Axcelis Technologies Inc (ACLS) 2006 Q4 法說會逐字稿

Good day, everyone, and welcome to the Axcelis fourth quarter of 2006 earnings release conference call. As a reminder, today's call is being recorded. Later, we will conduct a question-and-answer session. Instructions will follow at that time.

For opening remarks and introductions, I would now like to turn the call over to Ms. Maureen Hart, Vice President of Corporate Communications at Axcelis. Please go ahead, ma'am.

Good afternoon. This is Maureen Hart, Vice President of Corporate Communications for Axcelis Technologies. Welcome to our conference call to discuss our results for the fourth quarter and full-year 2006. If you have not received a copy of our press release issued earlier this afternoon, it is available on our website.

Discussing our results today are Mary Puma, Chairman and Chief Executive Officer, and Stephen Bassett, our Executive Vice President and Chief Financial Officer. Also joining us is Mark Namaroff, our Senior Vice President of Marketing. After the prepared remarks, there will be some time for questions. Playback service will be available on our website as described in our press release.

Please note that comments made today about our expectations for future revenues, profits, and other achievements are forward-looking statements under the SEC Safe Harbor provisions. These forward-looking statements are based on management's current expectations and are subject to risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements.

Now I would like to turn the call over to Steve.

Thank you, Maureen. 2006 was a solid year for Axcelis with revenues of $462 million and earnings of $40.8 million, $0.40 per share, exceeding our targets. We ended the year on a high note. Earnings for the fourth quarter were $15.6 million or $0.15 per share on revenues of $123 million, both at the upper end of our guidance.

Our service business, which includes product upgrades, again showed strong performance with revenues of $43 million. Service operations continue to represent an opportunity for growth and increased profitability as overall service margins are accretive.

Systems sales came in at approximately $78 million, in line with our expectations. From our product perspective, our implant business accounted for 63% of total shipments. Gross margins were better than expected at 41.6%. The positive margin performance is attributable to product mix and lower warranty cost, as the Company's continued focus on product quality is yielding positive results.

New systems bookings increased 66% over Q3 to $98 million. Bookings for 300 mm products accounted for 69% of new orders. As we have said in the past, quarterly fluctuation in systems orders reflect customer buying patterns and do not necessarily indicate changes in the overall business environment. Our order rate fluctuated significantly quarter to quarter in 2006 and we expect to experience the same type of fluctuation in 2007.

Systems orders averaged $80 million per quarter in 2006. We expect to see a higher average order rate in 2007 with increases driven by the success of the Optima HD.

Based on the geographic location of the [Fab], Asia accounted for 57% of Axcelis' systems orders with 33% coming from the U.S. and 10% from Europe. Memory manufacturers accounted for 54% of new systems bookings, with Logic at 33% and Foundry's at 13%.

R&D spending and SG&A expenses for the quarter were approximately $42 billion, in line with our expectations. The contribution from SEN, our joint venture in Japan, consisted of $2.5 million in royalties and $8.5 million of Axcelis' 50% share of its net income.

Cash flow in Q4 was positive at $22 million. In 2006, we made a substantial investment in inventory of over $50 million to support new products. Even with this investment, we generated positive cash flow from operations for the year.

Looking to 2007, I would like to provide some insight on what we expect. As I said before, we expect orders to continue to fluctuate quarter to quarter, but for the average order rate to increase over what we realized in 2006. From a revenue standpoint, we anticipate a 15% to 20% increase over 2006 levels. This increase will come from the sale of Optima HD products. We expect shipments of the Optima HD to increase steadily throughout the year. However, we expect the revenue recognition to be heavily weighted to the second half. Most of the first half shipments will be evaluation tools for which the contractual evaluation period will not end until later in the year.

Gross margins for 2007, despite downward pressure from new product sales, are expected to be in the low 40s. For the first quarter of 2007, revenues are projected to be in a range of $90 million to $100 million. A significant portion of the orders booked in Q4 were for products scheduled for shipment in the second quarter of '07. In addition, we have had some tools originally planned to ship in Q1 move to Q2.

