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                                                                 EXHIBIT 10.8


                                January 13, 2000

Mr. Bill Yeates
9101 Prince Williams Dr.
Austin, TX  78730

Dear Bill:

         This letter confirms our understanding of the basic terms and
conditions on which you will serve as Chief Operating Officer of Power-One, Inc.
("POWER-ONE"):

              1. DUTIES. During your employment, your services will be
exclusive to Power-One, and you will devote your entire business time,
attention and energies to Power-One's business. You will perform your
services faithfully and to the best of your ability and carry out Power-One's
policies and directives consistent with your position.

              2. SALARY AND BONUS. Power-One will pay you a base salary at an
annualized rate of $300,000 payable in accordance with Power-One's payroll
policies, and Power-One will loan you $100,000 upon hire, which you will be
required to repay in accordance with Paragraph 7. In addition to your annual
salary, you will be eligible to receive an annual bonus of up to 100% of your
base salary. The payment and amount of your bonus will depend upon the
achievement of corporate, financial and individual performance goals outlined
in a plan upon which Power-One and you will mutually agree. Power-One will
reimburse you for expenses incurred in connection with performance of your
duties upon presentation of standard documentation.

              3. STOCK OPTIONS. Power-One will grant you non-qualified stock
options to purchase shares of Power-One common stock in accordance with the
provisions of Power-One's Amended and Restated 1996 Stock Incentive Plan as
follows:

                 a. You will receive an option to purchase 75,000 shares of
         common stock, all of which will vest and become exercisable on
         December 31, 2001 (the "LOAN OPTION"), provided that (i) you have
         not terminated your employment for any reason other than death or
         permanent disability (as defined below) or (ii) Power-One has not
         terminated your employment for cause (as defined below).

                 b. You will also receive an option to purchase 150,000
         shares of Power-One common stock (the "EMPLOYEE OPTION" and together
         with the Loan Option, the "OPTIONS"). The shares of common stock
         underlying the Employee Option will vest and become exercisable over
         four years at the rate of 25% per year pursuant to our standard
         Employee Non-Qualified Stock Option Agreement, a form of which is
         attached as EXHIBIT A.

                 c. The Options will be at an exercise price equal to the
         closing price on Nasdaq of the common stock on your first day of
         employment; January 13, 2000.

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                 d. You will be eligible to receive additional annual option
         grants under Power-One's Stock Incentive Plan to the extent, if any,
         and on terms awarded by Power-One's Compensation Committee to
         Power-One's executive officers.

              4. LOAN. On the date of this letter, Power-One will loan you
$660,000, and you will execute and deliver a full-recourse promissory note
(the "NOTE") in favor of Power-One. Interest will accrue on this note at the
rate of 5.5% per annum (Power-One's corporate borrowing rate in effect on the
date of this agreement). All principal and interest under the Note will be
due and payable on the fourth anniversary of the date of this letter, but you
may prepay any amount of outstanding indebtedness at any time without penalty.

              5. CHANGE OF CONTROL. If a Change in Control (as defined below)
of Power-One occurs within four years after your start date, the following
will apply:

                 a. You will receive a one-time payment equal to two times
         the sum of your most recent annual salary and your most recent
         annual bonus. This amount will be deposited in an escrow account,
         and two years after the effective date of the Change in Control, you
         will receive this payment, together will any interest that has
         accrued on such amount.

                 b. At your election, all of the unvested shares underlying
         the Employee Option will vest and become exercisable on the
         effective date of the Change in Control, and any cash proceeds or
         shares of the acquirer's capital stock that you receive in payment
         for these shares as a result of such Change in Control will be
         deposited in an escrow account until the earlier of (i) with respect
         to any shares underlying the Employee Option that vest, the vesting
         date for such shares, (ii) two years from the effective date of the
         Change in Control and (iii) the four year anniversary of your hire
         date. To the extent that you are required to recognize income from
         the acceleration and exercise of these options, you will either (i)
         be distributed from the escrow account cash in the amount of your
         tax liability or (ii) the number of your shares of capital stock of
         the acquirer held in escrow equal to the amount of your tax
         liability will be released to you. If you elect not to accelerate
         your options, your options will become options to purchase the
         acquirer's capital stock on the same terms and conditions of your
         Power-One options.

