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

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

                                   FORM 10-K/A
(Mark One)

                           Amendment No. 1 to Form 10-K

/x/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934.  FOR THE FISCAL YEAR ENDED MARCH 31, 1999.

                                         OR
/ /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934.  For the transition period from _______ to ______.

                           Commission file number 0-15895

                           DIGITAL MICROWAVE CORPORATION
               (Exact Name of Registrant as Specified in Its Charter)

                   DELAWARE                             77-0016028
           (State of Incorporation)        (I.R.S. Employer Identification No.)

  170 ROSE ORCHARD WAY, SAN JOSE, CALIFORNIA              95134
        (Address of Principal Executive                 (Zip Code)
                 Offices)


Registrant's telephone number, including area code:  (408) 943-0777

Securities registered pursuant to Section 12 (b) of the Act:  NONE

Securities registered pursuant to Section 12 (g) of the Act:


                       COMMON STOCK-PAR VALUE $0.01 PER SHARE
                                  (Title of class)

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

     Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. / /

     State the aggregate market value of the voting stock held by non-affiliates
of Registrant (based on the last reported sale price of $12.50 per share on the
Nasdaq National Market) as of June 1, 1999:  Approximately $703,364,688.

     As of June 1, 1999, there were 63,418,389 shares of Common Stock, par value
$0.01 per share, outstanding.

                        DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions of the Registrant's Annual Report to Stockholders for the fiscal
     year ended March 31, 1999 are incorporated by reference into Parts I and
     II of this Form 10-K Report.  With the exception of those portions which
     are incorporated by reference, the Registrant's Fiscal 1999 Annual Report
     is not deemed filed as part of this Report.

2.   Portions of the Registrant's Proxy Statement for the Annual Meeting of
     Stockholders to be held on August 10, 1999 are incorporated by reference
     into Part III of this Form 10-K Report.

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                                  EXPLANATORY NOTE

     This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K for
the  fiscal year ended March 31, 1999 replaces the previous Form 10-K filing in
its entirety.

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                                  TABLE OF CONTENTS


                           DIGITAL MICROWAVE CORPORATION
                            1999 FORM 10-K ANNUAL REPORT

                                       PART I
<TABLE>
<S>       <C>
Item 1    Business .......................................................................   3
Item 2    Properties .....................................................................  13
Item 3    Legal Proceedings ..............................................................  13
Item 4    Submission of Matters to a Vote of Security Holders ............................  13

                                      PART II

Item 5    Market for Registrant's Common Equity and Related Stockholder Matters ..........  14
Item 6    Selected Financial Data ........................................................  14
Item 7    Management's Discussion and Analysis of Financial Condition and
            Results of Operations ........................................................  14
Item 7A   Quantitative and Qualitative Disclosures About Market Risk .....................  14
Item 8    Financial Statements and Supplementary Data ....................................  15
Item 9    Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure .........................................................  15

                                      PART III

Item 10   Directors and Executive Officers of the Registrant .............................  15
Item 11   Executive Compensation .........................................................  16
Item 12   Security Ownership of Certain Beneficial Owners and Management .................  16
Item 13   Certain Relationships and Related Transactions .................................  16

                                      PART IV

Item 14   Exhibits, Financial Statement Schedules, and Reports on Form 8-K ...............  17
</TABLE>

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ITEM 1.  BUSINESS

     THE FOLLOWING BUSINESS SECTION CONTAINS FORWARD-LOOKING STATEMENTS WHICH
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "FACTORS THAT MAY
AFFECT FUTURE FINANCIAL RESULTS" AND ELSEWHERE IN, OR INCORPORATED BY REFERENCE
INTO, THIS FORM 10-K.

INTRODUCTION

     Digital Microwave Corporation ("Digital Microwave" or the "Company")
designs, manufactures and markets advanced wireless solutions for worldwide
telephone network interconnection and access. The Company provides its customers
with a broad product line, which contains products that operate using a variety
of transmission frequencies, ranging from 0.3 GigaHertz (GHz) TO 38 GHz, and a
variety of transmission capacities, typically ranging from 64 Kilobits to DS-3
or 45 Megabits per second. The company's broad product line allows it to market
and sell its products to service providers in many locations worldwide with
varying interconnection and access requirements. Digital microwave designs its
products to meet the requirements of mobile communications networks and fixed
access networks worldwide. The company's products typically enable its customers
to deploy and expand their wireless infrastructure and market their services
rapidly to subscribers, so that service providers can realize a return on their
investments in frequency allocation licenses and network equipment.

     In October 1998, the company merged with Innova Corporation, a Washington
Corporation, which designs, manufactures, markets and supports Digital Microwave
radio links for the worldwide telecommunications market. The basis for this
merger was Innova's low-cost technology for its low-to-medium capacity products,
and minimal overlap in the customer bases of the two companies.

     In March 1998, the company merged with MAS Technology Limited, a New
Zealand company, which designs, manufactures, markets and supports digital
microwave radio links for the worldwide telecommunications market.  The
complementary product lines and distribution channels of MAS Technology
broadened the range of wireless connection solutions that the Company offers to
its customers worldwide.

     The Company has sold over 130,000 radios, which have been installed in over
70 countries. The Company markets its products to service providers directly, as
well as indirectly through its relationships with original equipment
manufacturer ("OEM") base station suppliers, including Nokia Telecommunications,
Northern Telecom, Motorola, Inc., and Siemens AG.  Between April 1, 1998 and
March 31, 1999, the Company sold its products to a number of service providers,
including Beijing Telecommunication Equipment Factory and Smart Communications
in the Asia/Pacific region; Polska Telefonia Komorkowa, Jordan Mobile Telephone
Services, Panafon S.A., Sonangol S.A., Orange PCS Limited and Tele2 AB in
Europe, the Middle East and Africa; and Winstar Wireless, Telcel, Radiomovil
Dipsa S.A., Avantel S.A. and Impsat S.A. in the Americas.

INDUSTRY BACKGROUND

     Although there was a decline in new business in the past year due to
economic problems in Asia as well as other parts of the world, there continues
to be worldwide demand for high performance mobile voice telephony, high-speed
data communications, fixed and mobile cellular communications, video broadcast
services and paging services. This demand continues due to: (i) changes in the
regulatory environment in many countries; (ii) the rapid establishment of
telecommunications infrastructures in many developing countries; (iii)
technological advances, particularly in the wireless telecommunications market;
and (iv) the deployment of private communications networks. Given their
relatively low cost and ease of deployment, wireless solutions are attractive to
new service providers establishing competing telecommunications services in
developed countries and to telecommunications service providers in developing
countries seeking to rapidly increase the availability and quality of
telecommunications services. The upgrade and expansion of existing networks and
the deployment of new networks, such as those for Global System for Mobile
Communcations (GSM), Personal Communication Network (PCN), and Personal
Communication System (PCS), are expected to continue

                                                                  PAGE 3
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to offer growth opportunities for wireless infrastructure suppliers. Wireless
infrastructure suppliers address the requirements of both mobile
communications networks and fixed access networks.

     Cellular telephone and other wireless services have grown rapidly over
the past five years due to deregulation, increased competition, technological
advances, and increasing consumer demand for connectivity to
telecommunications services. The demand for fixed access networks also
continues to increase for many of the same reasons, including the
privatization of public telephone operators, deregulation and the emergence
of new applications, including wireless local loop, wireless data transport
and alternative local telephone facilities access.

     Wireless networks are constructed using microwave radios and other
equipment to connect cell sites, switching systems, other wireline
transmission systems and other fixed facilities. wireless networks range in
size from a single transmission link connecting two buildings to complex
networks comprised of thousands of wireless connections. The architecture of
a network is influenced by several factors, including the available radio
frequency spectrum, coordination of frequencies with existing infrastructure,
application requirements, environmental factors and local geography.
Regulatory authorities in different jurisdictions allocate different portions
of the radio frequency spectrum for various telecommunications services. In
addition, most individual networks require radio links which operate at
several frequencies and the transmission of voice and data typically requires
different transmission capacities. moreover, networks in different locations
are constructed using different combinations of frequencies and with
different transmission capacities. no one transmission frequency or
transmission capacity predominates in the global market.

