UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-K

[X]  Annual report  pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 for the fiscal year ended March 31, 1998 or

[ ]  Transition  report  pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange  Act of 1934 for the  transition  period from  _______________  to
     _______________.


                        Commission file number: 0-24360


                              SPECTRIAN CORPORATION
             (Exact name of registrant as specified in its charter)

           Delaware                                      77-0023003
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)


350 West Java Drive, Sunnyvale, California                 94089
 (Address of principal executive office)                (Zip Code)


       Registrant's telephone number, including area code: (408) 745-5400

           Securities registered pursuant to Section 12(b) of the Act:


                                                          Name of each exchange
 Title of each class                                        on which registered
 -------------------                                        -------------------
      None                                                         None


           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.001 par value
             Series A Participating Preferred Stock, $.001 par value


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                Yes  X    No
                                    ---      ---

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment  to this Form 10-K.  [X]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant, based upon the closing sale price of the Common Stock on May 18,
1998 as reported on the Nasdaq National Market, was approximately  $124,769,768.
Shares of Common  Stock held by each officer and director and by each person who
owns 5% or more of the outstanding  Common Stock have been excluded in that such
persons may be deemed to be affiliates.  This  determination of affiliate status
is not necessarily a conclusive determination for other purposes.

     As of May 18, 1998, registrant had outstanding  10,907,605 shares of Common
Stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

     The Registrant has  incorporated  by reference into Part III of this Annual
Report on Form 10-K portions of its Proxy  Statement for the 1998 Annual Meeting
of Stockholders to be held June 26, 1998.


<PAGE>


                                     PART I

ITEM 1. BUSINESS

     This Annual Report on Form 10-K,  the exhibits  hereto and the  information
incorporated by reference herein contain "forward looking statements" within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act") and Section 21E of the  Securities  Exchange Act of 1934,  as
amended (the "Exchange Act"), and such forward looking  statements involve risks
and uncertainties. When used in this Report, the words "expects," "anticipates,"
and "estimates" and similar expressions are intended to identify forward looking
statements.  Such statements are subject to risks and  uncertainties  that could
cause actual results to differ materially from those projected.  These risks and
uncertainties include those discussed below and those discussed in "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  or
documents incorporated by reference herein.  Spectrian Corporation undertakes no
obligation to publicly release any revisions to these forward looking statements
to reflect events or circumstances  after the date this Report is filed with the
Securities and Exchange Commission or to reflect the occurrence of unanticipated
events.

     Spectrian Corporation (the "Company" or "Spectrian") designs,  manufactures
and markets highly linear radio frequency  ("RF") power  amplifiers that address
the needs of wireless  infrastructure  original equipment manufacturers ("OEMs")
and  their  service  provider  customers.  The  Company's  amplifiers  have been
deployed  in  wireless  networks  in over 35  countries  worldwide.  Spectrian's
amplifiers  deliver high  linearity,  are  cost-effectively  produced in volume,
support multiple transmission  standards and demonstrate high field reliability.
These  attributes  enable  service  providers  to  improve  spectrum  efficiency
resulting in reduced cost per subscriber,  to rapidly deploy new services and to
offer enhanced quality and reliability of service.

Industry Background

     The market for  cellular,  personal  communications  services  ("PCS")  and
wireless  local loop  ("WLL")  communications  services  (collectively  known as
"wireless" services) has grown significantly  during the past decade,  fueled by
decreasing   prices  for  wireless   handsets,   a  more  favorable   regulatory
environment,  increasing  competition  among  service  providers  and a  greater
availability  of services  and RF  spectrum.  In  addition,  several  developing
countries  are  installing  wireless  telephone  networks as an  alternative  to
installing,  expanding  or upgrading  traditional  wireline  networks.  Emerging
bidirectional  wireless data  applications  have the potential to further expand
the market for wireless communications by allowing service providers to increase
revenue generating traffic on their networks. The Strategis Group estimates that
the number of wireless subscribers  worldwide will grow from 205 million in 1997
to 675 million in 2002.

     The growth in wireless  communications  has required,  and will continue to
require,   substantial   investment  by  service   providers  in  infrastructure
equipment.  The  Yankee  Group  estimates  that  spending  by  wireless  service
providers on infrastructure  equipment was approximately $32 billion in 1997 and
will  rise  to   approximately   $93  billion  in  2002.   A  typical   wireless
communications  system  comprises a  geographic  region  containing  a number of
cells,  each of which  contains  a cell  site (or  "base  station"),  which  are
networked to form a service  provider's  coverage area. Each base station houses
the equipment that receives  incoming  telephone calls from the switching office
of the local wireline  telephone  company and  broadcasts  calls to the wireless
users within the cell. A base station contains a fixed number of RF channels; in
a single carrier system, each separate channel requires a separate  transceiver,
single channel power amplifier and tunable cavity filter,  along with an antenna
to transmit the outgoing  signal to the wireless  telephone  user. Most existing
wireless  systems  use single  channel  power  amplifiers.  The power  amplifier
receives a relatively weak signal from the transceiver and significantly  boosts
the power of that signal so that it can be broadcast  throughout the cell, which
typically  covers a  geographic  area up to five miles in  radius.  The RF power
levels necessary to transmit the signal over the required range must be achieved
without distorting the modulation characteristics of the signal.

     Traditional  cellular  systems are  capable of  carrying  only one call per
channel of spectrum and are based on analog technology. This limitation combined
with the continuing growth of the wireless communications market has resulted in
the crowding of transmissions within the available RF spectrum.

                                        1

<PAGE>


Because the radio  frequencies  assigned  to  transmissions  are fixed,  service
providers  are seeking new methods to use the RF spectrum  more  efficiently  to
increase capacity. Analog systems are being supplanted by digital systems, which
convert voice transmissions into bits of electronic  information and thereby use
the finite RF spectrum  allocated  to wireless  transmissions  to serve  growing
demand. Three dominant digital transmission  modulation formats have emerged for
cellular  and PCS  networks  that are  known as Time  Division  Multiple  Access
("TDMA"),  Code Division  Multiple  Access ("CDMA") and Global System for Mobile
Communication  ("GSM").  These  transmission  modulation formats allow a digital
network  to have a call  capacity  of three to eight  times the  number of voice
conversations as an analog network. Existing analog cellular networks are in the
process of upgrading to digital formats that operate at frequencies  between 800
MHZ and 1000 MHZ, and new digital cellular networks are being constructed around
the world as new  licenses  are being  awarded.  In  addition  to the  growth in
digital cellular networks, 1997 was a year of significant growth for new digital
PCS networks that may be more desirable to wireless service  providers,  because
such  networks  also allow a higher  volume of calls in a given RF spectrum than
analog  cellular  networks.  PCS  networks  operate  in the 1800 MHZ to 2000 MHZ
frequency range but typically have a smaller coverage area per base station than
their cellular  counterparts.  Thus PCS networks need two to three times as many
base stations  (and power  amplifiers)  as digital  cellular  networks.  Service
providers are upgrading their cellular networks to digital and deploying new PCS
networks,   trends  which  the  Company  believes  will  increase  rapidly.  The
implementation  of digital and PCS networks,  in conjunction  with the continued
growth in analog  networks,  has  resulted  in an  increased  demand for network
infrastructure equipment.

     Wireless  carriers  are also  increasing  system  capacity by  implementing
dynamic channel  allocation,  which allows the service provider to automatically
move available unused channels from less active base stations to busier adjacent
base  stations  as the demand load moves,  such as during  commuter  rush hours.
Systems  with  dynamic  channel  allocation  are more  easily  implemented  with
multicarrier power amplifiers,  which can simultaneously broadcast signals using
multiple transmission  standards over a variable number of channels. The need to
increase system  capacity,  combined with the development of multicarrier  power
amplifiers, has also encouraged wireless carriers to transition from "macrocell"
base stations (which typically have a five mile radius) to microcells.  When the
number  of  subscribers  within  the  macrocell  exceeds  the  capacity  of  its
equipment,  the cell can be split into  several  smaller  microcells  to avoid a
degradation in service.  The geographic range of these microcells is smaller and
requires  equipment  that consumes less power and is less expensive at each base
station,  but more  microcells are required in order to increase the capacity of
the overall system.

     Wireless  carriers'  ability to more  effectively  manage  scarce  spectrum
resources and  accommodate a larger number of  subscribers is dependent on their
ability to broadcast signals with high  "linearity."  Linearity is the degree to
which amplified signals remain within their prescribed band of the spectrum with
low distortion or interference from adjacent channels.  In current systems,  the
RF power  amplifier  is generally  the source of the  greatest  amount of signal
distortion.  Consequently,  obtaining RF power amplifiers with high linearity is
critical  to a service  provider's  ability  to reduce  interference  levels and
thereby increase system capacity.  For example,  higher linearity amplifiers are
required as the industry transitions from analog to digital technologies without
significant  improvements in power amplifier linearity relative to that required
for analog  networks.  Multiple  conversations on a single channel would lead to
unacceptable  channel  interference.  Consequently,  high linearity is even more
critical  in  digital  networks  than in  analog  networks.  Multicarrier  power
amplifiers,  which are  critical to the use of dynamic  channel  allocation  and
microcells,  require  leading edge  linearity  technology to function  properly.
Substantial  investment  and  technical  expertise  are  required  to design and
manufacture RF power amplifiers with high linearity.

     Wireless  service  providers  compete in dynamic markets  characterized  by
evolving and competing industry  standards,  technologies and applications,  and
those  wireless  service  providers that are able to increase the efficiency and
lower  the cost of new and  existing  systems  will  compete  most  effectively.
Wireless  service  providers must  anticipate  evolving  industry  standards and
invest  in  infrastructure  equipment  that  both  maximizes  efficiency  in the
management of the limited  spectrum  licensed to them and is available in volume
for rapid deployment.

                                        2

<PAGE>


     Service providers obtain their equipment from a concentrated group of large
OEMs. The Company believes that Lucent Technologies,  Inc. ("Lucent"),  Ericsson
Telephone Company  ("Ericsson"),  Motorola  Corporation  ("Motorola"),  Northern
Telecom  Limited  ("Northern  Telecom"),  Nortel Matra  Communications  ("Nortel
Matra"),  in  which  Northern  Telecom  has an  equity  interest,  and  Nokia OY
("Nokia") supplied over 80% of the wireless  infrastructure  equipment installed
worldwide  in 1997.  Most of these  OEMs  manufacture  base  station  components
internally.   However,  in  response  to  competition  and  as  the  performance
requirements of certain  components  increase,  many of these OEMs have begun to
rely on  independent  sources  for  certain  system  components,  such as  power
amplifiers,  that  must  meet  unique  technical  requirements.  To  succeed  in
capturing orders from these OEMs,  power amplifier  suppliers must rapidly bring
to  market  products  that  are  highly  linear,   can  be  produced  in  volume
cost-effectively, support multiple standards and are reliable in the field.

The Spectrian Solution

     Spectrian  Corporation  designs,  manufactures and markets highly linear RF
power  amplifiers  that  address the needs of wireless  infrastructure  OEMs and
their service provider customers.  The Company's  amplifiers provide significant
advantages to its customers, including:

     High  Linearity.   Spectrian  has  developed  the  multiple   technological
competencies  and  disciplines   required  to  achieve  high  linearity  in  its
amplifiers.   These  competencies  and  disciplines   include  RF  semiconductor
technology, solid state device physics, thermal and mechanical packaging design,
advanced circuit design,  amplifier  linear  correction  technologies,  advanced
signal  processing  techniques,  control  systems and computer  aided design and
modeling.  The  Company  believes  that its  combined  strengths  in these areas
provide it with an important competitive advantage in maintaining  technological
leadership.  The high degree of linearity of the  Company's  amplifiers  enables
Spectrian's  OEM  customers  to furnish  wireless  service  providers  with high
capacity base station equipment at low capital cost per subscriber.

     Rapid Time to Market and Volume Manufacturing.  The vertical integration of
Spectrian's  design and  production  processes is a key element of the Company's
ability to address wireless  infrastructure  equipment  suppliers'  quantity and
time to market  requirements  for power  amplification  products.  The Company's
ability to design and manufacture its RF semiconductors  in-house is critical to
rapidly and  cost-effectively  introducing new products that meet OEMs' evolving
needs.  Spectrian also designs its amplifiers to be manufactured in high volumes
at low cost,  which the Company  believes  has been a  competitive  advantage in
securing   orders  from  its  OEM  customers   because  power   amplifiers  have
historically  been difficult to manufacture in high volumes based upon the labor
intensive nature of the  manufacturing  process and the complexities of RF power
technology.  Finally,  the Company's use of automated  testing  reduces  overall
manufacturing  cycle times and enables the Company to deliver products in volume
more rapidly.

     Standards  Independence.   Spectrian's  technologies  support  every  major
wireless  modulation  standard,  and its multicarrier  power amplifiers  support
several  standards  simultaneously.  Certain  of the  Company's  single  carrier
products  support both analog and digital  standards in a dual mode format.  The
Company  believes  that this  breadth of product  functionality  is important to
wireless  service  providers  as  they  upgrade  their  cellular  infrastructure
equipment and  implement  digital  systems in an  environment  characterized  by
evolving industry standards and the proliferation of spectrum allocation.

     High Quality and Reliability.  Spectrian designs its power amplifiers to be
highly reliable in the field.  Spectrian's  integrated  design and manufacturing
processes  are  important  factors  contributing  to its  ability to develop and
produce highly reliable power  amplifiers.  In order to further address customer
requirements for amplifier quality and reliability and to ensure process quality
control,  Spectrian has  implemented a continuous  process  improvement  program
throughout the Company and is ISO 9001 certified.

     Multicarrier  Functionality.  Spectrian develops and supplies  multicarrier
amplifiers  that  integrate  the  functions  of multiple  single  carrier  power
amplifiers into a single smaller unit while simultaneously  eliminating the need
for  cavity  filters.   The  Company  believes  that  the  distortion  reduction
performance  of its  multicarrier  amplifiers  will provide it with an important
competitive  advantage.  The ability of the Company's  multicarrier  products to
combine multiple digital and analog channel schemes enables carriers

                                        3

<PAGE>


to  maintain  backward  compatibility  as  they  add  digital  transmission  and
implement dynamic channel allocation solutions. In addition,  multicarrier units
can potentially  reduce service  providers'  equipment and maintenance costs and
space requirements, thereby facilitating the implementation of microcells.

Spectrian Strategy

     Spectrian's objective is to strengthen its position as the leading merchant
supplier of highly linear power amplifiers to wireless infrastructure  equipment
manufacturers  and  service   providers   worldwide.   The  Company's   strategy
incorporates the following key elements:

     Capitalize on Vertical Integration in Design and Manufacturing. The Company
has  historically  pursued a strategy of vertical  integration of its design and
manufacturing  processes,  from design and development of the  semiconductor die
through  assembly and automated  testing with  proprietary  software and systems
that minimize  manufacturing  cycle times. During fiscal 1998, the Company began
outsourcing  some of its printed circuit board assemblies but continues to exert
control  over  each  of  the  design  and  manufacturing   steps  which  further
contributes  to improved  amplifier  linearity,  shortens the Company's  time to
market,  reduces unit costs and increases quality and reliability.  In addition,
operating a wafer fabrication facility improves the Company's access to a supply
of RF semiconductors  even in periods of high industry demand for semiconductors
and intense competition for wafer fabrication capacity.

     Expand  Relationships  with  Leading  Worldwide  Manufacturers  of Wireless
Infrastructure  Equipment.  The Company has developed relationships with certain
large wireless OEMs,  including  Northern Telecom,  Nortel Matra, LG Information
and Communications Limited ("LGIC") and QUALCOMM Incorporated  ("QUALCOMM"),  as
well as certain emerging  manufacturers  including  Harris,  Tellabs and Watkins
Johnson.  The Company markets its products worldwide,  and as of March 31, 1998,
its power  amplifiers had been  installed in over 35 countries.  In fiscal 1997,
Spectrian also began to establish  direct  relationships  with certain  wireless
service  providers,  allowing  the  Company  to address  previously  unavailable
markets.  The Company's  strategy is to form lasting  customer  relationships by
working  closely  with OEM  customers to develop  insight  into their  amplifier
requirements  and to design specific  products that meet their needs, by rapidly
delivering  product  designs  and  volume  production  and  by  maintaining  the
confidentiality of customer technology.

     Leverage  Product  Platforms to Provide  Rapid Time to Market.  The Company
provides customized or "application specific"  amplification products to address
the  particular  technical  and  time  to  market  requirements  of  each of its
customers. The Company leverages its modular product architecture,  configurable
core  technologies  and  product  platforms,  as well as its  ability  to design
products for all RF modulation  schemes, to rapidly and cost effectively develop
and deliver application specific solutions to its customers.

     Pursue  Standards  and Systems  Independence.  The  Company's  products are
compatible   with   wireless   communications   systems   provided   by  various
infrastructure   suppliers   and  operate   under  every  major   domestic   and
international standard. By pursuing both standards and systems independence, the
Company  believes  that it will  benefit  from  the  continuing  growth  of both
existing and emerging wireless  communications  systems while reducing the risks
associated  with relying on the success of one or a limited number of systems or
existing or emerging industry  standards.  In addition to supporting every major
cellular  standard,  the Company has  developed,  and is  continuing to develop,
products that address the needs of the PCS and WLL markets.

     Strengthen  Leadership  Position in Amplification  Technology.  The Company
intends  to  maintain  and  expand  its  technological  leadership  position  by
continuing  to invest  significant  resources  in research  and  development  of
amplification  technology.  The Company believes that its RF amplifier  research
and  development  team is among the largest and most  skilled in the merchant RF
power amplifier industry. To maintain a technological  leadership position,  the
Company believes that numerous integrated  technical  capabilities are required,
including  semiconductor  design and fabrication,  unique packaging concepts and
components,  customized  linearization and correction technologies and expert RF
circuit  design.  The  Company's  strategy is to continue to invest  significant
resources to support the Company's technology leadership in amplifier linearity,
power and efficiency.

                                        4

<PAGE>


Markets

     Wireless systems have historically  employed analog  transmission  formats,
certain  of  which  have  been  adopted  as  industry  standards.  The  need  to
accommodate a growing wireless  customer base within a finite amount of spectrum
has, however, encouraged a worldwide transition from analog standards to various
digital  technologies  which are  significantly  more efficient.  Current analog
standards  include  Advanced Mobile Phone Services  ("AMPS") in the Americas and
Total Access  Communications System ("TACS") and Nordic Mobile Telephone ("NMT")
in Europe.  Current  digital  standards  include TDMA,  CDMA,  Personal  Digital
Cellular ("PDC") in Japan and GSM.

     The  Company  offers  amplifiers  that  support  the AMPS  and TACS  analog
standards and the TDMA, CDMA and GSM digital standards for cellular systems. The
Company has elected not to support the NMT analog standard in Europe, because it
believes  that  NMT  has a lower  potential  for  growth  than  the GSM  digital
standard.  To  date,  the  Company  has  not  invested  significant  development
resources to incorporate  the PDC standard into its product  offerings,  because
such  standard  has not  developed  to any great  degree  outside of Japan.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Factors  Affecting  Future  Operating  Results--Rapid  Technological
Change; Evolving Industry Standards; Dependence on New Products."

     In addition to the analog and digital cellular systems discussed above, the
market for PCS systems is expanding rapidly. The FCC has reallocated spectrum in
the 1.85 to 1.99 gigahertz  range for the provision of PCS and has conducted six
rounds of  auctions  for the PCS  spectrum.  The  success  of PCS as a  wireless
service will depend in part on whether infrastructure  manufacturers and service
providers  can  reduce  system   manufacturing  and  service  costs  and  prices
sufficiently  to  increase  significantly  the  rate of  market  penetration  of
potential subscribers.

     The following chart illustrates these existing and developing standards for
wireless  communications,  and the shaded  areas  represent  markets  served and
standards supported by the Company's current product offerings.


--------------------------------------------------------------------------------
                       Major Wireless Standards by Region
--------------------------------------------------------------------------------
                 Americas           Europe          Asia Pacific      Japan
                  (MHZ)             (MHZ)              (MHZ)          (MHZ)
             -------------------------------------------------------------------
 Analog        AMPS (800)       NMT (450, 900)     NMT (450, 900)   NTT (800)
 Cellular                        TACS (900)         AMPS (800)     JTACS (800)
                                 AMPS (800)         TACS (900)
--------------------------------------------------------------------------------
 Digital       CDMA (800)        GSM (900)        CDMA (800, 900)   PDC (1500)
 Cellular      TDMA (800)                           GSM (900)       JDC (800)
                                                  TDMA (450, 800)   CDMA (800)
--------------------------------------------------------------------------------
 PCS           CDMA (1900)       GSM (1800)         CDMA (1900)     PHS (1900)
               TDMA (1900)                          GSM (1800)
               GSM (1900)                           CDMA (1800)
--------------------------------------------------------------------------------


     The Company  believes  that the potential  for wireless  communications  in
countries  without  reliable or extensive  wireline  systems may be even greater
than  in  countries  with  developed  telecommunications  systems.  The  cost of
building and  maintaining a wireless  network is generally less than the cost of
building and  maintaining  a comparable  wireline  network.  Thus,  in many less
developed  countries,  wireless service may provide the primary service platform
for both mobile and fixed  telecommunications.  In  addition,  if  technological
advances and price  decreases  continue to occur,  a market in the United States
and other  developed  countries for wireless  service to be used in  conjunction
with, or in place of, traditional wireline ("local loop") service may emerge for
a variety of  applications.  For example,  WLL networks could provide local loop
service and direct access to the long distance carriers.

