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

                                  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 quarterly period ended December 30, 2001.

                                       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 offices) (Zip Code)

                         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 January 31, 2002 there were 11,388,422  shares of the Registrant's  Common
Stock outstanding.

================================================================================
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                              SPECTRIAN CORPORATION

                                    FORM 10-Q

                                      INDEX

                       FOR QUARTER ENDED DECEMBER 30, 2001

<TABLE>
<CAPTION>
                                                                                                               Page

                                               PART I - FINANCIAL INFORMATION

Item 1.         Financial Statements

<S>             <C>                                                                                             <C>
                Condensed Consolidated Balance Sheets - December 30, 2001 and March 31, 2001................     3

                Condensed Consolidated Statements Of Operations - Three Months and Nine Months Ended
                    December 30, 2001 and December 31, 2000..............................................        4

                Condensed Consolidated Statements of Cash Flows - Nine Months Ended December 30, 2001 and
                    December 31, 2000.......................................................................     5

                Notes to Condensed Consolidated Financial Statements........................................     6

ITEM 2.         Management's Discussion and Analysis of Financial Condition and Results of Operations.......    15

ITEM 3.         Quantitative and Qualitative Disclosures about Market Risk..................................    33

                                                PART II - OTHER INFORMATION

ITEM 6.         Exhibits and Reports on Form 8-K............................................................    34

Signatures..................................................................................................    35
</TABLE>


                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                                             December 30,           March 31,
                                                                                                 2001                2001 (1)
                                                                                          ------------------    -----------------
<S>                                                                                             <C>                 <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                                                    $  52,117           $  36,397
   Restricted cash                                                                                     --               6,354
   Short-term investments                                                                          43,064              73,512
   Accounts receivable, less allowance for doubtful
     accounts of $460 and $460, respectively                                                       17,048              27,587
   Inventories                                                                                     23,888              22,221
   Income taxes receivable                                                                          1,830                  --
   Deferred tax asset                                                                               1,988               3,818
   Prepaid expenses and other current assets                                                        5,421               4,918
                                                                                                 --------            --------
     Total current assets                                                                         145,356             174,807

Property and equipment, net                                                                         9,892              11,632
Other assets                                                                                        3,613               1,584
                                                                                                 --------            --------
     Total assets                                                                                $158,861            $188,023
                                                                                                 ========            ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                                              $ 16,483           $  23,613
   Accrued liabilities                                                                             14,060              13,958
   Income taxes payable                                                                               697                 750
   Deferred gain, current portion                                                                  27,900              31,550
   Capital lease obligations                                                                           98                  --
                                                                                                 --------            --------
     Total current liabilities                                                                     59,238              69,871

Deferred gain, net of current portion                                                                  --              19,650
                                                                                                 --------            --------
     Total liabilities                                                                             59,238              89,521
                                                                                                 --------            --------

STOCKHOLDERS' EQUITY:
   Preferred  stock,  $0.001 par value,  5,000,000  shares  authorized;  none issued and
      outstanding                                                                                     --                   --
   Common  stock,  $0.001  par  value,  20,000,000  shares  authorized;  12,649,690  and
      12,501,026   shares  issued,   respectively;   11,355,990  and  11,501,026  shares
      outstanding, respectively                                                                        13                  13
   Additional paid-in capital                                                                     168,979             167,524
   Treasury stock, 1,293,700 and 1,000,000 shares of common stock held, respectively              (17,669)            (14,789)
   Deferred compensation expense                                                                      (47)                (69)
   Accumulated other comprehensive income (loss)                                                      543             (22,856)
   Accumulated deficit                                                                            (52,196)            (31,321)
                                                                                               ----------          ----------
     Total stockholders' equity                                                                    99,623              98,502
                                                                                               ----------           ---------
     Total liabilities and stockholders' equity                                                  $158,861            $188,023
                                                                                                 ========            ========
</TABLE>

(1)  Derived from the March 31, 2001 audited  balance sheet included in the 2001
     Annual Report on Form 10-K of Spectrian Corporation.

     See accompanying notes to condensed consolidated financial statements.


                                        3
<PAGE>

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

<TABLE>
<CAPTION>
                                                             Three Months Ended                   Nine Months Ended
                                                       --------------------------------    --------------------------------
                                                        December 30,     December 31,       December 30,     December 31,
                                                            2001             2000               2001             2000
                                                       --------------------------------    --------------------------------
<S>                                                      <C>              <C>                <C>            <C>
REVENUES                                                 $   25,457       $   51,398         $   76,267       $  135,504
                                                         ----------       ----------         ----------       ----------
COSTS AND EXPENSES:
  Cost of revenues                                           24,030           39,490             77,649          109,472
  Research and development                                    5,709            5,422             17,504           16,364
  Selling, general and administrative                         4,862            5,267             14,185           17,133
  Restructuring costs                                            --               --                686               --
                                                         ----------       ----------         ----------       ----------
     Total costs and expenses                                34,601           50,179            110,024          142,969
                                                         ----------       -----------        ----------       ----------

OPERATING INCOME (LOSS)                                      (9,144)           1,219            (33,757)          (7,465)

INTEREST INCOME                                                 836              563              2,657            1,683
INTEREST EXPENSE                                                 (3)             (73)               (11)            (162)
OTHER INCOME, NET                                             7,500           11,701              9,757           11,701
                                                         ----------       ----------         ----------       ----------
INCOME (LOSS) BEFORE INCOME TAXES                              (811)          13,410            (21,354)           5,757

INCOME TAXES                                                     --               --                 15               12
                                                         ----------       ----------         ----------       ----------
INCOME (LOSS) BEFORE CUMULATIVE
  EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE
                                                               (811)          13,410            (21,369)           5,745
CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLE
  -  ADOPTION OF SFAS 133                                        --               --                494               --
                                                         ----------       ----------         ----------       ----------
NET INCOME (LOSS)                                        $     (811)      $   13,410         $  (20,875)      $    5,745
                                                         ===========      ==========         ==========       ==========
NET INCOME (LOSS) PER SHARE:
  Basic income (loss) per share before cumulative
     effect of change in accounting principle            $    (0.07)      $     1.20         $    (1.86)      $     0.52
  Cumulative effect of change in accounting
     principle                                                   --               --               0.04               --
                                                         ----------       ----------         ----------       ----------
  Basic net income (loss) per share                      $    (0.07)      $     1.20         $    (1.82)      $     0.52
                                                         ==========       ==========         ==========       ==========

  Diluted income (loss) per share before cumulative
     effect of change in accounting principle            $    (0.07)      $     1.19         $    (1.86)      $     0.51
  Cumulative effect of change in accounting
     principle                                                   --               --               0.04               --
                                                         ----------       ----------         ----------       ----------
  Diluted net income (loss) per share                    $    (0.07)      $     1.19         $    (1.82)      $     0.51
                                                         ==========       ==========         ==========       ==========
SHARES USED IN COMPUTING PER SHARE AMOUNTS:
  Basic                                                      11,360           11,154             11,498           11,014
                                                         ==========       ==========         ==========       ==========
  Diluted                                                    11,360           11,270             11,498           11,251
                                                         ==========       ==========         ==========       ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                        4
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Nine Months Ended
                                                                                  -----------------------------------
                                                                                    December 30,      December 31,
                                                                                        2001              2000
                                                                                  -----------------------------------
<S>                                                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income (loss)                                                               $ (20,875)         $    5,745
    Adjustments to reconcile net income (loss) to net
      cash provided by (used in) operating activities:
        Depreciation and amortization                                                   3,853               8,294
        Gain on the sale of UltraRF                                                   (23,300)            (11,701)
        Net loss on sale of short-term investments                                     13,049                   7
        Loss on sale and write-off of property and equipment, net                         985                  48
        Stock option compensation expense                                                  22                 154
        Changes in deferred tax asset                                                   1,830              (4,800)
        Changes in operating assets and liabilities:
          Accounts receivable                                                          10,539              (3,967)
          Inventories                                                                  (1,667)              6,858
          Prepaid expenses and other assets                                              (532)             (1,415)
          Income taxes receivable                                                      (1,830)                 --
          Accounts payable                                                             (7,130)              2,991
          Accrued liabilities                                                             102                 (57)
          Income tax payable                                                              (53)              4,800
                                                                                    ----------         ----------
             Net cash provided by  (used in) operating activities                     (25,007)              6,957
                                                                                    ----------         ----------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of short-term investments                                                (30,349)             (2,966)
    Proceeds from sale and maturities of short-term investments                        71,021               9,182
    Purchase of minority investment in Paragon Communications Ltd.                     (2,000)                 --
    Release of restricted cash                                                          6,480                  --
    Purchase of property and equipment                                                 (2,929)             (6,757)
    Cost associated with sale of UltraRF                                                   --              (2,791)
    Proceeds from sale of property and equipment                                           --                  98
                                                                                    ----------         ----------
             Net cash provided by (used in) investing activities                       42,223              (3,234)
                                                                                    ----------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayment of debt and capital lease obligations                                       (71)             (1,964)
    Proceeds from sales of common stock, net                                            1,455               4,906
    Purchase of treasury stock                                                         (2,880)                 --
                                                                                    ----------         ----------
             Net cash provided by (used in) financing activities                       (1,496)              2,942
                                                                                    ----------         ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                              15,720               6,665

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                         36,397              11,553
                                                                                    ----------         ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                              $52,117          $   18,218
                                                                                    ==========         ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    Cash paid for interest                                                          $      11          $      162
                                                                                    ==========         ==========
    Cash paid for income taxes                                                      $      68          $       12
                                                                                    ==========         ==========
    Acquisition of equipment under capital lease obligation                         $     169          $       --
                                                                                    ==========         ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                        5
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

1.       BASIS OF PRESENTATION

         Principles of Consolidation

         The accompanying  unaudited condensed consolidated financial statements
of Spectrian  Corporation and  subsidiaries  ("Spectrian" or the "Company") 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 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  consolidated  financial  statements as set forth on pages F-1
through  F-26 of the  Company's  Annual  Report on Form 10-K for the fiscal year
ended  March  31,  2001  and  the  Company's  unaudited  consolidated  financial
statements  in the  Quarterly  Reports  on  Form  10-Q  for the  quarters  ended
September 30, 2001 and July 1, 2001. 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, 2002, or any other future period.

