Cavium (CAVM) 8-K Cavium Networks to Acquire Taiwan-Based Star Semiconductor

Exhibit 99.2

Cavium Networks Contact:
Art Chadwick	Angel Atondo
VP and Chief Financial Officer	Marketing Communications Manager
Tel: (650) 623-7063	Tel : (650) 623-7033
Email: art.chadwick@caviumnetworks.com	Email: angel.atondo@caviumnetworks.com

Cavium Networks Announces Financial Results for Q2 2008

Cavium announces record quarterly revenue in Q2 2008.
Revenue increased 18% sequentially and 70% year-over-year

MOUNTAIN VIEW, Calif., July 16, 2008— Cavium Networks (NASDAQ: CAVM), a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications, storage, wireless and security applications, today announced financial results for the second quarter of 2008 ended June 30, 2008.

Revenue in the second quarter of 2008 was $21.6 million, an 18% sequential increase from the $18.3 million reported for the first quarter of 2008 and an increase of 70% from the $12.7 million reported for the second quarter of last year.

Generally Accepted Accounting Principles (GAAP) Results

Net income for the second quarter of 2008, on a GAAP basis, was $2.1 million, or $0.05 per share (diluted), compared to net income of $2.0 million, or $0.05 per diluted share in the first quarter of 2008, and a net loss of $0.1 million, or $0.00 per share in the second quarter of last year. Gross margins were 63.8% in the second quarter of 2008 compared to 64.1% in the first quarter of this year. Total cash and cash equivalents were $99.3 million at June 30, 2008, $3.7 million higher than the balance at the end of the first quarter of this year.

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. Non-GAAP financial measures in the second quarter of 2008 exclude $1.8 million in stock-based compensation and related payroll tax expense, and amortization of acquired intangible assets.

The reconciliation between GAAP and non-GAAP financial results are provided in the financial statements portion of this release.

Net income for the second quarter of 2008, on a non-GAAP basis, was $3.8 million, or $0.09 per share (diluted), compared with $2.9 million, or $0.07 per share (diluted) in the first quarter of the year and $1.0 million, or $0.03 per share (diluted) in the second quarter of last year. Gross margins, on a non-GAAP basis, were 64.2% in the second quarter of 2008 compared to 64.7% in the first quarter of this year.

“The second quarter was another strong quarter for us, which continued our history of record quarterly sales as well as strong sequential and year-over-year growth,” said Syed Ali, president and CEO of Cavium Networks. “We continue to experience strong design win traction and growth across all markets that we serve. We have continued to expand non-GAAP operating margins every quarter since our IPO. Non-GAAP operating margins have increased from just above breakeven in the first quarter of 2007 to 12.6% in the first quarter of 2008 and to 16.8% in the second quarter of 2008. Furthermore, non-GAAP operating income, which we consider to be an important measure of the health of our business, increased this year 42% sequentially from Q4 2007 to Q1 2008 and 56% sequentially from Q1 2008 to Q2 2008, due to the strength in our business and leverage in our business model.”

Second Quarter 2008 Highlights:

• July 16, 2008 — Sumitomo Electric Networks Inc. selected OCTEON to power Triple-Play Home Gateways for Next Generation Fiber to the Home (FTTH) Service.

• July 16, 2008 — Cavium Networks signed a definitive agreement on July 15, 2008 to acquire certain assets and the business of Star Semiconductor, a Taiwan corporation. This acquisition for a net purchase price of approximately $9 million cash will enable Cavium to deliver highly optimized, cost effective and low power SOC processors to address a significantly broader range of network connected, triple-play enabled devices for the digitally connected home and office. Cavium Networks will continue to ship and sell Star’s existing product lines.

• June 23, 2008- Cavium Networks’ CEO Syed Ali was named Ernst & Young Entrepreneur of the Year^® 2008 Award Recipient in Northern California.

• June 17, 2008 — Emerson Network Power announced AdvancedTCA Leadership with new high performance OCTEON based processing blade.

• June 16, 2008 — Cavium Networks and Effnet announce collaboration to offer robust header compression (RoHC) software on OCTEON. RoHC is used in 3G/4G wireless infrastructure equipment.

• June 12, 2008 — Interphase announced availability of ispan 36CA AdvancedMC™ and the ispan 55CA PCI-X Packet Accelerator Cards that use OCTEON processors.

• June 12, 2008 — Kontron debuted its portfolio of AdvancedMC Intelligent IO modules based on OCTEON™ Plus CN56xx multi-core processors.

• May 20, 2008 — Palo Alto Networks PA-4000 Series next generation firewall that uses Cavium’s OCTEON processor won the highly coveted Interop Grand Prize Award as well as the Best of Show award in the security category at the recent Interop 2008 in Las Vegas.

• May 2, 2008 — Sandeep Vij joined Cavium Networks as Vice President of Strategic Markets & Business Development. Prior to joining Cavium Networks, Mr. Vij held the position of Vice President of Worldwide Marketing, Services and Support for Xilinx Inc.