Revenues for the quarter are not indicative of what we expect for the year. As I said previously, we project revenues to increase significantly in 2007, but most of the increase will be recognized in the second half of the year.

Gross margins for the quarter are expected to be in the range of 42% to 43%. Operating expenses are projected at approximate Q4 levels, since contribution including royalties and Axcelis' share of net earnings is expected in the range of $6 million to $8 million, of which about one-third will be from royalties.

Our effective income tax rate for the year is forecast at 6%. Earnings for the quarter are projected at $0.02 to $0.06 per share. Building off the success of our core businesses in 2006 and the traction we are seeing with the Optima platform, we are well-positioned for solid growth and strong financial performance in 2007.

I will now turn the call over to Mary.

Thanks, Steve. We are very pleased with the progress Axcelis made during 2006. As Steve mentioned, we exceeded our full-year financial targets for 2006 revenue and margin, and our systems order rate for the year was also higher than expected. Our solid financial results in 2006 highlight the strength of Axcelis' core business, which will continue into 2007.

In 2007, we expect to maintain our dominant market share in high-energy implant as well as to continue to receive a significant number of additional capacity buys for our 200 mm high current implanters. We believe that our overall share in dry strip doubled in 2006. Our dry strip business moving into 2007 remains very strong as our customers continue to ramp their Fab's.

We are excited about work we are doing at 45 nanometer with several customers for critical claims. Our research confirms that our radiant and rapid strip tools are well-suited for these emerging applications. Curing wins will also continue in 2007 for both charge erasure and dielectric film curing.

In addition, our service business will continue to grow, driven by increased penetration at existing customers and an ever expanding installed base. This business delivers healthy margins accretive to Axcelis overall.

We are confident that our core business in high-energy and 200 mm high current implanters, dry strip and curing products and service will remain solid in 2007. Building on this, we expect to achieve significant growth and market share gains with our new Optima ion implant platform.

The interest and momentum that continues to build for the Optima HD family of tools in particular makes us very optimistic about our outlook. As Steve mentioned, we expect that overall, our orders and revenues in 2007 will grow substantially due principally to market share gains in high current implant.

There are a number of things that support our conviction about 2007. First, we are currently shipping the first wave of Optima HD's and Optima HD Imax tool. This first wave of customers, which mainly consists of memory manufacturers, comprises the foundation needed for much of the growth that we expect in 2007.

Second, our first Optima HD, which was installed at a leading memory customer in Asia last year, is in production as a process tool of record. This customer has placed the first of multiple repeat orders that we expect to secure. Their buying decision was based on data gathered from head-to-head competition against the incumbent's products. The data shows that the Optima HD's superior process performance and higher productivity ultimately deliver a lower cost of ownership.

Third, comparisons of the Optima HD Imax with plasma immersion tools at two large memory manufactures in Asia are also producing very positive performance results for dual poly-gate implants. Dual poly-gate implants are becoming a standard process for advanced DRAM manufacturing.

The interest in the Optima HD Imax is further strengthened by our customers' desire to lower their risk and their total cost of ownership. This product reduces risk because our leading edge molecular implant technology builds on traditional implant architecture.

The Optima HD Imax also delivers a lower cost of ownership owing to its high effective throughput at lower effective energies. The Optima HD Imax allows customers to eliminate additional process steps that plasma immersion requires both before and after implant. This clearly explains why after years of trying to make plasma immersion tools work for production processes, customers are very excited about what the Optima HD Imax has to offer for all emerging lower energy high dose applications.

In addition to the interest from memory manufacturers, several key Logic customers are interested in our cluster ion capability. These customers see unique process advantages to the Optima HD Imax that could dramatically improve device yield. One large Logic customer is evaluating the use of cluster boron with the Optima HD Imax for 45 and 32 nanometer processes. This broadening market interest in cluster implants is creating new opportunities for Axcelis' Optima HD platform.

Finally, we are building momentum for the second wave of Optima HD and Optima HD Imax penetrations. Unlike the first wave, which is dominated by memory manufactures, the second wave includes a broad mix of memory, Logic, and Foundry customers. This momentum is evidenced by the strong demo activity we are engaged in with major customers across all segments. These demos have produced very positive results and will lead to future orders for both the Optima HD and Optima HD Imax.

