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

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

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

(Mark One)
 [X]     Quarterly  report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the period ended December 28, 1997

                                       OR

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

Commission file number: 0-24360



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

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

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

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




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

                           Yes   X                No
                               -----                  -----

As of December 28, 1997 there were 10,754,724 shares of the Registrant's  Common
Stock outstanding.

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

                              SPECTRIAN CORPORATION

                                    Form 10-Q

                                      INDEX
                                                                            Page
                                                                            No.

Cover Page                                                                     1

Index                                                                          2

PART I - Financial Information

              ITEM 1 - Condensed consolidated financial statements

                 Condensed consolidated balance sheets -
                    December 28, 1997 and March 31, 1997                       3

                 Condensed consolidated statements of operations -
                    three and nine months ended December 28, 1997 
                    and December 28, 1996                                      4

                 Condensed consolidated statements of cash flows -
                    nine months ended December 28, 1997 and 
                    December 28, 1996                                          5

                 Notes to condensed consolidated financial statements          6

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


PART II - Other Information

              ITEM 1 - Legal Proceedings                                      18

              ITEM 2 - Changes in Securities and Use of Proceeds              18

              ITEM 6 - Exhibits and Reports on Form 8-K                       18

                 Signatures                                                   19


                                       2
<PAGE>

<TABLE>
                                  SPECTRIAN CORPORATION AND SUBSIDIARY
                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In thousands, except share data)
<CAPTION>

                                                                         December 28,        March 31,
Assets                                                                       1997              1997
                                                                       ----------------    -------------
                                                                        (unaudited)
<S>                                                                      <C>               <C>      
Current assets:
   Cash and cash equivalents                                               $    2,717      $   6,240
   Short-term investments                                                      98,032             --
   Accounts receivable, less allowance for doubtful
      accounts of $373 and $365, respectively                                  34,373         15,825
   Inventories                                                                 20,130         17,301
   Prepaid expenses and other current assets                                    1,009          1,806
                                                                           ----------      ---------
        Total current assets                                                  156,261         41,172

Property and equipment, net                                                    29,311         25,461
                                                                           ----------      ---------
                                                                           $  185,572      $  66,633
                                                                           ==========      =========


Liabilities and Stockholders' Equity

Current liabilities:
   Current portion of debt obligations                                     $    1,441      $   1,588
   Accounts payable                                                            13,111          8,101
   Accrued liabilities                                                         10,877          7,421
                                                                           ----------      ---------
        Total current liabilities                                              25,429         17,110

Debt obligations, net of current portion                                        6,239          7,057
                                                                           ----------      ---------

        Total liabilities                                                      31,668         24,167
                                                                           ----------      ---------

Stockholders' equity:
   Common stock, $0.001 par value, 20,000,000 shares authorized; 
    10,754,724 and 8,265,230 shares issued and outstanding,
    respectively                                                                   11              8

    Additional paid-in capital                                                145,497         53,387
    Unrealized gain on short-term investments                                     237            --
    Retained earnings (accumulated deficit)                                     8,159        (10,929)
                                                                           ----------      ---------

    Total stockholders' equity                                                153,904         42,466
                                                                           ----------      ---------
                                                                           $  185,572      $  66,633
                                                                           ==========      =========
<FN>
The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.
</FN>
</TABLE>

                                       3
<PAGE>


<TABLE>
                                               SPECTRIAN CORPORATION AND SUBSIDIARY
                                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                      (In thousands, except share and per share data)
                                                        (Unaudited)
<CAPTION>

                                                      Three months ended                  Nine months ended
                                                          December 28,                      December 28,
                                                  ---------------------------        -----------------------------
                                                      1997         1996                 1997               1996
                                                      ----         ----                 ----               ----

<S>                                                <C>              <C>               <C>               <C>   
Revenues                                           $  47,158        $  24,485         $ 141,165         $  56,680

Costs and expenses:
   Cost of product sales                              33,702           17,211           100,233            42,341
   Research and development                            5,074            4,773            13,455            12,836
   Selling, general and administrative                 3,429            2,293             9,936             6,620
                                                   ---------        ---------         ---------         ---------
                                                      42,205           24,277           123,624            61,797
                                                   ---------        ---------         ---------         ---------
        Operating income (loss)                        4,953              208            17,541            (5,117)

Interest income(expense), net                          1,429              (70)            2,006              (395)
Other income, net                                       --               --               1,530                --
                                                   ---------        ---------         ---------         ---------

Income (loss) before income taxes                      6,382             (138)           21,077            (5,512)

Income tax expense                                      --               --               1,988                --
                                                   ---------        ---------         ---------         ---------
Net income (loss)                                  $   6,382        $     138         $  19,089         $  (5,512)
                                                   =========        =========         =========         =========
Net income (loss) per share
        Basic                                      $    0.59        $    0.02         $    2.00         $   (0.68)
        Diluted                                    $    0.56        $    0.02         $    1.83         $   (0.68)

Shares used in computing per share amounts:
        Basic                                         10,744            8,169             9,531             8,105
        Diluted                                       11,491            8,295            10,423             8,105

<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>

                                       4
<PAGE>

<TABLE>
                           SPECTRIAN CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (In thousands)
                                        (Unaudited)
<CAPTION>
     
