the Company's announced restatement; 5) expectations as to the timing of the completion of the Special Committee investigation, the Company's review, restatement and filing of its historical financial statements and the filing of its Form 10-Q for the second quarter of fiscal year 2005 ; 6) third quarter costs incurred by Mercury in connection with the Special Committee investigation and the SEC investigation ; 7) the impact related to the expensing of stock options and stock purchases under Mercurf/s employee stock purchase program under Financial Accounting Standards Board's Statement 123 including, without limitation, the impact of the restatement ; 8) the possibility that the trustee for the Notes or the holders of at least 25% of the outstanding principal amount of the Notes may, following expiration of a 60 day cure period, cause acceleration of repayment of the entire principal amount and accrued interest on the Notes ; 9) the nature and scope of the ongoing SEC investigation ; 10) the possibility that the Nasdaq Listing Qualifications Panel may not grant the Company's request for an extension to regain compliance with Nasdaq listing qualifications or the Company's failure to regain compliance within any extension period, in which case the Company's common stock would be delisted from the Nasdaq National Market ; 11) dependence of Mercury's financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy ; and 12) the additional risks and important factors described in Mercury's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2004, and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, which are available at the SEC's website at ww sec gov . All of the information in this press release is made as of October 4, 2005, and Mercury undertakes no duty to update this information .

While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental measure since, with the reconciliation from non-GAAP to GAAP financial information ; it may provide additional insight into its financial results. For example, the non-GAAP results provide an indication of the Company's baseline performance before the effects of business combination adjustments and other charges that are considered by manaqement to be outside of the Company's core operational results . The Company believes that presenting the non-GAAP results provides investors with an additional tool for evaluating the performance of the Company's business, particularly on a comparative basis from period to period . The non-GAAP financial measures are presented by the Company in order to give investors further information about historical and expected results and increase their ability to compare financial information from period to period .

N##

Investor Relations Contacts Michelle Ahlman n Mercury (650) 603-520 0

Public Relations Contacts Dave Peterso n Mercury (650) 603-5200

2006, Mercury Interactive Corporation Adam Sand Declaration Exhibit 30 Press Releas e

Mercury Board of Directors Names Anthony Zingale Chief Executive Office r

• David Murphy Appointed Chief Financial Officer ; Giora Yaron Elected Chairman • Board Accepts Resignations of Amnon Landan, Douglas Smith and Susan Skae r • Resignations Follow Presentation to Board of Special Committee's Determinations of Previously Announced Investigatio n • The Company expects revenue to be $205 million to $210 million forthe third quarter ended September 30, 200 5

Mountain View, CA - November 2, 2005 - Mercury Interactive Corporation (NASDAQ : MERQE) today announced that the Board of Directors has named Anthony ("Tony ") Zingale as chief executive officer . Mr. Zingale, who joined Mercury in December 2004 as the Company's president and chief operating officer, is a highly regarded executive with more than twenty years of experience building profitable, high growth information technology companies . David Murphy, who joined the Company in 2003 as senior vice president, corporate development, has been named chief financial officer . Dr . Giora Yaron, a member of the Mercury Board since 1996, has been elected Chairman of the Board .

The appointments of Mr. Zingale, Mr. Murphy, and Dr . Yaron follow the presentation of determinations by the Special Committee and its independent counsel, O' Melveny & Myers LLP to the Board of Directors regarding the previously announced investigation .

As previously announced, the Special Committee was formed in June 2005 to conduct an internal investigation relating to past stock option grants in response to an inquiry which was initiated by the Securities and Exchange Commission in November 2004 . The Special Committee, its outside legal counsel and accounting experts reviewed millions of pages of documents, interviewed numerous individuals, and engaged in a forensic audit of the issues under investigation . As a part of its continuing investigation, the Special Committee has determined the following :

From 1995 to the present, there have been forty-nine instances in which the stated date of a Mercury stock option grant is different from the date on which the option appears to have actually been granted . In almost every such instance, the price on the actual date was higher than the price on the stated grant date. These instances represent the overwhelming majority of the grants between January 1996 and April 2002 . The misdating occurred with respect to grants to all levels of employees .

Chief Executive Officer Amnon Landan, Chief Financial Officer Douglas Smith, and General Counsel Susan Skaer were each aware of and, to varying degrees, participated in the practices discussed above . Each of them also benefited personally from the practices . While each of these officers asserts that he or she did not focus on the fact that the practices and their related accounting were improper, the Special Committee has concluded that each of them knew or should have known that the practices were contrary to the options plan and proper accounting . While the Special Committee is appreciative of and sympathetic to the far-reaching demands of these executives' positions during this critical period, missing or overlooking a practice as basic and important as the proper granting of options is not acceptable.

On at least three occasions, between 1998 and 2001, exercise dates for options exercised by Mr . Landan appear to be incorrectly reported, which would have had the effect of reducing Mr . Landon's income and exposing the Company to possible penalties for failure to pay withholding taxes .

In addition, a $1 million loan to Mr . Landan in 1999 (which has since been repaid) did not appear to have been approved in advance by the Board of Directors and was referred to in some of the Company's public filings, but was not clearly disclosed .

Intentional selection of a favorable price for option grants appears to have ended in or about April 2002, at which time the Company began to follow a different dating practice for grants .

The Special Committee believes that questions should have been raised in the minds of the Compensation Committee members from 1995 through 2002 (who included present directors Igal Kohavi, Yair Shamir and Dr . Yaron) whether six grants that they approved by unanimous written consent were properly dated . It appears that the Compensation Committee members reasonably, but mistakenly, relied on management to draft the proper documentation for the option grants and to account for the options properly . The Special Committee believes that changes in Board procedures made in recent years will prevent similar oversights occurring in the future .