     Whether expanding existing networks or deploying new networks, service
providers must choose between constructing networks using traditional wireline
infrastructure or wireless infrastructure. Traditional wireline connectivity
solutions typically require significant installation periods and may be
relatively expensive to install. In developed countries where wireline
infrastructure is in place, new service providers may have the option to lease
networks from traditional service providers, but may choose not to do so because
leasing arrangements must be entered into with their competitors, may be
comparatively expensive and do not allow control over the network. In developing
countries, many service providers are initially installing wireless networks
because such networks are generally faster to install and may be less expensive
than traditional wireline networks. As a result, many service providers are
deploying wireless networks as an alternative to the construction or leasing of
traditional wireline networks.

     For several applications, digital microwave transmission systems offer
numerous advantages over competing transmission technologies, including lower
cost of implementation and rapid deployment.  Digital microwave systems can
be deployed in a matter of weeks and typically require lower infrastructure
investments and installation lead times than alternative transmission
technologies.  Digital microwave systems are especially advantageous where
geographically dispersed customers or operations, environmental constraints,
difficult terrain, or limited installation times render the installation and
implementation of wireline networks impractical or too costly.

     The Company believes that as telecommunication requirements grow,
digital microwave systems will continue to be used as transmission links to
support a variety of existing and expanding communications networks and
applications.  In this regard, the Company believes that digital microwave
systems will be used to address the connection requirements of  several
markets and applications, including the infrastructure development market,
cellular applications, private networks and wireless analog replacement
applications.

THE DIGITAL MICROWAVE SOLUTION

     The Company believes that the use of standard design platforms for both
hardware and software components in the development of its products enables
the Company to more rapidly introduce and commercially ship new products and
product enhancements to address changing market demands. The use of standard
design platforms, flexible architectures and components, and software
configurable features allows the Company to offer its customers
high-performance products with a high degree of flexibility and
functionality.  Flexible architectures and components facilitate system
scalability, allow customers to acquire additional features at a relatively
low incremental cost, reduce the development time of new features, and
facilitate the efficient customization of the Company's products. The use of
standard design platforms also enables the Company to manufacture its
products in a more cost-effective manner. The

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software features of many of the Company's product lines provide the
Company's customers with a greater degree of flexibility in installing,
operating and maintaining their networks.

     As a result of the merger with MAS Technology and Innova Corporation,
Digital Microwave has expanded its product line and has added additional
engineering staff to allow it to focus its efforts on multiple new product
development programs concurrently.

THE COMPANY'S STRATEGY

     The Company's strategy is to build on the strength of its current products,
which offer point-to-point solutions, and its strong customer sales, service and
support organization to become a leading provider of integrated wireless
solutions.  Key elements of Digital Microwave's strategy include:

     MAINTAIN A COMPREHENSIVE PRODUCT LINE.  The Company anticipates that the
requirements of its customers will continue to evolve as the telecommunications
services market changes and expands.  In this regard, since the Company's
customers often do not know the exact frequency band and capacity needs of their
networks at the time they are awarded franchises, Digital Microwave's broad
product line provides them with the flexibility to respond to individual market
needs, and to coordinate frequencies with existing infrastructure and other
significant variables.  The Company believes that the use of standard design
platforms and flexible architectures for both hardware and software components
in its products enables it to quickly introduce and commercially ship new
products and product enhancements to address changing market demands.  The
Company intends to continue to expand its product line in response to the
varying worldwide requirements of wireless networks.  Digital Microwave believes
that its mergers with MAS Technology and Innova Corporation increased its
capability to develop and market new products.

     ADDRESS WORLDWIDE MARKET OPPORTUNITIES. The Company believes that it is
well-positioned to address worldwide market opportunities for wireless
infrastructure suppliers. For example, there are substantial telecommunications
infrastructures being built for the first time in many African, Asian and Latin
American countries; telecommunications infrastructures are being expanded in
Europe; and PCS interconnect networks are being constructed in the United
States. The Company believes that maintaining close proximity to its customers
provides it with a competitive advantage in securing orders for its products and
in servicing its customers. Local offices enable the Company to better
understand the local issues and requirements of its customers and to address its
customers' individual geographic, regulatory, and infrastructure requirements.
As a result, the Company has developed a global sales, service and support
organization, with offices in Europe, Africa, Asia, New Zealand, Australia, the
Middle East and the Americas. With its 31 sales or support offices in 25
countries, the Company can respond quickly to its customers' needs and provide
prompt on-site technical support.

     LEVERAGE DISTRIBUTION CHANNELS.  The Company markets its products to
service providers directly, as well as indirectly through its relationships with
OEM base station suppliers, such as Nokia Telecommunications, Northern Telecom,
Motorola, Inc., and Siemens AG, as well as through its relationships with system
integrators and private labelers.  The Company also markets its products through
independent agents and distributors in certain countries.  The Company intends
to leverage upon such relationships and its direct worldwide presence with
service providers to expand its customer base and enhance its global presence.
The merger with MAS Technology increased Digital Microwave's geography coverage
in New Zealand, Australia and Africa through the sales and service offices that
MAS Technology had in these locations.

     FOCUS ON BUSINESS EXPANSION INTO EMERGING APPLICATIONS.  The Company
believes that it can leverage its core technical competencies and its global
sales, service and support organization to enter into emerging applications,
including wireless local loop, data access, wireless data transport, and
alternative local telephone facilities access.

EXISTING PRODUCTS

The Company's principal product families include the SPECTRUM-TM- II, XP4-TM-,
DART-TM-, Altium-TM-,  DXR-TM- 700, DXR-TM- 200,  DXR-TM- 100, and ProVision.



                                                                   PAGE 5
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     SPECTRUM II.  The SPECTRUM II product family, introduced in July 1995,
offers medium capacity products ranging from T-1, or 1.5 Megabits per second
(Mbps), TO DS-3, OR 45 Mbps, that operate at 7, 8, 13, 15, 18, 23, 26 and 38
GHz.  THE SPECTRUM II product line is smaller in size, less expensive and easier
to install than Digital Microwave's previous products.  In addition,
significantly more functionality is available in the SPECTRUM II product line
than earlier generation products because of its enhanced software
configurability, which provides the Company's customers with greater flexibility
and control.

     XP4.  The XP4 product family, which began shipping in September 1998, is
based on a common system architecture and is software configurable.  XP4
products operate at frequencies of  7, 8, 13, 15, 18, 23, 26 and 38 GHz.
similar to the SPECTRUM II product family, the XP4 provides significantly more
functionality compared to Digital Microwave's older product lines because of its
enhanced software configurability.

     DART.  The DART microwave radio, which began shipping in September 1998, is
the latest in radio technology for low-cost, wireless transmission of
telecommunications services. The DART radio offers a single E1 or DS-1 data
stream transmission and is designed for a smaller cell site in a wireless
network, typically referred to as microcell/picocell, and last-mile access
requirements.  The very compact, all-outdoor design connects directly to base
station equipment via a single twisted-pair cable, making the DART radio
extremely cost efficient to install and a viable alternative to leased line
facilities. The DART radio can also be used in the build out of wireless
internet access networks. Features of the DART microwave radio include its
compact, integrated outdoor unit, low power consumption, programmability from
laptop computers, and simple network management protocol (SNMP) compatibility.
available frequencies range from 15 GHz to 38 GHz.

     ALTIUM.  Altium, which began volume shipments in January 1999, is a next
generation radio aimed at providing higher capacity solutions in microwave and
millimeter wave bands.  SONET/SDH capable, Altium can wirelessly extend or
complete SONET and SDH transport networks to complement or be an alternative to
fiber deployment.  Key attributes of size, performance, and flexibility bring
benefits to both interconnect and access applications. The Company initially
shipped Altium at 7 and 8 GHz frequencies and intends to release additional
frequencies during Fiscal 2000.

     DXR 700.  The DXR 700 product family, began shipping in March 1999, is a
high performance radio platform that operates across a range of capacities from
2X2 Mbps TO 34 Mbps, using efficient 16 and 64 quadrature amplitude modulation
(QAM).  A set of advanced features, including forward error correction and an
adaptive equalizer, target medium- and long-distance link requirements.
Optional errorless diversity protection switching delivers excellent performance
under the most difficult radio transmission conditions.  The DXR 700 platform
covers multiple frequencies from 2 GHz to 8 GHz.