                                                                                  Nine months ended
                                                                                    December 28,
                                                                         ----------------------------------
                                                                              1997                 1996
                                                                              ----                 ----
<S>                                                                        <C>                  <C>       
Cash flows from operating activities:
    Net income (loss)                                                      $  19,089            $  (5,512)
     Adjustments to  reconcile  net income  (loss)
      to net cash  provided by (used for) operating activities:
        Gain on sale of subsidiary                                            (1,530)                  --
        Depreciation and amortization                                          6,913                4,486
        Stock option compensation expense                                         --                   72
        Tax benefit associated with stock options                              1,378                   --
        Changes in operating assets and liabilities
           Accounts receivable                                               (19,281)                 577
           Inventories                                                        (4,405)              (7,104)
           Prepaid expenses and other assets                                     760                 (272)
           Accounts payable                                                    5,796                1,666
           Accrued liabilities                                                 3,704                1,158
                                                                           ---------            --------- 
              Net cash provided by (used for) operating activities            12,424               (4,929)
                                                                           ---------            --------- 

Cash flows from investing activities:
    Purchase of short-term investments                                      (102,843)                  --
    Proceeds from sale of short-term investments                               5,048                3,000
    Purchase of property and equipment                                       (11,639)             (10,355)
    Proceeds from sale of land, building and improvements                         --               16,418
    Proceeds from sale of subsidiary                                           4,016                   --
                                                                           ---------            --------- 
             Net cash provided by (used for) investing activities           (105,418)               9,063
                                                                           ---------            --------- 

Cash flows from financing activities:
    Repayment of debt                                                         (1,264)                  --
    Proceeds from sales of Common Stock, net                                  90,735                  910
                                                                           ---------            --------- 
             Net cash provided by financing activities                        89,471                  910
                                                                           ---------            --------- 
             Net increase (decrease) in cash and cash  equivalents            (3,523)               5,044
             Cash and cash equivalents, beginning of period                    6,240                1,163
                                                                           ---------            --------- 
             Cash and cash equivalents, end of period                      $   2,717            $   6,207
                                                                           =========            ========= 
<FN>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.
</FN>
</TABLE>

                                       5
<PAGE>


                      SPECTRIAN CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1: Basis of Presentation

The  accompanying  financial  statements  have been prepared in conformity  with
generally  accepted  accounting  principles.  However,  certain  information  or
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  In the  opinion  of the  management,  the  statements  include  all
adjustments  (which are of a normal and recurring nature) necessary for the fair
presentation  of the financial  information  set forth therein.  These financial
statements should be read in conjunction with the Company's audited consolidated
financial statements as incorporated by reference in the Company's Form 10-K for
fiscal year ended March 31, 1997. 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, 1998, or any other future period.

NOTE 2: Reincorporation

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

NOTE 3: Balance Sheet Components

Balance sheet components are as follows:

                                          December 28,              March 31,
                                              1997                    1997
                                         -------------             -----------
                                                      (In thousands

Inventories:
   Raw materials                           $ 9,925                   $ 9,315
   Work in process                           8,499                     6,699
   Finished goods                            1,706                     1,287
                                           -------                   -------
                                           $20,130                   $17,301
                                           =======                   =======


Property and equipment:
   Machinery and equipment                 $44,877                   $37,181
   Land, building and improvements           2,822                     2,813
   Furniture and fixtures                    1,376                     1,382
   Leasehold improvements                    1,550                       867
                                           -------                   -------
                                            50,622                    42,246
   Less accumulated depreciation and
      amortization                          21,311                    16,785
                                           -------                   -------
                                           $29,311                   $25,461
                                           =======                   =======

                                       6
<PAGE>

NOTE 3: Balance Sheet Components (continued)

                                               December 28,      March 31,
                                                   1997             1997
                                              ---------------- ---------------
                                                      (In thousands)

Accrued liabilities:
   Employee compensation and benefits          $   4,098       $   3,772
   Warranty                                        5,140           1,940
   Other accrued liabilities                       1,639           1,709
                                              -----------      ----------
                                                $ 10,877       $   7,421
                                              ===========      ==========

NOTE 4: Short-Term Investments

The Company  accounts for  investments in accordance with Statement of Financial
Accounting  Standards ("SFAS") No. 115,  "Accounting for Certain  Investments in
Debt and Equity  Securities".  Under the provisions of SFAS No. 115, the Company
has    classified   its    investments    in   certain   debt    securities   as
"available-for-sale."  Such investments are recorded at fair market value,  with
unrealized  gains and losses reported as a separate  component of  stockholders'
equity.  Interest income is recorded using an effective  interest rate, with the
associated premium or discount amortized to "Interest income, net."

As of December 28, 1997, short-term investments classified as available-for-sale
securities were as follows:

                                                  Unrealized     Estimated
                                       Cost          Gains       Fair Value
                                   ---------------------------------- --------
                                                     (In thousands)
    Corporate debt securities            68,737        99            68,836
    U.S. Government securities           29,058       138            29,196
                                   -------------------------------------------
                                      $  97,795     $ 237          $ 98,032
                                   -------------------------------------------


NOTE 5: Revenue Recognition

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


NOTE 6: Earnings Per Share Computation

The Company adopted  Statement of Financial  Accounting  Standards  ("SFAS") No.
128, "Earnings per Share" effective December 28, 1997. SFAS No. 128 requires the
presentation of basic earnings per share ("EPS") and, for companies with complex
capital  structures [or  potentially  dilutive  securities,  such as convertible
debt,  options and warrants],  diluted EPS. The Company's earnings per share for
the three months and nine months ended  December 28, 1996 have been restated for
the effects of SFAS No. 128.