During the relevant period, Mercury's internal controls and accounting controls with respect to option grants and exercises were inadequate . The weaknesses allowed dates of both grants and exercises to be manipulated . They also allowed grant dates to be changed to provide employees with more favorably priced options . The Company began to improve its controls and procedures in April 2002 and has continued to improve them . The Special Committee believes that changes that Mercury has made with respect to its option practices will help prevent a recurrence of the problems .

Based on the evidence reviewed during its investigation, the Special Committee has concluded that the actions of Mr. Landan, Mr. Smith and Ms. Skaer are not acceptable.

Accordingly, the Board has accepted the resignations of Mr . Landan as chairman, chief executive officer and director, Mr . Smith as executive vice president and chief financial officer, and Ms. Skaer as vice president, general counsel and secretary . Pursuant to his employment agreement, Mr. Landan is entitled to 60 days prior notice for his resignation being effective . He is being relieved of all his duties immediately .

The Company expects revenue to be $205 .0 million to $210 .0 million for the third quarter ended September 30, 2005 . As a result of these announcements and the findings of the Special Committee, the Company is not in a position to provide its entire financial results for Q3 2005 . The Company is working diligently to determine the impact of the misdated stock grants identified by the Special Committee, and the impact of the new issues related to misdated option exercises and certain loans to officers in 1998, 1999, and 2001 on its current and historical financial statements included in its current report on Form 10-K and its report on Form 10-Q for the first quarter of 2005 . The Company does not believe that these items will have an impact on its historical revenues, cash position or non-stock option related operating expenses . Due to the pending restatement, the Company is not able to give GAAP fully diluted earnings per share or non-GAAP fully diluted earnings per share at this time . The Company believes that its ability to file amended reports by November 30, 2005 on Form 10-K and Form 10-Q with the Securities and Exchange Commission with respect to such periods is in serious jeopardy .

The Company anticipates that the fourth quarter will be challenging and at this time we will not provide guidance for Q4 2005 .

As previously announced, the Company may be delisted by NASDAQ in the event it does not complete such restatements and submit the required filings to the SEC by November 30, 2005 . The Company anticipates providing the Panel with a revised plan of compliance by no later than November 15, 2005 . There is no assurance that the Panel will provide the Company with any additional extensions beyond November 30, 2005 .

The Company's Board of Directors stated, "Amnon Landan should be credited with establishing the Company as a leader in its markets . However, the adverse findings of the Special Committee's investigation make it appropriate for him, and the other two individuals, to relinquish their positions . Mercury is well served having Tony Zingale assume the leadership of the Company . He is a highly respected professional, with a proven track record . He is knowledgeable about Mercury, its markets, and customers . He is uniquely qualified to lead Mercury for long-term success . "

"Mercury is committed to achieving consistently strong profitable growth over the long term to the benefit of its customers, people, and in so doing, realizing enhanced value to shareholders," said Tony Zingale, Mercury's new chief executive officer. "Our focus is to ensure we capitalize on our significant market opportunity, clear technology leadership, great people, and loyal customer base . "

"Similarly, our constituencies can be fully assured that Mercury will be a model for best business practices and full compliance with all regulatory and legal requirements . This is a responsibility that we have to all our constituencies and is a core element of our business foundation going forward," concluded Mr. Zingale .

Anthony ("Tony") Zingale Backgroun d Prior to serving as Mercury's President and Chief Operating Officer, Mr . Zingale was president and chief executive officer of Clarify, a publicly traded enterprise technology company that was a leader in the customer relationship management market from 1997 until it was acquired by Nortel Networks . in 2000 . Following the acquisition, he served as president of Nortel's billion-dollar eBusiness Solutions Group . Prior to that, Mr. Zingale spent more than 10 years at Cadence Design Systems, Inc ., a leading supplier of electronic design products and services, in a succession of executive management positions leading to his role as senior vice president of worldwide marketing . Mr . Zingale holds a Bachelor of Science degree in electrical and computer engineering and a Bachelor of Arts degree in business administration from the University of Cincinnati .

David Murphy Background David Murphy joined Mercury in January 2003 . Previously, he was CEO of Asera, where he led the company's efforts as a pioneer in delivering real time collaborative business process solutions for the extended enterprise . Before joining Asera, Mr. Murphy was president and general manager of Tivoli Systems at IBM where he was responsible for day-to-day operations and drove aggressive expansion into new markets . Previously he was head of the private equity investments group at Perot Systems and a partner at McKinsey & Company . Mr . Murphy holds master's degrees in business administration from the Stanford Graduate School of Business Administration and in electrical engineering from Florida Atlantic University, as well as a bachelor's degree in computer science and applied mathematics from the University of Louisville .

Dr. Giora Yaron Backgroun d Dr. Giora Yaron has been a Director of Mercury since February 1996 . Dr . Yaron is a founder of several startup companies and currently serves as their active Chairman . Prior to that, Dr . Yaron served as the president of Indigo NV, from August 1992 to November 1995 . From April 1979 to July 1992, Dr. Yaron was with National Semiconductor Corporation where he served as general manager of its Israeli operations and corporate vice president of Microprocessor Products. Dr. Yaron also serves as chairman of the board of Yissum Research & Development Company of the Hebrew University and a member of the Board of Governors and the Executive Committee of the Hebrew University .

Appendix : Summa ry of Special Committee Findings to Date From 1995 to the present, there have been forty-nine instances in which the stated date of a Mercury Interactive Corporation ("Mercury" or "the Company ") stock option grant is different from the date on which the option appears to have actually been granted . In almost every such instance, the price on the actual date was higher than the price on the stated grant date . These instances represent the overwhelming majority of the grants between January 1996 and April 2002 . The misdating occurred with respect to grants to all levels of employees . On at least three occasions, the exercise dates for options exercised by Mercury executives appear to have been incorrectly recorded . In addition, a $1 million loan to Mr . Landan in 1999 (which has since been repaid) was not clearly disclosed in the Company's public filings .

