Obrem Capital Management Open Letter to our Fellow Micrel Stockholders

NEW YORK, April 1, 2008 /PRNewswire-FirstCall/ -- We are disappointed that Micrel management has chosen to attack Obrem Capital Management rather than address our primary concern: creating permanent value for stockholders. We believe it is important to clarify several points raised by Micrel this morning.

Micrel improperly blames the market for company-specific issues. Micrel blames semiconductor market conditions for the Company's ongoing underperformance; however, the last five years have been strong for the analog semiconductor industry, with analog industry revenue up 36% from 2003 to 2007 (source: WSTS). Micrel, in the corresponding period, has only increased revenues 22%. In addition, current sentiment and market conditions might explain why Micrel's stock is trading at the lower end of its "range" but does not explain why Micrel's shares have underperformed peers.

Growth is typical in the semiconductor industry, and Micrel lags. Micrel asserts that it has increased revenue in 24 out of the last 29 years. While that is true, Micrel fails to point out that the entire semiconductor industry has increased revenue in 24 out of the last 29 years (sources: WSTS, SIA). More importantly, Micrel fails to address the fact that it has trailed industry growth rates (based on WSTS data) in 6 of the last 7 years.

Micrel's operating performance lags its peer group. Obrem stands by its previous statements regarding Micrel's poor operational performance relative to peers. Obrem has compared Micrel to an appropriate high-performance analog peer group and is surprised that Micrel management has chosen to include several smaller or lower-end competitors in its analysis. Deutsche Bank, in its March 25, 2008 note, "HPA Roundup #5 2007/2008 Winners & Losers," identifies Micrel as having the lowest 3, 4, and 5 year revenue CAGRs among a group of 10 peers. In addition, Micrel's operating margins are among the lowest of appropriate high performance analog comparables. Micrel's performance issues are not new and are quite serious.

We are disappointed by Micrel's personal attacks and misstatements. Micrel makes several inaccurate assertions in an attempt to disparage our Nominees. Contrary to Micrel's assertion that our Nominees "have very limited semiconductor industry and operating experience," two of our Nominees, Keith Kolerus and Bill Bradford, collectively have 60 years of semiconductor industry experience in top leadership roles, with the vast majority of that time spent at companies significantly larger than Micrel.

From 2003 - 2008, Mr. Kolerus was Chairman of the Board of ACI Electronics, a semiconductor distributor, which was sold earlier this year to Arrow Electronics for $60mn. Since 1998, Mr. Kolerus has been involved in several semiconductor start-ups in addition to his work at ACI. Mr. Kolerus was employed by National Semiconductor from 1973 - 1998. He was Chairman of the Board of National Semiconductor Japan, Ltd. from 1995 - 1998, President of the division from 1992 - 1995, and served on the Management Committee of National Semiconductor from 1990 - 1998. Prior to National Semiconductor, Mr. Kolerus worked in sales at Fairchild from 1970 - 1973 and began his career as a design engineer at Motorola in 1968.

Mr. Bradford was Senior Vice President of Global Sales at Freescale Semiconductor from 2006 - 2007, where he led an 800 person global sales organization that generated $6bn in revenues. Prior to Freescale, Mr. Bradford was Senior Vice President of Sales and Marketing at ON Semiconductor from 2002 - 2006, where he ran the sales and marketing team of a global sales organization with $1.2bn in annual sales. From 1991 - 2002, Mr. Bradford worked in progressively senior sales and marketing roles at Cypress Semiconductor, including running a 150 person European sales force. Mr. Bradford began his career at Texas Instruments in 1986.

Obrem Senior Investment Analyst Eric Gomberg was a Managing Director at Thomas Weisel Partners, where he covered the semiconductor industry and frequently spoke at industry conferences. Keith Gollust, currently Chairman of Synta Pharmaceuticals, has a track record of supporting stockholder rights to create permanent value that is rivaled by few in the investment profession. All of our Nominees have exceptional track records of creating value and have significant managerial, financial, operational, and semiconductor industry experience. We are confident our Nominees compare favorably to the current Board and encourage stockholders to assess their qualifications.

It is also worth noting that during the past 10 years, while Ray Zinn has been CEO and a director of Micrel, there has been a decrease in Micrel's share price and no tangible value creation for stockholders.

We also must clarify Micrel's FALSE assertion that we propose removing Micrel CEO Ray Zinn. Obrem wishes to install our slate of Nominees to take action to maximize stockholder value. We have not currently proposed replacing Mr. Zinn as CEO or pursuing any action that will disrupt the Company's operations.

Obrem encourages our fellow stockholders to read all of our filings. It is our intent to be transparent, available, and accountable to our fellow stockholders. The Nominees motivation is aligned with our fellow stockholders and is not influenced by their desire to remain employed at, or any emotional attachment to, Micrel.

First Call Analyst:
FCMN Contact:

Source: Obrem Capital Management

CONTACT: Andrea Bennett of Obrem Capital Management, +1-646-454-5310,
andrea@obremcapital.com

2008-04-01 16:59:13 0325544 PRNEWSWIRE