Cavium Reports Q3

MOUNTAIN VIEW, Calif. -- Cavium Networks(NASDAQ: CAVM), a leading provider of highly integrated semiconductorproducts that enable intelligent processing for networking,communications, storage and security applications, today announcedfinancial results for the third quarter of 2007 ended September 30,2007.

Revenue in the third quarter of 2007 was $14.2 million, a 12%sequential increase from the $12.7 million reported for the secondquarter of 2007 and an increase of 54% from the $9.2 million reportedfor the third quarter of last year.

Generally Accepted Accounting Principles (GAAP) Results

Net income for the third quarter of 2007, on a GAAP basis, was $1.3million, or $0.03 per share (diluted), compared with a net loss of$0.1 million, or $0.00 per diluted share in the second quarter of2007, and a net loss of $1.7 million, or $0.21 per share (diluted) inthe third quarter of last year. Gross margins were 63.2% in thethird quarter of 2007 compared to 57.8% in the third quarter lastyear. Total cash and cash equivalents were $101.5 million atSeptember 30, 2007.

Non-GAAP ResultsCavium Networks believes that the presentation of non-GAAP financialmeasures provides important supplemental information to managementand investors regarding financial and business trends relating to thecompany's financial condition and results of operations. Non-GAAPfinancial measures in the third quarter of 2007 exclude $0.5 millionin stock-based compensation expense and $0.2 million in amortizationof acquired intangible assets. The reconciliation between GAAP andnon-GAAP financial results are provided in the financial statementsportion of this release.

Net income for the third quarter of 2007, on a non-GAAP basis, was$2.1 million, or $0.05 per share (diluted), compared with $1.0million, or $0.03 per share (diluted) in the second quarter of 2007,and a net loss of $1.2 million, or $0.14 per share (diluted) in thethird quarter of last year. Gross margins, on a non-GAAP basis, were64.9% in the third quarter of 2007 compared to 65.2% in the secondquarter of 2007 and 60.9% in the third quarter of last year.

Company Highlights

"We continue to show strong revenue growth on both a sequential andyear-over-year basis," said Syed Ali, president and CEO of CaviumNetworks. "The increased revenue growth along with strong grossmargins has driven continued operating margin expansion. Inaddition, we generated our first quarterly positive GAAP net incomein the Company's history. We have seen accelerated design winactivity this quarter and continue to gain strong traction in anumber of significant growth markets."

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