LOS GATOS, Calif., Sept. 18 /PRNewswire-FirstCall/ -- Hifn , the leading provider of security processors for the networking and storage markets, announced today that it expects revenues for its fourth quarter of fiscal year 2006, ending September 30, 2006, to fall short of expectations by approximately 20%.

Hifn has been informed by one of its major OEM customers that the customer has changed its business model with its contract manufacturer, leading to a significant inventory reduction that substantially reduces the Hifn deliveries to the contract manufacturer for the current quarter. Hifn has been informed by the customer that there is no evidence of weakness in end-user demand. As a result, Hifn does not expect the effect of this reduction in inventory to be significant in future quarters. Hifn's outlook for FY2007 remains unchanged.

Hifn will discuss its fourth quarter and fiscal year results in detail in its regular conference call, scheduled for October 26, 2006.

About Hifn

Hifn combines security, compression, content search, and flow classification technology into solutions for networking, security and storage suppliers. Hifn's solutions are deployed in virtually all market-leading networking and security products. Founded in 1996, Hifn is headquartered in Los Gatos, California. For more information on Hifn solutions, please visit: http://www.hifn.com/ .

"Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, statements regarding the Company's future financial performance including, without limitation, statements related to the extent of the Company's expected revenue shortfall in the fourth quarter of fiscal 2006, the Company's expectations that future quarters will not be significantly impacted, and the Company's outlook for fiscal 2007 are all forward-looking statements within the meaning of the Safe Harbor that may cause actual results to differ materially from the forward-looking statements contained herein. Factors that could cause actual results to differ materially from those described herein include, but are not limited to: dependency on a small number of customers; actual results obtained for the balance of the quarter could be different than the Company expects, and future customer demand and customer ordering patterns are not predictable and could be lower than the current expectations due to a myriad of market factors; and orders from Hifn's customers may be below the company's current expectations. These and other risks are detailed from time to time in Hifn's filings with the Securities and Exchange Commission. Hifn expressly disclaims any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

NOTE: Hi/fn(R) is a registered trademark of hi/fn, inc. Hifn is a trademark of hi/fn, inc.

CONTACT: Hifn, Inc., Corporate Communications, press@hifn.com

Web site: http://www.hifn.com/