Basic net income  (loss) per share for the three and nine month  periods  ending
December  28,  1997 has been  computed  using  the  weighted  average  number of
outstanding  shares of common stock.  Diluted net income per share for the three
and nine month  periods  ending  December 28, 1997 has been  computed  using the
weighted  average  number  of  outstanding  shares of  common  stock and  common
equivalent  shares  from stock  options  outstanding  (when  dilutive  using the
treasury  stock method).  Using the treasury stock method,  common stock options
are assumed to be exercised  and the  proceeds  used to buy back common stock at
the Company's  average stock price for the quarter ended  December 28, 1997. Due
to the net loss incurred during the nine month periods 

                                       7
<PAGE>


ending December 28, 1996, common stock options outstanding would be antidilutive
and are  therefore  not  included  in the loss per  share  calculation  for that
period.

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

<CAPTION>

                                              Three Months Ended                     Nine Months Ended
                                               December 28, 1997                     December 28, 1997
                                        --------------------------------     ----------------------------------
(In thousands except per share data)                          Per Share                              Per Share
                                          Income    Shares      Amount          Income     Shares      Amount
                                        --------------------------------     ----------------------------------

<S>                                      <C>         <C>         <C>            <C>          <C>         <C>  
Basic EPS                                $ 6,382     10,744      $ 0.59         $19,089      9,531       $2.00
Effect of dilutive securities                           747                                    892
                                        --------------------------------     ----------------------------------
Diluted EPS                              $ 6,382     11,491       $0.56         $19,089     10,423       $1.83
                                        ================================     ==================================
</TABLE>


<TABLE>
<CAPTION>
                                              Three Months Ended                     Nine Months Ended
                                               December 28, 1996                     December 28, 1996
                                        --------------------------------     ----------------------------------
 (In thousands except per share data)                        Per Share                              Per Share
                                         Income    Shares      Amount          Income     Shares      Amount
                                        --------- ---------- -----------     ----------- ---------- -----------

<S>                                     <C>           <C>        <C>          <C>            <C>       <C>    
Basic EPS                               $    138      8,169      $ 0.02       $ (5,512)      8,105     $(0.68)
Effect of dilutive securities                           126                                     --
                                        --------------------------------     ----------------------------------
Diluted EPS                             $    138      8,295       $0.02       $ (5,512)      8,105     $(0.68)
                                        ================================     ==================================

</TABLE>


NOTE 7: Legal Proceedings

Between  December  23,  1997 and  Febuary 3, 1998,  four  complaints  were filed
against the Company  and  certain of its  officers in the Federal  Court for the
Northern District of California  alleging  violations of the federal  securities
laws. The  plaintiffs in these lawsuits  purport to represent a class of persons
who  purchased  the  Company's  securities  during the  period of July 17,  1997
through  October 23, 1997.  The suits allege that the Company and certain of its
officers  intentionally  misled the  investing  public  regarding  the financial
prospects  of the  Company.  The  Company  believes  that  the  allegations  are
completely without merit and will vigorously defend itself.

                                       8
<PAGE>



                      SPECTRIAN CORPORATION AND SUBSIDIARY

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



         Certain  statements in this  "Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations" are "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the  Securities  Exchange Act of 1934, as amended.  These forward
looking  statements  include,  but are not  limited  to:  the  statements  under
"Revenues" regarding future revenue growth, the statements in "Factors Affecting
Future  Operating  Results;"  and the  statements  in the last  paragraph  under
"Liquidity and Capital Resources" regarding the anticipated spending for capital
additions  in fiscal  1998 and  beyond,  and the  sufficiency  of the  Company's
available   resources   to  meet   working   capital  and  capital   expenditure
requirements.  The  forward  looking  statements  contained  herein are based on
current expectations and entail various risks and uncertainties that could cause
actual results to differ materially from those expressed in such forward looking
statements,  including  those  risks and  uncertainties  set forth  below  under
"Factors Affecting Future Operating Results."

Overview

         The Company  designs,  manufactures  and markets  highly  linear single
carrier and multicarrier  radio frequency ("RF") power amplifiers that support a
broad range of worldwide  analog and digital wireless  transmissions  standards,
including  AMPS,  TDMA,  CDMA,  TACS and GSM.  The  Company,  founded in 1984 to
perform design and engineering services,  first entered the commercial amplifier
market in 1988 and shipped its first  cellular  power  amplifiers  in 1990.  The
Company's  revenues are now derived  primarily from sales to a limited number of
OEMs in the wireless  infrastructure  equipment market,  in particular  Northern
Telecom Limited  ("Northern  Telecom").  The Company has historically  pursued a
strategy  of vertical  integration  in its design and  manufacturing  processes,
including the establishment of a 3-inch wafer  fabrication  facility in 1985 and
the conversion to a 4-inch wafer  fabrication  facility to increase its capacity
in 1996. During the third quarter just ended, the Company outsourced some of its
higher volume  printed  circuit board  sub-assemblies  on a turnkey  basis.  The
Company  anticipates it will continue using an outsourcing  strategy wherever it
makes economic sense to do so.

         During fiscal 1997,  Northern  Telecom and Nortel Matra  Communications
("Nortel  Matra"),  in which Northern Telecom has an equity interest,  accounted
for approximately 63% and 12% of revenues, respectively. During the three months
ended December 28, 1997, Northern Telecom,  Nortel Matra, and LG Information and
Communications  Limited ("LGIC") accounted for approximately 52%, 22% and 20% of
revenues, respectively. During the nine months ended December 28, 1997, Northern
Telecom,  Nortel Matra and LGIC accounted for approximately  57%, 21% and 17% of
the Company's revenues. The Company's business,  financial condition and results
of operations have been materially adversely affected in the past by anticipated
orders failing to materialize and by deferrals or  cancellations  of orders as a
result of changes in OEM  requirements.  If the  Company  were to lose  Northern
Telecom or any other major OEM customer, or if orders by Northern Telecom or any
other major OEM customer were to otherwise  materially  decrease  either in unit
quantity or in price, the Company's business, financial condition and results of
operations would be materially adversely affected.

