February 28, 2001–Milpitas, California–Elantec Semiconductor, Inc. today announced that sales for the second quarter of fiscal 2001 will be below previous expectations as a result of continued economic slowdown and weakening demand, particularly in the PC industry.

The company expects its second quarter revenue to be down approximately 20 to 25% compared to its first fiscal quarter ended December 31, 2000. Market conditions have not improved during the quarter for the company’s products, particularly those tied to PC market demand. Customers in this market segment continue to cancel or reschedule backlog, causing limited visibility for the company. So far this quarter, demand for Elantec’s DSL communications products remain strong, but will not be able to offset the decline in its other market segments.

As a result of the revenue decline and lower factory loadings, the company anticipates gross margins will be between 55 and 56% in the second quarter. Elantec has already initiated a series of cost-reduction actions to partially offset the effects of the reduced revenues. Earnings per share for the quarter should be in the range of $0.20 to $0.22.

“Despite the softening demand caused by a market slowdown, Elantec remains well positioned in the four markets we focus on,” commented Rich Beyer, President and CEO. “We believe we will resume strong sales and earnings growth when the economy and our target markets rebound.”