Atheros Announces Record Financial Results for Q3 2009 Record Revenue and Net Income

SANTA CLARA, CA--(October 19, 2009) - Atheros Communications, Inc. (NASDAQ: ATHR), a global leader in innovative technologies for wireless and wired communications, today announced its unaudited financial results for its third quarter ended Sept. 30, 2009.

Revenue in the third quarter was a record $156.6 million, up 40 percent from the $112.2 million reported in the second quarter of 2009 and 13 percent higher than the $138.1 million reported in the third quarter of 2008.

In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded third quarter GAAP net income of $38.6 million or $0.60 per diluted share. This compares with a GAAP net loss of $0.3 million or $0.00 per diluted share in the second quarter of 2009. GAAP net income in the third quarter of 2008 was $10.1 million or $0.16 per diluted share. Cash, cash equivalents and short-term marketable securities were $382.8 million at Sept. 30, 2009, up from $340.6 million in the prior quarter. Cash flow from operations for the first three quarters of 2009 was $79.5 million.

Atheros reports gross margins, operating expenses, operating income (loss), net income (loss) and basic and diluted net income (loss) per share in accordance with GAAP and additionally on a non-GAAP basis. Non-GAAP net income excludes, where applicable, the effect of stock-based compensation, amortization of acquired intangible assets and acquisition-related charges, the other-than-temporary impairment of long-term investments and the tax impact of these excluded items, as well as a benefit from the favorable settlement of a foreign tax liability and the benefit from a change in state tax filing position. A reconciliation of preliminary GAAP net income (loss) to non-GAAP net income, as well as a description of items excluded in the calculation of non-GAAP net income is presented in the financial statements portion of this release.

Non-GAAP gross margins in the third quarter were 48.4 percent, compared to 47.4 percent reported in the second quarter of 2009, and 49.4 percent in the third quarter of 2008. Non-GAAP operating income in the third quarter of 2009 was 19.4 percent of revenue, compared to 10.8 percent in the second quarter of 2009 and 17.7 percent in the third quarter of 2008.

Non-GAAP net income in the third quarter was $29.3 million or $0.46 per diluted share, compared with $12.3 million or $0.20 per diluted share in the second quarter of 2009 and $23.4 million or $0.37 per diluted share in the third quarter of 2008.

"While the economic environment worldwide continues to be challenging, the strength of our product cycles and the increasing diversification of our business enabled us to achieve record top and bottom-line results this quarter," said Dr. Craig Barratt, Atheros' president and chief executive officer. "We were particularly successful in our PC OEM and Consumer channels as our Align™, ETHOS™ and ROCm® solutions continued to be adopted by a growing number of customers. Our strategy of building a diversified communications company is paying dividends, and we believe our pending acquisition of Intellon will further broaden our communications solutions portfolio," Dr. Barratt said.

Recent Highlights

Conference Call
Atheros will broadcast its third quarter financial results conference call today, Monday, Oct. 19, 2009 at 2 p.m. Pacific Time (5 p.m. Eastern Time).

To listen to the call from within the United States, please dial 877-835-9268 approximately 10 minutes prior to the start of the call. To listen to the call from outside the United States, please dial 706-634-9690 approximately 10 minutes prior to the start of the call. The pass code is Atheros. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available for one week after the live call. To access the replay, please dial 706-645-9291 and use the pass code 32287070.
Atheros' financial results conference call will be available via a live webcast on the investor relations section of the Atheros web site at www.atheros.com. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the web site for 6 months.

About Atheros Communications, Inc.
Atheros Communications is a global leader in innovative technologies for wireless and wired communications products. Atheros combines its wireless and networking systems expertise with high-performance radio frequency (RF), mixed signal and digital semiconductor design skills to provide highly integrated chipsets that are manufactured on low-cost, standard complementary metal-oxide semiconductor (CMOS) processes. Atheros technology is used by a broad base of leading customers, including personal computer, networking equipment and consumer device manufacturers. For more information, please visit www.atheros.com or send an email to info@atheros.com.

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NOTE: Atheros, the Atheros logo, XSPAN, Align, ETHOS, ROCm and Atheros Direct Connect, are trademarks of Atheros Communications, Inc. All other trademarks mentioned in this document are the sole property of their respective owners.

NOTE ON FORWARD-LOOKING STATEMENTS:
Except for the historical information contained herein, the matters set forth in this press release, including our statements regarding our strategy, the expected benefits of our acquisition of Intellon and the benefit of using non-GAAP financial measures are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including, but not limited to, difficulties in the development of new and enhanced products, general economic conditions, the effects of competition and technological change, risks associated with the Company's planned acquisition of Intellon, including but not limited to the integration of Intellon into Atheros and market expansion opportunities for Atheros, and the risks detailed in Atheros' Annual Report on Form 10-K for the year ended December 31, 2008 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission, and in other reports filed with the SEC by Atheros from time to time. These forward-looking statements speak only as of the date hereof. Atheros disclaims any obligation to update these forward-looking statements.

Important Additional Information and Where You Can Find It In connection with the proposed acquisition of Intellon Corporation, Atheros has filed a Registration Statement on Form S-4 containing a proxy statement/prospectus and other documents concerning the proposed acquisition with the Securities and Exchange Commission (the SEC). Investors and security holders are urged to read the proxy statement/prospectus and any amendments thereto when they become available and other relevant documents filed with the SEC regarding the proposed transaction because they will contain important information. Investors and security holders may obtain a free copy of the proxy statement/prospectus, as amended (when it is available), and other documents filed by Atheros and Intellon with the SEC at the SEC's web site at http://www.sec.gov. The proxy statement/prospectus, as amended (when available), and other documents filed with the SEC may also be obtained for free by contacting Atheros Investor Relations by e-mail at ir@atheros.com or by telephone at (408) 830-5672 or by contacting Intellon Investor Relations by e-mail at suzanne@blueshirtgroup.com or by telephone at (415) 217-7722.

Atheros, Intellon, and their respective directors, executive officers, certain members of management and certain employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Additional information concerning Atheros' directors and executive officers is set forth in Atheros' Proxy Statement for its 2009 Annual Meeting of Stockholders, which was filed with the SEC on April 6, 2009. Additional information concerning Intellon's directors and executive officers is set forth in Intellon's Proxy Statement for its 2009 Annual Meeting of Stockholders, which was filed with the SEC on April 28, 2009. These documents are available free of charge at the SEC's web site at www.sec.gov or by going to, respectively, Atheros' Investors page on its corporate website at www.atheros.com and Intellon's Investor Relations page on its corporate website at www.intellon.com. Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies in connection with the proposed transaction, and a description of their direct and indirect interests in the proposed transaction, which may differ from the interests of Atheros or Intellon stockholders generally will be set forth in the proxy statement/prospectus when it is filed with the SEC.

– Summary Financial Data PDF Link –

For analyst inquires contact: Jack Lazar, Chief Financial Officer for Atheros Communications, Inc.,
+1-408-773-5200; or David Allen, +1-408-830-5762, david.allen@atheros.com

For Atheros press contact: Dakota Lee,  408-720-5597, dakota@atheros.com

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