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Atheros Announces Fourth Quarter and Fiscal Year 2009 Results

Record Fourth Quarter and Full Year Revenue

SANTA CLARA, Calif. – Jan. 25, 2010 – 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 full year ended Dec. 31, 2009.

Revenue in the fourth quarter of 2009 was $185.7 million, up 19 percent compared to $156.6 million reported in the third quarter of 2009. Fourth quarter 2009 revenue increased 89 percent compared to $98.3 million reported in the fourth quarter of 2008.

In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded net income in the fourth quarter of 2009 of $15.6 million or $0.24 per diluted share. This compares with GAAP net income of $38.6 million or $0.60 per diluted share in the third quarter of 2009. Net loss in the fourth quarter of 2008 was $4.8 million or $0.08 per diluted share. Cash, cash equivalents and marketable securities were $402.2 million at Dec. 31, 2009, up $19.4 million from the third quarter of 2009 and up $108.5 million from the balance at Dec. 31, 2008.

Revenue in 2009 was $542.5 million, up 15 percent from the $472.4 million reported in 2008. GAAP net income for 2009 was $46.4 million or $0.73 per diluted share. In 2008, GAAP net income was $18.9 million or $0.30 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 impairment of long-term investments, the tax impact of these excluded items and the tax benefits resulting from the favorable settlement of a foreign tax liability and 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 fourth quarter of 2009 were 50.2 percent, compared to 48.4 percent reported in the third quarter of 2009 and 49.2 percent in the fourth quarter of 2008. Non-GAAP operating income in the fourth quarter of 2009 was 23.4 percent of revenue, compared to 19.4 percent in the third quarter of 2009 and 7.6 percent in the fourth quarter of 2008.

Non-GAAP net income in the fourth quarter of 2009 was $41.2 million or $0.62 per diluted share, compared to $29.3 million or $0.46 per diluted share in the third quarter of 2009 and $10.8 million or $0.17 per diluted share in the fourth quarter of 2008.

Non-GAAP net income for the full year 2009 was $86.7 million or $1.36 per diluted share, compared to non-GAAP net income in 2008 of $70.6 million or $1.14 per diluted share.

"We are very pleased with our record fourth quarter revenue and strong cash flow generation. Our commitment to technology innovation, product execution, market share gains and TAM expansion enabled Atheros to record its eighth consecutive year of revenue growth," said Craig Barratt, president and chief executive officer of Atheros Communications. "Our Mobile WLAN and Ethernet product lines both performed well in the fourth quarter further demonstrating the success of our ongoing diversification efforts. The recent acquisition of Intellon® expands our technology portfolio to include leadership powerline communication products and uniquely positions Atheros as a provider of the robust, seamless Wi-Fi, PLC and Ethernet hybrid solutions.

Recent Atheros Highlights:

Conference Call
Atheros will broadcast its fourth quarter financial results conference call today, Monday, Jan. 25, 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. 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 49453309.

Atheros' financial results conference call will be available via a live webcast on the investor relations section of the Atheros web site at http://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. 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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Atheros, the Atheros logo, XSPAN,ETHOS and Intellon are trademarks of Atheros Communications, Inc. HomePlug AV is a registered trademark of the HomePlug Powerline Alliance, 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 anticipated product execution, market share gains and TAM expansion through diversification, the expected benefits of our recent acquisition of Intellon, 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, risks associated with Atheros' recent acquisition of Intellon, including but not limited to, whether Atheros is successful in integrating Intellon's business and in realizing the anticipated benefits from the acquisition, 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 September 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.

– 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: Susan Lansing, 408-773-5216, susan.lansing@atheros.com

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