         The Company's vertical  integration strategy entails a number of risks,
including a high level of fixed and variable  costs,  the  management of complex
processes,  dependence  on a single  source  of supply  and a strict  regulatory
environment.  During periods of low demand,  high fixed wafer  fabrication costs
are likely to have a material  adverse  effect on the Company's  operations.  In
addition, the Company's strategy of frequently introducing and rapidly expanding
the  manufacture  of new  products to meet  evolving  OEM  customer  and service
provider  needs  has  caused  the  Company  to  experience  high  materials  and
manufacturing  costs,  including  high  scrap and  material  waste,  significant
 
                                      9
<PAGE>


material obsolescence,  labor inefficiencies,  high overtime hours,  inefficient
material procurement and an inability to recognize economies of scale.


Results of Operations
<TABLE>

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

                                                      Three Months Ended           Nine Months Ended
                                                          December 28,               December 28,
                                                    1997            1996           1997        1996
                                                    ----            ----           ----        ----

<S>                                                 <C>             <C>           <C>         <C>   
    Revenues                                        100.0%          100.0%        100.0%      100.0%

    Costs and expenses:
      Cost of product sales                          71.5            70.3          71.0        74.7
      Research and development                       10.8            19.5           9.5        22.6
      Selling, general and administrative             7.2             9.3           7.0        11.7
                                                   ------          ------        ------      ------
        Total costs and expenses                     89.5            99.1          87.5       109.0
        Operating income (loss)                      10.5             0.9          12.5        (9.0)
    Interest income (expense), net                    3.0            (0.3)          1.4        (0.7)
    Other income                                       --              --           1.0          --
                                                   ------          ------        ------      ------
      Income (loss) before income taxes              13.5             0.6          14.9        (9.7)
    Income tax expense                                 --              --           1.4          --
                                                   ------          ------        ------      ------
        Net income (loss)                            13.5%            0.6%         13.5%       (9.7)%
                                                   ======          ======        ======      ======
    Gross margin on product sales                    28.5%           29.7%         29.0%       25.3%
</TABLE>


         Revenues.  The Company's revenues increased by 93% to $47.2 million for
the three months ended December 28, 1997 from $24.5 million for the three months
ended  December 28, 1996.  The  Company's  revenues  increased by 149% to $141.2
million for the nine months ended  December 28, 1997 from $56.7  million for the
nine months ended  December 28, 1996.  The sizable  increase in revenues for the
three months ended December 28, 1997 reflects a significant  increase in demand,
primarily by Northern  Telecom,  for the  Company's  second  generation  GSM and
multicarrier products,  single carrier TDMA product and Korean PCS CDMA product.
In addition to the products listed above,  the increase in revenues for the nine
months ended December 28, 1997 as compared to the nine months ended December 28,
1996,  also  reflects  below normal  customer  demand  experienced  in the first
quarter of fiscal  1997 ended  June 29,  1996.  Although  the  Company's  future
revenue  is  difficult  to  predict,   the  Company  believes  that  the  recent
significant  percentage  growth in  revenues  will not be  sustainable  and that
fiscal 1999 growth in revenues, if any, will be slight.

         Cost of Product Sales. Cost of product sales consists  primarily of raw
materials,  RF  semiconductor  fabrication  costs,  amplifier  assembly and test
costs,  overhead  and  warranty  costs.  The  Company's  cost of  product  sales
increased by 95.8% to $33.7 million for the three months ended December 28, 1997
from $17.2 million for the three months ended December 28, 1996. Included in the
cost of  product  sales  were  costs  associated  with  the  rapid  increase  in
manufacturing  volume for new products and costs  associated with  discontinuing
older  products.  Gross  margin on product  sales was 28.5% for the three months
ended December 28, 1997 as compared to 29.7% for the three months ended December
28, 1996.  The  Company's  cost of product  sales  increased by 136.7% to $100.2
million for the nine months ended  December 28, 1997 from $42.3  million for the
nine months ended December 28, 1996. Gross margin on product sales was 29.0% for
the nine months ended December 28, 1997 as compared to 25.3% for the nine months
ended  December 28, 1996.  The  improvement in product gross margin for the nine
months  ended  December  28, 1997  primarily  reflects the benefits of spreading
fixed manufacturing overhead spending over a larger number of units sold.

                                       10
<PAGE>

         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 6.3%
to $5.1 million in the three months ended December 28, 1997 from $4.8 million in
the three months ended December 28, 1996. R&D spending in the three months ended
December 28, 1996  included  development  costs for the  Company's  4-inch wafer
fabrication  facility.  The  increase in R&D  spending in the three months ended
December 28, 1997 reflects the absence of these facility  development  costs but
was offset by  increased  overall R&D  spending,  primarily  for  personnel  and
related expenses. R&D expenses as a percentage of revenues decreased to 10.8% in
the three months  ended  December 28, 1997 from 19.5% for the three months ended
December 28, 1996,  reflecting  the  substantially  higher revenue levels in the
three months ended  December 28, 1997.  The Company's R&D expenses  increased by
4.8% to $13.5  million in the nine  months  ended  December  28, 1997 from $12.8
million in the nine months ended December 28, 1996. The increase in R&D spending
in the nine months ended December 28, 1997 reflects  increased  spending in both
amplifier and semiconductor R&D for personnel  expenses and project  development
expenses but was offset in part by facility  development  costs  incurred in the
nine month period  ended  December  28,  1996.  R&D expenses as a percentage  of
revenues decreased to 9.5% in the nine months ended December 28, 1997 from 22.6%
for the nine months ended December 28, 1996, reflecting the significantly higher
revenue levels in the nine months ended December 28, 1997.

