Ariel reports third quarter results - sales increase 53%.

CRANBURY, N.J.--(BUSINESS WIRE)--October 24, 1996--Ariel Corporation (Nasdaq:ADSP), a leading digital signal processing technology company, today announced sales of $3,760,367 for the three months ended September 30, 1996, a 53% increase from sales of $2,462,287 reported for the three months ended September 30, 1995.

For the three months ended September 30, 1996, Ariel reported a net loss of $1,765,142, or ($0.20) per share, compared with a net loss of $863,959, or ($0.18) per share, for the three months ended September 30, 1995.

Ariel's sales for the nine months ended September 30, 1996 rose 33% to $8,943,415 from the $6,737,249 reported for the nine months ended September 30, 1995. For the nine months ended September 30, 1996, Ariel reported a net loss of $5,501,660, or ($0.72) per share, compared with a loss of $2,331,512, or ($0.51) per share, for the nine months ended September 30, 1995. The net loss for the nine months ended September 30, 1996, includes non-recurring severance costs of approximately $335,000, or $0.04 per share, associated with certain management personnel.

Anthony M. Agnello, Chairman and Chief Executive Officer of Ariel, said, "Our third quarter revenue increase is a result of shipments of Ariel's OEM DSP products as well as initial shipments of Ariel's high-density Computer Telephony modems." Mr. Agnello also noted that third quarter bookings were over 200% higher compared to the prior year period. A substantial portion of the bookings increase is a result of orders received for Ariel's high-density Computer Telephony modem products - CTI-Modem and T-1 Modem. Bookings for the first nine months of calendar year 1996 are approximately 97% ahead of the prior year period.

Ariel is a worldwide expert in applying advanced technologies to create innovative products for emerging markets. Ariel's products service three market segments: ADSL Data Communications, Commercial-Off-The-Shelf (COTS) DSP, and Computer Telephony Integration (CTI). Ariel's success is rooted in engineering excellence. Founded by engineers in 1982, the Company has played a leading role in the application and proliferation of digital signal processing technology.

For more information, please contact Ariel Corporation at 2540 Route 130, Cranbury, NJ 08512. Phone [phone]. Fax [phone]. e-mail:[e-mail]. World Wide Web:Http//www.ariel.com. -0-

                             ARIEL CORPORATION
                         STATEMENTS OF OPERATIONS
                                (Unaudited)

                               Three Months Ended      Nine Months Ended
                                  September 30,          September 30,
                               1996        1995         1996        1995

SALES                      $3,760,367  $2,462,287  $8,943,415  $6,737,249
COST OF GOODS SOLD          1,886,051   1,121,252   4,583,584   3,334,136

    GROSS PROFIT            1,874,316   1,341,035   4,359,831   3,403,113

EXPENSES:
 SALES AND MARKETING        1,024,198     750,216   2,972,661   1,977,163
 GENERAL AND ADMINISTRATIVE 1,045,844     769,854   3,158,795   2,080,644
  RESEARCH AND DEVELOPMENT  1,806,204     729,903   4,280,640   1,816,742

    LOSS FROM OPERATIONS   (2,001,930)   (908,938) (6,052,265) (2,471,436)

INTEREST INCOME               205,919      49,121     519,587     148,090

INTEREST EXPENSE               (9,773)     (8,544)    (28,840)    (26,158)

OTHER INCOME                   40,642       4,402      59,858      17,992

 LOSS BEFORE INCOME
  TAX BENEFIT                _________     _______   _________   _________
       (PROVISION)         (1,765,142)   (863,959) (5,501,660) (2,331,512)

 INCOME TAX BENEFIT
       (PROVISION)                  0           0           0           0
                             _________    _________  _________   _________
           NET LOSS
                          ($1,765,142) ($863,959) ($5,501,660) ($2,331,512)

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES
  OUTSTANDING               8,813,487  4,758,625    7,660,248    4,611,681


NET LOSS PER COMMON SHARE      ($0.20)    ($0.18)      ($0.72)      ($0.51)

CONTACT Anthony M. Agnello

Chairman & CEO

Gerard E. Dorsey, CFO

Ariel Corporation

609-860-2900

or

Carl Hymans

Polly Riemenschneider

G.S. Schwartz & Co.

212-725-4500