2.       SALE OF ULTRARF

         On December 29, 2000, the Company  completed the sale of  substantially
all of  the  assets  and  liabilities  comprising  the  Company's  semiconductor
division, UltraRF, pursuant to the Asset Purchase Agreement dated as of November
20, 2000 (the "Asset  Purchase  Agreement")  among Cree, Inc.  ("Cree"),  Zoltar
Acquisition, Inc. ("Zoltar") and the Company for 1,815,402 shares of Cree common
stock then valued at $64,503,000,  based upon the per share price at the date of
closing,  plus common  stock of Cree with a guaranteed  realizable  value of $30
million,  less $1,141,000 owed by the Company to Cree due to a change in the net
assets of UltraRF  between  October 1, 2000 and December 29, 2000.  Of the total
consideration  received,  191,094  shares of Cree  common  stock were  placed in
escrow to secure the Company's  representations,  warranties and covenants under
the Asset  Purchase  Agreement  over a 12 month  period.  In January  2001,  the
Company  sold all the shares  held in escrow for  approximately  $6,309,000  and
recognized a loss of approximately  $481,000 from the sale of these  securities.
On June 29, 2001,  one-half of the cash  proceeds from the sale of escrow shares
plus interest  earned in the amount of $3,213,000  was released from escrow.  On
December 29, 2001,  the  remaining  amount held in escrow plus  interest  earned
totaling $3,267,000 was released from escrow.

         For the three months ended  December 30, 2001, the Company did not have
any gain or loss from the sale of Cree common  stock.  For the six months  ended
September 30, 2001, the Company sold  1,139,308  shares of Cree common stock for
$27.9  million and realized a loss of $12.6  million.  In addition,  the Company
exercised  put options in relation  to 485,000  shares of Cree common  stock for
proceeds of $12.4 million and realized a loss of $4.8  million.  As of September
30, 2001,  the Company had disposed of all shares of Cree common stock  received
as consideration under the Asset Purchase Agreement.

         As part of the definitive agreement,  the Company and Cree entered into
a  two-year  supply  agreement,  as amended on October  19,  2001,  under  which
Spectrian  is  obligated  to purchase  from Cree an  aggregate of $58 million of
semiconductors.  In the event  Spectrian  fails to make these  purchases,  it is
obligated  to pay Cree the amount of the  shortfall.  Accordingly,  the  Company
deferred  $58  million of the gain on sale of UltraRF and is  recognizing  it in
periods as the related  purchase  commitments  to Cree are being  fulfilled.  In
addition, Spectrian and Cree entered into a one-year joint development agreement
to develop  advanced  technologies  related to  laterally  diffused  metal oxide
semiconductors ("LDMOS"), linear high gain LDMOS driver modules, high efficiency
LDMOS power modules and SiC MESFET  components,  under which  Spectrian  paid to
Cree a  development  fee of $2.4  million  in  four  quarterly  installments  of


                                        6
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

$600,000  beginning in April 2001. The joint  development  agreement  expired on
December  29,  2001 and the  Company  has paid  Cree  all  fees  due  under  the
agreement.  The Company  also  subleased  one of the  facilities  in  Sunnyvale,
California  to Cree for a term of 11 years  (with  three  options  to extend the
lease an  additional  five  years)  with  similar  terms as the lease  agreement
between the Company and its landlord.

         The Company  realized an aggregate  gain of $69.7 million from the sale
of UltraRF  assets,  of which $58.0  million was  deferred,  with the balance of
$11.7 million  recognized as other income during the three months ended December
31, 2000.  During the quarter ended  December 30, 2001,  Spectrian  recognized a
gain of $7.5  million as other  income as the related  purchase  commitment  was
fulfilled  by the  Company.  During the nine months  ended  December  30,  2001,
Spectrian  recognized  a gain of $23.3  million as other  income as the  related
purchase commitment was fulfilled by the Company.

3.       ADOPTION OF SFAS 133

         The Company  adopted  Statement of Financial  Accounting  Standards No.
133, Accounting for Derivative Instruments and Hedging Activities, as amended by
Statement of Financial  Accounting  Standards No. 137, Accounting for Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement  No. 133, an amendment  of FASB  Statement  No. 133, and  Statement of
Financial  Accounting  Standards  No. 138,  Accounting  for  Certain  Derivative
Instruments and Certain Hedging  Activities,  an amendment of FASB Statement No.
133 (referred to hereafter as "SFAS 133"),  on April 1, 2001. In accordance with
the  transition  provisions  of SFAS 133,  the Company  recorded an  approximate
$494,000 gain cumulative effect adjustment in earnings as of April 1, 2001.

         Accounting for Derivatives and Hedging Activities

         All  derivatives  are  recognized  on the  balance  sheet at their fair
value.  On the date that the  Company  enters  into a  derivative  contract,  it
designates the derivative as (1) a hedge of the fair value of a recognized asset
or  liability  or (2) an  instrument  that is held for  trading  or  non-hedging
purposes (a "trading" or  "non-hedging"  instrument).  Since April 1, 2001,  the
Company has designated all derivative contacts as a fair value hedge and has not
entered into derivatives for the purposes of trading.  Changes in the fair value
of a  derivative  that is  highly  effective  as - and  that is  designated  and
qualifies as - a fair-value  hedge,  along with changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk, are recorded
in current-period earnings.

         The  Company  formally  documents  all  relationships  between  hedging
instruments  and hedged  items,  as well as its  risk-management  objective  and
strategy for  undertaking  various  hedge  transactions.  This process  includes
linking all  derivatives  that are  designated as fair-value  hedges to specific
assets on the balance  sheet.  The Company also formally  assesses  (both at the
hedge's inception and on an ongoing basis) whether the derivatives that are used
in hedging  transactions have been highly effective in offsetting changes in the
fair value of hedged  items and  whether  those  derivatives  may be expected to
remain highly effective in future periods.

         The Company  discontinues  hedge accounting  prospectively  when (1) it
determines that the derivative is no longer  effective in offsetting  changes in
the  fair  value  of a  hedged  item;  (2) the  derivative  expires  or is sold,
terminated,  or exercised;  or (3) management  determines  that  designating the
derivative as a hedging instrument is no longer appropriate.


                                        7
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

         Derivative Instruments and Hedging Activities

         The Company had an  investment  in the common stock of Cree (see Note 2
above). The Company's  investment exposed it to a risk related to the effects of
changes in price of Cree common stock. This financial  exposure is monitored and
managed  by  the  Company.   The  Company's   risk-management   focuses  on  the
unpredictability  of  financial  markets  and  seeks to reduce  the  potentially
adverse  effects that the  volatility of these markets may have on its operating
results.  The Company used cashless  collars,  which are  combinations of option
contracts to hedge this risk. The Company  generally hedged 60 to 100 percent of
its investment in Cree common stock. The Company excludes from its assessment of
hedge  effectiveness  the gain or loss  associated  with  the time  value of the
options.

         By using derivative financial instruments to hedge exposures to changes
in share  prices,  the Company  exposes  itself to credit risk and market  risk.
Credit  risk is the  risk  that  the  counterparty  might  fail to  fulfill  its
performance  obligations  under the terms of the derivative  contract.  When the
fair value of a  derivative  contract is  positive,  the  counterparty  owes the
Company,  which creates repayment risk for the Company. When the fair value of a
derivative  contract  is  negative,  the  Company  owes  the  counterparty  and,
therefore,  does not assume repayment risk. The Company minimizes its credit (or
repayment) risk in derivative instruments by (1) entering into transactions with
high-quality  counterparties,  (2)  limiting  the amount of its exposure to each
counterparty,  and (3) monitoring the financial condition of its counterparties.
The Company also maintains a policy of requiring  that all derivative  contracts
be  governed  by an  International  Swaps  and  Derivatives  Association  Master
Agreement.

         The  Company  did not have any gain or loss from the sale of Cree stock
options for the three months ended  December 30, 2001. For the nine months ended
December 30, 2001, the Company  terminated  615,000 shares of Cree stock options
prior to their  expiration  dates and  realized  a gain of $4.4  million,  which
represented  the proceeds  realized upon  termination of these options.  Of this
gain,  $494,000 was  recognized  as a cumulative  effect of change in accounting
principle  upon  adoption of SFAS 133 and  therefore a $3.9 million net gain was
recorded in the nine months ended  December  30, 2001.  As of December 30, 2001,
the Company has no derivative financial instruments.

4.       OTHER INCOME, NET

         Other income, net included (in thousands):

<TABLE>
<CAPTION>
                                                        Three Months Ended                   Nine Months Ended
                                                 ---------------------------------    ---------------------------------
                                                  December 30,     December 31,        December 30,     December 31,
                                                      2001             2000                2001             2000
                                                 ---------------------------------    ---------------------------------
<S>                                                  <C>              <C>                 <C>            <C>
Gain on sale of UltraRF                              $  7,500         $ 11,701            $ 23,300       $ 11,701
Loss on sale of Cree, Inc. common stock                    --               --             (17,429)            --
Net gain on Cree, Inc. common stock options                --               --               3,886             --
                                                     --------         --------            --------       --------
Other income, net                                    $  7,500         $ 11,701            $  9,757       $ 11,701
                                                     ========         ========            ========       ========
</TABLE>


                                        8
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

5.       BALANCE SHEET COMPONENTS

     Balance sheet components are as follows (in thousands):

                                                        December 30,   March 31,
                                                           2001          2001
                                                       ------------   ----------
     Inventories:

       Raw materials                                     $13,864        $11,185
       Work in progress                                    1,675          5,699
       Finished goods                                      8,349          5,337
                                                         -------        -------
                                                         $23,888        $22,221
                                                         =======        =======
     Property and equipment:

       Machinery and equipment                           $43,021        $47,341
       Software                                            3,747          3,819
       Leasehold improvements                              2,023          2,673
                                                         -------        -------
                                                          48,791         53,833
       Less accumulated depreciation and amortization     38,899         42,201
                                                         -------        -------
                                                        $  9,892        $11,632
                                                         =======        =======
     Accrued liabilities:

       Employee compensation and benefits               $  3,124        $ 2,839
       Warranty                                            6,700          9,800
       Restructuring                                         161             --
       Other accrued liabilities                           4,075          1,319
                                                         -------        -------
                                                         $14,060        $13,958
                                                         =======        =======

6.       RECENT ACCOUNTING PRONOUNCEMENTS

         In July 2001, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  No. 141 ("SFAS  141"),  "Business
Combinations."  SFAS 141 requires the purchase method of accounting for business
combinations    initiated    after   June   30,   2001   and    eliminates   the
pooling-of-interests  method. The Company believes that the adoption of SFAS 141
to date has not had a significant impact on their financial statements.

         In July  2001,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is
effective for fiscal years beginning after December 15, 2001. SFAS 142 requires,
among other things,  the discontinuance of goodwill  amortization.  In addition,
the standard  includes  provisions  upon  adoption for the  reclassification  of
certain existing recognized intangibles as goodwill,  reassessment of the useful
lives  of  existing   recognized   intangibles,   reclassification   of  certain
intangibles out of previously  reported  goodwill and the testing for impairment
of  existing  goodwill  and other  intangibles.  The Company  believes  that the
adoption  of SFAS  142  will  not have a  significant  impact  on its  financial
statements.  The Company will adopt SFAS 142 in the quarter  beginning  April 1,
2002.