         Selling,    General   and   Administrative.    Selling,   general   and
administrative  ("SG&A")  expenses include  compensation and benefits for sales,
marketing,  senior management and administrative personnel,  commissions paid to
independent sales  representatives,  professional  fees and other expenses.  The
Company's SG&A expenses  increased by 49.5% to $3.4 million for the three months
ended  December 28, 1997 from $2.3  million for the three months ended  December
28, 1996.  SG&A expenses as a percentage  of revenues  decreased to 7.2% for the
three  months  ended  December  28,  1997 from 9.3% for the three  months  ended
December  28,  1996.  The  Company's  SG&A  expenses  increased by 50.1% to $9.9
million for the nine months  ended  December  28, 1997 from $6.6 million for the
nine months ended  December 28, 1996.  SG&A expenses as a percentage of revenues
decreased to 7.0% for the nine months ended December 28, 1997 from 11.7% for the
nine months  ended  December 28,  1996.  The increase in SG&A  expenses for both
periods was  primarily due to outside  commissions  paid for South Korean sales,
increases  in sales and  administrative  headcount,  and to a lesser  extent the
maintenance  of a South  Korean  sales  support  office.  The  decrease  of SG&A
expenses  as a  percentage  of  sales  in  both  periods  was a  result  of  the
substantially higher revenue levels in those periods.

         Interest Income  (Expense),  net.  Interest  income,  net for the three
months ended December 28, 1997 was $1.4 million compared to net interest expense
of $69,000 for the three months ended December 28, 1996.  Interest  income,  net
for the nine months ended  December  28, 1997 was $2.0  million  compared to net
interest  expense of $395,000 for the nine months ended  December 28, 1996.  The
increase  in net  interest  income was the result of interest  income  earned on
substantially  higher  cash  balances  and  short-term   investments  reflecting
primarily the  investment  of the proceeds of the  Company's  August 1997 public
offering.

         Income Taxes.  The Company did not record an income tax expense for the
three months ended  December 28, 1997. As of the nine months ended  December 28,
1997,  the Company had  recorded  income tax expense of $2.0  million  which the
Company  believes  will be  sufficient  to cover  its  fiscal  1998  income  tax
provision.  The combined  effective tax rate of 9.4%,  for the nine months ended
December  28,  1997,  reflects  the  use of  net  operating  loss  carryforwards
("NOLs").  The Company's  ability to use its NOLs against  taxable income may be
subject to  restrictions  and  limitations  under  Section  382 of the  Internal
Revenue Code of 1986,  as amended,  in the event of a change in ownership of the
Company as defined therein.


Factors Affecting Future Operating Results

         Customer  Concentration;  Dependence on Northern Telecom.  The wireless
infrastructure equipment market is dominated by a small number of large original
equipment  manufacturers  ("OEMs"),  including  LM  Ericsson  Telephone  Company
("Ericsson"),   Lucent  Technologies,   Inc.  ("Lucent"),  Motorola  Corporation
("Motorola"),  Northern Telecom,  Nortel Matra, and Siemens AG ("Siemens").  The
Company's revenues are derived primarily from sales to a limited number of these
OEMs. During the three months ended December 28, 1997, Northern Telecom,  Nortel
Matra and LGIC  accounted  for  approximately  52%, 22% and 20% of the Company's
revenues,  respectively.  Northern Telecom, 

                                       11
<PAGE>

Nortel  Matra  and LGIC  accounted  for  approximately  57%,  21% and 17% of the
Company's revenues during the nine months ended December 28,1997. Furthermore, a
substantial  portion of revenues from  Northern  Telecom and Nortel Matra in the
three and nine months ended  December 28, 1997  resulted from sales of a limited
number of the Company's products. The Company's top five customers accounted for
97% of its sales for the three and nine months  ended  December  28,  1997.  The
Company,  Northern  Telecom  and Nortel  Matra have an  agreement,  renegotiated
annually, pursuant to which Northern Telecom and Nortel Matra commit to purchase
a certain  volume of their annual power  amplifier  requirements  for  specified
prices from the Company.  The renewal of the Company's  agreement  with Northern
Telecom and Nortel Matra for calendar  year 1998 was  finalized in October 1997.
Based on lower RF amplifier volume  commitments and reduced pricing contained in
this agreement and other factors,  the Company expects that the Company's recent
significant  growth in  revenues  will not be  sustainable  and that fiscal 1999
revenue growth, if any, will be slight.  In addition,  there can be no assurance
that  Northern  Telecom and Nortel Matra will enter into a contract as favorable
to the Company, if any, in the future or otherwise agree to purchase the same or
similar  levels  of their  power  amplifier  requirements  from the  Company  or
purchase their power amplifier  requirements at the same or similar pricing. Any
reduction  in the level of  purchases of the  Company's  amplifiers  by Northern
Telecom  and  Nortel  Matra,  or  any  material  reduction  in  pricing  without
significant  offsets,  would have a  material  adverse  effect on the  Company's
business, financial condition and results of operations. Further, if the Company
were to lose Northern  Telecom or any other major OEM customer,  or if orders by
Northern  Telecom or any other major OEM customer  were to otherwise  materially
decrease, the Company's business,  financial condition and results of operations
would be materially adversely affected. In addition, the recent financial market
turmoil and economic downturn in Korea may have a material adverse effect on the
Company's  sales of its  products  to LGIC,  an OEM  based in  Korea,  because a
majority  of the  Company's  products  ordered  by LGIC to  date  relate  to the
build-out of the Korean PCS system. In addition,  because the Company's products
are priced in U.S.  dollars,  the currency  instability  in the Korean and other
Asian  financial  markets may have the effect of making the  Company's  products
more  expensive  to LGIC than those of other  manufacturers  whose  products are
priced in one of the affected Asian currencies,  and, therefore, LGIC may reduce
future purchases of the Company's products. In addition, wireless infrastructure
equipment OEMs have come under  increasing  price pressure from wireless service
providers,  which in turn has  resulted  in  downward  pricing  pressure  on the
Company's  products.  The Company expects to incur increasing  pricing pressures
from Northern Telecom and other major OEM customers in future periods which will
result in declining average sales prices for the Company's products.

