SMSC Updates Fourth Quarter Revenue and Earnings Expectations.

Business/Technology Editors

HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Feb. 26, 2001

Standard Microsystems Corporation (Nasdaq:SMSC) announced today that it expects revenues for the fourth quarter ending February 28, 2001 to be between $31 million and $33 million and income (loss) per share from continuing operations to be between ($0.04) and breakeven.

SMSC's fourth quarter results will reflect a reduction of its annual effective income tax rate due, in part, to an increased proportion of non-taxable income from short-term investments. These estimates for fiscal fourth quarter 2001 compare with actual revenues of $33.9 million and income from continuing operations of $0.02 per share for the same period in fiscal 2000.

Normal seasonal weakness in demand in the fiscal fourth quarter has been compounded by adverse economic conditions. Therefore, results for the fourth quarter ending February 28, 2001 will fall short of Company guidance issued at the start of the quarter. SMSC had previously stated that it expected fourth quarter results to be ahead of the comparable year-ago quarter.

"At the start of the quarter, SMSC stated that visibility was uncertain," commented Steven J. Bilodeau, Chairman and Chief Executive Officer of Standard Microsystems Corporation. "Since then, declining economic conditions have had a significant negative impact throughout the semiconductor industry, and SMSC's fiscal fourth quarter results have been impacted similarly. However, the Company has performed well over the past four quarters and we have made significant progress in the execution of our operational business plan. Despite a weak fourth quarter, we expect to deliver revenue and earnings growth for the full year and, excluding significant increases in research and development, an increase in operating income for the year. We have continued to secure strategic design wins and build market share, and our long-term growth strategy remains on track."

Further commenting on SMSC's financial outlook, Andrew M. Caggia, Senior Vice President and Chief Financial Officer, said, "Given the current economic outlook, we believe that revenues for the first quarter of fiscal 2002 will be flat on a sequential basis and anticipate that gross margins will continue to be approximately 40%. We are well positioned to produce stronger results when the economy improves. Our current fiscal 2002 plan calls for a year-over-year increase in revenue and earnings, before gains on security sales, despite a weaker first half. Fundamentally, SMSC remains strong and we are confident in our ability to manage operations through this anticipated period of softer demand."

Audited results for the fiscal fourth quarter and year ending February 28, 2001 will be released in early April.

About SMSC

SMSC is a worldwide supplier of metal-oxide-semiconductor/very large-scale integrated (MOS/VLSI) circuits for the personal computer, peripherals and embedded systems marketplaces. The Company's products provide solutions in Advanced Input/Output (I/O) technology, Systems Logic, USB Connectivity, Local Area Networking and Embedded Control Systems. SMSC is the world's leading supplier of PC I/O integrated circuits.

Standard Microsystems is based in Hauppauge, New York and maintains offices worldwide, including locations in North America, Asia, Europe and Japan. SMSC operates engineering design centers in San Jose, CA; Westborough, MA; Hauppauge, NY and Austin, TX. More information about the Company is available on the World Wide Web at http://www.smsc.com.

Forward Looking Statements

Except for historical information contained herein, the matters discussed in this announcement are forward-looking statements that involve risks and uncertainties, including the timely development and market acceptance of new products, the impact of competitive products and pricing, the effect of changing economic conditions, and such risks and uncertainties as are detailed from time to time in the Company's reports filed with the SEC. Investors are advised to read the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, particularly those sections entitled "Other Factors That May Affect Future Operating Results" for a more complete discussion of these and other risks and uncertainties.

Standard Microsystems is a registered trademark and SMSC is a trademark of Standard Microsystems Corporation. Product names and company names are the trademarks of their respective holders.