                                       5

<PAGE>


Products

     The Company  designs  highly  linear  amplifiers  that address the specific
requirements of each of its OEM customers.  The Company's product strategy is to
support multiple wireless systems and standards.  Most existing wireless systems
use single  carrier power  amplifiers.  The following  table  provides a list of
standards for which the Company develops single carrier amplifiers:


              ---------------------------------------------------
                Spectrian Single Carrier Amplifier Configurations
              ---------------------------------------------------
                                           Frequency      Power
                        Standard             (MHZ)       (Watts)
              ---------------------------------------------------
              Analog Cellular:
                AMPS, CDPD                 869-894        45,65
                TACS                       917-950         65
              ---------------------------------------------------
              Digital Cellular:
                TDMA                       485-495         50
                TDMA                       869-894        25,50
                CDMA                       869-894         25
                GSM                        925-960         30
              ---------------------------------------------------
              PCS:
                GSM 1800                  1805-1880        30
                CDMA                      1930-1990       20,25
                GSM 1900                  1930-1990        30
                CDMA                      1805-1870        25
              ---------------------------------------------------
              WLL:
                Wideband CDMA             2370-2400     10,20,40
              ---------------------------------------------------


     The Company also offers  multicarrier  application  specific  amplification
products.  Multicarrier power amplifiers require  significantly higher linearity
than  single  carrier  designs.  The  following  table  provides  a list  of the
standards for which the Company develops multicarrier amplifiers:


     ---------------------------------------------------------------------
                 Spectrian Multicarrier Amplifier Configurations
     ---------------------------------------------------------------------
                                                                  Typical
                                       Frequency      Power      Linearity
                 Standard                (MHZ)       (Watts)      (dBc)*
     -------------------------------- -----------   ---------   ----------
             AMPS, TDMA, CDMA, CDPD    869-894       30-175        -70
             ETACS                     917-950         25          -50
             CDMA                     1805-1870      25-100        -65
     ---------------------------------------------------------------------


------------
*Carrier to Intermodulation Distortion Ratio.

     The Company's  amplifiers  can be configured as either  modules or pallets,
separate  plug-in  amplifier  units or integrated  subsystems and range in price
from  approximately  $500 to $30,000.  A pallet  represents  the lowest level of
amplifier  complexity  and  consists of RF  semiconductors  mounted on a printed
circuit board  without a housing.  A plug-in  amplifier  unit consists of a cast
housing,  which provides for thermal management and low cost of production,  and
contains a RF amplifier pallet combined with a digital control interface module.
A power amplifier  subsystem  consists of multiple cast housings and adds signal
processing to enhance linearity. The Company's products are integrated into base
station systems designed and/or manufactured by its OEM customers, and therefore
must be engineered to be com-patible with industry standards, as well as certain
customer specifications including frequency, power and linearity.

OEM Customers, Sales and Marketing

     The Company  sells power  amplifiers  to a limited  number of OEMs in North
America, Europe and Asia principally through its direct sales organization.  The
Company's customers include many of the

                                        6

<PAGE>


world's largest manufacturers of wireless  infrastructure  equipment,  including
Northern Telecom, Nortel Matra, LGIC and QUALCOMM.  During fiscal 1998, Northern
Telecom,  Nortel Matra and LGIC accounted for approximately  57%, 22% and 14% of
revenues,  respectively.  During fiscal 1997,  Northern Telecom and Nortel Matra
accounted for approximately 63% and 12% of revenues, respectively. During fiscal
1996,  Northern Telecom and Nortel Matra accounted for approximately 58% and 17%
of revenues,  respectively. While Northern Telecom continues to be the Company's
dominant customer due to Northern Telecom's growth and diversification  into new
markets,  the products the Company  supplies to Northern Telecom and the regions
in which they are deployed  have become more diverse.  The Company  expects that
sales of its products will continue to be concentrated among a limited number of
customers.  In  addition,  the recent  financial  market  turmoil  and  economic
downturn in Korea may have a material  adverse effect on the Company's  sales of
its products to LGIC, an OEM based in Korea, because a majority of the Company's
products  ordered  by LGIC to date  relate to the  build-out  of the  Korean PCS
system. In addition,  because the Company's products are priced in U.S. dollars,
the currency  instability  in the Korean and other Asian  financial  markets may
have the effect of making the  Company's  products  more  expensive to LGIC than
those of other  manufacturers  whose  products are priced in one of the affected
Asian  currencies,  and,  therefore,  LGIC may reduce  future  purchases  of the
Company's products.  In addition,  wireless  infrastructure OEMs have come under
increasing  price pressure from wireless  service  providers,  which in turn has
resulted in downward pricing pressure on the Company's products.  Therefore, the
Company expects to incur  increasing  price pressures from Northern  Telecom and
its other major OEM customers in future  periods which could result in declining
average  sales  prices  for the  Company's  products.  The  Company's  business,
financial  condition and results of operations  have been  materially  adversely
affected in the past by the failure of anticipated  orders to materialize and by
deferrals or  cancellations  of orders by its customers.  If the Company were to
lose Northern Telecom or any other major customer as a customer, or if orders by
Northern Telecom or any other major OEM customer were to otherwise decrease, the
Company's  business,  financial  condition  and results of  operations  would be
materially  adversely  affected.  See  "Management's  Discussion and Analysis of
Financial  Condition  and  Results  of   Operations--Factors   Affecting  Future
Operating Results--Customer Concentration; Dependence on Northern Telecom."

     The Company employs a customer focused, team based direct sales approach to
satisfy  the  power  amplification  needs of its  customers.  Sales to large OEM
customers   require   close  account   management   by  Company   personnel  and
relationships  at multiple  levels of its  customers'  organizations,  including
management,  engineering and purchasing  personnel.  In addition,  the Company's
application specific  amplification products require experienced sales personnel
to match the  customer's  amplification  requirements  to the Company's  product
capabilities.  The Company believes that close technical  collaboration with the
customer during the design phase of new communications  equipment is critical to
the  integration  of its  amplification  products  into the new  equipment.  The
Company's  integrated  sales  approach  involves a team  consisting  of a senior
account  manager,  a program  manager and members of the  Company's  engineering
department.  This sales approach allows the Company's  engineering  personnel to
work closely with their counterparts at the OEM customer to assure compliance of
the product to the customer's  specification.  The Company's  executive officers
are also involved in all aspects of the Company's  relationships  with its major
customers and work closely with their senior  management.  As of March 31, 1998,
the Company had a direct sales staff of six people. The Company warrants its new
products against defects in design,  materials and workmanship,  typically for a
period of 12 to 18 months.

     As part of the effort to  diversify  its product  base,  in fiscal 1997 the
Company began to sell  multicarrier  amplifier  systems  (including  filters and
combiners)  directly  to service  providers.  To date,  these sales have been to
providers in the United  States and Israel.  The Company  recognizes  that these
sales may be in conflict  with  potential or current OEM sales and is willing to
work with its OEM equipment  suppliers so that the service  provider  receives a
Spectrian  power  amplifier  system directly or through the OEM. There can be no
assurance  that the Company's  direct sales to service  providers will not cause
its OEM  equipment  suppliers to reduce orders or terminate  their  relationship
with the  Company.  Any such  reduction  or  termination  could  have a material
adverse effect on the Company's business, financial condition and

                                        7

<PAGE>


results of operations.  See  "Management's  Discussion and Analysis of Financial
Condition  and  Results  of   Operations--Factors   Affecting  Future  Operating
Results--Customer Concentration; Dependence on Northern Telecom."

     The  Company   markets  its  products   overseas  with  the  assistance  of
independent sales representatives in various parts of the world. The Company has
one  independent  sales   representative  in  the  United  States,  three  sales
representatives in Europe covering Austria,  Finland,  France,  Germany,  Italy,
Sweden and Switzerland,  one sales representative dedicated to each of Japan and
Israel  and  a   representative   organization  in  South  Korea.   The  Company
continuously  evaluates  whether to establish  direct sales forces or to utilize
independent  representatives  in a  particular  region or for a given  potential
customer  depending  upon  the  scope  of  potential  sales  opportunities.  The
Company's  direct  sales  staff  provides  sales  direction  and  support to its
international  sales  representatives.   Sales  outside  of  the  United  States
represented 95%, 73% and 72% of revenues in fiscal 1998,  fiscal 1997 and fiscal
1996,  respectively.  Sales outside of the United States are denominated in U.S.
dollars in order to reduce the risks associated with the fluctuations of foreign
currency  exchange  rates.  The Company  expects that  international  sales will
continue to account for a significant portion of its revenues.  Sales outside of
the  United  States  involve  a number  of  inherent  risks,  including  reduced
protection for  intellectual  property rights in some  countries,  the impact of
recessionary  environments  in economies  outside the United  States,  generally
longer  receivables   collection  periods,   unexpected  changes  in  regulatory
requirements,   tariffs  and  other  trade   barriers.   In  addition,   because
substantially  all of the  Company's  foreign  sales  are  denominated  in  U.S.
dollars,  increases  in the value of the dollar  relative to the local  currency
would increase the price of the Company's  products in foreign  markets and make
the Company's products relatively more expensive and less price competitive than
competitors'  products  that are  priced  in local  currencies.  There can be no
assurance  that these  factors  will not have a material  adverse  effect on the
Company's  future  international  sales  and,  consequently,  on  the  Company's
business, financial condition and results of operations. The Company anticipates
that the recent turmoil in Asian financial markets and the recent  deterioration
of the  underlying  economic  conditions in certain Asian  countries may have an
impact on its sales to customers located in or whose projects are based in those
countries due to the impact of currency  fluctuations  on the relative  price of
the Company's  products and  restrictions on government  spending imposed by the
International  Monetary Fund (the "IMF") on those countries  receiving the IMF's
assistance. In addition, customers in those countries may face reduced access to
working capital to fund component purchases, such as the Company's products, due
to higher interest rates,  reduced bank lending due to contractions in the money
supply or the deterioration in the customer's or its bank's financial  condition
or the inability to access local equity financing. A substantial majority of the
Company's  products are sold to OEMs who incorporate the Company's products into
systems sold and installed to end-user customers. These OEMs are not required by
contract and do not typically provide the Company with information regarding the
location and identity of their end-user customers,  and, therefore,  the Company
is not able to determine  what portion of its product  sales have been or future
orders will be incorporated into OEM sales to end-users in those Asian countries
currently experiencing financial market turmoil and/or deterioration of economic
conditions. Furthermore, a large portion of the Company's existing customers and
potential new customers are servicing new markets in developing  countries  that
the Company's customers expect will deploy wireless communication networks as an
alternative to the construction of a wireline infrastructure.  If such countries
decline to construct  wireless  communication  systems,  or construction of such
systems is delayed for any reason,  including  business and economic  conditions
and changes in economic stability due to factors such as increased inflation and
political  turmoil,  such  delays  could have a material  adverse  effect on the
Company's  business,   results  of  operations  and  financial  condition.   See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Factors  Affecting Future Operating  Results--Risks of International
Sales."

Manufacturing

     The Company assembles,  tests, packages and ships amplifier products at its
manufacturing  facilities  located  in  Sunnyvale,   California.  The  Company's
manufacturing facilities consist of a 4 inch wafer fabrication and semiconductor
assembly and test facility and an amplifier assembly and test facility. The

                                        8

<PAGE>


Company's manufacturing product engineering group, comprised of 37 engineers, is
devoted to improving product  manufacturability  by minimizing assembly and test
cycle times,  improving  product test yields and reducing overall  manufacturing
costs.

     Wafer  Fabrication.  As part of its strategy of vertical  integration,  the
Company operates its own wafer fabrication facility for the production of the RF
semiconductor,   the  most  important   component   utilized  in  the  Company's
amplifiers.  The Company has an eight person  semiconductor  process engineering
group  responsible for continuous  improvement of semiconductor  processes.  The
Company believes that control of the semiconductor  manufacturing process allows
it to reduce unit costs,  control  quality,  improve time to market delivery and
most  importantly  increase the linearity of the RF  semiconductors  used in its
amplifiers.

     The Company's operation of its manufacturing facilities entails a number of
risks,  including a high level of fixed and variable  costs,  the  management of
complex  processes,  dependence  on a  single  source  of  supply  and a  strict
regulatory  environment.  Fixed costs  consist  primarily  of  occupancy  costs,
investment in  manufacturing  equipment,  repair,  maintenance and  depreciation
costs related to equipment and fixed labor costs  related to  manufacturing  and
process engineering.  During periods of low demand, high fixed wafer fabrication
costs are likely to have a material  adverse effect on the Company's  results of
operations.

     The Company's strategy of frequently  introducing and rapidly expanding the
manufacture  of new products to meet evolving OEM customer and service  provider
needs has caused the Company to  experience  high  materials  and  manufacturing
costs,   including  high  scrap  and  material   waste,   significant   material
obsolescence,  labor inefficiencies and overtime expenses,  inefficient material
procurement  and  an  inability  to  realize  economies  of  scale.  These  high
manufacturing  costs and production  interruptions have had an adverse effect on
the  Company's  results of  operations.  In  addition,  the Company has made and
expects to continue to make pricing commitments to OEM customers in anticipation
of achieving such  manufacturing  cost  reductions.  Any failure to achieve such
manufacturing  cost  reductions  could  have a  material  adverse  effect on the
Company's business, financial condition and results of operations.

     The design and  fabrication of RF  semiconductors  is a complex and precise
process. Such manufacturing is sensitive to a wide variety of factors, including
variations and impurities in the raw materials,  difficulties in the fabrication
process,  performance of the manufacturing equipment,  defects in the masks used
to print circuits on a wafer and the level of contaminants in the  manufacturing
environment. As a result of these and other factors, semiconductor manufacturing
yields  from  time  to time in the  past  have  suffered,  and  there  can be no
assurance that the Company will be able to achieve acceptable  production yields
in the future. In addition,  the Company's wafer fabrication facility represents
a single point of failure in its manufacturing  process that would be costly and
time-consuming to replace if its operation were interrupted. The interruption of
wafer  fabrication  operations  or the loss of employees  dedicated to the wafer
fabrication  facility  could have a  material  adverse  effect on the  Company's
business, financial condition and results of operations. Any failure to maintain
acceptable wafer production levels, either from the Company's facility or from a
third party wafer supplier, will have a material adverse effect on the Company's
business, financial condition and results of operations.

     The  Company's  operation of its wafer  fabrication  facility  subjects the
Company  to a variety  of  local,  state and  federal  governmental  regulations
relating to the storage, discharge, handling, emission, generation,  manufacture
and disposal of toxic or other  hazardous  substances  used to  manufacture  the
Com-pany's products.  The Company believes that it is currently in compliance in
all  material  respects  with  such  regulations  and that it has  obtained  all
necessary environmental permits to conduct its business. However, the failure to
comply with  current or future  regulations  could result in the  imposition  of
substantial  fines on the Company,  suspension of production,  alteration of its
manufacturing processes or cessation of operations. In addition, compliance with
such  regulations  could  require the Company to acquire  expensive  remediation
equipment or to incur substantial  expenses.  See  "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations--Factors  Affecting
Future Operating Results--Risks Associated with Internal Wafer Fabrication."

     The Company expects that its customers will continue to establish demanding
specifications for quality,  performance and reliability that must be met by the
Company's products. RF semiconductors as

                                        9

<PAGE>


complex as those offered by the Company often encounter  development  delays and
may  contain  undetected  defects or  failures  when first  introduced  or after
commencement of commercial  shipments.  The Company has from time to time in the
past experienced product quality,  performance or reliability problems, although
no such problems have had a material  adverse effect on the Company's  business,
financial condition and results of operations.  In addition,  multicarrier power
amplifiers  have a higher  probability of  malfunction  because of their greater
complexity. There can be no assurance that defects or failures will not occur in
the  future  relating  to  the  Company's   product  quality,   performance  and
reliability that may have a material  adverse effect on the Company's  business,
financial  condition  and  results of  operations.  If such  defects or failures
occur,  the Company could  experience lost revenue,  increased costs  (including
warranty  expense,  costs  associated  with  customer  support and other product
liability  related costs),  delays in or cancellations or rescheduling of orders
or  shipments  and  product  returns  or  discounts,  any of which  would have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.  See  "Management's  Discussion and Analysis of Financial
Condition  and  Results  of   Operations--Factors   Affecting  Future  Operating
Results--Product Quality, Performance and Reliability."

     Semiconductor  Assembly and Test.  Once a wafer is processed,  it is tested
and diced into chips that are attached to a special ceramic package, wire bonded
and  encapsulated.  The packages are designed for optimal thermal and electrical
performance  that are critical  during high power RF operation.  These processes
require  precision for  performance of the  semiconductor  to meet the Company's
strict standards but must also be suited to manufacturing in large volumes.  The
Company utilizes patented packaging techniques to improve the performance of its
semiconductors and amplifiers as well as the automated  assembly  techniques for
semiconductors.  In addition,  the Company utilizes a specialized  surface mount
packaging  process to improve  transistor  assembly  volume  that also  enhances
thermal performance,  lowers costs and improves  reliability.  See "Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations--Factors Affecting Future Operating Results."

     Amplifier  Assembly  and  Test.  The  Company's   amplifier   manufacturing
activities consist of purchasing  components,  assembling and testing components
and subassemblies,  and integrating  subassemblies  into finished products.  The
Company's  amplifiers are comprised of a variety of subassemblies and components
designed or specified by the Company,  including  housings,  harnesses,  cables,
packaged  RF  semiconductors,  semiconductor  integrated  circuits  and  printed
circuit  boards.  Except  for  the  RF  semiconductors,   these  components  and
subassemblies  are  manufactured by third parties and are shipped to the Company
for final  assembly.  During the third quarter of fiscal 1998, the Company began
outsourcing some of the assembly of its higher volume  components  consisting of
the integration of printed circuit boards and the RF semiconductors manufactured
by the Company on a turnkey basis. Regardless of whether the Company assembles a
component  in house or  relies on a turnkey  contractor,  each of the  Company's
products receives extensive in process and final quality inspections and tests.

     The Company  attempts to utilize  standard  parts and  components  that are
available  from  multiple  vendors.  However,  certain  components  used  in the
Company's products are currently  available only from single sources,  and other
components  are  available  from only a limited  number of sources.  Despite the
risks  associated  with  purchasing  components  from  single  sources or from a
limited number of sources, the Company has made the strategic decision to select
single  source or limited  source  suppliers in order to obtain  lower  pricing,
receive more timely delivery and maintain quality  control.  If the Company were
unable to obtain  sufficient  quantities of components,  delays or reductions in
product  shipments could occur which would have a material adverse effect on the
Company's  business,   financial  condition  and  results  of  operations.   See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Factors  Affecting Future Operating Results--Sole or Limited Sources
of Materials and Services."

     The  Company  continues  to  initiate  actions to reduce its  manufacturing
costs. The Company has negotiated master purchase agreements with its vendors to
have  substantially  all of its parts bid on an annual  basis  rather  than on a
monthly basis, which it believes has generated significant volume discounts. The
Company is also implementing  standardized automated test processes and material
handling

                                       10

<PAGE>


throughout the manufacturing area which is also designed to reduce costs. In the
third quarter  fiscal 1998,  the Company also began  utilizing the services of a
turnkey  contractor to assemble certain of its high volume printed circuit board
components. There can be no assurance that these activities will reduce costs as
quickly as  anticipated  reductions in average  selling  prices of the Company's
products.  Any failure to achieve continued  manufacturing cost reductions could
have a material adverse effect on the Company's  business,  financial  condition
and  results  of  operations.  See  "Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of   Operations--Factors   Affecting  Future
Operating Results--  Fluctuations in Operating Results" and "--Declining Average
Sales Prices."

Research and Development

     The mission of the Company's  research and  development  organization is to
rapidly design low cost, highly manufacturable RF power amplifiers with industry
leading  performance.  The Company's research and development staff is organized
into a  semiconductor  group and an amplifier  group.  The  semiconductor  group
focuses on the rapid  design of RF  semiconductors  that are low cost and highly
efficient  to provide  improved RF  performance.  The  semiconductor  group also
performs  advanced  research  in  device  modeling  and  semiconductor   process
development to support the amplifier  engineering group's efforts. The amplifier
engineering  group focuses on rapid  development of new RF power amplifiers that
are  manufacturable  in high  volumes at low cost and achieve  industry  leading
performance.  This group creates new product  platforms  and leverages  existing
ones,  reuses  existing  circuit  topologies and introduces  into production new
correction, control and amplification concepts created by the group. The Company
uses an automated design  environment to model RF semiconductors and amplifiers.
This  design   environment,   together  with  the  Company's   modular   product
architecture and  configurable  core  technologies,  allow it to rapidly define,
develop and deliver on a timely basis the new and enhanced  products demanded by
its OEM customers.

     The Company has historically devoted a significant portion of its resources
to research  and  development  programs  and expects to continue to do so. As of
March 31, 1998, the Company had 119 people engaged in research and  development.
The Company's research and development  expenses in fiscal 1998, fiscal 1997 and
fiscal 1996 were $18.6 million,  $17.2 million and $14.5 million,  respectively,
and  represented  11%,  19% and 20%,  respectively,  of total  revenues in those
periods.