     DXR 200.  First shipped in 1994, the DXR 200 product line provides an
integrated, modular, linking solution for a wide variety of communications
systems in markets with low to medium capacity transmission requirements.
the DXR 200'S integrated modular design allows it to support  a variety of
configurations, which can incorporate multiple features in the unit to
accommodate the differing communications needs of the Company's customers,
overcome difficult radio frequency environments, accommodate multiple data
speeds and support multiple communication protocols.  The DXR 200 can operate
in frequency bands from 64 kilobits per second (Kbps) to 2.7 GHz.

     DXR 100.  First shipped in 1996, the DXR 100 product line is designed to
address medium and long haul, trunking applications and capacities higher
than those addressed by the DXR 200.  The DXR 100 supports these higher
capacity environments using spectrum efficient transmission techniques,
including quadrature phase shift keying (QPSK) OR QAM modulation and low
error rate technologies, including forward error correction and adaptive
equalization.  the DXR 100 provides low to medium capacity links for cellular
applications, basic telephony transmission and customer access applications,
particularly in urban areas.  The DXR 100 supports a variety of data rates
with high spectrum efficiencies and maintains signal reception in harsh or
difficult radio frequency environments.

     PROVISION.  The ProVision element manager is a centralized network
monitoring and control system for all digital microwave products.  based on a
UNIX-TM- system platform, the ProVision element manager can expand to manage
small systems as well as large networks.  The system is particularly suitable
for management of broadband access networks.

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The ProVision management system is built on open standards. It supports
multiple protocols, such as SNMP, TL1 and ASCII, and it seamlessly integrates
into higher level managers through available interfaces. The ProVision
element manager is compatible with all management-enabled digital microwave
radios, including the Altium, SPECTRUM II, XP4, DXR and DART radio families,
as well as prior radio products.

NEW PRODUCT DEVELOPMENT

     Digital Microwave intends to continue to focus significant resources on
product development to maintain its competitiveness and to support its entry
into new wireless opportunities, including wireless data transport and
alternative local telephone facilities access.  Programs currently in progress,
if successfully completed, could result in new products and additions to current
product families that will have the capability to handle greater amounts of
voice and data traffic at increased cost-effectiveness.

     There can be no assurance that the Company will be successful in developing
and marketing any of the products currently being developed, that the Company
will not experience difficulties that could further delay or prevent the
successful development, introduction and sale of future products, or that these
products will adequately meet the requirements of the marketplace and achieve
market acceptance.  See "Research and Development."

CUSTOMERS

     Digital Microwave markets its products to customers in the
telecommunications industry worldwide. The Company's customers include
service providers, which incorporate the Company's products into their
telecommunications networks to deliver services directly to consumers, and
OEMs, which provide and install integrated systems to service providers.

     Although the Company has a large customer base, during any given
quarter, a small number of customers may account for a significant portion of
the Company's net sales. In certain circumstances the Company sells its
products to service providers through OEMs, which provide the service
providers with access to financing and in some instances, protection from
fluctuations in foreign currency exchange rates. During Fiscal 1999 and
Fiscal 1998, no single customer accounted for 10% or more of the Company's
net sales. However, Siemens AG accounted for 12% of net sales in 1997. At
March 31, 1999, five customers collectively accounted for approximately 42%
of the Company's $63.9 million backlog. While management considers the
Company's relationships with each of its major customers to be good, there
can be no assurance that the Company's current customers will continue to
place orders with the Company, that orders by existing customers will
continue to be at levels of previous periods, or that the Company will be
able to obtain orders from new customers.  The Company's customers typically
are not contractually obligated to purchase any quantity of products in a
particular period and product sales to major customers have varied widely
from period to period. The loss of any existing customer, a significant
reduction in the level of sales to any existing customer, or the failure of
the Company to gain additional customers could have a material adverse effect
on the Company's business, financial condition and results of operations.
See "Factors That May Affect Future Financial Results."

SALES, MARKETING AND SERVICE

     Digital Microwave believes that a direct and continuing relationship
with service providers is a competitive advantage in attracting new customers
and satisfying existing ones. As a result, the Company offers its products
and services principally through its own sales, service and support
organization, which allows the Company to closely monitor the needs of its
customers. The Company has offices in the United States, New Zealand,
Australia, Canada, the United Kingdom, Germany, United Arab Emirates, Mexico,
Colombia, India, Sri Lanka, China, Singapore, Argentina, Brazil, Greece,
Malaysia,  Sweden, Denmark, South Africa, Zimbabwe, Botswana, Thailand, and
the Philippines. The Company's local offices provide it with a better
understanding of its customers' needs and enable the Company to respond to
local issues and unique local requirements.

     The Company has informal, and in some cases formal, relationships with
OEM base station suppliers. Such relationships increase the Company's ability
to pursue the limited number of major contract awards each year. In addition,
such relationships provide the Company's customers with easier access to
financing and to integrated system providers

                                                                     PAGE 7
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with a variety of equipment and service capabilities. There can be no
assurance that the Company will continue to be able to maintain and develop
such relationships or, that if such relationships are developed, they will be
successful. In selected countries, the Company also markets its products
through independent agents and distributors, as well as system integrators
and brand labelers.

     As of March 31, 1999, the Company employed approximately 244 people in
its sales, service and support organization, approximately 70% of whom
primarily support sales outside the United States.  Sales personnel are
highly trained to provide the customer with assistance in selecting and
configuring a digital microwave system suitable for the customer's particular
needs. The Company's customer service and support personnel provide customers
with training, installation, service and maintenance of the Company's systems
under contract. The Company generally offers a standard two-year warranty for
all customers on all of the Company's products other than the DXR 200 and DXR
700 product lines, for which there is generally a standard one-year warranty
for all customers. The Company provides warranty and post-warranty services
from its manufacturing locations in the United States and New Zealand and its
service centers in the United Kingdom, the United States and the Philippines.

RESEARCH AND DEVELOPMENT

      Digital Microwave  believes that its ability to enhance its current
products, develop and introduce new products on a timely basis, maintain
technological competitiveness and meet customer requirements is essential to
the Company's continued success. Accordingly, the Company allocates, and
intends to continue to allocate, a significant portion of its resources to
research and development efforts. During Fiscal 1999, the Company invested
$24.1 million or 10.2% of net sales on research and development, compared to
$24.5 million or 7.1% of net sales in Fiscal 1998 and $16.2 million or 7.6%
of net sales in Fiscal 1997. The Company expects its research and development
spending to increase in Fiscal 2000. As of March 31, 1999, the Company
employed approximately 174 people in its research and development
organization in San Jose, California, Seattle, Washington and Wellington, New
Zealand.

     The market for the Company's products is characterized by rapidly
changing technologies and evolving industry standards. Accordingly, the
Company's future performance depends on a number of factors, including its
ability to identify emerging technological trends in its target markets, to
develop and to maintain competitive products, to enhance its products by
adding innovative features that differentiate its products from those of its
competitors and to manufacture and to bring products to market quickly at
cost-effective prices. The Company believes that the use of flexible
architectures and components assists in the rapid deployment of new products
and enhancements to satisfy customer, industry and market needs. The Company
believes that to remain competitive in the future it will need to continue to
develop new products, which will require the investment of significant
financial resources in product development. There can be no assurance,
however, that the Company will successfully complete the development of any
future products, that such products will achieve market acceptance or that
such products will be capable of being manufactured at competitive prices in
sufficient volumes. In the event that such products are not developed in a
timely manner, do not gain market acceptance or are not manufacturable at
competitive prices, the Company's business, financial condition and results
of operations could be harmed.

MANUFACTURING AND SUPPLIERS

     Digital Microwave's manufacturing operations consist primarily of final
assembly, customer software configuration, test and quality control of
materials and components. The manufacturing process consists primarily of
materials management, extensive unit and environmental testing of components
and subassemblies at each stage of the manufacturing process, final assembly
of the terminals, and prior to shipment, quality assurance testing and
inspection of all products. The Company has three manufacturing facilities,
which presently are located in San Jose, California, Wellington, New Zealand
and Seattle, Washington. The Company's manufacturing operations in San Jose,
California, Seattle, Washington and Wellington, New Zealand are certified to
International Standards Organization (ISO) 9001, a recognized international
quality standard.  The manufacturing facility in Wellington, New Zealand is
also certified to ISO 14001, an internationally recognized environmental
quality standard.  As of March 31, 1999, the Company maintained a staff of
279 manufacturing personnel.

