================================================================================

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

                                ----------------
                                    FORM 10-Q
                                ----------------

(Mark One)
[ X ]    Quarterly  report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the period ended September 27, 1998

                                       OR

[   ]    Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

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
 incorporation or organization)                           Identification Number)

                               350 West Java Drive
                           Sunnyvale, California 94089
                    (Address of principal executive offices)

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


              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                 
                                ---            ---

As of September 27, 1998 there were 10,447,386 shares of the Registrant's Common
Stock outstanding.

================================================================================

<PAGE>


                              SPECTRIAN CORPORATION

                                    Form 10-Q

                                      INDEX
                                                                            Page
                                                                             No.

Cover Page                                                                    1

Index                                                                         2

PART I - Financial Information

       ITEM 1 - Condensed consolidated financial statements

          Condensed consolidated balance sheets -
             September 27, 1998 and March 31, 1998                            3

          Condensed consolidated statements of operations -
             three months and six months ended September 27, 1998             4
             and September 28, 1997

          Condensed consolidated statements of cash flows -
             six months ended September 27, 1998 and September 28, 1997       5

          Notes to condensed consolidated financial statements                6

       ITEM 2 - Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                       9


       ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk



PART II - Other Information


        ITEM 1 - Legal Proceedings                                            19

        ITEM 6 - Exhibits and Reports on Form 8-K                             20

          Signatures                                                          21

                                       2
<PAGE>

                      SPECTRIAN CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
                                   (unaudited)

                                                        September 27,  March 31,
                                                            1998         1998
                                                         ---------    ---------
Assets

Current assets:
   Cash and cash equivalents                             $  21,611    $  31,460
   Short-term investments                                   54,739       68,128
   Accounts receivable, less allowance for doubtful
      accounts of $382 and $376, respectively               20,840       21,123
   Inventories                                              19,855       15,362
   Prepaid expenses and other current assets                 4,651        6,202
                                                         ---------    ---------
        Total current assets                               121,696      142,275

Property and equipment, net                                 33,561       32,776
                                                         ---------    ---------
                                                         $ 155,257    $ 175,051
                                                         =========    =========

Liabilities and Stockholders' Equity

Current liabilities:
   Current portion of debt obligations                   $   1,178        1,360
   Accounts payable                                          6,256       10,456
   Accrued liabilities                                      11,708       12,981
                                                         ---------    ---------
        Total current liabilities                           19,142       24,797

Debt obligations, net of current portion                     5,368        5,912
                                                         ---------    ---------
        Total liabilities                                   24,510       30,709
                                                         ---------    ---------
Stockholders' equity:
   Common stock,  $0.001 par value,
      20,000,000 shares authorized;
      10,944,586 and 10,904,077
      shares issued, respectively;
      10,447,386 and 10,904,077 shares
      outstanding, respectively.                                10           10
   Additional paid-in capital                              148,201      146,827
   Treasury stock, 497,000 shares of common stock held      (7,418)        --
   Deferred compensation expense                              (519)        (609)
   Other comprehensive income                                  918          121
   Accumulated deficit                                     (10,445)      (2,007)
                                                         ---------    ---------
     Total stockholders' equity                            130,747      144,342
                                                         ---------    ---------
                                                         $ 155,257    $ 175,051
                                                         =========    =========

See accompanying notes to condensed consolidated financial statements.

                                       3

<PAGE>
<TABLE>

                                        SPECTRIAN CORPORATION AND SUBSIDIARY
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (In thousands, except per share data)
                                                    (unaudited)

<CAPTION>
                                                       Three months ended                   Six months ended
                                                  -----------------------------       ----------------------------
                                                   September 27,  September 28,       September 27,  September 28,
                                                       1998          1997                  1998           1997        
                                                       ----          ----                  ----           ----        
<S>                                                  <C>           <C>                  <C>            <C>      
Revenues                                             $ 26,869      $ 48,242             $ 57,653       $ 94,008
                                                     --------      --------             --------       --------
                                                                                                     
