<PAGE>

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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934


     For the quarterly period ended April 1, 2001

                                       OR


[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934


     For the transition period from ___________ to ___________


                        Commission File Number 000-21507

                          POWERWAVE TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)


                  Delaware                               11-2723423
         (State or other jurisdiction of             (I.R.S. Employer
          incorporation or organization)              Identification No.)



                            1801 E. St. Andrew Place
                              Santa Ana, CA 92705
               (Address of principal executive offices, zip code)


      Registrant's telephone number, including area code: (714) 466-1000

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

     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 May 14, 2001 the number of outstanding shares of Common Stock, par
value $.0001 per share, of the Registrant was 63,998,641.

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



<PAGE>

                         POWERWAVE TECHNOLOGIES, INC.
                                     INDEX


                                                                            Page
                                                                            ----
Part I.  Financial Information

   Item 1.  Financial Statements

            Consolidated Balance Sheets at April 1, 2001 (Unaudited)
             and December 31, 2000                                            3

            Consolidated Statements of Operations (Unaudited) for the
             three months ended April 1, 2001 and April 2, 2000               4

            Consolidated Statements of Comprehensive Operations (Unaudited)
             for the three months ended April 1, 2001 and April 2, 2000       5

            Consolidated Statements of Cash Flows (Unaudited) for the
             three months ended April 1, 2001 and April 2, 2000               6

            Notes to Consolidated Financial Statements (Unaudited)          7-9

   Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                    10-25

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk       26

Part II.  Other Information

   Item 6.  Exhibits and Reports on Form 8-K                                 27

Signatures                                                                   28

This Quarterly Report on Form 10-Q includes certain forward-looking statements
as defined within Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, relating to
revenue, revenue composition, demand and pricing trends, future expense levels,
trends in average selling prices and gross margins, the level of expected
capital expenditures and 3G product trends.  Such forward-looking statements are
based on the beliefs of, and estimates made by and information currently
available to, the Company's management  and are subject to certain risks,
uncertainties and assumptions.  Any statements contained herein (including
without limitation statements to the effect that the Company or management
"estimates," "expects," "anticipates," "plans," "believes," "projects,"
"continues," "may," or "will," or statements concerning "potential" or
"opportunity" or variations thereof or comparable terminology or the negative
thereof) that are not statements of historical fact should be construed as
forward looking statements. The actual results of Powerwave Technologies, Inc.
may vary materially from those expected or anticipated in these forward-looking
statements. The realization of such forward-looking statements may be impacted
by certain important factors which are discussed in "Additional Factors That May
Affect Future Results" under Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" at pages 10-25. Because of these
and other factors that may affect Powerwave's operating results, past
performance should not be considered as an indicator of future performance and
investors should not use historical results to anticipate results or trends in
future periods.  Powerwave undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers should carefully review the risk
factors described in this and other documents Powerwave files from time to time
with the Securities and Exchange Commission, including subsequent Current
Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form
10-K.

                                       2
<PAGE>

                          POWERWAVE TECHNOLOGIES, INC.
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                              April 1,      December 31,
                                                                                2001           2000
                                                                            ------------    ------------
<S>                                                                         <C>             <C>
                                      ASSETS                                 (Unaudited)
Current Assets:
  Cash and cash equivalents.................................................    $109,994        $128,733
  Accounts receivable, net of allowance for doubtful accounts of $2,968
   and $3,021 at April 1, 2001 and December 31, 2000, respectively..........      55,390          80,006
  Inventories, net..........................................................      69,903          51,275
  Prepaid expenses and other current assets.................................       3,577           5,387
  Notes receivable..........................................................          --              26
  Prepaid income taxes......................................................       4,678              --
  Deferred tax assets.......................................................       8,745           8,553
                                                                                --------        --------
     Total current assets...................................................     252,287         273,980

Property and equipment......................................................     145,305         128,638
Less accumulated depreciation and amortization..............................     (33,325)        (26,980)
                                                                                --------        --------
  Net property and equipment................................................     111,980         101,658
                                                                                --------        --------
Intangible assets, net......................................................       9,899          10,777
Deferred tax assets.........................................................       5,436           5,436
Other non-current assets....................................................       1,782           1,946
                                                                                --------        --------
TOTAL ASSETS................................................................    $381,384        $393,797
                                                                                ========        ========

                           LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable..........................................................    $ 49,314        $ 50,829
  Accrued expenses and other liabilities....................................      19,637          24,023
  Current portion of long-term debt.........................................         167              96
  Income taxes payable......................................................          --           2,299
                                                                                --------        --------
     Total current liabilities..............................................      69,118          77,247

Long-term debt, net of current portion......................................          39              42
Other non-current liabilities...............................................          56             236
                                                                                --------        --------
     Total liabilities......................................................      69,213          77,525
                                                                                --------        --------

Contingencies...............................................................          --              --

Shareholders' Equity:
  Preferred Stock, $.0001 par value, 5,000 shares authorized and
    no shares issued and outstanding........................................          --              --
  Common Stock, $.0001 par value, 135,000 shares authorized,
    63,916 shares issued and outstanding at April 1, 2001 and
    63,509 shares issued and outstanding at December 31, 2000...............     227,055         221,349
  Accumulated other comprehensive income....................................          --             276
  Retained earnings.........................................................      85,116          94,647
                                                                                --------        --------
     Total shareholders' equity.............................................     312,171         316,272
                                                                                --------        --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..................................    $381,384        $393,797
                                                                                ========        ========
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

                         POWERWAVE TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                   Three Months Ended
                                                -----------------------
                                                April 1,       April 2,
                                                  2001           2000
                                                --------       --------
<S>                                             <C>            <C>
Net sales....................................   $ 72,976       $103,854
Cost of sales................................     68,383         71,397
                                                --------       --------
Gross profit.................................      4,593         32,457
Operating expenses:
  Sales and marketing........................      4,976          5,065
  Research and development...................     10,897          9,008
  General and administrative.................      6,158          3,585
                                                --------       --------
Total operating expenses.....................     22,031         17,658

Operating income (loss)......................    (17,438)        14,799
Other income, net............................      2,546          1,210
                                                --------       --------

Income (loss) before income taxes............    (14,892)        16,009
Provision (benefit) for income taxes.........     (5,361)         5,683
                                                --------       --------

Net income (loss)............................   $ (9,531)      $ 10,326
                                                ========       ========
Basic earnings (loss) per share..............     $(0.15)         $0.17
                                                ========       ========
Diluted earnings (loss) per share............     $(0.15)         $0.16
                                                ========       ========
Basic weighted average common shares.........     63,697         60,936
                                                ========       ========
Diluted weighted average common shares.......     63,697         64,284
                                                ========       ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>

                         POWERWAVE TECHNOLOGIES, INC.
              CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
                                  (Unaudited)
                                (in thousands)


<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                           ----------------------
                                                           April 1,      April 2,
                                                             2001          2000
                                                           --------      --------
<S>                                                        <C>           <C>
Net income (loss)........................................  $(9,531)      $10,326
Other comprehensive income (loss) net of tax:
Reclassification adjustment for realized gains on
 available-for-sale securities included in net income....     (276)           --
                                                           -------       -------
Comprehensive income (loss)..............................  $(9,807)      $10,326
                                                           =======       =======
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>

                         POWERWAVE TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                (in thousands)
<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                     -----------------------------
                                                                        April 1,         April 2,
                                                                          2001             2000
                                                                     --------------   ------------
<S>                                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)................................................  $     (9,531)    $     10,326
  Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
    Depreciation and amortization..................................         7,363            3,401
    Provision for doubtful accounts................................            71              201
    Provision for excess and obsolete inventories..................         5,466            1,750
    Compensation costs related to stock options....................            15               22
    Loss on disposal of property, plant and equipment..............            --               57
    Gain on sale of available-for-sale securities..................          (568)              --
  Changes in operating assets and liabilities:
    Accounts receivable............................................        24,545          (12,609)
    Inventories....................................................       (24,094)          (1,575)
    Prepaid expenses and other current assets......................         1,341             (336)
    Income taxes...................................................        (4,822)          (2,943)
    Accounts payable...............................................        (1,515)          (1,656)
    Accrued expenses and other liabilities.........................        (4,386)          (1,510)
    Other non-current assets.......................................           164           (2,369)
    Other non-current liabilities..................................          (180)              28
                                                                     ------------     ------------
      Net cash provided by (used in) operating activities..........        (6,131)             488

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment...............................       (16,679)          (3,984)
  Proceeds from sale of available-for-sale securities..............           568               --
  Payment received on notes receivable.............................            26            6,975
                                                                     ------------     ------------
      Net cash provided by (used in)  investing activities.........       (16,085)           2,991