The misdated stock option grants fall largely into three categories : (i) 'look back" grants, in which the date of the grant was picked retroactively (e .g ., a decision in February to pick a January date) ; (ii) "wait and see" grants, in which a grant date was selected, but the decision was finalized - and sometimes changed - at a later date (e .g., a decision on January 1 to issue a grant on January 15, but there is a period after January 15 in which the grantor waits to see if a more advantageous price occurs and, if one does, uses that later date instead) ; and (iii) grants where there was a failure to complete the option grant process by the date of the grant (e.g ., where there is a decision to issue a grant as of a certain date, but after that date there are changes in the grantees or amounts to grantees, and although the work is not complete on those grants as of the stated grant date, that date is nonetheless used) .

During the 1995 to April 2002 period, most grants fell into the "look back" and "wait and see" categories . Since April 2002, there have been a small number of instances of the third category identified above, in which the Company appears to have been making changes to the grantees or amounts of the options after the stated date of the option grant . However, intentional selection of a favorable price for option grants appears to have ended in or about April 2002, at which time the Company began to follow a different dating practice for new-hire, transfer and promotion grants . Pursuant to that practice, which is in effect now, all such grants are to be made on a fixed date based on the employee's hire date.

In reviewing the evidence, the Special Committee believes that questions should have been raised in the minds of the Compensation Committee members from 1995 through 2002 (who included present directors Mr. Kohavi, Mr . Shamir and Dr . Yaron) whether six grants that they approved by unanimous written consent were properly dated . The evidence indicates that the Compensation Committee members were focused on the substance of who received options and how many options they received, as opposed to the effective dates of the unanimous written consents. It appears that the Compensation Committee members reasonably, but mistakenly, relied on management to draft the proper documentation for the option grants and to account for the options properly . The Special Committee believes that changes in Board procedures made in recent years will prevent similar oversights occurring in the future . On at least three occasions, the exercise dates for the options exercised by Mercury executives including Mr . Landon appear to have been incorrectly reported . In each case, the price of Mercury stock was substantially lower on the reported date than on the date the option appears to have been actually exercised . The reporting of an incorrect date would have had the effect of reducing the executives' taxable income significantly and exposing Mercury to possible penalties for failing to pay withholding taxes . In at least one instance, Ms . Skaer was involved in Mr. Landan's exercise of options as of a prior date

Mr . Landan received three loans from Mercury. Two of the loans were for a total of approximately $3 .4 million in connection with the exercise of options by him and other executives . In September 1999, Mr. Landan received a $1 million loan from Mercury . The Special Committee has not been able to find any record that the $1 million loan was approved in advance by the Board of Directors, although the board did approve an extension of the loan in December 2000 . The loan was referred to in some of the Company's public filings, but was not clearly disclosed . Nor did Mr. Landan disclose it in his Directors and Officers questionnaire in February 2000 . The Special Committee has not yet been able to ascertain the purpose or use of the loan . Each of the loans, together with applicable interest, has subsequently been repaid in full .

Based on the evidence reviewed during its investigation, the Special Committee has concluded that the actions of Mr . Landan, Mr. Smith and Ms . Skaer set forth above are not acceptable . Ms . Skaer and Mr. Smith have resigned from Mercury ; and Mr. Landan has resigned from Mercury and from Mercury's Board of Directors. The Special Committee has also expressly reserved all of the Company's rights against Mr . Landan, Mr. Smith and Ms . Skaer .

About Mercury Mercury Interactive Corporation (NASDAQ : MERGE), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today . Mercury provides software and services for IT Governance, Application Delivery, and Application Management . Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information please visit www mercury com .

Forward Looking Statement s The press release contains 'forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury's expected financial performance, as well as Mercury s future business prospects and product and service offerings . Mercury's actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance . Potential risks and uncertainties include, among other things : 1) the timing of completion of the Company's review, restatement and filing of its historical financial statements and the filing of its Form 10-Q for the second and third quarters of fiscal year 2005, 2) the impact of the expensing of stock options and stock purchases under Mercury's employee stock purchase program pursuant to Financial Accounting Standards Board's Statement 123 including, without limitation, the impact of the restatement, 3) the impact of the resignations of Amnon Landan, Douglas Smith and Susan Skaer, 4) the possibility that the trustee for the Notes or the holders of at least 25% of the outstanding principal amount of the Notes may, if the Company does not file its historical financial statements and periodic reports by March 31, 2005, cause acceleration of repayment of the entire principal amount and accrued interest on the Notes, 5) the nature and scope of the ongoing SEC investigation, 6) the substantial risk that the Company will not file its quarterly reports on Form 10-0 for the periods ended June 30, 2005 and September 30, 2005 and all required restated and other financial statements for previous periods by November 30, 2005 and that the Nasdaq Listing Qualifications Panel may not grant the Company's request for a further extension to regain compliance with Nasdaq listing qualifications, in which case the Company's common stock would be delisted from the Nasdaq National Market, 7) the effect of any third party litigation arising out of the Special Committee investigation, 8) costs incurred by Mercury in connection with the Special Committee investigation and the SEC investigation, 9) the mix of perpetual and term licenses and the effect of the timing of recognition of revenue from products sold under the term licenses, 8) the impact of the transition in Europe, 10) the amount of restructuring charges incurred by Mercury in the third quarter, 11) dependence of Mercury's growth on the continued success and acceptance of its existing and new software products and services and on the success of its BTO strategy, and 12) the additional risks and important factors described in Mercury's SEC reports, including the Quarterly Report on Form 10-0 for the fiscal quarter ended March 31, 2005, which is available at the SEC's website athttp ://www .sec.gov . All of the information in this press release is made as of November 2, 2005, and Mercury undertakes no duty to update this information .

