Atheros Announces Fourth Quarter and Fiscal Year 2008 Results

SANTA CLARA, Calif., Feb 2, 2009 — Atheros Communications, Inc. (NASDAQ: ATHR), a global leader in innovative technologies for wireless and wired communications, today announced financial results for its fourth quarter and fiscal year ended Dec. 31, 2008.

Revenue in the fourth quarter was $98.3 million, compared to $138.1 million reported in the third quarter of 2008 and $114.3 million reported in the fourth quarter of 2007.

In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded a fourth quarter net loss of $4.8 million or $0.08 per diluted share. This compares with GAAP net income of $10.1 million or $0.16 per diluted share in the third quarter of 2008. Net income in the fourth quarter of 2007 was $13.4 million or $0.22 per diluted share. Cash, cash equivalents and marketable securities were $293.8 million at Dec. 31, 2008, up $19.7 million from the prior quarter and up $74.2 million from the balance at Dec. 31, 2007.

Revenue in 2008 was a record $472.4 million, up 13 percent from the $417.0 million reported in 2007. Net income in accordance with GAAP for 2008 was $18.9 million or $0.30 per diluted share. In 2007, GAAP net income was $40.0 million or $0.67 per diluted share.

Atheros reports gross margins, operating expenses, operating income, 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, the tax impact of these excluded items and the tax benefits from a change in state tax filing position and the release of deferred tax valuation allowances. 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 fourth quarter were 49.2 percent, compared to 49.4 percent reported in the third quarter of 2008 and 52.3 percent in the fourth quarter of 2007. Non-GAAP operating income in the fourth quarter was 7.6 percent of revenue, compared to 17.7 percent in the third quarter of 2008 and 19.0 percent in the fourth quarter of 2007.

Non-GAAP net income in the fourth quarter was $10.8 million or $0.17 per diluted share, compared to $23.4 million or $0.37 per diluted share in the third quarter of 2008 and $21.4 million or $0.36 per diluted share in the fourth quarter of 2007.

Non-GAAP net income for the full year 2008 was $70.6 million or $1.14 per diluted share, compared to non-GAAP net income in 2007 of $66.7 million or $1.12 per diluted share.

“The business environment in the fourth quarter was clearly difficult, however I am proud of our accomplishments in 2008 in which we posted strong financial results and expanded our portfolio of industry-leading wireless and wireline communications solutions," said Dr. Craig Barratt, Atheros’ president and chief executive officer. “While we are cautious about the near-term and are carefully managing operating expenses, we are also encouraged by our design win opportunities as we enter 2009 and remain committed to serving our customers through industry-leading technology innovation,” Dr. Barratt said.

Recent Atheros Highlights

• Jan. 8, 2009 Atheros Demonstrates Its Industry-Leading Connectivity Portfolio
  at CES 2009
• Jan. 6, 2009 Atheros Ships 50-Millionth Ethernet Chip
• Dec. 9, 2008 Atheros XSPAN®  Accessorizes New Generation of Ultra-Slim
  ASUS Eee PC™ Netbooks With 802.11n Technology
• Oct. 27, 2008 Atheros Launches Align™ Technology Leveraging 802.11n
  1-Stream Specification to Provide Upgrade from Legacy 802.11g

Conference Call
Atheros will broadcast its fourth quarter financial results conference call today, Monday, Feb. 2, 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 80099148.

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 email to info@atheros.com. 

NOTE: Atheros and the Atheros logo are trademarks of Atheros Communications, Inc.

NOTE ON FORWARD-LOOKING STATEMENTS:
Except for the historical information contained herein, the matters set forth in this press release, including our near-term prospects, our design win opportunities, providing industry-leading technology innovations and limitations and benefits of our 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, and the risks detailed in Atheros' Annual Report on Form 10-K for the year ended December 31, 2007 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, 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.

– 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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