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt.............................           (60)             (89)
  Issuance of Common Stock.........................................         1,623              654
  Proceeds from exercise of stock options..........................         1,914            3,080
                                                                     ------------     ------------
      Net cash provided by financing activities....................         3,477            3,645
                                                                     ------------     ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...............       (18,739)           7,124
CASH AND CASH EQUIVALENTS, beginning of period.....................       128,733           76,671
                                                                     ------------     ------------
CASH AND CASH EQUIVALENTS, end of period...........................  $    109,994     $     83,795
                                                                     ============     ============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid (received) for:
    Interest.......................................................  $         32     $          9
                                                                     ============     ============
    Income taxes...................................................  $       (539)    $        925
                                                                     ============     ============
NON CASH ITEMS:
  Tax benefit related to stock option exercises....................  $      2,116     $     10,492
                                                                     ============     ============
  Tax benefit related to issuance of Common Stock under the
   Employee Stock Purchase Plan....................................  $         39     $        216
                                                                     ============     ============
  Reversal of deferred tax liability on available-for-
   sale-securities.................................................  $        192     $         --
                                                                     ============     ============
  Reclassification adjustment for realized gains on available-for-
   sale securities.................................................  $        276     $         --
                                                                     ============     ============
  Acquisition of property and equipment through capital leases.....  $        128     $         60
                                                                     ============     ============
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>

                         POWERWAVE TECHNOLOGIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
             (in thousands except for share and per share amounts)


Basis of Presentation

  The accompanying consolidated financial statements have been prepared by
Powerwave Technologies, Inc. ("Powerwave" or the "Company") without audit
(except for balance sheet information as of December 31, 2000) in accordance
with generally accepted accounting principles for interim financial information
and with instructions to Form 10-Q and Article 10 of Regulation S-X.  In the
opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been included.  The
accompanying consolidated financial statements do not include certain footnotes
and financial presentations normally required under generally accepted
accounting principles and, therefore, should be read in conjunction with the
audited consolidated financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000.  The accounting
policies followed by the Company are set forth in Note 2 of the Notes to
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.

  The results of operations for the three months ended April 1, 2001, are not
necessarily indicative of the results to be expected for the entire fiscal year
ending December 30, 2001 (fiscal year 2001).  For further information on
additional factors that may affect future results, please refer to the
"Management Discussion and Analysis of Financial Condition and Results of
Operations" under Item 2 and the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.

Earnings (loss) Per Share

  In accordance with Statement of Financial Accounting Standards ("SFAS") No.
128 Earnings Per Share, basic earnings (loss) per share is based upon the
weighted average number of common shares outstanding.  Diluted earnings (loss)
per share is based upon the weighted average number of common and potential
common shares for each period presented.  Potential common shares include stock
options using the treasury stock method. Potential common shares have been
excluded from diluted weighted average common shares for the three months ended
April 1, 2001, as the effect would be anti-dilutive.

   The following details the calculation of basic and diluted earnings  (loss)
per share:

<TABLE>
                                                           April 1,        April 2,
                                                             2001            2000
                                                           --------        --------
                                                           (In thousands except for
                                                               per share amounts)
<S>                                                        <C>            <C>
  Basic:..............................................
    Basic weighted average common shares..............      63,697          60,936
    Net income (loss).................................     $(9,531)        $10,326
                                                           -------         -------
    Basic earnings (loss) per share...................     $ (0.15)        $  0.17
                                                           =======         =======

  Diluted:
    Basic weighted average common shares..............      63,697          60,936
    Potential common shares...........................          --           3,348
                                                           -------         -------
    Diluted weighted average common shares............      63,697          64,284
    Net income (loss).................................     $(9,531)        $10,326
                                                           -------         -------
    Diluted earnings (loss) per share.................     $ (0.15)        $  0.16
                                                           =======         =======
</TABLE>

                                       7
<PAGE>

New Accounting Pronouncements

  SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities is
effective for all fiscal years beginning after June 15, 2000.  SFAS No. 133 as
amended, establishes accounting and reporting standards for derivative
instruments including certain derivative instruments embedded in other contracts
and for hedging activities.  Under SFAS No. 133, certain contracts that were not
previously considered derivatives may now meet the definition of a derivative.
The Company adopted SFAS No. 133 effective January 1, 2001 and such adoption did
not have a material impact on the Company's consolidated financial statements.

Inventories

  Inventories, net, consist of the following:

<TABLE>
                                                           April 1,     December 31,
                                                             2001           2000
                                                           -------      ------------
<S>                                                        <C>            <C>
   Parts and components..............................      $32,306         $29,023
   Work-in-process...................................       17,131          12,824
   Finished goods....................................       20,465           9,428
                                                           -------         -------
   Total.............................................      $69,902         $51,275
                                                           =======         =======
</TABLE>

  Inventories are net of an allowance for excess and obsolete inventory of
$14,479 and $9,449 as of April 1, 2001 and December 31, 2000, respectively.

Segment Information

  Utilizing the management approach, the Company has broken down its business
based upon the RF frequency in megahertz ("MHz"), within which the product
operates, i.e., 800-1000 MHz, 1800-2000 MHz,  and over 2000 MHz. Neither
operating expenses nor specific assets are allocated to these segments.
Therefore, the segment information reported only includes net sales, cost of
sales and gross profit (loss).

<TABLE>
<CAPTION>
                                                      Business Segments
                                                      -----------------
                                                        (in thousands)
                                       800-1000     1800-2000       2000+
                                         MHz           MHz           MHz         Total
                                    ----------------------------------------------------
<S>                                  <C>          <C>              <C>          <C>
Three months ended April 1, 2001
Net sales..........................    $46,373       $11,942       $14,661      $ 72,976
Cost of sales......................    $38,584        15,841        13,958        68,383
                                       -------       -------       -------      --------
Gross profit (loss)................    $ 7,789       $(3,899)      $   703      $  4,593
                                       =======       =======       =======      ========

Three months ended April 2, 2000
Net sales..........................    $75,586       $28,268       $    --      $103,854
Cost of sales......................    $48,824        22,573            --        71,397
                                       -------       -------       -------      --------
Gross profit (loss)................    $26,762       $ 5,695       $    --      $ 32,457
                                       =======       =======       =======      ========
</TABLE>

  The following schedule presents an analysis of Powerwave's net sales based
upon the geographic location to which a product was shipped.  North American
sales include sales to the United States, Canada and Mexico.  Asian sales
include sales to South Korea and all locations in Asia.  Europe and Other
International sales include sales to Europe and all other foreign countries.
Shipments to Canada were $10,226 and $24,304 for the three months ended April 1,
2001 and April 2, 2000, respectively.  There were no shipments to Mexico for the
three months ended April 1, 2001, compared to $2,559 for the three months ended
April 2, 2000.  For the three months ended April 1, 2001 and April 2, 2000,
shipments to South Korea were $12,879 and $7,831, respectively.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                          North                    Europe and Other
                                         American       Asia        International        Total
                                         --------   ------------   ----------------   -----------
<S>                                      <C>        <C>            <C>                <C>
   Net sales for the three
    months ended April 1, 2001........    $40,792      $14,351          $17,833          $ 72,976
   Net sales for the three
    months ended April 2, 2000........    $81,678      $ 7,831          $14,345          $103,854
</TABLE>

     The majority of the Company's assets are located in the United States.

     Total accounts receivable as of April 1, 2001, include 56% from United
States based customers, 23% from customers located in France and 12% from
customers located in South Korea.

     The Company's product sales have historically been concentrated in a small
number of customers.  During the three months ended April 1, 2001 sales to one
customer accounted for approximately 37% of net sales and sales to three other
customers each accounted for at least 10% of net sales.  For the three months
ended April 2, 2000 sales to one customer accounted for approximately 41% of net
sales and sales to two other customers each accounted for over 10% of net sales.

Stock Option Plans

     The following is a summary of stock option transactions under Powerwave's
stock option plans, including the 1995 Stock Option Plan, the 1996 Stock
Incentive Plan, 1996 Director Stock Option Plan and the 2000 Stock Option Plan
for the three months ended April 1, 2001:

<TABLE>
<CAPTION>
                                                                     Number of       Number of
                                                                      Options         Options
                                                                    Exercisable    Available for
                                   Number of        Price per          as of        Grant as of
                                     Shares           Share        April 1, 2001   April 1, 2001
                                   ----------     --------------   -------------   -------------
<S>                                <C>            <C>              <C>             <C>
     Balance at January 1, 2001    8,266,522      $ 0.82-$73.56
      Granted                        436,350      $15.19-$50.00
      Exercised                     (365,155)     $ 0.82-$17.71
      Cancelled                     (272,364)     $ 4.58-$44.75
                                   ---------
     Balance at April 1, 2001      8,065,353      $ 0.82-$73.56        2,535,113       2,557,013
                                   =========                           =========       =========

</TABLE>

     During the three months ended April 1, 2001 and April 2, 2000, the Company
recorded compensation costs related to stock options of approximately $15 and
$22, respectively. The remaining unamortized compensation expense as of April 1,
2001 was approximately $141 and will be amortized through September 2003.

Employee Stock Purchase Plan

     The eighth offering under the Powerwave's Employee Stock Purchase Plan (the
"Purchase Plan") concluded on January 31, 2001, with 60,595 shares of the
Company's Common Stock purchased under the Purchase Plan at a price per share of
$26.775. At April 1, 2001, there were rights to purchase approximately 23,000
shares of Common Stock outstanding under the Purchase Plan's ninth offering,
based on a purchase price of 85% of the closing price of the Company's stock at
February 1, 2001. The ninth offering will conclude on July 31, 2001.