Investor Relations Contacts Michelle Ahlman n Mercury (650) 603-520 0

Public Relations Contacts Dave Peterson Mercury (650) 603-5200

2006, Mercury Interactive Corporation Adam Sand Declaratio n Exhibit 3 1 ~~ti r x

Press Release

Mercury Files Restated Financial Statement s

• Completes Major Milestone with the Filing of the Amended 2004 10-K/A

• Restatement Principally Non-Cash Adjustments From Past Stock Option Practices

• Provides Update on SEC Activitie s Mountain View, CA - July 3, 2006 - Mercury Interactive Corporation (OTC: MERQ), the global leader in business technology optimization (BTO) software, today said that it has completed its previously announced restatement of the Company's financial statements for the fiscal years 2004, 2003 and 2002. The restated financial statements have been filed with the Securities and Exchange Commission in an amended Form 10-K/A for the year ended December 31, 2004. The Company intends to file an amended Form 10-Q/A for the quarter ended March 31, 2005 with the SEC later this month . "We have taken a rigorous and thorough approach to completing the restatement and recertification of our financial statements. I want to thank our customers, partners, shareholders and employees for their loyalty and support during this time period," said Tony Zingale, president and chief executive officer at Mercury . "The Company remains in a strong financial position and we believe has a significant market opportunity going forward . I am particularly proud of Mercury's continued ability to execute against our strategic business plan and our focus on customer success, technology innovation and expansion of our capabilities through our acquisitions . " Update on SEC Filing s The Company intends to file its Forms 10-Q for the quarters ended June 30 and September 30, 2005 and its Form 10-K for the year ended December 31, 2005 in Q3 2006, and to become current in its SEC reporting in as timely a fashion as possible thereafter. Overview of Restatement of Consolidated Financial Statement s As previously announced, a Special Committee comprised of disinterested members of the Audit Committee of the Board was formed in June 2005 to conduct an internal investigation relating to past stock option practices in response to an inquiry initiated by the SEC in November 2004. The Special Committee, its outside legal counsel and accounting experts reviewed thousands of individual option grants, modifications and exercises dating back to 1993, interviewed numerous individuals, and engaged in a forensic audit of the issues under investigation . In August 2005, the Special Committee concluded that the actual grant dates for certain past stock options differed from the originally stated grant dates for such awards . As a result, the Company determined that it should have recognized material amounts of stock-based compensation expense which were not accounted for in its previously issued financial statements and, accordingly, that the previously filed unaudited interim and audited consolidated financial statements for the fiscal years 2004, 2003 and 2002, as well as the unaudited interim financial statements for the first quarter of 2005, should no longer be relied upon because these financial statements contained misstatements and would need to be restated . On November 2, 2005, the Company announced that the Special Committee had made certain determinations as a result of its review, and that the Board of Directors had accepted the resignations of the then CEO, CFO and General Counsel . As a result of the Special Committee's investigation and the Company's internal review of its historical financial statements, the Company has recorded significant adjustments to its previously filed financial statements. The adjustments in the restated consolidated financial statements did not affect the Company's previously reported cash and investment balances in prior periods . The restated consolidated financial statements reflect a decrease in income before provision for taxes of approximately $566 .7 million for the periods 1992 through December 31, 2004, consisting principally of non-cash adjustments to stock-based compensation expense resulting from the stock option grant and exercise practices described below . The majority of these expenses are reflected as a decrease to retained earnings (net of income tax effects) in the opening balance sheet for 2002 of approximately $362 .3 million, reflecting adjustments from 1992 to 2001, and the remaining amounts are reported in the Company's consolidated statements of operations in subsequent periods . The Company also has made a number of tax- related adjustments arising principally from the stock-based compensation adjustments . The primary components of the accounting adjustments reflected in the restated consolidated financial statements are as follows :

Year etolyd Deeeniber 31. fathonsxstls) 2604 2W 1992 t tans a ro , P a tots of .1 ata ota -, b tots ar ,a a tots inereact? adjuWmnts inereast+ adjustments increasel adjrs>inunts increase;' adjustments idecxrata) prior to (decmase) prior to (decrease) prior to (decrease) prior to _ eEaa•t"~ fm periad income laser- for period income rases . for pzr'sod (ornate taxes for petisi incuare taxes

ce, . t rechauees S lsa, 5 { - 3 r476T $ FIi 3 PMM-c cox nc:ea S:axt l : t°c'. . to caosc ag, tnmcan,^., .s e adsssorc ooies - .3) G, -. 0j~ r ,') . Other :n . . ea>to`3p6etu 153 3 '.~ 3e` - Total cock z so uiaes, adjtu,.ueaits i 39-1 (374 (- 2045?

