Delaware (State or other jurisdiction of incorporation or organization)

94-2958543 (I.R.S. Employer Identification No.)

5964 W. Las Positas Blvd., Pleasanton, California (Address of principal executive offices)

94588-8540 (Zip Code)

PART I.    FINANCIAL INFORMATION
Item 1.		Condensed Consolidated Financial Statements (unaudited):
		Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001		3
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2002 and September 30, 2001		4
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and September 30, 2001		5
		Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		34
Item 4.		Controls and Procedures		34
PART II.    OTHER INFORMATION
Item 1.		Legal Proceedings		35
Item 2.		Changes in Securities and Use of Proceeds		35
Item 3.		Defaults Upon Senior Securities		35
Item 4.		Submission of Matters to a Vote of Security Holders		35
Item 5.		Other Information		35
Item 6.		Exhibits and Reports on Form 8-K		36
Signatures				37
Certification				38

		September 30, 2002				December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents		$	32,616			$	46,338
Short-term investments			—				3,029
Accounts receivable, net of allowance for doubtful accounts of $86 and $6,908 in 2002 and 2001, respectively			995				550
Inventories, net			4,175				11,839
Prepaid expenses and other			1,370				1,742
Total current assets			39,156				63,498
Property and equipment, net			5,931				8,171
Intangibles and other assets			5,257				7,323
Total assets		$	50,344			$	78,992
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	501			$	1,204
Accrued liabilities			7,180				9,856
Deferred revenue			712				954
Total current liabilities			8,393				12,014
Deferred revenue, net of current portion			82				553
Other liabilities			281				329
Total liabilities			8,756				12,896
Commitments and contingencies (Note 6)
Stockholders’ equity:
Common stock, $0.001 par value, 100,000 shares authorized, 16,482 and 16,411 shares issued and outstanding in 2002 and 2001, respectively			16				16
Additional paid-in capital			301,249				301,182
Deferred compensation			—				(17	)
Notes receivable from stockholders			—				(96	)
Accumulated other comprehensive loss			(145	)			(78	)
Accumulated deficit			(259,532	)			(234,911	)
Total stockholders’ equity			41,588				66,096
Total liabilities and stockholders’ equity		$	50,344			$	78,992

		Three Months Ended September 30,								Nine Months Ended September 30,
		2002				2001				2002				2001
Revenues:
Product		$	1,840			$	3,753			$	6,317			$	10,897
License and royalty			195				214				590				679
Total revenues			2,035				3,967				6,907				11,576
Cost of goods sold:
Product			1,249				14,615				9,340				38,905
Total cost of goods sold			1,249				14,615				9,340				38,905
Gross (loss) margin			786				(10,648	)			(2,433	)			(27,329	)
Operating expenses:
Sales and marketing			1,830				2,767				6,612				10,093
Research and development			3,172				3,028				9,959				11,802
General and administrative			642				1,616				3,844				7,770
Restructuring costs			870				—				870				2,092
In-process research and development			—				—				—				1,160
Impairment of intangible assets			—				29,859				—				32,551
Amortization of intangible assets			300				2,561				899				7,774
Noncash compensation expense			—				60				—				182
Total operating expenses			6,814				39,891				22,184				73,424
Loss from operations			(6,028	)			(50,539	)			(24,617	)			(100,753	)
Impairment of certain equity investments			—				—				(592	)			—
Interest and other income, net			161				707				588				2,953
Net loss		$	(5,867	)		$	(49,832	)		$	(24,621	)		$	(97,800	)
Net loss per share, basic and diluted (Note 3)		$	(0.36	)		$	(3.05	)		$	(1.50	)		$	(6.01	)
Shares used in computing net loss per share, basic and diluted (Note 3)			16,482				16,353				16,451				16,286

		Nine Months Ended September 30,
		2002				2001
Cash flows from operating activities:
Net loss		$	(24,621	)		$	(97,800	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and other			2,599				2,549
Provision (recovery) for doubtful accounts			(2,035	)			761
Provision for excess and obsolete inventory and abandoned products			5,182				33,302
Write-off of certain equity investments			592				—
Impairment of intangibles			—				32,551
Amortization of intangibles			899				8,741
Write-off of in-process research and development			—				1,160
Change in operating assets and liabilities, net of businesses acquired:
Accounts receivable			1,590				2,804
Inventories