Alpha Microsystems Acquires Telephony Interconnect Services Business; Acquisition Potentially Increases Alpha Microsystems Revenue by 20 Percent.

SANTA ANA, Calif.--(BUSINESS WIRE)--Jan. 5, 1998--Alpha Microsystems (Nasdaq NM:ALMI) today announced that as part of its acquisition strategy to expand its IT services division, the Company has acquired the telephony interconnect services business from Pennsylvania-based ATI Communications, an operating division of Applied Cellular Technology Inc. (Nasdaq:ACTC). According to Alpha Microsystems President and Chief Executive Officer Douglas J. Tullio, the acquisition has the potential to increase Alpha Microsystems' annual revenue by 20 percent. The newly acquired business will be operated through a wholly-owned subsidiary incorporated in Delaware, Alpha Technology Interconnect Inc.

Alpha Microsystems purchased the services-based business, which has projected annual revenue of approximately $4 million, for a purchase price based on future annualized revenues, and is estimated to be $2.2 million. Alpha Microsystems will retain 60 employees from ATI. ATI specializes in providing cellular and business telephone systems, as well as networking products, Internet access and direct satellite television connections to over one million customers across Pennsylvania, Washington, D.C., Maryland and Virginia.

"The acquisition of the services business from ATI represents another step toward realizing a longer-term vision for Alpha Microsystems in the IT services industry," commented Tullio. "In addition to bringing Alpha Microsystems an immediate increase in revenues and giving the Company an entree into the interconnect services industry, this acquisition provides a significant opportunity for Alpha Microsystems to take advantage of an industry that is positioned for an extensive consolidation."

"Today's mid-range IT services industry is largely characterized by regionalism and niche fragmentation. The fast-growing market for IT support demands the national reach along with the efficiencies and the depth of expertise across related fields. With our 43 offices nationwide and 20 years of experience, we have the operational advantages and economies of scale to become a recognized leader in the services industry. We will continue to augment our national operations with strong regional operations like this unit of ATI which will allow the leveraging of our services infrastructure to economically support the technology needs of not only large installations but of mid-sized, `Main Street USA'-style companies."

Pointing to an IT services and support market estimated to be more than $13 billion annually, and in which industry analysts say no single provider exceeds an estimated 16 percent share, Tullio said, "Our focused mission now at Alpha Microsystems is to accelerate the growth of our national operations with strong regional operations like this unit of ATI. Over time, these established organizations -- with specialized local and technical expertise as well as positive operating cash flow and growth market opportunities -- will give us the momentum, the visibility, and the leverage to make substantial competitive gains."

According to Alpha Microsystems Vice President of Services Randy Parks, the acquisition of ATI's telephony interconnect business brings a new element to the Company's growing portfolio of services and consulting offerings, at a time when more and more of Alpha Microsystems' customers nationwide are facing the convergence of computer and telephony operations.

According to Parks, "Computer Telephony Integration (CTI) is a critical issue, facing every information technology professional hoping to leverage local area networks, as well as next generation advances in the Internet and electronic commerce." Parks added that the addition of ATI's services group should provide the company a competitive edge in the marketplace -- as the telephony expertise gained by this purchase will be shared nationally with Alpha Microsystems' 43 offices nationwide.

This acquisition, according to ATI President Barry Smoker, also reflects a growing trend among technology and telephony providers to focus on product marketing and sales, while turning critical services issues over to organizations such as Alpha Microsystems, which delivers a commitment and a range of expertise that pure product specialists can't always match.

"We at ATI are moving ahead and growing rapidly by doing what we do best," said Smoker. "Having Alpha Microsystems take on the service and support issues we have traditionally provided, and bring to that effort their proven expertise in a whole range of increasingly related technologies, such as data network services, simply means both companies can be mutually focused on providing our installed base and future customers the best there is in after-sale support."

Alpha Microsystems (Nasdaq NM:ALMI), is dedicated to providing a consistent level of high-quality computer services such as consulting, maintenance and networking for small, mid-sized and large corporations nationwide through its AM Services Operation division with over 40 North American locations. Alpha Microsystems -- a 20-year-old, Santa Ana, Calif. company -- also serves the Internet/intranet market through its AlphaCONNECT division, which includes business-to-business software and technologies. For more information, visit the company's Web site at www.alphamicro.com . -0-

Certain statements in this press release, including statements that the ATI acquisition will potentially increase revenues by 20 percent, bring an immediate increase in revenues, provide the Company an opportunity to take advantage of an industry consolidation and leverage its infrastructure to provide a competitive edge, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties, including (i) projected revenue increases have been based on historical results that are not necessarily indicative of the results expected in future periods, (ii) the Company's ability to successfully complete and integrate acquisitions within the services industry, (iii) the ability of the Company to successfully market its services to its target markets, and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

CONTACT: Alpha Microsystems

Denny Michael, 714/641-6373

[e-mail]

or

Sterling Hager Inc.

Sterling B. Hager, Jr., 617/926-6665, Ext. 124

[e-mail]