Other an_sz's;aues : ac:v,

Total ad,nta0 0 oamr :ssp?l s b:Iczeyrt :sssoo too t"', otaxes . (4,472 I0<):`•,, !00% (6110) %Ci0 % €3'". ., IOQ' o

Inc.sao ea% impart ofre~atnie;uesso xrti~t~t` zt:ts Ii,fi»' ?.466 Total oats' to nzt in oar r0) 4 7)T ~' _

(1) For explanatory purposes, we have classified the stock option and other adjustments that were affected by the restatement into the aforementioned categories as presented above . The classified amounts involve certain subjective judgments by management to the extent particular stock option related accounting errors may fall within more than one category to avoid double counting the adjustment amounts between categories (e .g., a stock option that is subject to date changes, combined with expenses resulting from the exercise of promissory notes, and/or combined with expenses resulting from consulting, transition or advisory roles) . As such, the table above should be considered a reasonable representation of the magnitude of expenses in each category. The cumulative effect of the restatement adjustments on the Company's restated consolidated balance sheet at December 31, 2004 resulted in an increase in the accumulated deficit offset by a corresponding increase in additional paid-in capital and unearned stock-based compensation which results in a net decrease in total stockholders' equity of $17 .1 million . The adjustments reduced retained earnings as of December 31, 2001 from $155 .7 million to an accumulated deficit of $206 .6 million, and reduced retained earnings as of December 31, 2004 from $347.1 million to an accumulated deficit of $178 .3 million . The restated consolidated financial statements reflect the following increases (decreases) in previously reported GAAP net income, and previously reported GAAP diluted earnings per common share : 20 1914 2003 2002

N t Ir q (ir. rn lli~~ .~_ ...... _ r ~,{ l•im_~~ j 1':

Overview of Financial Recertification -Related Proces s After the November 2005 determinations by the Special Committee, the Board of Directors requested that the Special Committee work in conjunction with the Company to conduct a supplemental review of the principal financial reporting control areas of the Company and the key individuals functioning in these areas during the relevant time periods . This recertification work was conducted in order to determine whether the work previously carried out by the Company in connection with the preparation of its restated financial statements could be relied upon with respect to matters other than the stock option related matters that were the subject of the Special Committee's initial efforts. As a result of the initial Special Committee findings and this work, the Company determined, as part of the Item 9A Controls and Procedures disclosure in its amended 2004 Annual Report on Form 10-K/A, that the Company's disclosure controls and procedures were not effective at a reasonable level of assurance as of December 31, 2004 . In its Item 9A disclosure, the Company identified two material weaknesses in its internal control over financial reporting as of December 31, 2004. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected . The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, issued an opinion that management's assessment that the Company did not maintain effective internal control over financial reporting as of December 31, 2004 is fairly stated, in all material respects . Notwithstanding these material weaknesses, management believes that because of the substantial work performed during the restatement process, the Company's financial position, results of operations and cash flows, as reflected in the restated consolidated financial statements, are fairly stated in all material respects in accordance with GAAP for each of the periods presented. Certain Directors Receive "Wells Notice" from SEC On June 23, 2006, the SEC Staff, as part of the "Wells" process by which the SEC Staff affords individuals and companies the opportunity to present their views regarding potential action by the SEC, advised counsel for directors Igal Kohavi, Yair Shamir and Giora Yaron that the SEC Staff is considering recommending that the Commission file a civil enforcement proceeding against each of these directors under applicable provisions of the federal securities laws . The directors have advised the SEC Staff that they intend to file a Wells submission arguing that they did not violate the federal securities laws, that they did not participate in or know of option backdating and that the charges under consideration are legally and factually without basis . Former officers of the Company are likely to receive or have received similar notices . In light of the Wells notice, the aforementioned directors have offered to withdraw from their respective positions on the applicable committees of the Company's Board of Directors, and the Board has accepted that offer . As previously disclosed, the Company is cooperating in the continuing formal SEC investigation of the Company. Update on 2005 Unaudited Financial Metric s The Company also announced today full year 2005 revenue of approximately $843 million and a net full year increase in deferred revenue of approximately $50 million . The Company had 79 deals greater than $1 million for the full year 2005 . The full year restated GAAP operating margin was approximately 13%, and the full year restated Non-GAAP operating margin was approximately 21 % . The principal adjustments between the restated GAAP operating margin estimates and the restated Non-GAAP operating margin estimates are : the costs incurred in connection with the Special Committee investigation, our internal review of our historical financial statements, the preparation of the restated financial statements, the SEC investigation and inquiries from other government agencies, the related class action and derivative litigation and amendments to the terms of our notes as a result of our failure to timely file our Exchange Act reports with the SEC and the trustee for the notes, and amortization and write-off of intangible assets . The Company's cash and investment balance was $1 .4 billion at December 31, 2005. Conference Cal l Mercury will host a conference call to discuss the restatement and financial results at 5 :00 a.m. Pacific Time on Wednesday , July 5, 2006. A live Webcast of the conference call, together with supplemental financial information , can be accessed through the Company's Investor Relations Web site at http://www.mercurv .com/ir. In addition , an archive of the Webcast can be accessed through the same link . An audio replay of the call will be available until midnight on July 11, 2006. The audio replay can be accessed by calling 888-203 -1112 or 719-457-0820 , conference call code : 4047904 About Mercur y Mercury Interactive Corporation (OTC : MERQ), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today . Mercury provides software and services for IT Governance, Application Delivery and Application Management . Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications . Mercury BTO offerings ar e complemented by technologies and services from global business partners . For more information, please visit www .mercury .com. Forward Looking Statement s This release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that reflect Mercury's judgment and involve risks and uncertainties as of the date of this release . These forward looking statements include those related to the filing of the restated report on Form 10-Q/A for the first quarter of 2005 and the filing of delinquent reports on Forms 10-Q and 10-K, and the estimates of fiscal 2005 revenue, increase in deferred revenue, number of transactions greater than $1 million and restated GAAP and Non-GAAP operating margins, and the Company's cash and investment balance at December 31, 2005 . Actual events or results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and should not be considered as an indication of future events or results . Potential risks and uncertainties include, among other things: 1) the timing of completion of the Company's filing of its Form 10-Q/A for the first quarter of fiscal 2005, its Forms 10-Q for the second and third quarters of fiscal year 2005 and the first quarter of fiscal year 2006, and its Form 10-K for fiscal year 2005, and any other required SEC reports, 2) the impact of the expensing of stock options and stock purchases under Mercury's employee stock purchase program pursuant to Financial Accounting Standards Board's Statement 123(R), 3) the impact of the resignations of Amnon Landan, Douglas Smith and Susan Skaer, 4) the nature and scope of the ongoing government investigation, 5) the effect of the Wells notices received by certain directors, 6) the timing of relisting of the Company's securities on a national securities exchange, including the risk that relisting will not occur, 7) the effect of the SEC investigation and any litigation or other legal proceedings arising out of the matters covered by the Special Committee investigation, 8) costs incurred by Mercury in connection with the Special Committee investigation and the SEC investigation, 9) financial results for fiscal 2005, and the adjustments resulting from the quarter-end and year-end close process and audit by Mercury's independent auditors of the financial results for fiscal 2005, and 10) the additional risks and important factors described in Mercury's SEC reports, including the Quarterly Report on Form 10-Q/A for the fiscal quarter ended March 31, 2005, which is available at the SEC's website at http://www.ssec,gov. All of the information in this press release is made as of July 3, 2006, and Mercury undertakes no duty to update this information .