Costs and expenses:                                                                                  
     Cost of sales                                     20,629        34,481               48,357         66,532
     Research and developement                          6,549         4,139               12,503          8,380
     Selling, general and  administrative               4,151         3,046                7,627          6,507
                                                     --------      --------             --------       --------
                                                       31,329        41,666               68,487         81,419
                                                     --------      --------             --------       --------
        Operating income (loss)                        (4,460)        6,576              (10,834)        12,589
                                                                                                     
Interest income, net                                    1,262           595                2,396            576
Other income, net                                        --            --                   --            1,530
                                                     --------      --------             --------       --------
Income (loss) before income taxes                      (3,198)        7,171               (8,438)        14,695
Income taxes                                             --             859                 --            1,989
                                                     --------      --------             --------       --------
Net income (loss)                                    $ (3,198)     $  6,312             $ (8,438)      $ 12,706
                                                     ========      ========             ========       ========
Net income (loss) per share                                                                          
        Basic                                        $  (0.30)     $   0.66             $  (0.78)      $   1.42
        Diluted                                      $  (0.30)     $   0.60             $  (0.78)      $   1.30
Shares used in computing per share amounts:                                                          
        Basic                                          10,739         9,502               10,824          8,945
        Diluted                                        10,739        10,603               10,824          9,804
                                                                            
<FN>

See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
                                       4

<PAGE>
<TABLE>

                              SPECTRIAN CORPORATION AND SUBSIDIARY
                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (In thousands)
                                           (unaudited)

<CAPTION>
                                                                      Six months ended
                                                               --------------------------------
                                                               September 27,      September 28,
                                                                   1998               1997
                                                                   ----               ----
<S>                                                               <C>               <C>       
Cash flows from operating activities:
     Net income (loss)                                            $ (8,438)         $ 12,706  
     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                                6,323             3,483
        Loss on disposal of equipment                                  291              --
        Stock compensation expense                                   1,128              --
        Tax benefit associated with stock options                     --               1,379
        Changes in operating assets and liabilities:                               
           Accounts receivable                                         283           (11,445)
           Inventories                                              (4,493)           (6,288)
           Prepaid expenses and other assets                         1,551            (2,428)
           Accounts payable                                         (4,200)            1,397
           Accrued liabilities                                      (1,273)            4,771
                                                                  --------          --------
              Net cash provided by (used for) operating             
               activities                                           (8,828)            2,045
                                                                  --------          --------
                                                                                   
Cash flows from investing activities:                                              
     Purchase of short-term investments                            (33,325)          (80,038)
     Proceeds from sale of short-term investments                   47,512              --
     Purchase of property and equipment                             (7,400)           (7,363)
     Proceeds from sale of subsidiary                                 --               4,016
                                                                  --------          --------
              Net cash provided by (used for) investing              
               activities                                            6,787           (83,385)
                                                                  --------          --------
                                                                                   
Cash flows from financing activities:                                              
     Repayment of debt and capital lease obligations                  (726)             (831)
     Repurchase of common stock                                     (7,418)             --
     Proceeds from sales of common stock, net                          336            90,409
                                                                  --------          --------
             Net cash provided by (used for) financing              
              activities                                            (7,808)           89,578
                                                                  --------          --------
                                                                                   
             Net increase (decrease) in cash and cash               
              equivalents                                           (9,849)            8,238               
             Cash and cash equivalents, beginning of period         31,460             6,240
                                                                  ========          ========
             Cash and cash equivalents, end of period             $ 21,611          $ 14,478
                                                                  ========          ========
<FN>
                                                                             
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
                                               5
<PAGE>


                      SPECTRIAN CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1: Basis of Presentation

         The accompanying  financial statements have been prepared in conformity
with generally accepted accounting principles.  However,  certain information or
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  In the  opinion  of the  management,  the  statements  include  all
adjustments  (which are of a normal and recurring nature) necessary for the fair
presentation  of the financial  information  set forth therein.  These financial
statements  should be read in conjunction with the Company's  audited  condensed
consolidated  financial statements as set forth on pages F-1 through F-15 of the
Company's  Annual Report on Form 10-K for fiscal year ended March 31, 1998.  The
interim results  presented herein are not necessarily  indicative of the results
of  operations  that may be expected  for the full fiscal year ending  March 31,
1999, or any other future period.

