Zoran's Chief Competitor in DVD Software Announced a Contract with Compaq Computers for its Presario Line Consumer PCs

Business Wire, August 31, 1998

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 31, 1998-- -0-

Zoran Corporation Inc.
(NASDAQ:ZRAN)($6 3/4)
Rating: HOLD

Rating        Hold  52-Week Range  $28 5/8-$5 13/16  Current     4.0x
                                                      Ratio

Shares Out(M) 10.0  Management Owns      40.0%     Cash/Share   $1.62

Market Cap.(M) $67  FY 98 PE/Growth       N/A      L-T Debt/     0.0%
                                                    Equity

Avg. Volume(K) 285  Float(M)              5.5      Bk. Value/   $3.14
                                                    Share

       --------------- EPS ---------------       Price/     Fiscal Yr.
       31-Mar  30-Jun   30-Sep  31-Dec  FY      Earnings       Rev.

1997A  $0.06    $0.09   $0.08   $0.15  $0.38     17.7x         $45
1998E  $0.06A  ($0.10A) $0.00   $0.04  $0.01   1337.2x         $39
1999E                                  $0.50     13.5x         $63

-0-

Mediamatics, a wholly owned subsidiary of National Semiconductor (NSM) announced a Direct Show version of its DVD playback software. Preferred Capital Markets Inc. has been expecting product and contract announcements from Mediamatics, since the Windows 98 release last June. While Preferred Capital Markets Inc. views this as a loss for Zoran, in the next few months, Preferred Capital Markets Inc. expects to see numerous announcements from both Zoran and Mediamatics, demonstrating the proliferation of DVD content in the PC.

Preferred Capital Markets Inc. expects Zoran to have a leadership position in this burgeoning industry. The sheer number of man hours spent verifying compliance within multiple systems, is an advantage over the competition. By being first to market and on its third generation of the product, Zoran has already identified and corrected many of the problems the competition has yet to experience. Preferred Capital Markets Inc. expects this market to become increasingly competitive as well as increasingly profitable as more and more content is developed for the PC.

While ZRAN has had difficulty predicting their top line growth, the company has continuously delivered on its products. Preferred Capital Markets Inc. expects product announcements later this fall to once again show the long-term strength of the company. Additionally, contract announcements this fall could improve the visibility management has towards top line growth.

Preferred Capital Markets Inc. continues to rate shares of Zoran a HOLD, and would be looking for improved revenue visibility before any upgrades were made.

Institutional Trading: Roger Levine / Doug Wasson, 800/659-1215

The information contained herein is based on data obtained from recognized market research firms, statistical services, issuer reports or communications, or other sources that are believed to be reliable. However, this information has not been verified by Preferred Capital Markets Inc. and Preferred Capital Markets Inc. therefore does not make any representations as to its accuracy or completeness. The information contained in this report is not and does not purport to be a complete analysis of every material fact respecting any company, industry or security. Preferred Capital Markets Inc. and its affiliates make no representation as to whether any of the companies mentioned herein are in compliance with the informational reporting requirements of the Securities Exchange Act of 1934. The firm makes a market in the aforementioned security.

Any statements nonfactual in nature herein constitute only current opinions or estimates, represent only the current judgment of the author(s), and are subject to change without notice. Preferred Capital Markets Inc. (or one of its affiliates) or their partners, officers, directors, analysts, employees or customers may have an interest in the securities mentioned herein and may make purchases or sales as principal or agent of these securities, or their derivatives, while this report is in circulation. A partner, employee, analyst, officer, or director of Preferred Capital Markets Inc. (or one of its affiliates) may serve as a director or consultant for any company mentioned herein. The information and opinions expressed herein do not constitute an offer or solicitation with respect to the purchase or sale of any security. Transactions in securities mentioned herein may be effected only in those states where such securities are qualified for sale. Preferred Capital Markets Inc. (or one of its affiliates) may from time to time perform investment banking services for, or solicit investment banking business or other business from, any company mentioned herein. Prices are as of Aug. 28, 1998 unless noted otherwise. Additional information on the securities discussed herein is available on request.

    CONTACT: Preferred Capital Markets Inc.
              Brian Alger, 415/733-3041
              balger@preftech.com