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Cavium to Buy MontaVista

MOUNTAIN VIEW, Calif. -- Cavium Networks (NASDAQ:CAVM - News), a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, wireless, storage and video applications, today announced that it is has signed a definitive agreement to acquire MontaVista Software for $50 million, comprised of approximately $16 million in cash and approximately $34 million in Cavium Networks common stock. The deal is expected to close in December 2009. This acquisition will significantly increase Cavium's software and services revenue, and is expected to be gross margin and non-GAAP earnings accretive in 2010 and beyond.

Today embedded Linux is fast becoming the operating system of choice for hundreds of millions of devices ranging from very large carrier grade equipment to consumer electronics. Traditionally embedded devices used a proprietary OS or commercial real-time operating system. However, there is a major trend towards using embedded Linux. This rapid adoption of Linux in embedded networking, wireless, consumer electronics, mobile devices and storage is driving the demand for a high quality, commercial grade embedded Linux along with support for multi-core processors and embedded virtualization.

MontaVista Software is a leader in multi-core embedded Linux operating systems, virtualization, development tools and professional services with a broad array of Tier-1 customers. As the first commercial embedded Linux vendor, MontaVista provides the industry's leading Carrier Grade Linux that has been widely adopted by industry leading companies that include Alcatel-Lucent, Cisco, Ericsson, Fujitsu, NEC, Nokia-Siemens, NTT, Motorola, Samsung and many other Tier-1 vendors. MontaVista is also the innovation leader in the embedded Linux market segment with deployments in Tier-1 Consumer Electronics manufacturers such as Sony, Samsung and Philips; MID and Mobile vendors such as NEC and Garmin; Industrial Automation vendors such as HP, Kyocera-Mita and Fuji Xerox and leading Automotive infotainment suppliers. One of MontaVista's signature, high profile deployments includes Dell's latest innovative enterprise notebook the Dell Latitude ON(TM) that uses MontaVista's Montabello software platform.

"Software is becoming an increasingly important part of the total solution with the rapidly increasing adoption of multi-core processors," said Syed Ali, President and CEO of Cavium Networks. "This acquisition will complement Cavium's market leading processor portfolio with world-class software expertise and will enable us to deliver highly compelling and differentiated solutions to the market."

Cavium Inc. (Nasdaq: CAVM)

MontaVista Software Inc.

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