         In October  2001,  the FASB issued  Statement of  Financial  Accounting
Standards No. 144 ("SFAS 144"),  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets," which is effective for fiscal years beginning after December
15, 2001 and  interim  periods  within  those  fiscal  periods.  This  Statement
supersedes FASB Statement No. 121,  "Accounting for the Impairment of Long-Lived
Assets and for


                                        9
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

Long-Lived Assets to be Disposed of" and Accounting Principals Board Opinion No.
30 ("APB 30"),  "Reporting  Results of  Operations  -  Reporting  the Effects of
Disposal of a Division  of a  Business",  however,  this  Statement  retains the
requirement  of  APB  30  to  report  discontinued  operations  separately  from
continuing  operations  and extends  that  reporting to a component of an entity
that either has been disposed of (by sale, by abandonment,  or in a distribution
to owners) or is classified as held for sale. This Statement addresses financial
accounting and reporting for the impairment of certain long-lived assets and for
long-lived assets to be disposed of. The Company does not expect the adoption of
SFAS 144 to have a  material  impact on the  Company's  financial  position  and
results of operations.

7.       SHORT-TERM INVESTMENTS

         The Company considers all liquid  investments with an original maturity
of three months or less to be cash  equivalents.  As of December  30, 2001,  the
cash equivalents consisted of commercial paper and U.S. government securities.

         The Company has classified its investments in certain debt  securities,
equity options and common stock investments in Cree as "available-for-sale," and
records such  investments  at fair market value.  Unrealized  unhedged gains and
losses on debt securities and common stock investments in Cree are reported as a
separate  component  of  stockholders'  equity.  Realized  gains and  losses are
determined using the specific identification method. Interest income is recorded
using an  effective  interest  rate,  with the  associated  premium or  discount
amortized to interest income.

         As of December  30,  2001 and March 31,  2001,  short-term  investments
classified as available-for-sale securities were as follows (in thousands):

<TABLE>
<CAPTION>
                                                            Amortized      Net Unrealized         Fair
                    As of December 30, 2001                    Cost             Gain             Value
----------------------------------------------------------------------------------------------------------
<S>                                                          <C>               <C>               <C>
Government bonds and notes...............................    $ 23,332          $    259       $ 23,591
Corporate bonds and notes................................      40,179               284         40,463
                                                             --------          --------       --------
                                                               63,511               543         64,054
Less amounts classified as cash equivalents..............      20,990                --         20,990
                                                             --------          --------       --------
Short-term investments...................................    $ 42,521          $    543       $ 43,064
                                                             ========          ========       ========

Contractual maturity dates of short-term investment in
   bonds and notes:
     Less than 1 year....................................                                     $ 13,478
     1 to 5 years........................................                                       29,586
                                                                                              --------
                                                                                              $ 43,064
                                                                                              ========
</TABLE>


                                       10
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Amortized     Net Unrealized        Fair
                     As of March 31, 2001                      Cost         Gain (Loss)         Value
----------------------------------------------------------------------------------------------------------
<S>                                                          <C>            <C>               <C>
Government bonds and notes...............................    $ 23,355       $    120          $ 23,475
Corporate bonds and notes................................      41,164            144            41,308
Cree, Inc. common stock..................................      57,713        (33,397)           24,316
Cree, Inc. common stock options .........................          --         10,277            10,277
                                                             --------       ---------         --------
                                                              122,232        (22,856)           99,376
Less amounts classified as cash equivalents..............      25,864             --            25,864
                                                             --------       ---------         --------
Short-term investments...................................    $ 96,368       $(22,856)         $ 73,512
                                                             ========       =========         ========

Contractual maturity dates of short-term investment in
  bonds and notes:
     Less than 1 year........................................                                 $  8,931
     1 to 5 years............................................                                   29,988
                                                                                              --------
                                                                                              $ 38,919
                                                                                              ========
</TABLE>

8.       TREASURY STOCK

         In September 2001, the Board of Directors  authorized the repurchase of
up to $10 million of the Company's  common stock.  During the three months ended
December 30, 2001, the Company  repurchased  155,700  shares of the  outstanding
common  stock for  approximately  $1.5  million.  During the nine  months  ended
December 30, 2001, the Company  repurchased  293,700  shares of the  outstanding
common stock for approximately  $2.9 million.  Treasury stock is carried at cost
in the condensed consolidated balance sheets.

9.       PER SHARE COMPUTATION

         Basic net income  (loss) per share is computed  by dividing  net income
(loss)  by the  weighted-average  number of common  shares  outstanding  for the
period.  Diluted net income per share is  computed  using the  weighted  average
number of common and potentially  dilutive common shares  outstanding during the
period using the treasury  stock  method.  Potentially  dilutive  common  shares
include  the  effect  of stock  options.  For the three  and nine  months  ended
December 30, 2001, 2,936,608 stock options were not included for the calculation
of diluted net loss per share as they were  considered  antidilutive  due to the
net loss the Company experienced in these fiscal periods. For the three and nine
months ended  December 31, 2000,  options to purchase  2,222,079  and  1,499,300
common  shares were  outstanding,  but were not included in the  computation  of
diluted net income per share  because the  exercise  prices of the options  were
greater than the average market price of the common shares.


                                       11
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

10.      SEGMENT INFORMATION

Geographic Segment Data:

         Revenue  from   unaffiliated   customers  by  geographic  region  as  a
percentage of revenues were as follows:

<TABLE>
<CAPTION>
                                 Three Months Ended                      Nine Months Ended
                          ----------------------------------     ----------------------------------
                            December 30,     December 31,         December 30,      December 31,
                                2001             2000                 2001              2000
                          ----------------- ----------------     ---------------- -----------------
<S>                             <C>                <C>                <C>              <C>
  Canada                          6%                40%                27%              41%
  United States                  51%                23%                36%              27%
  South Korea                    20%                28%                18%              15%
  France                          4%                 8%                 4%              16%
  China                          11%                 --                 9%              --
  Brazil                          7%                 1%                 4%               1%
  Other countries                 1%                 --                 2%              --
                               -----              -----              -----            -----
  Total                         100%               100%               100%             100%
                               =====              =====              =====            =====
</TABLE>

         The Company's  long-lived assets are located in the following countries
(in thousands):

                                            December 30,      March 31,
                                               2001             2001
                                        ----------------- ----------------
  United States                            $  4,977          $  7,966
  Thailand                                    3,266             2,707
  South Korea                                 1,024               959
  China                                         479                --
  Malaysia                                      146                --
                                            -------           -------
                                            $ 9,892           $11,632
                                            =======           =======


                                       12
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

11.      RESTRUCTURING COSTS

         During the three  months  ended July 1, 2001,  the  Company  decided to
transfer its power amplifier repair  operations in Sunnyvale,  California,  to a
contract manufacturer located in Thailand. In connection with the decision,  the
Company  recognized  in the three  months ended July 1, 2001,  an  approximately
$686,000   restructuring   charge  for  estimated  severance  costs  related  to
organizational  changes and a planned  reduction  in work force and to write off
property and equipment  that have no future value to the Company.  Approximately
60 employees  engaged in the repair  operations are anticipated to be terminated
as a result of the  restructuring.  As of December  30, 2001,  approximately  50
employees  engaged in the repair  operations have been  terminated.  The Company
anticipates  that the  restructuring  will be  completed  no later than June 30,
2002. The following table represents the restructuring  activity that took place
up through December 30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                         Asset       Reduction in
                                                      Write-offs       Workforce         Other
                                                      (Non Cash)        (Cash)           (Cash)         Total
                                                   -------------- ------------------ -------------- -------------
<S>                                                     <C>             <C>                 <C>         <C>
Accrual for restructuring charges                       $ 161           $ 485               $40         $ 686
Cash payment of severance costs                            --            (356)               --          (356)
Cash payment of other restructuring costs                  --              --                (8)           (8)
Write-off of property and equipment                      (161)             --                --          (161)
                                                        -----           -----            ------         -----
Balance at December 30, 2001                            $  --           $ 129            $   32         $ 161
                                                        =====           =====            ======         =====
</TABLE>

         The  balance  of the  restructuring  accrual  is  included  in  accrued
liabilities on the condensed consolidated balance sheets.

12.      COMPREHENSIVE INCOME (LOSS)

         Statement  of  Financial  Accounting  Standard  No.  130  ("SFAS  130")
"Reporting Comprehensive Income" establishes rules for the reporting and display
of comprehensive income and its components.  The following are the components of
comprehensive income (loss) (in thousands):

<TABLE>
<CAPTION>
                                               Three Months Ended                   Nine Months Ended
                                         --------------------------------    --------------------------------
                                          December 30,    December 31,        December 30,    December 31,
                                              2001            2000                2001            2000
                                         --------------- ----------------    --------------- ----------------
<S>                                          <C>           <C>                  <C>            <C>
Net income (loss)                            $   (811)     $ 13,410            $ (20,875)       $ 5,745
Realized loss on marketable securities
  previously included in unrealized loss           --            --               12,987             --
Unrealized gain (loss) on marketable
  securities                                     (145)          224               10,412            560
                                             ---------     --------            ---------        -------
Comprehensive income (loss)                  $   (956)     $ 13,634            $   2,524        $ 6,305
                                             =========     ========            =========        =======
</TABLE>

         The components of accumulated other comprehensive  income (loss) are as
follows (in thousands):

                                                      December 30,     March 31,
                                                          2001           2001
                                                     --------------  -----------
   Unrealized gain (loss) on marketable securities        $543         $(22,856)
                                                          ====         =========


                                       13
<PAGE>

                     SPECTRIAN CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
                                   (Unaudited)

13.      COMMITMENTS

         Purchase Commitments

         As  described  in Note 2, the  Company  has  signed a  two-year  supply
agreement  with  Cree  on  December  29,  2000  to  purchase  $58.0  million  of
semiconductors.  The Company fulfilled its purchase obligation for the three and
the nine months ended  December 30, 2001 and  recognized  $7.5 million and $23.3
million of the deferred gain, respectively. As of December 30, 2001, the Company
has an obligation to purchase an additional $27.9 million of semiconductors from
Cree under the supply agreement.  The amount of purchase  commitment is included
in deferred gain on the condensed consolidated balance sheets.

