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Revenues for the year ended December 31, 1999, totaled $310.7 million, an increase of 42 percent from fiscal 1998 revenues of $218.3 million. Net income for the year was $40.1 million, or $0.88 per share, compared to a net loss of ($28.0) million or ($0.68) per share, for the year ended December 31, 1998.

``During the fourth quarter, ESS attained record revenues and continued to grow profits,'' stated Robert Blair, President and Chief Executive Officer of ESS. ``Additionally, we shipped over 500,000 DVD units, making this one of the fastest ramping products in ESS history. We established a strategic relationship with a major e-commerce portal in China, and announced today that our subsidiary, ViAlta.com, was taking an equity position in this portal.

``We continued to introduce new products and gained new design wins across all product lines to support our continued expansion and future growth. Overall, this was an outstanding quarter for ESS,'' Mr. Blair concluded.

Fred Chan, ESS Chairman and Chairman and CEO of ViAlta.com, added, ``During this quarter ViAlta continued its progress. We announced a new line of Internet appliances at the Consumer Electronics Show and are acquiring an equity position in China E-Commerce Technology, the only nationwide secure e-commerce portal in China today. Both of these accomplishments position ViAlta to be a key Internet player, both in the US and in the rapidly growing Chinese marketplace,'' he concluded.

ESS Technology

ESS Technology, Inc., a leader in Internet, communications, PC audio and digital video, provides advanced products enabling the convergence of communications, computer, consumer, and Internet markets.

ESS's subsidiary, ViAlta.com, Inc. plans to introduce advanced, user friendly products and applications for the Internet. Products will include multi-media appliances, applications and content for the Internet, which enable the user to experience new levels of entertainment and e-Commerce.

ESS, headquartered in Fremont, California, has R&D, sales, and technical support offices worldwide. ESS Technology's common stock is traded on the Nasdaq under the symbol ESST. ESS's web site address is: http://www.esstech.com.

The matters discussed in this news release include certain forward looking statements that involve risks and uncertainties, including, not limited to, the timely availability and acceptance of the Company's new products, the impact of competitive products and pricing, the dependence on continued growth in demand for PC and consumer multimedia products, as well as the other risks detailed from time to time in the SEC reports of ESS, including the reports on Form 10-K and Form 10Q. Actual results could differ materially from those projected in the forward-looking statements.

                             ESS TECHNOLOGY, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share data)
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     1999       1998      1999        1998

    Net revenues                   $88,728     $78,232   $310,651  $218,252
    Cost of revenues                55,660      56,326    191,529   182,417
    Gross profit                    33,068      21,906    119,122    35,835

    Operating expenses:
     Research and development       10,079       7,370     37,383    30,529
     Selling, general and
      administrative                11,306       9,813     39,735    36,289
     Operating income (loss)        11,683       4,723     42,004  (30,983)
    Nonoperating income              1,766         296      5,178     1,478
    Income (loss) before
     provision for (benefit
     from) income taxes             13,449       5,019     47,182  (29,505)
     Provision for (benefit
     from) income taxes              2,017         251      7,077   (1,489)
    Net income (loss)              $11,432      $4,768    $40,105 $(28,016)
    Net income (loss) per
     share - basic                  $ 0.28       $0.12      $0.99   $(0.68)
    Net income (loss) per
     share - diluted                $ 0.24       $0.11      $0.88   $(0.68)
    Shares used in calculating
     net income (loss) per
     share - basic                  41,143      40,991     40,640    40,955
    Shares used in calculating
     net income (loss) per
     share - diluted                46,677      44,566     45,625    40,955

                             ESS TECHNOLOGY, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)
                                 (unaudited)

                                                     Dec. 31        Dec. 31
                                                      1999           1998

    ASSETS
    Current Assets:
     Cash and cash equivalents                       $40,413        $65,752
     Cash and cash equivalents - ViAlta               90,500             --
     Short-term investments                           28,274         16,719
     Short-term investments - ViAlta                  22,344             --
     Accounts receivable, net                         34,362         37,830
     Inventories                                      42,347         22,882
     Deferred income taxes                            10,758          6,372
     Prepaid expenses and other assets                 2,199          4,142
       Total current assets                          271,197        153,697
    Property, plant and equipment, net                40,564         38,000
    Other assets                                       9,266         22,948
                                                    $321,027       $214,645

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
     Accounts payable and accrued expenses           $72,303        $57,930
     Income taxes payable and
      deferred income taxes                           12,285         14,643
       Total current liabilities                      84,588         72,573
    Minority Interest                                 52,860             --
    Shareholders' equity:
     Common stock                                    140,597        137,312
     Retained earnings                                42,982          4,760
       Total shareholders' equity                    183,579        142,072
                                                    $321,027       $214,645

SOURCE: ESS Technology, Inc.