Cavium Networks Announces
Financial Results for Q3 2010
MOUNTAIN VIEW, Calif., October 27, 2010 –
Cavium Networks, Inc. (NASDAQ: CAVM), a leading provider
of highly integrated semiconductor products that enable
intelligent processing for networking, communications, and
the digital home, today announced financial results for
the third quarter of 2010 ended September 30, 2010.
Revenue in the third quarter of 2010 was $55.2 million,
an 11% sequential increase from the $49.9 million reported
for the second quarter of 2010 and an increase of 113% from
the $25.9 million reported for the third quarter of last
year.
Generally Accepted Accounting Principles (GAAP)
Results
Net income for the third quarter of 2010, on a GAAP basis,
was $5.0 million, or $0.10 per diluted share, compared to
net income of $0.6 million, or $0.01 per diluted share in
the second quarter of 2010, and a net loss of $4.2 million,
or $0.10 per diluted share in the third quarter of last
year. Gross margins were 62.3% in the third quarter of 2010
compared to 60.8% in the second quarter of 2010 and 51.5%
in the third quarter of 2009. Total cash and cash equivalents
were $83.3 million at September 30, 2010.
Non-GAAP Results
Cavium Networks believes that the presentation of non-GAAP
financial measures provides important supplemental information
to management and investors regarding financial and business
trends relating to the company's financial condition and
results of operations. These measures should only be used
to evaluate the Company’s results of operations in
conjunction with the corresponding GAAP measures. Non-GAAP
financial measures in the third quarter of 2010 exclude
expenses totaling $7.6 million related to stock-based compensation
and related payroll expense, amortization of acquired intangible
assets and acquisition related expenses. The reconciliation
between GAAP and non-GAAP financial results is provided
in the financial statements portion of this release.
Net income for the third quarter of 2010, on a non-GAAP
basis, was $12.5 million, or $0.25 per diluted share, compared
with non-GAAP net income of $10.2 million, or $0.20 per
share in the second quarter of 2010. Gross margins, on a
non-GAAP basis, were 65.1% in the third quarter of 2010
compared to 64.4% in the second quarter of 2010. Operating
margins (non-GAAP income from operations as a percentage
of revenue), on a non-GAAP basis, were 23.9% in the third
quarter of 2010 compared to 21.1% in the second quarter
of 2010.
“Key financial metrics were positive across the board.
Our record sales and strong sequential sales growth came
from strength across multiple markets and geographies. This
was our sixth consecutive quarter of double digit sequential
sales growth, with growth coming from both our chip and
software and services business. We generated more than $14
million in cash during the quarter. In addition, we increased
non-GAAP gross margins by 70 basis points and operating
margins by 280 basis points, sequentially. This led to record
GAAP and non-GAAP earnings for the company” said Syed
Ali, president and CEO of Cavium Networks. “Furthermore,
design win traction continues to be strong across of our
major product families”.
Recent News Highlights:
October 25, 2010 – Cavium and
MontaVista announced availability of Android on ECONA
processors and demonstration of next generation broadband
gateways at BBWF, Paris
October 20, 2010 - MontaVista released
its new Carrier Grade Linux 6.0 with Bare Metal Performance
features and Embedded Virtualization for Multi-Core Architectures
October 20, 2010 - Kontron released
the first Cavium OCTEON® II AdvancedMC module
October 19, 2010 - Cavium and Partners
Demonstrated 4G Solutions at Chicago 4G WORLD
October 18, 2010 - Tata Elxsi extended
its LTE Software Portfolio for Cavium Networks OCTEON
II
October 05, 2010 - Cavium Introduced
and demonstrated new PureVu-3D for 3D Wireless Display
Solutions at CEATEC 2010
September 21, 2010 - Cavium Launched
10 GbE Intelligent Adapters for Secure Network, Storage
and Cloud Computing
September 8, 2010 - Metaswitch reported
trend-setting adoption of OCTEON amongst their customers
August 24, 2010 - Citrix Systems uses
FIPS 140-2 Certified Adapters in Four New NetScaler®
Platforms
Aug 11, 2010 - MontaVista Software
Launched its Next Generation Community for Developers
of Embedded Linux called Meld 2.0
August 04, 2010 - CriticalBlue announced
availability of its Multicore Software Development Analysis
Environment for OCTEON and OCTEON II Processors
July 29, 2010 - ViaSat Selected Cavium
Networks Multi-Core OCTEON Plus Processors to Power its
Next Generation Satellite Broadband Modems
July 27, 2010 – GE announced
their new WANic product based on OCTEON II
July 27, 2010 - Advantech Selected
OCTEON® II for Packetarium™ with Two New Platforms
Jul 22, 2010 - MontaVista Software
Launched DevRocket 6.1 Integrated IDE for Embedded Linux
Development
Conference Call
Cavium Networks, Inc. will broadcast its third quarter 2010
financial results conference call today, October 27th, 2010,
at 2 p.m. Pacific time (5 p.m. Eastern time). The conference
call will be available via a live web cast on the investor
relations section of the Cavium Networks website at http://www.caviumnetworks.com.
Please access the website at least a few minutes prior to
the start of the call in order to download and install any
necessary audio software. An archived web cast replay of the
call will be available on the web site for a limited period
of time.
About Cavium Networks
Cavium Networks is a leading provider of highly integrated semiconductor products that enable intelligent processing in networking, communications and the digital home.. Cavium Networks offers a broad portfolio of integrated, software compatible processors ranging in performance from 10 Mbps to 40 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access & service provider equipment. Cavium Networks processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium Networks principal offices are in Mountain View, California with design team locations in California, Massachusetts, India and Taiwan. For more information, please visit: http://www.caviumnetworks.com
Note on Forward-Looking Statements
This press release may contain forward-looking statements regarding
future events that involve risks and uncertainties. Readers
are cautioned that these forward-looking statements are only
predictions and may differ materially from actual future events
or results. These forward-looking statements involve risks and
uncertainties, as well as assumptions and current expectations.
Our actual results and the timing of events could differ materially
from those anticipated in such forward-looking statements as
a result of these risks, uncertainties and assumptions. The
risks and uncertainties that could cause our results to differ
materially from those expressed or implied by such forward-looking
statements include but are not limited to the rate of new design
wins, acceptance by customers of Cavium’s new product
introductions, whether or not the company can continue to expand
gross margins and operating margins, the rate at which existing
design wins go into production, pricing pressures; general economic
conditions; manufacturing difficulties; and other risks and
uncertainties described more fully in our documents filed with
or furnished to the Securities and Exchange Commission. More
information about these and other risks that may impact Cavium’s
business are set forth in the “Risk Factors” section
of our Form 10K filed with the Securities and Exchange Commission
on March 1, 2010. All forward-looking statements in this press
release are based on information available to us as of the date
hereof and qualified in their entirety by this cautionary statement,
and we assume no obligation to revise or update these forward-looking
statements.
