Atheros Announces Second Quarter 2010 Results

11 Percent Sequential Increase in Revenue to $238.2 Million

SANTA CLARA, CA--(Marketwire - July 19, 2010) - Atheros Communications, Inc. (NASDAQ: ATHR), a global leader in innovative technologies for wireless and wired communications, today announced financial results for its second quarter ended June 30, 2010.

Revenue in the second quarter of 2010 was a record $238.2 million, up 11 percent compared to $214.7 million reported in the first quarter of 2010. Second quarter 2010 revenue increased 112 percent compared to $112.2 million reported in the second quarter of 2009.

In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded net income in the second quarter of 2010 of $29.7 million or $0.41 per diluted share. This compares to GAAP net income of $19.7 million or $0.27 per diluted share in the first quarter of 2010. Net loss in the second quarter of 2009 was $0.3 million or $0.00 per diluted share. Cash, cash equivalents and marketable securities were $508.4 million at June 30, 2010, up $64.8 million from the balance at March 31, 2010.
Atheros reports gross margin, 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 realized gain on sale or the impairment of long-term investments and the tax impact of these excluded items. 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 margin in the second quarter of 2010 was 49.8 percent of revenue, compared to 49.5 percent reported in the first quarter of 2010 and 47.4 percent in the second quarter of 2009. Non-GAAP operating income in the second quarter of 2010 was 22.6 percent of revenue, compared to 21.4 percent in the first quarter of 2010 and 10.8 percent in the second quarter of 2009.

Non-GAAP net income in the second quarter of 2010 was $49.2 million or $0.67 per diluted share, compared to $40.7 million or $0.57 per diluted share in the first quarter of 2010 and $12.3 million or $0.20 per diluted share in the second quarter of 2009.

"Strong demand from our networking and consumer channels enabled us to post record revenue, operating profit and cash flow generation in the second quarter. Connectivity solutions for our consumer channel are being widely adopted by a variety of customers reflecting new market opportunities for our portfolio of communications products," said Craig Barratt, president and chief executive officer of Atheros Communications. "Our networking channel was also strong in the second quarter, and with the anticipated acquisition of Opulan Technologies, Atheros is further broadening its platform solutions for these customers. We believe our vision of driving widespread connectivity into an expanding number of hybrid networking, PC and consumer solutions, positions us well for the future."

Recent Atheros Highlights

• July 19, 2010 -- Atheros Adds PON Technology with the Acquisition of Opulan Technologies

• July 19, 2010 -- Atheros Ships 500 Millionth Wi-Fi® Chipset

• July 14, 2010 -- Atheros and Wilocity Partner to Build Tri-Band Wireless Solutions that Combine Wi-Fi and WiGig™ Technologies

• June 15, 2010 -- Atheros Awarded U.S. Department of Energy Grant to Develop Low-Power, Smart Grid Solutions with Its AMP™ Powerline Technology

• June 1, 2010 -- Atheros Wi-Fi and Bluetooth® Solutions Help Acer Enhance the Mobile Connectivity Experience

• June 1, 2010 -- Atheros 3-Stream 802.11n Router Solutions Deliver Exceptional Performance to Support Demanding Multimedia Applications in the Home and Enterprise

• May 6, 2010 -- Atheros Powerline Technology Delivers Unprecedented Performance for Ethernet-over-Coax Broadband Deployments

Conference Call
Atheros will broadcast its second quarter financial results conference call today, Monday, July 19, 2010, 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.

Prior to this conference call, Atheros will post supplemental financial data on its web site at http://investors.atheros.com. Atheros is making this information available prior to the conference call in order to provide the investment community with additional time to analyze Atheros' results and prepare for the call with management.

Atheros' financial results conference call will also be available via a webcast at http://investors.atheros.com. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software. The webcast will be recorded and available approximately one hour after the live call concludes at http://investors.atheros.com for six months.

About Atheros Communications, Inc.
Atheros Communications is a global leader in innovative technologies for wireless and wired communications. 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.

Atheros, the Atheros logo and AMP 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 market opportunities from the consumer channel, the anticipated acquisition of Opulan Technologies Corp. and the expected benefits from the acquisition, our future prospects, and the benefits 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, the risk that the acquisition of Opulan Technologies will not be consummated or that we will not realize the benefits we expect from the acquisition, and the risks detailed in Atheros' Annual Report on Form 10-K for the year ended December 31, 2009 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, 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

Molly Mulloy, 408-830-5850, molly.mulloy@atheros.com, or Greg Wood, A&R Edelman for Atheros , 650-762-2838, gwood@ar-edelman.com

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