“Looking at our Smart Sensor business, where our 2010 revenues are based primarily on design-in decisions made as long as two years ago, several recent design wins underscore the strong market acceptance of our newest TruePrint® smart sensors and TrueSuite® identity management software. This validates our decision to invest in our sensor, packaging and software developments over the last year, while concurrently reducing our Smart Sensor expenses by some 25 percent. In less than one year, we have added an entirely new packaging technology, introduced a new smart sensor for the mobile market and two for the PC market, and unveiled our new TrueSuite application software. As a result of our efforts, we expect TruePrint sensor revenues from nine of the top ten PC OEMs next year as well as several wireless manufacturers. We also expect to generate our first TrueSuite software revenues based on the seven PC OEMs we now count as future customers. Moreover, we are also making significant progress on our newest smart sensor offering for the mobile market, codenamed ‘Saturn,’ which we believe will set a new standard for size, cost, ease of integration, touch navigation and biometric performance for mobile phones.

“We believe our prudent investments in hardware and software developments have resulted in new mobile phone and PC SSS design wins. Our acquisitions of Atrua and SafeNet’s Embedded Security Solutions have also further enhanced our broad IP portfolio, technology and most importantly, future revenue opportunities. Fueled by a product ramp-up to support these design wins and contributions expected from Embedded Security Solutions, we believe AuthenTec is well positioned for growth in 2011.”

Business Outlook:

Mr. Moody concluded, “Looking ahead to the third quarter, the effect of previously discussed design-in decisions on notebooks using the Intel Calpella platform will be fully realized for the first time in our third quarter Smart Sensor revenue projections. As a result, we expect third quarter revenue to decline sequentially to between a range of $8.2 million and $9.2 million. Operating expenses for the third quarter are expected to be consistent with the prior quarter resulting in an expected non-GAAP net loss per diluted share of between $0.10 and $0.12.

“While we do not typically provide guidance beyond one quarter, we do expect our Smart Sensor revenues to increase again in the fourth quarter. Even though several of AuthenTec’s new Smart Sensor design wins are expected to ramp to full production throughout 2011, we anticipate benefiting from some of these wins by the end of this year.”

Second Quarter 2010 Financial Results Webcast and Conference Call:

AuthenTec will host a conference call to discuss its second quarter 2010 financial results and other information that may be material to investors at 5:00 p.m. Eastern Time (ET) today, July 29, 2010. Investors and analysts may join the conference call by dialing 800-573-4840 and providing the participant pass code 34269504. International callers may join the teleconference by dialing +1-617-224-4326 and using the same pass code. A replay of the conference call will be available beginning at 8:00 p.m. ET and will remain available until midnight ET on Thursday, August 5, 2010. The U.S. replay number is 888-286-8010, with a confirmation code of 87257907. International callers should dial +1-617-801-6888, with the same confirmation code. A live web cast of the conference call will be accessible from the Investor section of the Company's web site at  http://investors.authentec.com. Following the live web cast, an archived version will be made available on AuthenTec’s web site.

Use of GAAP and Non-GAAP Financial Metrics:

To supplement AuthenTec’s consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP financial measures that exclude from the statement of operations the effects of stock-based compensation, certain acquisition-related charges, amortization of certain intangible assets, impairments on investments, and costs related to a reduction in workforce. AuthenTec uses the above non-GAAP financial measures internally to understand, manage and evaluate the business. Management believes it is useful for itself and investors to review, as applicable, both GAAP information and the non-GAAP measures in order to assess the performance of continuing operations and for planning and forecasting in future periods. The presentation of these non-GAAP measures is intended to provide investors with an understanding of the Company’s operational results and trends that enables them to analyze the base financial and operating performance and facilitate period-to-period comparisons and analysis of operational trends. AuthenTec believes the presentation of these non-GAAP financial measures is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered substitutes for or superior to GAAP results. In addition, our non-GAAP financial measures may not be comparable to similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as we do.

Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which are provided in Table 2 after the text of this release. For additional information regarding these non-GAAP financial measures, and management's explanation of why it considers such measures to be useful, refer to the filings made from time to time with the Securities and Exchange Commission.