Contingencies

     The Company is subject to various legal proceedings from time to time as
part of its business. As of April 1, 2001, the Company is not currently party to
any legal proceedings, the adverse outcome of which, individually or in the
aggregate, the Company believes would have a material adverse effect on the
Company's business, financial condition and results of operations.

                                       9
<PAGE>

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

     The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. This discussion contains
forward-looking statements, the realization of which may be impacted by certain
important factors including, but not limited to, those discussed in "Additional
Factors That May Affect Our Future Results."

Results of Operations

     The following table summarizes our results of operations as a percentage of
net sales for the three months ended April 1, 2001 and April 2, 2000.

<TABLE>
<CAPTION>
                                           As a Percentage of Net Sales
                                                Three Months Ended
                                           ----------------------------
                                            April 1,          April 2,
                                              2001              2000
                                           ----------        ----------
<S>                                        <C>               <C>
Net sales                                     100.0%            100.0%
Cost of sales                                  93.7              68.8
                                             ------             -----
Gross profit                                    6.3              31.2
Operating expenses:
     Sales and marketing                        6.8               4.9
     Research and development                  14.9               8.7
     General and administrative                 8.5               3.4
                                             ------             -----
Total operating expenses                       30.2              17.0
                                             ------             -----

Operating income (loss)                       (23.9)             14.2
Other income, net                               3.5               1.2
                                             ------             -----

Income (loss) before income taxes             (20.4)             15.4
Provision (benefit) for income taxes           (7.3)              5.5
                                             ------             -----

Net income (loss)                            (13.1)%              9.9%
                                             =====              =====

</TABLE>

Three months ended April 2, 2001 and April 1, 2000

Net Sales

     Our net sales are derived primarily from the sale of RF power amplifiers
for use in wireless communications networks. Sales decreased by 29.7% to $73.0
million for the quarter ended April 1, 2001 from $103.9 million for the quarter
ended April 2, 2000. The decline in net sales was due to a significant reduction
in demand for our single-carrier products which are sold through our original
equipment manufacturer ("OEM') customers, as well as a reduction in demand from
our direct operator customers for multi-carrier products. The reduction in
demand occurred in our products covering both the 800-1000 MHz and the 1800-2000
MHz ranges. We believe that this reduction in demand was due in large part to
the current economic slowdown occurring in the United States as well as the
slowdown occurring in the worldwide wireless communications markets. We
currently anticipate that both the economic slowdown in the United States and
the slowdown in the worldwide wireless communications markets will negatively
impact our revenues for the remainder of the current fiscal year. For the
quarter ended April 1, 2001, total sales of products for networks in the 800-
1000 MHz range (including both single and multi-carrier RF power amplifiers and
racks) accounted for approximately 64% of sales or $46.4 million, compared to
approximately 73% of sales or $75.6 million for the quarter ended April 2, 2000.
Sales of RF power amplifiers and associated products for networks in the 1800-
2000 MHz range (consisting mainly of single carrier RF power amplifiers)
accounted for approximately 16% of sales or $11.9 million for the first quarter
of 2001, compared to approximately 27% or $28.3 million for the first quarter of
2000. The decline in sales of 800-1000 MHz and 1800-2000 MHz products was
partially offset by sales of products for use in networks over 2000 MHz, which
largely consist of third

                                       10
<PAGE>

generation or 3G products. For the quarter ended April 1, 2001 sales of products
for use in networks over 2000 MHz accounted for approximately 20% of revenues or
$14.7 million, as compared to no revenues for the quarter ended April 2, 2000.

     We track the geographic location of our sales based upon the location to
which we ship products. Since many of our customers receive products from us at
central locations and then reship the product with other base station equipment
to locations throughout the world, we are not able to identify the final
installation location of our products. Based upon the location to which we ship
our products, North America has accounted for the majority of our sales. Sales
to customers in North America accounted for approximately 56% of revenue or
$40.8 million for the quarter ended April 1, 2001, compared to approximately 79%
of revenue or $81.7 million for the quarter ended April 2, 2000. Total
international sales (excluding North American sales) accounted for approximately
44% of revenues or $32.2 million for the quarter ended April 1, 2001, compared
to approximately 21% or $22.2 million for the quarter ended April 2, 2000. Total
Asian sales increased to $14.4 million for the quarter ended April 1, 2001 from
$7.8 million for the quarter ended April 2, 2000. Total Asian sales accounted
for approximately 20% of revenues in the first quarter of 2001 compared to
approximately 8% of sales in the first quarter of 2000. See "Additional Factors
That May Affect Our Future Results--A Significant Amount of Our Revenues Comes
from a Few Customers; --Our Success is Tied to the Growth of the Wireless
Service Market; and --There are Many Risks Associated With International
Operations."

     For the first quarter ended April 1, 2001, total sales to Nortel Networks
Corporation and related entities ("Nortel") accounted for approximately 37% of
revenues and sales to Cingular Wireless, Verizon Wireless and Samsung
Electronics Co. Ltd. ("Samsung") each accounted for at least 10% of the revenues
for the quarter. We cannot guarantee that we will continue to be successful in
attracting new customers or retaining or increasing business with our existing
customers. In addition, we believe that a significant portion of our business
with OEMs, such as LM Ericsson Telephone Company ("Ericsson"), Lucent
Technologies, Inc. ("Lucent") and Nortel, is dependent upon the development
schedules of wireless network operators who are purchasing infrastructure
equipment from such OEMs and on such OEMs' strategy concerning the outsourcing
of RF power amplifiers. A number of factors may cause delays in wireless
infrastructure deployment schedules for both North American and international
deployments, including deployments in Europe, Asia, South America and other
areas. Such factors include economic slowdowns in the wireless operator's
operating region, delays in government approvals required for system deployment,
reduced subscriber demand for wireless services, high prices for new spectrum
licenses, increased competition and bidding between OEMs for infrastructure
contracts and delays in the development and delivery of telephone handsets which
are compatible with new wireless protocols. In addition, a number of factors may
cause OEMs to alter their outsourcing strategy concerning RF power amplifiers,
which could cause such OEMs to reduce or eliminate their demand for external
supplies of RF power amplifiers or shift their demand to alternative suppliers.
Such factors include lower perceived internal manufacturing costs and
competitive reasons to remain vertically integrated. Due to the possible
uncertainties associated with wireless infrastructure deployments and OEM
demand, we have experienced and expect to continue to experience significant
fluctuations in demand from our OEM customers. Such fluctuations have caused and
may continue to cause significant reduction in our revenues and/or operating
income which has harmed and may continue to harm our business, financial
condition and results of operations. See "Additional Factors That May Affect Our
Future Results--A Significant Amount of Our Revenues Comes from a Few
Customers; --There are Many Risks Associated With International Operations; and
--Our Quarterly Results Fluctuate Significantly."

Gross Profit

     Cost of sales consists primarily of raw materials, assembly and test labor,
overhead and warranty costs. Gross profit margins for the first quarter of
fiscal 2001 and 2000 were 6.3% and 31.2%, respectively. The decrease in our
gross profit margins during the first quarter of 2001 as compared to the first
quarter of 2000 is due to several factors, the most significant being the
unanticipated reduction in revenues which resulted in lower absorption of
manufacturing overhead expense and increased labor costs, when viewed as a
percentage of revenue. Additionally, during the first quarter of 2001, we
incurred costs to ramp up several new production lines in our new Santa Ana
facility, as well as additional depreciation expenses associated with the
additional capital equipment purchased to support our new production lines which
we have planned for this fiscal year. We also incurred approximately $1.4
million in one-time expenses associated directly with our manufacturing
operations related to the move and

                                       11
<PAGE>

consolidation of our facilities during the first quarter of 2001. We anticipate
that in the near-term, due to our reduced sales level, we will continue to
experience lower labor and overhead absorption rates, which increases cost of
sales as a percentage of revenues. For the first quarter of 2001, our gross
profit margins were also impacted by a $5.5 million provision for excess and
obsolete inventories. We have taken this additional inventory provision to
reflect the additional amount of excess and obsolete raw material and finished
goods we had in inventory at April 1, 2001. The increase in the amount of excess
and obsolete inventories was due to the significant order quantity reductions
and delivery cancellation and push outs of our products that we experienced in
the quarter ended April 1, 2001.

     While we continue to strive for manufacturing and engineering cost
reductions to offset pricing pressures on our products, we cannot guarantee that
these cost reduction or redesign efforts will keep pace with price declines and
cost increases. If we are unable to reduce our costs through our manufacturing
and/or engineering efforts, our gross margins and profitability may be adversely
affected. For a discussion of the effects of declining average sales prices on
our business, see "Additional Factors That May Affect Our Future Results--Our
Average Sales Prices are Declining."

     The wireless communications infrastructure 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. Due to these competitive
pressures, we expect that the average sales prices of our products will continue
to decrease. We have introduced new products at lower sales prices. These lower
sales prices have impacted the average sales prices of our products. Future
pricing actions by us and our competitors may also adversely impact our gross
profit margins and profitability, which could also result in decreased liquidity
and adversely affect our business, financial condition and results of
operations. For a discussion of the impact of new products on our business, see
"Additional Factors That May Affect Our Future Results--We Must Develop and Sell
New Products in Order to Keep Up With Rapid Technological Change."

