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Company Substantially Beats Consensus Revenue and Profits; Sequential Improvement Achieved on Gross Margins and Operating Expenses; Expects Significant Growth for 2002

SONICblue attributed the substantial revenue increase to strong demand for its popular Rio digital audio players, Go-Video Dual-Deck DVD+VCRs and ReplayTV 4000 Digital Video Recorders. The Company's Rio and Go-Video businesses realized greater than 50 percent quarter-on-quarter sequential revenue growth and the Company completely sold out of its initial ReplayTV 4000 build.

SONICblue reported a pro forma fourth quarter operating loss of $6.8 million, or $0.07 per share, versus initial consensus estimates of a loss of $0.11 per share and as compared with a pro forma operating loss of $17.7 million, or $0.20 per share, in the third quarter of 2001. Pro forma operating results reflect the reported loss from operations less in-process research and development, restructuring expense and impairment charge, non-cash deferred compensation and amortization of goodwill and intangibles.

Net loss for the fourth quarter was $44.1 million, or $0.47 per share, reflecting non-cash losses from the sale of United Microelectronics (UMC) securities, goodwill amortization and income tax provisions. This compares to losses of $55.3 million, or $0.62 per share, in the third quarter of 2001. The Company sold a portion of its UMC securities in order to pay down its China Trust loan, which is now paid in full, and to fund working capital increases fueled by strong product demand. The Company ended the quarter with 128 million shares of UMC, with a market value of $185 million, based on the closing price of UMC shares on the Taiwan Stock Exchange and the prevailing U.S. dollar to New Taiwan Dollar exchange rate on December 31, 2001.

``Our strong fourth quarter performance is further validation of the successful actions we have taken in 2001 to become a profitable, broad based, digital entertainment device company,'' said John Todd, chief operating officer, SONICblue. ``This is the third consecutive quarter of sequential revenue growth improvement, sequential gross margin improvement, sequential reduction in operating expenses and reduced operating cash burn.''

``We are comfortable with the current consensus revenue guidance of $55 million for the first quarter and the increased consensus of $280 million for 2002,'' continued Todd. ``We also are comfortable with the current earnings per share consensus, which estimates a pro forma operating loss of $0.06 for the first quarter and a pro forma operating loss of $0.05 for the full year, and we are comfortable with consensus estimates of returning to profitability in the third quarter.''

``We are very pleased with our strong fourth quarter and the sequential progress we've achieved throughout 2001,'' said Ken Potashner, CEO and chairman, SONICblue. ``Our current momentum has us enthusiastic about our prospects for 2002. We have expanded our product offerings, increased our retail relationships and formed new partnerships that we expect will enable us to accomplish our 2002 growth objectives.''

Investor Conference Call

Please dial in at least ten minutes prior to the conference in order for the operator to connect you to the call. The domestic dial in number for the live audio call beginning at 2:00 p.m. Pacific Time is: (888) 928-9177, International: (712) 257-3686 Passcode: Earnings.

The conference call will also be available online. To access the live webcast please visit: http://www.SONICblue.com/company/investor_relations.asp.

A replay of the call will be available from 3:00 p.m. Pacific Time on Feb. 6th until 6:00 p.m. on Feb. 13th on both the SONICblue website and by dialing: (800) 945-5759, International: (402) 220-3546 Passcode: Earnings.

About SONICblue Incorporated (www.SONICblue.com)

SONICblue is a leader in the converging Internet, digital media, entertainment and consumer electronics markets. Working with partners that include some of the biggest brands in consumer electronics, SONICblue creates and markets products that let consumers enjoy all the benefits of a digital home and connected lifestyle. SONICblue holds significant financial assets, global marketing capabilities and a focused technology portfolio that includes Rio® digital audio players; ReplayTV® personal television technology and software solutions; Go-Video® Dual-Deck(TM) VCRs and integrated DVD+VCRs and California Audio Labs(TM) high-end home entertainment theater components.

Except for the historical information contained herein, the matters set forth in this press release, including statements as to the Company's expectations regarding revenues, earnings per share, pro forma operating losses and profitability during 2002, as well as growth objectives and prospects for 2002, and the expected benefits of the Company's expanded product offerings, increased retail relationships and new partnerships, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially, including, but not limited to, the Company's ability to implement its business plan and reduce expenses, the impact of competitive products and pricing and of alternative technological advances, fluctuations in consumer demand due to economic developments and uncertainties, and other risks detailed from time to time in the SEC reports of SONICblue Incorporated, including its quarterly report on Form 10-Q for the quarter ended September 30, 2001. These forward-looking statements speak only as of the date hereof. SONICblue disclaims any obligation to update these forward-looking statements.