In summary, 2006 was a solid year for Axcelis. We are very pleased with Axcelis' execution and the fact that we exceeded our financial targets, and 2007 promises to be even better. Our strong core business will provide a platform for growth for our innovative new Optima HD product line, which is fast gaining customer interest and acceptance worldwide. As the Optima HD becomes the high dose tool of choice for implant customers, we will regain significant high current implant market share in 2007.

In addition, exciting new products and single wafer high energy and dry strip will drive us towards continued financial and market success.

I will open it up now for questions.

(OPERATOR INSTRUCTIONS). Satya Kumar, Credit Suisse.

Question. First [when you] get to the revenue guidance in Q1, it looks like it's about $40 million to $50 million lower. Could you help me, give some more granularity on the component that was booked that's in Q2 as well as the part that got pushed out and any more details you can provide on the nature of the push-out?

Just the push-outs, we had about four tools move from Q1 to Q2 and that was based on the customers telling us when they wanted us to schedule to ship the tool, and then orders that we received, a significant portion of the 98 million that we received at the latter part of 2007, have been scheduled out -- have been scheduled to ship in Q2.

If I look out into Q2, if some of these products get shipped in Q2, should we expect margins to maybe decline sequentially in Q2 because of all these new products coming in or --?

It's not new products and I wouldn't expect margins to decline or to fluctuate significantly in Q2. They will change somewhat because of product mix, but they -- we won't have too much revenue from new products in Q2.

I think what you need to remember is that we -- Steve did give directional revenue information saying -- or targets saying that we'd grow 15% to 20%, and obviously, even with the guidance that we gave for Q1, we've taken this into consideration. So we clearly expect, especially the second half of our year, to be very, very strong.

Exactly. If I do the math on there, you're getting to something like $520 million in revenues. It should be [excluding] the year, maybe even close to $150 million in quarterly run rates. Is that the right math? And what are you baking in, in terms of expectations on both recycle and the market share in implant?

In terms of -- the math is about right. Yes, so you hit that one. In terms of the market outlook, our market outlook really hasn't changed considerably. We expected the market overall will be flat. We've been saying maybe plus or minus 10%, but what we continue to emphasize is that 2007 is an Axcelis specific story. It's not an industry story. And because of the strong growth that we expect in the Optima HD, we expect to grow faster than the market in 2007.

In terms of market share, we're working every day to regain our market share leadership in both high current and implant overall, and again, based on the customer interest and the accelerating order rate that we're seeing for Optima HD, the ramp that we expect to come, we believe that achieving these significant share gains is very achievable in 2007.

One more question and maybe I'll go away. I was looking at your non-implant revenues and you seem to be at nearly five-year peak levels on the non-implant revenue. It's almost a third of your business. It's getting to a point where I guess we should all be looking a little bit more closely. What's really driving this extra bit of growth? Is it market share growth or is it just market growth or is it something to do with maybe the DRAM spin that's going on? Can you give some more color on why you're seeing all this growth?

I think in terms of the split between implant and dry strip, it's just a timing issue. We had a very strong fourth quarter in terms of our dry strip products and it is market share gains. As I mentioned, we think we've doubled our market share in dry strip in 2006. A lot of it is based on customer buying patterns. We have several customers that happened to be spending quite a bit in 2006 and they bought our tools. So that's worked to our advantage, but we expect that strength to continue into 2007.

C.J. Muse, Lehman Brothers.

I guess a couple of questions. First off, Mary, I don't think you mentioned a specific market share target for high current. Are you pulling back from that 45% target that you've previously stated for '07?

No, we have no reason to back off of that. We're very optimistic about the growth of the Optima HD this year.

And then, I guess in terms of that target, can you help me understand how you expect -- I guess, if you assume the market is flat, you've got to get to about $320 million. How will that come through to you guys in terms of, I guess, single wafer versus batch versus SEN versus service and spares? I know it's tough to give precise numbers, but how do you think about the mix between those different levers?