Mercury, Mercury Interactive and the Mercury logo are trademarks of Mercury Interactive Corporation and may be registered in certain jurisdictions . Other product and company names are used herein for identification purposes only, and may be trademarks of their respective companies . View entire press release . (363 KB) PDF Investor Relations Contact s Michelle Ahlmann Mercury (650) 603-5464 Public Relations Contacts Dave Peterso n Mercury (650) 603-523 1

Paul Sherer Ogilvy Public Relations Worldwide (415) 385-5970 Adam Sand Declaration Exhibit 32 Press Releas e

HP to Acquire Mercury Interactive Corp

Acquisition positions company as a market leader in IT management softwar e

PALO ALTO, Calif. - July 25, 2006 - HP today announced that it has signed a definitive agreement to purchase Mercury Interactive Corp ., a leading IT management software and services company, through a cash tender offer for $52 .00 per share, or an enterprise value of approximately $4 .5 billion, which is net of existing cash and debt .

Upon closing, the acquisition will establish HP's portfolio of IT management software and services as the clear choice for companies seeking to optimize the value that IT brings to business.

'Today, we are combining two market-leading businesses to create the most powerful management software portfolio in the industry," said Mark Hurd, HP chief executive officer and president . "Together, they will help customers cut their IT costs, speed the delivery of new services and drive profitable growth at HP . We expect this important acquisition to deliver significant value for our shareholders ."

Mercury Chief Executive Officer and President Tony Zingale said, "Together, HP and Mercury instantly become the industry's premier provider of business technology optimization (BTO) software . A deal of this magnitude creates significant opportunities for our customers, our shareholders, our people and our partners "

The transaction brings together the strength of HP OpenView systems, network and IT service management software with Mercury's strength in application management, application delivery, IT governance and service-oriented architecture governance . This combination provides customers with the industry's most robust suite for optimizing, automating and aligning IT services with business needs .

"FP's software strategy is to be the clear leader in end-to-end enterprise IT management and help our customers tightly align IT priorities with changing business requirements," said Thomas E . Hogan, senior vice president, Software, HP . "Combining our HP OpenView offerings with Mercury's BTO Enterprise offerings will integrate the many building blocks of enterprise IT management into one complete solution for the entire IT lifecycle, from planning through to deployment and operations. Mercury is a results-driven, high-performing company with outstanding people that will be a strong addition to HP ."

The Mercury acquisition is expected to increase the size of the HP Software business to more than $2 billion in annual revenue . Immediately following the close of the transaction, Mercury will become part of the HP Software business and both companies' sales forces will begin reference-selling each others products .

HP forecasts that on a non-GAAP basis, the combined HP Software business will deliver revenue growth of approximately 10 percent to 15 percent and operating margin of approximately 20 percent in fiscal year 2008. On a pro forma basis, the transaction is expected to be approximately $0 .04 dilutive to non- GAAP per share earnings in fiscal year 2007 and approximately $0 .02 accretive to non-GAAP per share earnings in fiscal 2008 . This includes purchase accounting adjustments related to deferred revenue write downs and deferred compensation expense of approximately $141 million, or $0 .05 per share, in fiscal 2007 and approximately $43 million, or $0 .01 per share, in fiscal 2008, as well as expected synergies .

The acquisition will be conducted by means of a tender offer for all of the outstanding shares of Mercury, followed by merger of Mercury with an HP subsidiary. The tender offer is subject to a number of conditions, including that Mercury has filed its Annual Report on Form 10-K for its fiscal year ended Dec. 31, 2005 . HP expects to commence the tender offer promptly and the merger is expected to close in the fourth quarter of calendar year 2006 .

Webcasts and conference call s This afternoon, HP will conduct one webcast and two live audio calls to discuss its intent to acquire Mercury . Mercury will conduct a separate webcast for financial analysts.

HP media call : 4 :30 p .m . ET / 1 :30 p .m . PT, hosted by Mark Hurd . U .S . dial-in : +1 866 356 3377 ; International dial-in : +1 617 597 5392, passcode : 36175291 . Replay information, available until Aug . 1, 2006 : U .S . dial-in : +1 888 286 8010, International dial-in : +1 617 801 6888, passcode : 16464601 .

HP conference call and webcast for financial analysts and shareholders: 5 p .m . ET / 2 p .m . PT, hosted by Mark Hurd . Listen only dial-in : U .S . +1 800 299 0148, International dialin : +1 617 801 9711, passcode : 82591745. Live audio webcast : www ho comrhoinfo/investor . Replay information, available until Aug. 1, 2006 : U .S . : +1 888 286 8010, International dial-in : +1 617 801 6888, passcode : 55367340.