     The  markets  in  which  the  Company   and  its   customers   compete  are
characterized by rapidly changing  technology,  evolving industry  standards and
continuous  improvements in products and services.  The Company's future success
depends  upon,  among other  things,  its  ability to develop new  products in a
timely manner that compete effectively on the basis of price and performance and
that  adequately  address the needs of its OEM  customers.  No assurance  can be
given that the Company's product  development  efforts will be successful,  that
its new products will achieve  customer  acceptance or that such OEMs'  products
will achieve  customer  acceptance.  In addition,  as is  characteristic  of the
wireless  communications  equipment  industry,  the average  sales prices of the
Company's products have historically  decreased over the products' lives and are
expected to continue to do so. To offset  declining  average sales  prices,  the
Company  believes  that in the  near  term it must  develop  new  products  that
incorporate advanced features and can be sold at higher average sales prices. To
the extent  that new  products  are not  developed  in a timely  manner,  do not
achieve customer  acceptance or do not generate higher sales prices and margins,
the Company's  business,  financial condition and results of operations would be
materially  adversely  affected.  See  "Management's  Discussion and Analysis of
Financial  Condition  and  Results  of   Operations--Factors   Affecting  Future
Operating  Results--Rapid  Technological  Change;  Evolving Industry  Standards;
Dependence on New Products" and "--Declining Average Sales Prices."

Patents and Proprietary Technology

     The Company's  ability to compete  successfully  and achieve future revenue
growth  will  depend,  in  part,  on its  ability  to  protect  its  proprietary
technology and operate without  infringing the rights of others. The Company has
a policy of seeking  patents on inventions  resulting from its ongoing  research
and  development  activities.  The  Company  has been  awarded 16 United  States
patents,  and has 22 United States patent applications  pending,  including five
that have been allowed but not yet formally issued. The

                                       11

<PAGE>


Company also has been awarded  four foreign  patents and has ten foreign  patent
applications  pending.  There can be no  assurance  that the  Company's  pending
patent  applications  will be allowed or that the issued or pending patents will
not be challenged or circumvented by competitors.  Notwithstanding the Company's
active pursuit of patent  protection,  the Company  believes that the success of
its   business   depends   more  on  the   collective   value  of  its  patents,
specifications,  computer aided design and modeling tools,  technical  processes
and employee  expertise.  The Company generally enters into  confidentiality and
nondisclosure  agreements  with its employees,  suppliers,  OEM  customers,  and
potential  customers and limits access to and  distribution  of its  proprietary
technology.  However,  there can be no assurance that such measures will provide
adequate  protection  for the  Company's  trade  secrets  or  other  proprietary
information,  or that the Company's trade secrets or proprietary technology will
not otherwise  become known or be  independently  developed by competitors.  The
failure of the  Company  to  protect  its  proprietary  technology  could have a
material  adverse  effect on its  business,  financial  condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of  Operations--Factors  Affecting Future  Operating  Results--Uncertain
Protection of Intellectual Property."

     The   communications   equipment  industry  is  characterized  by  vigorous
protection and pursuit of intellectual property rights or positions,  which have
resulted in significant and often protracted and expensive litigation.  Although
there is  currently  no pending  intellectual  property  litigation  against the
Company,  the  Company or its  suppliers  may from time to time be  notified  of
claims that the Company may be infringing patents or other intellectual property
rights owned by third parties. If it is necessary or desirable,  the Company may
seek licenses under such patents or other intellectual property rights. However,
there can be no assurance that licenses will be offered or that the terms of any
offered  licenses  will be  acceptable  to the Company.  The failure to obtain a
license  from a third  party for  technology  used by the  Company or  otherwise
secure  rights  to  use  such  technology  could  cause  the  Company  to  incur
substantial  liabilities,  to suspend  the  manufacture  of  products  or expend
significant  resources  to  develop  noninfringing  technology.  There can be no
assurance that the Company would be successful in such  development or that such
licenses  would be available  on  reasonable  terms or a "design  around" is not
practicable,  if at all. In the event that any third  party  makes a  successful
claim  against  either the  Company or its  customers  and a license is not made
available  to the  Company  on  commercially  reasonable  terms,  the  Company's
business,  financial  condition  and results of  operations  would be materially
adversely affected.  Furthermore,  the Company may initiate claims or litigation
against third parties for infringement of the Company's proprietary rights or to
establish the validity of the  Company's  proprietary  rights.  Litigation by or
against  the  Company  could  result in  significant  expense to the Company and
divert the efforts of the Company's technical and management personnel,  whether
or not such litigation results in a favorable  determination for the Company. In
the event of an adverse  result in any such  litigation,  the  Company  could be
required  to  pay  substantial  damages,  indemnify  its  customers,  cease  the
manufacture,  use and sale of infringing products,  expend significant resources
to develop noninfringing technology, discontinue the use of certain processes or
obtain licenses to the infringing technology.  See "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations--Factors  Affecting
Future Operating Results--Risk of Third Party Claims of Infringement."

Competition

     The wireless communications equipment industry is extremely competitive and
is  characterized by rapid  technological  change,  new product  development and
product obsolescence,  evolving industry standards and significant price erosion
over the life of a product.  The ability of the Company to compete  successfully
and  sustain  profitability  depends  in part upon the  rates at which  wireless
equipment  OEMs  incorporate  the Company's  products into their systems and the
Company captures market share from other merchant suppliers. The Company's major
OEM customers,  including  Northern  Telecom,  Nortel Matra,  LGIC and QUALCOMM,
continuously evaluate whether to manufacture their own amplification products or
purchase  them  from  outside  sources  such  as the  Company.  There  can be no
assurance that these OEM customers will incorporate the Company's  products into
their  systems or that in general  they will  continue to rely,  or expand their
reliance,  on  external  sources of supply  for their  power  amplifiers.  These
customers and other large  manufacturers  of wireless  communications  equipment
could also elect

                                       12

<PAGE>


to enter into the merchant market and compete directly with the Company,  and at
least one OEM,  NEC  Corporation  ("NEC")  has already  done so. Such  increased
competition could materially adversely affect the Company's business,  financial
condition and results of operations.  See "Management's  Discussion and Analysis
of  Financial  Condition  and Results of  Operations--Factors  Affecting  Future
Operating  Results--Internal  Amplifier  Design and Production  Capabilities  of
OEMs" and "--Market for the Company's Products is Highly Competitive."

     The   Company's   principal   competitors   in  the  market  for   wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,  Amplidyne,  Hewlett-Packard  Wireless Infrastructure  Division,
M/A-COM (a  subsidiary  of AMP),  Microwave  Power  Devices,  NEC and  Powerwave
Technologies.   Certain  of  these   competitors   have,  and  potential  future
competitors could have, substantially greater technical,  financial,  marketing,
distribution  and other  resources  than the  Company  and have,  or could have,
greater  name   recognition   and  market   acceptance  of  their  products  and
technologies.  No assurance can be given that the Company's competitors will not
develop new  technologies or enhancements to existing  products or introduce new
products that will offer superior price or performance  features compared to the
Company's products.  To the extent that OEMs increase their reliance on external
sources for their power amplification needs, more competitors could be attracted
to the market.  The Company  expects its  competitors  to offer new and existing
products at prices  necessary to gain or retain  market  share.  The Company has
experienced significant price competition,  which has in the past affected gross
margins.  Certain  of  the  Company's  competitors  have  substantial  financial
resources  which may enable them to withstand  sustained  price  competition  or
downturns in the power amplification  market. There can be no assurance that the
Company will not be subject to increased  price  competition or that the Company
will be able to compete successfully in the future. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Factors Affecting
Future  Operating   Results--Market   for  the  Company's   Products  is  Highly
Competitive."

Backlog

     The Company does not believe that its backlog as of any particular  date is
representative  of  actual  sales  for  any  succeeding  period.  As part of the
Company's close working  relationships with its major customers,  such customers
expect  the  Company to  respond  quickly to changes in the volume and  delivery
schedule of their  amplifiers,  and if necessary,  to inventory  products at the
Company's  facilities for just in time delivery.  Therefore,  although contracts
with such customers typically specify aggregate dollar volumes of products to be
purchased  over an extended  time  period,  such  contracts  also  provide  that
scheduled  shipment  dates of particular  volumes are generally  released to the
Company only a few days or weeks prior to the actual required delivery dates. In
addition, the Company's customers may cancel or defer orders without significant
penalty.

American Microwave Technology, Inc.

     In April 1997,  the Company sold its wholly owned  subsidiary,  AMT, to the
management  group and employees of AMT for  approximately  $4.0 million in cash,
realizing a gain of  approximately  $1.5 million after  disposition of AMT's net
assets.  The  Company  decided  to  divest  AMT,  which  designs,  develops  and
manufactures RF power amplifier  systems for selected  wireless,  scientific and
application  specific  markets,  after  concluding  that AMT's  market focus had
become less  synergistic  with the Company's core  business.  In fiscal 1997 and
fiscal 1996, AMT accounted for  approximately 10% and 7%,  respectively,  of the
Company's revenues.

Employees

     As of March 31, 1998, the Company had a total of 688 regular, temporary and
contract  employees,  including  502  in  manufacturing,  119  in  research  and
development, 26 in sales and 41 in administration.  The Company's future success
will depend, in part, on its ability to continue to attract, retain and motivate
highly  qualified  technical  and  management  personnel.  None of the Company's
employees is  represented  by a  collective  bargaining  agreement,  nor has the
Company experienced any work stoppage.  The Company considers its relations with
its employees to be good.

                                       13

<PAGE>


Year 2000 Compliance

     Many installed  computer programs were written using a two digit date field
rather  than four digit  fields to define the  applicable  year.  Such  computer
programs  utilizing a two digit date  fields may  recognize a date using "00" as
the year 1900 rather than the year 2000 (the "Year 2000  Issue").  The Year 2000
Issue could potentially result in a system failure or in miscalculations causing
disruptions of operations,  including among other things, a temporary  inability
to  process  transactions,  send  invoices  or  engage in other  similar  normal
business  activities.  The Company has identified Year 2000 Issues in certain of
its  internal  operating  systems  and is in the  process  of  installing  a new
computer   software  system  which  will  increase   operational  and  financial
efficiencies  and information  analysis.  The new enterprise  system  recognizes
dates beyond December 31, 1999 and addresses the substantial portion of the Year
2000 Issue that may impact the Company.  The cost of this project, as it relates
to the Year  2000  Issue,  is not  expected  to have a  material  effect  on the
operations of the Company and will be funded through  operating cash flows.  The
Company has not completed an audit of its remaining internal systems or products
with respect to Year 2000 Issues.

Management

     The executive officers of the Company and certain information about them as
of March 31, 1998 are as follows:


          Name            Age                           Position
-----------------------  -----   ----------------------------------------------
Garrett A. Garrettson     54     President, Chief Executive Officer and Director
Stephen B. Greenspan      56     Executive Vice President of Operations and
                                   Chief Operating Officer
Bruce R. Wright           49     Executive Vice President, Finance and 
                                   Administration, Chief Financial Officer and 
                                   Secretary
Timothy Heyboer           48     Vice President, Amplifier Engineering
David Piazza              34     Vice President, Semiconductor R&D
Joseph M. Veni            46     Senior Vice President, Sales and Marketing
William Zucker            40     Vice President, Marketing


     Garrett A. Garrettson joined the Company in April 1996 as President,  Chief
Executive  Officer and a Director.  Between March 1993 and March 1996, he served
as President and Chief  Executive  Officer of Censtor  Corporation  ("Censtor"),
which designs and sells technology  related to magnetic  recording heads for the
disk drive  industry.  From 1986 to March 1993, he served as a Vice President of
Imprimis  Technology  Incorporated  ("Imprimis"),  a wholly owned  subsidiary of
Control  Data  Corporation,  and  subsequently  as a Vice  President  of Seagate
Technology,  Inc.  ("Seagate")  following its  acquisition  of Imprimis in 1989.
Prior to 1986, Mr.  Garrettson held a variety of positions with  Hewlett-Packard
Company and served in the United States Navy. Mr.  Garrettson also serves on the
Boards of  Directors  of RedLake  Imaging  and Benton  Oil and Gas  Company.  He
received his B.S. and M.S. in  Engineering  Physics and his Ph.D.  in Mechanical
Engineering from Stanford University.

     Stephen B.  Greenspan  joined the  Company  in May 1996 as  Executive  Vice
President of  Operations  and was named Chief  Operating  Officer in April 1997.
From November 1991 to February 1996, he served as Senior Vice President, Quality
and Customer Service at Seagate.  Mr. Greenspan also held a variety of positions
at Seagate including Vice President of Process Development and Vice President of
Domestic and Far East Operations.  From March 1986 to August 1987, Mr. Greenspan
served as Vice President of Operations at Tandon Corporation,  a manufacturer of
personal  computers.  From  1967  to  1986,  Mr.  Greenspan  held a  variety  of
management  positions at IBM Corporation  related to  semiconductor  and circuit
technologies,  personal  computer  manufacturing  and  supplier  management.  He
received his B.S.E.E.  degree from New Jersey  Institute of  Technology  and his
M.S.E.E. degree from Syracuse University.

     Bruce R.  Wright  joined  the  Company  on May 1,  1997 as  Executive  Vice
President of Finance and Administration,  Chief Financial Officer and Secretary.
Prior to joining the Company, he was Chief

                                       14

<PAGE>


Financial  Officer at Tencor  Instruments from December 1991 to April 1997. From
January  1988  to  July  1991,  he was  Chief  Financial  Officer  at  Teknekron
Corporation. Mr. Wright also served with Atlantic Richfield Company and the U.S.
Air Force.  He received  his B.A. in Physics  from Pomona  College,  his B.S. in
Mechanical  Engineering from California  Institute of Technology and his S.M. in
Management from the Massachusetts Institute of Technology ("MIT").

     Tim  Heyboer  joined the Company in 1986 as  Director  of  Engineering  and
served in a variety of departments including product line management and the now
discontinued  military  division.  In August  1996,  Mr.  Heyboer was named Vice
President of Amplifier  Engineering of the Company.  Prior to joining Spectrian,
Mr.  Heyboer  was  employed at Narda  Western  Operations,  a passive  microwave
components  company,  most  recently  as director of  engineering.  Mr.  Heyboer
received  his  B.S.E.E.  degree  and his  M.S.E.E.  degree  from  University  of
Michigan, Ann Arbor.

     David Piazza joined the Company in 1990 as a Project Engineer. In September
1996, Mr. Piazza was named Vice President, Semiconductor R&D for the Company. He
has served in various management positions at the Company, including Director of
Engineering, PCS Amplifier Products, Engineering Manager, Amplifier Products and
Project Engineer. Mr. Piazza received his B.S.E.E. degree from the University of
California at Davis.

     Joseph M. Veni joined the Company in April 1992 as Vice  President of Sales
and in June 1996 was named Senior Vice President, Sales and Marketing. From 1987
to April 1992,  he was Vice  President  of Sales and  Marketing  at  TTI-General
Signal. From 1985 to 1987, Mr. Veni worked at Cushman Electronics, Inc. Prior to
that time,  Mr. Veni was employed by Halcyon  Communications,  Inc.,  ICS Group,
Inc. and Western Union Telegraph Co. in various  marketing and sales  positions.
Mr. Veni received his Associates  Degree in Electronics  Technology from Mt. San
Antonio College.

     William  Zucker  joined the Company in October  1995 as Vice  President  of
Engineering.  In August 1996,  Mr. Zucker became Vice  President of Product Line
Management.  In April 1997, he was named Vice  President of Marketing.  Prior to
joining the Company,  Mr. Zucker held several  positions at AT&T/AT&T Bell Labs,
including  director  of product  management  from July 1994 to October  1995 and
director of development from November 1991 to July 1994. Mr. Zucker received his
B.S.E.E.  degree from Manhattan  College and his S.M. in Electrical  Engineering
from MIT.


ITEM 2. PROPERTIES

     The  Company's  principal  administrative,  engineering  and  manufacturing
facilities are located in two buildings of approximately  141,000 square feet in
Sunnyvale,  California.  In November  1996,  the Company  entered  into  several
agreements in connection  with a transaction  with respect to these  properties.
Pursuant to these agreements, the Company sold these properties to SPEC (CA) QRS
12-20,  Inc.  ("SPEC"),  and  pursuant to the terms of a lease  agreement,  SPEC
agreed to lease these properties to the Company for a term of 15 years (with two
options  to extend  the lease for up to an  additional  ten  years).  This lease
agreement  also  provides that the Company shall have the right of first refusal
to purchase the properties from SPEC upon the occurrence of certain  conditions.
During the first  quarter of fiscal 1999,  the Company  entered  into  operating
leases for an ancillary  40,000 square foot  manufacturing  facility in Rocklin,
California  and a  7,750  square  foot  engineering  design  center  in  Quincy,
Illinois.  The Rocklin  facility has a sixty-two  month term and expires in July
2003, and the Quincy facility has a twelve month term and expires in March 1998.
In March 1997, through means of a limited liability company of which the Company
owns 91.5%, the Company purchased a building of approximately 39,000 square feet
in Sunnyvale,  California located between the Company's two occupied  buildings.
The Company is currently  sharing  occupancy of this building with a third party
to whom it subleases space under month to month lease arrangements.


ITEM 3. LEGAL PROCEEDINGS

     Since December 23, 1997, a number of complaints have been filed against the
Company  and  certain of its  officers  in the  Federal  Court for the  Northern
District of California that allege  violations of the federal  securities  laws.
Similar  complaints  have been  filed in  California  state  court  that  allege
violations

                                       15

<PAGE>


of California  state  securities laws and California  common law. The complaints
have been  consolidated  in the  federal  and state  courts,  respectively.  The
plaintiffs in both the federal and state  lawsuits  purport to represent a class
of persons who purchased the Company's  securities during the period of July 17,
1997  through  October  23,  1997.  The  complaints  allege that the Company and
certain of its officers  misled the  investing  public  regarding  the financial
prospects  of the  Company.  The  Company  believes  that  the  allegations  are
completely without merit and will vigorously defend itself.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.


                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


                      PRICE RANGE OF SPECTRIAN COMMON STOCK

     The Company's  Common Stock has been traded on the Nasdaq  National  Market
under the symbol "SPCT" since August 4, 1994. The following table sets forth for
the period  indicated  the high and low sale  prices for the  Common  Stock,  as
reported by the Nasdaq National Market.


                                                 High          Low
                                             -----------   ----------
         Fiscal Year Ended March 31, 1997
            First Quarter                      $25 1/2       $13
            Second Quarter                      15 1/4         7
            Third Quarter                       13             7 3/8
            Fourth Quarter                      14 3/8         7 5/8
         Fiscal Year Ended March 31, 1998
            First Quarter                       37 3/4        10 3/4
            Second Quarter                      64 1/4        36 1/4
            Third Quarter                       66 3/8        16 3/4
            Fourth Quarter                      20 1/2        14 5/8


     On May 18, 1998, the last reported sale price of the Company's Common Stock
on the Nasdaq  National  Market was $16.125 per share.  As of May 18, 1998 there
were approximately 305 holders of record of the Company's Common Stock.


                                 DIVIDEND POLICY

     The Company has never paid any cash  dividends on its Common Stock and does
not anticipate paying cash dividends in the foreseeable  future. The Company has
entered into a bank line of credit and the Company's  agreement with such lender
prohibits the payment of cash dividends without the prior written consent of the
lender.

                                       16

<PAGE>


ITEM 6: SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
     The selected consolidated financial data set forth below under the captions
"Statement of Operations  Data" and "Balance  Sheet Data" for, and as of the end
of, each of the years in the five-year  period ended March 31, 1998, are derived
from the  consolidated  financial  statements of Spectrian  Corporation  and its
subsidiaries,  which financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors.  The results for the fiscal year ended March 31, 1998
are not  necessarily  indicative  of the  results  for any  future  period.  The
selected  consolidated  financial  data  set  forth  below  should  be  read  in
conjunction with the consolidated  financial statements as of March 31, 1998 and
March 31,  1997 and for each of the years in the three year  period  ended March
31,  1998 and notes  thereto  set  forth on Pages F-1 to F-15 and  "Management's
Discussion and Analysis of Financial Condition and Results of Operation."