14.      LINE OF CREDIT

         The Company has a revolving line of credit of $10.0 million with a bank
collateralized  by the  majority  of the  Company's  assets.  The line of credit
expires on June 30, 2002. Under the terms of the master agreement governing this
credit  instrument,  as amended,  the  Company is  required to maintain  certain
minimum  working  capital  and  other  specific  financial  ratios.  The  master
agreement also has certain restrictions on other indebtedness and the payment of
dividends.  At  December  30,  2001,  the  Company  was in  compliance  with the
covenants of the master  agreement.  The amount  available to borrow at December
30,  2001,  was $10.0  million.  The Company can borrow at either (i) a variable
rate  equal to the prime  rate or (ii) a fixed  rate  equal to 200 basis  points
above  the  LIBOR  rate,   which  at  December  30,  2001  was  4.8%  and  3.9%,
respectively. The Company had no borrowings under the line of credit at December
30, 2001.


                                       14
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The  statements  contained  in this  Quarterly  Report on Form 10-Q that are not
purely historical are  forward-looking  statements within the meaning of Section
27A of the Securities Act of 1933 (the "Securities  Act") and Section 21E of the
Securities  Exchange  Act of 1934 (the  "Exchange  Act"),  including  statements
regarding   Spectrian   Corporation's  ("the  Company")   expectations,   hopes,
intentions  or  strategies  regarding  the future.  When used herein,  the words
"may,"  "will,"  "expect,"  "anticipate,"   "continue,"  "estimate,"  "project,"
"intend"  and similar  expressions  are  intended  to  identify  forward-looking
statements  within  the  meaning of the  Securities  Act and the  Exchange  Act.
Forward looking  statements  include,  but are not limited to: the statements in
the fourth paragraph of "Overview" regarding the impact on the Company of a loss
of a major OEM customer and the future fluctuations of Nortel product orders, in
the fifth  paragraph  regarding  international  sales as a percentage  of future
revenues,  the impact of currency fluctuations on future revenues and the impact
of  expatriation  rules on the Company in the seventh  paragraph  regarding  the
timing of the transfer of power  amplifier  repair  operations,  and in the last
paragraph regarding average selling prices and gross margins;  the statements in
the second paragraph under "Results of Operations - Cost of Revenues"  regarding
the gross margin as a percentage of net revenues;  the statements under "Results
of Operations - Restructuring  Costs"  regarding the timing of the completion of
the  restructuring  and the  reduction in force due to the  reorganization;  the
statements   under  "Results  of  Operations  -  Income  Taxes"   regarding  the
recoverability  and the recording of the net deferred tax asset;  the statements
in the last paragraph  under  "Liquidity and Capital  Resources"  concerning the
anticipated  spending  for capital  additions  for the next twelve  months,  the
sufficiency of the Company's  available  resources to meet cash requirements and
the factors which will determine the Company's future cash requirements; and the
statements in "Factors Affecting Future Operating Results." Results could differ
materially  based on  various  factors  including,  but not  limited  to,  those
described below,  under the heading "Factors Affecting Future Operating Results"
and elsewhere in this Quarterly Report on Form 10-Q.

All   forward-looking   statements  included  in  this  document  are  based  on
information available to the Company on the date hereof, and the Company assumes
no  obligation  to update any such  forward-looking  statements.  Investors  are
cautioned  that any  forward-looking  statements  are not  guarantees  of future
performance and are subject to risks and  uncertainties  and that actual results
may differ materially from those included within the forward-looking  statements
as a result of various  factors.  These  forward-looking  statements are made in
reliance  upon the safe harbor  provision of The Private  Securities  Litigation
Reform Act of 1995.

Overview

         Spectrian   Corporation   ("Spectrian"   or  the  "Company")   designs,
manufacturers and markets high-power radio frequency ("RF") amplifiers,  for the
global wireless communications  industry. The Company's power amplifiers support
a broad  range  of  transmission  standards,  including  Advanced  Mobile  Phone
Services  ("AMPS"),  Time  Division  Multiple  Access  ("TDMA"),  Code  Division
Multiple Access ("CDMA" and "CDMA2000"), Personal Communications System ("PCS"),
Global System for Mobil  Communications  ("GSM"),  Wireless  Local Loop ("WLL"),
Universal Mobile  Telephone  Service  ("UMTS") and IMT-2000.  Spectrian's  power
amplifiers  are utilized as part of the  infrastructure  for both wireless voice
and data networks. The Company's power amplifiers boost the power of a signal so
that  it can  reach a  wireless  phone  or  other  device  within  a  designated
geography.

         On December 29, 2000, the Company  completed the sale of  substantially
all  of  the  assets  and  external  liabilities  comprising  its  semiconductor
division,  UltraRF,  to Cree,  Inc.  ("Cree")  pursuant  to the  Asset  Purchase
Agreement dated as of November 20, 2000 (the "Asset Purchase  Agreement")  among
Cree, Zoltar  Acquisition,  Inc. ("Zoltar") and the Company for 1,815,402 shares
of common stock of Cree plus common stock with a guaranteed  realizable value of
$30 million,  less $1,141,000 owed by the Company to


                                       15
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Cree due to a change in the net  assets of UltraRF  between  October 1, 2000 and
December 29, 2000.  As part of the  definitive  agreement,  the Company and Cree
entered into a two-year supply agreement, which was amended on October 19, 2001,
under which  Spectrian is  obligated  to purchase  from Cree an aggregate of $58
million of semiconductors. In the event Spectrian fails to make these purchases,
it is obligated to purchase excess inventory that it may never utilize or to pay
Cree the amount of the shortfall. Accordingly, Spectrian deferred $58 million of
the gain on sale of UltraRF  and is  recognizing  it in  periods as the  related
purchase  commitments to Cree are being fulfilled.  In the three and nine months
ended December 30, 2001,  Spectrian  fulfilled its purchase obligation under the
contract and  recognized  $7.5 million and $23.3  million of the deferred  gain,
respectively.  Spectrian and Cree also entered into a one-year joint development
agreement to develop advanced  technologies  related to laterally diffused metal
oxide  semiconductors  ("LDMOS"),  linear high gain LDMOS driver  modules,  high
efficiency LDMOS power modules and SiC MESFET components.  The joint development
agreement  expired on  December  29,  2001.  Following  the close of the sale of
UltraRF,  the  Company  no longer  has  revenues  related to the sale of UltraRF
products to third party  customers.  Additionally,  as a result of the sale, the
Company's cost of semiconductors used in the manufacturing of amplifier products
have  increased  because  purchases from UltraRF are at fair market value rather
than at manufacturing cost as was the case historically.

         For  the  three  months  ended  December  30,  2001,   Nortel  Networks
Corporation   ("Nortel"),   Cingular   Wireless   LLC   ("Cingular"),    Verizon
Communications  ("Verizon")  and  Samsung  Electronics  Co.,  Ltd.  ("Samsung"),
accounted for approximately 28%, 21%, 21% and 19% of net revenues, respectively.
For the nine months  ended  December  30,  2001,  Nortel,  Samsung and  Verizon,
accounted for approximately 56%, 15% and 12% of net revenues,  respectively. For
the three months ended December 31, 2000, Nortel, Samsung and Verizon, accounted
for approximately 55%, 25% and 13% of net revenues,  respectively.  For the nine
months ended December 31, 2000,  Nortel and Verizon  accounted for approximately
60% and 20% of net revenues, respectively.

         The Company and Nortel have a supply agreement,  renegotiated annually,
pursuant  to which  Nortel  commits to  purchase a certain  volume of its annual
power  amplifier  requirements  for  specified  prices  from the  Company.  This
agreement  allows  Nortel to change  the  product  mix  requirements,  which can
significantly  affect  the  Company's  gross  margins,  and to change  requested
delivery  dates without  significant  financial  consequences  to Nortel,  which
affects the Company's  ability to efficiently  manage  production  schedules and
inventory  levels  and to  accurately  forecast  product  sales.  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  customer
requirements.  In the past,  product orders from Nortel have fluctuated  sharply
and the  Company  does not  currently  sell any  multicarrier  power  amplifiers
("MCPA") products to Nortel, which has adversely affected the Company's revenues
and  earnings.  There can be no assurance  that the Company will not  experience
such  fluctuations in the future or that the Company will receive any orders for
MCPA products from Nortel in the future.  If the Company is unable to find other
customers to generate  demand for its new and existing  products,  the Company's
revenues  may be  materially  adversely  affected.  If the Company  were to lose
Nortel, Verizon,  Cingular, Samsung or any other major customer, or if orders by
Nortel, Verizon, Cingular, Samsung or any other major 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.

         During the three months ended  December 30, 2001 and December 31, 2000,
sales  outside  of  the  United  States  were  49%  and  77%  of  net  revenues,
respectively.  During the nine months  ended  December 30, 2001 and December 31,
2000,  sales  outside of the  United  States  were 64% and 73% of net  revenues,
respectively.  The Company  expects that  international  sales will  continue to
account for a  significant  percentage  of the  Company's  net  revenues for the
foreseeable future. Financial market turmoil,  economic downturn,  consolidation
or merger of customers,  and other changes in business  conditions in any of the


                                       16
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Company's current or future markets,  such as Canada, South Korea, China, France
and Brazil,  may have a material  adverse  effect on the Company's  sales of its
products.  Furthermore,  because the Company's products are predominantly priced
in U.S. dollars,  currency fluctuations and instability in the financial markets
that are  served by the  Company  may have the  effect of making  the  Company's
products more  expensive  than those of other  manufacturers  whose products are
priced in the local currency of the customer and may result in reduced  revenues
for the Company. In addition, a portion of the Company's  international revenues
are  denominated in foreign  currencies.  Due to the passage of time between the
pricing and sale of its  products,  the  Company may be unable to  competitively
adjust its prices to reflect  fluctuations in the exchange rate which may result
in reduced  revenues.  Also, due to expatriation  laws or regulations in foreign
countries,  the Company may be restricted or impaired from  exchanging its local
currency into U.S. dollars which would adversely affect the Company's operations
and financial condition.

         The Company utilizes  contract  manufacturers to decrease the Company's
manufacturing  overhead and cost of its  products,  to increase  flexibility  to
respond to  fluctuations  in product demand and to leverage the strengths of the
contract  manufacturer's focus on high volume, high quality  manufacturing.  The
cost of transitioning manufacturing activities to the contract manufacturer were
higher than the savings from costs of  products,  which  adversely  affected the
Company's gross margins from January 1999 to November 2000. Although the Company
has transitioned substantially all of its manufacturing activities to an outside
contract  manufacturer,  the Company  still has  significant  fixed costs and is
therefore   dependent  upon   substantial   revenues  to  achieve  and  maintain
profitability.  See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Factors Affecting Future Operating Results - Sole or
Limited Sources of Products, Materials and Services."

         Prior to July 2001, the Company  serviced its power amplifier  products
in  Sunnyvale,  California.  During the three  months  ended  July 1, 2001,  the
Company began to transition its power amplifier repair  operations to a contract
manufacturer  located in  Thailand.  As of December  30, 2001, a majority of the
Company's power amplifier products are serviced by the contract  manufacturer in
Thailand.  The Company  anticipates  that the  transfer of its  remaining  power
amplifier repair operations will be completed no later than June 30, 2002.

