Celeritek Reports Third Quarter Results

Santa Clara, CA. Celeritek (Nasdaq: CLTK), a manufacturer of GaAs RF ICs and subsystems for the wireless communications market, today reported results for the third quarter of its fiscal year 2000.

For its third quarter ended December 31, 1999, Celeritek reported revenues of $11,822,000 compared with revenues of $10,004,000 for the same quarter in fiscal 1999, an increase of 18%. The company reported a net loss of $3,125,000 or $0.42 basic and diluted earnings per share, compared with a net loss of $1,594,000 or $0.22 basic and diluted earnings per share for the same period a year ago.

"The company had its third consecutive quarter of increased revenues and recorded quarterly net bookings of $18.0 million, bringing total bookings for the fiscal year to $43.4 million, a 1.3 book-to-billings ratio as we saw solid growth in both our semiconductor and Radio/Satellite product areas," said Tamer Husseini, president and chief executive officer. "As a result of this booking activity, we believe the company will be close to break even in the fourth quarter of fiscal 2000," he continued.

"However, our profitability in the third quarter was impacted by several factors, including the costs associated with relocating certain production activities off-shore, facility moves in Santa Clara, increased engineering headcount, increased manufacturing overtime and selling expenses and the decline in defense market revenues," he added.

The company reported that semiconductor sales increased 127% to $4.2 million in the third quarter of fiscal 2000 from $1.9 million in the third quarter of fiscal 1999. Radio/Satellite revenues for the third quarter of fiscal 2000 were $4.0 million versus $2.2 million in the third quarter of fiscal 1999, an increase of 76%. Defense sales were down 39% to $3.6 million from $5.9 million in the third quarter of fiscal 1999.

In the wireless semiconductor area, Motorola released the first production orders totaling $2.6 million for 3.0V pHEMT CDMA power amplifiers packaged in a leadless chip carrier that is one-third the size of previous product offerings. These components will be used in high-volume, data enabled consumer applications and this first release is scheduled to ship before the end of the current fiscal year. Metricom, a new customer last quarter, released an additional $2.5 million order for a chip set for use in its Ricochet service that provides high-speed wireless Internet access for mobile data users. Additionally, the company received a development order from a major Korean supplier for several of its new InGaP HBT power amplifier modules, which are targeted for use in CDMA and Wideband CDMA consumer applications.

"Our devices are well positioned as the market increasingly adopts CDMA technology," Husseini said. "Our linear power amplifiers, in particular, are an excellent fit for this segment of the cellular handset market. Our recently introduced InGaP HBT modules are less than half the size of comparable solutions, integrate fourteen supporting components and have been specifically developed to meet the continuing requirement for small, low-cost, high capacity wireless voice and data applications," he added. These TrueTriangle(TM) products are currently being sampled and will be in production this summer. The company has received seven new design wins with this exciting new technology.

To meet the increased demand, the Celeritek foundry is now operating three shifts. An external foundry has been qualified to process Celeritek wafers and a second foundry is in the qualification process. Additional assembly and test subcontractors have been qualified and brought on line.

Husseini said that the company s Radio/Satellite product line had a book-to-bill ratio of 2.3 in the quarter with the majority of orders for products for the point-to-point radio market. The company is also beginning to receive orders for products slated for the new and growing point-to-multipoint radio market.

"We are benefiting from a resurgence in the wireless infrastructure market, as well as our successful programs to add new customers, such as Nortel and Giganet. In addition, we have experienced increasing activity with long-standing customers such as P-Com, Digital Microwave and Gilat," Husseini said. For the Radio/Satellite products, the company has significantly increased its microwave testing capacity by adding computer controlled test stations. As previously announced, Celeritek has established a new design center in the UK, which is staffed with senior microwave engineers.

For the nine months ended December 31, 1999, revenues were $32,741,000 compared with $31,029,000 for the nine months ended December 31, 1998, an increase of six percent. The company reported a loss of $0.93 per basic and diluted share for the first nine months of fiscal 2000 versus a loss of $0.77 per basic and diluted share for the same period a year ago.

Peggy Smith has rejoined the company as chief financial officer, replacing Michael Houlihan who has left the company to pursue other interests.

Celeritek designs and manufactures GaAs RF ICs and high frequency radio products for wireless communications. The company s products are used worldwide by leading manufacturers of wireless communications systems.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements represent the company s expectations or beliefs concerning future events and include statements, among others, regarding the long-term potential of the market, levels of profitability, introduction of new products and level of production capacity. Actual results could differ materially from those projected in the forward-looking statements as a result of known and unknown risk factors and uncertainties. Such factors may include, but are not necessarily limited to, the timing, cancellations or delay of customer orders; continued achievement of design wins; the mix of products sold; changes in manufacturing capacities and variation in the utilization of this capacity; market acceptance of the company s and customers products; variation in manufacturing yields and other competitive factors. Reference is made to the discussion of risk factors detailed in the company s filings with the Securities and Exchange Commission, including its reports on Forms 10-K and 10-Q.

Contact:
Peggy Smith of Celeritek;
Tel: 408-986-5060