NOTE 2: Balance Sheet Components

Balance sheet components are as follows:

                                                September 27,      March 31,
                                                    1998             1998
                                               ---------------- ----------------
                                                        (In thousands)
Inventories:
   Raw materials                                  $ 8,714           $ 7,395
   Work in progress                                 7,650             5,538
   Finished goods                                   3,491             2,429
                                                  -------           -------
                                                  $19,855           $15,362
                                                  =======           =======
Property and equipment:
   Machinery and equipment                        $57,758           $51,091
   Land, building and improvements                  2,768             2,829
   Furniture and fixtures                           1,420             1,382
   Leasehold improvements                           1,870             1,633
                                                  -------           -------
                                                   63,816            56,935
   Less accumulated depreciation and
      amortization                                 30,255            24,159
                                                  -------           -------
                                                  $33,561           $32,776
                                                  =======           =======
Accrued liabilities:
   Employee compensation and benefits             $ 3,320           $ 2,958
   Warranty                                         5,427             7,326
   Other accrued liabilities                        2,961             2,697
                                                  -------           -------
                                                  $11,708           $12,981
                                                  =======           =======


                                        6
<PAGE>

NOTE 3: Recent Accounting Pronouncements

         In June 1997, the Financial  Accounting Standards Board issued SFAS No.
130,  Reporting  Comprehensive  Income.  SFAS No. 130  establishes  standards of
reporting and display of  comprehensive  income and its components of net income
and "other  comprehensive  income" in a full set of  general  purpose  financial
statements. "Other comprehensive income" refers to revenues, expenses, gains and
losses that are not included in net income but rather are  recorded  directly in
stockholders'  equity in accordance  with SFAS No. 115,  Accounting  for Certain
Debt and Equity  Securities.  SFAS No. 130 is  effective  for annual and interim
periods beginning after December 15, 1997 and for periods ended before that date
when presented for comparative purposes.  The Company has not yet determined the
format it will use to display  the  information  required by SFAS No. 130 in the
financial   statements  for  the  fiscal  year  ending  March  31,  1999.  Other
comprehensive  income  consists of  unrealized  gains and losses  related to the
Company's available-for-sale investments.

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities.  SFAS No. 133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including   certain   derivative   instruments   embedded  in  other  contracts,
(collectively  referred  to as  derivatives)  and  for  hedging  activities.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities in the statement of financial position and measure those instruments
at fair value.  The  accounting  for  changes in the fair value of a  derivative
(that is, gains and losses)  depends on the intended use of the  derivative  and
the  resulting  designation.  Under SFAS No. 133, an entity that elects to apply
hedge  accounting  is required to  establish  at the  inception of the hedge the
method it will use for assessing the effectiveness of the hedging derivative and
the measurement  approach for  determining the ineffective  aspect of the hedge.
Those methods must be consistent  with the entity's  approach to managing  risk.
The Company has not yet  determined  the impact of SFAS No. 133 on its financial
condition or results of operations.

NOTE 4: Short Term Investments

         The Company has classified its  investments in certain debt  securities
as  "available-for-sale."  Such  investments  are recorded 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.

         As of September 27, and March 31, 1998, cash equivalents and short-term
investments classified as available-for-sale securities were as follows:

                                                September 27,     March 31,
                                                    1998            1998
                                               ---------------- --------------
                                                       (In thousands)

   Commercial paper                                   $ 54,761       $ 63,341
   U.S. government securities                           18,527         28,158
                                               ---------------- --------------
                                                      $ 73,288       $ 91,499
                                               ================ ==============

         As of September 27, and March 31, 1998 the estimated fair value of each
investment  approximated  the  amortized  cost  and,  therefore,  there  were no
significant  unrealized gains or losses. At September 27, and March 31, 1998 all
securities held were due in less than one year and were classified as follows:


                                                September 27,     March 31,
                                                    1998            1998
                                               ---------------- --------------
                                                       (In thousands)

