Exhibit 99.1

For more information, contact:

Rob Bateman, Chief Financial Officer
Applied Microsystems Corporation
(425) 882-5683
rob.bateman@amc.com

                APPLIED MICROSYSTEMS ANNOUNCES PLANS TO LIQUIDATE

      REDMOND, WASH. -- DECEMBER 16, 2002 -- Applied Microsystems Corporation
(NASDAQ: APMC) today reported that its board of directors has unanimously
decided to recommend to shareholders that the Company be liquidated.

      In early September of 2002, the Company agreed to sell its embedded
systems development tools business to a third party in an asset sale transaction
that was subsequently approved by shareholders. In mid-October of 2002, the
Company announced that it had negotiated a buyout of its remaining obligations
under a multi-year facilities lease, which enabled it to accelerate its search
for development-stage funding for its Libra Networks business. Libra Networks
represents an expansion into development of hardware and software products aimed
at end-user markets - specifically, corporate data centers.

      "Though we have made solid progress on Libra development efforts, the
overall funding environment, coupled with our corporate structure, pose
significant challenges to our ability to fund Libra Networks at this time,"
stated Stephen J. Verleye, President and CEO of Applied. "We previously advised
our shareholders that our board would consider liquidation if it appeared to be
the course of action most likely to optimize shareholder value. The feedback we
have received from a variety of potential funding sources now leads us to
conclude that liquidation is in fact the better alternative."

      The Company's board of directors has appointed an independent committee,
consisting of directors Elwood D. Howse, Jr. and Charles H. House, to oversee
the process of selling the Libra Networks assets. This committee has been
empowered to engage a financial advisor to assist it in this process.

      Liquidation of a corporation is a complex process, and requires
shareholder approval. Applied plans to prepare a proxy statement as soon as
practicable that will


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provide additional information and will submit a plan of liquidation and
dissolution to its shareholders for approval. Even after shareholder approval of
the plan of liquidation and dissolution, liquidation distributions to
shareholders, if any, may be delayed for a lengthy period of time to allow the
Company to sell any remaining assets (such as the Libra Networks intellectual
property), and to discharge or make provision for satisfaction of the claims of
known and contingent creditors (including indemnification obligations arising
from the sale of the Company's embedded systems development tools business). The
Company is currently unable to predict the amount of any potential distribution
to shareholders or the timing of any such distribution.

      Applied also announced that one of its directors, Lary L. Evans, has
resigned from its board of directors. Mr. Evans was the majority owner of Reba
Technologies, Inc., from which the Company purchased a portion of its Libra
Networks intellectual property in May of 2002.

      The company can be reached at P.O. Box 97002, Redmond, Wash. 98073-9702;
by phone at 800-426-3925; or by e-mail at info@amc.com. Visit Applied on the Web
at www.amc.com.

      Forward-looking statements in this press release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to various risks and uncertainties
that could cause actual results to differ materially from historical results or
those anticipated or stated or implied by such forward-looking statements. These
factors include, without limitation, the Company's ability to effect an orderly
wind down of its operations and to implement the plan of liquidation and
dissolution in a timely manner, its ability to resolve any claims against it,
its ability to sell certain of its remaining assets to generate cash to satisfy
its obligations, its ability to maintain sufficient cash which could be
distributed to its shareholders, its ability to retain the services of key
employees or consultants to complete the wind down process or the sale of
certain assets, its obligation to incur substantial expenses in complying with
public company reporting and regulatory requirements, and other risks and
uncertainties detailed from time to time in the Company's filings with the
Securities and Exchange Commission.

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