Operating Expenses

     Sales and marketing expenses consist primarily of sales commissions,
salaries, other expenses for sales and marketing personnel, travel expenses,
charges for customer demonstration units, reserves for credit losses, and trade
show expenses. Sales and marketing expenses decreased by 2% to $5.0 million for
the quarter ended April 1, 2001, from $5.1 million for the quarter ended April
2, 2000. As a percentage of sales, sales and marketing expenses were 6.8% and
4.9% for the quarters ended April 1, 2001 and April 2, 2000, respectively. The
decrease in sales and marketing expenses in absolute dollars was primarily
attributable to decreased sales commissions related to lower product sales,
partially offset by increased trade show expenses and charges for customer
demonstration units. For both the quarters ended April 1, 2001 and April 2,
2000, approximately $0.2 million in sales and marketing expenses represents the
amortization of a customer list and non-compete agreement acquired as part of
our acquisition of Hewlett-Packard Company's RF power amplifier business in
October 1998 (the "HP Acquisition").

     Research and development expenses include ongoing RF power amplifier design
and development expenses, as well as design expenses associated with reducing
the cost and improving the manufacturability of existing RF power amplifiers.
Current programs include cellular, PCS, and next generation "2.5G" and "3G"
products. Research and development expenses increased by 21% to $10.9 million
for the quarter ended April 1, 2001 from $9.0 million for the quarter ended
April 2, 2000. Research and development expenses as a percentage of sales for
the quarters ended April 1, 2001 and April 2, 2000 were 14.9% and 8.7%,
respectively. The increase in research and development expenses was primarily
due to increased staffing and associated engineering costs related to continued
new product development and existing product enhancement efforts.

     General and administrative expenses consist primarily of salaries and other
expenses for management, finance, information systems, facilities maintenance
and human resources. General and administrative expenses increased by 72% to
$6.2 million for the quarter ended April 1, 2001, from $3.6 million for the
quarter ended April 1, 2000. General and administrative expenses as a percentage
of sales for the quarters ended April 1, 2001 and April 2, 2000 were 8.5% and
3.4%, respectively. The increase in general and administrative expenses was
primarily attributable to increased staffing costs which resulted from the
growth we experienced during fiscal year 2000. In addition we

                                       12
<PAGE>

incurred approximately $2.2 million in one-time expenses during the quarter
ended April 1, 2001, related to the move to our new Southern California
headquarters and manufacturing facility.

     As part of the purchase price allocation of the HP Acquisition, an
allocation of approximately $4.6 million, reflecting the value of goodwill
acquired was capitalized on our balance sheet. This amount is being amortized
over ten years and is included in general and administrative expenses. For both
the quarter ended April 1, 2001 and the quarter ended April 2, 2000,
approximately $0.1 million of goodwill was amortized and included in general and
administrative expenses.

Other Income (Expense)

     We earned $2.5 million of other income, net, during the first quarter of
2001 compared to $1.2 million of other income, net, earned in the first quarter
of 2000. Other income consists primarily of interest income, net of any interest
expense. The increase in other income is primarily due to increased cash
balances. In addition, during the first quarter of 2001, we recognized a gain of
approximately $568,000 on the sale of available-for-sale securities.

Provision (Benefit) for Income Taxes

     During the quarter ended April 1, 2001, we recorded a tax benefit at a rate
of 36.0% as a result of the availability of net operating loss carryforwards.
During the quarter ended April 2, 2000, we recorded a tax provision at our
effective rate of 35.5%.

Liquidity and Capital Resources

     We have historically financed our operations primarily through a
combination of cash on hand, cash provided from operations, equipment lease
financings, available borrowings under bank lines of credit and both private and
public equity offerings. As of April 1, 2001, we had working capital of $183.2
million, including $110.0 million in cash and cash equivalents as compared to
working capital of $196.7 million at December 31, 2000, which included $128.7
million in cash and cash equivalents.

     Net accounts receivable decreased to $55.4 million at April 1, 2001 from
$80.0 million at December 31, 2000, and net inventories increased to $69.9
million at April 1, 2001 from $51.3 million at December 31, 2000, primarily due
to the significant decrease in sales volume during the first quarter of 2001 as
compared to the fourth quarter of 2000. Net cash used by operating activities
was approximately $6.1 million for the three months ended April 1, 2001,
compared with net cash provided by operations of $0.5 million for the three
months ended April 2, 2000. The decrease in cash flow from operating activities
is primarily due to our net loss from operations.

     Capital expenditures were approximately $16.7 million and $4.0 million for
the first quarter of 2001 and 2000, respectively. The majority of the capital
spending during the first quarter of 2001 was for capital improvements to our
new Southern California manufacturing and headquarters facility, as well as
spending on electronic test equipment utilized in our manufacturing and research
and development areas.

     On April 28, 1998, we purchased $2.5 million of 13.75% Senior Secured
Bridge Notes due April 28, 2000 (the "Notes") from Metawave Communications
Corporation ("Metawave"), a supplier of "smart" antennas to the wireless
communications market and a customer, in a private offering. The total amount
raised in this private offering was $29.0 million. The Notes initially accrued
interest at a rate of 13.75% per annum and interest was payable semi-annually.
The Notes contained provisions to increase the rate of interest during the life
of the Notes if the Notes were not repaid prior to maturity. The Notes were
secured by certain assets of Metawave and were redeemed in full on April 28,
1999. Upon the issuance of the Notes, we received related warrants to purchase
53,576 shares of Metawave Series D Preferred Stock at a price of $.01 per share.
We exercised these warrants in April 1999. These shares of Series D Preferred
Stock were converted into 51,420 shares of Metawave Common Stock upon Metawave's
initial public offering in May 2000. We sold these shares in February 2001, at
an average price per share, net of commissions of $11.06, and recognized a gain
of approximately $568,000. This gain is included in other income, net.

                                       13
<PAGE>

     Net cash provided by financing activities was approximately $3.5 million
for the first quarter of 2001 compared to $3.7 million for the first quarter of
2000. Net cash provided by financing activities primarily represents proceeds
from stock option exercises as well as proceeds from the issuance of common
stock under our Employee Stock Purchase Plan.

     We had cash and cash equivalents of $110.0 million at April 1, 2001,
compared with $128.7 million at December 31, 2000. We regularly review our cash
funding requirements and attempt to meet those requirements through a
combination of cash on hand, cash provided by operations, available borrowings
under any credit facilities, financing through equipment lease transactions, and
possible future public or private debt and/or equity offerings. We invest our
excess cash in short-term, investment-grade money market instruments.

     We currently believe that our existing cash balances and funds expected to
be generated from operations will provide us with sufficient funds to finance
our operations for at least the next 12 months. For the remainder of fiscal
2001, we currently anticipate capital spending on property and equipment to be
in the range of $5 million to $15 million, and we currently we plan to fund
these expenditures from our existing cash balances. However, we have utilized
both operating and capital lease financing for certain equipment purchases used
in our manufacturing and research and development operations and expect to
continue to do so selectively in the future. We may require additional funds in
the future to support our working capital requirements or for other purposes,
and we may seek to raise such additional funds through the sale of public or
private equity and/or debt financings as well as from other sources. No
assurance can be given that additional financing will be available in the future
or that if available, such financing will be obtainable on terms favorable to us
or our stockholders when we may require it.


New Accounting Pronouncements

     SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities
is effective for all fiscal years beginning after June 15, 2000. SFAS No. 133 as
amended, establishes accounting and reporting standards for derivative
instruments including certain derivative instruments embedded in other contracts
and for hedging activities. Under SFAS No. 133, certain contracts that were not
previously considered derivatives may now meet the definition of a derivative.
We adopted SFAS No. 133 effective January 1, 2001 and such adoption did not have
a material impact on our consolidated financial statements.

Disclosure About Foreign Currency Risk

     A significant portion of our revenues have been derived from international
sources, with our international customers accounting for approximately 44% of
our first quarter fiscal 2001 revenues, 21% of our fiscal 2000 revenues and 33%
of our fiscal 1999 revenues. We regularly pursue new customers in various
domestic and international locations where new deployments or upgrades to
existing wireless communication networks are planned. Such international
locations include Asia, Europe and South America. International locations have a
history of instability in the value of their currencies. Although we currently
invoice all of our customers in U.S. Dollars, changes in the value of the U.S.
Dollar versus the local currency in which our products are sold, along with the
economic and political conditions of such foreign countries, could adversely
affect our business, financial condition and results of operations. In addition,
the weakening of an international customer's local currency and banking market
may negatively impact such customer's ability to meet their payment obligations
to us. Although we currently believe that our international customers have the
ability to meet all of their obligations to us, there can be no assurance that
they will continue to be able meet such obligations. We regularly monitor the
credit worthiness of our international customers and make credit decisions based
on both prior sales experience with such customers as well as current financial
performance and overall economic conditions. We may decide in the future to
offer certain foreign customers extended payment terms and/or sell certain
products or services in the local currency of such customers. If we sell
products or services in a foreign currency, our results of operations and gross
margins may be affected by changes in currency exchange rates.