   Cash equivalents                                    $18,549       $ 23,371
   Short-term investments                               54,739         68,128
                                               ---------------- --------------
                                                       $73,288       $ 91,499
                                               ================ ==============

                                       7
<PAGE>

NOTE 5: Earnings Per Share Computation

         Basic  earnings  per  share  ("EPS")  excludes   potentially   dilutive
securities  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 potentially dilutive securities and is computed by
dividing net income  available to common  stockholders  by 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 three months and six months ended  September 27, 1998,  common
equivalent  shares were not included for the  calculation of diluted EPS as they
were considered antidilutive due to the net loss the Company experienced in that
period.  The  Company's  earnings  per share for the three months and six months
ended September 28, 1997 have been restated to reflect net income (loss) on both
a basic and a diluted basis.

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

(In thousands except per share data)
<CAPTION>

                                       Three months ended          Three months ended
                                       September 27, 1998          September 28, 1997
                                ----------------------------- --------------------------
                                  Net               Per Share   Net             Per Share
                                  Loss      Shares   Amount    Income    Shares  Amount
                                ----------------------------- --------------------------
<S>                             <C>         <C>      <C>      <C>         <C>     <C>  
Basic EPS                       $(3,198)    10,739   $(0.30)  $ 6,312     9,502   $0.66
Effect of dilutive securities      --         --      --         --       1,101    --
                                ----------------------------- --------------------------
Diluted EPS                     $(3,198)    10,739   $(0.30)  $ 6,312    10,603   $0.60
                                ============================= ==========================


                                       Six months ended            Six months ended
                                      September 27, 1998          September 28, 1997
                                ----------------------------- --------------------------
                                   Net              Per Share   Net             Per Share
                                  Loss      Shares   Amount    Income   Shares   Amount
                                ----------------------------- --------------------------
Basic EPS                       $(8,438)    10,824   $(0.78)  $12,706     8,945   $1.42
Effect of dilutive securities      --         --      --         --         859    --
                                ----------------------------- --------------------------
Diluted EPS                     $(8,438)    10,824   $(0.78)  $12,706     9,804   $1.30
                                ============================= ==========================
</TABLE>

NOTE 6: 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 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.

                                       8
<PAGE>

                      SPECTRIAN CORPORATION AND SUBSIDIARY

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations



         Certain  statements  in this  "Management  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  outsourcing  and in the second
paragraph of  "Overview"  regarding  customer  orders and the impact of currency
fluctuations  on future  revenues;  the statements  under  "Revenues"  regarding
future revenue growth; the statements in the last paragraph under "Liquidity and
Capital Resources"  regarding the anticipated  spending for capital additions in
fiscal 1999 and beyond, and the sufficiency of the Company's available resources
to meet working capital and capital expenditure requirement;  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 those
expressed  in  such  forward  looking  statements,  including  those  risks  and
uncertainties  set  forth  below  under  "Factors   Affecting  Future  Operating
Results."

Overview

         The Company  designs,  manufactures  and markets  highly  linear single
carrier and multicarrier  radio frequency ("RF") power amplifiers that support a
broad range of worldwide  analog and digital wireless  transmissions  standards,
including  AMPS,  TDMA,  CDMA 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 Limited
("Northern  Telecom").  Prior to the third  quarter of fiscal 1998,  the Company
pursued a strategy of vertical  integration in both its design and manufacturing
processes. During the third quarter of fiscal 1998 the Company began outsourcing
some of its higher  volume  printed  circuit board  sub-assemblies  on a turnkey
basis.  During  the second  quarter  of fiscal  1999,  the  Company  also made a
decision to outsource  its higher volume  single  channel power  amplifiers on a
turnkey basis from an offshore manufacturer and the Company anticipates that the
first outsourced  amplifier units will be shipped in the third quarter of fiscal
1999. The Company  anticipates that this change in  manufacturing  strategy will
eventually have a favorable  effect on its variable  versus fixed  manufacturing
cost  ratio.  However,  there can be no  guarantee  that the  shift to  offshore
turnkey  manufacturing  will  have a  favorable  effect on the  Company's  gross
margins.  In  fact,  the  Company  continues  to  operate  its own 4 inch  wafer
fabrication  facility  and  inherent  in that  facility is a high level of fixed
costs. As a result,  the Company is still dependent upon substantial  revenue to
achieve  profitability.  In the first and second quarters of fiscal 1999, 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 first and second quarters of fiscal 1999
and 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 and GSM  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.  Based on the above
factors,  the Company  anticipates  lower product  revenues over the next two to
three  quarters as  compared to the first three  quarters of fiscal 1998 and the
Company  anticipates  that  revenues  for fiscal  1999 will likely be lower than
revenues for fiscal 1998.