         The  market  for  the  Company's  products  is  becoming   increasingly
competitive. The Company sells its power amplifier products in several countries
where its  competitors are already well  established as suppliers.  In addition,
the Company competes with several merchant amplifier  manufacturers for business
from Nortel,  Verizon,  Cingular  and  Samsung.  Also,  major  manufacturers  of
wireless  communications  equipment have elected to enter the merchant amplifier
business and compete directly with the Company. For example, Lucent Technologies
Inc.  formed  and spun out  Celiant  Corporation,  which has  become  one of the
Company's   principal   competitors  in  the  merchant  amplifier  market.  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.


                                       17
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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 gross margin on sales.

<TABLE>
<CAPTION>
                                                        Three Months Ended                     Nine Months Ended
                                                 ----------------------------------    ----------------------------------
                                                  December 30,      December 31,         December 30,     December 31,
                                                      2001              2000                 2001             2000
                                                 ---------------- -----------------    ----------------- ----------------
<S>                                                   <C>              <C>                  <C>              <C>
NET REVENUES                                          100.0%           100.0%               100.0%           100.0%
                                                     ------           ------               ------           ------
COSTS AND EXPENSES:
  Cost of revenues                                     94.4             76.8                101.8             80.8
  Research and development                             22.4             10.5                 23.0             12.1
  Selling, general and administrative                  19.1             10.3                 18.6             12.6
  Restructuring costs                                    --               --                  0.9               --
                                                     ------           ------               ------           ------
     Total costs and expenses                         135.9             97.6                144.3            105.5
                                                     ------           ------               ------           ------
OPERATING INCOME (loss)                               (35.9)             2.4                (44.3)            (5.5)

INTEREST INCOME                                         3.3              1.1                  3.5              1.2
INTEREST EXPENSE                                         --             (0.1)                  --             (0.1)
OTHER INCOME, NET                                      29.5             22.7                 12.8              8.6
                                                     ------           ------               ------           ------
INCOME (LOSS) BEFORE INCOME TAXES
                                                       (3.2)            26.1                (28.0)             4.2
INCOME TAXES                                             --               --                   --               --
                                                     ------           ------               ------           ------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE
  IN ACCOUNTING PRINCIPLE                              (3.2)            26.1                (28.0)             4.2
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE - ADOPTION OF SFAS 133                       --               --                  0.6               --
                                                     ------           ------               ------           ------
NET INCOME (LOSS)                                      (3.2)%           26.1%               (27.4)%            4.2%
                                                     ======           ======               ======           ======

GROSS MARGIN ON SALES                                   5.6%            23.2%                (1.8)%           19.2%
                                                     ======           ======               ======           ======
</TABLE>

         Net Revenues. The Company's net revenues decreased 50% to $25.5 million
for the three  months ended  December 30, 2001 from $51.4  million for the three
months ended  December 31, 2000.  The  Company's  net revenues  decreased 44% to
$76.3  million for the nine months ended  December 30, 2001 from $135.5  million
for the nine months  ended  December  31,  2000.  The  decrease in net  revenues
compared to the three and nine months ended  December 31, 2000 was primarily due
to lower demand and reduced  average  selling  prices for the  Company's  single
carrier power amplifier  ("SCPA")  products as a result of reductions in capital
spending  and  replacement  of SCPA  with  MCPA in new  product  designs  by the
Company's  customers and, to a lesser degree,  lower demand and average  selling
price for some of the Company's  MCPA products.  MCPA revenues  decreased 15% to
$17.9  million for the three months ended  December 30, 2001 from $21.1  million
for the three months ended  December 31, 2000.  SCPA  revenues  decreased 77% to
$6.4 million for the three months ended December 30, 2001 from $27.8 million for
the three months ended December 31, 2000.  Broadband  revenues decreased 100% to
none for the three  months ended  December 30, 2001 from  $691,000 for the three
months ended December 31, 2000.

         For the nine months ended  December 30, 2001,  MCPA revenues  decreased
19% to $31.6 million from $39.0  million for the nine months ended  December 31,
2000.  SCPA  revenues  decreased  50% to $40.1


                                       18
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

million for the nine months ended  December 30, 2001 from $80.3  million for the
nine months  ended  December  31,  2000.  Broadband  revenues  decreased  94% to
$576,000 for the nine months ended  December 30, 2001 from $10.4 million for the
nine months ended December 31, 2000.

         Cost of  Revenues.  Cost of  revenues  consists  primarily  of  turnkey
amplifier costs for the Company's products, internal amplifier assembly and test
costs, RF  semiconductor  fabrication,  assembly and test costs,  raw materials,
manufacturing overhead and warranty costs. The Company's cost of sales decreased
by 39% to $24.0 million for the three months ended  December 30, 2001 from $39.5
million for the three months ended  December 31,  2000.  The  Company's  cost of
sales  decreased by 29% to $77.6 million for the nine months ended  December 30,
2001 from $109.5  million for the nine  months  ended  December  31,  2000.  The
decrease on a dollar basis for the three and nine months ended December 30, 2001
was due to lower sales,  partially offset by the higher costs of  semiconductors
because  purchases  from  UltraRF  are at  fair  market  value  rather  than  at
manufacturing  cost as had previously been the case and increased write offs for
excess and obsolete inventory and lower of cost or market.

         Gross margin on sales was 6% for the three  months  ended  December 30,
2001 as compared to 23% for the three  months ended  December  31,  2000.  Gross
margin on sales was (2)% for the nine months ended December 30, 2001 as compared
to 19% for the nine months ended December 31, 2000. The decrease in gross margin
for the  three  and  nine  months  ended  December  30,  2001  was due to  lower
production  volumes to absorb  fixed  overhead  costs,  a decline in the average
selling prices of SCPA products and some MCPA products, increased write offs for
excess  and  obsolete  inventory  and  lower  of cost  of  market.  The  Company
anticipates  that gross profit as a percentage  of net revenues will continue to
be adversely effected by continued declining average selling prices,  especially
for SCPA products,  and as a result of the sale of the UltraRF  division to Cree
as the  Company is  required to  purchase  the LDMOS RF  semiconductor  parts at
market price rather than  recognizing the cost of revenues at the actual cost of
production.

         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 5% to
$5.7 million in the three  months  ended  December 30, 2001 from $5.4 million in
the three months ended December 31, 2000.  The Company's R&D expenses  increased
by 7% to $17.5  million in the nine months  ended  December  30, 2001 from $16.3
million in the nine months  ended  December 31,  2000.  As a  percentage  of net
revenues,  R&D  expenses  represented  22% of net  revenues for the three months
ended  December 30, 2001 as compared to 11% of net revenues for the three months
ended  December  31,  2000.  As a  percentage  of  net  revenues,  R&D  expenses
represented  23% of net revenues for the nine months ended  December 30, 2001 as
compared to 12% of net revenues for the nine months ended December 31, 2000. The
increase in R&D expenses on a dollar  basis for the three months ended  December
30,  2001 was due to new  product  development  initiatives  which  the  Company
believes  are   required  to  meet  current  and  future   market  and  customer
requirements and the $600,000 cost of the joint  development  agreement  between
the Company and Cree,  partially  offset by the  elimination  of R&D expenses of
UltraRF as a result of the sale of UltraRF in December 2000. The increase in R&D
expenses on a dollar basis for the nine months  ended  December 30, 2001 was due
to new product  development  initiatives  and the $1.8 million cost of the joint
development  agreement  between the Company  and Cree,  partially  offset by the
elimination of R&D expenses of UltraRF. The joint development  agreement was not
in place during the three and nine months ended  December 31, 2000. The increase
in R&D  expenses as a  percentage  of net revenues for the three and nine months
ended  December  30,  2001 was due to higher R&D  expense on a dollar  basis and
lower revenues as compared to the similar periods in the prior year.

         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  decreased  by 8% to $4.9  million in the three months
ended December 30, 2001 from $5.3 million in the three months ended December 31,
2000. The Company's SG&A expenses  decreased by 17% to $14.2 million in the nine
months  ended  December  30, 2001


                                       19
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

from $17.1  million in the nine months ended  December 31, 2000. As a percentage
of net  revenues,  SG&A expenses  represented  19% of net revenues for the three
months ended  December 30, 2001 as compared to 10% of net revenues for the three
months ended  December 31, 2000. As a percentage of net revenues,  SG&A expenses
represented  19% of net revenues for the nine months ended  December 30, 2001 as
compared to 13% of net revenues for the nine months ended December 31, 2000. The
decrease in SG&A  expenses on a dollar basis for the three and nine months ended
December 30, 2001, was primarily due to lower commissions  associated with lower
sales as compared to the similar  periods in the prior year and reduced  general
and administrative spending as a result of cost reduction actions implemented by
management  and  the  sale of  UltraRF.  The  increase  in  SG&A  expenses  as a
percentage of net revenues for the three and nine months ended December 30, 2001
was due to lower revenues as compared to the similar periods in the prior year.

         Restructuring  Costs.  During the three months ended July 1, 2001,  the
Company began to transfer its power  amplifier  repair  operations in Sunnyvale,
California,  to a contract  manufacturer located in Thailand. In connection with
the decision,  the Company recognized in the three months ended July 1, 2001, an
approximately  $686,000  restructuring  charge  for  estimated  severance  costs
related to  organizational  changes and a planned reduction in work force and to
write off  property  and  equipment  that have no future  value to the  Company.
Approximately 60 employees  engaged in the repair operations were anticipated to
be  terminated  as a result  of the  restructuring.  As of  December  30,  2001,
approximately  50  employees   engaged  in  the  repair   operations  have  been
terminated.  The Company anticipates that the restructuring will be completed no
later than June 30, 2002.

         Interest  Income.  Interest  income for the three months ended December
30, 2001 increased to $836,000 from $563,000 for the three months ended December
31, 2000.  Interest income for the nine months ended December 30, 2001 increased
to $2.7 million  from $1.7 million for the nine months ended  December 31, 2000.
The increase in interest  income on a dollar basis for the three and nine months
ended  December  30,  2001  resulted  from  higher  interest-bearing  investment
balances  associated  with higher  average  cash and cash  equivalent  balances,
partially offset by lower average interest rates.

         Interest Expense.  Interest expense for the three months ended December
30, 2001  decreased to $3,000 from  $73,000 for the three months ended  December
31, 2000. Interest expense for the nine months ended December 30, 2001 decreased
to $11,000  from  $162,000 for the nine months  ended  December  31,  2000.  The
decrease  in  interest  expense on a dollar  basis for the three and nine months
ended December 30, 2001 was a result of substantially  reduced average borrowing
levels  due to  repayments  of  debt  and  capital  lease  obligations  made  in
association with the sale of UltraRF.