• April 29, 2008 — Cavium Networks introduces New OCTEON Plus Based PCI-Express Accelerator Cards for Networking, Storage and Security Applications.

• April 28, 2008 — Cavium Networks and its Ecosystem Partners displayed multiple leading intelligent networking solutions at INTEROP 2008 in Las Vegas, NV.

Conference Call

Cavium Networks will broadcast its second quarter 2008 financial results conference call today, July 16, 2008 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, storage, wireless and security applications. Cavium Networks offers a broad portfolio of integrated, software compatible processors ranging in performance from 10 Mbps to 10 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 and India. 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 that if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or

implied by such forward-looking statements. 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, the rate at which existing design wins go into production, technological advances, pricing pressures; general economic conditions; development of new products and technologies; manufacturing difficulties; whether Cavium Networks is successful in marketing its products; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. In addition, there can be no assurance that the company will be able to continue to expand non-GAAP operating margins for the foreseeable future. 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 10, 2008 and our Form 10Q filed on May 2 2008. 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.

CAVIUM NETWORKS, INC.
Unaudited GAAP Consolidated Statements of Operations
(In thousands, except per share amounts)

	Three Months Ended
	June 30, 2008			March 31, 2008
Revenue	$	21,562		$	18,342
Cost of revenue (1)		7,808			6,587
Gross profit		13,754			11,755
Operating expenses:
Research and development (2)		6,461			5,820
Sales, general and administrative (3)		5,454			4,555
Total operating expenses		11,915			10,375
Income from operations		1,839			1,380
Other income, net:
Interest expense		(135	)		(153	)
Interest income and other		609			992
Total other income, net		474			839
Income before income tax		2,313			2,219
Income tax expense		240			247
Net income	$	2,073		$	1,972
Net income per common share, basic	$	0.05		$	0.05
Shares used in computing basic net income per common share		40,300			39,966
Net income per common share, diluted	$	0.05		$	0.05
Shares used in computing diluted net income per common share		42,992			42,135
(1) Cost of revenue:
Amortization of acquired technology		32			88
Stock-based compensation and related taxes		55			29
(2) Research and development expense
Stock-based compensation and related taxes		821			372
(3) Sales, general and administrative
Stock-based compensation and related taxes		866			446

CAVIUM NETWORKS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share amounts)

Reconciliation of GAAP gross profit & margin to non-GAAP:

	Three Months Ended
	June 30, 2008			March 31, 2008
Revenue	$	21,562		$	18,342
GAAP gross profit		13,754			11,755
GAAP gross margin		63.8	%		64.1	%
Amortization of acquired technology:
Cost of revenue		32			88
Stock-based compensation and related taxes:
Cost of revenue		55			29
Non-GAAP gross profit	$	13,841		$	11,872
Non-GAAP gross margin		64.2	%		64.7	%

Reconciliation of GAAP income from operations to non-GAAP:

	Three Months Ended
	June 30, 2008			March 31, 2008
GAAP income from operations	$	1,839		$	1,380
Amortization of acquired technology		32			88
Stock-based compensation and related taxes		1,742			847
Non-GAAP income from operations	$	3,613		$	2,315
Non-GAAP income from operations as a percentage of revenue		16.8	%		12.6	%

Reconciliation of GAAP net income to non-GAAP:

	Three Months Ended
	June 30, 2008		March 31, 2008
GAAP net income	$	2,073	$	1,972
Non-GAAP adjustments:
Stock-based compensation and related taxes:
Cost of revenue		55		29
Research and development		821		372
Sales, general and administrative		866		446
Amortization of acquired technology:
Cost of revenue		32		88
Total of non-GAAP adjustments		1,774		935
Non-GAAP net income	$	3,847	$	2,907
GAAP net income per share (diluted)	$	0.05	$	0.05
Non-GAAP adjustments detailed above		0.04		0.02
Non-GAAP net income per share (diluted)	$	0.09	$	0.07
GAAP weighted average shares (diluted)		42,992		42,135
Non-GAAP adjustment		775		534
Non-GAAP weighted average shares (diluted)		43,767		42,669

CAVIUM NETWORKS, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(In thousands)

	June 30, 2008			March 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	99,284		$	95,612
Accounts receivable, net		10,867			13,747
Inventories		12,913			10,767
Prepaid expenses and other current assets		1,287			952
Total current assets		124,351			121,078
Property and equipment, net		11,041			11,498
Intangible assets, net		3,963			3,774
Goodwill		807			—
Other assets		410			295
Total assets	$	140,572		$	136,645
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,444		$	4,985
Accrued expenses and other current liabilities		2,700			2,449
Deferred revenue		1,980			2,506
Capital lease and technology license obligations, current		3,120			3,501
Total current liabilities		13,244			13,441
Capital lease and technology license obligations, net of current		2,792			3,432
Other non-current liabilities		508			—
Total liabilities		16,544			16,873
Stockholders’ equity
Common stock		41			40
Additional paid-in capital		178,672			176,490
Accumulated deficit		(54,685	)		(56,758	)
Total stockholders’ equity		124,028			119,772
Total liabilities and stockholders’ equity	$	140,572		$	136,645