Zoran Reports Fourth Quarter and Year End 2008 Results

DTV Revenues Grow 59 Percent Annually, Achieving Records in Revenues and Units Shipped

SUNNYVALE, CA — Zoran Corporation (NASDAQ: ZRAN), a leading provider of digital solutions for applications in the digital entertainment and digital imaging markets, today reported results for its fourth quarter and year ended December 31, 2008.

Revenues for the fourth quarter were $74.7 million, compared to $126.1 million last quarter and $129.4 million for the fourth quarter of 2007. The Company reported a fourth quarter GAAP net loss of $20.2 million, or $0.40 per share, which includes $3.1 million for stock-based compensation expense, $109 thousand for amortization of acquired intangible assets and an adjustment of the tax provision to a non-GAAP rate of $6.5 million. This compares with a net loss of $154.2 million, or $3.01 per share, for the previous quarter and net income of $58.7 million, or $1.11 per diluted share, for the fourth quarter last year. As a reminder, the previous quarter’s net loss included non-cash charges of $167.6 million for impairment of intangible assets.

Non-GAAP net loss for the fourth quarter was $10.5 million, or $0.21 per share, which excludes charges related to the amortization of acquisition-related purchased intangible assets, stock-based compensation expenses and the adjustment of the tax provision to a non-GAAP rate. This compares with non-GAAP net income of $13.9 million, or $0.27 per diluted share, for the previous quarter, and $18.1 million, or $0.34 per diluted share, for the same period last year.

For the full year 2008, revenues were $438.5 million, compared to $507.4 million for 2007. GAAP net loss for 2008 was $215.7 million, or $4.20 per diluted share, compared to net income of $66.2 million or $1.29 per diluted share for the full year 2007. Non-GAAP net income for 2008 was $8.4 million, or $0.16 per diluted share. This compares with non-GAAP net income of $70.9 million, or $1.37 per diluted share for 2007.

“At the onset of 2008, we stated that revenues from our DTV and mobile phone processor product lines would grow substantially throughout the year and we are pleased that despite the worldwide recession, we were able to deliver on this objective,” said Dr. Levy Gerzberg, Zoran’s president and chief executive officer. “DTV grew 59 percent on an annual basis and mobile phone processors increased nearly five-fold during the same period. These strong results were not enough to offset the impact of the deteriorating economy on our remaining markets however, and we do not expect any near-term improvements in those markets. Our focus remains on managing our resources and controlling expenses and we are pleased to have generated nearly $26 million in cash from operations during the quarter, enabling us to begin the year with $396 million in cash and short-term investments and long-term investments. We have multiple new product introductions scheduled for 2009 and continue to see solid design win activity for existing product lines, positioning us well for when the economy recovers.”

Recent Highlights

• Revenues by product line for the fourth quarter of 2008 were 36 percent Digital Camera, 23 percent DTV, 23 percent Printer Imaging, 10 percent DVD, 7 percent mobile phone processors and 1 percent other
• Zoran demonstrated new HDTV, Set-Top Box, Digital Camera, HD DVD, Multimedia Mobile Phone, Printer and Connected Technologies at CES 2009
• Over 70 new consumer electronic product models Powered by Zoran were displayed at CES 2009
• Products powered by Zoran gained CES 2009 Innovation recognition, including Aiptek’s Portable Media Player PocketCinema V10, Samsung’s Upconverting DVD Player DVD-H1080, and new digital camera models under major brand names
• Flip Mino HD from Pure Digital using Zoran’s COACH digital camera technology was named “Gadget of the Year” by Freep.com and listed under PC World’s Best Products of CES 2009
• Printing devices using Zoran’s IPS Software Solution won industry awards again in 2008
• Zoran shipped new SupraHD® 775 & SupraHD® 785 HDTV Processors with Advanced Audio Processing and Color Management capabilities

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