                 c. For the purposes of this Paragraph 5, "CHANGE IN CONTROL"
         means (i) the sale of all or substantially all of the outstanding
         capital stock of Power-One, (ii) a merger of Power-One into another
         company in which Power-One is not the surviving entity, (iii) the
         acquisition by any individual, entity or group other than Stephens
         Inc. within the meaning of the Sections 13 or 14 of the Securities
         Exchange Act of 1934, as amended (the "EXCHANGE ACT") of "beneficial
         ownership," within the meaning of Rule 13d-3 of the Exchange Act of
         40% or more of the combined voting power of the then outstanding
         voting securities of Power-One entitled to vote generally in the
         election of directors or (iv) the sale of all or substantially all
         of Power-One's assets.

                 d. If your employment is terminated for anything other than
         "cause" during the two-year period after the effective date of the
         Change in Control, including


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         your death or permanent disability, all cash proceeds (or shares of
         stock, as the case may be) then held in escrow will immediately be
         paid to you and your emloyee benefits will continue for a period of
         two years. "CAUSE" means (i) theft, embezzlement or obtaining funds
         or property under false pretenses, if such transgressions are
         demonstrably material in amount both in relation to you and
         Power-One's successor, (ii) engaging in an act of dishonesty or
         moral turpitude (including convictions of felonies) if such act
         materially and demonstrably injures Power-One's successor, but
         traffic or moving violations will not constitute acts of dishonesty
         or moral turpitude for the purpose of this definition or (iii)
         willfully failing to substantially perform your duties as an
         employee of Power-One's successor (other than as a result of
         incapacity due to physical illness), where you have either acted in
         bad faith or without reasonable belief that such breach was in the
         best interests of Power-One's successor, and such failure has
         resulted in material and demonstrable injury to Power-One's
         successor.

                 e. If you terminate your employment for any reason other
         than your death or permanent disability during this two-year period,
         then all cash proceeds (or shares of stock, as the case may be) then
         held in escrow will be distributed to Power-One, and you will have
         no right in them. "PERMANENT DISABILITY" means your absence from
         your duties with Power-One on a full-time basis for 180 consecutive
         business days as a result of incapacity due to mental or physical
         illness that is determined to be total and permanent by a physician
         selected by Power-One or its insurers and acceptable to you or your
         legal representative.

              6. MOVING EXPENSES. Power-One will make loans to you for
relocation expenses as follows:

                 a. an amount equal to $25,000 to cover miscellaneous moving
         expenses, without any requirement for you to document such expenses;

                 b. for all reasonable expenses necessarily incurred by you
         in connection with selling your home in Austin, TX upon presentation
         of receipts for such expenses, including realtor's commissions and
         all escrow and closing fees for which you are responsible but not
         including reimbursement for any taxes or mortgage fees incurred in
         connection with the sale of your residence;

                 c. up to $75,000 for losses that you may incur on the sale
         of your residence in Austin, TX;

                 d. for all reasonable expenses necessarily incurred by you
         in connection with purchasing a residence in Ventura County, CA upon
         presentation of receipts for such expenses, including realtor's
         commissions and all escrow and closing fees for which you are
         responsible and up to two points payable in connection with
         obtaining a mortgage for the purchase of this residence;


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                 e. for no more than sixth months from the date of hire, up
         to $2,000 per month plus amounts required to pay all utilities for
         the temporary residence that you occupy in Ventura County, CA while
         looking for a permanent residence;

                 f. for all reasonable travel expenses necessarily incurred
         by you in relocating your family to California upon presentation of
         receipts for such expenses;

                 g. for the cost to relocate your furniture, other household
         goods and vehicles to California. You will be required to obtain two
         estimates from movers of your choice. Power-One will directly pay
         the mover that you select, but if one of these estimates is more
         than $1000 lower than the other and you do not use the mover with
         the lower estimate, Power-One will obtain an estimate from a mover,
         and you will required to use the mover with the lower of this
         estimate and the lower of the two estimates that you previously
         obtained; and

                 h. for storage of your furniture and household goods for up
         to six months following your relocation to California.