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

                                       12
<PAGE>

the foregoing factors,  it is likely that in some future quarter or quarters the
Company's revenues or operating results will not meet the expectations of public
stock  market  analysts or  investors.  In such event,  the market  price of the
Company's Common Stock would be materially adversely affected.

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

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

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

         Product Quality,  Performance and Reliability. The Company expects that
its customers will continue to establish  demanding  specifications for quality,
performance  and  reliability  that must be met by the  Company's  products.  RF
semiconductors  as  complex  as those  offered by the  Company  often  encounter
development  delays and may contain  undetected  defects or failures  when first
introduced or after commencement of commercial  shipments.  The Company 

                                       13
<PAGE>

has from time to time in the past experienced  product  quality,  performance or
reliability problems.  In addition,  multicarrier power amplifiers have a higher
probability of malfunction because of their greater complexity.  There can be no
assurance that defects or failures will not occur in the future  relating to the
Company's product quality,  performance and reliability that may have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

         Sole  or  Limited  Sources  of  Materials  and  Services.  The  Company
currently  procures from single sources certain  components and services for its
products  including  cast  housings,  printed  circuit  boards,  specialized  RF
components  and  specialized   sub-assemblies.   The  Company   purchases  these
components  and services on a purchase order basis,  does not carry  significant
inventories of these components and does not have any long-term supply contracts
with its sole source  vendors.  Although  the Company is  currently  identifying
potential alternative sources of these components,  its reliance on sole sources
entails  certain  risks,  including  reduced  control  over  the  price,  timely
delivery,  reliability  and quality of the  components.  If the Company  were to
change  any of its  sole  source  vendors,  the  Company  would be  required  to
requalify the components  with each new vendor.  Any inability of the Company to
obtain  timely  deliveries  of  components  of  acceptable  quality in  required
quantities or a significant  increase in the prices of components  for which the
Company does not have alternative sources could materially  adversely affect the
Company's business,  financial condition and results of operations.  The Company
has occasionally experienced difficulties in obtaining these components,  and no
assurance can be given that shortages will not occur in the future.

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

         Risks of International  Sales.  Sales outside of the United States were
73% and 94% of revenues in fiscal 1997 and the nine months  ended  December  28,
1997,  respectively.  The Company expects that international sales will continue
to account for a significant  percentage of the Company's total revenues for the
foreseeable  future.  These sales involve a number of inherent risks,  including
imposition of government  controls,  currency exchange  fluctuations,  potential
insolvency  of  international  distributors  and  representatives  or customers,
reduced  protection for  intellectual  property  rights in some  countries,  the
impact of  recessionary  environments  in economies  outside the United  States,
political  instability and generally longer receivables  collection  periods, as
well as tariffs and other trade barriers. In addition, because substantially all
of the Company's foreign sales are denominated in U.S. dollars, increases in the
value of the dollar  relative to the local  currency would increase the price of
the  Company's  products  in foreign  markets  and make the  Company's  products
relatively more expensive and less price competitive than competitors'  products
that are  priced in local  currencies.  There  can be no  assurance  that  these
factors  will  not  have a  material  adverse  effect  on the  Company's  future
international  sales and,  consequently,  on the Company's  business,  financial
condition and results of  operations.  The Company  anticipates  that the recent
turmoil  in  Asian  financial  markets  and  the  recent  deterioration  of  the
underlying  economic conditions in certain Asian countries may have an impact on
its sales to customers located in or whose projects are based in those countries
due to  the  impact  of  currency  fluctuations  on the  relative  price  of the
Company's  products  and  restrictions  on  government  spending  imposed by the
International  Monetary Fund (the "IMF") on those countries  receiving the IMF's
assistance. In addition, customers in those countries may face reduced access to
working capital to fund component purchases, such as the Company's products, due
to higher interest rates,  reduced bank lending due to contractions in the money
supply or the deterioration in the customer's or its bank's financial  condition
or the inability to access local equity financing. A substantial majority of the
Company's  products are sold to OEMs who incorporate the Company's products into
systems sold and installed to end-user customers. These OEMs are not required by
contract and do not typically provide the Company with information regarding the
location and identity of their end-user customers,  and, therefore,  the Company
is not able to determine  what portion of its product  sales have been or future
orders will be incorporated into OEM sales to end-users in those Asian countries
currently experiencing financial market turmoil and/or deterioration of economic
conditions. Furthermore, a large

                                       14
<PAGE>

portion of the  Company's  existing  customers  and  potential new customers are
servicing  new markets in  developing  countries  that the  Company's  customers
expect will deploy  wireless  communication  networks as an  alternative  to the
construction  of  a  wireline  infrastructure.  If  such  countries  decline  to
construct  wireless  communication  systems,  or construction of such systems is
delayed for any reason,  including business and economic  conditions and changes
in economic  stability due to factors such as increased  inflation and political
turmoil,  such  delays  could have a material  adverse  effect on the  Company's
business, results of operations and financial condition.