         Other Income and Loss. Other income for the three months ended December
30,  2001 was $7.5  million as compared  to $11.7  million for the three  months
ended  December  31, 2000.  Other income for the nine months ended  December 30,
2001 was $9.8  million as  compared to $11.7  million for the nine months  ended
December  31, 2000.  Other  income for the three months ended  December 30, 2001
represented  the $7.5 million of non-cash  deferred  gain on the sale of UltraRF
recognized  upon the  satisfaction  of the Company's RF  semiconductor  purchase
commitment  to Cree.  Other income for the nine months  ended  December 30, 2001
included  $23.3  million  of  non-cash  deferred  gain on the  sale  of  UltraRF
recognized  upon the  satisfaction  of the Company's RF  semiconductor  purchase
commitment  to Cree and a $3.9  million  gain on Cree stock  options,  partially
offset by a $17.4  million  realized  loss on sale of Cree common  stock.  Other
income for the three and nine months ended December 31, 2000 represented a $11.7
million gain recognized on the sale of UltraRF.

         Income Taxes.  The Company did not record income tax expense except for
minimum  state  taxes  and  foreign  taxes in the three  and nine  months  ended
December 30, 2001 and December 31, 2000.  Due to


                                       20
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

the  uncertainties  surrounding  the  realization  of the  deferred  tax  assets
resulting from the Company's  accumulated deficit and net losses incurred in the
fiscal  years  ended March 31,  2001,  March 31,  2000 and March 31,  1999,  the
Company has provided a valuation allowance against deferred tax assets where the
realization  was uncertain.  The Company will continue to evaluate  positive and
negative  evidence  on the  recoverability  of its net  deferred  tax asset each
quarter and will record the net  deferred  tax asset when it is more likely than
not that it will be recovered.

         Cumulative  Effect of Change in  Accounting  Principle  -  Adoption  of
SFAS133. On April 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended by Statement of Financial  Accounting  Standards No. 137,  Accounting
for Derivative  Instruments  and Hedging  Activities - Deferral of the Effective
Date of FASB  Statement  No. 133, an  amendment of FASB  Statement  No. 133, and
Statement of Financial  Accounting  Standards  No. 138,  Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities,  an amendment of FASB
Statement  No. 133  (referred to  hereafter as "SFAS 133").  In the three months
ended  March  31and  July 1, 2001,  the  Company  entered  into  various  option
arrangements  known as a cashless collar, to hedge its investment in Cree common
stock,  which was acquired through the sale of UltraRF.  The Company  designated
these option  arrangements  as fair value  hedges under SFAS 133. In  accordance
with the transition  provisions of SFAS 133, the Company recorded an approximate
$494,000 gain cumulative effect adjustment in earnings as of April 1, 2001.

Recent Accounting Pronouncements

         In July 2001, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  No. 141 ("SFAS  141"),  "Business
Combinations."  SFAS 141 requires the purchase method of accounting for business
combinations    initiated    after   June   30,   2001   and    eliminates   the
pooling-of-interests  method. The Company believes that the adoption of SFAS 141
to date has not had a significant impact on their financial statements.

         In July  2001,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is
effective for fiscal years beginning after December 15, 2001. SFAS 142 requires,
among other things,  the discontinuance of goodwill  amortization.  In addition,
the standard  includes  provisions  upon  adoption for the  reclassification  of
certain existing recognized intangibles as goodwill,  reassessment of the useful
lives  of  existing   recognized   intangibles,   reclassification   of  certain
intangibles out of previously  reported  goodwill and the testing for impairment
of  existing  goodwill  and other  intangibles.  The Company  believes  that the
adoption  of SFAS  142  will  not have a  significant  impact  on its  financial
statements.  The Company will adopt SFAS 142 in the quarter  beginning  April 1,
2002.

         In October  2001,  the FASB issued  Statement of  Financial  Accounting
Standards No. 144 ("SFAS 144"),  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets," which is effective for fiscal years beginning after December
15, 2001 and  interim  periods  within  those  fiscal  periods.  This  Statement
supersedes FASB Statement No. 121,  "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived  Assets to be Disposed of" and  Accounting  Principals
Board  Opinion No. 30 ("APB 30"),  "Reporting  Results of Operations - Reporting
the Effects of Disposal of a Division of a Business",  however,  this  Statement
retains the requirement of APB 30 to report discontinued  operations  separately
from  continuing  operations  and extends  that  reporting  to a component of an
entity  that  either has been  disposed  of (by sale,  by  abandonment,  or in a
distribution  to  owners)  or is  classified  as held for sale.  This  Statement
addresses  financial  accounting  and  reporting  for the  impairment of certain
long-lived  assets and for long-lived assets to be disposed of. The Company does
not expect the adoption of SFAS 144 to have a material  impact on the  Company's
financial position and results of operations.


                                       21
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources

         The Company has  financed  its growth  through  sales of common  stock,
private sales of equity  securities,  sales of Company  assets or  subsidiaries,
capital equipment  leases,  bank lines of credit and cash flows from operations.
Principal  sources of liquidity at December 30, 2001  consisted of cash and cash
equivalents and short-term debt investments, which total $95.2 million, and bank
borrowing arrangements.

         The Company has a revolving line of credit of $10.0 million with a bank
collateralized  by the  majority  of the  Company's  assets.  The line of credit
expires on June 30, 2002. Under the terms of the master agreement governing this
credit  instrument,  as amended,  the  Company is  required to maintain  certain
minimum  working  capital  and  other  specific  financial  ratios.  The  master
agreement also has certain restrictions on other indebtedness and the payment of
dividends.  At  December  30,  2001,  the  Company  was in  compliance  with the
covenants of the master  agreement.  The amount  available to borrow at December
30, 2001 was $10.0 million. The Company can borrow at either (i) a variable rate
equal to the prime rate or (ii) a fixed rate equal to 200 basis points above the
LIBOR rate,  which at December  30,  2001 was 4.8% and 3.9%,  respectively.  The
Company had no borrowings under the line of credit as of December 30, 2001.

         The  Company's  working  capital  decreased  by $18.8  million to $86.1
million as of December 30, 2001 from $104.9  million as of March 31,  2001.  The
decrease was  primarily  attributable  to a $21.1  million  decrease in cash and
short-term  investments,  a  $10.5  million  decrease  in  accounts  receivable,
partially  offset by a $1.7  million  increase  in net  inventories,  a $532,000
increase  in prepaid  and other  current  assets,  a $7.1  million  decrease  in
accounts  payable,  a $3.7 million  decrease in  short-term  deferred  gain as a
result of fulfilling the $23.3 million minimum  purchase  commitments to Cree in
the  nine  months   ended   December   30,   2001,   partially   offset  by  the
reclassification  of $19.7  million from  long-term  deferred gain to short-term
deferred gain. As of December 30, 2001, the Company had income taxes  receivable
of $1.8 million for  expected tax refunds  based upon the fiscal 2001 income tax
returns filed in December 2001.

         Cash used by  operations  was $25.0  million for the nine months  ended
December 30, 2001 compared to cash  provided by  operations  for the nine months
ended  December 31, 2000 of $7.0 million.  Cash used by operations  for the nine
months ended December 30, 2001 was principally the result of a $20.9 million net
loss,  increased by a $23.3  million  recognized  non-cash gain from the sale of
UltraRF,  a $7.1 million  decrease in accounts  payable due to cash payments and
lower production volumes associated with lower sales, a $1.7 million increase in
net inventories and a $532,000 increase in prepaid and other assets,  which were
partially  offset by a $13.0  million  realized loss from the sale of short-term
investments  which  resulted from the  liquidation  of all Cree common stock and
options  held as of  March  31,  2001,  a $10.5  million  decrease  in  accounts
receivable  as a result  of cash  collected  and  lower  sales,  a $3.9  million
depreciation and amortization expense and a $1.0 million loss on the disposition
of property and equipment.

         Cash provided by operations for the nine months ended December 31, 2000
was  principally  the result of a $5.7 million of net income,  depreciation  and
amortization of $8.3 million,  a $6.9 million decrease in net inventories,  a $3
million  increase in accounts  payable,  which were partially offset by an $11.7
million noncash gain on the sale of UltraRF net assets, a $4 million increase in
accounts  receivable as a result of higher sales in the quarter  ended  December
31, 2000 and an $1.4  million  increase in prepaid  expenses  and other  current
assets.

         The  Company's  investing  activities  during  the  nine  months  ended
December 30, 2001  provided cash of  approximately  $42.2 million as compared to
using cash of $3.2  million for the nine months ended  December  31, 2000.  Cash
provided by investing  activities during the nine months ended December 30, 2001
resulted  primarily  from $71.0  million  proceeds  from sale and  maturities of
short-term  investments,


                                       22
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

which included  approximately  $44.7 million generated from the sale of all Cree
common stock and options  held as of March 31,  2001,  and $6.5 million from the
release of  restricted  cash,  which  represented  the amount  held in escrow to
secure the Company's  representations,  warranties and covenants  related to the
sale of UltraRF to Cree,  partially  offset by $30.3  million  in  purchases  of
short-term investments,  $2.9 million in additions to property and equipment and
a $2.0  million  minority  investment  in Paragon  Communications  Ltd.  Capital
additions  for the nine months ended  December 30, 2001  included  manufacturing
test  and  production  equipment  required  to  support  new  products  and test
equipment to support various research and development projects.

         Cash used by investing activities during the nine months ended December
31, 2000  resulted  primarily  from $6.8  million in  additions  to property and
equipment,  $2.8 million in payments for transaction  costs  associated with the
sale of UltraRF and $3 million in purchases of short-term investments which were
partially offset by $9.2 million proceeds from sale and maturities of short-term
investments.  Capital  additions  for the nine months  ended  December  31, 2000
included  manufacturing  test and production  equipment  required to support new
products  and  test  equipment  to  support  various  research  and  development
projects.

         The  Company's  financing  activities  during  the  nine  months  ended
December  30,  2001 used cash of  approximately  $1.5  million  as  compared  to
providing $2.9 million of cash for the nine months ended December 31, 2000. Cash
used by financing  activities during the nine months ended December 30, 2001 was
the result of $2.9 million in purchases of treasury  stock,  which was partially
offset by $1.5 million  proceeds from the issuance of common stock,  through the
exercise of employee stock options and employee stock purchase plan activity.

         Cash  provided by  financing  activities  during the nine months  ended
December 31, 2000 was the result of $4.9 million  proceeds  from the issuance of
common stock,  through the exercise of employee stock options and employee stock
purchase plan activity, which was partially offset by $2.0 million in repayments
of debt and capital lease obligations.

