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Cavium Announces Financial Results for Q1 2010


MOUNTAIN VIEW, Calif., April 26, 2010 – Cavium, 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 first quarter of 2010 ended March 31, 2010.

Revenue in the first quarter of 2010 was $ 41.6 million, a 30% sequential increase from the $32.1 million reported for the fourth quarter of 2009 and an increase of 104% from the $20.4 million reported for the first quarter of last year.

Generally Accepted Accounting Principles (GAAP) Results
Net loss for the first quarter of 2010, on a GAAP basis, was $ 3.1 million, or $0.07 per share, compared to a net loss of $4.5 million, or $0.11 per share in the fourth quarter of 2009, and net loss of $6.5 million, or $0.16 per diluted share in the first quarter of last year. Gross margins were 59.6% in the first quarter of 2010 compared to 51.5% in the fourth quarter of 2009 and 46.9% in the first quarter of 2009. Total cash and cash equivalents were $65.7 million at March 31, 2010.

Non-GAAP Results
Cavium 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 first quarter of 2010 exclude expenses totaling $10.0 million related to stock-based compensation and related payroll expense, amortization of acquired intangible assets and acquisition related compensation expense and other 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 first quarter of 2010, on a non-GAAP basis, was $6.9 million, or $0.14 per diluted share, compared with non-GAAP net income of $3.8 million, or $0.08 per share in the fourth quarter of 2009. Gross margins, on a non-GAAP basis, were 63.4% in the first quarter of 2010 compared to 58.9% in the fourth quarter of 2009.

“Our record sales and strong sequential sales growth came from strength across multiple markets and geographies.  We had record bookings again this quarter for both our chip and software businesses, which is an indicator of the strong trends we are experiencing. Furthermore, non-GAAP gross margins increased 450 basis points sequentially due to improved product mix and reduced manufacturing costs, and operating margins increased 470 basis points sequentially, which shows the continued leverage in our business model,” said Syed Ali, president and CEO of Cavium.  “Design win traction was very strong, especially for recently introduced products including our Next Generation OCTEON™ II family of multi-core processors as well as our other key product families.”

Recent News Highlights:

  • April 22, 2010 - Cavium was ranked as the #1 Multi-core processor supplier by Heavy Reading Report.
  • April 22, 2010 – Monta Vista showcased developer tools for multi-core development, Android-based devices, and industrial automation solutions.
  • April 14, 2010 - Cavium demonstrated an OCTEON® processor based secure, scalable, content aware IP storage solution.
  • March 24, 2010 - Renesas and Cavium established a strategic collaboration to deliver optimized reference designs for high-performance routers and switches.
  • March 22, 2010 - Cavium and Wind River announced a partnership to develop future generations of Multi-core software solutions based on OCTEON processors.
  • March 17, 2010 - ZTE announced that they are deploying multiple, industry leading networking platforms based on Cavium OCTEON processors.
  • March 16, 2010 - MontaVista Software was elected to the GENIVI Alliance board of directors, which is an automotive and consumer electronics industry association driving the development and adoption of an open In-vehicle Infotainment (IVI) reference platform.
  • February 15, 2010 - Cavium introduced comprehensive, market leading LTE eNodeB and packet core solutions using OCTEON.
  • February 15, 2010 - Cavium introduced innovative DPI protocol software for 3G/4G core networks based on OCTEON processors.
  • February 15, 2010 - Cavium along with Continuous Computing and picoChip announced the industry’s first complete end-to-end LTE Femtocell reference design.
  • February 11, 2010 – MontaVista’s Montabello™ MID Platform won VME and Critical Systems magazine Editor's Choice Award for its rapid boot time, efficient power management, wireless connectivity, and common business applications for the Dell LatitudeON.
  • February 08, 2010 - Tata Elxsi Introduced a market-leading LTE software solution optimized for OCTEON Processors

Conference Call
Cavium, Inc. will broadcast its first quarter 2010 financial results conference call today, April 26th, 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 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
Cavium is a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications and the digital home. Cavium 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 and service provider equipment. Cavium processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium principal offices are in Mountain View, CA with design team locations in California, Massachusetts, India and Taiwan. For more information, please visit: http://www.caviumnetworks.com.

Cavium Contact:
Angel Atondo
Marketing Communications Manager
Cavium
805 East Middlefield Road,
Mountain View, CA 94043
Telephone: +1 (650) 623-7033
Email:angel.atondo@caviumnetworks.com

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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.

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