Data I/O Announces Third Quarter Results

REDMOND, WA, Oct 23 (MARKET WIRE) --
Data I/O Corporation (NASDAQ: DAIO), the leading provider of manual and
automated device programming systems, today announced financial results
for the third quarter of 2008.

Revenues for the third quarter of 2008 were $7.8 million compared with
$7.3 million in the third quarter of 2007, an increase of 7%. Compared to
the second quarter of 2008, revenues for the third quarter of 2008 were
down 3%. For the first nine months of 2008, revenues were $22 million, up
15.3% from the $19.1 million recorded in the first nine months of 2007. In
accordance with U.S. generally accepted accounting principles (GAAP), net
income for the third quarter of 2008 was $1.2 million, or $0.13 per
diluted share, compared to $1.6 million, or $0.18 per share for the third
quarter of 2007.

Gross margin as a percentage of sales for the third quarter of 2008 was
60% achieving our target model. Operating expenses for the third quarter
of 2008 were $3.3 million, including accrued bonuses of $300,000, compared
with $3.0 million and no bonus accruals in the third quarter of 2007.

"We were pleased to be operating at our financial model of 60% gross
margin and 15% operating income again in the third quarter with revenue
for the year up 15% over the same nine months of 2007. Orders were $6.9
million for the third quarter down 16% from the third quarter of 2007 and
down 22% from the second quarter of 2008. We were disappointed to see
some orders slide out, primarily in Europe and the US, but Asia remained
very strong with orders up nearly 50% compared with the same quarter of
2007," said Fred Hume, President and CEO.

"We also secured orders during the quarter that are important for future
business with key customers in wireless, automotive, and industrial
sectors of our business. These orders set the stage for new product
introductions in the coming months," Hume said. "During the third quarter
we achieved two significant product development milestones with respect
to providing increased value to our customers. We released our new job
automation software for RoadRunner that eliminates the need for human
intervention during job setup. We also shipped a special version of our
PS-588 automated systems to a European customer that was the most capable
automated system delivered to date."

Conference Call Information

A conference call discussing the third quarter of 2008 financial results
will follow this release today at 2:00 p.m. Pacific time/5:00 p.m. Eastern
time. To listen to the conference call, please dial (612) 332-0718
passcode: DAIO. A taped replay will be made available approximately one
hour after the conclusion of the call and will remain available for one
week. To access the replay, please dial (320) 365-3844, access code:
964978. The conference call will also be simultaneously webcast over the
Internet; visit the News and Events section of the Data I/O Corporation
website at http://www.dataio.com to access the call from the site. This
webcast will be recorded and available for replay on the Data I/O
Corporation website approximately two hours after the conclusion of the
conference call.

About Data I/O Corporation

With over 35 years of expertise in delivering intellectual property to
programmable devices, Data I/O offers complete, integrated manufacturing
solutions in wireless, automotive, programming center, semiconductor, and
industrial control market segments for OEM, ODM, EMS and semiconductor
companies. Data I/O provides hardware and software solutions for turn-key
programming and device testing services, as well as in-system (on-board),
in-line (right before use at the SMT line), or in-socket (off-line)
programming. These solutions are scalable for small, medium and large
volume applications with different device mixes. Data I/O Corporation has
headquarters in Redmond, Wash., with sales and services worldwide. For
further information, visit the company's website at http://www.dataio.com.

Forward-Looking Statement

Statements in this news release concerning future results from operations,
financial position, economic conditions, product releases and any other
statement that may be construed as a prediction of future performance or
events are forward-looking statements which involve known and unknown
risks, uncertainties and other factors which may cause actual results to
differ materially from those expressed or implied by such statements.
These factors include uncertainties as to levels of orders, ability to
record revenues, release schedules, market acceptance of new products,
changes in economic conditions and market demand, pricing and other
activities by competitors, and other risks including those described from
time to time in the Company's filings on Forms 10K and 10Q with the
Securities and Exchange Commission (SEC), press releases and other
communications.

425 Summary Financial Data Attached -

DATA I/O CORPORATION
COMPARATIVE STATEMENTS OF EARNINGS

(in thousands
except per
share data) Third Quarter Nine Months Ended
---------------------------- ----------------------------
Percent Percent
9/30/2008 9/30/2007 Change 9/30/2008 9/30/2007 Change
-------- -------- -------- -------- -------- --------
Net sales $ 7,807 $ 7,283 7.2% $ 22,018 $ 19,089 15.3%
Gross margin 4,664 4,512 3.4% 12,983 10,670 21.7%
Gross margin as
percent of sales 59.7% 62.0% -2.3% 59.0% 55.9% 3.1%
Operating
expenses:
Research &
development 1,093 1,036 5.5% 3,358 3,693 -9.1%
Selling,
general and
administrative 2,231 1,969 13.3% 6,545 6,534 0.2%
Provision for
business
restructure 0 (107) 7 725
-------- -------- -------- --------
Operating income
(loss) 1,340 1,614 3,073 (282)
Non-operating
income
(expense) (44) (9) 2,119 32
-------- -------- -------- --------
Income(loss)
from operations
before taxes 1,296 1,605 5,192 (250)
Income tax
expense
(benefit) 90 (1) 142 8
-------- -------- -------- --------
Net income
(loss) $ 1,206 $ 1,606 $ 5,050 $ (258)
======== ======== ======== ========

-------- -------- -------- --------
Total diluted
earnings(loss)
per share $ 0.13 $ 0.18 $ 0.56 $ (0.03)
======== ======== ======== ========

Diluted weighted
average shares
outstanding 9,167 8,815 9,097 8,555

CONDENSED BALANCE SHEET
(in thousands)

9/30/2008 12/31/2007
---------- ----------
Cash and cash equivalents $ 11,556 $ 7,637
Accounts receivable, net 7,841 5,299
Inventories 5,301 4,980
Other current assets 177 323
Land, building and equipment 2,126 2,257
Other long-term assets 114 124
---------- ----------
Total assets $ 27,115 $ 20,620
========== ==========

Current liabilities $ 6,101 $ 5,177
Long term debt 326 357
Shareholders' equity 20,688 15,086
---------- ----------
Total liabilities and shareholders' equity $ 27,115 $ 20,620
---------- ----------

Contact:
Joel Hatlen
Vice President and Chief Financial Officer
(425) 881-6444

Data I/O Corporation
6464 185th Ave. NE, Suite 101
Redmond, WA 98052

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