FOR IMMEDIATE RELEASE

READ-RITE�S MAGNETIC RECORDING HEAD OPERATIONS REPORT Q1 EARNINGS PER SHARE OF $0.04 AND NET INCOME OF $4.8 MILLION

FREMONT, CA � January 30, 2002 -- Read-Rite Corporation (Nasdaq:  RDRT) today reported pro forma net income and diluted earnings per share from its magnetic recording head operations of $4.8 million and $0.04, respectively, for the first fiscal quarter ended December 30, 2001, on revenues of $135.9 million.  The company�s consolidated results under Generally Accepted Accounting Principles (GAAP) are revenues of $136.9 million and a loss of $4.5 million or a $0.04 per share loss.  The GAAP consolidated results for the quarter include $1.0 million in revenue and a $9.3 million accounting-based charge for Scion Photonics, Inc. (�Scion�). 

The company shipped 21.6 million magnetic recording heads and 1.8 million head stack assemblies (�HSAs�) during the quarter, compared to 21.7 million heads and 2.2 million HSAs in the previous quarter.  The company�s revenue was down 12% quarter-to-quarter on flat HGA shipments due primarily to a shift to more HGA sales from HSA sales, and reductions in average selling prices (�ASP�).  The company continued its focus on cost reduction and was able to offset the ASP declines with improved manufacturing efficiencies, cost savings and higher yields.

The majority of the company�s shipments during the quarter were 20 and 30 gigabyte (GB) per platter products.  �The company�s positive and profitable experience with its 20GB and 30GB products demonstrates our ability to manage programs for profitability throughout an extended product life cycle,� stated Alan S. Lowe, president and chief executive officer.  In the first fiscal quarter the company also ramped production of its 40GB per platter products for 5400 rpm 3.5� hard disk drives (�HDDs�).  However, technical challenges prevented a smooth production ramp and limited the volume of 40GB heads the company was able to ship during the latter portion of the quarter.  The company believes it will resolve the technical issues in the second quarter and its market share on these and other 40GB per platter programs will rebound in the third fiscal quarter.  Lowe added, �I am very disappointed in our inability to meet the goals we set for ourselves on these 40GB programs.  I expect to see a dramatic improvement in our execution going forward to recapture volume on these and other 40GB programs and to regain lead supplier status on customer launches of higher density drives in the future�. 

Read-Rite�s majority-owned fiber optics subsidiary, Scion Photonics, Inc., reported revenues of $1.0 million and a loss of $7.1 million in the December quarter.  Scion recently received $30 million in connection with its series B financing round.  The $30 million included an equity investment of $5 million from a new investor in January and $25 million in convertible debt from the original investors.  The company�s investment in series B preferred stock is $18.8 million. 

BUSINESS OUTLOOK

          Given the current situation in connection with the company�s transition to 40GB per platter programs, the following is the company�s forecast for the second fiscal quarter.  The statements below are based on current expectations, are forward-looking, and actual results may differ materially.

• The company expects revenue for the second fiscal quarter of 2002 to be in the range of $65 million to $85 million.
• This lower revenue is expected to result in an operating loss for the company�s magnetic recording head business of between $0.25 to $0.35 cents per share.
• The company also expects to record a charge during the second quarter of approximately $6 million for severance payments related to a reduction in force which occurred this past week in our U.S. and Thailand facilities of approximately 1250 employees or 11% of the company�s worldwide workforce.  
• Scion Photonics is targeting to be profitable before the end of calendar year 2002.  However, Scion is expected to report a loss for the coming quarter with Read-Rite�s share of this loss forecasted to be approximately $2 million.

The company continues to believe that long-term demand for data storage will continue to grow with the increased introductions of non-PC applications and the migration to network attached storage and storage area networks from direct attached server storage systems. 

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, the 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., an integrated solution provider to the fiber optics industry whose offerings include advanced DWDM products, fiber optic assembly equipment and application specific photonic components.  Scion's website is located at http://www.scionphotonics.com.

This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. The forward-looking statements in this release include statements addressing the following subjects:  resolving technical issues surrounding the 40GB production ramp; recapturing 40GB market share in the third fiscal quarter; expectations of improved execution going forward on the 40GB and future customer programs; and future financial and operating results for the company and for Scion Photonics, Inc.  Actual results may vary materially from the expectations contained in such forward-looking statements. Factors that could cause actual results to differ include, but are not limited to: there may be reductions, cancellations or a rescheduling of orders by any of the company�s customers; the company may be unsuccessful in resolving the technical issues concerning the 40GB products; the company may be unsuccessful in quickly and cost effectively ramping volume production of heads for higher density drives in the future; design-ins or qualifications of the company�s products on future programs may not occur or could take place at a slower rate than anticipated; the company may be unsuccessful in achieving and maintaining satisfactory yields; and other risk factors described in the company's reports filed with the SEC, including, but not limited to, its Annual Report on Form 10-K for fiscal 2001.  Read-Rite undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.