Highlights for the Third Quarter 2008 include:

-- Revenues of $21.1 million, up 9% sequentially but down 1% from Q3 last year.-- $14.5 million in probe station and engineering probe revenue, up 12% sequentially but down 8% from Q3 last year.-- $6.6 million in probe card and socket revenue, up 3% sequentially and up 18% over Q3 last year.-- Loss per share was $(0.10) compared to a loss per share of $(0.14) sequentially and loss per share of $(0.02) from Q3 last year.-- The loss for the third quarter 2008 includes severance charges of $490,000 related to a previously announced restructuring of the Company along functional lines.

"During the quarter we took steps to restructure our business and reduceour cost structure. However, in common with an emerging consensus in theindustry, we do not expect a short-term rebound in market conditions, andour fourth quarter guidance reflects this view," said Geoff Wild, CEO ofCascade Microtech. "During this period, we shall continue to closely manageour expenses and conserve cash but still make the necessary investments toposition the business for a market recovery," added Mr. Wild.

Revenue for the third quarter was $21.1 million, net loss for the quarterwas $1.3 million and loss per share was $(0.10), compared to revenue of$19.3 million, net loss of $1.9 million and loss per share of $(0.14) forthe second quarter of 2008.

Financial Outlook

Based on the current backlog, anticipated bookings and the current malaisein the economic environment, Cascade anticipates that fourth quarter 2008revenues will be in the range of $15.0 million to $19.0 million and thatdiluted earnings per share will be in the range of a loss of $(0.12) to$(0.25).

In view of the current turbulent economic environment and the decline inCascade's stock price, the fair value of one or more of its reporting unitsmay have been, or may be in the future, reduced below its carrying value.As a result, Cascade is currently conducting an analysis to determine ifthere has been an impairment of goodwill and intangibles that could resultin a non-cash charge which, if necessary, would be reflected in thecompany's third quarter results and reported in the company's QuarterlyReport on Form 10-Q. As of September 30, 2008, prior to any impact from animpairment charge, Cascade's total goodwill balance was $17.4 million andits purchased intangible asset balance was $13.2 million.

About Cascade Microtech

Cascade Microtech, Inc. (NASDAQ: CSCD) is a worldwide leader in the preciseelectrical measurement and test of integrated circuits (ICs) and othersmall structures. For technology businesses and scientific institutionsthat need to evaluate small structures, Cascade Microtech delivers accessto, and extraction of, electrical data from wafers, integrated circuits(ICs), IC packages, circuit boards and modules, MEMs, biologicalstructures, electro-optic devices and more. Cascade Microtech'sleading-edge semiconductor production test consumables include unique probecards and test sockets that reduce manufacturing costs of high-speed andhigh-density semiconductor chips. Information about Cascade Microtech canbe found on the Web at www.cascademicrotech.com.

Forward-Looking Statements

The statements in this release regarding the Company's financial outlook asto revenue and earnings in the fourth quarter of 2008 and the comments byMr. Wild are "forward-looking" statements within the meaning of theSecurities Litigation Reform act of 1995. Such statements are based oncurrent expectations, estimates and projections about the Company'sbusiness based in part on assumptions made by management. These statementsare not guarantees of future performance and involve risks anduncertainties that are difficult to predict. Therefore, actual outcomes andresults may differ materially from what is expressed or forecasted in suchforward-looking statements due to numerous factors, including changes indemand for the Company's products, product mix, the timing of shipments andcustomer orders, constraints on supplies of components, excess or shortageof production capacity, the results of our goodwill and intangiblesimpairment analysis and other risks discussed from time to time in theCompany's Securities and Exchange Commission filings and reports, includingthe Company's Annual Report on Form 10-K. In addition such statements couldbe affected by general industry and market conditions and growth rates andgeneral domestic and international economic conditions. Suchforward-looking statements speak only as of the date on which they are madeand the company does not undertake any obligation to update anyforward-looking statement to reflect events or circumstances after the dateof this release.

The company will host a conference call beginning at 5 p.m. EDT (2 p.m.PDT) on October 28, 2008 to discuss its results for the third quarter endedSeptember 30, 2008 and its outlook for the fourth quarter of 2008.