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     The Company's manufacturing operations are highly dependent upon the
delivery of materials and components by outside suppliers in a timely manner. In
addition, the Company depends in part upon subcontractors to assemble major
components and subassemblies used in its products in a timely and satisfactory
manner. The Company does not generally enter into long-term or volume purchase
agreements with any of its suppliers, and no assurance can be given that such
materials, components and subsystems will be available in the quantities
required by the Company, if at all. The inability of the Company to develop
alternative sources of supply quickly and on a cost-effective basis could
materially impair the Company's ability to manufacture and deliver its products
in a timely manner. There can be no assurance that the Company will not
experience material supply problems or component or subsystem delays in the
future.

     From time to time, the Company has experienced delays and other supply
problems with vendors, but such delays and other problems have not had a
significant impact on the Company's results of operations. To reduce any future
problems associated with delays, the Company has contracted for component and
subassembly parts from additional sources. The Company and its key suppliers
maintain a high level of communication at all levels of their respective
management to ensure that production requirements and constraints are taken into
account in each of their respective production plans.

BACKLOG

     Digital Microwave's backlog at March 31, 1999 was $63.9 million, as
compared with $102.3 million at March 31, 1998. The Company only includes orders
scheduled for delivery within 12 months in its backlog. Product orders in the
Company's current backlog are subject to changes in delivery schedules or to
cancellation at the option of the purchaser without significant penalty.
Accordingly, although useful for scheduling production, backlog as of any
particular date may not be a reliable measure of sales for any future period
because of the timing of orders, delivery intervals, customer and product mix,
and the possibility of changes in delivery schedules and additions or
cancellations of orders.

COMPETITION

     The microwave interconnection and access business is a specialized
segment of the wireless telecommunications industry and is extremely
competitive. The Company expects such competition to increase in the future.
Several established and emerging companies offer a variety of microwave,
fiber optic, and other connectivity products for applications similar to
those of the Company's products. Many of the Company's competitors have more
extensive engineering, manufacturing and marketing capabilities and
substantially greater financial, technical and personnel resources than the
Company. In addition, many of the Company's competitors have greater name
recognition, a larger installed base of products and longer-standing customer
relationships. The Company considers its primary competitors to be L.M.
Ericsson, Northern Telecom, Siemens AG, P-COM, Inc., NERA, Alcatel and the
Microwave Communications  Division of Harris Corporation. In addition, other
existing competitors include Nokia, SIAE, Sagem and NEC. Both Northern
Telecom and Siemens AG have product lines that compete with those of the
Company, and are also OEMs through which the Company markets and sells its
products. Some of the Company's largest customers could develop the
capability to manufacture products similar to those manufactured by the
Company. Existing and potential competition in the industry has resulted in,
and will continue to result in, significant price competition. The Company
believes that competition in its markets is based primarily on price,
quality, availability, customer service and support, breadth of product line,
product performance and features, rapid delivery, reliability, timing of new
product introductions by the Company, its customers and its competitors, and
the ability of its customers to obtain financing. The Company's future
success will depend upon its ability to address the increasingly
sophisticated needs of its customers by enhancing its current products, by
developing and introducing new products in a timely manner that keep pace
with technological developments and emerging wireless telecommunications
services, and by providing such products at competitive prices. There can be
no assurance that the Company will have the financial resources, technical
expertise, or marketing, sales, distribution, and customer service and
support capabilities to compete successfully.  See "Factors That May Affect
Future Financial Results."

                                                               PAGE 9
<PAGE>


GOVERNMENT REGULATION

     Radio communications are subject to regulation by United States and
foreign laws and international treaties. Digital Microwave's equipment must
conform to international requirements established to avoid interference among
users of microwave frequencies and to permit interconnection of
telecommunications equipment. The Company has complied with such rules and
regulations with respect to its existing products. Any delays in compliance
with respect to future products could delay the introduction of such
products. In addition, radio transmission is subject to regulation by foreign
laws and international treaties. Equipment to support these services can be
marketed only if permitted by suitable frequency allocations and regulations.
Failure by the regulatory authorities to allocate suitable frequency spectrum
could harm the Company's business, financial condition and results of
operations.

     The regulatory environment in which the Company operates is subject to
change.  Regulatory changes, which are affected by political, economic and
technical factors, could significantly impact the Company's operations by
restricting development efforts by the Company and its customers, making
current systems obsolete or increasing the opportunity for additional
competition.  Any such regulatory changes could harm the Company's business,
financial condition and results of operations.  The Company might deem it
necessary or advisable to modify its systems to operate in compliance with
such regulations.  Such modifications could be extremely expensive and
time-consuming to complete.

INTELLECTUAL PROPERTY

     The Company's ability to compete will depend, in part, on its ability to
obtain and enforce intellectual property protection for its technology in the
United States and internationally. The Company relies upon a combination of
trade secrets, trademarks, copyrights, patents and contractual rights to
protect its intellectual property. For example, the Company presently has two
patents covering its products.  In addition, the Company enters into
confidentiality and invention assignment agreements with its employees, and
enters into non-disclosure agreements with its suppliers and appropriate
customers so as to limit access to and disclosure of its proprietary
information. There can be no assurance that any steps taken by the Company
will be adequate to deter misappropriation or impede independent third party
development of similar technologies. In the event that such intellectual
property arrangements are insufficient, the Company's business, financial
condition and results of operations could be harmed. Moreover, there can be
no assurance that the protection provided to the Company's intellectual
property by the laws and courts of foreign nations will be substantially
similar to the remedies available under United States law or that third
parties will not assert infringement claims against the Company.

     While the Company's ability to compete may be affected by its ability to
protect its intellectual property, the Company believes that, because of the
rapid pace of technological change in the wireless telecommunications
industry, its innovative skills, technical expertise and ability to introduce
new products on a timely basis will be more important in maintaining its
competitive position than protection of its intellectual property. Trade
secret, trademark, copyright and patent protections are important but must be
supported by other factors such as the expanding knowledge, ability and
experience of the Company's personnel, new product introductions and product
enhancements. Although the Company continues to implement protective measures
and intends to defend vigorously its intellectual property rights, there can
be no assurance that these measures will be successful.

     The wireless telecommunications industry is characterized by numerous
allegations of patent infringement among competitors and considerable related
litigation. Accordingly, the Company may in the future be notified that it is
infringing certain patent or other intellectual property rights of others.
Although there are no such pending lawsuits against the Company or unresolved
notices that the Company is infringing upon intellectual property rights of
others, there can be no assurance that litigation or infringement claims will
not occur in the future. Such litigation or claims could result in
substantial costs and diversion of resources and could harm the Company's
business, financial condition and results of operations. The wireless
telecommunications industry is subject to frequent litigation regarding
patent and other intellectual property rights. Certain companies and
organizations in the wireless telecommunications industry have patents that
protect their intellectual property rights in these areas. In the event of an
adverse result of any such litigation, the Company could be required to
expend significant resources to develop non-infringing technology or to
obtain licenses to

PAGE 10
<PAGE>

the technology that is the subject of the litigation. There can be no
assurance that the Company would be successful in such development or that
any such license would be available on commercially reasonable terms.

LITIGATION

     The Company may be a defendant at any time in various suits and is subject
to various claims that arise in the normal course of business.  In the opinion
of management, the ultimate disposition of these proceedings will not harm the
consolidated financial position, liquidity or results of operations of the
Company.

EMPLOYEES

     As of March 31, 1999, the Company employed 873 full-time and temporary
employees. None of the Company's employees is represented by a collective
bargaining agreement. The Company's future performance will depend in large
measure on its ability to attract and retain highly skilled employees.
Competition for such personnel is intense and there can be no assurance that the
Company will be successful in attracting and retaining highly skilled employees.
The Company has never experienced a work stoppage and believes its relationship
with its employees to be good.