         During the six months  ended  September  27,  1998,  Northern  Telecom,
QUALCOMM  Incorporated   ("QUALCOMM"),   Nortel  Matra  Communications  ("Nortel
Matra"), an affiliate of Northern Telecom, and LG Information and Communications
Limited ("LGIC")  accounted for approximately 66%, 11%, 11% and 10% of revenues,
respectively.  During  fiscal  1998,  Northern  Telecom,  Nortel  Matra and LGIC
accounted  for  approximately  57%, 22% and 14% of revenues,  respectively.  The
Company's  business,  financial  condition and results of  operations 

                                       9
<PAGE>
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. 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.

         The  Company's  vertical  integration  strategy  in  its  semiconductor
operations  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  sells some of 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 some of the product business received 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
<TABLE>

         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 gross margin on sales.

<CAPTION>
                                               Three months ended           Six months ended
                                          September 27, September 28,  September 27,  September 28,
                                             1998           1997           1998            1997
                                             ----           ----           ----            ----
<S>                                         <C>             <C>            <C>             <C>   
Revenues                                    100.0%          100.0%         100.0%          100.0%
                                           -----------------------     --------------------------
Costs and expenses:                                                                       
  Cost of sales                              76.8            71.5           83.9            70.8
  Research and development                   24.4             8.6           21.7             8.9
  Selling, general and administrative        15.4             6.3           13.2             6.9
                                           -----------------------     --------------------------
    Total costs and expenses                116.6            86.4          118.8            86.6
                                           -----------------------     --------------------------
    Operating income (loss)                 (16.6)           13.6          (18.8)           13.4
                                           -----------------------     --------------------------
Interest income (expense), net                4.7             1.3            4.2             0.6
Other income                                  --              --             --              1.6
                                           -----------------------     --------------------------
  Income (loss) before income taxes         (11.9)           14.9          (14.6)           15.6
                                           -----------------------     --------------------------
Income taxes                                  --              1.8            --              2.1
                                           -----------------------     --------------------------
    Net income (loss)                       (11.9)%          13.1%         (14.6)%          13.5%
                                           =======================     ==========================
Gross margin on sales                        23.2%           28.5%          16.1%           29.2%
</TABLE>                                                            
                                                                              
         Revenues.  The Company's revenues decreased by 44% to $26.9 million for
the three  months  ended  September  27,  1998 from $48.2  million for the three
months ended  September 28, 1997.  The decrease in revenues for

                                       10
<PAGE>

the three  months  ended  September  27, 1998  primarily  reflects a decrease in
demand for the Company's GSM and TDMA products. The Company's revenues decreased
by 39% to $57.7  million for the six months ended  September 27, 1998 from $94.0
million for the six months ended September 28, 1997, again reflecting  decreased
demand  for GSM and  TDMA  products  as well as the  Company's  Korean  CDMA PCS
products.

         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 Company's cost of
sales decreased by 40% to $20.6 million for the three months ended September 27,
1998 from $34.5  million for the three months  ended  September  28,  1997.  The
Company's  cost of sales  decreased  by 27% to $48.4  million for the six months
ended  September 27, 1998 from $66.5 million for the six months ended  September
28, 1997.

         Gross margin on sales was 23.2% for the three  months  ended  September
27, 1998 as compared to 28.5% for the three  months  ended  September  28, 1997.
Gross margin on sales was 16.1% for the six months ended  September  27, 1998 as
compared to 29.2% for the six months ended  September  28, 1997.  The decline in
gross  margin for the three  months  and six months  ended  September  27,  1998
primarily reflect  insufficient  absorption of fixed costs at the lower shipment
volume levels as well as declining average sales prices.