<CAPTION>
                                                                        Fiscal Year Ended March 31
                                                   -------------------------------------------------------------------------
                                                     1998            1997             1996            1995            1994
                                                   --------        --------         --------        --------        --------
                                                                   (in thousands, except per share data)
<S>                                                <C>             <C>              <C>             <C>             <C>     
Statement of Operations Data:
Revenues .......................................   $168,798        $ 88,252         $ 72,113        $ 62,478        $ 37,859
                                                   --------        --------         --------        --------        --------
Costs and expenses:
 Cost of sales .................................    132,684          65,322           45,355          39,068          22,154
 Research and development ......................     18,644          17,230           14,548          11,374          10,058
 Selling, general and administrative ...........     13,014           9,299            7,450           6,784           5,529
                                                   --------        --------         --------        --------        --------
   Total costs and expenses ....................    164,342          91,851           67,353          57,226          37,741
                                                   --------        --------         --------        --------        --------
   Operating income (loss) .....................      4,456          (3,599)           4,760           5,252             118
Interest income (expense), net .................      3,335            (392)             889             391            (667)
Other income, net ..............................      1,530            --               --              --              --
                                                   --------        --------         --------        --------        --------
 Income (loss) before income taxes .............      9,321          (3,991)           5,649           5,643            (549)
Income tax expense .............................        399            --                169             170            --
                                                   --------        --------         --------        --------        --------
 Net income (loss) .............................   $  8,922        $ (3,991)        $  5,480        $  5,473        $   (549)
                                                   ========        ========         ========        ========        ========
Net income (loss) per share:(1)
 Basic .........................................   $   0.91        $  (0.49)        $   0.71        $   0.87        $  (0.39)
 Diluted .......................................   $   0.83        $  (0.49)        $   0.66        $   0.70        $  (0.39)
Shares used in computing per share
 amounts:(1)
 Basic .........................................      9,881           8,150            7,684           6,300           1,399
 Diluted .......................................     10,701           8,150            8,363           7,764           1,399
</TABLE>


<TABLE>
<CAPTION>
                                                                                      March 31
                                                         --------------------------------------------------------------------
                                                           1998           1997           1996           1995           1994
                                                         --------       --------       --------       --------       --------
                                                                                    (in thousands)
<S>                                                      <C>            <C>            <C>            <C>            <C>     
Balance Sheet Data:
Working capital ..................................       $117,478       $ 24,062       $ 12,710       $ 28,317       $  7,859
Total assets .....................................        175,051         66,633         55,922         45,070         20,965
Debt and capital lease obligations, net of
 current portion(2) ..............................          5,912          7,057           --             --            3,634
Total stockholders' equity .......................        144,342         42,466         44,838         37,056          9,765

<FN>
------------
(1)  See Note 1 of Notes to Consolidated Financial Statements contained on pages
     F-1 to F-15 of this  Annual  Report on Form 10-K for the fiscal  year ended
     March 31, 1998 for information concerning the per share computations.
(2)  See Note 4 of Notes  to  Consolidated  Financial  Statements  herein  for a
     description of the Company's debt and lease obligations.
</FN>
</TABLE>

                                                                 17

<PAGE>


ITEM  7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     Certain  statements  in  this  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations" are forward looking  statements.
These forward looking statements include, but are not limited to: the statements
in the first paragraph of "Overview" regarding future revenues; second paragraph
of  "Overview"  regarding  the  impact on the  Company  of a loss of a major OEM
customer;  the  statements in the analysis of "--Years  ended March 31, 1998 and
1997"  under  "--Cost of Sales"  regarding  anticipated  product  introductions,
related cost  improvements  and trends  offsetting such cost  improvements;  the
statements  in the second  paragraph  of  "--Liquidity  and  Capital  Resources"
concerning renewal of the revolving line of credit to this the statements in the
last  paragraph  under  "--Liquidity  and  Capital   Resources"   regarding  the
anticipated spending for capital additions in fiscal 1999 and the sufficiency of
the  Company's   available   resources  to  meet  working  capital  and  capital
expenditure  requirements;  and the  statements  in  "Factors  Affecting  Future
Operating Results." The forward looking statements contained herein are based on
current expectations and entail various risks and uncertainties that could cause
actual results to differ materially from these expressed in such forward looking
statements.

Overview

     The Company designs,  manufactures and markets highly linear single carrier
and multicarrier power amplifiers that support a broad range of worldwide analog
and digital wireless transmissions  standards,  including AMPS, TDMA, CDMA, TACS
and  GSM.  The  Company,  founded  in 1984 to  perform  design  and  engineering
services,  first entered the commercial amplifier market in 1988 and shipped its
first cellular power amplifiers in 1990. The Company's  revenues are now derived
primarily from sales to a limited number of OEMs in the wireless  infrastructure
equipment market, in particular Northern Telecom. The Company pursues a strategy
of vertical  integration in its design and  manufacturing  processes,  including
operating its own 4 inch wafer fabrication  facility.  As a result,  the Company
has a higher level of fixed costs and is dependent upon  substantial  revenue to
achieve  profitability.  In the fourth quarter of fiscal 1998,  first quarter of
fiscal  1997 and third  quarter of fiscal  1996,  product  orders  fell  sharply
resulting in  substantial  losses in those  quarters.  There can be no assurance
that the Company  will not  experience  such  fluctuations  in the  future.  For
example, the significant reduction in product revenue the Company experienced in
the fourth quarter of fiscal 1998 reflects the impact of  fluctuations in demand
with a cost  structure  that is  relatively  fixed in the  short  term  from the
softening  demand in the TDMA  markets and delays in build-out of the Korean PCS
systems  due to the  unstable  Asian  financial  markets  and  general  economic
conditions  in Korea and other Asian  countries.  The Company  also  anticipates
lower product  revenues over the next two to three  quarters as a result of such
factors and  anticipates  that revenues for fiscal 1999 may not equal,  and will
not exceed, revenues for fiscal 1998.

     During fiscal 1998,  Northern Telecom,  Nortel Matra and LGIC accounted for
approximately  57%, 22% and 14% of revenues,  respectively.  During fiscal 1997,
Northern  Telecom and Nortel Matra  accounted for  approximately  63% and 12% of
revenues,  respectively.  During fiscal 1996,  Northern Telecom and Nortel Matra
accounted for approximately 58% and 17% of revenues, respectively. The Company's
business,  financial  condition and results of operations  have been  materially
adversely  affected in the past by anticipated orders failing to materialize and
by  deferrals  or  cancellations  of  orders  as a  result  of  changes  in  OEM
requirements.  If the Company were to lose  Northern  Telecom or any other major
OEM customer,  or if orders by Northern  Telecom or any other major OEM customer
were to otherwise  materially  decrease either in unit quantity or in price, the
Company's  business,  financial  condition  and results of  operations  would be
materially adversely affected. In addition,  the recent financial market turmoil
and  economic  downturn  in Korea  may have a  material  adverse  effect  on the
Company's  sales of its  products  to LGIC,  an OEM  based in  Korea,  because a
majority  of the  Company's  products  ordered  by LGIC to  date  relate  to the
build-out of the Korean PCS system. In addition,  because the Company's products
are priced in U.S.  dollars,  the currency  instability  in the Korean and other
Asian  financial  markets may have the effect of making the  Company's  products
more  expensive  to LGIC than those of other  manufacturers  whose  products are
priced in one of the affected Asian currencies,  and, therefore, LGIC may reduce
future purchases of the Company's products.

                                       18

<PAGE>


     The  Company's  vertical  integration  strategy  entails a number of risks,
including a high level of fixed and variable  costs,  the  management of complex
processes,  dependence  on a single  source  of supply  and a strict  regulatory
environment.  During periods of low demand,  high fixed wafer  fabrication costs
are likely to have a material  adverse  effect on the Company's  operations.  In
addition, the Company's strategy of frequently introducing and rapidly expanding
the  manufacture  of new  products to meet  evolving  OEM  customer and wireless
service  provider needs has caused the Company to experience  high materials and
manufacturing  costs,  including  high  scrap and  material  waste,  significant
material obsolescence,  labor inefficiencies,  high overtime hours,  inefficient
material procurement and an inability to realize economies of scale.

     The market for the Company's products is becoming increasingly competitive.
The Company has recently  begun  selling its power  amplifier  products in South
Korea, as well as directly to cellular  service  providers where its competitors
are already established as suppliers.  In addition, the Company competes with at
least one  amplifier  manufacturer  for business  from  Northern  Telecom.  This
competition  has  resulted  in, and will  continue to result in reduced  average
selling prices for the Company's  products,  which  accordingly  will negatively
impact gross margins.

Results of Operations

     The following table sets forth for the periods  indicated certain statement
of operations  data of the Company  expressed as a percentage of total  revenues
and the gross margin on sales.


                                                  Fiscal Year ended March 31,
                                                 ------------------------------
                                                 1998        1997         1996
                                                 -----       -----        -----
Revenues ..................................      100.0%      100.0%       100.0%
                                                 -----       -----        -----
Costs and expenses:
 Cost of sales ............................       78.6        74.0         62.9
 Research and development .................       11.0        19.6         20.2
 Selling, general and administrative ......        7.8        10.5         10.3
                                                 -----       -----        -----
   Total costs and expenses ...............       97.4       104.1         93.4
                                                 -----       -----        -----
   Operating income (loss) ................        2.6        (4.1)         6.6
Interest income (expense), net ............        2.0        (0.4)         1.2
Other income, net .........................        0.9        --           --
                                                 -----       -----        -----
 Income (loss) before income taxes ........        5.5        (4.5)         7.8
Income tax expense ........................        0.2        --            0.2
                                                 -----       -----        -----
 Net income (loss) ........................        5.3%       (4.5)%        7.6%
                                                 =====       =====        =====
Gross margin on sales .....................       21.4%      26.0 %        37.1%


   Years Ended March 31, 1998 and 1997

     Revenues. The Company's revenues increased by 91% to $168.8 million for the
fiscal year ending  March 31, 1998  ("fiscal  1998") from $88.3  million for the
fiscal  year ending  March 31, 1997  ("fiscal  1997").  The sizable  increase in
revenues for fiscal 1998 reflects a significant  increase in demand in the first
three fiscal quarters of 1998,  primarily by Northern Telecom, for the Company's
second  generation GSM and multicarrier  products,  single carrier TDMA products
and  Korean  PCS CDMA  products.  In the  fourth  quarter  of fiscal  1998,  the
Company's revenues  decreased  substantially to $27.6 million from $47.2 million
in the  immediately  preceding  quarter due to reduced orders from OEM customers
stemming in part from the impact of the financial market and economic turmoil in
parts of Asia, particularly Korea. The Company believes that it is unlikely that
demand for the Company's  products will return to prior levels in calendar 1998,
if ever.  As a result of this factor and others as well as the  difficulties  in
predicting the Company's future revenue,  the Company believes that the revenues
in fiscal 1999 may not meet, and will not exceed, fiscal 1998 revenues.

     Cost of  Sales.  Cost of sales  consists  primarily  of raw  materials,  RF
semiconductor  fabrication  costs,  amplifier assembly and test costs (including
turnkey assembly services), overhead and warranty costs. The

                                       19

<PAGE>


Company's cost of sales increased by 103% to $132.7 million for fiscal 1998 from
$65.3  million  for  fiscal  1997.  Included  in the  cost of sales  were  costs
associated with the rapid increase in manufacturing  volume for new products and
costs associated with  discontinuing  older products.  Gross margin on sales was
21% for fiscal  1998 as compared  to 26% for fiscal  1997.  The decline in gross
margin  for fiscal  1998  primarily  reflects  costs  associated  with steep new
product   volume   manufacturing   growth   including   investment  in  overhead
infrastructure  and automated  test  equipment,  premium costs  associated  with
materials procurement and logistics, excess and obsolete inventories and product
warranty  costs.  In the fourth quarter of fiscal 1998, the Company had negative
gross margin of 17.4% as compared to positive  gross  margins of 28.5% and 27.2%
in the third  quarter  of fiscal  1998 and the fourth  quarter  of fiscal  1997,
respectively.  The decline in the gross margin for the fourth  quarter of fiscal
1998 was  attributable  to  increased  material,  warranty,  excess and obsolete
inventory costs that were not reduced  proportionately to revenues.  The Company
anticipates that the use of turnkey  contractors to assemble certain high volume
printed circuit board components may reduce the growth of manufacturing costs in
future periods.

     Research and Development. Research and development ("R&D") expenses include
the  cost  of  designing,  developing  or  reducing  the  manufacturing  cost of
amplifiers and RF semiconductors.  The Company's R&D expenses increased by 8% to
$18.6 million in fiscal 1998 from $17.2 million in fiscal 1997.  R&D spending in
fiscal  1997  included   development  costs  for  the  Company's  4  inch  wafer
fabrication  facility.  The  increase in R&D  spending  in fiscal 1998  reflects
increased  spending  in both  amplifier  and  semiconductor  R&D  for  personnel
expenses and project  development  expenses.  R&D  expenses as a  percentage  of
revenues decreased to 11.0% in fiscal 1998 from 19.6% in fiscal 1997, reflecting
the substantially higher revenue levels in fiscal 1998.

     Selling,  General and Administrative.  Selling,  general and administrative
("SG&A") expenses include compensation and benefits for sales, marketing, senior
management and administrative  personnel,  commissions paid to independent sales
representatives,  professional  fees and  other  expenses.  The  Company's  SG&A
expenses  increased by 39.9% to $13.0  million for fiscal 1998 from $9.3 million
for fiscal 1997. SG&A expenses as a percentage of revenues decreased to 7.8% for
fiscal  1998 from 10.5% for fiscal  1997.  The  increase  in SG&A  expenses  was
primarily due to outside commissions paid for South Korean sales, MIS investment
in new infrastructure, increases in sales and administrative headcount, and to a
lesser  extent the  maintenance  of a South Korean  sales  support  office.  The
decrease  of  SG&A  expenses  as a  percentage  of  sales  was a  result  of the
substantially higher revenue level in that period.

     Interest Income (Expense),  net.  Interest income,  net for fiscal 1998 was
$3.3 million  compared to net interest  expense of $392,000 for fiscal 1997. The
increase  in net  interest  income was the result of interest  income  earned on
substantially  higher  cash  balances  and  short-term   investments  reflecting
primarily the  investment  of the proceeds of the  Company's  August 1997 public
offering.

     Other Income,  net.  Other income of $1.5 million was recorded in the first
quarter of fiscal 1998  representing the net gain realized from the cash sale of
the  Company's  wholly  owned  subsidiary,  AMT,  to the  management  group  and
employees of AMT. No other  expense or other income was recorded  during  fiscal
1997.

     Income Taxes.  The Company  recorded  income tax expense for fiscal 1998 of
$399,000.  The combined  effective tax rate of 4.3% for fiscal 1998 reflects the
use of net operating loss carryforwards  ("NOLs").  The Company's ability to use
its NOLs against taxable income may be subject to  restrictions  and limitations
under Section 382 of the Internal Revenue Code of 1986, as amended, in the event
of a change in ownership of the Company as defined therein.

   Years Ended March 31, 1997 and 1996

     Revenues.  The  Company's  revenues  increased by 22.4% to $88.3 million in
fiscal 1997 from $72.1 million in fiscal 1996. The increase was due primarily to
increasing volume in sales of PCS products, reflecting the build-out of the U.S.
PCS network infrastructure, and continued strong GSM product sales.

     Cost of Sales.  The  Company's  cost of sales  increased  by 44.0% to $65.3
million in fiscal 1997 from $45.4 million in fiscal 1996.  Gross margin on sales
in fiscal 1997  declined to 26.0% from 37.1% in fiscal 1996.  During fiscal 1997
the Company introduced 14 new products into manufacturing to meet customer and

                                       20

<PAGE>


market  demands.  The need to produce  many of these  products  in high  volumes
during their manufacturing infancy resulted in much higher costs for the related
material,  labor and  overhead.  The heavy new product  volume had a detrimental
effect on the Company's fiscal 1997 gross margins and profitability.

     Research and  Development.  The Company's R&D expenses  increased  18.4% to
$17.2  million in fiscal 1997 from $14.5 million in fiscal 1996. As a percentage
of revenues,  R&D expenses  declined slightly to 19.6% in fiscal 1997 from 20.2%
in fiscal 1996. The increase in R&D expenses primarily  reflected nine months of
development  expenses  for the  Company's 4 inch wafer  fabrication  facility as
compared to only three months in fiscal 1996 as well as increased R&D hiring and
the associated recruiting and salary costs.

     Selling, General and Administrative.  The Company's SG&A expenses increased
by 24.8% to $9.3 million in fiscal 1997 from $7.5  million in fiscal 1996.  SG&A
expenses as a percentage of revenues  increased slightly to 10.5% in fiscal 1997
from 10.3% in fiscal  1996.  The increase in SG&A  expenses  from fiscal 1996 to
fiscal 1997 was  primarily  attributable  to  increases  in sales and  marketing
headcount  and the related  salaries  and expense  benefits,  as well as outside
commissions  expenses required to support the Company's  expanding customer base
and product portfolio.

     Interest Income  (Expense),  net. Net interest  expense for fiscal 1997 was
$392,000, compared to net interest income of $889,000 in fiscal 1996. The change
between fiscal 1997 and fiscal 1996 primarily reflects decreased interest income
as a result of lower  average  cash  balances  in fiscal  1997 and the  interest
expense  incurred as a result of the Company  utilizing  various debt  financing
instruments during fiscal 1997.

     Income  Taxes.  The Company did not record a provision  for income taxes in
fiscal 1997 because the Company  incurred a net loss. An income tax provision of
$169,000 was recorded in fiscal 1996,  an effective  tax rate of 3% after use of
NOLs from prior periods.

Liquidity and Capital Resources

     The Company has financed its growth through its initial public  offering in
August 1994, a public  equity  offering in August 1997,  private sales of equity
securities,  capital equipment leases,  bank lines of credit and cash flows from
operations.  Cash provided by operations was $16.6 million in fiscal 1998, while
cash used by operations  in fiscal 1997 was $8.1  million.  The cash provided by
operations for fiscal 1998 was  principally  generated by the Company's  profits
over the first three quarters of the fiscal year. The cash used by operations in
fiscal 1997 was  principally  for  purchasing  inventory  to support  production
growth for increasing product shipment volumes.

     As of March 31,  1998,  the Company had working  capital of $117.5  million
including $99.6 million in cash, cash equivalents and short-term investments. In
addition,  the Company has a revolving  line of credit of $10.0  million  with a
bank secured by the  majority of the  Company's  assets.  Under the terms of the
master agreement  governing this credit  instrument,  the Company is required to
maintain certain minimum working  capital,  net worth,  profitability  and other
specific  financial  ratios. As of March 31, 1998, the Company was in compliance
with all of these  financial  covenants with the exception of the  profitability
covenant  with  respect to which  covenant  the  lender  granted a waiver to the
Company.  There were no borrowings outstanding against this line of credit as of
March 31, 1998.

     In April  1998,  the  Company  announced a  repurchase  program  (the "1998
Repurchase  Program")  pursuant to which it may acquire up to one million shares
of  Common  Stock  in open  market  purchases.  To date,  no  shares  have  been
repurchased under the 1998 Repurchase Program.

     In January  1997,  the  Company  borrowed  $6.0  million  under a term loan
secured by certain capital  equipment.  The loan, which expires in January 2002,
requires  the  payment  of monthly  principal  plus  interest  and is subject to
certain minimum working capital,  net worth and other specific financial ratios.
The Company was in  compliance  with these  covenants as of March 31,  1998.  In
March 1997,  the Company also  secured a $3.2  million  real estate loan,  which
expires in April 2007, for the purchase of a light  industrial  building for its
future facilities expansion.

     Additions to property and equipment  were $18.0 million for fiscal 1998 and
$16.3  million in fiscal 1997.  Capital  additions  for fiscal 1998 included the
purchase of new corporate management information

                                       21

<PAGE>


systems  software,  manufacturing  test and  production  equipment  required  to
support new  products  and  increase  factory  capacity,  and test  equipment to
support various research and development projects.

     The Company anticipates spending approximately $18 million over the next 12
months  for  capital  additions  primarily  to  support  manufacturing  capacity
requirements,  development  projects  and  facilities  expansion.  Based  on the
Company's current working capital  position,  the cash flows the Company expects
to generate from fiscal 1999  operations  and the  available  line of credit the
Company expects to renew, the Company believes that sufficient resources will be
available to meet the Company's cash  requirements  for at least the next twelve
months.  Cash  requirements  for periods beyond the next twelve months depend on
the Company's profitability,  timing and level of capital expenditures,  working
capital requirements and rate of growth.

Factors Affecting Future Operating Results

     Customer  Concentration;  Dependence  on  Northern  Telecom.  The  wireless
infrastructure  equipment  market is  dominated by a small number of large OEMs,
including Ericsson, Lucent, Motorola, Northern Telecom, Nortel Matra and Siemens
AG. The Company's  revenues are derived primarily from sales to a limited number
of these OEMs,  particularly  Northern  Telecom and Nortel Matra.  During fiscal
1998 Northern Telecom,  Nortel Matra and LGIC accounted for  approximately  57%,
22% and 14% of revenues, respectively.  During fiscal 1997, Northern Telecom and
Nortel Matra accounted for approximately 63% and 12% of revenues,  respectively.
During   fiscal  1996,   Northern   Telecom  and  Nortel  Matra   accounted  for
approximately 58% and 17% of revenues, respectively.  Furthermore, a substantial
portion of  revenues  from  Northern  Telecom and Nortel  Matra in fiscal  1998,
fiscal  1997 and fiscal  1996  resulted  from  sales of a limited  number of the
Company's products.  The Company's business,  financial condition and results of
operations  have been materially  adversely  affected in the past by anticipated
orders failing to materialize and by deferrals or  cancellations  of orders as a
result of changes in OEM requirements.  The Company, Northern Telecom and Nortel
Matra have an  agreement,  renegotiated  annually,  pursuant  to which  Northern
Telecom and Nortel  Matra  commit to purchase a certain  volume of their  annual
power amplifier  requirements for specified prices from the Company. The renewal
of the Company's  agreement with Northern  Telecom and Nortel Matra for calendar
year 1998 was  finalized in October  1997.  Based on lower RF  amplifier  volume
commitments and reduced pricing contained in this agreement, the recent slowdown
in demand for TDMA  products and delays in the Korean PCS system  build-out,  as
well as other factors, the Company expects that the Company's recent significant
growth in revenues will not be sustainable.  The Company also  anticipates  that
the  Company's  fiscal 1999 revenues may not meet,  and will not exceed,  fiscal
1998 revenues. In addition,  there can be no assurance that Northern Telecom and
Nortel Matra will enter into a contract as favorable to the Company,  if any, in
the future otherwise agree to purchase the same or similar levels of their power
amplifier  requirements  at the same or similar  pricing.  Any  reduction in the
level of purchases of the Company's  amplifiers  by Northern  Telecom and Nortel
Matra, or any material reduction in pricing without significant  offsets,  would
have a material adverse effect on the Company's  business,  financial  condition
and results of operations. Further, if the Company were to lose Northern Telecom
or any other major OEM customer,  or if orders by Northern  Telecom or any other
major  OEM  customer  were  to  otherwise  materially  decrease,  the  Company's
business,  financial  condition  and results of  operations  would be materially
adversely  affected.  In  addition,  the recent  financial  market  turmoil  and
economic  downturn in Korea may have a material  adverse effect on the Company's
sales of its products to LGIC, an OEM based in Korea,  because a majority of the
Company's products ordered by LGIC to date relate to the build-out of the Korean
PCS system.  In  addition,  because the  Company's  products  are priced in U.S.
dollars,  the  currency  instability  in the  Korean and other  Asian  financial
markets may have the effect of making the Company's  products more  expensive to
LGIC than those of other  manufacturers  whose products are priced in one of the
affected Asian currencies,  and, therefore,  LGIC may reduce future purchases of
the Company's products. In addition, wireless infrastructure equipment OEMs have
come under increasing price pressure from wireless service  providers,  which in
turn has resulted in downward  pricing pressure on the Company's  products.  The
Company expects to incur increasing  pricing pressures from Northern Telecom and
other major OEM  customers  in future  periods,  which could result in declining
average sales prices for the Company's products.  See "Business--OEM  Customers,
Sales and Marketing."

