C-Cube reports revenues and profits for first quarter of 1997; Q1 revenues up 38 percent from Q1 prior year.

MILPITAS, Calif.--(BUSINESS WIRE)--April 10, 1997--C-Cube Microsystems Inc. (NASDAQ:CUBE), a market leader in digital video, today announced financial results for its first fiscal quarter, which ended March 31, 1997.

Revenues for the first quarter were $94.1 million, up 38 percent from the $68.1 million reported in the first quarter of 1996 and down 1 percent from the $95.5 million reported in the fourth quarter of 1996.

Net income for the first quarter was $15.4 million, or $0.41 per share on 37.9 million shares, up 13% compared with $13.6 million, or $0.38 per share on 36.0 million shares, in the first quarter of 1996 and down 11% compared with $17.3 million, or $0.45 per share on 38.6 million shares, in the fourth quarter of 1996.

"During the first quarter of 1997, C-Cube continued to lead the digital video market by introducing several advanced digital video products," said Alex Balkanski, president and chief executive officer of C-Cube Microsystems.

"The company began volume production of the leading CL680 Advanced Video CD Decoder, spurring leading OEMs to upgrade from earlier C-Cube products in order to deliver next-generation VideoCD capability. In February C-Cube delivered its ZiVA DVD decoder family, the first integrated audio/video DVD decoding solutions to be certified by Dolby as AC-3 compliant. The company also introduced the CLM4730Z encoding technology, the first MPEG-2 statistical variable bit rate chipset capable of encoding an entire film onto DVD in real time."

About C-Cube Microsystems

C-Cube Microsystems Inc. is the industry leader in the development and delivery of highly integrated digital video silicon solutions that address the consumer electronics, communications and convergence markets. Divicom, the leading provider of digital video networking systems and solutions, is a wholly owned subsidiary of C-Cube. C-Cube employs 706 people and is headquartered in Milpitas, with offices in North America, Europe, and Asia. Its stock is traded on the NASDAQ National Market System under the symbol CUBE. C-Cube can be reached at 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. -0-

                        C-CUBE MICROSYSTEMS INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (In thousands, except per share amounts)
                              (Unaudited)

                                             Quarter Ended March 31,
                                                1997         1996
Net revenues:
  Product                                     $94,132      $67,900
  Development contracts                            --          200
     Total                                     94,132       68,100
Costs and expenses:
  Cost of product revenues                     40,975       31,979
  Research and development                     15,612        6,850
  Selling, general and administrative          13,070        7,800
     Total                                     69,657       46,629
Income from operations                         24,475       21,471
Other income (expense), net                    (1,067)         471
Income before income taxes
 and minority interest                         23,408       21,942
Income tax expense                              7,958        7,680
Income before minority interest                15,450       14,262
Minority interest in net income
 of subsidiary                                     55          681
Net income                                    $15,395      $13,581
Net income per share                            $0.41        $0.38
Shares used in computation                     37,944       36,042


                        C-CUBE MICROSYSTEMS INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)

                                              March 31,   Dec. 31,
                                                1997        1996
                                             (Unaudited)
ASSETS
Current assets:
  Cash and equivalents                        $103,731    $76,241
  Short-term investments                         4,985      6,005
  Receivables -- net                            54,856     40,706
  Inventories                                   19,607     28,056
  Deferred taxes and other current assets       31,354     41,669
          Total current assets                 214,533    192,677
  Property and equipment -- net                 24,101     22,653
  Production capacity rights                    45,150     46,200
  Distribution rights -- net                     1,771      1,812
  Purchased technology -- net                   12,023     12,895
  Other assets                                   3,200      3,278
          Total                               $300,778   $279,515

LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
  Notes payable                                $24,500    $24,500
  Accounts payable                              18,662     18,320
  Accrued liabilities                           24,163     24,533
  Current portion of long-term obligations         780        837
          Total current liabilities             68,105     68,190
  Long-term obligations                         92,418     92,140
          Total liabilities                    160,523    160,330
Minority interest in subsidiary                    668        613
Stockholders equity:
  Common stock                                 196,432    191,044
  Deferred stock compensation                     (144)      (250)
  Notes receivable from stockholders                --       (305)
  Accumulated translation adjustments           (1,381)    (1,238)
  Unrealized loss on investments                   (49)       (13)
  Accumulated deficit                          (55,271)   (70,666)
          Total stockholders equity            139,587    118,572
          Total                               $300,778   $279,515

CONTACT: C-Cube Microsystems

John Hagedorn, 408/944-6300

Mary Sharpless-Giani, 408/944-8628 (Media Contact)

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