26-Oct-2009

SILICOM REPORTS Q3 2009 RESULTS
- Sequential Growth of 15% in Revenue and 35% in Net Income Compared to Q2 2009 -
- Renewed Purchasing by Major Customers, New Customers & New Products Contribute to Growth -

KFAR SAVA, Israel, October 26, 2009 Silicom Ltd. (NASDAQ: SILC and TASE: SILC), today reported its financial results for the third quarter and nine month period ended September 30, 2009.

Revenues for the third quarter of 2009 were $4.6 million compared with $6.1 million in the third quarter of 2008. Net income for the period was $346,000, or $0.05 per share (basic and diluted), compared with $944,000, or $0.14 per share (basic and diluted), for the third quarter of 2008.

For the first nine months of 2009, revenues were $13.7 million compared with $19.0 million for the parallel period of 2008. Net income for the nine-month period was $1.5 million, or $0.21 per diluted share ($0.22 per basic share), compared with $3.0 million, or $0.44 per diluted share ($0.45 per basic share), for the parallel period of 2008.

On a sequential basis, revenues and net income for the third quarter of 2009 increased significantly by 15% and 35%, respectively, compared with the second quarter of 2009, consistent with the Company’s expectations regarding a return to growth in the second half of the year.

As of September 30, 2009, the Company’s cash, cash equivalents, bank deposits and marketable securities totaled $41.7 million, up $0.5 million compared with the end of the second quarter of 2009, and up $2.5 million compared with the end of 2008.

Commenting on the results, Shaike Orbach, President and CEO, said, “We are very pleased to report sequential growth in line with our expectations, an encouraging achievement that derives from the renewal of purchases by major customers, in line with indications suggesting that their target markets have begun to reawaken, and the success of our efforts to secure new customers. We believe that the continuation of these trends will bring with them sustained top-line and bottom-line growth for Silicom, for both the short term and the long term.
“For the longer term, we are also excited by the potential of our strategic new product line, the SETAC SErver To Appliance Converter, to build our business to a new level. This innovative new product is opening the door to new types of clients, and gives us a full network appliance platform solution to offer - for the first time - to both existing and new customers. Although the product is too new to quantify long-term predictions, our experience so far has confirmed our initial market assessment, and we are optimistic about its potential to drive our future growth.”
Mr. Orbach concluded “Taken as a whole, with a better global market environment, an exciting new product line and broader addressable markets, we feel well positioned to continue delivering growth, thereby building the company to the next level.”

Conference Call Details :

Silicom’s Management will host an interactive conference today, October 26th, at 9am EDT (6am Pacific Time, 3pm Israel Time) to review and discuss the results. To participate, please call one of the following numbers approximately 10 minutes before that time.

US: 1 888 668 9141 (toll free)

ISRAEL: 03 918 0609 (not toll free)

UK: 0 800 917 5108 (toll free)

INTERNATIONAL: +972 3 918 0609 (not toll free)

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Silicom Ltd. is an industry-leading provider of high-performance server/appliances networking solutions. The Company's flagship products include a variety of multi-port Gigabit Ethernet, copper and fiber-optic, server adapters and innovative BYPASS adapters designed to increase throughput and availability of server-based systems, WAN Optimization and security appliances and other mission-critical gateway applications. For more information, please visit: www.silicom.co.il.

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission. The Company disclaims any duty to update such statements.

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 Silicom Ltd. Consolidated
Statements of Income

(US$ thousands, except for share and per share data)