                                       22

<PAGE>


     Fluctuations  in Operating  Results.  The  Company's  quarterly  and annual
results have in the past been,  and will continue to be,  subject to significant
fluctuations  due to a number of  factors,  any of which  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  In  particular,  the Company's  results of operations are likely to
vary due to the timing,  cancellation,  delay or  rescheduling  of OEM  customer
orders  and  shipments;  the timing of  announcements  or  introductions  of new
products by the Company, its competitors or their respective OEM customers;  the
acceptance  of such  products by wireless  equipment  OEMs and their  customers;
relative variations in manufacturing efficiencies, yields and costs; competitive
factors  such  as  the   pricing,   availability,   and  demand  for   competing
amplification  products;  changes  in average  sales  prices  and  product  mix;
variations  in  operating  expenses;   changes  in  manufacturing  capacity  and
variations in the utilization of this capacity;  shortages of key supplies;  the
long sales cycles associated with the Company's customer specific products;  the
timing  and level of product  and  process  development  costs;  and  changes in
inventory  levels;  and most  recently,  the  relative  strength  or weakness of
international  financial  markets.  Anticipated  orders from the  Company's  OEM
customers  have in the past failed to  materialize  and delivery  schedules have
been  deferred or canceled as a result of changes in OEM  customer  requirements
and the Company  expects  this  pattern to  continue  as  customer  requirements
continue to change and industry standards continue to evolve. Reduced demand for
wireless  infrastructure  equipment  in the latter  part of fiscal  1996 and the
early  part of fiscal  1997,  driven  partly by delays in the  build-out  of PCS
infrastructure,  caused significant  fluctuations in the Company's product sales
during that period of time.  There can be no assurance that the Company will not
experience  such  fluctuations  in  the  future,   and,  in  fact,  the  Company
experienced a significant  reduction in product revenue in the fourth quarter of
fiscal 1998 and  anticipates  lower product  revenues over the next two to three
quarters  as a result of  softening  demand in the TDMA  markets  and  delays in
Korean  PCS demand due to the  unstable  Asian  financial  markets  and  general
economic conditions in Korea and other Asian countries.  The Company establishes
its expenditure  levels for product  development  and other  operating  expenses
based on its expected  revenues,  and expenses are relatively fixed in the short
term.  As a  result,  variations  in timing of  revenues  can cause  significant
variations in quarterly  results of  operations.  There can be no assurance that
the Company will be profitable on a quarter to quarter basis in the future.  The
Company believes that period to period  comparisons of its financial results are
not  necessarily  meaningful  and should not be relied upon as an  indication of
future performance.  Due to all the foregoing factors, it is likely that in some
future quarter or quarters the Company's  revenues or operating results will not
meet the  expectations  of public stock market  analysts or  investors.  In such
event,  the market  price of the  Company's  Common  Stock  would be  materially
adversely affected.

     Internal Amplifier Design and Production  Capabilities of OEMs. The Company
believes that a majority of the present worldwide production of power amplifiers
is captive within the manufacturing  operations of wireless equipment OEMs, many
of which have chosen not to purchase  amplifiers  from  outside  suppliers.  The
Company also believes  that those OEMs that purchase from third party  amplifier
vendors are reluctant to switch once committed to a particular  merchant vendor.
Consequently, the Company has only limited opportunities to increase revenues by
replacing  internal  OEM  amplifier  production  or  displacing  other  merchant
amplifier suppliers.  Moreover,  given the limited opportunities for merchant RF
amplifier  suppliers,  any decision by an OEM to employ a second source merchant
supplier for a product  currently  purchased from a merchant supplier may reduce
the existing  merchant  supplier's  ability to maintain a given level of product
sales to such OEM or,  possibly,  to retain the OEM as a  customer  due to price
competition from the second source merchant supplier.  There can be no assurance
that the Company's  major OEM customers will continue to rely, or increase their
reliance,  on the  Company  as an  external  source  of supply  for their  power
amplifiers,  or that other wireless  equipment OEMs will become customers of the
Company.  If  the  major  wireless  infrastructure  equipment  suppliers  do not
purchase or continue to purchase their power amplifiers from merchant suppliers,
the Company's  business,  results of operations and financial  condition will be
materially  adversely  affected.   See  "Business--OEM   Customers,   Sales  and
Marketing."

     Rapid Technological Change; Evolving Industry Standards;  Dependence on New
Products.  The markets in which the Company  and its OEM  customers  compete are
characterized by rapidly changing

                                       23

<PAGE>


technology,  evolving industry standards and continuous improvements in products
and services. In particular,  because the Company's strategy of rapidly bringing
to market products customized for numerous and evolving RF modulation  standards
requires  developing  and  achieving  volume  production  of a large  number  of
distinct  products,   the  Company's  ability  to  rapidly  design  and  produce
individual products for which there is significant OEM customer demand will be a
critical  determinant of the Company's  future success.  For example,  continued
softening of demand in the TDMA market or failure of another modulation standard
in which the Company has invested substantial  development  resources may have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of  operations.  No assurance  can be given that the  Company's  product
development efforts will be successful, that its new products will meet customer
requirements and be accepted or that its OEM customers'  product  offerings will
achieve customer acceptance.  If a significant number of development projects do
not result in  substantial  volume  production or if  technologies  or standards
supported by the Company's or its customers' products become obsolete or fail to
gain widespread commercial acceptance,  the Company's business may be materially
adversely  affected.  See  "Business--OEM   Customers,   Sales  and  Marketing,"
"--Manufacturing" and "--Research and Development."

     Risks Associated with Internal Wafer and Device Fabrication.  The Company's
operation  of its wafer and device  fabrication  facilities  entails a number of
risks,  including a high level of fixed and variable  costs,  the  management of
complex  processes,  dependence  on a  single  source  of  supply  and a  strict
regulatory  environment.   During  periods  of  low  demand,  high  fixed  wafer
fabrication  costs are likely to have a material adverse effect on the Company's
business,  financial  condition  and  results  of  operations.  The  design  and
fabrication  of  RF  semiconductors  is a  complex  and  precise  process.  Such
manufacturing  is sensitive to a wide variety of factors,  including  variations
and  impurities  in  the  raw  materials,   quality  control  of  the  packages,
difficulties  in the  fabrication  process,  performance  of  the  manufacturing
equipment,  defects in the masks used to print circuits on a wafer and the level
of contaminants in the manufacturing environment. As a result of these and other
factors,  semiconductor  manufacturing yields from time to time in the past have
suffered, and there can be no assurance that the Company will be able to achieve
acceptable production yields in the future. In addition, the Company's wafer and
device  fabrication  facility  represents  a  single  point  of  failure  in its
manufacturing  process that would be costly and time consuming to replace if its
operation were interrupted.  The interruption of wafer fabrication operations or
the loss of employees  dedicated to the wafer and device fabrication  facilities
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.  Any failure to maintain  acceptable  wafer
and  device  production  levels,  will  have a  material  adverse  effect on the
Company's  business,   financial  condition  and  results  of  operations.   See
"Business--Manufacturing" and "--Facilities."

     Product Quality,  Performance and Reliability. The Company expects that its
customers  will  continue to  establish  demanding  specifications  for quality,
performance  and  reliability  that must be met by the  Company's  products.  RF
semiconductors  as  complex  as those  offered by the  Company  often  encounter
development  delays and may contain  undetected  defects or failures  when first
introduced or after commencement of commercial  shipments.  The Company has from
time to time in the past experienced product quality, performance or reliability
problems.  In addition,  multicarrier power amplifiers have a higher probability
of  malfunction  than single carrier power  amplifiers  because of their greater
complexity. There can be no assurance that defects or failures will not occur in
the  future  relating  to  the  Company's   product  quality,   performance  and
reliability that may have a material  adverse effect on the Company's  business,
financial condition and results of operations. See "Business--Manufacturing."

     Sole or Limited  Sources of Materials and Services.  The Company  currently
procures from single  sources  certain  components and services for its products
including cast housings,  printed circuit boards,  specialized RF components and
specialized  subassemblies.  The Company purchases these components and services
on a purchase  order  basis,  does not carry  significant  inventories  of these
components and does not have any long-term supply contracts with its sole source
vendors.  Although the Company is currently  identifying  potential  alternative
sources of these components, its reliance on sole sources entails certain risks,
including  reduced  control over the price,  timely  delivery,  reliability  and
quality of the components.  If the Company were to change any of its sole source
vendors, the Company would be

                                       24

<PAGE>


required to requalify the components with each new vendor.  Any inability of the
Company to obtain timely  deliveries  of  components  of  acceptable  quality in
required  quantities or a significant  increase in the prices of components  for
which  the  Company  does not have  alternative  sources  could  materially  and
adversely  affect the  Company's  business,  financial  condition and results of
operations.  The Company has occasionally  experienced difficulties in obtaining
these components, and no assurance can be given that shortages will not occur in
the future. See "Business--Manufacturing."

     Declining Average Sales Prices. The Company has experienced, and expects to
continue  to  experience,  declining  average  sales  prices  for its  products.
Wireless infrastructure equipment manufacturers have come under increasing price
pressure from wireless service providers, which in turn has resulted in downward
pricing  pressure on the  Company's  products.  In addition,  competition  among
merchant  suppliers has increased the downward pricing pressure on the Company's
products.  Since  wireless  infrastructure  equipment  manufacturers  frequently
negotiate  supply  arrangements  far in advance of delivery  dates,  the Company
often must commit to price  reductions  for its  products  before it is aware of
how, or if, cost reductions can be obtained.  To offset declining  average sales
prices, the Company believes that it must achieve manufacturing cost reductions.
If the Company is unable to achieve such cost  reductions,  the Company's  gross
margins will decline,  and such decline will have a material  adverse  effect on
the  Company's  business,  financial  condition and results of  operations.  See
"Business--Manufacturing."

     Risks of International  Sales. Sales outside of the United States were 95%,
73%  and  72%  of  revenues  in  fiscal  1998,  fiscal  1997  and  fiscal  1996,
respectively.  The Company  expects that  international  sales will  continue to
account for a significant  percentage of the  Company's  total  revenues for the
foreseeable  future.  These sales involve a number of inherent risks,  including
imposition of government  controls,  currency exchange  fluctuations,  potential
insolvency  of  international  distributors  and  representatives  or customers,
reduced  protection for  intellectual  property  rights in some  countries,  the
impact of  recessionary  environments  in economies  outside the United  States,
political  instability and generally longer receivables  collection  periods, as
well as tariffs and other trade barriers. In addition, because substantially all
of the Company's foreign sales are denominated in U.S. dollars, increases in the
value of the dollar  relative to the local  currency would increase the price of
the  Company's  products  in foreign  markets  and make the  Company's  products
relatively more expensive and less price competitive than competitors'  products
that are  priced in local  currencies.  There  can be no  assurance  that  these
factors  will  not  have a  material  adverse  effect  on the  Company's  future
international  sales and,  consequently,  on the Company's  business,  financial
condition and results of  operations.  The Company  anticipates  that the recent
turmoil  in  Asian  financial  markets  and  the  recent  deterioration  of  the
underlying  economic conditions in certain Asian countries may have an impact on
its sales to customers located in or whose projects are based in those countries
due to  the  impact  of  currency  fluctuations  on the  relative  price  of the
Company's products and restrictions on government spending imposed by the IMF on
those countries receiving the IMF's assistance. In addition,  customers in those
countries  may  face  reduced  access  to  working  capital  to  fund  component
purchases, such as the Company's products, due to higher interest rates, reduced
bank lending due to contractions in the money supply or the deterioration in the
customer's  or its bank's  financial  condition or the inability to access local
equity financing.  A substantial  majority of the Company's products are sold to
OEMs who incorporate  the Company's  products into systems sold and installed to
end-user customers. These OEMs are not required by contract and do not typically
provide the Company  with  information  regarding  the  location and identity of
their end-user customers,  and, therefore,  the Company is not able to determine
what  portion  of  its  product  sales  have  been  or  future  orders  will  be
incorporated  into OEM sales to  end-users  in those Asian  countries  currently
experiencing   financial   market  turmoil  and/or   deterioration  of  economic
conditions. Furthermore, a large portion of the Company's existing customers and
potential new customers are servicing new markets in developing  countries  that
the Company's customers expect will deploy wireless communication networks as an
alternative to the construction of a wireline infrastructure.  If such countries
decline to construct  wireless  communication  systems,  or construction of such
systems is delayed for any reason,  including  business and economic  conditions
and changes in economic stability due to factors such as increased inflation and
political  turmoil,  such  delays  could have a material  adverse  effect on the
Company's  business,   results  of  operations  and  financial  condition.   See
"Business--OEM Customers, Sales and Marketing."

                                       25

<PAGE>


     Reliance  upon Growth of Wireless  Services.  Sales of power  amplifiers to
wireless infrastructure  equipment suppliers have in the past accounted, and are
expected  in the  future to  account,  for  substantially  all of the  Company's
product sales. Demand for wireless infrastructure  equipment is driven by demand
for wireless  service.  Although demand for power amplifiers has grown in recent
years,  if demand for  wireless  services  fails to increase or  increases  more
slowly than the Company or its OEM customers currently anticipate, the Company's
business,  financial condition and results of operations would be materially and
adversely affected. See "Business--Industry Background."

     Market for the  Company's  Products  Is Highly  Competitive.  The  wireless
communications  equipment industry is extremely competitive and is characterized
by rapid technological change, new product development and product obsolescence,
evolving  industry  standards and  significant  price erosion over the life of a
product.  The  ability  of the  Company  to  compete  successfully  and  sustain
profitability  depends in part upon the rates at which  wireless  equipment OEMs
incorporate the Company's  products into their systems and the Company  captures
market share from other merchant  suppliers.  The Company's major OEM customers,
including  Northern  Telecom,  Nortel  Matra,  LGIC and  QUALCOMM,  continuously
evaluate  whether to manufacture  their own  amplification  products or purchase
them from outside  sources.  There can be no assurance  that these OEM customers
will  incorporate  the Company's  products into their systems or that in general
they will continue to rely,  or expand their  reliance,  on external  sources of
supply for their power amplifiers. These customers and other large manufacturers
of  wireless  communications  equipment  could also elect to enter the  merchant
market and compete  directly  with the Company,  and at least one OEM,  NEC, has
already done so. Such increased  competition  could materially  adversely affect
the  Company's  business,  financial  condition and results of  operations.  See
"--Internal Amplifier Design and Production Capabilities of OEMs."

     The   Company's   principal   competitors   in  the  market  for   wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,  Amplidyne,  Hewlett-Packard  Wireless Infrastructure  Division,
M/A--COM (a  subsidiary  of AMP),  Microwave  Power  Devices,  NEC and Powerwave
Technologies.  No assurance can be given that the Company's competitors will not
develop new  technologies or enhancements to existing  products or introduce new
products that will offer superior price or performance  features compared to the
Company's products. See "Business--Competition."

     Uncertain  Protection of Intellectual  Property.  The Company's  ability to
compete  successfully and achieve future revenue growth will depend, in part, on
its ability to protect its proprietary technology and operate without infringing
the rights of others.  The Company has a policy of seeking patents on inventions
resulting from its ongoing research and development activities.  The Company has
been  awarded  16  United  States  patents,  and  has 22  United  States  patent
applications pending,  including five that had been allowed but not yet formally
issued.  The Company  also has been  awarded  four  foreign  patents and has ten
foreign  patent  applications  pending.  There  can  be no  assurance  that  the
Company's  pending  patent  applications  will be  allowed or that the issued or
pending   patents  will  not  be  challenged  or  circumvented  by  competitors.
Notwithstanding  the Company's active pursuit of patent protection,  the Company
believes that the success of its business  depends more on the collective  value
of its  patents,  specifications,  computer  aided  design and  modeling  tools,
technical  processes and employee  expertise.  The Company generally enters into
confidentiality and nondisclosure agreements with its employees,  suppliers, OEM
customers,  and potential customers and limits access to and distribution of its
proprietary  technology.  However,  there can be no assurance that such measures
will  provide  adequate  protection  for the  Company's  trade  secrets or other
proprietary  information,  or that the Company's  trade  secrets or  proprietary
technology  will not  otherwise  become known or be  independently  developed by
competitors.  The failure of the Company to protect its  proprietary  technology
could have a material  adverse effect on its business,  financial  condition and
results of operations. See "Business--Patents and Proprietary Technology."

     Risk of Third Party Claims of Infringement.  The  communications  equipment
industry is  characterized  by vigorous  protection and pursuit of  intellectual
property  rights or  positions,  which have  resulted in  significant  and often
protracted  and  expensive  litigation.  Although  there is currently no pending
intellectual  property  litigation  against  the  Company,  the  Company  or its
suppliers  may from time to time be  notified  of claims that the Company may be
infringing patents or other intellectual property rights owned by third parties.
If it is  necessary  or  desirable,  the  Company may seek  licenses  under such
patents or other

                                       26

<PAGE>


intellectual property rights.  However,  there can be no assurance that licenses
will be offered or that the terms of any offered  licenses will be acceptable to
the Company.  The failure to obtain a license from a third party for  technology
used by the Company or  otherwise  secure  rights to use such  technology  could
cause the Company to incur substantial  liabilities,  to suspend the manufacture
of products or expend significant resources to develop noninfringing technology.
There  can be no  assurance  that  the  Company  would  be  successful  in  such
development or that such licenses would be available on reasonable  terms, if at
all.  In the event that any third  party makes a  successful  claim  against the
Company  or its  customers  and either a license  is not made  available  to the
Company  on  commercially   reasonable   terms  or  a  "design  around"  is  not
practicable,   the  Company's  business,  financial  condition  and  results  of
operations would be materially adversely affected.  Furthermore, the Company may
initiate  claims or litigation  against third  parties for  infringement  of the
Company's  proprietary  rights or to  establish  the  validity of the  Company's
proprietary  rights.  Litigation  by or  against  the  Company  could  result in
significant  expense to the  Company  and divert  the  efforts of the  Company's
technical and management personnel,  whether or not such litigation results in a
favorable  determination  for the Company.  In the event of an adverse result in
any such litigation,  the Company could be required to pay substantial  damages,
indemnify  its  customers,  cease the  manufacture,  use and sale of  infringing
products,  expend  significant  resources to develop  noninfringing  technology,
discontinue  the use of certain  processes or obtain  licenses to the infringing
technology. See "Business--Patents and Proprietary Technology."

     Government   Regulation  of   Communications   Industry.   Radio  frequency
transmissions and emissions, and certain equipment used in connection therewith,
are regulated in the United States, Canada and throughout the rest of the world.
Regulatory  approvals  generally  must be obtained by the Company in  connection
with the manufacture and sale of its products, and by wireless service providers
to operate the  Company's  products.  The United States  Federal  Communications
Commission (the "FCC") and regulatory  authorities  abroad  constantly review RF
emission  issues  and  promulgate  standards  based  on  such  reviews.  If more
stringent RF emission regulations are adopted, the Company and its OEM customers
may be required to alter the manner in which radio  signals are  transmitted  or
otherwise alter the equipment  transmitting such signals, which could materially
adversely affect the Company's  products and markets.  The enactment by federal,
state, local or international governments of new laws or regulations or a change
in the  interpretation of existing  regulations could also materially  adversely
affect the market for the Company's  products.  Although recent  deregulation of
international  communications  industries  along  with  recent  radio  frequency
spectrum allocations made by the FCC have increased the potential demand for the
Company's  products by providing users of those products with  opportunities  to
establish  new  wireless  personal  communications  services,  there  can  be no
assurance that the trend toward deregulation and current regulatory developments
favorable to the promotion of new and expanded personal  communications services
will  continue  or that other  future  regulatory  changes  will have a positive
impact on the Company.  The increasing  demand for wireless  communications  has
exerted pressure on regulatory  bodies worldwide to adopt new standards for such
products,  generally following extensive  investigation of and deliberation over
competing  technologies.  The  delays  inherent  in this  governmental  approval
process have in the past caused,  and may in the future cause, the cancellation,
postponement or rescheduling of the  installation of  communications  systems by
the  Company's  OEM  customers.  These  delays have had in the past,  and in the
future  may have,  a  material  adverse  effect on the sale of  products  by the
Company to such OEM customers.

