The first quarter loss from continuing operations excluding noncash and non-recurring items as well as the Company’s provision for excess and obsolete inventory was $3.1 million, or $0.06 per diluted common share, as compared to a loss from continuing operations excluding non-cash and non-recurring items in the prior yearcomparable period of $310,000, or $0.00 per diluted common share.

During the quarter, WJ Communications initiated a cost reduction program designed to more closely align the Company’s production costs with its customers’ current forecasted demand. As part of this program, WJ initiated a 20% reduction in its workforce and incurred severance related costs totaling approximately $0.2 million in the first quarter.

Additionally, the Company has recorded an additional provision for excess and obsolete inventory during the quarter of $6.6 million, primarily related to inventory purchased for a contract with a major wireless base station customer.

As we announced on March 13th, our first quarter was impacted by a slowdown in

demand for fiber optic and wireless base station equipment due largely to the continued slowdown in the economy, said Malcolm Caraballo, Chief Executive Officer and President of WJ Communications. During the quarter, we continued to see strong year over year growth in our semiconductor products and fixed wireless sales showed double digit sequential growth.

In 2001, we have introduced a number of new innovative fiber optic products and have already received over $5 million in orders from customers for these products, continued Mr. Caraballo. These orders are firm evidence that we are having success in broadening our product line and customer base. In addition to the success we are having with our fiber optic products, our new semiconductor products are being well received in the market place and should begin to impact our sales in the second quarter. While our visibility remains limited, we are encouraged by these developments and we are on track to more than double our product portfolio in 2001. With these introductions and our current product line, we feel we are well positioned for the anticipated future roll-out of

four major technologies: fixed broadband wireless for the access market, OC-192 and OC-768 for both the metro and long haul fiber optics markets, and 2.5 and 3G wireless in both Europe and the United States.

As of April 1, 2001, the Company maintained its strong liquidity position with approximately $70 million in cash and short-term investments, after the payment of $10 million of income tax in the first quarter related primarily to the taxes owed on the Company’s fourth quarter of 2000 gain on the sales of real estate. In addition, as of April 1, 2001, the Company has no long-term debt.

Reported results for the first quarter of 2001 are a net loss from continuing operations of $7.1 million or $0.13 per diluted common share. This compares to a net loss from continuing operations of $26.2 million or $0.26 per diluted common share, for the first quarter of 2000. The 2000 quarterly results include $35.5 million of expenses related to our recapitalization and merger completed in January 2000.

SOURCE: COMPANY PRESS RELEASE