                                      14
<PAGE>

     Several of the international markets in which we sell our products have
experienced significant weaknesses in their currencies, banking systems and
equity markets in the last few years. Such weaknesses could negatively impact
demand for wireless services and thereby reduce demand for our products. Such a
reduction in demand for our products could have a negative impact on our future
sales and gross margins. Our foreign customers currently pay for our products
with U.S. Dollars. The past strengthening of the U.S. Dollar as compared to the
Brazilian Real or the South Korean Won, effectively increased the cost of our
products by as much as 100% or more for our Brazilian and South Korean
customers. Such a significant increase in the local currency based cost of such
products makes them less attractive to such customers. Accordingly, changes in
exchange rates, and in particular a strengthening of the U.S. Dollar, may
negatively impact our future sales and gross margins. For further discussion of
the risks associated with our international sales, see "Additional Factors That
May Affect Our Future Results--There are Many Risks Associated With
International Operations."

European Monetary Union

     Within Europe, the European Economic and Monetary Union (the "EMU")
introduced a new currency, the euro, on January 1, 1999. The new currency is in
response to the EMU's policy of economic convergence to harmonize trade policy,
eliminate business costs associated with currency exchange and to promote the
free flow of capital, goods and services.

     On January 1, 1999, the participating countries adopted the euro as their
local currency, initially available for currency trading on currency exchanges
and non-cash transactions such as banking. The existing local currencies, or
legacy currencies, will remain legal tender through January 1, 2002. Beginning
on January 1, 2002, euro-denominated bills and coins will be issued for cash
transactions. For a period of up to six months from this date, both legacy
currencies and the euro will be legal tender. On or before July 1, 2002, the
participating countries will withdraw all legacy currencies and exclusively use
the euro.

     Our transactions are recorded in U.S. Dollars and we do not currently
anticipate future sales transactions being recorded in the euro. Based on the
lack of transactions recorded in the euro, we do not believe that the euro will
have a material effect on our financial position, results of operations or cash
flows. In addition, we have not incurred and do not expect to incur any
significant costs from the continued implementation of the euro, including any
currency risk, which could materially affect our business, financial condition
and results of operations.

     We have not experienced any significant operational disruptions to date and
do not currently expect the continued implementation of the euro to cause any
significant operational disruptions.


Additional Factors That May Affect Our Future Results

     Our future operating results may be impacted by a number of factors that
could cause our actual results to differ materially from those stated herein,
which reflect our current expectations. These factors include the following:

     .  the ability to add new customers to reduce our dependence on any one
        customer;
     .  the ability to maintain our existing customers;
     .  industry specific factors, including a slowdown in the demand for
        wireless communications and RF power amplifiers;
     .  the impact of any reduction in demand for our products;
     .  the ability to increase demand for our products from major wireless
        infrastructure OEMs;
     .  the ability to produce both new and existing products which meet the
        quality standards of both our existing and potential new customers;
     .  the ability to ramp-up production of new products in both a timely and
        cost effective manner;
     .  the ability to timely develop and produce commercially viable products
        at competitive prices;
     .  the ability to maintain a stable and reliable source of electricity to
        support our operations at a reasonable cost;
     .  the ability to manage rapid change in demand for our products;
     .  the availability and cost of components;

                                       15
<PAGE>

     .  the ability to finance our activities and maintain our financial
        liquidity;
     .  the ability of our products to operate and be compatible with various
        OEMs' base station equipment;
     .  worldwide and regional economic downturns and unfavorable political
        conditions;
     .  the ability to manage expense levels;
     .  the ability to manage future product repairs; and
     .  the ability to accurately anticipate customer demand.

A Significant Amount of Our Revenues Comes from a Few Customers

     We sell most of our products to a small number of customers, and we expect
that this will continue.  We believe that our future success depends upon our
ability to broaden our customer base and maintain relationships with major
wireless OEMs, such as Ericsson, LG Electronics ("LG"), Lucent, Motorola Inc.
("Motorola"), Nokia Telecommunications Inc. ("Nokia"), Nortel and Samsung as
well as major operators of wireless networks, such as AT&T Wireless, Cingular
Wireless and Verizon Wireless.

     Our dependence on a small number of major customers exposes us to numerous
risks, including:

     .  slowdowns or delays in deployment of wireless networks that reduce
        customer demand for our products;
     .  changes in customer forecasts and demand;
     .  customers leveraging their buying power to change the terms of pricing,
        payment and product delivery schedules; and
     .  direct competition should a customer decide to manufacture RF power
        amplifiers internally.

     For the three months ended April 1, 2001, our largest customer was Nortel,
which accounted for approximately 37% of our net sales.  For fiscal 2000, Nortel
accounted for approximately 47% of our net sales. During the first quarter of
fiscal 2001, Nortel announced that it was lowering its expectations for wireless
infrastructure demand for the year 2001. The resulting significant reduction in
demand by Nortel had and will continue to have an adverse effect on our
business, results of operations and financial condition.  Also, for the first
quarter of 2001, our next three largest customers (in alphabetical order),
Cingular Wireless, Samsung and  Verizon Wireless, each accounted for at least
10% of our net sales.  The loss of any one of these customers, or a significant
loss, reduction or rescheduling of orders from any of our customers, would have
a material adverse effect on our business, results of operations and financial
condition.

     The risks related to our customer concentration were magnified in 1998 due
to certain of our customer's geographic concentration in South Korea, which
experienced an economic and financial crisis during 1998. For fiscal 1998, our
South Korean customers accounted for $30.2 million, or approximately 30% of
total net sales. This was a significant drop from 1997, when our South Korean
customers accounted for $99.3 million, or approximately 83% of our total net
sales. During fiscal 2000 our South Korean customers accounted for approximately
8% of total sales or $34.1 million and in fiscal 1999 they accounted for
approximately 21% of our total net sales or $62.2 million. For the first quarter
of fiscal 2001, our South Korean customers accounted for approximately 18% of
our net sales or $12.9 million.

     We believe that continued purchases of our products by OEMs is dependent
upon many factors, including the OEMs' view of utilizing third party suppliers
of RF power amplifiers. During fiscal 2000, Ericsson purchased Microwave Power
Devices, one of our competitors. Any shift in demand by an OEM away from
utilizing third party suppliers of RF amplifiers could have a negative impact on
our business, results of operations and financial condition. Additionally, OEM
purchases are impacted by their current view of wireless infrastructure
deployments and could be significantly reduced due to any delays of such
deployments. A number of factors may cause delays in wireless infrastructure
deployments, including the following factors:

     .  economic or political problems in the wireless operator's operating
        region;
     .  delays in government approvals required for system deployment;
     .  higher than anticipated network infrastructure costs;
     .  technical delays in the development of new wireless protocols, such as
        3G, and;
     .  reduced subscriber demand for wireless services.



                                       16
<PAGE>

  In addition, from time to time OEMs may purchase products from us in large
quantities over a short period of time, which may cause demand for our products
to change rapidly.  Due to these and other possible uncertainties associated
with wireless infrastructure deployments and OEMs' purchasing strategies, we may
experience significant fluctuations in demand from our OEM customers.  Such
fluctuations could cause a significant increase in demand which could exceed our
production capacity and could negatively impact our ability to meet customers'
demands as well as potentially impact product quality.  Alternatively, such
fluctuations could cause a significant reduction in revenues which could have a
material adverse effect on our business, results of operations and financial
condition.  We cannot guarantee that a major customer will not reduce, delay or
eliminate purchases from us, which could have a material adverse effect on our
business, results of operations and financial condition.

 Our Quarterly Results Fluctuate Significantly

  We have experienced, and will continue to experience, significant fluctuations
in sales and operating results from quarter to quarter. Our quarterly results
fluctuate due to a number of factors, any of which could have a material adverse
effect on our business, results of operations and financial condition.  Factors
that could cause our results of operations to vary include the following:

  . variations in the timing, cancellation, or rescheduling of customer orders
    and shipments;
  . variations in manufacturing costs, capacities and efficiencies;
  . capacity and production constraints, including constraints associated with
    single-source component suppliers;
  . delays in qualification by customers of new products or redesigns;
  . product failures and associated in-field service support costs;
  . cancellations or reductions of customer orders and shipments due to economic
    slowdowns in the  customers' operating regions;
  . cancellations or rescheduling of customer orders and shipments due to excess
    inventory levels caused by changes in demand or deployment schedules at the
    customer;
  . competitive factors, including pricing, availability and demand for
    competing amplification products;
  . warranty expenses;
  . the availability and cost of components;
  . the timing, availability and sale of new products by us or our competitors;
  . changes in the mix of products having differing gross margins;
  . changes in average sales prices;
  . long sales cycles associated with our products;
  . variations in product development and other operating expenses;
  . discounts given to certain customers for large volume purchases;
  . interruptions in the supply of electricity and significant increases in the
    cost of electricity; and
  . high fixed expenses that increase operating expenses, especially during a
    quarter with a sales shortfall.