FACTORS THAT MAY AFFECT FUTURE FINANCIAL RESULTS

     The statements in the Annual Report to Stockholders and this Form 10-K
concerning the Company's future products, expenses, revenues, gross margins,
liquidity, and cash needs, as well as the Company's plans and strategies,
contain forward-looking statements concerning the Company's future operations
and financial results.  These forward-looking statements are based on current
expectations, and the Company assumes no obligation to update this information.
Numerous factors could cause actual results to differ materially from those
described in these statements.  In particular, the Company's results can vary
due to economic and competitive conditions, the volume and timing of product
orders, shipment volumes, product margins, the ability of the Company and its
key suppliers to respond to changes made by customers in their orders, and the
timing of new product introductions by the Company and its competitors.  The
Company's results may also vary significantly depending on other factors,
including the mix of products sold; the cost and availability of components and
subsystems; relative prices of the Company's products; adoption of new
technologies and industry standards; competition; fluctuations in foreign
currency exchange rates; regulatory developments; and general economic
conditions.  Furthermore, the Company's backlog may not be representative of
actual sales for any succeeding period because of the timing of orders, delivery
intervals, customer and product mix, and the possibility of changes in delivery
schedules and additions or cancellation of orders.  Prospective investors and
stockholders should carefully consider the factors discussed above and set forth
below in evaluating these forward-looking statements.

     The quarterly operating results of the Company can vary significantly
depending on several factors, any of which could harm the Company's business,
financial condition or results of operations.  In particular, the Company's
quarterly results of operations can vary due to the volume and timing of product
orders received and delivered during the quarter, the ability of the Company and
its key suppliers to respond to changes made by customers in their orders, and
the timing of new product introductions by the Company and its competitors.  The
quarterly operating results also may vary significantly depending on other
factors, including the mix of products sold, the cost and availability of
components and subsystems, relative prices of the Company's products, adoption
of new technologies and industry standards, competition, fluctuations in foreign
currency exchange rates, regulatory developments, and general economic
conditions.

     Manufacturers of digital microwave telecommunications equipment are
experiencing, and are likely to continue to experience, intense price pressure,
which has resulted, and is expected to continue to result, in downward pricing
pressure on the Company's products.  As a result, the Company has experienced,
and expects to continue to experience, declining average sales prices for its
products.  The Company's future profitability is dependent upon its ability to
improve manufacturing efficiencies, reduce material costs of products, and to
continue to introduce new products and product enhancements.  Any inability of
the Company to respond to increased price competition would harm the Company's
business, financial condition and results of operations.

     The markets for the Company's products are extremely competitive, and the
Company expects that competition will increase.  The Company's existing and
potential competitors include established and emerging companies, such as

                                                                       PAGE 11
<PAGE>

L.M. Ericsson, Northern Telecom, Siemens AG, Microwave Communications
Division of Harris Corporation, P-COM, Alcatel, Nokia, NERA, NEC, Sagem and
SIAE, many of which have more extensive engineering, manufacturing and
marketing capabilities and significantly greater financial, technical, and
personnel resources than the Company.  The Company believes that its ability
to compete successfully will depend on a number of factors both within and
outside its control, including price, quality, availability, customer service
and support, breadth of product line, product performance and features, rapid
delivery, reliability, timing of new product introductions by the Company,
its customers and its competitors, and the ability of its customers to obtain
financing.  The Company continues to experience customer demands for shorter
delivery cycles. There can be no assurance that the Company will have the
financial resources, technical expertise, or marketing, sales, distribution,
and customer service and support capabilities to compete successfully.

     The Company expects that international sales will continue to account for
the majority of its net product sales for the foreseeable future.  As a result,
the Company is subject to the risks of doing business internationally, including
unexpected changes in regulatory requirements; fluctuations in foreign currency
exchange rates; imposition of tariffs and other barriers and restrictions; the
burdens of complying with a variety of foreign laws; and general economic and
geopolitical conditions, including inflation and trade relationships. There can
be no assurance that currency fluctuations, changes in the rate of inflation or
any of the aforementioned factors will not harm the Company's business,
financial condition and results of operations.

     The Company's manufacturing operations are highly dependent upon the
delivery of materials by outside suppliers in a timely manner.  In addition, the
Company depends in part upon subcontractors to assemble major components and
subsystems used in its products in a timely and satisfactory manner.  The
Company does not generally enter into long-term or volume purchase agreements
with any of its suppliers, and no assurance can be given that such materials,
components and subsystems will be available in the quantities required by the
Company, if at all.  The inability of the Company to develop alternative sources
of supply quickly and on a cost-effective basis could materially impair the
Company's ability to manufacture and deliver its products in a timely manner.
There can be no assurance that the Company will not experience material supply
problems or component or subsystem delays in the future.

     The Company has pursued, and will continue to pursue, growth opportunities
through internal development and acquisitions of complementary businesses and
technologies.  Acquisitions may involve difficulties in the retention of
personnel, diversion of management's attention, unexpected legal liabilities,
and tax and accounting issues.  There can be no assurance that the Company will
be able to successfully identify suitable acquisition candidates, complete
acquisitions, integrate acquired businesses into its operations, or expand into
new markets.  Once integrated, acquired businesses may not achieve comparable
levels of revenues, profitability, or productivity as the existing business of
the Company or otherwise perform as expected.  The Company's failure to manage
its growth effectively could harm the Company's business, financial condition
and results of operations.

     The Company is aware of the issues associated with the programming code
in existing computer systems as the year 2000 approaches.  The Year 2000
problem is concerned with whether computer systems will properly recognize
date-sensitive information when the year changes to 2000.  Systems that do
not properly recognize such information could generate erroneous data or
cause a system to fail.  The Year 2000 problem is pervasive and complex, as
virtually every company's computer operation will be affected in some way.
The Company's computer programs, which process its operational and financial
transactions, were designed and developed without considering the impact of
the upcoming change in century.  If not corrected, the Company's computer
programs could fail or create erroneous results by or at the year 2000.  The
Company has purchased new computer programs to address this issue and began
implementing these applications in Fiscal 1999.  The Company has contacted
its primary suppliers and subcontractors to determine that they are
developing plans to address processing transactions in the year 2000 and to
monitor their progress toward Year 2000 capability.  The Company believes
that it will expend approximately $0.5 million for investigating and
remedying issues related to Year 2000 compliance involving its internal
operations and to date has expensed approximately $0.2 million. Management
believes that the Year 2000 compliance expenses will not have a material
adverse effect on the Company's earnings. However, there can be no assurance
that Year 2000 problems will not occur with respect to the Company's computer
systems.  The Year 2000 problem may impact other entities with which the
Company transacts business, and the Company cannot predict the effect of the
Year 2000 problem on such entities.

     During any given quarter, a small number of customers may account for a
significant portion of the Company's net sales.  The Company's customers
typically are not contractually obligated to purchase any quantity of
products in any

PAGE 12
<PAGE>

particular period, and product sales to major customers have varied widely
from period to period.  The loss of any existing customer, a significant
reduction in the level of sales to any existing customer, or the failure of
the Company to gain additional customers could harm the Company's business,
financial condition and results of operations.

ITEM 2.  PROPERTIES

     The Company's corporate offices and principal research, development and
manufacturing facilities are located in San Jose, California in four leased
buildings aggregating approximately 132,000 square feet.  In Fiscal 1999, as
part of the Company's restructuring, approximately 100,000 square feet of
leased space in San Jose, California was vacated by the Company, the cost of
which has been included in the Company's merger and restructuring charge for
Fiscal 1999.  The Company's Seattle, Washington facilities consist of three
leased buildings aggregating approximately 79,000 square feet of office and
manufacturing space.

     The Company also owns a 44,000 square foot service and repair facility in
Hamilton, Scotland and leases 10,000 square feet in Coventry, England.  The
Company owns 7,000 square feet of office space and leases an additional 25,000
square feet of office and manufacturing space in Wellington, New Zealand.
Additionally, the Company also leases an aggregate of approximately 50,000
square feet world wide for sales, customer service and support offices.  The
Company believes these facilities are adequate to meet its anticipated needs for
the foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS

     See "Business -- Litigation" under Item 1 of this Form 10-K and Note 4 of
"Notes to Consolidated Financial Statements" incorporated herein by reference
from the Company's 1999 Annual Report to Stockholders.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     (a) The Company held a Special Meeting of Stockholders on June 8, 1999.

     (b) At the Special Meeting of Stockholders, the following matter was voted
         upon:

         1. A proposal to approve the adoption of the Digital Microwave
            Corporation 1999 Employee Stock Purchase Plan.