         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 58% to
$6.5 million in the three months ended  September  27, 1998 from $4.1 million in
the three months ended September 28, 1997. The Company's R&D expenses  increased
by 49% to $12.5  million in the six months  ended  September  27, 1998 from $8.4
million in the six months ended September 28, 1997. The increase in R&D spending
in the three months ended  September 27, 1998 reflects higher R&D headcount with
its  associated   expenses  and  increased   investment  in  semiconductor   R&D
activities.  R&D expenses as a percentage of revenues  increased to 24.4% in the
three  months  ended  September  27, 1998 from 8.6% for the three  months  ended
September 28, 1997,  reflecting  substantially  lower revenue  levels and higher
absolute  dollar  spending in the three months  ended  September  27, 1998.  R&D
expenses as a percentage of revenues  increased to 21.7% in the six months ended
September 27, 1998 from 8.9% for the six months ended  September 28, 1997,  also
reflecting  substantially  lower  revenue  levels  and  higher  absolute  dollar
spending in the six months ended September 27, 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, information systems costs
and other  expenses.  The  Company's  SG&A  expenses  increased by 36.3% to $4.2
million for the three months ended  September 27, 1998 from $3.0 million for the
three months ended September 28, 1997. The growth in SG&A spending for the three
months  ended  September  27,  1998  was  primarily   related  to  increases  in
depreciation  expense and  support  costs  related to  upgrading  the  Company's
internal  information  systems.  The Company's  SG&A expenses  increased to $7.6
million for the six months  ended  September  27, 1998 from $6.5 million for the
six months ended  September 28, 1997.  SG&A expenses as a percentage of revenues
increased to 15.4% for the three months ended  September  27, 1998 from 6.3% for
the three months  ended  September  28, 1997 and  increased to 13.2% for the six
months ended September 27, 1998 from 6.9% for the six months ended September 28,
1997.  The increase of SG&A  expenses as a  percentage  of sales was a result of
substantially  lower revenue levels as well as higher  absolute  dollar spending
versus the same periods of a year ago.

         Interest Income  (Expense),  net.  Interest  income,  net for the three
months ended September 27, 1998 was $1.3 million compared to net interest income
of $595,000 for the three  months ended  September  28,  1997.  Interest  income
increased  to $2.4  million  for the six months  ended  September  27, 1998 from
$576,000  for the six months  ended  September  28,  1997.  The  increase in net
interest  income  in both the  three and six  month  periods  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 for the six months
ended September 28, 1997 represented the net gain realized from the cash sale of
the  Company's  wholly  owned  subsidiary,  AMT,  to the  management  group  and
employees  of AMT in April 1997.  No other  expense or other income was recorded
during the six months ended September 27, 1998.

                                       11
<PAGE>

         Income  Taxes.  Due to the  losses  incurred  in the first  and  second
quarters  of fiscal  1999,  the Company did not record an income tax expense for
the six months ended September 27, 1998.