     Environmental  Regulations.  The  Company is subject to a variety of local,
state and federal governmental  regulations relating to the storage,  discharge,
handling,  emission,  generation,  manufacture  and  disposal  of toxic or other
hazardous  substances  used to manufacture the Company's  products.  The Company
believes that it is currently in  compliance in all material  respects with such
regulations  and that it has obtained  all  necessary  environmental  permits to
conduct its business. Nevertheless, the failure to comply with current or future
regulations  could result in the imposition of substantial fines on the Company,
suspension of production, alteration of its manufacturing processes or cessation
of operations.  Compliance  with such  regulations  could require the Company to
acquire expensive remediation  equipment or to incur substantial  expenses.  Any
failure by the Company to control the use,  disposal,  removal or storage of, or
to adequately  restrict the discharge of, or assist in the cleanup of, hazardous
or toxic  substances,  could  subject  the Company to  significant  liabilities,
including joint and several liability under

                                       27

<PAGE>


certain  statutes. The imposition of such liabilities could materially adversely
affect  the  Company's  business, financial condition and results of operations.
See "Business--Manufacturing."

     Year 2000 Compliance. Many installed computer programs were written using a
two digit date field  rather  than a four digit  field to define the  applicable
year.  Such computer  programs  utilizing a two digit date field may recognize a
date using "00" as the year 1900 rather than the year 2000.  The Year 2000 Issue
could  potentially  result  in  a  system  failure  or  miscalculations  causing
disruptions of operations,  including among other things, a temporary  inability
to  process  transactions,  send  invoices  or  engage in other  similar  normal
business  activities.  The Company has identified Year 2000 Issues in certain of
its  internal  operating  systems  and is in the  process  of  installing  a new
computer   software  system  which  will  increase   operational  and  financial
efficiencies  and information  analysis.  The new enterprise  system  recognizes
dates beyond  December 31, 1999 and  addresses the  substantial  position of the
Year 2000 Issue that impact the Company. The cost of this project, as it relates
to the Year  2000  Issue,  is not  expected  to have a  material  effect  on the
operations of the Company and will be funded through  operating cash flows.  The
Company has not completed an audit of its remaining internal systems or products
with respect to Year 2000 Issues.

     Management  of  Growth;  Dependence  on Key  Personnel.  The  growth in the
Company's  business  has  placed,  and is  expected  to  continue  to  place,  a
significant strain on the Company's  personnel,  management and other resources.
The Company's ability to manage any future growth effectively will require it to
attract,  train,  motivate,  manage and retain new  employees  successfully,  to
integrate  new  employees  into its overall  operations  and in  particular  its
manufacturing  operations, to retain the continued service of its key technical,
marketing and management personnel,  and to continue to improve its operational,
financial  and  management   information  systems.   Although  the  Company  has
employment contracts with several of its executive officers, these agreements do
not obligate such  individuals to remain in the  employment of the Company.  The
Company does not maintain key person life  insurance on any of its key technical
personnel.  The competition  for such personnel is intense,  and the loss of key
employees   could  have  a  material   adverse   effect  on  the  Company.   See
"Business--Employees" and "Management."

     Volatility  of Stock Price.  The market price of the shares of Common Stock
has  recently  been and is likely to  continue  to be  highly  volatile,  and is
affected  significantly  by  factors  such  as  fluctuations  in  the  Company's
operating  results,  announcements  of technological  innovations,  new customer
contracts or new products by the Company or its  competitors,  announcements  by
the  Company's  customers  regarding  their  business or  prospects,  changes in
analysts'  expectations,   governmental  regulatory  action,  developments  with
respect to patents or proprietary  rights,  general market  conditions and other
factors.  In  addition,  the  stock  market  has from  time to time  experienced
significant  price and volume  fluctuations  that are unrelated to the operating
performance of particular  companies.  The market price of the Company's  Common
Stock has fluctuated  substantially  during fiscal 1998, from a low of $10.75 on
April 1, 1997 to a high of $66.375 on October 1, 1997. On May 18, 1998, the last
reported  sale  price of the Common  Stock as  reported  on the Nasdaq  National
Market was  $16.125.  See "Market  for  Registrant's  Common  Equity and Related
Stockholder Matters."

     Pending  Litigation.  Since December 23, 1997, a number of complaints  have
been filed  against the Company and certain of its officers in the Federal Court
for the Northern  District of California  that allege  violations of the federal
securities  laws.  Similar  complaints have been filed in California state court
that allege violations of California state securities laws and California common
law. The  complaints  have been  consolidated  in the federal and state  courts,
respectively.  The plaintiffs in both the federal and state lawsuits  purport to
represent a class of persons who purchased the Company's  securities  during the
period of July 17, 1997 through October 23, 1997. The complaints allege that the
Company and certain of its officers  misled the investing  public  regarding the
financial  prospects of the Company.  The Company  believes that the allegations
are  completely  without  merit  and  will  vigorously  defend  itself.  Certain
provisions of the Company's  Certificate of  Incorporation  and  indemnification
agreements  between the Company and its officers  require the Company to advance
to such officers  ongoing legal  expenses of defending the suits and may require
the Company to indemnify them against judgments  rendered on certain claims. The
Company expects to incur  significant legal expenses on its behalf and on behalf
of such officers in connection with this litigation. In addition, defending this
litigation  has resulted and will likely  continue to result in the diversion of
management's attention from the day to day operations of the

                                       28

<PAGE>


Company's business.  Although the Company does not believe that it or any of its
officers  has engaged in any  wrongdoing,  there can be no  assurance  that this
stockholder  litigation  will be resolved  in the  Company's  favor.  An adverse
result,  settlement or prolonged litigation could have a material adverse effect
on the Company's business, financial condition or results of operations.

     Shareholder  Rights  Plan;  Issuance  of  Preferred  Stock.  The  Board  of
Directors of the Company adopted a Shareholder  Rights Plan in October 1996 (the
"Rights  Plan").  Pursuant to the Rights Plan,  the Board declared a dividend of
one Preferred  Stock Purchase Right per share of Common Stock (the "Rights") and
each such Right has an exercise price of $126.00.  The Rights become exercisable
upon the occurrence of certain  events,  including the  announcement of a tender
offer or exchange offer for the Company's  Common Stock or the  acquisition of a
specified  percentage  of the  Company's  Common  Stock  by a third  party.  The
exercise  of the  Rights  could  have  the  effect  of  delaying,  deferring  or
preventing a change in control of the Company,  including,  without  limitation,
discouraging  a proxy  contest or making more  difficult  the  acquisition  of a
substantial  block of the Company's  Common Stock.  These  provisions could also
limit the price that investors  might be willing to pay in the future for shares
of the Company's Common Stock. The Board of Directors has the authority to issue
up to 5,000,000  shares of  undesignated  Preferred  Stock and to determine  the
powers,   preferences  and  rights  and  the   qualifications,   limitations  or
restrictions   granted  to  or  imposed  upon  any  wholly  unissued  shares  of
undesignated  Preferred Stock and to fix the number of shares  constituting  any
series and the designation of such series, without any further vote or action by
the  Company's  stockholders.  For example,  in  connection  with the  Company's
Shareholder  Rights Plan,  the Board of Directors  designated  20,000  shares of
Preferred Stock as Series A Participating  Preferred Stock although none of such
shares have been  issued.  The  Preferred  Stock  could be issued  with  voting,
liquidation,  dividend  and other  rights  superior  to those of the  holders of
Common Stock. The issuance of Preferred Stock under certain  circumstances could
have the effect of delaying,  deferring or preventing a change in control of the
Company.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The  Company's   consolidated  financial  statements  and  the  independent
auditors' report appear on pages F-1 through F-15 of this Report.


ITEM  9. CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     Not applicable.

                                       29

<PAGE>


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item concerning the Company's directors is
incorporated by reference to the sections captioned  "Election of Directors" and
"Section  16(a)  Beneficial  Ownership  Reporting  Compliance"  contained in the
Company's Proxy Statement  related to the 1998 Annual Meeting of Stockholders to
be held  June 26,  1998,  to be filed by the  Company  with the  Securities  and
Exchange  Commission  within 120 days of the end of the  Company's  fiscal  year
pursuant  to  General  Instruction  G(3) of Form 10-K (the  "Proxy  Statement").
Certain information  required by this item concerning  executive officers is set
forth in Part I of this  Report  in  "Business--Management"  and  certain  other
information  required by this item is incorporated by reference from the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" contained in
the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION

     The  information  required by this item is incorporated by reference to the
section captioned  "Executive  Compensation and Other Matters"  contained in the
Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required by this item is incorporated by reference to the
sections  captioned   "Security  Ownership  of  Certain  Beneficial  Owners  and
Management"  and  "Record  Date;  Outstanding  Shares"  contained  in the  Proxy
Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required by this item is incorporated by reference to the
sections    captioned    "Compensation    Committee   Interlocks   and   Insider
Participation" and "Certain Transactions" contained in the Proxy Statement.

                                       30

<PAGE>


                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)(1) Financial Statements

     The  following   consolidated  financial  statements  are  incorporated  by
reference in Item 8 of this Report:

         Independent Auditors' Report

         Consolidated Balance Sheets, March 31, 1998 and 1997

         Consolidated  Statements  of  Operations  for the years ended March 31,
         1998, 1997 and 1996

         Consolidated  Statements  of  Stockholders'  Equity for the years ended
         March 31, 1998, 1997 and 1996

         Consolidated  Statements  of Cash Flows for the years  ended  March 31,
         1998, 1997 and 1996

         Notes to Consolidated Financial Statements

     (a)(2) Financial Statement Schedules

         Schedule  II--Valuation and Qualifying  Accounts and Reserves (see page
         S-1)

         Independent Auditors' Report (see page F-2)

     Schedules  not  listed  above have been  omitted  because  the  information
required to be set forth therein is not  applicable or is shown in the financial
statements or notes thereto.

     (a)(3) Exhibits


   3.1(4)         Restated Articles of Incorporation of Registrant.
   3.4(1)         Bylaws of Registrant.
   3.5(14)        Certificate of Incorporation of Registrants.
   3.6(15)        Bylaws of Registrant.
   4.1(11)        Amended and  Restated  Preferred  Shares  Rights  Agreement of
                  January 15,  1997,  between  the  Registrant  and  ChaseMellon
                  Shareholder Services,  L.L.C., as amended,  including the form
                  of Rights  Certificate and the  Certificate of  Determination,
                  the Summary of Rights attached thereto as Exhibits A, B and C,
                  respectively.
   4.1.1(11)      Letter  Agreement to amend Preferred  Shares Rights  Agreement
                  dated as of January 15, 1997 between the  Registrant  and Kopp
                  Investment Advisors, Inc.
  10.1(1)         Form of Indemnification Agreement with directors and officers.
  10.2(8)         1992 Stock Plan, as amended.
  10.3(8)         1994 Employee  Stock  Purchase  Plan, as amended,  and form of
                  agreement thereunder.
  10.4(8)         1994 Director Option Plan and form of agreement thereunder.
  10.5(1)         Amended and Restated Registration Rights Agreement dated as of
                  August 9, 1993 by and among Registrant and certain individuals
                  and entities named therein.
  10.6.1(1)       Lease between  Registrant and Portola Land Company dated March
                  28, 1984, as amended.
  10.6.2(1)       Lease  between  Registrant  and 465 Mountain  View  Properties
                  Incorporated dated May 15, 1990, as amended.
  10.6.3(1)       Standard  Industrial  Lease-Multiple-Tenant  between  American
                  Microwave Technology, Inc. and Enterprise Business Center-Brea
                  dated December 19, 1990.
  10.7.1(1)       Business Loan Agreement between  Registrant and Silicon Valley
                  Bank dated May 21, 1992, as amended,  and ancillary  documents
                  thereto.
  10.7.2(1)       Amendment to Business Loan  Agreement  between  Registrant and
                  Silicon Valley Bank dated June 27, 1994.
  10.7.3(14)      Amended  and  Restated   Business   Loan   Agreement   between
                  Registrant and Silicon Valley Bank dated February 11, 1997 and
                  ancillary documents thereto.
  10.8+(1)        Supply  Agreement  between  Registrant  and  Northern  Telecom
                  Canada Limited dated July 16, 1993.
  10.9+(1)        Agreement  between  Registrant and Matra  Communication  dated
                  March 24, 1993.

                                       31

<PAGE>


  10.10.1+(1)     Agreement   among    Registrant   and   Ericsson   GE   Mobile
                  Communications,  Inc.,  Ericsson  Radio  Access  AB,  Ericsson
                  Mobile  Communications  AB and Ericsson Radio Systems AB dated
                  July 21, 1993 (collectively "Ericsson").
  10.10.2+(1)     Addendum to Agreement among Registrant and Ericsson dated June
                  29, 1994.
  10.10.3+(1)     Addendum to Agreement among Registrant and Ericsson dated June
                  29, 1994.
  10.11+(2)       Hardware  Development  Agreement  dated  July 6, 1994  between
                  Northern Telecom Limited and Registrant.
  10.12+(3)       Hardware Development  Agreement dated October 18, 1994 between
                  Northern Telecom Limited and Registrant.
  10.13+(4)       Hardware Supply Agreement dated April 6, 1995 between Northern
                  Telecom Limited and Registrant
  10.14(4)        Employment  Agreement dated January 6, 1992 between Registrant
                  and C. Woodrow Rea, Jr.
  10.15(4)        Employment  Agreement dated January 6, 1992 between Registrant
                  and David S. Wisherd.
  10.16(5)        Purchase  and  Sale  Agreement   between   Metropolitan   Life
                  Insurance Company and Registrant.
  10.17+(6)       Development and Supply Agreement between QUALCOMM Incorporated
                  and Registrant.
  10.18+(7)       Purchasing Agreement between Airnet Communications Corporation
                  and Registrant.
  10.19(8)        Employment   Agreement   between  Garrett  A.  Garrettson  and
                  Registrant.
  10.20(8)        Employment   Agreement   between   Stephen  B.  Greenspan  and
                  Registrant.
  10.21(9)        Term Loan Agreement between Silicon Valley Bank and Registrant
  10.22(10)       Lease Agreement dated November 19, 1996 between the Registrant
                  and SPEC (CA) QRS 12-20, Inc.
  10.23(10)       Bill of Sale dated November 19, 1996 by the Registrant to SPEC
                  (CA) QRS 12-20, Inc.
  10.24(12)       Employment   Agreement   dated  March  11,  1997  between  the
                  Registrant and Bruce R. Wright.
  10.25(12)       Letter  Agreement  dated  November 6, 1996 between the Company
                  and Edward Supplee.
  10.26(13)       Stock  Option   Agreement  dated  November  26,  1997  between
                  Registrant and Garrett A. Garrettson.
  10.27(13)       Stock  Option   Agreement  dated  November  26,  1997  between
                  Registrant and Garrett A. Garrettson.
  10.28(13)       Stock  Option   Agreement  dated  November  26,  1997  between
                  Registrant and Garrett A. Garrettson.
  10.29(13)       Stock Option Agreement dated March 24, 1997 between Registrant
                  and Bruce Wright.
  10.30(13)       Stock Option Agreement dated March 20, 1997 between Registrant
                  and Michael Morrione.
  10.31(13)       Stock Option Agreement dated March 20, 1997 between Registrant
                  and Stephen B. Greenspan.
  10.32(15)       Form of Indemnification Agreement with directors and officers.
  10.33(16)       1998 Nonstatutory Stock Option Plan.
  10.34           1998 Employee Stock Purchase Plan.
  10.35           Lease Agreement dated December 19, 1997 between Registrant and
                  Stanford Ranch I, LLC.
  10.36(17)       Stock  Option  Agreement  dated  December 15, 1997 between the
                  Registrant and John Rottenburg.
  10.37           First  Amendment  to Lease dated  February  19,  1998  between
                  Registrant and Stanford Ranch I, LLC.
  23.1            Consent of KPMG Peat Marwick LLP.
  24.1            Power of Attorney (included on page 41).
  27.1            Financial Data Schedule.

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

  +  Confidential  treatment  has been  requested  or  granted  with  respect to
     certain  portions  of  this  exhibit.  Omitted  portions  have  been  filed
     separately with the Securities and Exchange Commission.
 (1) Incorporated by reference to the  Registration  Statement on Form S-1 (File
     No.  33-79952)  as  declared  effective  by  the  Securities  and  Exchange
     Commission August 2, 1994.
 (2) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended October 1, 1994.
 (3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended December 31, 1994.

                                       32

<PAGE>


 (4) Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the fiscal year ended March 31, 1995.
 (5) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended July 1, 1995.
 (6) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 1995.
 (7) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended December 30, 1995.
 (8) Incorporated   by  reference  to  exhibits  filed  with  the   Registrant's
     Registration  Statement on Form S-8 (File No.  333-38561) as filed with the
     Securities and Exchange Commission on October 23, 1997.
 (9) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended June 29, 1996
(10) Incorporated by reference to the  Registrant's  Form 8-K dated November 19,
     1996.
(11) Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form 8-A (File No. 000-24360) as filed with the Securities and
     Exchange Commission on January 17, 1997.
(12) Incorporated by reference to exhibits filed with Registrant's Annual Report
     on Form 10-K for the year ended March 31, 1997.
(13) Incorporated   by   reference   to   exhibits   filed   with   Registrant's
     Post-Effective  Amendment No. 1 to the  Registration  Statement on Form S-8
     (File No.  333-25435) as filed with the Securities and Exchange  Commission
     on October 21, 1997.
(14) Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 1997.
(15) Incorporated  by  reference  to exhibits  filed with  Registrant's  Current
     Report on Form 8-K dated October 10, 1997.
(16) Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S-8 (File No. 333-49081) as filed with the Securities and
     Exchange Commission on April 1, 1998.
(17) Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S-8 (File No. 333-53079) as filed with the Securities and
     Exchange Commission on May 19, 1998.

     (b)  Reports  on Form 8-K. The Company did not file any reports on Form 8-K
during the three months ended March 31, 1998.

     (c) Exhibits. See Item 14(a)(3) above.

     (d) Financial Statement Schedules. See Item 14(a)(2) above.

                                       33

<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                        SPECTRIAN CORPORATION

                                        By: /s/ Garrett A. Garrettson
                                          -------------------------------------
                                          Garrett A. Garrettson
                                          President,   Chief  Executive  Officer
                                          and Director


Date: May 21, 1998


                                POWER OF ATTORNEY

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears  below  constitutes  and  appoints  Garrett A.  Garrettson  and Bruce R.
Wright, and each of them, his true and lawful attorneys-in-fact and agents, each
with  full  power  of  substitution  and  resubstitution,  to  sign  any and all
amendments (including  post-effective  amendments) to this Annual Report on Form
10-K and to file the same,  with all  exhibits  thereto and other  documents  in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing  requisite  and necessary to be done
in connection therewith, as fully to all intents and purposes as he or she might
or  could  do  in  person,   hereby  ratifying  and  confirming  all  that  said
attorneys-in-fact  and agents,  or their  substitute or  substitutes,  or any of
them, shall do or cause to be done by virtue hereof.

<TABLE>
     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:

<CAPTION>
       Signature                               Title                           Date
------------------------------   --------------------------------------   -------------
<S>                              <C>                                        <C>
/s/ Garrett A. Garrettson        President, Chief Executive Officer and     May 21, 1998
---------------------------      Director (Principal Executive Officer)
  Garrett A. Garrettson

   /s/ Bruce R. Wright           Executive Vice President, Finance and      May 21, 1998
---------------------------      Administration, Chief Financial
    Bruce R. Wright              Officer and Secretary (Principal
                                 Financial and Accounting Officer)

   /s/ James A. Cole             Director                                   May 21, 1998
---------------------------
     James A. Cole

   /s/ Robert C. Wilson          Director                                   May 21, 1998
---------------------------
    Robert C. Wilson

    /s/ Eric A. Young            Director                                   May 21, 1998
---------------------------
      Eric A. Young

    /s/ Martin Cooper            Director                                   May 21, 1998
---------------------------
      Martin Cooper

   /s/ Charles D. Kissner        Director                                   May 21, 1998
---------------------------
      Charles D. Kissner
</TABLE>

                                       34

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS


                                                                         Page
                                                                        -----
Independent Auditors' Report ........................................    F-2
Consolidated Balance Sheets .........................................    F-3
Consolidated Statements of Operations ...............................    F-4
Consolidated Statements of Cash Flows ...............................    F-5
Consolidated Statements of Changes in Stockholders' Equity ..........    F-6
Notes to Consolidated Financial Statements ..........................    F-7

                                       F-1

<PAGE>


                          Independent Auditors' Report


The Board of Directors and Stockholders
Spectrian Corporation:


     We have audited the accompanying  consolidated  balance sheets of Spectrian
Corporation  (the Company) and  subsidiaries  as of March 31, 1998 and 1997, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the  three-year  period ended March 31, 1998.  In
connection with our audits of the  consolidated  financial  statements,  we also
have audited the  financial  statement  schedule as listed in Item 14(a).  These
consolidated  financial  statements and the financial statement schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  and  financial  statement
schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Spectrian
Corporation  and  subsidiaries as of March 31, 1998 and 1997, and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended March 31, 1998, in conformity  with generally  accepted  accounting
principles.  Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly in all material  respects,  the  information  set forth
therein.