As we said, we expect our -- what we called our base business, which would be the service and the 200 mm and SEN, I guess you could even throw into that category as being relatively flat. And also our 300 mm -- our high-energy business, right, both 200 and 300 mm. So those things for this year will be at least flat to slightly up, and then on top of that, really, the lever for us this year in terms of the growth is the Optima HD. So I think that's the way you should think about it as you model it.

In terms of implant business, can you give any idea as to the mix that you see for yourselves in '07 between batch and single wafer?

Well, our batch program will be -- 200 mm will stay the same; we'll be very strong in high-energy. We don't think we will have much fluctuation. We will be introducing our single wafer high-energy tool later on in the year and which we do believe will ship in 2007 but won't have a significant impact on revenue in 2007. Most of our increase in high current will be from a single wafer product.

Last question from me. In terms of the Optima tools, when do you expect to book those tools? Will it be when you revenue them? And then I guess beyond that going forward, will you then start booking upon actual receipt of order?

For evaluation tools, we book the order at the same time we book the revenue. And that's when they sign off on the evaluation tooling and give us the order. Actually, I expect in some cases, that we will recognize orders or bookings from customers and revenue from customers for follow-on orders before we recognize the booking or the revenue for the initial evaluation tool that we shipped.

We know this is going to be a real -- it's going to be difficult to sort of follow the progress on this from a revenue standpoint. You just have to -- most of the revenue will be in the back half of the year. What you really need to do in terms of tracking the momentum for the Optima HD is follow the press releases, because we expect the shipments to start accelerating and you will see those continuously throughout the year. It's the revenues that you're going to see mainly in the back half of the year. Does that make sense, C.J.?

It does. Thanks.

Timothy Arcuri, Citigroup.

This is actually Brian Lee calling in for Tim. I just had a few questions. Can you give us a sense for how much of the margin upside in the quarter was attributable to mix and how much to the lower warranty cost? And then I guess on a go forward basis, how sustainable are these lower warranty costs?

I think our warranty cost for our base business are sustainable, and I think we see continued improvement year to year, and we would expect that the warranty cost will continue to improve for the existing products. I don't have it broken down. It's between the product mix and the warranty costs. The upside -- maybe warranty costs were maybe a point a margin.

And then as a follow-up, given the new product revenue ramp really appears to be heavily skewed to the second half and then on top of that, your commentary that Q2 margins should not be too much different from Q1, is it fair to assume that margins in the second half are going to be relatively lower than what we see here in the first half, even though for the full-year you guys are still guiding to that low 40% range?

When we have a significant proportion of revenue from the newer products, that will force our margins down. We think that we can maintain margins at at-least 40% quarter over quarter, but we will have margin pressure in the second half of the year as we start to recognize a significant amount of revenue on the Optima HD product.

Robert Maire, Needham & Company.

Can you provide a little bit more detail? You said you doubled your market share in strip in '06. Is that on a unit or dollar basis? Is that your estimate or is that Gardner Dataquest or something or other? What share do you think you're currently at and where do you think it came from?

It's based on revenue. That's how Dataquest measures market share and we only report our numbers to Dataquest. It's our estimate based on total size of market for dry strip in 2006.

So what share do you think you're at, then?

Well, I think we were at 9% last year, so we're looking at something in the 15% to 18% range.

So, you think you've gone from 9% to 18%? And is that any particular place where you've gained that share? Is that with Memory Makers or Foundry's or -- it sounds as if a lot of that came in the fourth quarter and maybe you could provide a little more color?

No, it did not come in the fourth quarter. We shipped dry strip tools pretty steadily throughout the course of the year, if you go back and look at the press releases, we had several press releases on multiple orders for dry strip tools. So it was pretty consistent throughout the year. And you should see that continue through 2007.

And do you have any new products or other things that are coming out in the dry strip arena that would continue that?

We do, but we're not talking about them at this time. You'll probably hear more about them at our Analysts Day and when we actually launch the product.

Jim Covello, Goldman Sachs.

This is Amanda Hindlian for Jim Covello. My question really is, you've talked about seeing some shipment push-outs into Q2, but you obviously seem very confident in your revenue forecast for the full-year and I assume based on your comments, that the revenue growth is really being driven by the new products gaining traction. What I want to get a better understanding of is how you get to that level of confidence that the new products are going to drive so much revenue growth and that they won't get pushed out given that you've already started to see some push-outs.