                        Affirmative votes:       44,375,016
                        Negative votes:           5,575,143
                        Abstain:                     94,032
                        Non-votes:                        0

                                                                        PAGE 13
<PAGE>

                                      PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     The section labeled "Stock Information" appearing on page 36 of the
Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.

ITEM 6.  SELECTED FINANCIAL DATA

     The section labeled "Selected Consolidated Financial Data" appearing on
page 17 of the Company's 1999 Annual Report to Stockholders is incorporated
herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The information appearing under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 11 through
17 of the Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk:

     The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's investment portfolio.  The Company does not use
derivative financial instruments in its investment portfolio.  The Company
invests in high-credit quality issuers and, by policy, limits the amount of
credit exposure to any one issuer and country.  The portfolio includes only
marketable securities with active secondary or resale markets to ensure
portfolio liquidity.  The portfolio is also diversified by tenor to ensure that
funds are readily available as needed to meet the liquidity needs of the
Company.  This policy minimizes the requirement to sell securities in order to
meet liquidity needs and therefore the potential effect of changing market rates
on the value of securities sold.

     The table below presents principal amounts and related weighted average
interest rates by year of maturity for the Company's investment portfolio.

<TABLE>
                                                                        Years Ended March 31
                                                 ----------------------------------------------------------------
                                                   2000          2001          2002           2003           2004
(In thousands)                                     ----          ----          ----           ----           ----
<S>                                               <C>            <C>          <C>            <C>            <C>
Cash equivalents and short-term investments       $12,318          -             -              -              -
Weighted average interest rate                       5.19%         -             -              -              -

</TABLE>

Foreign Currency Exchange Risk:

     The Company transacts business in various foreign countries.  During fiscal
1998 and 1999, the Company employed a foreign currency hedging program utilizing
foreign currency forward exchange contracts to hedge certain balance sheet and
backlog transactions in non-functional currency transactions.  Under this
program, increases or decreases in the Company's foreign currency transactions
when translated to the functional currency are partially offset by realized
gains and losses on the hedging instruments.  The goal of this program is to
minimize net fluctuations in the value of these currencies which may cause
short-term earnings volatility.  As of March 31, 1999, the Company's foreign
currency forward exchange contracts were comprised primarily of New Zealand
dollars, British Pounds, Canadian dollars and European Monetary Units and
totaled the US dollar equivalent of $25.1 million.

PAGE 14
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements and supplementary data, and related
notes and Report of Independent Public Accountants appearing on pages 18 through
35 of the Company's 1999 Annual Report to Stockholders are incorporated herein
by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.


                                      PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The current executive officers of Digital Microwave are as follows:
<TABLE>
<CAPTION>
             NAME             AGE                  POSITION
             ----             ---                  ---------
<S>                          <C>   <C>

      Charles D. Kissner      52   Chairman of the Board and Chief Executive Officer
      Sam Smookler            59   President, Broadband, Long Haul and Services
      Jean-Francois Grenon    43   President, Narrowband Products
      Frank Carretta, Jr.     54   Senior Vice President, Worldwide Sales
      Carl A. Thomsen         54   Senior Vice President, Chief Financial Officer and Secretary
      John C. Brandt          42   Vice President and Corporate Controller
      Carol A. Goudey         51   Corporate Treasurer and Assistant Secretary
      Paul A. Kennard         48   Chief Technical Officer and Vice President, Corporate Marketing
      John P. O'Neil          61   Vice President, Personnel
</TABLE>

     Mr. Charles D. Kissner joined the Company as President, Chief Executive
Officer and was elected Director of the Company in July 1995 and Chairman of the
Board in August 1996. He currently serves as Chairman of the Board and Chief
Executive Officer of the Company. Prior to joining the Company, he served as
Vice President and General Manager of the Microelectronics Division of
M/A-COM, Inc. ("M/A-COM"), a manufacturer of radio and microwave communication
products, from July 1993 to July 1995. Mr. Kissner currently is a director of
Quickturn Design Systems, Inc., a provider of design emulation systems,
Spectrian, Inc., a supplier of linear high power amplifiers for wireless
communications, and American Medical Flight Support, Inc., a non-profit medical
transportation company.

     Mr. Sam Smookler joined the Company as President and Chief Operating
Officer in January 1998.  In October 1998, at the time of the merger with Innova
Corporation, he became President, Broadband, Long Haul and Services.  Prior to
joining the Company, he served as President and Chief Operating Officer of
Signal Technology Corporation, a manufacturer of electronic components and
subsystems, from September 1997 to January 1998 and as President of East Coast
Operations from February 1997 to September 1997.  Prior to such time he served
as Vice President and General Manager of the Interconnection Products Division
of Augat Corporation, a manufacturer of telecommunications connection products,
from November 1994 to February 1997.  From February 1992 to October 1994, he
served as General Manager of a division of M/A-COM.

     Mr. Jean-Francois Grenon joined the Company in October 1998 as President,
Narrowband Products when Innova Corporation merged with the Company. Mr. Grenon
joined Innova in February 1996 as its President and Chief Executive Officer, and
had served as a Director of Innova since June 1996.  From March 1994 to December
1995, Mr. Grenon served as President of Microwave Radio Corporation, Digital
Radio Group, a division of California Microwave Radio that he helped found,
which develops and manufactures digital millimeter wave radios.


                                                                         PAGE 15
<PAGE>

     Mr. Frank Carretta, Jr. joined the Company as Vice President, Worldwide
Sales and Service in October 1995 and was appointed Senior Vice President,
Worldwide Sales, Service and Marketing in November 1996. Prior to joining
Digital Microwave, Mr. Carretta served as Area Sales Director of M/A-COM from
July 1992 to September 1995.

     Mr. Carl A. Thomsen joined the Company as Vice President, Chief Financial
Officer and Secretary in February 1995. In April 1999, he was appointed Senior
Vice President.  Prior to joining the Company, he was Senior Vice President and
Chief Financial Officer of Measurex Corporation, a manufacturer of sensor based
process control systems.

     Mr. John C. Brandt joined the Company as Controller in June 1997 and was
appointed Vice President in April 1999.  Prior to joining the Company,
Mr. Brandt was employed with Honeywell-Measurex, a manufacturer of control
systems, from 1981 to June 1997, where he served in a variety of financial
positions, and most recently served as Operations Controller from 1988 to June
1997.

     Ms. Carol A. Goudey joined the Company as Treasurer in April 1996 and was
additionally appointed Assistant Secretary in May 1996. Prior to joining Digital
Microwave, she served as Acting Treasurer of California Micro Devices
Corporation, a manufacturer of semiconductor devices, since 1994.

     Mr. Paul Kennard joined the Company as Vice President, Engineering in April
1996. He was appointed Chief Technical Officer and Vice President, Corporate
Marketing in October 1998. From 1989 to March 1996, Mr. Kennard was with
California Microwave Corporation, a satellite and wireless communications
company, serving as Director of the Signal Processing Technology Department
until his promotion in 1994 to Vice President of Engineering, and then to Senior
Vice President of Engineering in 1995 for the Microwave Network Systems
Division.

     Mr. John O'Neil joined the Company as Vice President, Personnel in May
1993. Mr. O'Neil was Vice President of Personnel and Administration of BEI
Electronics, Inc., a defense electronics firm, from January 1989 to April 1993.

     Information concerning directors and executive officers under the caption
"Election of Directors," "Board Meetings and Committees," "Security Ownership of
Certain Beneficial Owners and Management" and "Compliance with Section 16(a) of
the Securities Exchange Act of 1934" in the Company's Proxy Statement for the
Annual Meeting of Stockholders to be held on August 10, 1999 (the "Proxy
Statement"), is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The information included in the Company's Proxy Statement under the
captions "Compensation of Directors," "Executive Compensation and Other
Information," "Stock Options," "Option Exercises and Holdings," "Compensation
Committee Interlocks and Insider Participation" and "Employment and Termination
Arrangements" is incorporated by reference herein.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information included in the Company's Proxy Statement under the
captions "Security Ownership of Certain Beneficial Owners and Management" and
"Employment and Termination Arrangements" is incorporated by reference herein.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See "Business -- Manufacturing and Suppliers" under Item 1 of this Form
10-K and Note 4 of "Notes to Consolidated Financial Statements" of the
Company's 1999 Annual Report to Stockholders incorporated herein by reference.