A simultaneous audio cast of the conference call may be accessed onlinefrom the investor relations page of www.cascademicrotech.com. A replay willbe available after 7 p.m. EDT at this same internet address. (For atelephone replay, dial (888) 286-8010 passcode: 57322304; International:617-801-6888.)

CASCADE MICROTECH, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended ------------------------------ September 30 September 30 June 30 September 30 ----------------- 2008 2008 2007 2008 2007 --------- -------- --------- -------- --------Sales $ 21,128 $ 19,287 $ 21,343 $ 61,174 $ 67,930Cost of sales 12,068 10,889 11,455 33,933 36,977 --------- -------- --------- -------- -------- Gross profit 9,060 8,398 9,888 27,241 30,953 --------- -------- --------- -------- --------Operating expenses: Research and development 2,308 2,826 2,723 8,040 8,482 Selling, general and administrative 7,739 7,335 6,748 21,953 20,851 Amortization of purchased intangibles 582 649 667 1,879 1,328 --------- -------- --------- -------- -------- Total operating expenses 10,629 10,810 10,138 31,872 30,661 --------- -------- --------- -------- -------- Income (loss) from operations (1,569) (2,412) (250) (4,631) 292 --------- -------- --------- -------- --------Other income (expense): Interest income, net 221 227 330 711 1,150 Other, net (369) (183) (101) (113) (56) --------- -------- --------- -------- -------- Total other income (expense), net (148) 44 229 598 1,094 --------- -------- --------- -------- -------- Income (loss) before income taxes (1,717) (2,368) (21) (4,033) 1,386Provision (benefit) for income taxes (426) (510) 195 (868) 316 --------- -------- --------- -------- -------- Net income (loss) $ (1,291) $ (1,858) $ (216) $ (3,165) $ 1,070 ========= ======== ========= ======== ======== Net income (loss) per share-Basic and Diluted Basic $ (0.10) $ (0.14) $ (0.02) $ (0.24) $ 0.09 Diluted $ (0.10) $ (0.14) $ (0.02) $ (0.24) $ 0.08 Shares used in computing net income (loss) per share: Basic 13,108 13,046 12,799 13,047 12,447 Diluted 13,108 13,046 12,799 13,047 12,755 CASCADE MICROTECH, INC. AND SUBSIDIARIES Consolidated Balance Sheets (unaudited, in thousands) September 30, 2008 and December 31, 2007 September 30, December 31, Assets 2008 2007 ------------- -------------Current assets: Cash and cash equivalents $ 4,422 $ 4,900 Marketable securities 25,521 24,521 Accounts receivable, net 16,890 18,195 Inventories 19,494 18,608 Prepaid expenses and other 1,141 1,874 Assets held for sale 562 - Deferred income taxes 3,071 2,729 ------------- ------------- Total current assets 71,101 70,827Long-term investments 5,039 4,836Fixed assets, net 13,799 14,575Goodwill 17,406 17,310Purchased intangible assets, net 13,163 15,042Other assets 2,820 2,691 ------------- ------------- $ 123,328 $ 125,281 ============= ============= Liabilities and Stockholders' EquityCurrent liabilities: Current portion of long-term debt and capital leases $ 16 $ 13 Accounts payable 4,773 5,158 Deferred revenue 905 1,102 Accrued liabilities 3,984 5,589 ------------- ------------- Total current liabilities 9,678 11,862Long-term debt and capital leases 59 51Deferred income tax 3,064 3,114Deferred revenue 413 481Other long-term liabilities 2,380 2,168 ------------- ------------- Total liabilities 15,594 17,676 ------------- -------------Stockholders' equity: Common stock 83,028 79,697 Unrealized holding gain on investments 8 45 Retained earnings 24,698 27,863 ------------- ------------- Total stockholders' equity 107,734 107,605 ------------- ------------- $ 123,328 $ 125,281 ============= =============

Contact:Cascade Microtech, Inc.Steven SipowiczChief Financial Officer503 601-1000