Atheros Announces First Quarter 2010 Results

SANTA CLARA, CA -- (MARKET WIRE) -- Apr 19, 2010 -- Atheros Communications, Inc. (NASDAQ: ATHR), a global leader in innovative technologies for wireless and wired communications, today announced financial results for its first quarter ended March 31, 2010.

Revenue in the first quarter of 2010 was a record $214.7 million, up 16 percent compared to $185.7 million reported in the fourth quarter of 2009. First quarter 2010 revenue increased 144 percent compared to $87.9 million reported in the first quarter of 2009.

In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded net income in the first quarter of 2010 of $19.7 million or $0.27 per diluted share. This compares with GAAP net income of $15.6 million or $0.24 per diluted share in the fourth quarter of 2009. Net loss in the first quarter of 2009 was $7.6 million or $0.12 per diluted share. Cash, cash equivalents and marketable securities were $443.6 million at March 31, 2010, up $41.4 million from the balance at December 31, 2009.

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 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 margins in the first quarter of 2010 were 49.5 percent, compared to 50.2 percent reported in the fourth quarter of 2009 and 48.1 percent in the first quarter of 2009. Non-GAAP operating income in the first quarter of 2010 was 21.4 percent of revenue, compared to 23.4 percent in the fourth quarter of 2009 and 3.2 percent in the first quarter of 2009.

Non-GAAP net income in the first quarter of 2010 was $40.7 million or $0.57 per diluted share, compared to $41.2 million or $0.62 per diluted share in the fourth quarter of 2009 and $3.9 million or $0.06 per diluted share in the first quarter of 2009.

"We experienced broad-based strength across our PC OEM and Networking channels including strong momentum for our newly acquired PLC business. Our success in growing the top line, and more importantly, the design win momentum in each of our sales channels, further validate our hybrid networking strategy and demonstrate our diversification initiatives are paying dividends," said Craig Barratt, president and chief executive officer of Atheros Communications.

Conference Call

Atheros will broadcast its first quarter financial results conference call today, Monday, April 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.

Atheros' financial results conference call will be available via a live webcast, which can be accessed from the Investors section of www.atheros.com. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. The webcast will be recorded and also made 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. 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 Email Contact.

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 statements regarding our design win momentum, the anticipated success of our hybrid networking and diversification strategies 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 and the risks detailed in Atheros' Annual Report on Form 10-K for the year ended December 31, 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.

ATHEROS COMMUNICATIONS, INC.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

                                                Three Months Ended
                                        ----------------------------------
                                        March 31,  December 31,  March 31,
                                           2010        2009        2009
                                        ----------  ----------  ----------
Net revenue                             $  214,705  $  185,678  $   87,925
Cost of goods sold                         111,315      92,793      45,844
                                        ----------  ----------  ----------
Gross profit                               103,390      92,885      42,081
Operating expenses:
   Research and development                 42,970      38,448      29,045
   Sales and marketing                      20,653      16,722      13,416
   General and administrative                9,508       8,434       5,930
   Amortization of acquired
    intangible assets                        9,115       3,220       2,885
   Acquisition-related charges                 466       9,557           -
                                        ----------  ----------  ----------
     Total operating expenses                         82,712            76,381            51,276

Income  (loss)  from  operations                              20,678            16,504            (9,195)
Interest  income,  net                                                  1,145              1,419              1,671
Realized  gain  (impairment)  of  long-term
  investments,  net                                                            196                    (7)          (1,107)
Income  tax  (provision)  benefit                            (2,280)          (2,283)            1,079
                                                                                ----------    ----------    ----------
Net  income  (loss)                                              $      19,739    $      15,633    $      (7,552)
                                                                                ==========    ==========    ==========

Basic  earnings  (loss)  per  share                  $          0.29    $          0.25    $        (0.12)
                                                                                ==========    ==========    ==========
Diluted  earnings  (loss)  per  share              $          0.27    $          0.24    $        (0.12)
                                                                                ==========    ==========    ==========