         In September 2001, the Board of Directors  authorized the repurchase of
up to $10 million of the Company's  common  stock.  During the nine months ended
December 30, 2001, the Company repurchased  approximately  293,700 shares of its
common stock for approximately $2.9 million. As part of the sale of UltraRF, the
Company has  committed  to purchase  $58.0  million of  semiconductors  over the
two-year period ending December 2002. As of December 30, 2001, the Company has a
remaining  obligation to purchase $27.9 million of semiconductors from Cree. The
Company  anticipates  spending  approximately  $5.0 million over the next twelve
months for capital additions primarily to support  manufacturing  production and
test  requirements  and  development  projects.  Based on the Company's  current
working capital position and the available line of credit,  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 future
periods will depend on the Company's profitability,  timing and level of capital
expenditures, working capital requirements and rate of growth.


                                       23
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Factors Affecting Future Operating Results

         Customer  Concentration;  Dependence on Nortel,  Verizon,  Cingular and
Samsung.  The wireless  infrastructure  equipment market is dominated by a small
number of large OEMs and wireless service providers,  including Ericsson, Nokia,
Lucent, Motorola,  Samsung, Nortel, Verizon, Cingular and Siemens. The Company's
revenues are derived  primarily from sales to a limited number of customers,  in
particular,  Nortel, Verizon, Cingular and Samsung.  Furthermore,  a substantial
portion of revenues from Nortel in the past has 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 customer  requirements.  The Company and Nortel
have a supply agreement, renegotiated annually, pursuant to which Nortel commits
to purchase a certain  volume of its annual  power  amplifier  requirements  for
specified  prices from the Company.  This agreement  allows Nortel to change the
product mix  requirements,  which can  significantly  affect the Company's gross
margins,  and to change requested delivery dates without  significant  financial
consequences  to Nortel,  which  affects the  Company's  ability to  efficiently
manage  production  schedules  and inventory  levels and to accurately  forecast
product  sales.  Any  reduction  in the  level  of  purchases  of the  Company's
amplifiers by Nortel, Verizon, Cingular or Samsung, 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. For example,
in the second  and third  quarters  of the fiscal  year  ending  March 31,  2002
("fiscal 2002") product orders from Nortel fell drastically and the Company does
not currently sell any MCPA products to Nortel, which has adversely affected the
Company's business.  There can be no assurance that the Company will receive any
product  orders for MCPA  products  from Nortel in the future.  If the Company's
current or new customers do not generate sufficient demand for the Company's new
products replacing prior demand from Nortel, the Company's  business,  financial
condition and results of  operations  could be  materially  adversely  affected.
Further, if the Company were to lose Nortel, Verizon, Cingular or Samsung or any
other major customer, the Company's business, financial condition and results of
operations  would  be  materially  adversely  affected.  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  Nortel,  Verizon,  Cingular,  Samsung  and other major
customers  in future  periods,  which could result in  declining  average  sales
prices and gross margins 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 and costs; competitive factors
such as the  pricing,  availability,  and  demand  for  competing  amplification
products;  changes in average  sales prices and related gross margins which vary
significantly based upon product mix; subcontractor  performance;  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  products;  the timing and level of product  and
process development costs; changes in inventory levels; the relative strength or
weakness  of  international  financial  markets  and the  financial  strength of
domestic 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 past has caused significant fluctuations in the
Company's  product


                                       24
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

sales.  For the nine months ended  December  30, 2001 when  compared to the nine
months ended December 31, 2000, the Company experienced negative sales growth as
a  result  of  delays  and  reductions  in  capital  spending  by the  Company's
customers.  There can be no assurance that the Company will not experience  such
fluctuations in the future or that the Company will experience in the future the
same annual  revenue  growth  that it did in fiscal  2000 and 2001.  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.  Currently,  the
Company has a  relatively  high level of  inventory  on hand.  Consequently,  if
customer demand falls below the Company's  forecast,  it may experience  charges
related to the write down of inventory.  The Company is not currently profitable
and  there  can be no  assurance  that  the  Company  will  be  profitable  on a
quarter-to-quarter  or annual  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.

         Economic Recession or other Economic Conditions. The Company's revenues
are derived  primarily from sales to wireless service  providers and OEMs in the
wireless  infrastructure  equipment  market.  Any  significant  downturn  in the
wireless   infrastructure   equipment   market,  or  domestic  or  international
conditions,  which result in the reduction of capital expenditure budgets or the
delay in  product  orders of the  Company's  customers  would  likely  produce a
decline in demand for the Company's power amplifier products.  Since early 2001,
the wireless  infrastructure  equipment  market has  experienced  a  significant
decline in revenue and product  orders.  In addition,  the terrorist  attacks of
September 11, 2001,  the subsequent  military  response by the United States and
future  events  occurring in response to or in  connection  with the attacks may
negatively impact the economy in general.  If the Company's  customers decide to
delay their product orders or reduce their capital  expenditures  as a result of
any of these  occurrences,  the Company's  results of  operations,  revenues and
financial condition would be adversely affected.

         Declining  Average  Sales  Prices.  The  Company has  experienced,  and
expects to  continue  to  experience,  declining  average  sales  prices for its
products,  especially  in the  market  for its  SCPAs.  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  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.

         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.  Power
amplifiers  as  complex  as  those  offered  by  the  Company  often   encounter
development delays and may contain  undetected defects or failures.  The Company
has from time to time in the past experienced  product quality,  performance and
reliability   problems.  In  addition,  a  MCPA  has  a  higher  probability  of
malfunction  than a SCPA  because  of its  greater  complexity.  There can be no
assurance that defects or failures  relating to the Company's  product  quality,
performance  and  reliability  will  not  occur  in the  future  that may have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.


                                       25
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         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  a  significant  volume  of
amplifiers from outside suppliers. In addition, these manufacturers could decide
to sell amplifiers to other wireless equipment OEMs, either through direct sales
or by spinning out their amplifier division as a separate entity. If this should
occur,  the competition for power amplifiers  would  significantly  increase and
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.

         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  power  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 do not continue to purchase  their power
amplifiers  from  merchant  suppliers,   the  Company's  business,   results  of
operations and financial condition will be materially adversely affected.

         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  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. A softening of demand in the markets served by the Company or a failure
of 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,  including the Company's new MCPA products,  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.

         Purchase  and  Supply  Agreement  with  Cree.  In  connection  with the
Company's  completion of the sale of UltraRF to Cree, the Company entered into a
Purchase and Supply Agreement,  dated as of December 29, 2000 by and between the
Company and UltraRF,  as amended on October 19, 2001 (the  "Purchase  and Supply
Agreement").  Pursuant  to  the  Purchase  and  Supply  Agreement,  the  Company
committed  to  purchase  and accept  delivery  from  UltraRF  of $58  million of
semiconductors  over a two-year  period  starting  January  2001.  The quarterly
commitments to purchase and accept  delivery of  semiconductor  components  from
UltraRF range from  approximately  $6.6 million to $8.3 million.  As of December
30, 2001, the Company's  remaining  purchase  commitment was $27.9 million.  The
Company's  need  for  UltraRF  components  during  a  calendar  quarter  may  be
insufficient to satisfy its minimum  commitments for such calendar  quarter.  In
such event,  the Company would be obligated to purchase excess inventory that it
may


                                       26
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

never  utilize or to pay a  shortfall  surcharge,  either of which  could have a
material adverse effect on the Company's business,  financial condition and cash
flow.

         Arm's-Length Relationship. The Company relies on UltraRF for the supply
of a substantial  amount of components  used in the manufacture of its products.
When the Company operated UltraRF as a separate  division,  it may have obtained
more favorable terms for semiconductor  products than through  negotiations with
unaffiliated third parties.  With the sale of UltraRF, the Company must now deal
with UltraRF on an arm's-length basis.  Accordingly,  the prices and other terms
for UltraRF semiconductor  products are less favorable to the Company than prior
to the sale of UltraRF to Cree,  which  adversely  affects the  Company's  gross
margin.

         Sole or Limited  Sources  of  Products,  Materials  and  Services.  The
Company  currently  procures from single sources  certain of its power amplifier
assemblies,   specialized  semiconductors,   components  and  services  for  its
products.  The Company  purchases these  products,  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.
In fiscal 2001,  the Company  completed the transfer of the  production of power
amplifiers to a contract manufacturer in Thailand. As a result of this transfer,
the Company no longer has significant manufacturing capacity. The Company issues
non-cancelable  purchase orders to the contract  manufacturer 60 days in advance
of requested delivery,  which is greater than the committed delivery schedule of
some of its  customers,  such as Nortel.  In  addition,  the  Company  began the
process  of  transferring  its power  amplifier  repair  operations  to the same
contract  manufacturer in Thailand in the quarter ended July 1, 2001 and expects
to complete this transfer no later than June 30, 2002.  Upon  completion of this
transfer, the Company will no longer have significant amplifier repair capacity.
On December 29, 2000, the Company completed the sale of substantially all of the
assets and liabilities comprising the Company's semiconductor division, UltraRF,
to Cree. As a result,  the Company no longer  manufactures  bipolar and LDMOS RF
power  semiconductors,  which are critical  components  in the  Company's  power
amplifier products.  As part of the definitive  agreement,  the Company and Cree
entered  into the  Purchase  and Supply  Agreement  under  which the  Company is
obligated to purchase  from Cree an aggregate of $58 million of  semiconductors.
Consequently,  Cree is the Company's  sole source vendor of certain  bipolar and
LDMOS RF power  semiconductors.  The  Company's  reliance  on sole  sources  for
certain components and its migration to an outsourced, turnkey manufacturing and
repair services strategy entail certain risks including reduced control over the
price,  timely delivery,  reliability and quality of the components and reliance
on  the  financial  strength  and  continued   relationship  with  the  contract
manufacturer.  For  example,  the  financial  strength  of one of the  Company's
foreign sole source contract  manufacturers  has recently become impaired due to
the  declaration  of bankruptcy  by its U.S.  parent  corporation.  Although the
Company  has taken  measures to protect  itself in the event that this  contract
manufacturer  declares bankruptcy or is placed in receivership,  the Company may
suffer a loss of assets or  disruption  of its  manufacturing  processes and the
Company's  business,  financial  condition  and  results  of  operations  may be
adversely affected. If the Company were to change any of its sole source vendors
or contract  manufacturer,  the  Company  would be  required  to  requalify  its
components with each new vendor or contract manufacturer,  respectively, as well
as with each of its  customers.  Any  inability of the Company to obtain  timely
deliveries of components,  repair services or assembled 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 some components, and no assurance can be given that shortages will not
occur in the future.