SONICblue is a trademark of SONICblue Incorporated. ReplayTV is a registered trademark of ReplayTV, Inc. Go-Video is a registered trademark of Sensory Science, Corp. Rio is a registered trademark of RioPort, Inc. and is used by SONICblue under license from RioPort, Inc. All other products and brand names as they appear in this release are trademarks or registered trademarks of their respective holders.

                        SONICBLUE INCORPORATED
                 CONDENSED CONSOLIDATED BALANCE SHEETS
            (In thousands, except share and per share data)

                                ASSETS

                                                      December 31,
                                                  2001           2000
Current assets:
  Cash and equivalents                     $    15,251    $    36,582
  Investment - UMC                              75,907        228,673
  Short-term investments                         6,830          9,017
  Accounts receivable                           30,986         66,212
  Inventories                                   20,571         86,727
  Prepaid expenses and other                     8,003         35,262
    Total current assets                       157,548        462,473
Property and equipment - net                     7,218         24,761
Investment - UMC                                86,886        406,363
Deferred income taxes                           15,197             --
Goodwill and intangible assets                 128,426        162,381
Other assets                                    18,232         43,327
    Total                                  $   413,507    $ 1,099,305

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                         $    68,590    $    99,296
  Notes payable                                 15,826         72,672
  Accrued liabilities                           85,710         53,641
  Deferred income taxes                         15,197         69,563
    Total current liabilities                  185,323        295,172
Deferred income taxes                               --         25,140
Other liabilities                               22,764          4,040
Convertible subordinated notes                 103,300        103,300
    Total liabilities                          311,387        427,652

Stockholders' equity:
  Common stock                                       9              9
  Additional paid-in capital                   583,922        602,557
  Unearned stock based compensation             (3,801)            --
  Accumulated other comprehensive
   gain (loss)                                     993       (199,599)
  Retained earnings (accumulated deficit)     (479,003)       268,686
    Total stockholders' equity                 102,120        671,653
    Total                                  $   413,507    $ 1,099,305



                        SONICBLUE INCORPORATED
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data)

                         THREE MONTHS ENDED            YEAR ENDED
                           DECEMBER 31,                DECEMBER 31,
                          2001         2000         2001         2000

Net sales            $  79,646    $  99,205    $ 213,823    $ 536,704

Cost of sales           65,332      109,293      275,578      548,616
Gross profit (loss)     14,314      (10,088)     (61,755)     (11,912)

Operating expenses:
 Research and
  development            4,958       19,725       28,706       83,433
 Selling, marketing
  and administrative    16,119       38,750       94,350      126,852
 In-process research
  and development           --           --        5,078           --
 Restructuring
  expense and
  impairment charge        864       (2,287)     130,323        6,694
 Non-cash deferred
  compensation             605           --          901           --
 Amortization of
  goodwill and
  intangibles            5,391       11,086       32,785       44,440
    Total operating
     expenses           27,937       67,274      292,143      261,419
Loss from operations   (13,623)     (77,362)    (353,898)    (273,331)

Gain (loss) on UMC
 investment            (15,938)      (4,348)    (561,610)     869,401
Gain (loss) on other
 investments            (2,704)      (1,997)     (27,413)      (5,456)
Gain on sale of
 manufacturing
 joint venture              --           --           --       14,738
Interest expense        (2,051)      (3,196)     (10,895)      (9,181)
Other income
 (expense), net          1,703       (5,311)       3,369       (1,865)
Income (loss)
 before income
 taxes                 (32,613)     (92,214)    (950,447)     594,306
Income tax
 expense (benefit)      11,475      (24,705)    (202,758)     281,478
Net income (loss)    $ (44,088)   $ (67,509)   $(747,689)   $ 312,828
Earnings per
 share amounts:
  Basic              $   (0.47)   $   (0.72)   $   (8.62)   $    3.46
  Diluted            $   (0.47)   $   (0.72)   $   (8.62)   $    3.13

Shares used in computing per share amounts:
  Basic                 93,790       93,313       86,725       90,390
  Diluted               93,790       93,313       86,725      101,150

Contact:

     SONICblue
     Heather Stanger, 408/588-8060 (Press)
     hstanger@SONICblue.com
     Tracy Perry, 408/588-8086 (Investor Relations)
     tperry@SONICblue.com