see thes ABU OMER AND ABU BADER FREMONT, Calif., Jun 24, 2002 /PRNewswire-FirstCall via COMTEX/ -- ESS Technology, Inc. (Nasdaq: ESST), the world's leading provider of DVD and VCD chips today announced updated guidance for the third quarter of 2002. ESS expects third quarter revenue and earnings to exceed previous guidance. The Company expects third quarter revenue to be approximately $86 - $90 million, compared with previous guidance of $82 - $87 million. The Company also expects gross margins to be in-line with or above previous guidance of 38% - 40% and net income per diluted share of between $0.35 - $0.38 in the third quarter, compared to previous guidance of $0.25 to $0.30. The Company also reiterated its current second quarter expectation of revenue greater than $84 million, compared with previous guidance of $76 - $79 million. The Company expects gross margins to be above previous guidance of 38% - 40% and net income per diluted share of greater than $0.34 in the second quarter, compared to previous guidance of $0.24 to $0.28. Robert Blair, president and CEO of ESS Technology said, "ESS Technology continues to see strong demand for digital entertainment products both for the current quarter and throughout the balance of 2002. We also see continued strong margins because of the introduction of more functions and features in our products, the increase in the percentage of our DVD revenues, and our ongoing product cost reduction efforts. We are especially excited about the market's acceptance and many new design wins for our new Vibratto DVD products with their many new features, and expect that this product family will be our largest selling product by Q3 of this year as our customers grow in their markets and we continue to expand our DVD market share." Mr. Blair continued, "We believe 2003 should be an even stronger year for ESS Technology as many of our other new products ramp into volume production. These products include our VibrattoII product family with the front-end servo, Vibratto MPEG decoder and video encoder integrated into a single DVD system-on-a-chip, the Visba3 family of VCD products which integrates a video encoder functionality into our current Visba2 decoder family to serve the growing VCD market throughout Asia, and our new MPEG encoder family of products which enables consumer entertainment products that digitally record television programs, movies and music onto hard-drives and/or DVD-recordable drives. "Overall, we believe our strategy of becoming the leader in the emerging digital entertainment market is working, and we expect to introduce innovative new products that will enable ESS to continue as the leader in the fast-growing digital video playback market while expanding our product offerings into related digital entertainment opportunities such as MPEG encoding products and set-top-boxes. We believe that our new products and our market leading position will enable ESS to continue to grow revenues and earnings in the second half of this year and in 2003. We invite our investors to join our earnings conference call on July 24th for more details about our business," Mr. Blair concluded.