HP industry analyst call : 6 p .m . ET / 3 p .m . PT, hosted by Thomas Hogan . U .S . dial-in: +1 800 299 8538 ; International dial-in: +1 617 786 2902, passcode : 83000965 . Replay information, available until July 25, 2007 : U .S . dial-in : +1 888 286 8010 ; International dial-in : +1 617 801 6888, passcode : 57320057

Mercury financial analyst webcast for analysts and shareholders : 8 :30 p .m . ET / 5 :30 p .m . PT, hosted by Tony Zingale ; David Murphy, chief financial officer ; and, Shelly Schaffer, vice president, Corporate Finance .

U.S. dial-in : +1 800 289 0533 ; International dial-in : +1 913 981 5525, passcode : 4078554 . The webcast link will be available on Mercury's website: www mercury comrir . The replay will be available via the same link .

Questions about the Mercury call should be directed to Shelly Shaffer at +1 650 603 4592 or Michelle Ahlmann at +1 650 603 5464 A replay of the Mercury call will be available at +1 719 457 0820 or +1 888 203 1112, passcode : 4078554 . Replay will be available shortly following the conclusion of the live call for one year and the dial-in replay will be available until July 31, 2006 .

THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT ANOFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SECURITIES . THE SOLICITATION AND THE OFFER TO BUY SHARES OF MERCURY COMMON STOCK WILL BE MADE ONLY PURSUANT TO AN OFFER TO PURCHASE AND RELATED MATERIALS THAT HP INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION . MERCURY STOCKHOLDERS AND OTHER INVESTORS SHOULD READ THESE MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER . ONCE FILED, MERCURY STOCKHOLDERS AND OTHER INVESTORS WILL BE ABLE TO OBTAIN COPIES OF THE TENDER OFFER STATEMENT ON SCHEDULE 'TO ; THE OFFER TO PURCHASE AND RELATED DOCUMENTS WITHOUT CHARGE FROM THE SECURITIES AND EXCHANGE COMMISSION THROUGH THE COMMISSION'S WEBSITE AT WWW SFC GOV . MERCURY STOCKHOLDERS AND OTHER INVESTORS ALSO WILL BE ABLE TO OBTAIN COPIES OF THESE DOCUMENTS, WITHOUT CHARGE, FROM INNISFREE M&A INCORPORATED, THE INFORMATION AGENT FOR THE OFFER, AT +1 877 750 5838 OR BY EMAIL AT INFO(Q1NNISFREFMA COM , FROM MERRILL LYNCH & CO ., THE DEALER MANAGER FOR THE OFFER, AT +1 877 653 2948, OR FROM HP . STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ CAREFULLY THOSE MATERIALS PRIOR TO MAKING ANY DECISIONS WITH RESPECT TO THE OFFER .

About Mercu ry Mercury, the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology . Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today . It provides software and services to govern the priorities, people, and processes of IT; deliver and manage applications ; and integrate IT strategy and execution . Customers worldwide rely on Mercury offerings to improve quality and performance of applications and manage IT costs, risks and compliance . Mercury BTO offerings are complemented by technologies and services from global business partners . For more information, please visit www mecc rv cnm .

About H P HP is a technology solutions provider to consumers, businesses and institutions globally . The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing . For the four fiscal quarters ended April 30, 2006, HP revenue totaled $88 .9 billion . More information about HP (NYSE, Nasdaq : HPQ) is available at www, h com .

Note to editors : HP news releases are available via RSS feed a t

Forward-looking statements This news release contains forward-looking statements that involve risks, uncertainties and assumptions . If such risks or uncertainties materialize or such assumptions prove incorrect, the results of HP and its consolidated subsidiaries could differ materially from those expressed or implied by such forward- looking statements and assumptions . All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected benefits and costs of the transaction ; management plans relating to the transaction ; the anticipated timing of filings and approvals relating to the acquisition ; the expected timing of the completion of the transaction ; the ability to complete the transaction considering the various closing conditions, including those conditions related to antitrust regulations ; any projections of earnings, revenues, synergies, accretion, margins or other financial items ; any statements of the plans, strategies and objectives of management for future operations, including the execution of integration plans ; any statements of expectation or belief ; and any statements of assumptions underlying any of the foregoing . Risks, uncertainties and assumptions include the possibility that expected benefits may not materialize as expected ; risks related to the timing or ultimate completion of the transaction ; that, prior to the completion of the transaction, Mercury's business may not perform as expected due to uncertainty ; that the parties are unable to successfully implement integration strategies ; and other risks that are described from time to time in HP's and Mercury's Securities and Exchange Commission reports, including but not limited to the risks described in HP's Quarterly Report on Form 104 for the fiscal quarter ended April 30, 2006 and other reports filed after HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2005 and Mercury's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 . HP assumes no obligation and does not intend to update these forward-looking statements .

© 2006 Hewlett-Packard Development Company, L .P. The information contained herein is subject to change without notice . The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services . Nothing herein should be construed as constituting an additional warranty . HP shall not be liable for technical or editorial errors or omissions contained herein .

