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Atheros Communications Announces Record Financial Results for First Quarter 2004

Q1 Revenues up 14 percent over Q4; Gross Margins Expand to 44.2 percent

Sunnyvale, Calif.-April 27, 2004-Atheros Communications, Inc. (Nasdaq: ATHR), a leading developer of advanced wireless LAN chipsets, today announced record financial results for the first quarter of fiscal 2004, ended March 31, 2004.

Revenue in the first quarter of fiscal 2004 was $43.1 million, compared with $37.7 million in the fourth quarter of fiscal 2003, an increase of 14 percent. Gross margin in the first quarter of fiscal 2004 was 44.2 percent, or 80 basis points higher than the 43.4 percent gross margin reported in the prior quarter.

In accordance with U.S. generally accepted accounting principles (GAAP), the company's net income in the first quarter of fiscal 2004 was $2.4 million, or earnings of $0.05 per diluted share on 48.2 million average shares outstanding. This compares with a net loss of $0.2 million, or a loss of $0.02 per diluted share on 13.1 million average shares outstanding in the fourth quarter of fiscal 2003.

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Total cash and short-term investments were $158.4 million at March 31, 2004, compared with $29.0 million at Dec. 31, 2003. Atheros raised $133.5 million in net proceeds to the company from its initial public offering of 10.35 million shares of common stock in February 2004.

Atheros reports 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, where applicable, excludes the effect of the amortization of stock-based compensation. In the first quarter of 2004, non-GAAP net income was $3.5 million, or $0.07 per diluted share, compared with non-GAAP net income of $1.6 million, or $0.13 per diluted share, in the fourth quarter of fiscal 2003. Average shares used in computing non-GAAP net income per share for the first quarter of fiscal 2004 increased to 48.2 million, compared with 13.1 million for the fourth quarter of fiscal 2003.

"It has been an extremely exciting quarter for Atheros, and we are pleased with our company's progress," said Dr. Craig Barratt, president and CEO. "Not only did we successfully complete our initial public offering in February, we continued to expand our customer base and drive the adoption of wireless networking technologies worldwide. In January we once again demonstrated our technological leadership in wireless solutions with the introduction of the industry's first single chip 802.11g based product and we believe that this product will enable our customers to continue to provide competitive solutions to the marketplace.

"In addition, the adoption of our Super G technology has enabled several of our partners to introduce Atheros-branded, market-leading products with the highest level of throughput available, giving them a competitive advantage and providing end users with a better performing solution," he said.