PAGE 16
<PAGE>

                                      PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)  1.   FINANCIAL STATEMENTS

          The following consolidated financial statements are contained in the
          Company's 1999 Annual Report to Stockholders and are incorporated
          herein by reference pursuant to Item 8:

               1.   Consolidated Balance Sheets as of March 31, 1999 and 1998.

               2.   Consolidated Statements of Operations for each of the three
                    years in the period ended March 31, 1999.

               3.   Consolidated Statements of Stockholders' Equity for each of
                    the three years in the period ended March 31, 1999.

               4.   Consolidated Statements of Cash Flows for each of the three
                    years in the period ended March 31, 1999.

               5.   Notes to Consolidated Financial Statements.

               6.   Report of Independent Public Accountants.


          2.   FINANCIAL STATEMENT SCHEDULES

          The following consolidated financial statement schedule for each of
          the three years in the period ended March 31, 1999 is submitted
          herewith:

               II   Valuation and Qualifying Accounts and Reserves.

         Schedules not listed above have been omitted because they are not
         applicable or required, or information required to be set forth
         therein is included in the Consolidated Financial Statements,
         including the Notes thereto, incorporated herein by reference.

         3.   EXHIBITS

              The Exhibit Index begins on Page 22 hereof.

     (b) There were no reports on Form 8-K filed by the Registrant during the
         quarter ended March 31, 1999.

     (c) See Item 14 (a) 3 above.

     (d) See Item 14 (a) 2 above.




                                                                    PAGE 17
<PAGE>


                                     SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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.

Date:   September 17, 1999.


DIGITAL MICROWAVE CORPORATION

BY:       /S/ CHARLES D. KISSNER*
   -------------------------------------
     Charles D. Kissner
     CHAIRMAN OF THE BOARD AND
     CHIEF EXECUTIVE OFFICER



PAGE 18
<PAGE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>


SIGNATURES                                           SIGNING CAPACITY                                     DATE
----------                                           ----------------                                     ----
<S>                                                  <C>                                                 <C>

 /s/       CHARLES D. KISSNER*                       Chairman of the Board and                            September 17, 1999
     ----------------------------                    Chief Executive Officer
           Charles D. Kissner

 /s/       CARL A. THOMSEN                           Senior Vice President, Chief Financial Officer &     September 17, 1999
     ----------------------------                    Secretary
           Carl A. Thomsen                           (Principal Financial and Accounting Officer)

 /s/       RICHARD C. ALBERDING*                     Director                                             September 17, 1999
     ----------------------------
           Richard C. Alberding

 /s/       PAUL S. BACHOW*                           Director                                             September 17, 1999
     ----------------------------
           Paul S. Bachow

 /s/       JOHN W. COMBS*                            Director                                             September 17, 1999
     ----------------------------
           John W. Combs

 /s/       JAMES D. MEINDL*                          Director                                             September 17, 1999
     ----------------------------
           James D. Meindl

 /s/       V. FRANK MENDICINO*                       Director                                             September 17, 1999
     ----------------------------
           V. Frank Mendicino

                                                     Director                                             September   , 1999
     ----------------------------
           Howard Oringer


By: /s/     CARL A. THOMSEN                                                                               September 17, 1999
    -----------------------------
            Carl A. Thomsen
            Attorney-in-fact

</TABLE>
                                                                        PAGE 19
<PAGE>



                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE


To Digital Microwave Corporation:

     We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Digital
Microwave Corporation's Annual Report incorporated by reference in this Form
10-K, and have issued our report thereon dated April 21, 1999.  Our audits
were made for the purpose of forming an opinion on the basic consolidated
financial statements taken as a whole.  The schedule listed in item 14a(2) is
the responsibility of the Company's management and is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not
part of the basic consolidated financial statements.  This schedule has been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the consolidated financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.

                                                      /s/ ARTHUR ANDERSEN LLP


San Jose, California
April 21, 1999


PAGE 20

<PAGE>

                                          SCHEDULE II



DIGITAL MICROWAVE CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(IN THOUSANDS)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                       BALANCE AT    CHARGED TO                 BALANCE
                                      BEGINNING OF    COSTS AND                  AT END
DESCRIPTION                              YEAR         EXPENSES    UTILIZED      OF YEAR
------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>           <C>          <C>
Year Ended March 31, 1999

Merger and
   Restructuring accrual:
     Innova merger costs                   -          $2,700       $2,700       $    -
     Severance costs                       -           4,200        3,300           900
     Facility termination costs            -           4,100        1,800         2,300
     Asset write-down                      -           5,800        5,000           800
     Goodwill                              -          13,100       13,100             -
                                    ------------------------------------------------------
                                           -         $29,900(A)   $25,900(B)     $4,000
</TABLE>

(A) Approximately $12,200 consists of cash outflow.
(B) Approximately $8,200 consists of cash outflow.

(IN THOUSANDS)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                       BALANCE AT    CHARGED TO                  BALANCE
                                      BEGINNING OF    COSTS AND   DEDUCTIONS/    AT END
DESCRIPTION                              YEAR         EXPENSES     WRITE-OFF     OF YEAR
------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>           <C>           <C>
Year Ended March 31, 1999

        Allowance for
          doubtful accounts          $   3,999      $  4,608      $ (5,346)      $  3,261


Year Ended March 31, 1998

     Allowance for
           doubtful accounts         $   3,377      $    356      $    266(A)    $  3,999


Year Ended March 31, 1997

    Allowance for
          doubtful accounts          $   1,373      $  1,400      $    604(A)    $  3,377

</TABLE>




(A) Net of transfers from other reserve accounts.

                                                                        PAGE 21
<PAGE>


                                     EXHIBIT INDEX
<TABLE>
<CAPTION>

EXHIBIT
NUMBER DESCRIPTION

<C>   <S>
2.1   Agreement and Plan of Reorganization and Amalgamation, dated December 22,
      1997, among the Company, South Amalgamation Sub Ltd. and MAS (incorporated
      by reference to Exhibit 2.1 to the Company's Registration Statement on
      Form S-4 (File No. 333-45053)).

2.2   Agreement and Plan of Reorganization and Merger, dated as of July 22,
      1998, by and among Digital Microwave Corporation, Iguana Merger Corp. and
      Innova Corporation (incorporated by reference to Exhibit 2.1 to the
      Company's Registration Statement on Form S-4 (File No. 333-62673)).

3.1   Restated Certificate of Incorporation, as amended as of March 24, 1998
      (incorporated by reference to Exhibit 3.1 to the Company's Annual
      Report on Form 10-K for the year ended March 31, 1998).

3.2   Amended and Restated Bylaws, dated as of October 8, 1998 (incorporated by
      reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
      for the quarter ended September 30, 1998).

4.1   Form of Common Stock Certificate (incorporated by reference to Exhibit
      4.1 to the Company's Annual Report on Form 10-K for the year ended
      March 31, 1988).

4.2   Amended and Restated Rights Agreement dated as of November 3, 1998
      between the Company and ChaseMellon Shareholder Services, L.L.C.,
      including the form of the Certificate of Designations for the Series A
      Junior Participating Stock (incorporated by reference to Exhibit 4.1
      to the Company's Quarterly Report on Form 10-Q for the quarter ended
      September 30, 1998.

10.1  Digital Microwave Corporation 1984 Stock Option Plan, as amended and
      restated on June 11, 1991. (incorporated by reference to Exhibit 10.1 to
      the Company's Annual Report on Form 10-K for the year ended March 31,
      1991).

10.2  Form of Installment Incentive Stock Option Agreement (incorporated by
      reference to Exhibit 28.2 to the Company's Registration Statement on
      Form S-8 (File No. 33-43155)).

10.3  Form of installment Non-qualified Stock Option Agreement (incorporated
      by reference to Exhibit 28.3 to the Company's Registration Statement on
      Form S-8 (File No. 33-43155)).

10.4  Lease of premises located at 170 Rose Orchard Way, San Jose, California
      (incorporated by reference to Exhibit 10.5 to the Company's Annual
      Report on Form 10-K for the year ended March 31, 1991).

10.5  Lease of premises located at 130 Rose Orchard Way, San Jose, California.
      (incorporated by reference to Exhibit 10.6 to the Company's Annual
      Report on Form 10-K for the year ended March 31, 1991).

