STOCKREPORTS

Oak Technology, Inc.

NASDAQ Symbol OAKT

Recent Price 10.19 52 Wk Range 14.50 - 6.19

Yield Nil 12-Mo. P/E NM

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) NA Fair Value NA Risk HIGH Earn/Div Rank NR
Technical Evaluation: BULLISH since 06/97 Rel. Strength Rank (1 Lowest - 99 Highest) 57 Insider Activity Neutral

Business Profile 08-JUL-97

A sudden and sharp decline in CD-ROM controller sales experienced in the fourth quarter of FY 96 (Jun.) continued into the first nine months of FY 97, reflecting inventory adjustments among CD-ROM drive makers. To combat this type of risk, OAK is diversifying its product and market mix. Offerings are being expanded to include MPEG decoders for the VideoCD and DVD consumer markets, 2-D and 3-D graphics accelerators and audio products for the multimedia market and image processors for the office equipment market.

Operation Review 08-JUL-97

Net revenues in the nine months ended March 31, 1997, decreased 48%, year to year. Gross margins widened, benefiting from an adjustment to cost of sales associated with the sale of products that had been fully reserved in a prior period (this adjustment increased third quarter income by $0.08 a share). Despite the wider gross margins, results were hurt by the lower volume, and after increased R&D and SG&A expenses, operating income fell 67%. In the absence of a $4.8 million charge for in-process R&D, net income declined 60%, to $21,075,000 ($0.49 a share), from $53,633,000 ($1.26).

Stock Performance 18-JUL-97n

In the past 30 trading days, OAKT's shares have increased 9%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 426,000 shares, compared with the 40-day moving average of 390,926 shares.

Key Stock Statistics

Fiscal Year Ending Jun. 30

Dividend Data: No cash dividends have been paid. The company intends to retain its earnings for use in its business and does not anticipate paying cash dividends in the foreseeable future. A two-for-one stock split was effected in March 1996.

Business Summary 08-JUL-97

Oak Technology supplies high-performance multimedia semiconductors and related software to the PC, PC peripheral and PC-based consumer electronics industries. Semiconductor products are developed in four key multimedia categories, optical storage, compression/imaging, video/graphics and PC audio.

Optical storage products include CD-ROM controllers that decode CD-ROM data according to industry standard formats. Certain controllers include automated command completion, automated packet handling and enhanced reset features, and high performance firmware that minimizes CPU utilization and increases both CD-ROM drive and system performance.

Compression/imaging products include an MPEG video decoder, which allows MPEG playback to be integrated cost effectively into PCs and consumer products, and a bi-tonal video compression/expansion processor, which is used in document storage and retrieval systems, laser printers, high performance fax machines and document imaging systems.

Video/graphics products currently include the Spitfire, a high performance 64-bit video/graphics accelerator that provides integrated multimedia support with the industry's first 16-bit multimedia port and a shared frame buffer memory architecture, which enables high quality, full-motion video to be brought to desktop PCs in a cost effective manner.

PC audio products include the Mozart single-chip, integrated digital sound controller that supports Sound Blaster and WSS Standards and has a digital audio processor and interface logic for AT bus, MIDI, Windows Sound System, FM and wavetable synthesis, mixer, game port, sound port and CD-ROM drive, and Mozart boards, which are designed to a customer's specific requirements and may include FM synthesis or wavetable synthesis.

Products are sold primarily to manufacturers of CD-ROM drives, PCs and add-in boards. In FY 96 (Jun.), Mitsumi Electric Co., Ltd. accounted for 26% of net revenues. The geographic breakdown of sales in FY 96 was: Japan 66%, Taiwan 19% and U.S. 15%.

Important Developments

Jun. '97 Oak unveiled Troika, an integrated MPEG-2/Dolby digital digital video disc (DVD) decoder for the consumer electronics and PC markets. Troika is a single-chip DVD decoder and presentation engine that integrates key functions of DVD such as MPEG-2 and MPEG-1 video decompression, Dolby Digital, MPEG-1 and Linear PCM (LPCM) audio decompression, sub-picture decoding, audio/video synchronization, on-screen display (OSD) and demultiplexing.

Capitalization

Long Term Liabilities: $9,463,000 (3/97).

Curr. Ratio	4.8	6.8	1.6	NA	NA	NA	NA	NA	NA	NA
% LT Debt of Cap.	1.3	1.4	14.1	NA	NA	NA	NA	NA	NA	NA
% Net Inc.of Revs.	15.0	19.1	9.0	NM	NA	NA	NA	NA	NA	NA
% Ret. on Assets	16.5	19.1	NA	NA	NA	NA	NA	NA	NA	NA
% Ret. on Equity	19.9	24.3	50.3	NA	NA	NA	NA	NA	NA	NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--139 Kifer Court, Sunnyvale, CA 94086. Tel--(408) 737-0888. Website--http://www.oaktech.com Chrmn, Pres & CEO--D. D. Tsang. EVP & COO--D. R. Bryson. VP-Fin, CFO & Secy--S. S. Faulkner. Dirs--R. B. Black, D. R. Bryson, T. Hsu, T. Tomlinson, D. D. Tsang. Transfer Agent--First National Bank of Boston. Incorporated--in California in 1987; reincorporated in Delaware in 1995. Empl-- 370. S&P Analyst: A.T.

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997