7/200 6

Mike Moeller HP +1 650 236 3028 michael .moeller( o co

HP Media Hotlin e www hp com//pn/nr-wcrnom +1 866 266 727 2 nr(afihn rnm

Company's press releases), all of which were factually accurate :

2000

¶62 : Our record third quarter results, the best in the history of the company, were driven by strong demand for all of Mercury Interactive's offerings, with rapid growth in our application performance monitoring and hosted e-services business . . . .The strength in our business shows that performance management solutions are becoming an indispensable component for companies deploying and maintaining complex, business critical web-based applications . (Exhibit 4)

200 1

¶67 : Mercury Interactive's record fourth quarter results top another outstanding year of accelerated growth . . . .Our dominance in the testing market, coupled with the rapid growth in our application performance management and hosted services businesses, makes Mercury Interactive uniquely positioned to address the internet infrastructure and application performance challenges faced by Global 2000 corporations . (Exhibit 5 )

¶72 : Mercury Interactive's strong faith quarter results, despite a difficult economic environment, demonstrate the value of our testing and performance management solutions and the viability of our business model . . . .As companies focus on maximizing the return from their IT investments, they are selecting our products and services to optimize their infrastructure, minimize capital and operational expenses and deliver reliable, high performance applications . (Exhibit 6)

¶77 : I am very pleased with our second quarter results, especially in a very tough worldwide economic environment . . . .These results reflect our strong leadership position, industry leading solutions and a large, loyal customer base . (Exhibit 7)

¶82 : Our business results were adversely impacted by continued economi c deterioration and the recent tragic events of September 11, 2001 . . . .While these destructive activities and their impact could not have been predicted, we remain confident in the value proposition of our testing and performance management solutions and our growth prospects going forward . (Exhibit 8 )

¶84 : Our third quarter results reflect the challenging economic environment . . . . We remain committed to our customers, focused on expanding our markets and very confident in our prospects going forward . (Exhibit 9 )

2002

¶89 : Our fourth quarter was a strong finish to a challenging year . . . .Despite a difficult economic environment, we grew revenue by 18 percent in 2001, strengthened our position in the testing market and cemented early leadership in the performance management market. (Exhibit 10 )

1194 : Mercury Interactive's business during the first quarter was very strong across all products and geographies. An a challenging spending environment, customers are turning to Mercury Interactive to reduce costs and improve effectiveness of IT operations and business processes . (Exhibit 11)

X99 : Mercury Interactive's strong second quarter results underscore the importance companies place on the quality, reliability and performance of their applications and infrastructure . . . .Our testing, tuning and performance management solutions help IT professionals optimize the return from their technology investments, mitigate risk and minimize capital and operational expenses as they deliver solutions to achieve their business goals . (Exhibit 12)

11104: Mercury Interactive's strong third quarter performance is a result of our ability to address customers' needs and the new IT reality . . . .Our Business Technology Optimization (BTO) solutions enable our customers to optimize the quality of their applications and infrastructure, eliminate technology waste and better align IT with the business . (Exhibit 13)

11111 : Mercury Interactive's record fourth quarter revenue is the highest in the history of the company and marks the first time we have exceeded $100 million in quarterly revenue . . . .Our business was strong across all products and geographies . (Exhibit 14)

2003

11113 : Our strong fourth quarter performance demonstrates the viability of our strategy and ability to execute successfully in a challenging environment . . . .2002 was a transformational year for Mercury Interactive . We have adapted to the changing IT agenda by initiating our Business Technology Optimization (BTO) strategy to optimize quality and align IT with business objectives and by executing on our business objectives across the board . (Exhibit 15 )

IJ120 : Mercury Interactive's solid first quarter results, despite a difficult IT spending environment, demonstrates the value of our application delivery and management solutions, the viability of our business model and the ability of our team to execute . . . We attribute these results to the emergence of Business Technology Optimization (BTO) as a strategic agenda for IT executives, as they strive to apply quality management principles to IT in order to optimize performance, reduce costs and align business and IT objectives . (Exhibit 16)

IJ127 : During the second quarter, Mercury Interactive achieved strong financial results as well as announced two strategic acquisitions and raised $500 million in a convertible notes offering . . . Our business model is working and we continue to take share in the expanding BTO market . (Exhibit 17) 11136 : In the third quarter Mercury had record revenues, strong deferred revenues, and a record number of large transactions, reflecting the adoption of Business Technology Optimization by our customers . (Exhibit 18)

2004

11145 : The fourth quarter capped off an impressive year of growth for Mercury with record revenues, record deferred revenue growth, and record cash flow from operations . . . Our customers are adopting the new Mercury Optimization Centers as they take an enterprise approach to Business Technology Optimization . (Exhibit 19)

11155 : Mercury's results in the first quarter were very strong, with growth in new orders of over 30 percent . . . This growth is driven by the continued adoption of our BTO solutions by our global customers . (Exhibit 20)

11164 : This was our fourth consecutive quarter of year over year new order growth exceeding 30 percent. . . This is a testament to customers increasing investment in Mercury's BTO offerings and our continued execution . (Exhibit 21 )

2005

11173 : We are very pleased with our strong results this quarter. . . Mercury is in a large and growing market, customers are increasing their investments in our BTO offerings, and we continue to execute . (Exhibit 22 )

¶182 : We are very pleased with our strong performance in the fourth quarter and full year 2004 . . . We would like to thank our customers and partners for their continued investment in Mercury's BTO offerings . (Exhibit 23 )

¶184 : 2004 was our most successful year ever . . . Our customers are expanding their investments in Mercury Optimization Center offerings as they take an enterprise approach to streamlining IT . (Exhibit 24)

¶193 : Q1 was a strong start for the year . . . Customers continue to invest in our solutions and leverage our broad and flexible portfolio of BTO offerings . (Exhibit 25 )

0204 : The disappointing third quarter results are due primarily to the delayed timing of several large transactions as well as our continued transition in Europe . . . We remain focused on improving execution and are cautious about the fourth quarter. We believe the actions initiated in the third quarter will position us to capitalize on our significant market opportunity and strong competitive position . (Exhibit 29)