Factors Affecting Future Operating Results

         Customer Concentration. The wireless infrastructure equipment market is
dominated by a small number of large original equipment  manufacturers ("OEMs"),
including  Alcatel  Network  Systems,   Inc.,  LM  Ericsson   Telephone  Company
("Ericsson"),   Hyundai   Electronics   Industries  Co.,  Ltd.,   LGIC,   Lucent
Technologies,  Inc. ("Lucent"),  Motorola Corporation ("Motorola"), NEC America,
Inc.,  Northern Telecom,  Nortel Matra,  Nokia OY ("Nokia"),  QUALCOMM,  Samsung
Electronics  Co., Ltd., and Siemens AG ("Siemens").  The Company's  revenues are
derived primarily from sales to a limited number of these OEMs. During the three
months  ended  September  27,  1998,  Northern  Telecom,  LGIC and Nortel  Matra
accounted  for  approximately  66%,  13%  and  11%  of the  Company's  revenues,
respectively.  During the six months ended September 28, 1997, Northern Telecom,
QUALCOMM, Nortel Matra and LGIC accounted for 66%, 11%, 11% and 10% of revenues,
respectively.   Furthermore,  a  substantial  portion  of  revenues  from  these
customers in the six months ended  September  27, 1998  resulted from sales of a
limited  number of the Company's  products.  The  Company's  top five  customers
accounted for 99% of its sales for the six months ended  September 27, 1998. The
Company,  Northern  Telecom  and Nortel  Matra have an  agreement,  renegotiated
annually,  pursuant to which  Northern  Telecom and Nortel  Matra,  a company in
which Northern  Telecom has an equity  investment,  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 1999 is being  negotiated  during the  Company's
third fiscal quarter of 1999. The results of these  negotiations could result in
lower RF amplifier  volume  commitments  and reduced  pricing  starting with the
Company's fourth fiscal quarter of 1999. There can be no assurance that Northern
Telecom and Nortel Matra will continue to enter into  contracts with the Company
in the future or otherwise agree to purchase the same or similar levels of their
power amplifier  requirements from the Company or purchase 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.  Due to the  Company's
products being 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 will result in declining  average  sales prices for the Company's
products.

         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 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 

                                       12
<PAGE>

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.  There  can be no  assurance  that  the  Company  will not
experience  demand  fluctuations  in the future,  and, in fact,  the Company has
experienced  reductions in product revenues in both the fourth quarter of fiscal
1998 and the first and second  quarters of fiscal 1999. The Company  anticipates
continued  lower  product  revenues  over the next  two to three  quarters  when
compared  to the first three  quarters  of fiscal 1998 as a result of  softening
demand  in the TDMA and GSM  markets  and  delays in Korean  PCS  demand  due to
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 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 sometimes  reluctant to switch once committed to a
particular  merchant  vendor.  Consequently,  the Company may have 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.  For
example,  the failure of the Company to reach an agreement with Northern Telecom
and Nortel  Matra that  provides for similar  levels of  purchases  could have a
material adverse effect on the Company,

         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  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, softening of demand in the TDMA and GSM markets 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.

         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 

                                       13
<PAGE>

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.

         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.

         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.  The Company does not carry  significant
inventories of these components and does not have any long-term supply contracts
with  its  sole  source  vendors.  Furthermore,  the  Company  intends  to begin
outsourcing  of  some of its  higher  volume  power  amplifiers  at an  offshore
independent  subcontractor's  facility  during the third fiscal quarter of 1999.
The  Company's  reliance on its existing  sole  sources and its  migration to an
outsource  turnkey  manufacturing  strategy  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 or its
turnkey subcontractor, the Company would be required to requalify the components
or amplifiers with new vendors or subcontractors, respectively. Any inability of
the Company to obtain timely  deliveries of its  components or its amplifiers 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.

         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.

         Risks of International  Sales.  Sales outside of the United States were
88%, 81% and 95% of revenues for the three months ended  September 27, 1998, the
six months ended September 27, 1998 and fiscal 1998,  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,   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

                                       14
<PAGE>

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 foreign financial
markets and the recent  deterioration of the underlying  economic  conditions in
certain  foreign  countries  will  continue  to 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.

         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.

         The  Company's  principal   competitors  in  the  market  for  wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,  Amplidyne,  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.

         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  twenty United States  patents,  and has  twenty-six  United States
patent  applications  pending,  including six that have been allowed but not yet
formally issued.  The Company also has been awarded four foreign patents and has
twelve 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 

                                       15
<PAGE>

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.

         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  intellectual  property  rights.  However,  there  can  be no
assurance  that such  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.