                                                        /s/KPMG Peat Marwick LLP

Mountain View, California
April 22, 1998

                                       F-2

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

                                                                March 31,
                                                         ----------------------
                                                           1998          1997
                                                         ---------    ---------
Assets
Current assets:
 Cash and cash equivalents ...........................   $  31,460    $   6,240
 Short-term investments ..............................      68,128         --
 Accounts receivable, less allowance for doubtful
   accounts of $376 and $365, respectively ...........      21,123       15,825
 Inventories .........................................      15,362       17,301
 Prepaid expenses and other current assets ...........       6,202        1,806
                                                         ---------    ---------
   Total current assets ..............................     142,275       41,172
Property and equipment, net ..........................      32,776       25,461
                                                         ---------    ---------
                                                         $ 175,051    $  66,633
                                                         =========    =========
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable ....................................   $  10,456    $   8,101
 Accrued liabilities .................................      12,981        7,421
 Current portion of debt obligations .................       1,360        1,588
                                                         ---------    ---------
   Total current liabilities .........................      24,797       17,110
Debt obligations, net of current portion .............       5,912        7,057
                                                         ---------    ---------
   Total liabilities .................................      30,709       24,167
                                                         ---------    ---------
Stockholders' equity:
 Common stock, $0.001 par value, 20,000,000 shares
   authorized; 10,904,077 and 8,265,230 shares
   issued and outstanding, respectively ..............          10            8
 Additional paid-in capital ..........................     146,827       53,387
 Deferred compensation expense .......................        (609)        --
 Unrealized gains on investments .....................         121         --
 Accumulated deficit .................................      (2,007)     (10,929)
                                                         ---------    ---------
   Total stockholders' equity ........................     144,342       42,466
                                                         ---------    ---------
Commitments and contingencies
                                                         ---------    ---------
                                                         $ 175,051    $  66,633
                                                         =========    =========

See accompanying notes to consolidated financial statements

                                       F-3

<PAGE>


<TABLE>
                                        SPECTRIAN CORPORATION AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                         (In thousands, except per share data)

<CAPTION>
                                                                                   Year ended March 31,
                                                                    -------------------------------------------------
                                                                      1998                1997                 1996
                                                                    --------            --------             --------
<S>                                                                 <C>                 <C>                  <C>     
Revenues ...............................................            $168,798            $ 88,252             $ 72,113
                                                                    --------            --------             --------
Costs and expenses:
 Cost of product sales .................................             132,684              65,322               45,355
 Research and development ..............................              18,644              17,230               14,548
 Selling, general and administrative ...................              13,014               9,299                7,450
                                                                    --------            --------             --------
                                                                     164,342              91,851               67,353
                                                                    --------            --------             --------
   Operating income (loss) .............................               4,456              (3,599)               4,760
Interest income (expense), net .........................               3,335                (392)                 889
Other income, net ......................................               1,530                --                   --
                                                                    --------            --------             --------
   Income (loss) before income taxes ...................               9,321              (3,991)               5,649
Income tax expense .....................................                 399                --                    169
                                                                    --------            --------             --------
   Net income (loss) ...................................            $  8,922            $ (3,991)            $  5,480
                                                                    ========            ========             ========
Net income (loss) per share:
   Basic ...............................................            $   0.90            $  (0.49)            $   0.71
   Diluted .............................................            $   0.83            $  (0.49)            $   0.66
Shares used in computing per share amounts:
   Basic ...............................................               9,881               8,150                7,684
   Diluted .............................................              10,701               8,150                8,363

<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-4

<PAGE>


<TABLE>
                                          SPECTRIAN CORPORATION AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (In thousands)

<CAPTION>
                                                                                         Year ended March 31,
                                                                           ----------------------------------------------
                                                                             1998               1997               1996
                                                                           --------           --------           --------
<S>                                                                        <C>                <C>                <C>     
Cash flows from operating activities:
 Net income (loss) ...............................................         $  8,922           $ (3,991)          $  5,480
 Adjustments to reconcile net income (loss) to net cash
   provided by (used for) operating activities:
   Gain on sale of subsidiary ....................................           (1,530)              --                 --
   Depreciation and amortization .................................            9,761              6,574              4,793
   Stock compensation expense ....................................              609                182                (49)
   Tax benefit associated with stock options .....................             --                 --                  138
   Changes in operating assets and liabilities:
    Accounts receivable ..........................................          (10,051)            (3,845)            (1,360)
    Inventories ..................................................              362            (10,072)            (2,444)
    Prepaid expenses and other assets ............................             (412)            (1,386)               (26)
    Accounts payable .............................................            3,141              1,137              2,897
    Accrued liabilities ..........................................            5,811              3,301                173
                                                                           --------           --------           --------
      Net cash provided by (used for) operating activities .......           16,613             (8,100)             9,602
                                                                           --------           --------           --------
Cash flows from investing activities:
 Proceeds (purchases) of short-term investments, net .............          (68,008)             3,000              9,107
 Proceeds from sale of subsidiary ................................            4,016               --                 --
 Proceeds from sale of property ..................................             --               16,414               --
 Purchase of property and equipment ..............................          (17,953)           (16,321)           (28,182)
                                                                           --------           --------           --------
      Net cash provided by (used for) investing activities .......          (81,945)             3,093            (19,075)
                                                                           --------           --------           --------
Cash flows from financing activities:
 Proceeds from real estate loan ..................................             --                2,917               --
 Proceeds from bank debt and equipment financing .................             --               18,000               --
 Repayments of debt and capital lease obligations ................           (1,672)           (12,272)              --
 Proceeds from sales of common stock, net ........................           92,224              1,439              2,216
                                                                           --------           --------           --------
      Net cash provided by financing activities ..................           90,552             10,084              2,216
                                                                           --------           --------           --------
      Net increase (decrease) in cash and cash equivalents .......           25,220              5,077             (7,257)
      Cash and cash equivalents, beginning of year ...............            6,240              1,163              8,420
                                                                           --------           --------           --------
      Cash and cash equivalents, end of year .....................         $ 31,460           $  6,240           $  1,163
                                                                           ========           ========           ========
Supplemental disclosures of cash flow information:
 Cash paid during the year for interest ..........................         $    457           $    660           $     31
 Taxes paid during the year ......................................         $    952           $   --             $   --
 Noncash investing and financing activities:
   Equipment recorded under capital lease obligations ............         $    307           $   --             $   --
   Deferred stock option compensation ............................         $  1,218           $   --             $   (425)
   Unrealized gain on investments ................................         $    121           $   --             $   --

<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-5

<PAGE>


<TABLE>
                                              SPECTRIAN CORPORATION AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                 (In thousands except share data)

<CAPTION>
                                                                                       Unrealized
                                         Common Stock                       Deferred      Gains                        Total
                                   -----------------------    Paid-In    Compensation  (Losses) on    Accumulated  Stockholders'
                                     Shares       Amount      Capital       Expense     Investments     Deficit        Equity
                                   ----------   ----------   ----------    ----------    ----------    ----------    ----------
<S>                                 <C>         <C>          <C>           <C>           <C>           <C>           <C>       
Balances as of March 31, 1995 ....  7,155,800   $        7   $   50,020    $     (558)   $        5    $  (12,418)   $   37,056
Exercise of stock options ........    761,778            1        1,160          --            --            --           1,161
Employee stock purchase plan .....     96,947         --          1,055          --            --            --           1,055
Deferred stock option
 compensation ....................       --           --           (425)          425          --            --            --
Stock option compensation ........       --           --           --             (49)         --            --             (49)
Tax benefit associated with
 stock options ...................       --           --            138          --            --            --             138
Unrealized losses on investments .       --           --           --            --              (3)         --              (3)
Net income .......................       --           --           --            --            --           5,480         5,480
                                   ----------   ----------   ----------    ----------    ----------    ----------    ----------
Balances as of March 31, 1996 ....  8,014,525            8       51,948          (182)            2        (6,938)       44,838
Exercise of stock options ........    114,671         --            276          --            --            --             276
Employee stock purchase plan .....    136,034         --          1,163          --            --            --           1,163
Stock option compensation ........       --           --           --             182          --            --             182
Unrealized losses on investments .       --           --           --            --              (2)         --              (2)
Net loss .........................       --           --           --            --            --          (3,991)       (3,991)
                                   ----------   ----------   ----------    ----------    ----------    ----------    ----------
Balances as of March 31, 1997 ....  8,265,230            8       53,387          --            --         (10,929)       42,466
Exercise of stock options ........    431,470         --          5,589          --            --            --           5,589
Employee stock purchase plan .....    207,377         --          1,604          --            --            --           1,604
Public offering, net of
 $4,969 expenses .................  2,000,000            2       85,029          --            --            --          85,031
Deferred stock option
 compensation ....................       --           --          1,218        (1,218)         --            --            --
Stock compensation expense .......       --           --           --             609          --            --             609
Unrealized gain on investments ...       --           --           --            --             121          --             121
Net income .......................       --           --           --            --            --           8,922         8,922
                                   ----------   ----------   ----------    ----------    ----------    ----------    ----------
Balances as of March 31, 1998 .... 10,904,077   $       10   $  146,827    $     (609)   $      121    $   (2,007)   $  144,342
                                   ==========   ==========   ==========    ==========    ==========    ==========    ==========

<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                                                 F-6

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Principles of Consolidation

     The accompanying  consolidated financial statements include the accounts of
the Company and its wholly and  majority  owned  subsidiaries.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

   Revenue Recognition

     The Company recognizes  revenue upon shipment and concurrently  accrues for
expected warranty expenses.  Repair and service revenues are recognized when the
service is performed.

   Concentration of Credit Risk and Fair Value of Financial Instruments

     The Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral on accounts receivable. When
required,  the Company  maintains  allowances  for credit losses and such losses
have been within management's expectations.

     The recorded amounts of financial instruments approximate their fair market
values.

   Cash Equivalents and Short-Term Investments

     The Company  considers all liquid  investments with an original maturity of
three months or less to be cash  equivalents.  The cash  equivalents  consist of
commercial paper as of March 31, 1998.

     The Company has  classified its  investments in certain debt  securities as
"available-for-sale,"  and records such  investments at fair market value,  with
unrealized  gains and losses reported as a separate  component of  stockholders'
equity.  Interest income is recorded using an effective  interest rate, with the
associated  premium or discount  amortized to interest income. At March 31, 1998
and 1997, the fair value of the Company's investments approximated cost.

   Inventories

     Inventories are stated at the lower of first-in, first-out cost or market.

   Property and Equipment

     Property and equipment are stated at cost.  Depreciation  and  amortization
are computed using the  straight-line  method over the estimated useful lives of
the respective  assets,  generally  three to five years.  Assets  recorded under
capital leases and leasehold improvements are amortized on a straight-line basis
over the  shorter  of the  lease  terms  or the  estimated  useful  lives of the
respective assets.

   Income Taxes

     Income taxes are recorded  using the asset and liability  method.  Deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases and operating
loss and tax credit  carryforwards.  Deferred  tax assets  and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment  date. A
valuation  allowance  is  recorded  against  deferred  tax  assets  where  their
realization is more likely than not.

   Per Share Computations

     The Company adopted Statement of Financial  Accounting  Standards  ("SFAS")
No. 128, "Earnings Per Share" effective December 28, 1997. SFAS No. 128 requires
presentation of basic earnings per share ("EPS") and, for companies with complex
capital structures,  diluted EPS. Basic EPS excludes dilution and is computed by
dividing net income  available to common  stockholders  by the  weighted-average
number of  common  shares  outstanding  for the  period.  Diluted  EPS  includes
dilution and net income per share is

                                       F-7

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

computed  using  the  weighted  average  number of common  and  dilutive  common
equivalent  shares  outstanding  during the  period.  Common  equivalent  shares
include the effect of the  exercise of stock  options.  For the year ended March
31, 1997,  common  equivalent  shares were not included for the  calculation  of
diluted EPS as they were considered  antidilutive.  The Company has restated net
income  (loss)  per  share  for  all  periods   presented  in  the  accompanying
consolidated financial statements to reflect net income (loss) per share on both
a basic and a diluted basis.

<TABLE>
     A reconciliation of the basic and diluted per share calculations follows:

<CAPTION>
                                                         Year ended                          Year ended
                                                       March 31, 1998                      March 31, 1997
                                                 ------------------------------    ---------------------------------
                                                                       Per                                 Per
                                                  Net                 Share          Net                   Share
                                                 Income    Shares     Amount         Loss      Shares      Amount
(In thousands, except per share data)            ------    ------     ------         ----      ------      ------
<S>                                              <C>         <C>       <C>          <C>          <C>        <C>      
Basic ......................................     $ 8,922     9,881     $   0.90     $(3,991)     8,150      $  (0.49)
Effect of dilutive securities ..............        --         820      --             --         --         --
                                                 -------   -------     -----        -------    -------      -----
Diluted ....................................     $ 8,922    10,701     $   0.83     $(3,991)     8,150      $  (0.49)
                                                 =======   =======     =====        =======    =======      =====
</TABLE>

                                                        Year ended
                                                      March 31, 1996
                                           ----------------------------------
                                                                        Per
                                            Net                        Share
                                           Income       Shares         Amount
(In thousands, except per share data)      ------       ------         ------
Basic ...............................      $5,480       7,684        $   0.71
Effect of dilutive securities .......        --           679            --
                                           ------       ------         -----
Diluted .............................      $5,480       8,363        $   0.66
                                           ======       ======         =====

   Use of Estimates in the Preparation of Financial Statements

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the  reported  amounts of assets and  liabilities,  the
disclosure of contingent  assets and  liabilities,  revenues and expenses during
the  reporting  period.  The most  significant  of these relate to the extent of
inventory  obsolescence,  the allowance  for doubtful  accounts and the warranty
accrual. Actual results could differ from those estimates.

   Accounting for Stock-Based Compensation

     The  Company  continues  to account  for its stock  option  plans using the
intrinsic value method.

   Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

     The Company reviews long-lived assets and certain identifiable  intangibles
for impairment  whenever  events or changes in  circumstances  indicate that the
carrying  amount  of an  asset  may  not be  recoverable.  If  such  assets  are
considered  to be impaired,  the  impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds its fair value. To date
the Company has made no such adjustments.


2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

     Available-for-sale securities at March 31, 1998 and 1997 were as follows:


                                                          1998             1997
                                                         -------         -------
                                                              (In thousands)
  Commercial paper .............................         $63,341         $  --
  Repurchase agreements ........................            --             4,830
  U.S. government securities ...................          28,158             128
                                                         -------         -------
                                                         $91,499         $ 4,958
                                                         =======         =======

                                       F-8

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     As of March 31, 1998 and 1997 the estimated  fair value of each  investment
approximated  the  amortized  cost and,  therefore,  there  were no  significant
unrealized gains or losses.  At March 31, 1998 and 1997 all securities held were
due in less than one year and were classified as follows (in thousands):


                                                               March 31,
                                                       -------------------------
                                                        1998              1997
                                                       -------           -------
  Cash equivalents .........................           $23,371           $ 4,958
  Short-term investments ...................            68,128              --
                                                       -------           -------
                                                       $91,499           $ 4,958
                                                       =======           =======


3. BALANCE SHEET COMPONENTS

     Balance  sheet  components  at March 31,  1998 and 1997 are as follows  (in
thousands):


                                                                  March 31,
                                                           ---------------------
                                                            1998          1997
                                                           -------       -------
     Inventories:
        Raw materials ..............................       $ 7,395       $ 9,315
        Work in progress ...........................         5,538         6,699
        Finished goods .............................         2,429         1,287
                                                           -------       -------
                                                           $15,362       $17,301
                                                           =======       =======
     Property and equipment:
        Machinery and equipment ....................       $51,091       $37,181
        Land, building and improvements ............         2,829         2,822
        Furniture and fixtures .....................         1,382         1,376
        Leasehold improvements .....................         1,633           867
                                                           -------       -------
                                                            56,935        42,246
        Less accumulated depreciation and
          amortization .............................        24,159        16,785
                                                           -------       -------
                                                           $32,776       $25,461
                                                           =======       =======
     Accrued liabilities:
        Employee compensation and benefits .........       $ 2,958       $ 3,772
        Warranty ...................................         7,326         1,940
        Deferred revenue and other .................         2,697         1,709
                                                           -------       -------
                                                           $12,981       $ 7,421
                                                           =======       =======


4. DEBT AND LEASE COMMITMENTS

   Lines of Credit

     The  Company  maintains a revolving  line of credit  under a master  credit
agreement with a bank. The master credit agreement  contains  certain  financial
covenants  and  certain  restrictions  on  other  indebtedness  and  payment  of
dividends.  The line of credit,  secured by a majority of the Company's  assets,
expires on  December 1, 1998,  bears  interest  at the bank's  prime  rate,  and
provides for  borrowings  and letters of credit  aggregating  up to  $10,000,000
based on a specified percentage of eligible accounts receivable. As of March 31,
1998,  the Company was in compliance  with all but its  quarterly  profitability
financial covenant for which the Company has received a waiver from its bank. As
of March 31,  1998,  the Company had  $10,000,000  available  under this line of
credit with no borrowings outstanding.

                                       F-9

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

   Equipment and Real Estate Loans

     In January 1997, the Company borrowed $6,000,000 secured by certain capital
equipment.  Under the terms of the agreement,  the Company is required to make a
series of uneven monthly  principal  payments  through January 2002 ranging from
$42,000 to $136,000,  plus  interest at a rate equal to the  Treasury  Rate plus
2.75%, and must maintain  certain minimum working  capital,  net worth and other
specific ratios for which the Company was in compliance as of March 31, 1998.

     In March 1997,  through means of a limited  liability  company in which the
Company is a majority owner, the Company purchased a 39,000 square foot building
and  secured a real estate  loan with an  institutional  lender in the amount of
$3,200,000 of which  $2,917,000  was received by the Company in fiscal 1997. The
loan has an initial maturity date of April 2002 with an option to be extended to
April 2007.  The Company  makes  monthly  payments of principal  and interest in
equal  amounts  which are  amortized  over two  hundred  forty  months  with the
remaining  principal  balance due on the maturity  date.  The interest rate is a
variable interest rate set at the LIBOR rate plus 3.25%.

     Future  minimum debt  principal  payments under these loans as of March 31,
1998  aggregated   $7,272,000  including   $1,360,000,   $1,300,000,   $889,000,
$1,472,000,  and $178,000 for the fiscal years 1999,  2000, 2001, 2002 and 2003,
respectively, and $2,073,000, thereafter.

   Lease Commitments

     During fiscal 1997, the Company sold its principal  facilities in Sunnyvale
for  $16,414,000,  and  leased the  facilities  back under a lease that has been
classified  as an operating  lease.  The lease  expires in November 2011 and the
quarterly  rent payments are subject to Consumer  Price Index  adjustments  on a
tri-annual basis beginning in November 1999.

     In 1998, the Company entered into operating  leases for an ancillary 40,000
square foot  manufacturing  facility in Rocklin,  California  and a 7,750 square
foot engineering design center in Quincy,  Illinois.  The Rocklin facility has a
sixty-two  month lease term  commencing  in June 1998 and expiring in July 2003.
The Quincy lease has a twelve-month lease term and expires in March 1999.

     The  Company   leases  these   facilities  and  certain   equipment   under
noncancelable  operating  leases.  Future  minimum  lease  payments  under these
noncancelable  operating  leases as of March  31,  1998  aggregated  $26,494,000
including $2,202,000,  $2,317,000, $2,317,000, $2,311,000 and $2,310,000 for the
fiscal years 1999,  2000,  2001, 2002 and 2003,  respectively  and  $15,037,000,
thereafter.  Rent expense was approximately  $2,530,000,  $819,000, and $778,000
for the years ended March 31, 1998, 1997 and 1996, respectively.


5. STOCKHOLDERS' EQUITY

   Reincorporation

     On September 11, 1997,  the Company's  shareholders  approved the Company's
reincorporation  in the state of Delaware,  providing for 20,000,000  authorized
shares of Common Stock and 5,000,000  authorized shares of Preferred Stock, both
with par values of $.001 per share. On October 3, 1997, the  reincorporation  in
the state of Delaware was effected.  The accompanying  financial statements have
been restated to give effect to the reincorporation.

   Preferred Stock

     The Board of Directors has the authority to issue up to 5,000,000 shares of
undesignated preferred stock and to determine the powers, preferences and rights
and the qualifications,  limitations or restrictions  granted to or imposed upon
any wholly unissued shares of undesignated preferred stock and to fix the

                                      F-10

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

number of shares  constituting  any series and the  designation  of such series,
without any further vote or action by the Company's  stockholders.  The Board of
Directors  has  designated   20,000  shares  of  preferred  stock  as  Series  A
Participating Preferred Stock, although none of such shares have been issued.

   Public Offering

     On August 20, 1997,  the Company  completed a public  offering of 2,000,000
shares of common stock and received net proceeds of $85,031,000.

   Stock Option Plans

     The Company has adopted  stock option  plans,  (the  "Plans"),  pursuant to
which the  Company's  Board of  Directors  may grant  stock  options to selected
employees, directors, officers and consultants of the Company. Stock options are
generally  granted with an exercise  price equal to the fair market value of the
Company's stock at the date of grant.  The options  generally have 10-year terms
and vest 25%  after one year from the  grant  date  with the  remaining  options
vesting pro rata over the following 36 months.

     A total of 186,380  shares of Common Stock have been  reserved for issuance
under the 1992 Stock Plan as of March 31, 1998.  Under the 1994 Director  Option
Plan, 25,000 shares were granted during fiscal 1998, and 35,000 shares of Common
Stock were reserved for issuance as of March 31, 1998.