Shares  used  in  computing  basic  earnings
  (loss)  per  share                                                      68,791            63,705            60,918
                                                                                ==========    ==========    ==========
Shares  used  in  computing  diluted
  earnings  (loss)  per  share                                    71,813            66,245            60,918
                                                                                ==========    ==========    ==========




ATHEROS  COMMUNICATIONS,  INC.
PRELIMINARY  CONDENSED  CONSOLIDATED  BALANCE  SHEETS
(Unaudited)
(in  thousands)

                                                                                                        March  31,    December  31,
                                                                                                              2010                2009
                                                                                                        -----------  -----------
ASSETS
Current  assets:
Cash,  cash  equivalents  and  marketable  securities        $      443,611  $      402,235
Accounts  receivable,  net                                                                  69,818            58,012
Inventory                                                                                                80,385            70,396
Deferred  income  taxes  and  other  current  assets                      27,190            26,985
                                                                                                        -----------  -----------
          Total  current  assets                                                              621,004          557,628

Property  and  equipment,  net                                                            14,482            14,955
Long-term  investments                                                                        12,899            15,523
Goodwill  and  net  acquired  intangible  assets                          315,114          324,229
Deferred  income  taxes  and  other  assets                                        4,062              3,014
                                                                                                        -----------  -----------
                                                                                                        $      967,561  $      915,349
                                                                                                        ===========  ===========

LIABILITIES  AND  STOCKHOLDERS'  EQUITY
Current  liabilities                                                                  $      139,203  $      141,068

Deferred  income  taxes  and  other  long-term
  liabilities                                                                                          41,697            42,421

Stockholders'  equity                                                                        786,661          731,860
                                                                                                        -----------  -----------
                                                                                                        $      967,561  $      915,349
                                                                                                        ===========  ===========




ATHEROS  COMMUNICATIONS,  INC.
RECONCILIATION  OF  PRELIMINARY  NON-GAAP  ADJUSTMENTS
(Unaudited)
(In  thousands,  except  per  share  data)

                                                                                                Three  Months  Ended
                                                                                ----------------------------------
                                                                                March  31,    December  31,    March  31,
                                                                                      2010                2009                2009
                                                                                ----------    ----------    ----------
GAAP  net  income  (loss)                                    $      19,739    $      15,633    $      (7,552)
Stock-based  compensation:
    Cost  of  goods  sold                                                      216                  254                  173
    Research  and  development                                      6,599              7,033              4,616
    Sales  and  marketing                                                4,067              3,962              2,842
    General  and  administrative                                  2,148              2,838              1,522
    Acquisition-related  charges                                        -              4,427                      -
                                                                                ----------    ----------    ----------
      Total  stock-based  compensation                      13,030            18,514              9,153

Acquisition-related  charges:
    Amortization  of  acquired  intangible
      assets                                                                        9,115              3,220              2,885
    Other  acquisition-related  charges                        466              5,130                      -
    Amortization  of  acquisition-related
      step-up  value  of  inventory                                2,634                      -                      -

Realized  gain  (impairment)  of  long-term
  investments,  net                                                          (196)                    7              1,107

Net  tax  effect  of  non-GAAP  adjustments            (4,067)          (1,330)          (1,709)
                                                                                ----------    ----------    ----------
Non-GAAP  net  income                                          $      40,721    $      41,174    $        3,884
                                                                                ==========    ==========    ==========

Shares  used  in  computing  non-GAAP  basic
  earnings  per  share                                                  68,791            63,705            60,918
                                                                                ==========    ==========    ==========
Shares  used  in  computing  non-GAAP
  diluted  earnings  per  share                                  71,813            66,245            62,252
                                                                                ==========    ==========    ==========
Non-GAAP  basic  earnings  per  share              $          0.59    $          0.65    $          0.06
                                                                                ==========    ==========    ==========
Non-GAAP  diluted  earnings  per  share          $          0.57    $          0.62    $          0.06
                                                                                ==========    ==========    ==========
 

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