10.6  Lease of premises located at 110 Rose Orchard Way, San Jose, California.
      (incorporated by reference to Exhibit 10.7 to the Company's Annual
      Report on Form 10-K for the year ended March 31, 1991).

10.7  Microelectronics Technology, Inc. Development Agreement dated as of
      March 9, 1984 (incorporated by reference to Exhibit 10.8 to the
      Company's Registration Statement on Form S-1 (File No. 33-13431)).

10.8  Form of Indemnification Agreement between the Company and its directors
      and certain officers (incorporated by reference to Exhibit 10.16 to
      the Company's Registration Statement on Form S-1 (File No. 33-13431)).

PAGE 22
<PAGE>


10.9  Technology Transfer & Marketing Agreement dated October 2, 1987 between
      Microelectronics Technology Inc. and the Company (incorporated by
      reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K
      for the year ended March 31, 1988).

10.10 Product Acquisition Agreement dated as of September 23, 1992 between
      the Company and Microelectronics Technology, Inc. (incorporated by
      reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K
      for the year ended March 31, 1993).

10.11 Product Acquisition Agreement dated as of December 28, 1992 between the
      Company and Microelectronics Technology, Inc. (incorporated by reference
      to Exhibit 10.27 to the Company's Annual Report on Form 10-K for the year
      ended March 31, 1993).

10.12 Teaming Agreement dated as of November 16, 1993 between the Company and
      Siemens AG (including the Supply Agreement dated November 16, 1993
      between Siemens AG and E-Plus Mobilfunk GmbH) (incorporated by reference
      to Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year
      ended March 31, 1994).

10.13 Agreement on Exchange of Interim Equipment dated October 27, 1994
      (incorporated by reference the Company's Quarterly Report on Form 10-Q
      for the quarter ended December 31, 1994).

10.14 Digital Microwave Corporation 1994 Stock Incentive Plan, as amended and
      restated (incorporated by reference to the Company's Proxy Statement for
      the Annual Meeting of Stockholders to be held on August 4, 1998).


10.15 Credit Agreement, dated as of June 30, 1997, by and between the Company
      and Bank of America National Trust and Savings Association (incorporated
      by reference to Exhibit 10.1 to the Company's Quarterly Report on
      Form 10-Q for the quarter ended June 30, 1997).

10.16 Lease, dated April 5, 1995, by and between Metropolitan Life Insurance
      Company and Digital Microwave Corporation, relating to 180 Rose Orchard
      Way, San Jose, California (incorporated by reference to Exhibit 10.2 to
      the Company's Quarterly Report on Form 10-Q for the quarter ended
      June 30, 1997).

10.17 Sublease Agreement, dated August 29, 1997, by and between Wyse
      Technology Inc., Digital Microwave Corporation and Wyse Technology
      Investments, Inc., relating to 3745 North First Street, San Jose,
      California (incorporated by reference to Exhibit 10.22 to the
      Company's Annual Report on Form 10-K for the year ended March 31,
      1998).

10.18 Purchase Agreement by and between the Company and Microelectronics
      Technology, Inc., dated as of January 15, 1998 (incorporated by
      reference to Exhibit 10.1 to the Company's Quarterly Report on
      Form 10-Q for the quarter ended December 31, 1998).

10.19 Purchase Agreement by and between the Company and REMEC Inc., dated as
      of January 15, 1998 (incorporated by reference to Exhibit 10.2 to the
      Company's Quarterly Report on Form 10-Q for the quarter ended
      December 31, 1998).

10.20 Business Agreement by and between the Company and MTI, dated as of
      January 26, 1998 (incorporated by reference to Exhibit 10.3 to the
      Company's Quarterly Report on Form 10-Q for the quarter ended
      December 31, 1998).

10.21 Digital Microwave Corporation 1998 Non-Officer Employee Stock Option
      Plan (incorporated by reference to Exhibit 99.1 to the Company's
      Registration Statement on Form S-8 (File No. 333-48535)).


                                                                    PAGE 23

<PAGE>


10.22 Product Purchase Agreement dated as of June 1, 1998, by and between
      Digital Microwave Corporation and Solectron Corporation (incorporated by
      reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
      for the quarter ended June 30, 1998).

10.23 First Amendment to Credit Agreement dated as of June 1, 1998, by and
      between Digital Microwave Corporation and Bank of America National Trust
      and Savings Association (incorporated by reference to Exhibit 10.2 to the
      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
      1998).

10.24 Second Amendment to Credit Agreement dated as of July 22, 1998,
      effective as of June 30, 1998, by and between Digital Microwave
      Corporation and Bank of America National Trust and Savings Association
      (incorporated by reference to Exhibit 10.3 to the Company's Quarterly
      Report on Form 10-Q for the quarter ended June 30, 1998).

10.25 Product Purchase Agreement, dated as of July 30, 1998, by and between
      Digital Microwave Corporation and REMEC Inc. (incorporated by reference
      to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
      quarter ended September 30, 1998).

10.26 Restated Employment Agreement, dated as of August 3, 1998, by and
      between Digital Microwave Corporation and Charles D. Kissner
      (incorporated by reference to Exhibit 10.2 to the Company's Quarterly
      Report on Form 10-Q for the quarter ended September 30, 1998).

10.27 Third Amendment to Credit Agreement dated as of September 30, 1998, by
      and between Digital Microwave Corporation and Bank of America National
      Trust and Savings Association (incorporated by reference to Exhibit 10.3
      to the Company's Quarterly Report on Form 10-Q for the quarter ended
      September 30, 1998).

10.28 Loan and Security Agreement dated as of October 1, 1998 between the
      Company and Greyrock Capital and related (a) Schedule to Loan and
      Security Agreement and (b) Secured Promissory Note, each as of the same
      date (incorporated by reference to Exhibit 10.4 to the Company's
      Quarterly Report on Form 10-Q for the quarter ended December 31, 1998).

10.29 Employment Agreement dated as of October 8, 1998 between the Company
      and Jean-Francois Grenon (incorporated by reference to Exhibit 10.5 to
      the Company's Quarterly Report on Form 10-Q for the quarter ended
      December 31, 1998).

10.30 Amended and Restated Agreement dated as of October 30, 1998 between the
      Company and Bank of America National Trust and Savings Association
      (incorporated by reference to Exhibit 10.6 to the Company's Quarterly
      Report on Form 10-Q for the quarter ended December 31, 1998).

10.31 Digital Microwave Corporation 1999 Non-Officer Employee Restricted
      Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the
      Company's Registration Statement on Form S-8 (File No. 333-76233)).

10.32 Digital Microwave Corporation 1999 Employee Stock Purchase Plan
      (incorporated by reference to Exhibit 99.1 to the Company's Registration
      Statement on Form S-8 (File No. 333-80281)).

10.33 Form of Employment Agreement between the Company and Frank Carretta, Jr.,
      Paul A. Kennard, Sam Smookler and Carl A. Thomsen.

10.34 Form of Employment Agreement between John C. Brandt, Carol A. Goudey
      and John P. O'Neil.

13.1 Portions of 1999 Annual Report to Stockholders incorporated herein by
     reference.

21.1 List of subsidiaries.

PAGE 24
<PAGE>


23.1 Consent of Independent Public Accountants (included on page 26 of this
     Annual Report on Form 10-K).

24.1 Power of Attorney (included on page 19 of this Annual Report on Form 10-K).

27.1 Financial Data Schedule for the fiscal year ended March 31, 1999.

27.2 Restated Financial Data Schedule for the fiscal year ended March 31, 1998.

27.3 Restated Financial Data Schedule for the fiscal year ended March 31, 1997.
</TABLE>
                                                                        PAGE 25

<PAGE>
                                                               EXHIBIT 23.1

                 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



     As independent public accountants, we hereby consent to the
incorporation of our reports included (or incorporated by reference) in this
Form 10-K into the Company's previously filed Registration Statements (File
Nos. 33-16539, 33-37173, 33-43155, 33-85270, 33-94438, 333-00855, 333-11385,
333-11387, 333-11389, 333-25953, 333-48533, 333-48535, 333-46867, 333-62673,
333-45053, 333-66857, 333-73007, 333-76233 and 333-80281) on Form S-8.

                                                     /s/ ARTHUR ANDERSEN LLP


San Jose, California
June 24, 1999



PAGE 26