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

         Market for the Company's Products Is Highly  Competitive.  The wireless
communications  equipment industry is extremely competitive and is characterized
by rapid technological change, new product development and product obsolescence,
evolving  industry  standards and  significant  price erosion over the life of a
product.  The  ability  of the  Company  to  compete  successfully  and  sustain
profitability  depends in part upon the rates at which  wireless  equipment OEMs
incorporate the Company's  products into their systems and the Company  captures
market share from other merchant  suppliers.  The Company's major OEM customers,
including  Northern  Telecom,  Nortel  Matra,  LGIC and  QUALCOMM,  continuously
evaluate  whether to manufacture  their own  amplification  products or purchase
them from outside  sources.  There can be no assurance  that these OEM customers
will  incorporate  the Company's  products into their systems or that in general
they will continue to rely,  or expand their  reliance,  on external  sources of
supply for their power amplifiers.  The Company's  principal  competitors in the
market for  wireless  amplification  products  provided  by  merchant  suppliers
currently include AML Communications,  Hewlett-Packard  Wireless  Infrastructure
Division,  Microwave Power Devices, NEC Corporation and Powerwave  Technologies.
No assurance  can be given that the Company's  competitors  will not develop new
technologies or enhancements to existing products or introduce new products that
will offer  superior  price or  performance  features  compared to the Company's
products.

         Uncertain Protection of Intellectual Property. The Company's ability to
compete  successfully and achieve future revenue growth will depend, in part, on
its ability to protect its proprietary technology and operate without infringing
the rights of others.  The Company has a policy of seeking patents on inventions
resulting from its ongoing research and development activities.  The Company has
been  awarded  15  United  States  patents,  and  has 20  United  States  patent
applications pending including three that have been allowed but not yet formally
issued.  The  Company  also has been  awarded  six  foreign  patents and has ten
foreign  patent  applications  pending.  There  can  be no  assurance  that  the
Company's  pending  patent  applications  will be  allowed or that the issued or
pending  patents will not be  challenged or  circumvented  by  competitors.  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.
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

         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. 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 

                                       15
<PAGE>

laws or regulations or a change in the  interpretation  of existing  regulations
could also materially adversely affect the market for the Company's products.

         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.  Any failure by the Company to control the
use,  disposal,  removal or storage of, or to adequately  restrict the discharge
of, or assist in the cleanup of,  hazardous or toxic  substances,  could subject
the Company to significant  liabilities,  including joint and several  liability
under certain  statutes.  The imposition of such  liabilities  could  materially
adversely  affect the  Company's  business,  financial  condition and results of
operations.

         Management of Growth;  Dependence on Key  Personnel.  The growth in the
Company's  business  has  placed,  and is  expected  to  continue  to  place,  a
significant strain on the Company's  personnel,  management and other resources.
The Company's ability to manage any future growth effectively will require it to
attract,  train,  motivate,  manage and retain new  employees  successfully,  to
integrate new  employees  into its overall  operations,  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 man life
insurance  on any of its key  technical  personnel.  The  competition  for  such
personnel  is  intense,  and the loss of key  employees  could  have a  material
adverse effect on the Company.

         Volatility  of Stock  Price.  The market  price of the shares of Common
Stock has recently been and is likely to continue to be highly volatile.  During
the third fiscal quarter of 1998, the Company's  closing stock price ranged from
a high of $64.875 to a low of  $16.875.  The  Company's  stock price is affected
significantly  by  factors  such  as  fluctuations  in the  Company's  operating
results,  announcements of technological innovations,  new customer contracts or
new products by the Company or its  competitors,  announcements by the Company's
customers   regarding   their  business  or  prospects,   changes  in  analysts'
expectations,  governmental  regulatory  action,  developments  with  respect to
patents or proprietary  rights,  general market conditions and other factors. In
addition,  the stock market has from time to time experienced  significant price
and volume  fluctuations  that are  unrelated to the  operating  performance  of
particular companies.

         Pending Litigation. Between December 23, 1998 and Febuary 3, 1998, four
complaints  were filed  against the  Company and certain of its  officers in the
Federal Court for the Northern District of California alleging violations of the
federal securities laws. The plaintiffs in these lawsuits purport to represent a
class of persons who  purchased the  Company's  securities  during the period of
July 17, 1997 through  October 23,  1997.  The suits allege that the Company and
certain of its officers  intentionally misled the investing public regarding the
financial  prospects of the Company.  The Company  believes that the allegations
are  completely  without  merit  and  will  vigorously  defend  itself.  Certain
provisions of the Company's  Certificate of  Incorporation  and  indemnification
agreements  between the Company and its officers  require the Company to advance
to such officers  ongoing legal  expenses of defending the suits and may require
the Company to indemnify them against judgments  rendered on certain claims. The
Company expects to incur  significant legal expenses on its behalf and behalf of
such officers in connection with this  litigation.  In addition,  defending this
litigation  has resulted and will likely  continue to result in the diversion of
management's attention from the day-to-day operations of the Company's business.
Although the Company does not believe that it or any of its officers has engaged
in any wrongdoing,  there can be no assurance that this  stockholder  litigation
will be  resolved in the  Company's  favor.  An adverse  result,  settlement  or
prolonged  litigation  could have a  material  adverse  effect on the  Company's
business, financial condition or results of operations.


