The net revenues in fourth quarter 2008 were $120.8 million, compared with $123.6 million in the fourth quarter 2007 and $139.4 million reported in third quarter 2008. The revenues in fourth quarter 2008 declined 2% year over year and 13% sequentially.

The net income in fourth quarter 2008 on a GAAP basis was $13.7 million (GAAP diluted net income per share of $0.06). This compares with a GAAP net loss of $5.1 million (GAAP loss per share of $0.02) in the fourth quarter of 2007 and GAAP net income of $5.7 million (GAAP income per share of $0.03) in the third quarter of 2008.

The non-GAAP net income in fourth quarter 2008 was $16.8 million (non-GAAP diluted net income per share of $0.07). This compares with non-GAAP net income in fourth quarter 2007 of $20.1 million (non-GAAP diluted net income per share of $0.09) and non-GAAP net income in third quarter 2008 of $29.2 million (non-GAAP diluted net income per share of $0.13).

The non-GAAP net income for the fourth quarter of 2008 excludes the following items: (i) $5.1 million in stock-based compensation expense; (ii) $9.8 million in amortization of purchased intangible assets; (iii) $13.8 million gain on the repurchase of senior convertible notes, net; (iv) $4.3 million asset impairment; (v) $4.5 million net foreign exchange gain on the company’s net foreign tax liabilities; and (vi) $2.2 million net income tax effects comprised of $0.4 million income tax recovery related to the non-GAAP adjustments, $5.6 million deferred tax expense relating to unrealized gain on foreign exchange translation of a foreign subsidiary, $4.3 million reversal of unrecognized tax benefits and related interest, and $1.3 million tax adjustments based on completed filings and assessments received from tax authorities.

In 2008, our Company’s financial performance improved as total revenue increased 17% year over year, and our operating margin was 22% compared to 14% the prior year, said Greg Lang, president and chief executive officer of PMC-Sierra. While we were impacted by the global macro-economic slowdown in the fourth quarter of 2008, we are pleased with the year-over-year progress we have made in revenue and operating income.

The non-GAAP net income in 2008 was $99.2 million (non-GAAP diluted net income per share of $0.44), compared with the prior year’s non-GAAP net income of $51.0 million (non-GAAP diluted net income per share of $0.23).

The company believes the additional non-GAAP measures are useful to investors for the purpose of financial analysis. The management uses the non-GAAP measures internally to evaluate its in-period operating performance before gains, losses and other charges that are considered by management to be outside of the company’s core operating results. In addition, the measures are used to plan for the company’s future periods. However, non-GAAP measures are neither stated in accordance with, nor are they a substitute for, GAAP measures.

The company announced the following in the fourth quarter of 2008:

The company’s PM8011 SRC 8x6G 6Gb/s SAS RAID-on-Chip (RoC) is shipping on HP’s new P212, P410, and P411 high-performance Smart Array RAID controller cards. PMC-Sierra’s SRC RoC provides superior performance and flexibility, enabling HP to deliver a next-generation 6 Gb/s SAS RAID platform that more than doubles the performance of existing RAID solutions.

ZTE Corporation has selected the company’s CHESS architecture for its Unitrans product line. The CHESS family of solutions enables ZTE to offer a modular, scalable metro transport architecture with reduced power and cost to improve fiber efficiency, reduce capital and operational costs, and allow Service Providers to more effectively manage Ethernet and existing T1/E1 services.

ECI Telecom has chosen the company’s ADM 622, ARROW 2488, TEMAP 84FDL and HDLIU 32 devices for its Multi-Service Provisioning Platform family. The company’s chipset architecture provides ECI with a cost-effective and highly scalable MSPP platform that enables operators to easily provision new Ethernet-based services making it an ideal solution particularly for emerging markets.