         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 

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<PAGE>

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

         Year 2000  Compliance.  Many installed  computer  programs were written
using a two digit date field  rather  than a four digit date 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").  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 identified the
Year 2000 Issue in certain of its internal operating systems and installed a new
enterprise  wide  computer  software  system  in July  1998  that  is Year  2000
compliant and which the Company believes will increase operational and financial
efficiencies and information  analysis.  The cost of this project, as it relates
to the Year 2000 Issue,  did not have a material effect on the operations of the
Company and is being funded through  operating cash flows and investment  income
from the Company's  liquid assets.  The Company has launched a Year 2000 project
and  assigned a team to assess the Year 2000 Issue.  This team is in the process
of  conducting  inventories  on the  balance of the  Company's  internally  used
software programs and imbedded systems,  and will prepare and conduct surveys of
its customers,  suppliers and other business  partners for Year 2000 compliance.
The Company  anticipates that this effort will be completed by January 1999. The
Company is not aware of any  material  exposures  related to the Year 2000 Issue
but  can not  conclusively  rule  out  any  material  effects  on the  Company's
operations  or any  potential  loss of  revenues  related to the Year 2000 issue
until the assessment project has been completed.

         Dependence on Key Personnel. The Company's ability to manage any future
growth effectively will require attracting,  training, motivating,  managing and
retaining new employees  successfully as well as retaining the continued service
of its key technical,  marketing and management personnel.  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.

         Volatility  of Stock  Price.  The market  price of the shares of Common
Stock  has 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 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. As of September  27, 1998,  the
last reported sale price of the Common Stock as reported on the Nasdaq  National
Market was $12.875.

         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 

                                       17
<PAGE>

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 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.

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 used by  operations  was $8.8 million for the six months ended
September 27, 1998 while cash provided by operations in the corresponding period
of fiscal 1998 was $2.0 million.  Cash flow from  operations  for the six months
ended September 27, 1998 was negatively impacted by the reduced level and timing
of shipments and slower collections from the Company's international customers.

         As of  September  27, 1998,  the Company had working  capital of $102.6
million  including  $76.4  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 September 27, 1998, the Company was
in compliance  with all of these  financial  covenants with the exception of the
profitability  covenant.  The Company  has  received a waiver from the bank with
respect to this financial covenant default. There were no borrowings outstanding
against this line of credit as of September 27, 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.  During the six months ended September
27, 1998,  the Company  repurchased a total of 497,200 shares on the open market
for a total of $7.4 million.

         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

                                       18
<PAGE>

these  covenants  as of  September  27,  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 $7.4 million for both the six
months ended  September  27, 1998 and the six months ended  September  28, 1997.
Purchases  of  equipment  and other  capital  assets  for the six  months  ended
September 27, 1998 included the purchase of new management  information systems,
manufacturing  test  equipment  to support new  products  and  engineering  test
equipment to support various research and development projects.

         The Company  anticipates  spending  approximately  $10 million over the
next twelve months for capital  additions  primarily to complete its information
systems infrastructure upgrades, set up automated test stations for new products
and and upgrade its  engineering  test equipment as required for new development
projects.  Based on the  Company's  current  working  capital  position  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.

         ITEM 3:  Quantitative and Qualitative Disclosures about Market Risk

         The  Company   does  not  engage  in  any  foreign   currency   hedging
transactions  and  therefore,  does not believe it is subject to  exchange  rate
risk.  In compliance  with the Company's  cash  investment  policy,  the Company
limits  its  cash  investments  in  terms  of  type  of  financial   instrument,
concentration  limit, credit quality and marketability with the highest priority
being  preservation  of principal.  The Company does not consider itself exposed
with respect to any material market risk.

PART II - OTHER INFORMATION

         ITEM 1:  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 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.

                                       19
<PAGE>

ITEM 6:  Exhibits and Reports on Form 8-K


                  (a)      Exhibits


       27.1 Financial Data Schedule



                                       20
<PAGE>


                                   SIGNATURES




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



Dated: November 5, 1998

                                      SPECTRIAN CORPORATION
                                           (Registrant)

                                       /S/ BRUCE R. WRIGHT
                          -----------------------------------------------------
                                           Bruce R. Wright
                          Executive Vice President, Finance and Administration,
                          Chief Financial Officer and Secretary
                          (Principal Financial and Accounting Officer)



                                INDEX TO EXHIBITS



   Exhibits                                                        Sequentially
   --------                                                        Numbered Page
                                                                   -------------

     27.1 Financial Data Schedule                                       22




                                       21