  In addition, while we periodically receive order forecasts from our major
customers, such customers generally have no binding obligation to purchase the
forecasted amounts.  See "A Significant Amount of Our Revenues Comes From a Few
Customers." Order deferrals and cancellations by our customers, declining
average sales prices, changes in the mix of products sold, delays in the
introduction of new products and longer than anticipated sales cycles for our
products have in the past adversely affected our quarterly results of
operations.  We cannot guarantee that our quarterly results of operations will
not be similarly adversely affected in the future.

  Our sales to customers are usually made under purchase orders with short
delivery requirements.  While we receive periodic order forecasts, customers
generally have no obligation to purchase the forecasted amounts and may cancel
orders, change delivery schedules or change the mix of products ordered with
minimal notice.  In spite of these limitations, we maintain significant work-in-
progress and raw materials inventory as well as increased levels of technical
production staff to meet estimated order forecasts.  If customers purchase less
than the forecasted amounts or cancel or delay existing purchase orders, we will
have higher levels of inventory that face a greater risk of obsolescence and
excess production staff.  If our customers desire to purchase products in excess
of the forecasted amounts or in a different product mix, we may lack the
inventory or manufacturing capacity to fill their

                                       17
<PAGE>

orders. Either situation could have a material adverse effect upon our business,
financial condition and results of operations and future business with such
customers.

  Due to these factors, our past results are not reliable indicators of our
future performance.  Future revenues and operating results may not meet the
expectations of public market analysts and investors.  In either case, the price
of our Common Stock could be materially adversely affected.  See "--Our Stock
Price Has Been and May Continue to Be Volatile."

 Our Average Sales Prices are Declining

  Our average sales prices have declined, and we anticipate that the average
sales prices for our products will continue to decline and negatively impact our
gross profit margins.  Wireless service providers are placing increasing price
pressure on wireless infrastructure manufacturers, which in turn has resulted in
downward pricing pressure on our products.  Competition among third-party
suppliers also has increased the downward price pressure on our products.  Since
wireless infrastructure manufacturers frequently negotiate supply arrangements
far in advance of delivery dates, we must often commit to price reductions for
our products before we know how, or if, we can obtain such cost reductions.  In
addition, average sales prices are affected by price discounts negotiated for
large volume purchases by certain customers.  To offset declining average sales
prices, we must reduce manufacturing costs and ultimately develop new products
with lower costs or higher average sales prices.  If we cannot achieve such cost
reductions or product improvements, our gross margins will continue to decline.

  Sales of single carrier RF power amplifiers have been subject to intense price
competition and historically have carried lower gross profit margins than our
multi-carrier RF power amplifier products.  If we cannot reduce manufacturing
costs on our single carrier RF power amplifiers and such RF power amplifiers
continue to account for a significant percentage of our net sales, our overall
gross profit margins will fall.  In addition, we currently expect that 3G multi-
carrier RF power amplifiers will have lower gross margins than our 2G multi-
carrier products.  If we are unable to continue to reduce our manufacturing
costs on all of our products, our gross margins will decline.

 Our Failure to Manage Future Growth Could Have Adverse Effects

  Our ability to compete effectively and manage future growth depends on our
ability to:

  . effectively expand, train and manage our work force, particularly in
    response to fluctuations in demand for various products;
  . manage production and inventory levels to meet product demand and new
    product introductions;
  . manage and improve production quality;
  . expand both the range of customers and the geographic scope of our customer
    base;
  . reduce product costs; and
  . improve financial and management controls, reporting systems and procedures.

  Any failure to manage growth effectively could have a material adverse effect
on our business, financial condition and results of operations.

  Our Facilities are Located in the State of California Which is Experiencing an
Electricity Shortage

  The two largest investor owned electric utility companies in California,
Pacific Gas & Electric and Southern California Edison, have been experiencing
electricity generation shortages due to the collapse of California's
deregulation strategy.  Pacific Gas & Electric has declared voluntary bankruptcy
in order to restructure its outstanding obligations, and Southern California
Edison continues to operate with the potential risk of a future bankruptcy
filing.  The inability of these companies to continue purchasing electricity has
resulted in rolling blackouts in certain parts of the state.  Our Southern
California operation is wholly dependent on Southern California Edison and our
Northern California engineering center is wholly dependent upon Pacific Gas and
Electric.  As of May 5, 2001 we have not experienced any interruption in
electrical service to our facilities. We currently do not have backup power
generators or alternate sources of power to support our needs in the event of a

                                       18
<PAGE>

blackout and our current insurance does not provide coverage for any damages we
or our customers may suffer as a result of interruptions of power supply. We are
not able to guarantee that we will not experience any interruptions in
electrical service to our facilities in the future. The loss of electrical
service would cause a temporary shutdown of our operations resulting in lost
production and may require us to re-calibrate our production equipment,
resulting in potentially significant unanticipated costs. In addition, many of
our suppliers are located in California and could be similarly affected.
Frequent and continuing shutdowns of our operations and those of our suppliers
could cause us to be unable to manufacture the products required by our
customers in a timely manner. Shipments to our customers could be delayed,
resulting in the delay or loss of product revenues. Such delay or loss of
product revenues could have a material adverse effect on our business, financial
condition and results of operations.

  Furthermore, the deregulation of the energy industry instituted in 1996 by the
California government has caused power prices to increase.  Under deregulation,
utilities were encouraged to sell their plants, which traditionally had produced
most of California's power, to independent energy companies that were expected
to compete aggressively on price.   Instead, due in part to a shortage of
supply, wholesale prices have skyrocketed over the past year.  If wholesale
prices continue to increase and these increases are passed on to end users, the
operating expenses associated with our facilities will likely increase, which
could harm our results of operations.

 Our Success is Tied to the Growth of the Wireless Services Market

  Almost all of our revenues come from the sale of RF power amplifiers for
wireless communications networks.  Our future success depends to a considerable
extent upon the continued growth and increased availability of wireless
communications services.  Wireless communications services may not continue to
grow and create demand for our products.  We believe that continued growth in
the use of wireless communications services depends, in part, on lowering the
cost per subscriber by reducing the costs of the infrastructure capital
equipment and thereby enabling reductions in wireless service pricing.
Although FCC regulations require local phone companies to reduce the rates
charged to wireless carriers for connection to their wireline networks, wireless
service rates will probably remain higher than rates charged by traditional
wireline companies.

  The expansion of wireless communications services depends on developed
countries, such as the United States, continuing to allow deployment of new
networks and upgrades to existing networks, and on less developed countries
deploying wireless communications networks.

  Our performance could be adversely affected by any of the following risks:

  . failure of local governments or foreign countries to allow construction of
    new wireless communications systems;
  . lack of demand for new wireless services;
  . termination or delays by local governments or foreign countries of existing
    construction of wireless communications systems;
  . imposition of moratoriums by local governments or foreign countries on
    building new base stations for existing wireless communications systems; and
  . foreign authorities may disfavor wireless communications systems because of
    environmental concerns, political unrest, economic downturns, favorable
    prices for other communications services or delays in implementing wireless
    communications systems.


 We Depend on Single Sources for Key Components

  A number of the parts used in our products are available from only one or a
limited number of outside suppliers due to unique component designs as well as
certain quality and performance requirements.  To take advantage of volume
pricing discounts, we also purchase certain customized components from single
sources.  We have experienced, and expect to continue to experience, shortages
of single-sourced components.  Shortages have compelled us to adjust our product
designs and production schedules.  If single-sourced components become
unavailable in sufficient quantities or available only on unsatisfactory terms,
we would be required to purchase

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<PAGE>

comparable components from other sources and "retune" our products to function
with the replacement components, or we may be required to redesign our products
to use other components, either of which could delay production and delivery of
our products. In addition, our reliance on certain single-sourced components
exposes us to quality control issues if such suppliers experience a failure in
their production process. A failure in a single-sourced component could force us
to repair or replace a product utilizing replacement components. Such a
requirement could have a material adverse effect on our business, results of
operations and financial condition. In addition, if we can not obtain comparable
replacements or effectively retune or redesign our products, there could be a
material adverse effect on our business, results of operations and financial
condition.

  As a result of our reliance on certain single-sourced customized components,
an abrupt reduction in customer demand could result in excess inventories of
such components due to the nature of the volume purchasing agreements that we
utilize to obtain component cost reductions.  If we are unable to utilize such
components in a timely manner and are unable to sell such components due to
their customized nature, the resulting negative impact on our liquidity and
resulting increased inventory levels could have a material adverse effect on our
business, results of operations and financial condition.

 The Market in Which We Operate is Highly Competitive

  The wireless communications infrastructure equipment industry is extremely
competitive and is characterized by rapid technological change, frequent new
product development, rapid product obsolescence, evolving industry standards and
significant price erosion over the life of a product.  Our products compete on
the basis of the following key characteristics:

  . performance;
  . functionality;
  . reliability;
  . pricing;
  . quality;
  . designs that can be efficiently manufactured in large volumes;
  . time-to-market delivery capabilities; and
  . compliance with industry standards.

  While we believe that we currently compete favorably with respect to these
characteristics, this may change in the future.  If we fail to address our
competitive challenges, there could be a material adverse effect on our
business, financial condition and results of operations.

