C-Cube Completes Acquisition of DiviCom; C-Cube Uniquely Positioned to Provide Complete Solutions for Digital Video Network Applications.

MILPITAS, Calif.--(BUSINESS WIRE)--Aug. 29, 1996--C-Cube Microsystems Inc. (NASDAQ: CUBE), the leader in digital video compression technology, today announced the completion of its acquisition of DiviCom Inc. pursuant to an agreement signed in May.

DiviCom is a digital video networking company that designs, integrates and markets complete systems for the delivery of broadcast digital video networks. C-Cube's acquisition of DiviCom positions C-Cube as the most complete solution provider for the digital video communications market.

C-Cube paid $65.7 million, issued approximately 2,291,000 shares of its common stock and assumed options excercisable for approximately 264,000 shares of its common stock in exchange for the outstanding shares of DiviCom stock that C-Cube does not already own. The acquisition is being accounted for as a purchase. C-Cube expects to incur one time charges in the third quarter associated with the acquisition of approximately $133 million dollars, based on the valuation of the transaction. Of the $133 million dollars, approximately $130 million dollars are for in-process research and development.

As a result of the acquisition, DiviCom has become a wholly-owned subsidiary of C-Cube. DiviCom will continue to operate from its headquarters in Milpitas, Calif., with Nolan Daines continuing as president and chief executive officer, reporting to Alex Balkanski, president and chief executive officer of C-Cube.

"The acquisition of DiviCom redoubles C-Cube's commitment to digital video communications," said Alex Balkanski, president and CEO of C-Cube Microsystems. "DiviCom's video networking products coupled with C-Cube's video chip level solutions will allow for the deployment of complete end-to-end video networks. DiviCom and C-Cube share the belief that the key to success in this market is to deliver and deploy complete, open architecture, interoperable, digital video systems."

"The merger of C-Cube and DiviCom furthers our business model for developing integrated end-to-end digital video networking systems," said Nolan Daines, president and CEO of DiviCom. "C-Cube provides us with opportunities for further growth, allowing us to enhance our product and service offerings to better meet the needs of our customers."

About C-Cube Microsystems

C-Cube is the leading provider of digital video semiconductor solutions, which implement international standards for digital video, including MPEG 1 and MPEG 2. C-Cube's Emmy award-winning encoder chips form the heart of digital video networks worldwide. DiviCom Inc. is a wholly owned subsidiary of C-Cube Microsystems and is a leading developer of digital video networking systems for broadcast communications applications.

C-Cube Microsystems is headquartered in Milpitas, California and has offices in North America, Europe, and Asia. The company employs 620 people worldwide. Its stock is traded on the NASDAQ National Market System under the symbol CUBE. C-Cube can be reached at +1.408.944.6300 or on the World Wide Web at http://www.c-cube.com. -0-

Note to Editors: The C-Cube logo is a registered trademark of C-Cube Microsystems Inc. C-Cube is a trademark of C-Cube Microsystems Inc.

CONTACT: C-Cube Microsystems

Jim Burke, 408/944-6300

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Mary Sharpless, 408/944-8628

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