Liquidity and Capital Resources

         The Company has financed its growth through its initial public offering
in August  1994,  a recent  public  equity  offering  in August 1997 and through
private sales of equity  securities,  capital  equipment  leases,  bank lines of
credit and 

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<PAGE>

cash flows from  operations.  Cash provided by operations  was $11.8 million for
the nine months  ended  December 28, 1997 while cash used by  operations  in the
corresponding  period of fiscal  1997 was $4.9  million.  The cash  provided  by
operations for the nine months ended December 28, 1997 was principally generated
by the Company's profits over the nine month period. The cash used by operations
in fiscal 1997 was  principally for purchasing  inventory to support  production
growth for increasing product shipment volumes.

         As of December  28,  1997,  the  Company had working  capital of $130.2
million  including  $100.7  million in cash,  cash  equivalents  and  short-term
investments.  In addition,  the Company has a revolving  line of credit of $10.0
million with a bank secured by the majority of the Company's  assets.  Under the
terms of the master agreement  governing this credit instrument,  the Company is
required to maintain certain minimum working capital,  net worth,  profitability
and other specific financial ratios. As of December 28, 1997, the Company was in
compliance with these financial covenants.  There were no borrowings outstanding
against this line of credit as of December 28, 1997.

         In January  1997,  the Company  borrowed $6.0 million under a term loan
secured by certain capital  equipment.  The loan, which expires in January 2002,
requires  the  payment  of monthly  principal  plus  interest  and is subject to
certain minimum working capital,  net worth and other specific financial ratios.
The Company was in compliance  with these  covenants as of December 28, 1997. In
March 1997,  the Company also  secured a $3.2  million  real estate loan,  which
expires in April 2007, for the purchase of a light  industrial  building for its
future facilities expansion.

         Additions to property  and  equipment  were $11.6  million for the nine
months  ended  December  28,  1997 and $16.3  million  in fiscal  1997.  Capital
additions  for the first nine months of fiscal 1998 included the purchase of new
corporate  management  information  systems  software,  manufacturing  test  and
production  equipment  required to support new  products  and  increase  factory
capacity,  and test  equipment  to  support  various  research  and  development
projects.

         The Company  anticipates  spending  approximately  $18 million over the
next 12 months for capital additions primarily to support manufacturing capacity
requirements,  development  projects  and  facilities  expansion.  Based  on the
Company's current working capital  position,  the cash flows the Company expects
to generate from fiscal 1998  operations  and the  available  line of credit the
Company expects to renew, the Company believes that sufficient resources will be
available to meet the Company's cash  requirements  for at least the next twelve
months.  Cash  requirements  for periods beyond the next twelve months depend on
the Company's profitability,  timing and level of capital expenditures,  working
capital requirements and rate of growth.

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<PAGE>


PART II - OTHER INFORMATION

         ITEM 1:  Legal Proceedings

         Between  December 23, 1997 and Febuary 3,  1998,  four complaints  were
filed  against the Company and certain of its officers in the Federal  Court for
the  Northern  District  of  California   alleging  violations  of  the  federal
securities  laws. The plaintiffs in these lawsuits  purport to represent a class
of persons who purchased the Company's  securities during the period of July 17,
1997 through  October 23, 1997. The suits allege that the Company and certain of
its officers  intentionally  misled the investing public regarding the financial
prospects  of the  Company.  The  Company  believes  that  the  allegations  are
completely without merit and will vigorously defend itself.


         ITEM 2:  Changes in Securities and Use of Proceeds

         (a) On October 3,  1997,  the  Company  affected a  reincorporation  in
Delaware.  The Certificate of Incorporation and Bylaws of the surviving Delaware
corporation  were approved by the  stockholders  of the Company on September 11,
1997.

         (b) Not applicable.

         (c) Between  September  28, 1997 and  December  28,  1997,  the Company
issued  options to purchase an aggregate of 25,000 shares of Common Stock to one
employee at an exercise  price of $17.625  per share  pursuant to  Non-Qualified
Stock Option Agreements.

         The  sale  of the  above  securities  were  deemed  to be  exempt  from
registration  under the  Securities  Act of 1933,  as amended  (the  "Securities
Act"),  in  reliance  on  Section  4(2)  of the  Securities  Act,  Regulation  D
promulgated  thereunder,  or Rule  701  promulgated  under  Section  3(b) of the
Securities Act, as transactions  not involving a public offering or transactions
pursuant to compensatory benefit plans and contracts relating to compensation as
provided  under  Rule 701.  The  recipient  had  adequate  access,  through  his
relationship with the Company, to information about the Company.

         (d) Not applicable.


         ITEM 6:  Exhibits and Reports on Form 8-K


         (a)  Exhibits


          11.1   Statement regarding  computation of net income (loss) per share
          27.1   Financial Data Schedule

         (b)  On October  10,  1997  the  Company  filed a  Report  on Form  8-K
    regarding the effectiveness of its reincorporation in Delaware on October 3,
    1997 and filing the Delaware  corporation's  certificate  of  incorporation,
    bylaws,  form of indemnification  agreement and the merger agreement used to
    affect the reincorporation.

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<PAGE>



                                   SIGNATURES




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


Dated: February 3, 1998

                                    SPECTRIAN CORPORATION
                                        (Registrant)



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


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