  Our current competitors include AML Communications, Inc., and Spectrian
Corporation, in addition to a number of privately held companies throughout the
world, subsidiaries of certain multinational corporations and the RF power
amplifier manufacturing operations of the leading wireless infrastructure
manufacturers such as Ericsson, Lucent, Motorola, Nokia and Samsung.  Some
competitors have significantly greater financial, technical, manufacturing,
sales, marketing and other resources than we do and have achieved greater name
recognition for their products and technologies than we have.  We may not be
able to successfully increase our market penetration or our overall share of the
RF power amplifier market.  Our results of operations could be adversely
impacted if we are unable to effectively increase our share of the RF power
amplifier market.

  Our future success depends largely upon the rate at which wireless
infrastructure manufacturers incorporate our products into their systems. A
substantial portion of the present worldwide production of RF power amplifiers
is captive within the internal manufacturing operations of leading wireless
infrastructure manufacturers such as Ericsson, Lucent, Motorola, Nokia and
Samsung. These companies regularly evaluate whether to manufacture their own RF
power amplifiers rather than purchase them from us. During 2000, Ericsson
purchased Microwave Power Devices, one of our competitors. We cannot predict the
ultimate impact this purchase will have on our business with Ericsson. Any
potential reduction in our business with Ericsson could have a negative impact
on our business, financial condition and results of operations. In addition,
various companies could also compete directly with us by selling their RF power
amplifiers to other manufacturers and operators, including our customers. If we
are not

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<PAGE>

successful in increasing the use of our products by the leading wireless
infrastructure manufacturers, there would be a material adverse effect on our
business, financial condition and results of operations.

 We Must Develop and Sell New Products in Order to Keep Up With Rapid
 Technological Change

  The markets in which we compete are characterized by:

  . rapidly changing technology;
  . constant pricing pressure;
  . evolving industry standards and communications protocols; and
  . frequent improvements in products and services.

  To succeed, we must improve current products and develop and introduce new
products that are competitive in terms of price, performance and quality. These
products must adequately address the requirements of wireless infrastructure
manufacturing customers and end-users.

  To develop new products, we invest in the research and development of RF power
amplifiers for wireless communications networks. We target our research and
development efforts on major wireless network deployments worldwide, which cover
a broad range of frequency and transmission protocols. In addition, we are
currently working on products for third generation networks as well as
development projects for products requested by our customers. In spite of our
efforts, the deployment of a wireless network may be delayed which could cause a
particular research or development effort to not generate a revenue producing
product. Additionally, the new products we develop may not achieve market
acceptance or may not be manufacturable at competitive prices in sufficient
volumes. We cannot guarantee the success of our research and development
efforts.

  We also continue efforts to improve our existing cellular and PCS lines of RF
power amplifier products. Any delays in the shipment of these products may cause
customer dissatisfaction and delay or loss of product revenues. In addition, it
is possible that a significant number of development projects will not result in
manufacturable new products or product improvements.

  If we fail to develop new products or improve existing products in a timely
manner, there will be a material adverse effect on our business, financial
condition and results of operations.

 We May Fail to Develop Products that are Sufficiently Manufacturable or of
 Adequate Quality and Reliability

  Manufacturing our products is a complex process and requires significant time
and expertise to meet customers' specifications. Successful manufacturing is
substantially dependent upon our ability to tune these products to meet
specifications in an efficient manner. In this regard, we depend on our staff of
trained technicians. If we cannot design our products to minimize the manual
tuning process, if we are unable to attract additional trained technicians, or
if we lose a number of our trained technicians, it would have a material adverse
effect on our business, financial condition and results of operations.

  We have had quality problems with our products in the past and may have
similar problems in the future. We have replaced components in some products in
accordance with our product warranties. We believe that our overall relationship
with our customers is good and that they consider our products to be of good
quality. We also believe that our customers will demand increasingly stringent
product performance and reliability. We cannot provide any assurance that our
product designs will remain successful or that they will keep pace with
technological developments, evolving industry standards and new communications
protocols. We may fail to adequately improve product quality and meet the
quality standards of our customers, which could cause us to lose such customers.
Design problems could damage relationships with existing and prospective
customers and could limit our ability to market our products to large wireless
infrastructure manufacturers, many of which build their own, high quality RF
power amplifiers and have stringent quality control standards. See "--Many
Wireless Infrastructure Manufacturers have Internal RF Power Amplifier
Production Capabilities."

 We Must Retain Key Executives and Personnel

                                       21
<PAGE>

  We need to hire and retain highly qualified technical, marketing and
managerial personnel.  Competition for personnel, particularly qualified
engineers, is intense, and the loss of a significant number of such persons, as
well as the failure to recruit and train additional technical personnel in a
timely manner, could have a material adverse effect on our business, results of
operations and financial condition.  The departure of any of our management and
technical personnel, the breach of their confidentiality and non-disclosure
obligations to Powerwave or the failure to achieve our intellectual property
objectives may have a material adverse effect on our business, financial
condition and results of operations.

  We believe that our success depends upon the knowledge and experience of our
management and technical personnel and our ability to market our existing
products and to develop new products.   We do not have non-compete agreements
with our employees who are employed on an at-will-basis.  Therefore, employees
may leave us and go to work for a competitor.  We have had employees leave us
and go to work for competitors.  While we believe that we have adequately
protected our proprietary technology, and we will take all legal measures to
protect it, the use of our processes by a competitor could have a material
adverse effect on our business, financial condition and results of operations.

 There are Many Risks Associated With International Operations

  For the first quarter of fiscal 2001, fiscal years 2000, 1999 and 1998,
international revenues (excluding North American sales) accounted for
approximately 44%, 21%, 33% and 41% respectively, of our net sales.  We
currently expect that international revenues will continue to account for a
significant percentage of our revenues for the foreseeable future.  Therefore,
the following risks associated with international operations could have a
material adverse effect on our performance:

   . compliance with multiple and potentially conflicting regulations, including
     export requirements, tariffs, import duties and other barriers, and health
     and safety requirements;
   . differences in intellectual property protections;
   . difficulties in staffing and managing foreign operations;
   . longer accounts receivable collection cycles;
   . currency fluctuations;
   . economic instability, including inflation and interest rate fluctuations,
     such as those previously seen in South Korea and Brazil;
   . competition from foreign based suppliers;
   . restrictions against the repatriation of earnings from a foreign country;
   . overlapping or differing tax structures; and
   . political or civil turmoil.

  We have traditionally invoiced all of our foreign sales in U.S. Dollars.
Accordingly, we do not currently engage in foreign currency hedging
transactions.  However, as we continue to expand our international operations,
we may be paid in foreign currencies and, therefore, would become exposed to
possible losses in foreign currency transactions.  Since we sell our products in
many countries, when the U.S. Dollar becomes more expensive relative to the
currency of our foreign customers, the price of our products in those countries
rises and our sales into those countries may fall.  This happened to us in South
Korea during 1998.  In addition, as we sell our products into foreign countries,
our products can become subject to tariffs and import duties which raise the
overall price of our products to such a level that our products are no longer
competitive in price to locally based suppliers.  If any of the above risks
actually occurs, there may be a material adverse effect on our business,
financial condition and results of operations.

 The Sales Cycle for Our Products is Lengthy

  The sales cycle associated with our products is typically lengthy, often
lasting from six to eighteen months.  Our customers normally conduct significant
technical evaluations of our products and our competitors' products before
making purchase commitments.  Our OEM customers typically require extensive
technical qualification of our products before they are integrated into each
OEM's products.  This qualification process involves a significant

                                       22
<PAGE>

investment of time and resources from us and the OEMs to ensure that our product
designs are fully qualified to perform with each OEM's equipment. Also,
individual wireless network operators can subject our products to field and
evaluation trials, which can last anywhere from one to nine months, before
making a purchase. The qualification and evaluation process and the customer
field trials may delay the shipment of sales forecasted for a specific customer
for a particular quarter and our operating results for that quarter could be
materially adversely affected.

 Many Wireless Infrastructure Manufacturers have Internal RF Power Amplifier
 Production Capabilities

  Many of the leading wireless infrastructure equipment manufacturers internally
manufacture their own RF power amplifiers.  We believe that our existing
customers continuously evaluate whether to manufacture their own RF power
amplifiers.  Certain of our customers regularly produce RF power amplifiers in
an attempt to replace products manufactured by us.  We believe that this
practice will continue.  Recently, Ericsson, one of our OEM customers, purchased
Microwave Power Devices, Inc., one of our competitors.  In the event that our
customers manufacture their own RF power amplifiers, such customers could reduce
or eliminate their purchases of our products.  We cannot guarantee that our
current customers will continue to rely or expand their reliance on us as an
external source of supply for their RF power amplifiers.

  Wireless infrastructure equipment manufacturers with internal manufacturing
capabilities could also sell RF power amplifiers externally to other
manufacturers, thereby competing directly with us.  In addition, even if we are
successful in selling our products to these customers, we believe that such
customers will demand price and other concessions based on their ability to
manufacture RF power amplifiers internally.  If, for any reason, our major
customers decide to produce their RF power amplifiers internally or through
joint ventures with other competitors, or require us to participate in joint
venture manufacturing with them, our business, results of operations and
financial condition could be materially adversely affected.