     Outside of the 1992  Stock  Plan and the 1994  Director  Option  Plan,  two
officers  and one  employee  of the  Company  were  granted a combined  total of
390,000  options  during fiscal 1997, at exercise  prices  ranging from $9.50 to
$14.50,  which are subject to the same vesting schedule as that of the Company's
1992 Stock Plan. In fiscal 1998,  one officer and two  employees  were granted a
combined total of 90,000 options outside of the Plans at exercise prices ranging
from $16.88 to $56.38, which are subject to the same vesting schedule as that of
the 1992 Stock Plan.

     In January 1998 the Company adopted the 1998 Nonstatutory Stock Option Plan
under which 400,000 shares were  reserved.  Under this plan,  certain  employees
were granted  stock options with  exercise  prices  ranging from $6.59 to $16.36
that were below the $17.25  fair  market  value of the stock on the day of grant
and were subject to a six-month vesting schedule. Stock compensation of $609,000
was recorded for these options in the fourth  quarter of fiscal 1998. A total of
226,312 shares were reserved for issuance as of March 31, 1998.

                                      F-11

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     The following table summarizes  option activity under the Company's various
plans:


                                                                        Weighted
                                                                         Average
                                            Available for               Exercise
                                                Grant       Options      Price
                                             ----------    ----------    ------
Outstanding as of March 31, 1995 ..........   1,263,728     1,625,942    $ 4.34
   Granted ................................    (444,743)      444,743     23.98
   Exercised ..............................        --        (761,791)     1.52
   Canceled ...............................     372,306      (372,306)     4.13
                                             ----------    ----------    ------
Outstanding as of March 31, 1996 ..........   1,191,291       936,588     16.03
   Additional shares reserved .............     390,000          --        --
   Granted at fair market value ...........  (1,790,746)    1,790,746     14.91
   Granted in excess of fair market value .    (250,000)      250,000     14.50
   Exercised ..............................        --        (114,671)     2.50
   Canceled ...............................   1,124,874    (1,124,874)    19.69
                                             ----------    ----------    ------
Outstanding as of March 31, 1997 ..........     665,419     1,726,753    $13.18
Additional shares reserved ................     500,000          --        --
   Granted ................................    (855,755)      855,755     25.91
   Exercised ..............................        --        (431,511)    12.87
   Canceled ...............................     138,028      (138,028)    17.45
                                             ----------    ----------    ------
Outstanding as of March 31, 1998 ..........     447,692     2,024,005    $18.34
                                             ==========    ==========    ======


     Using  the  Black-Scholes  Option-Pricing  Model,  the per  share  weighted
average fair market value of stock options  granted  during fiscal 1998,  fiscal
1997 and fiscal 1996 were $18.34, $9.41 and $17.69, respectively, on the date of
grant.  Assumptions  used with the  Black-Scholes  Option-Pricing  Model were as
follows:  for  fiscal  1998,  a  stock  price  volatility  of 83%,  no  expected
dividends,  an average  risk-free  interest rate of 5.6% and an average expected
option  term of 4.5 years;  and for both fiscal  1997 and fiscal  1996,  a stock
price volatility of 80%, no expected  dividends,  an average risk-free  interest
rate of 6.0% and an average expected option term of 4.3 years.

                                      F-12

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

<TABLE>
     The following tables summarize  information about stock options outstanding
at March 31, 1998:

<CAPTION>
                                       Weighted
                                       Average       Weighted                      Weighted
                        Number        Remaining       Average        Number        Average
   Range of          Outstanding     Contractual     Exercise     Exercisable      Exercise
Exercise Prices        Options           Life          Price        Options         Price
-----------------   -------------   -------------   ----------   -------------   -----------
<S>                     <C>               <C>        <C>             <C>          <C>     
$ 0.20 -  6.59          149,402           8.6        $   5.46        38,957       $   2.28
  7.00 -  9.50          337,380           8.6            9.37       109,375           9.12
 10.00 - 14.38          219,540           9.0           14.04        44,327          13.85
 14.50 - 14.50          606,890           7.9           14.50       243,140          14.50
 16.25 - 21.25          294,593           9.6           18.52        12,549          18.92
 21.38 - 43.31          295,000           8.9           31.13        43,751          22.86
 43.50 - 64.13          121,200           9.5           54.60           --             --
                      ---------                                     -------
                      2,024,005           8.7        $  18.34       492,099       $  13.13
                      =========                                     =======
</TABLE>

   Employee Stock Purchase Plan

     In May 1994,  the  Board of  Directors  approved  the 1994  Employee  Stock
Purchase  Plan (the  "Purchase  Plan")  which  permitted  eligible  employees to
purchase the Company's  Common Stock through  payroll  deductions.  The Purchase
Plan consisted of consecutive and overlapping  24-month offering  periods,  each
divided into four 6-month purchase periods.  The purchase price of the shares in
the  Purchase  Plan was 85% of the lower of the fair market  value of the Common
Stock  at the  beginning  of the  offering  period  or the end of each  purchase
period.  The  Company  reserved  a total of 475,000  shares of common  stock for
issuance  under this plan,  of which no  remaining  shares of Common  Stock were
available  for  issuance as of March 31,  1998.  During the year ended March 31,
1998,  there were 207,377  shares  acquired under the Purchase Plan at per share
prices ranging from $6.59 to $16.36.

     Under SFAS No. 123, pro forma  compensation cost is calculated for the fair
market value of the employees'  purchase rights.  The per share weighted average
fair market value of those purchase  rights granted in fiscal 1998,  fiscal 1997
and  fiscal  1996,   respectively,   was  $4.32,  $5.14  and  $6.54,  using  the
Black-Scholes  Option-Pricing Model with the following  assumptions:  for fiscal
1998, a stock price volatility of 83%, no expected dividends, risk free interest
rate of 5.6% and an expected  term of 0.5 years;  for fiscal 1997, a stock price
volatility of 80%, no expected dividends,  a risk free interest rate of 6.0% and
an expected term of 0.9 years;  and for fiscal 1996, a stock price volatility of
80%, no expected  dividends,  a risk free  interest rate of 6.0% and an expected
term of 0.8 years.

   Pro Forma Fair Value Information

<TABLE>
     The  Company  accounts  for its stock  options  using the  intrinsic  value
method. Had the Company determined  compensation cost based on the fair value at
the grant date for its stock  options  under SFAS No.  123,  the  Company's  net
income (loss) and related per share amounts would have been altered as indicated
in the pro forma amounts indicated below:

<CAPTION>
                                                      1998                1997               1996
                                               -----------------   -----------------   ----------------
<S>                                              <C>                 <C>                 <C>         
Net income (loss) ..........   As reported       $   8,922,000       $  (3,991,000)      $  5,480,000
                               Pro forma         $  (1,870,000)      $  (8,018,000)      $  2,339,000
Net income (loss) per share:
   Basic ...................   As reported       $        0.90       $       (0.49)      $       0.71
                               Pro forma         $       (0.19)      $       (0.98)      $       0.30
   Diluted .................   As reported       $        0.83       $       (0.49)      $       0.66
                               Pro forma         $       (0.19)      $       (0.98)      $       0.28
</TABLE>

                                                  F-13

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     Pro forma net income  (loss)  reflects  only the options  granted in fiscal
1998, 1997 and 1996. Therefore, the full impact of calculating compensation cost
for stock  options  under  SFAS No.  123 is not  reflected  in the pro forma net
income (loss) amounts  presented  above because  compensation  cost is reflected
over the options' vesting period of four years and compensation cost for options
granted prior to April 1, 1995 is not considered.


6. INCOME TAXES

     Income  tax  expense  for the years  ended  March 31,  1998,  1997 and 1996
differs from the amount  computed by applying the federal income tax rate of 34%
to  pretax  income  (loss)  from  operations  as a result of the  following  (in
thousands):


                                                       Year ended March 31,
                                                  -----------------------------
                                                   1998       1997       1996
                                                  -------    -------    -------
        Federal tax (benefit) at statutory rate   $ 3,189    $(1,357)   $ 1,921
        Utilization of net operating loss
         carryforwards ........................    (3,314)      --       (1,921)
        Unutilized net operating losses .......      --        1,337       --
        Alternative minimum tax ...............       183       --          169
        FSC tax expense .......................       215       --         --
        Unrealized benefit from LLC loss ......        44       --         --
        Other .................................        82         20       --
                                                  -------    -------    -------
        Income tax expense ....................   $   399    $  --      $   169
                                                  =======    =======    =======


     The Company is entitled to a deduction  for federal and state tax  purposes
with respect to employees' early  disposition of stock acquired through employee
stock options.  The net reduction in taxes  otherwise  payable arising from that
deduction has been credited to Common Stock.

     The tax  effects of  temporary  differences  that give rise to  significant
portions of the  deferred tax assets and  liabilities  are  presented  below (in
thousands):


                                                                March 31,
                                                         ----------------------
                                                           1998          1997
                                                         --------      --------
         Deferred tax assets:
            Various accruals and reserves ...........    $  6,999      $  2,921
            Net operating loss carryforwards ........       7,986        10,266
            Credit carryforwards ....................       6,604         4,721
                                                         --------      --------
               Total gross deferred tax assets ......      21,589        17,908
               Less valuation allowance .............     (20,642)      (17,313)
                                                         --------      --------
               Net deferred tax assets ..............    $    947      $    595
                                                         ========      ========
         Deferred tax liabilities:
            Property and equipment depreciation
             differences ............................    $   (947)     $   (595)
                                                         --------      --------
               Total gross deferred tax liabilities..        (947)         (595)
                                                         --------      --------
               Net deferred tax assets ..............    $   --            --
                                                         ========      ========


     A valuation  allowance  is provided  due to  uncertainties  relating to the
realization of deferred tax assets.

     As of March 31, 1998, the Company has a net operating loss  carryforward of
$23 million for federal  income tax  purposes.  The Company has research  credit
carryforwards of approximately $2 million and

                                      F-14

<PAGE>


                     SPECTRIAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

$1.9 million for federal and California  income tax purposes,  respectively.  If
not utilized,  these  carryforwards  will expire in various amounts beginning in
1999.   The  Company  also  has  an  investment  tax  credit   carryforward   of
approximately  $2.3 million for  California  income tax purposes  which,  if not
utilized,  will expire in 2004 through 2006. Included in the deferred tax assets
is approximately  $13.3 million of assets relating to the tax benefit associated
with stock option exercises which will be credited to equity when realized.


7. MAJOR CUSTOMERS

     The  following  table  summarizes  the annual  percentage  contribution  to
revenues by customers when sales to such customers exceeded 10% of such revenues
in fiscal  1998,  1997 and 1996,  and the amounts due from these  customers as a
percentage of total accounts receivable as of March 31, 1998 and 1997, follows:


                                                  Percentage of
                                                  Total Accounts
                                                   Receivable
                        Percentage of Revenues         as of
                         Year Ended March 31,       March 31,
                       ------------------------   --------------
                        1998     1997     1996     1998     1997
                       ------   ------   ------   ------   -----
  Customer A .........  57%      63%      58%       41%      51%
  Customer B .........  22%      12%      17%       33%      27%
  Customer C .........  14%      --       --         8%      --


     Customers  A,  B  and  C are major companies in the wireless infrastructure
equipment industry. Company A has an equity investment in Company B.

     Export sales as a percentage of revenues were as follows:


                              Year ended March 31,
                            -------------------------
                             1998     1997      1998
                            ------   ------   -------
  Canada ................    49%       57%       51%
  Europe ................    20%       13%       20%
  Korea .................    26%        2%       --
  Other .................    --         1%        1%
                             --        --        --
  Total exports .........    95%       73%       72%
                             ==        ==        ==

8. LITIGATION

     Since December 23, 1997, a number of complaints have been filed against the
Company  and  certain of its  officers  in the  Federal  Court for the  Northern
District of California that allege  violations of the federal  securities  laws.
Similar  complaints  have been  filed in  California  state  court  that  allege
violations of California  state  securities laws and California  common law. The
complaints have been consolidated in the federal and state courts, respectively.
The  plaintiffs  in both the federal and state  lawsuits  purport to represent a
class of persons who  purchased the  Company's  securities  during the period of
July 17, 1997 through  October 23, 1997. The complaints  allege that the Company
and certain of its officers misled the investing  public regarding the financial
prospects  of the  Company.  The  Company  believes  that  the  allegations  are
completely without merit and will vigorously defend itself.

                                      F-15

<PAGE>


                                   SCHEDULE II


                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                 (in thousands)


                             Balance at   Additions                  Balance at
    Allowance for Doubtful    Beginning   Charged to                  End of
 Accounts and Sales Returns:  of Period     Income     Deductions     Period
 ---------------------------  ---------     ------     ----------     ------
          1998                  $365        $ 24          $ 13          $376
          1997                  $339        $ 36          $ 10          $365
          1996                  $454        $ 14          $129          $339

                                       S-1

<PAGE>

                                INDEX TO EXHIBITS


                                                                    Sequentially
  Exhibits                                                         Numbered Page
  --------                                                         -------------
    3.1(4)        Restated   Articles  of  Incorporation  of
                  Registrant.
    3.4(1)        Bylaws of Registrant.
    3.5(14)       Certificate    of     Incorporation     of
                  Registrants.
    3.6(15)       Bylaws of Registrant.
    4.1(11)       Amended  and  Restated   Preferred  Shares
                  Rights  Agreement  of  January  15,  1997,
                  between  the  Registrant  and  ChaseMellon
                  Shareholder Services,  L.L.C., as amended,
                  including  the form of Rights  Certificate
                  and the Certificate of Determination,  the
                  Summary  of  Rights  attached  thereto  as
                  Exhibits A, B and C, respectively.
    4.1.1(11)     Letter Agreement to amend Preferred Shares
                  Rights  Agreement  dated as of January 15,
                  1997  between  the   Registrant  and  Kopp
                  Investment Advisors, Inc.
   10.1(1)        Form  of  Indemnification  Agreement  with
                  directors and officers.
   10.2(8)        1992 Stock Plan, as amended.
   10.3(8)        1994  Employee  Stock  Purchase  Plan,  as
                  amended, and form of agreement thereunder.
   10.4(8)        1994  Director  Option  Plan  and  form of
                  agreement thereunder.
   10.5(1)        Amended and Restated  Registration  Rights
                  Agreement  dated as of  August  9, 1993 by
                  and   among    Registrant    and   certain
                  individuals and entities named therein.
   10.6.1(1)      Lease between  Registrant and Portola Land
                  Company dated March 28, 1984, as amended.
   10.6.2(1)      Lease between  Registrant and 465 Mountain
                  View Properties Incorporated dated May 15,
                  1990, as amended.
   10.6.3(1)      Standard Industrial  Lease-Multiple-Tenant
                  between  American  Microwave   Technology,
                  Inc. and Enterprise  Business  Center-Brea
                  dated December 19, 1990.
   10.7.1(1)      Business Loan Agreement between Registrant
                  and  Silicon  Valley  Bank  dated  May 21,
                  1992, as amended,  and ancillary documents
                  thereto.
   10.7.2(1)      Amendment  to  Business   Loan   Agreement
                  between Registrant and Silicon Valley Bank
                  dated June 27, 1994.
   10.7.3(14)     Amended   and   Restated   Business   Loan
                  Agreement  between  Registrant and Silicon
                  Valley  Bank dated  February  11, 1997 and
                  ancillary documents thereto.
   10.8+(1)       Supply  Agreement  between  Registrant and
                  Northern Telecom Canada Limited dated July
                  16, 1993.
   10.9+(1)       Agreement  between  Registrant  and  Matra
                  Communication dated March 24, 1993.
   10.10.1+(1)    Agreement among Registrant and Ericsson GE
                  Mobile   Communications,   Inc.,  Ericsson
                  Radio   Access   AB,    Ericsson    Mobile
                  Communications   AB  and  Ericsson   Radio
                  Systems   AB   dated    July   21,    1993
                  (collectively "Ericsson").
   10.10.2+(1)    Addendum to Agreement among Registrant and
                  Ericsson dated June 29, 1994.
   10.10.3+(1)    Addendum to Agreement among Registrant and
                  Ericsson dated June 29, 1994.
   10.11+(2)      Hardware Development  Agreement dated July
                  6, 1994 between  Northern  Telecom Limited
                  and Registrant.
   10.12+(3)      Hardware   Development   Agreement   dated
                  October 18, 1994 between  Northern Telecom
                  Limited and Registrant.
   10.13+(4)      Hardware  Supply  Agreement dated April 6,
                  1995 between  Northern Telecom Limited and
                  Registrant
   10.14(4)       Employment Agreement dated January 6, 1992
                  between Registrant and C. Woodrow Rea, Jr.
   10.15(4)       Employment Agreement dated January 6, 1992
                  between Registrant and David S. Wisherd.
   10.16(5)       Purchase   and  Sale   Agreement   between
                  Metropolitan  Life  Insurance  Company and
                  Registrant.


<PAGE>


                                                                    Sequentially
  Exhibits                                                         Numbered Page
  --------                                                         -------------
   10.17+(6)      Development and Supply  Agreement  between
                  QUALCOMM Incorporated and Registrant.
   10.18+(7)      Purchasing    Agreement   between   Airnet
                  Communications Corporation and Registrant.
   10.19(8)       Employment  Agreement  between  Garrett A.
                  Garrettson and Registrant.
   10.20(8)       Employment  Agreement  between  Stephen B.
                  Greenspan and Registrant.
   10.21(9)       Term Loan Agreement between Silicon Valley
                  Bank and Registrant
   10.22(10)      Lease  Agreement  dated  November 19, 1996
                  between the  Registrant  and SPEC (CA) QRS
                  12-20, Inc.
   10.23(10)      Bill of Sale dated  November  19,  1996 by
                  the  Registrant  to SPEC  (CA) QRS  12-20,
                  Inc.
   10.24(12)      Employment  Agreement dated March 11, 1997
                  between  the   Registrant   and  Bruce  R.
                  Wright.
   10.25(12)      Letter  Agreement  dated  November 6, 1996
                  between the Company and Edward Supplee.
   10.26(13)      Stock Option  Agreement dated November 26,
                  1997  between  Registrant  and  Garrett A.
                  Garrettson.
   10.27(13)      Stock Option  Agreement dated November 26,
                  1997  between  Registrant  and  Garrett A.
                  Garrettson.
   10.28(13)      Stock Option  Agreement dated November 26,
                  1997  between  Registrant  and  Garrett A.
                  Garrettson.
   10.29(13)      Stock  Option  Agreement  dated  March 24,
                  1997 between Registrant and Bruce Wright.
   10.30(13)      Stock  Option  Agreement  dated  March 20,
                  1997   between   Registrant   and  Michael
                  Morrione.
   10.31(13)      Stock  Option  Agreement  dated  March 20,
                  1997  between  Registrant  and  Stephen B.
                  Greenspan.
   10.32(15)      Form  of  Indemnification  Agreement  with
                  directors and officers.
   10.33(16)      1998 Nonstatutory Stock Option Plan.
   10.34          1998 Employee Stock Purchase Plan.
   10.35          Lease  Agreement  dated  December 19, 1997
                  between  Registrant  and Stanford Ranch I,
                  LLC.
   10.36(17)      Stock Option  Agreement dated December 15,
                  1997  between  the   Registrant  and  John
                  Rottenburg.
   10.37          First  Amendment  to Lease dated  February
                  19, 1998 between  Registrant  and Stanford
                  Ranch I, LLC.
   23.1           Consent of KPMG Peat Marwick LLP.
   24.1           Power of Attorney (included on page 41).
   27.1           Financial Data Schedule.

------------
  +  Confidential  treatment  has been  requested  or  granted  with  respect to
     certain  portions  of  this  exhibit.  Omitted  portions  have  been  filed
     separately with the Securities and Exchange Commission.
 (1) Incorporated by reference to the  Registration  Statement on Form S-1 (File
     No.  33-70594)  as  declared  effective  by  the  Securities  and  Exchange
     Commission December 13, 1993.
 (2) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for quarter ended October 1, 1994.
 (3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for quarter ended December 31, 1994.
 (4) Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for fiscal year ended March 31, 1995.
 (5) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended July 1, 1995.
 (6) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 1995.
 (7) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended December 30, 1995.
 (8) Incorporated   by  reference  to  exhibits  filed  with  the   Registrant's
     Registration  Statement on Form S-8 (File No.  333-38561) as filed with the
     Securities and Exchange Commission on October 23, 1997.


<PAGE>


 (9) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended June 29, 1996.
(10) Incorporated by reference to the  Registrant's  Form 8-K dated November 19,
     1996.
(11) Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form 8-A (File No. 000-24360) as filed with the Securities and
     Exchange Commission on January 17, 1997.
(12) Incorporated by reference to exhibits filed with Registrant's Annual Report
     on Form 10-K for the year ended March 31, 1997.
(13) Incorporated   by   reference   to   exhibits   filed   with   Registrant's
     Post-Effective  Amendment No. 1 to the  Registration  Statement on Form S-8
     (File No.  333-25435) as filed with the Securities and Exchange  Commission
     on October 21, 1997.
(14) Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 1997.
(15) Incorporated  by  reference  to exhibits  filed with  Registrant's  Current
     Report on Form 8-K dated October 10, 1997.
(16) Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S-8 (File No. 333-49081) as filed with the Securities and
     Exchange Commission on April 1, 1998.
(17) Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement  on Form S-8 (File No.  333- ) as filed with the  Securities  and
     Exchange Commission on May 19, 1998.