The company now expects revenue for the fourth quarter of 2008 to be approximately 10% lower than third quarter revenue of $24.5 million, based on information currently available. Additionally, the company expects that gross margins in the fourth quarter will be two to three percentage points lower than previously expected, due to the lower revenue and changes in product mix.

"Customer demand for our products has been weaker than expected this quarter, especially in high-end service provider and enterprise products," said Syed Ali, president and CEO of Cavium Networks. "The deteriorating global economic climate is clearly having a short term impact on our business, as our customers slow down orders and minimize inventory. However, we continue to experience design win activity at record levels and are confident that we are well positioned for the future. We have numerous Tier 1 customer design wins that should go into production in 2009 and beyond, which we believe will provide sustained long term growth for the company."

Q4 2008 Results Conference Call

Cavium Networks plans to announce Q4 2008 results on January 28, 2009. The company will hold a conference call that day at 2 p.m. Pacific time (5 p.m. Eastern time) which will be available via a live web cast on the investor relations section of the Cavium Networks website at http://www.caviumnetworks.com.

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 20 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 contains forward-looking statements regarding future events that involve risks and uncertainties, including, without limitation, statements relating to revenue and gross margin expectations for the fourth quarter of 2008. Words such as "expect," "outlook," "should," "believe," and similar expressions are intended to identify forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions based on Cavium Networks' current expectations 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 general economic conditions, changes in customer demand during the remainder of the fourth quarter of 2008, changes in gross margins during the quarter, pricing pressures; 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. There can be no assurance that the current economic environment will not have an extended impact on our business. More information about these and other risks that may impact Cavium's business are set forth in the "Risk Factors" section of our latest Form 10Q filed on November 12, 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. We expressly disclaim any obligation or undertaking to release publicly any revisions or updates to any forward-looking statements contained herein.

Cavium Networks Contact:

Art Chadwick
VP and Chief Financial Officer
Tel: (650) 623-7063
Email: Email Contact

Angel Atondo
Marketing Communications Manager
Tel: (650) 623-7033
Email: Email Contact

SOURCE: Cavium Networks, Inc.

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