Exhibit 99.1

Contact:

Mallorie Burak

Southwall Technologies Inc.

Phone:  (650) 798-1200

For Immediate Release

Southwall Announces Q1 2008 Results

DEMAND FOR ENERGY CONSERVATION PRODUCTS

 DRIVES IMPROVED OPERATING MARGIN IN FIRST QUARTER

PALO ALTO, Calif.--(BUSINESS WIRE)—May 15, 2008--Southwall Technologies Inc. (OTCBB: SWTX) announced first quarter 2008 revenue of $10.6 million, up 21% from the fourth quarter of 2007 and up approximately 1% from the first quarter of 2007. The increase year over year was primarily due to higher sales of Automotive products, which more than offset the decline in revenue relating to Plasma Display product sales resulting from the Company’s decision to exit that business and focus on its core energy conservation products.

Net income increased to $2.0 million, or $.06 per fully diluted share, compared to net income of $0.2 million, or earnings of $0.00 per fully diluted share, in the first quarter of 2007. First quarter 2008 gross margins increased to 46% of sales from 42% in the first quarter of 2007 on a shift in product mix to higher margin energy conversation products and improved operating efficiencies.  Operating margins increased to 20% of sales from 5% due to cost reduction efforts begun last year to more closely align the Company’s operating expenses with its strategic objectives of the Company.  Overall, operating expenses decreased $1.1 million, or 29%, year over year.

Dennis Capovilla, Southwall’s President said of the Q1 results, “We believe that we are well positioned for growth in our core energy markets, where our products enable a new level of energy efficiency for green building and automotive designs.  The recent increase in sales for our energy conservation products follows a growing global trend, highlighting consumer awareness that energy conservation is an efficient, effective and readily-available renewable technology choice that can have an immediate impact on saving energy and reducing carbon emissions.” 

About Southwall Technologies Inc.

Southwall Technologies Inc. is recognized as an innovator in the development and manufacture of high performance, energy-saving films and glass products that improve the energy efficiency of architectural and automotive glass. Southwall is an ISO 9001:2000-certified manufacturer with customers in over 25 countries around the world, including Audi, BMW, DaimlerChrysler, Guardian, Peugeot-Citroen, Pilkington, Renault, Saint-Gobain Sekurit, and Volvo.

This press release may contain forward-looking statements, including, without limitation, statements regarding the Company's expectations, beliefs, intentions, or strategies regarding the future.  All forward-looking statements in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements.  These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presented.  These risks include the possibility that the Company’s expected future results will be materially worse than estimated, that the Company may not continue to be profitable in future quarters or may not be able to achieve future long-term growth, that there will be a decline in one or more portions of our business in 2008 or thereafter, that the Company will not be successful in improving operations performance or controlling costs, that the Company will suffer a decline in manufacturing or financial effectiveness, that the Company’s new product development and joint venture will not be successful, that there may be decreasing demand in markets in addition to the electronic display market, and that the Company will not be able to secure additional financing if required, as well as risks associated with its failure to meet potential covenant requirements under future credit facilities.  Further risks are detailed in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2007, filed on March 31, 2008.

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SOUTHWALL TECHNOLOGIES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three months ended
	March 31,			March 31,
	2008			2007
Net Revenues	$	10,570		$	10,505
Cost of revenues		5,719			6,095
Gross profit		4,851			4,410
Operating expenses:
Research & Development		709			1,369
Selling, general and administrative		2,038			2,529
Recoveries for long-lived assets, net		-			(8	)
Total operating expenses		2,747			3,890
Income from operations		2,104			520
Interest expense, net		(139	)		(113	)
Other income, net		193			6
Income before provision for income taxes		2,158			413
Provision for income taxes		113			181
Net income		2,045			232
Deemed dividend on preferred stock		122			122
Net income attributable to common stockholders	$	1,923		$	110
Net income per share:
Basic	$	0.07		$	0.00
Diluted	$	0.06		$	0.00
Weighted average shares used in computing net income per share :
Basic		27,820			27,139
Diluted		33,520			27,566

SOUTHWALL TECHNOLOGIES INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	March 31,			December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	4,362		$	6,492
Restricted cash		316			294
Accounts receivable, net		8,183			4,346
Inventories, net		7,241			5,640
Other current assets		1,106			837
Total current assets		21,208			17,609
Property, plant and equipment, net		17,916			17,071
Restricted cash loans		1,348			1,242
Other assets		254			1,345
Total assets	$	40,726		$	37,267
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt	$	1,262		$	1,149
Accounts payable		3,353			964
Accrued compensation		595			1,267
Other accrued liabilities		4,826			6,350
Total current liabilities		10,036			9,730
Term debt		8,463			8,277
Other long term liabilities		2,578			2,567
Total liabilities		21,077			20,574
Series A, convertible preferred stock		4,810			4,810
Stockholders' equity:
Common stock		28			28
Capital in excess of par value		78,215			78,290
Accumulated other comprehensive income:
Translation gain on subsidiary		5,762			4,776
Accumulated deficit		(69,166	)		(71,211	)
Total stockholders' equity		14,839			11,883
Total liabilities, preferred stock and stockholders' equity	$	40,726		$	37,267

SOUTHWALL TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three months ended
	March 31,			March 31,
	2008			2007
Cash flows from operating activities:
Net income	$	2,045		$	232
Adjustments to reconcile net income to net cash used in operating activities:
Deferred income tax		0			(36	)
Impairment recoveries for long-lived assets		0			(8	)
Depreciation and amortization		746			696
Stock compensation		48			113
Changes in operating assets and liabilities:
Accounts receivable, net		(4,099	)		(1,872	)
Inventories, net		(1,601	)		(117	)
Accrued restructuring		0			(10	)
Other current and non-current assets		790			57
Accounts payable and accrued liabilities		74			(530	)
Net cash used in operating activities		(1,997	)		(1,475	)
Cash flows from investing activities:
Restricted cash		(13	)		(13	)
Proceeds from sale of property, plant and equipment		0			8
Expenditures for property, plant and equipment		(369	)		(299	)
Net cash used in investing activities		(382	)		(304	)
Cash flows from financing activities:
Borrowings on line of credit		0			3,000
Repayments on line of credit		0			(2,996	)
Repayments of notes payable		(293	)		(267	)
Net cash used in financing activities		(293	)		(263	)
Effect of foreign exchange rate changes on cash and cash equivalents		542			(95	)
Net decrease in cash and cash equivalents		(2,130	)		(2,137	)
Cash and cash equivalents, beginning of period		6,492			5,524
Cash and cash equivalents, end of period	$	4,362		$	3,387
Supplemental cash flows disclosures:
Interest paid	$	263		$	176
Income taxes paid	$	131		$	181
Supplemental schedule of non-cash investing and financing activities:
Dividends accrued	$	122		$	122

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