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Tuesday July 17, 4:14 pm Eastern Time

Press Release

Pixelworks Reports Second Quarter Financial
Results

Record Revenue Exceeds April Outlook

TUALATIN, Ore.--(BUSINESS WIRE)--July 17, 2001--Pixelworks, Inc.
(Nasdaq:PXLW - news):

Selected Highlights

    Record second quarter revenue of $22.7 million increases 88 percent over the
    second quarter of 2000 and 7 percent sequentially; exceeds April outlook of $22.5
    million
    Gross profit margin increases to 47.3 percent in the second quarter from 43.4
    percent in the first quarter; sixth consecutive quarter of improvement
    Record pro forma net income(a) of $3.5 million increases for eighth consecutive
    quarter
    (a) Pro forma net income (loss) represents net income (loss) excluding non-cash
    expenses for the amortization of goodwill and assembled workforce, patent
    settlement expense, in-process research and development expense, amortization of
    deferred stock compensation, accretion of preferred stock redemption preference
    and preferred stock beneficial conversion feature. Net income (loss) excluding these
    expenses differs from net income (loss) according to generally accepted accounting
    principles.

Pixelworks, Inc. (Nasdaq:PXLW - news), the leading provider of system-on-a-chip ICs
for the advanced display market, today announced financial results for the second quarter
ended June 30, 2001.

Revenue for the second quarter of 2001 was $22.7 million, an 88 percent increase over
revenue of $12.1 million in the second quarter of 2000 and 7 percent increase sequentially
from the first quarter of 2001.

Pro forma net income(a) for the second quarter was $3.5 million, a 194 percent increase
from the second quarter of 2000 and up 14 percent sequentially. Pro forma earnings for the
second quarter were $0.08 per diluted share, up 142 percent from $0.03 in the second
quarter of 2000 and up 9 percent sequentially.

Non-cash charges recorded in the second quarter in accordance with generally accepted accounting principles included $4.4
million for amortization of goodwill and assembled workforce related to the acquisition of Panstera, Inc., and $2.5 million for
amortization of deferred stock compensation, of which $2.2 million was related to the acquisition of Panstera, Inc. Including
these non-cash charges, net loss for the second quarter was $3.4 million, or $0.08 per diluted share, compared to net income
of $0.6 million, or $0.02 per diluted share, in the second quarter of 2000 and a net loss of $34.1 million, or $0.87 per diluted
share, in the first quarter of 2001.

``We were very pleased to have another quarter of record revenues despite a very tough economic environment. Our financial
performance for the second quarter continued to show that we are executing across all segments of our business,'' said Allen
Alley, president, CEO, and chairman of Pixelworks. ``Our flat panel monitor business was again the fastest growing segment
with over 150 percent revenue growth year over year.''

``I couldn't be more pleased with the development of the company and our competitive position,'' Alley added.

``The building blocks we have put in place over the last year, in the form of strategic partnerships, the acquisition of Panstera,
and other investments both inside and outside the company, have put us in position to continue rolling out the broadest
product line-up in the industry over the next twelve months,'' concluded Alley.

Business Outlook

The following statements are based on current expectations. These statements are forward-looking, subject to risks and
uncertainties, and actual results may differ materially. These statements do not include the potential impact of any investments
outside the ordinary course of business, or mergers or acquisitions that may be completed after June 30, 2001. Readers are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press
release. The inclusion of any statement in this release does not constitute a suggestion by the company or any other person that
the events or circumstances described in such statements are material. The company does not undertake to publicly update or
revise these forward-looking statements even if experience or future changes make it clear that any projected results
expressed or implied in this release will not be realized.

    The company estimates revenue of approximately $24.5 to $25.5 million in the third quarter. Revenue in the fourth
    quarter is anticipated to increase 8 to 12 percent over the third quarter. Revenue is highly dependent on a number of
    factors including, but not limited to, general economic conditions, timely new product introductions, the company's
    ability to secure additional design wins with customers, growth rates in the flat panel monitor, multimedia projector, and
    advanced television markets, and increased supply of products from the company's third party foundries.
    The company expects gross profit margins of approximately 46 to 47 percent in the second half of 2001. Gross profit
    margins may be higher or lower than expected due to many factors including, but not limited to, competitive pricing
    actions, changes in estimated product costs, and changes in estimated product mix.
    The company expects combined operating expenses for R&D and SG&A to range from $9.0 to $9.2 million in the
    third quarter, and $9.5 to $10.0 million in the fourth quarter.
    The company expects non-cash charges related to the amortization of deferred stock compensation to be
    approximately $2.5 million per quarter for the remainder of 2001. The company expects non-cash charges from the
    acquisition of Panstera, Inc. for amortization of goodwill and assembled workforce to be approximately $4.4 million
    per quarter for the remainder of 2001.
    The company expects interest income of approximately $1.0 million per quarter in the third and fourth quarters. This
    estimate is dependent on no material change to average cash balances and interest rates from those at June 30, 2001.
    The company expects no tax provision will be necessary in 2001.

Gruß Hans-Udo
 

das darf nicht wahr sein, aber trotzdem viel Spaß mit deinen PXLW. Ich war etwas zurückhaltend, weil die so stark nachgegeben hatten...