 Protection of Our Intellectual Property is Limited; Risk of Third-Party Claims
 of Infringement

  We rely upon trade secrets and patents to protect our intellectual property.
We execute confidentiality and non-disclosure agreements with our employees and
suppliers and limit access to and distribution of our proprietary information.
We have an on-going program to identify and file applications for both U.S. and
international patents for various aspects of our technology.  We have been
granted a total of 10 U.S. patents, and we currently have 15 separate U.S.
patent applications filed.  All of these efforts along with the knowledge and
experience of our management and technical personnel strengthen our ability to
market our existing products and to develop new products. The departure of any
of our management and technical personnel, the breach of their confidentiality
and non-disclosure obligations to us, or the failure to achieve our intellectual
property objectives may have a material adverse effect on our business,
financial condition and results of operations.

  We do not have non-compete agreements with our employees who are employed on
an "at-will" basis.  Therefore, employees may leave us and go to work for a
competitor.  We have had employees leave us and go to work for competitors in
the past.  While we believe that we have adequately protected our proprietary
technology, and we will take all legal measures to protect it, the use of our
processes by a competitor could have a material adverse effect on our business,
financial condition and results of operations.

  Our ability to compete successfully and achieve future revenue growth will
depend, in part, on our ability to protect our proprietary technology and
operate without infringing the rights of others.  We may fail to do so.  In
addition, the laws of certain countries in which our products are or may be sold
may not protect our products and intellectual property rights to the same extent
as the laws of the United States.

  As the number of patents, copyrights and other intellectual property rights in
our industry increases, and as the coverage of these rights and the
functionality of the products in the market further overlap, we believe that
companies in our industry may face more frequent infringement claims.  Although
there are no pending or threatened intellectual property lawsuits against us, we
may face litigation or infringement claims in the future.  Such claims could
result in substantial costs and diversion of our resources.

                                       23
<PAGE>

  A third party claiming infringement may also obtain an injunction or other
equitable relief, which could effectively block the distribution or sale of
allegedly infringing products.  Although we may seek licenses from third parties
covering intellectual property that we are allegedly infringing, we cannot
guarantee that any such licenses could be obtained on acceptable terms, if at
all.

  Certain of our customers and other wireless communications infrastructure
equipment manufacturers may decide to protect their intellectual property by
deciding not to purchase RF power amplifiers from external sources.  The
appearance of a close working relationship with a particular customer may
adversely affect our ability to establish or maintain a relationship with, or
sell products to, competitors of that particular customer.  The failure of our
major customers to purchase products from us due to our relationship with other
customers could have a material adverse effect on our business, financial
condition and results of operations.

 Actual or Alleged Defects in Our Products May Create Liability to Those
 Claiming Injury

  Any of the following could have a material adverse effect on our business,
financial condition and results of operations:

   . a determination or allegation that systems or devices relying on or
     incorporating our products create a health risk, causing us to be named as
     a defendant, and held liable, in a product liability lawsuit;
   . delays or prohibitions on the installation of wireless communications
     networks due to alleged health or environmental risks; and
   . our inability to maintain insurance at an acceptable cost or to otherwise
     protect against potential product liability lawsuits.

 Government Regulation of the Communications Industry

  The products that we manufacture are regulated.  We must obtain regulatory
approvals to manufacture and sell our products and our customers must obtain
approvals to operate our products.  The FCC has adopted regulations that impose
stringent RF emissions standards on the communications industry.  These
regulations may require that we alter the manner in which radio signals are
transmitted or otherwise alter the equipment transmitting such signals.  We are
also subject to regulatory requirements in international markets where prominent
local competitors may have the ability to influence regulations in situations
where we do not.

  The enactment by governments of new laws or regulations or a change in the
interpretation of existing regulations could adversely affect the market for our
products.  Deregulation of international communications industries along with RF
spectrum allocations made by the FCC have increased the potential demand for our
products.  We cannot guarantee that the trend toward deregulation and current
regulatory developments favorable to the promotion of new and expanded wireless
services will continue or that other future regulatory changes will have a
positive impact on us.  The increasing demand for wireless communications has
exerted pressure on regulatory bodies worldwide to adopt new standards for such
products, generally following extensive investigation and deliberation over
competing technologies.  In the past, the delays inherent in this governmental
approval process have caused, and may in the future cause, the cancellation,
postponement or rescheduling of the installation of communications systems by
our customers.  These delays could have a material adverse effect on our
business, results of operations and financial condition.

 Our Stock Price Has Been and May Continue to Be Volatile

  The price of our Common Stock has exhibited high levels of volatility with
significant volume and price fluctuations, which makes our Common Stock
unsuitable for some investors.  In addition, the stock market has from time to
time experienced significant price and volume fluctuations.  The fluctuations in
the stock market are often unrelated to the operating performance of particular
companies, and the market prices for securities of technology companies have
been especially volatile.  These broad market fluctuations may adversely affect
the market price of our Common Stock.  Our stock price may be affected by the
factors discussed above as well as:

   .  fluctuations in our results of operations or the operations of our
      competitors;

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<PAGE>

   .  failure of such results of operations to meet the expectations of stock
      market analysts and investors;
   .  reductions in demand or expectations of future demand by our customers;
   .  delays or postponement of wireless infrastructure deployments, including
      new 3G deployments;
   .  changes in the political or economic outlook of the markets into which we
      sell our products;
   .  changes in stock market analyst recommendations regarding us, our
      competitors or our customers;
   .  the timing and announcements of technological innovations or new products
      by us or our competitors;
   .  changes in the wireless communications industry; and
   .  general market conditions.

 Risk of Litigation

  Powerwave is not currently party to any legal proceedings, the adverse outcome
of which, individually or in the aggregate, we believe would have a material
adverse effect on our business, financial condition and results of operations.
Any potential litigation, regardless of its merits, could result in substantial
costs to us and divert management's attention from our operations.  Such
diversion could have an adverse impact on our business, results of operations
and financial condition.

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<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

  Our financial instruments include cash and cash equivalents and long-term
debt.  At April 1, 2001, the carrying values of our financial instruments
approximated their fair values based on current market prices and rates.

  Currently, we do not enter into derivative financial instruments and we do not
currently have any significant direct foreign currency exposure.  Aside from
operating costs of our South Korean repair operation, we do not transact
business in foreign currencies.  As a result , we do not have any significant
direct foreign currency exposure at April 1, 2001.

  We are exposed to a number of market risks in the ordinary course of business.
These risks, which include interest rate risk, foreign currency exchange risk
and commodity price risk, arise in the normal course of business rather than
from trading. We have examined our exposures to these risks and concluded that
none of our exposures in these areas is material to fair values, cash flows or
earnings.  We regularly review these risks to determine if we should enter into
active strategies, such as hedging, to help manage the risks.  At the present
time, we do not have any hedging programs in place and we are not trading in any
financial or derivative instruments.

  We currently do not have any material debt outstanding, so we do not have
interest rate risk from a liability perspective.  We do have a significant
amount of cash and short-term investments with maturities less than three
months.  This cash portfolio exposes us to interest rate risk as short-term
investment rates can be volatile.  Given the short-term maturity structure of
our investment portfolio, and the high-grade investment quality of our
portfolio, we believe that we are not subject to principal fluctuations and the
effective interest rate of our portfolio tracks closely to various short-term
money market interest rate benchmarks.

  Our international sales expose us to foreign currency risk in the ordinary
course of our business.  Please review our  "Disclosure About Foreign Currency
Risk" in this Form 10-Q for a more detailed description of the various risks
involved in our international sales.

  We require significant quantities of RF transistors, semiconductors and
various metals for use in the manufacture of our products. We therefore are
exposed to certain commodity price risk associated with variations in the market
prices for these electronic components. We attempt to manage this risk by
entering into supply agreements with various suppliers of these components.
These supply agreements are not long-term supply agreements. If we become
subject to a significant increase in the price of one of these components, we
would likely be forced to pay such higher prices and we may not be able to pass
such costs onto our customers. In such an event, our business, results of
operations and financial condition could be adversely affected. In addition, we
require specialized electronic test equipment, which is utilized in both the
design and manufacture of our products. Such electronic test equipment is
available from limited sources and may not be available in the time periods
required for us to meet our customers' demand. If required, we may be forced to
pay higher prices for such equipment and/or we may not be able to obtain the
equipment in the time periods required, which would then delay our development
or production of new products. Such delays and any potential additional costs
could adversely effect our business, results of operations and financial
condition.

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<PAGE>

                          PART II.  OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

        (a) Documents filed as a part of this report:

None

        (b) No reports have been filed on Form 8-K for the quarter for which
this report is filed.

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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.

  POWERWAVE TECHNOLOGIES, INC.


Date:     May 15, 2001                        By: /s/  Kevin T. Michaels
          ------------                        ----------------------------------
                                                       Kevin T. Michaels
                                              Senior Vice President, Finance and
                                              Chief Financial Officer


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