Atheros Announces Financial Results for Q3 2008

Fourteenth Consecutive Quarter of Revenue Growth

SANTA CLARA, Calif., Oct. 27, 2008 — Atheros Communications, Inc. (NASDAQ: ATHR), a leading developer of advanced wireless and wired network communications solutions, today announced financial results for its third quarter ended Sept. 30, 2008.

Revenue in the third quarter was a record $138.1 million, compared with $121.5 million reported in the second quarter of 2008 and $106.3 million reported in the third quarter of 2007.

In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded third quarter net income of $10.1 million or $0.16 per diluted share. This compares with GAAP net income of $10.1 million or $0.16 per diluted share in the second quarter of 2008. GAAP net income in the third quarter of 2007 was $9.7 million or $0.16 per diluted share. Total cash, cash equivalents and short-term marketable securities were $274.1 million at Sept. 30, 2008, up $21.5 million from the prior quarter.

Atheros reports gross margins, operating expenses, operating income, net income and basic and diluted net income 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. A reconciliation of preliminary GAAP 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 third quarter was 49.4 percent, compared with 50.8 percent in the second quarter of 2008 and 49.3 percent in the third quarter of 2007. Non-GAAP operating income was 17.7 percent of revenue, compared with 16.6 percent in the second quarter of 2008 and 17.0 percent in the third quarter of 2007.

Non-GAAP net income in the third quarter was $23.4 million or $0.37 per diluted share, compared with $19.3 million or $0.31 per diluted share in the second quarter of 2008 and $16.9 million or $0.28 per diluted share in the third quarter of 2007.

"We are pleased to report our 14th consecutive quarter of revenue growth,” said Dr. Craig Barratt, president and chief executive officer.  “Our 14 percent sequential increase in revenue was driven by strength in each of our three channels - PC, Networking and Consumer.  Demand for our expanded family of 802.11n products was particularly strong while our 802.11g solutions continue to be incorporated into a wide variety of value-oriented laptops, networking products and consumer devices,” Dr. Barratt said.

Recent Atheros Highlights:

• October 27, 2008
  Atheros Launches Align™ 1-Stream Solutions Leveraging 802.11n Specification to Provide Upgrade from Legacy 11g

• September 29, 2008
  Atheros Appoints Amir Faintuch as Vice President and General Manager to Lead Mobile Wireless Business Unit

• September 22, 2008
  Atheros Named to FORTUNE’s 100 Fastest-Growing Companies List

• August 11, 2008
  Atheros XSPAN PC Solutions Are First to Achieve Cisco Compatible Extensions Version 5 Certification

Conference Call:

Atheros will broadcast its third quarter financial results conference call today, Monday, Oct. 27, 2008 at 2 p.m. Pacific time (5 p.m. Eastern time).

To listen to the call, dial 210-234-0024 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. To access the replay, dial 888-562-4471 and use the pass code 2843767.

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.  Please 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 leading developer of semiconductor system solutions 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.

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NOTE: Atheros, the Atheros logo, Align and XSPAN 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 anticipated growth and the continued incorporation of our 802.11g solutions in a variety of products, 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 the impacts of competition, technological advances; general economic conditions; difficulties in the development of new products and technologies; whether Atheros is successful in marketing and selling its products; and other 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 June 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, or Greg Wood, A&R Edelman for Atheros , 650-762-2838, gwood@ar-edelman.com   

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