FOR IMMEDIATE RELEASE

  READ-RITE SURGES PAST ANALYSTS� ESTIMATES WITH FIRST QUARTER EARNINGS PER SHARE OF $0.11 AND NET PROFIT OF $12.5 MILLION; POSITIVE BUSINESS OUTLOOK CONTINUES

FREMONT, CA � January 24, 2001 -- Read-Rite Corporation (Nasdaq:  RDRT) today reported for the first fiscal quarter ended December 31, 2000, a net profit and earnings per diluted share of $12.5 million and $0.11 respectively, on revenues of $190.0 million.  This represents a sequential revenue growth of 30% when compared to the fourth fiscal quarter ended September 30, 2000.  Gross margins improved to 20.1%, from the prior quarter�s gross margin of 5.6%, and the operating net income improved by $28.6 million from the fourth quarter.  These results are considerably higher than the recently increased First Call consensus estimate of $0.03.  Read-Rite�s pro forma net profit amounted to $14.2 million, or $0.13 per diluted share, excluding a net loss of $1.7 million for the company�s majority-owned optical components subsidiary, Scion Photonics, Inc.  Read-Rite�s revenue growth and profitability resulted from the company�s ongoing focus on technology leadership, the performance and customer acceptance of its 20GB per platter GMR heads, continued yield and productivity improvements, and a substantial gain in market share. 

�This return to profitability is a testament to the hard work and dedication of all our employees.  I am grateful to each of them for the commitment they have demonstrated each and every day in making Read-Rite the clear leader in GMR technology,� stated Alan S. Lowe, president and chief executive officer.  He added, �Read-Rite�s technology, products and financial performance have put the company in position to continue to gain market share and to grow profitability during the year.  We remain focused on providing the best technology and products to give our customers a competitive advantage in the market.�

Read-Rite shipped over 23 million heads, a 21% quarter-to-quarter growth.  The company also nearly doubled its head stack assembly (HSA) volumes to 3.5 million.  Throughout the quarter, Read-Rite improved its yields, its productivity and its cost structure due to continued deployment of automation and process improvements and higher capacity utilization.             

During the quarter the company made substantial progress in improving its liquidity position.  The company increased its cash position to $98.6 million from $64.4 million at the end of the previous quarter,converted its 10% bonds to equity and paid off the balance of the existing U.S. bank debt.  Balance sheet debt has now been reduced by over $450 million since September 30, 1999, and at the end of the first fiscal quarter shareholders equity totaled $297.0 million compared to $39.9 million at the end of fiscal year 2000.  �Our balance sheet is now in great shape and will continue to strengthen�, Lowe added.

In its efforts to expand its business opportunities and lay the foundation for future growth, Scion Photonics recently announced the acquisition of Optical Systems Corporation (OSC), based in Valencia, California.  OSC is a provider and manufacturer of precision automated tooling for the fiber optics component manufacturing industry.

BUSINESS OUTLOOK

The following statements are based on current expectations. 

• The company is targeting flat to modest revenue growth for the second fiscal quarter of 2001 due to continued strong demand for its 20GB per platter products plus the introduction and ramp of its 30GB per platter products.
• The company expects earnings per share for the second fiscal quarter to be in the range of $0.11 to $0.14 per share.  This expectation takes into account an increase in the average shares outstanding from 110 million in the first fiscal quarter to an estimated 121 million in the second fiscal quarter.
• The company expects Scion Photonics to begin generating revenues during the second fiscal quarter of 2001.

Read-Rite Corporation is one of the world's leading independent manufacturers of magnetic recording heads, head gimbal assemblies (HGAs) and head stack assemblies (HSAs) for disk drives and tape drives.  The company is headquartered in Fremont, California and has operations in California, Thailand, Philippines, Japan, Singapore and South Korea.  The company's website is located at http://www.readrite.com.  Read-Rite is also the majority shareholder of Scion Photonics, Inc. which designs, develops, manufactures and sells optical communication components.  Scion's website is located at http://www.scionphotonics.com.

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