              7. NO-INTEREST LOAN. Amounts that Power-One loans you under
Paragraph 6 and Paragraph 2 will not accrue interest. Power-One will forgive
all of this indebtedness (i) three years after your date of hire, (ii) on
your death or permanent disability or (iii) if your employment is terminated
for any reason other than cause. If you terminate your employment for any
reason other than death or permanent disability or Power-One or its successor
terminates your employment for cause during the three-year period after your
date of hire, you will immediately be required to repay these amounts in-full
without accrued interest. You will be required to enter into a promissory
note or notes for all amounts covered by this paragraph. You will be required
to pay all taxes that you incur as a result of the reimbursement expenses
that you receive under Paragraph 6.

              8. BENEFITS. You will be entitled to receive all of the
employee benefits described on EXHIBIT B

              Please sign below to indicate your acceptance of these basic
terms and conditions of your employment with Power-One. We very much look
forward to working with you.

                                            Best regards,



                                            ------------------------------------
                                            Steven J. Goldman
                                            Chairman and Chief Executive Officer
                                            Power-One, Inc.


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                                    EXHIBIT B


CAR ALLOWANCE: You will be eligible for an automobile allowance of $255 per
week. (On an annualized basis, this is equivalent to $13,260.) This allowance
is intended to reimburse you for all expenses incurred while using your
personal vehicle for company business. In exchange for this allowance, you
must maintain a minimum of $300,000 personal liability insurance coverage on
your vehicles at all times.

401K PLAN: You will be eligible to participate in the 401(k) Plan on the next
plan entry date (07/01/00). At that time and subject to the provisions of the
plan, you may contribute from 1% to 15% of your pay on a before tax 401(k)
basis. Power-One's current matching contribution is 50 cents for every dollar
you save, up to 3% of your pay and 25 cents for every dollar you save
thereafter, up to the next 3% of your pay, for a total partial matching
contribution of up to 6% of your pay. Although this is the contribution
amount that Power-One has made since the inception of the plan, this amount
is subject to change in the future.

EMPLOYEE STOCK PURCHASE PROGRAM: Employees can contribute 2 to 15% of their
after tax pay to purchase Power-One stock at a 15% discount subject to the
terms of that plan.

VACATION: You will be eligible to receive 4 weeks of paid vacation per year
at a straight time rate.

SICK PAY: We do not have a formal sick pay policy. Therefore, if you are out
ill, we will continue your pay up to 30 calendar days per year. After that
time, you would be eligible for short-term disability insurance (provided by
Power-One) and eventually eligible for long-term disability (also provided by
Power-One).

HOLIDAYS:  Power-One currently enjoys 9 paid holidays per year.  They are:

                  New Years Day
                  Presidents Day
                  Memorial Day
                  Independence Day
                  Labor Day
                  Thanksgiving Day
                  Day after Thanksgiving
                  Christmas Eve
                  Christmas Day

MEDICAL COVERAGE: Due to your wife's pregnancy and upcoming childbirth, we
agree to reimburse you the cost to maintain your present coverage under COBRA
for up to 6 months.

Blue Cross provides our medical coverage effective 01/01/00. There is a
choice of coverage available:

- PPO - Single Coverage = 10.50/wk; Employee +1= $32.00/wk; Employee +2 or
  more = $45/wk.
- HMO - Single Coverage = 8.50/wk; Employee +1= $22.00/wk; Employee +2 or
  more = $35/wk.
- Out of Area Plan - 10.50/wk; Employee +1= $32.00/wk; Employee +2 or
  more = $45/wk.


                                  Exhibit B-1

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DENTAL COVERAGE: MetLife provides Coverage. They offer a policy that provides
the same level of benefits whether the employee sees a dentist in or out of
network. This coverage is free for both the employee and dependents. A summary
of coverage is:

                  Annual Max  = $1000 per person

                  Co-insurance =
                           Preventative     100%
                           Basic            80%
                           Major            50%

                  Deductible:  $50/$150 - Waived for Preventative


VISION: Coverage is provided by V.S.P. This is a nationwide program.
Employees must see a doctor within the network. There are various limits of
coverage. We can also review this information in detail at a later time. This
coverage is free for both the employee and dependents.

LIFE INSURANCE: Our current contract with our life insurance carriers limits
coverage to $300,000. This is an AD & D Plan. We will attempt to modify this
limit. In the event of accidental death while utilizing any mode of
transportation, you would have an additional $100,000. Additional Life
Insurance can be purchased in increments of $15,000 to a maximum of $500,000.


                                  Exhibit B-2