         Risks of International  Sales. The Company operates in an international
market and  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  terrorist
attack on


                                       27

<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

U.S.   companies,   imposition  of  government   controls,   currency   exchange
fluctuations,    potential    insolvency    of    international    distributors,
representatives  and  customers,  reduced  protection of  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, where the Company sells its products 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.  Where the Company  sells its  products in
foreign currencies, the Company may be unable to increase or decrease the prices
for its  products in a timely  fashion to reflect  fluctuations  in the exchange
rate which would reduce the  competitiveness  of the Company's prices and result
in lower revenues. Furthermore,  foreign governments or regulatory bodies may in
the future  impose  currency  restrictions  or controls  which  would  impair or
prohibit the  Company's  ability to exchange  its funds from foreign  currencies
into U.S. dollars thereby adversely affecting the Company's business,  financial
condition  and  results  of  operations.  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,  and the Company  has  determined  not to
engage in hedging activities to mitigate any of these risks.

         The  Company  anticipates  that  turmoil in  financial  markets and the
deterioration of the underlying  economic  conditions in certain countries where
the Company has  significant  sales 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  funding of wireless  infrastructure  by  domestic  governments,
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 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  countries
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, financial condition and results of operations.

         Reliance upon Growth of Wireless Services. Sales of power amplifiers to
wireless  infrastructure  equipment  suppliers and network operators 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.  If demand for wireless services fails to
increase or increases  more slowly than the Company or its  customers  currently
anticipate,   the  Company's  business,   financial  condition  and  results  of
operations would be materially and adversely affected.

         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


                                       28
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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  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  two OEMs,  NEC and  Lucent,
through  Celiant,  have  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,  Andrew
Corporation,  Celiant,  Fujitsu,  Japan Radio Co. Ltd., Hitachi Kokusai Electric
Inc., Mitsubishi, Hung Chang Co. Ltd., Paradigm Communications,  Inc., Powerwave
Technologies   Inc.,   Wireless   Systems   International   Ltd.   and  Wiseband
Communications  Ltd. 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.  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.  In addition,  the
Company assigned 20 of its United States patents and 4 of its foreign patents to
Cree in  connection  with the sale of UltraRF.  The Company has been  granted by
Cree a non-exclusive,  royalty-free  license to each of these patents,  however,
there can be no assurance  that Cree will  adequately  protect this  proprietary
information and any such failure could adversely affect the Company's  business,
financial condition and results of operations. 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.

         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  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


                                       29
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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.  In addition,  the Company
remains liable for any potential claims,  losses or expenses incurred by Cree as
a direct or  indirect  result of any  inaccuracy  or breach of the  intellectual
property,  taxes or  environmental  representations  and warranties  made by the
Company in connection with the sale of UltraRF.  The Company's liability for any
such claim, loss or expense is unlimited,  and, therefore,  the filing of such a
claim  against  Cree  or the  Company  could  materially  adversely  affect  the
Company's financial condition.

         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. For example, recently enacted laws
and  regulations  which  prohibit  or  restrict  the use of hand  held  cellular
telephones while operating a motor vehicle may have a material adverse affect on
the market for the Company's  products.  Although  deregulation of international
communications  industries along with 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. However, the delays inherent in this governmental approval process
and the current uncertainty surrounding the ownership and allocation of wireless
spectrum  licenses  have in the past caused,  and may in the future  cause,  the
cancellation,  postponement  or  rescheduling  of the FCC  auction  of  spectrum
licenses and 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.


                                       30
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         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 liabilities under certain
statutes.  The imposition of such liabilities could materially  adversely affect
the  Company's  business,  financial  condition  and results of  operations.  In
addition,  the  Company  is liable  for any  potential  claim,  loss or  expense
incurred by Cree as a result of any  inaccuracy  or breach of the  environmental
representations  and warranties  made by the Company in connection with the sale
of UltraRF.

         Management  of  Growth;  Dependence  on Key  Personnel.  The  Company's
business  and growth  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,  motivate, manage and retain new employees successfully,  especially in
the  highly  competitive  northern  California  job  market,  to  integrate  new
employees into its overall operations and 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.  The
Company  has  experienced  loss of key  employees  in the past and  could in the
future. Such losses could have a material adverse effect on the Company.

         The Company's  ability to manage its growth will require it to continue
to invest in its  operational,  financial and  management  information  systems,
procedures and controls.  The Company can give no assurance that it will be able
to manage its growth  effectively.  Failure to manage growth  effectively  would
have a material adverse effect on the Company's  business,  financial  condition
and  results of  operations.  The  Company  may,  from time to time,  pursue the
acquisition  of other  companies,  technology,  assets  or  product  lines  that
complement or expand its existing  business.  The Company may also, from time to
time,  pursue  divestitures  of  existing  operations,   technology  or  assets.
Acquisitions  and  divestitures  involve a number of risks that could  adversely
affect the  Company's  operating  results.  These risks include the diversion of
management's  attention from day-to-day  business,  the fluctuation of operating
results due to the timing of charges for costs  associated with  acquisitions or
divestitures,  the difficulty of combining and  assimilating  the operations and
personnel of the acquired  companies,  the  difficulty  of separating a divested
operation from the remaining operations,  charges to the Company's earnings as a
result of the  purchase of  intangible  assets,  and the  potential  loss of key
employees as a result of an acquisition or  divestiture.  Should any acquisition
or divestiture  take place, we can give no assurance that this  transaction will
not  materially  and adversely  affect the Company or that any such  transaction
will enhance the Company's business.

         Risk of Business Interruption.  The Company's operations are vulnerable
to interruption by fire, earthquake, power loss,  telecommunications failure and
other events beyond the Company's control.  The Company does not have a detailed
disaster  recovery plan and its facilities in the State of California  have been
in the past subject to electrical  blackouts as a  consequence  of a shortage of
available  electrical  power.  In the event these blackouts occur in the future,
they could disrupt the operations of the Company's  facilities in California and
increase the Company's operating costs. In addition,  the Company does not carry


                                       31
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

sufficient business interruption  insurance to compensate it for losses that may
occur and any losses or damages incurred could have a material adverse effect on
the Company's business.

         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  quarterly and
annual  operating  results,  customer  concentration,  reliance on single source
vendors,  the timing difference between its customers'  requested delivery dates
and  its  vendor  purchase   commitments  to  support  the  customer's  delivery
requirements, reliance on international markets, the absence of the economies of
scale  achieved  by  some of its  competitors,  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,  estimates and recommendations,
news  reports   regarding  the  Company,   its   competitors  and  its  markets,
governmental  regulatory  action,   developments  with  respect  to  patents  or
proprietary  rights,  announcements  of  significant  acquisitions  or strategic
partnerships  by the Company or its  competitors,  announcements  of significant
divestitures  of existing  businesses or product lines,  concentration  of stock
ownership by a few entities  resulting  in a low float of the  Company's  common
stock in the public  market,  general market  conditions  and other factors.  In
addition, the stock market in general, and the market prices for power amplifier
manufacturers in particular,  have experienced  extreme volatility that is often
unrelated to the operating  performance of these  companies.  These broad market
and industry fluctuations may adversely affect the price of the Company's common
stock,  regardless  of actual  operating  performance.  The market  price of the
Company's Common Stock has fluctuated significantly in the past.


                                       32
<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company  develops  products  in the United  States and markets its
products in North America,  South America,  Europe and the Asia-Pacific  region.
Thus,  the  financial  results  could be affected by factors  such as changes in
foreign currency exchange rates or weak economic  conditions in foreign markets.
As all sales are currently made in U.S.  dollars,  a strengthening of the dollar
could make the Company's products less competitive in foreign markets.

         The  Company's  exposure  to market  rate risk for  changes in interest
rates relate  primarily to its investment  portfolio.  The Company does not hold
derivative financial instruments in its investment portfolio. The Company places
its investments  with high quality  institutions and limits the amount of credit
exposure to any one issuer.  The Company is averse to principal loss and ensures
the safety and  preservation of its invested funds by limiting  default,  market
and  reinvestment  risk. The Company  classifies  its short-term  investments as
"fixed-rate" if the rate of return on such instruments  remains fixed over their
term.  These  "fixed-rate"   investments   include  fixed-rate  U.S.  government
securities and corporate  obligations  with  contractual  maturity dates ranging
from less than one year up to five years.  The table below  presents the amounts
and related weighted interest rates of the Company's  short-term  investments at
December 30, 2001 and March 31, 2001 (dollars in thousands).

                                            December 30,         March 31,
                                                2001               2001
                                           --------------     --------------
       Average fixed interest rate                4.0%                 5.5%
                                              =======              =======

       Amortized cost                         $42,521              $38,655
                                              =======              =======
       Fair value                             $43,064              $38,919
                                              =======              =======

       Contractual maturity dates:
            Less than 1 year                  $13,478              $ 8,931
            1 to 5 years                       29,586               29,988
                                              -------              -------
                                              $43,064              $38,919
                                              =======              =======


                                       33
<PAGE>

                           PART II - OTHER INFORMATION

  ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

  (a)      Exhibits.

         Exhibit
         Number                                  Description
         ------                                  -----------

         10.55     Amended   Employment   Agreement  dated  September  30,  2001
                   between  the Company and Garrett A. Garrettson.

         10.56*    Amendment of Purchase and Supply Agreement, dated October 19,
                   2001, between the Company and UltraRF Inc. (formerly known as
                   Zoltar Acquisition, Inc.)

  (b)    Reports on Form 8-K.  The  Company did not file any Reports on Form 8-K
         during the quarter ended December 30, 2001.

*    Confidential  treatment has been requested with respect to certain portions
     of this  exhibit.  Omitted  portions  have been filed  separately  with the
     Securities and Exchange Commission.

                                       34
<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.

                                        SPECTRIAN CORPORATION
                                        ---------------------
                                            (Registrant)

Dated: February 8, 2002                By:    /s/  MICHAEL D. ANGEL
                                            ---------------------------
                                                Michael D. Angel
                                            Executive Vice President,
                                           Finance and Administration,
                                      Chief Financial Officer and Secretary
                                        (Authorized Officer and Principal
                                        Financial and Accounting Officer)


                                       35
<PAGE>

                                INDEX TO EXHIBITS

  Exhibit                                                          Sequentially
  Number                                 Description                  Numbered
  ------                                 -----------                  --------
                                                                       Page
                                                                       ----

 10.55  Amended Employment Agreement dated September 30, 2001
        between the Company and Garrett A. Garrettson.                  __

 10.56* Amendment  of  Purchase and Supply  Agreement,  dated
        October 19,  2001,  between  the Company  and UltraRF
        Inc. (formerly known as Zoltar  Acquisition,  Inc.)             __

*    Confidential  treatment has been requested with respect to certain portions
     of this  exhibit.  Omitted  portions  have been filed  separately  with the
     Securities and Exchange Commission.

                             36