Well, anything could happen. Obviously our forecast is always dependent on our customers' CapEx spending. However, for the Optima HD, especially the first and second wave, the initial tools that we're shipping, they're going to be capacity -- I'm sorry, they're going to be technology buys, not necessarily capacity buys. So, we believe that as we continue to be designed in, we will ship Optima HD's and we said the first wave was into memory customers and despite the fact that yes, there's been a little bit of softness even in the memory segment, we still believe that for 2007 overall, memory spending will remain essentially where it's been forecasted to be today.

So it's really based -- we've talked about this before -- it's based on a bottoms up analysis customer by customer in terms of where we expect the tools to go. And we've also mentioned that really, most of the growth will come from the customers that we have already penetrated. There are a few additional customers that are in the queue right now for shipments, and again, we will be announcing those at some point in time, but most of what we need from a designing perspective is already there and now it's simply a matter of just shipping additional tools to those customers.

And then the four tools that were pushed out from Q1 to Q2, is there one customer segment i.e. memory or Logic that dominated those push-outs?

No, it was a mix.

Yes, it was a mix. It was both.

It was broad, okay. And then you mentioned what memory represented as a total, as a percentage of the total in Q1 -- I'm sorry, in Q4. How about what you expect in Q1?

I don't think we've done the forecast that way. I don't think we expect a significant change.

I don't -- yes, it shouldn't change significantly from that. The memory penetration in Q4 was [about] kind of what we've seen it. We've seen it kind of average for the year. It's gone as low as 35% and as high as 57%, but it's the timing of the customer orders, but it shouldn't be significantly different from that. It could be plus or minus 10.

Peter Kim, Deutsche Bank.

I had a question about your order composition. You had a very strong systems orders in the current quarter, and I was wondering if you care to give some color to what the mix was in terms of 200 mm versus 300 mm?

Yes, 300 mm is --

On the bookings?

300 mm on the bookings I believe was 69% of the total.

With regards to SEN, I think you've changed the way you kind of color their outlook. You haven't given an outlook for SEN in terms of revenue. And also, it looks like you had guided SEN's revenue to be about 115 to 120 and it came in at 93. Is there a slowdown in Japan that we're not seeing? That you're particularly seeing?

Actually, we're not seeing a slowdown in Japan. Some of it's the timing on the recognition of revenue, but since business remains strong, they had an extraordinarily strong quarter for them. Their revenue was a little bit lighter, but their performance overall, and I think that their fourth quarter, which ends in March 31, is going to be strong as well.

So would you like to -- would you give a revenue guidance for SEN?

We haven't given revenue guidance for SEN and we don't -- we're not going to give the revenue guidance for SEN any longer. We'll report the performance of SEN as we did this time. In the past, we had been reporting worldwide revenues of Axcelis and combined SEN but we thought it was more meaningful to just show the results of SEN separately and let people focus on the separate results of Axcelis.

Then one last question would be what's the composition of memory in terms of the shipments in Q2? It looks like there's a strong surge in shipments in Q2 and I was wondering how much of that will be memory?

In Q2?

Yes.

The shipments will generally track our order rate and so our orders over the past couple of quarters have been 50% plus of memory and the shipments will track that way.

David Kanen, Point Capital.

A lot of my questions have been answered already, but as far as the $16 million sequential increase in inventory from quarter to quarter, can you give me a sense as to how much is newer Optima HD product?

Almost all of it. Almost all of it relates to the Optima. Very, very high percentage of the total increase for the year is Optima product. You have to remember as we ship tools under evaluation contracts, those tools for reporting purposes remain in inventory. So, I think the inventory levels that you see right now will not fluctuate up much more for the rest of the year and in the end of the year, we will see the inventory come down as the tools start to rotate out [EBOW], but almost all of the increase is Optima.

And then, as far as the sequential decline, tell me if -- I think somebody had touched on this, a previous question asked or in regard to orders, new systems orders, I think in Q3 they were down and is that reflective of the Q1 guidance and that with the 66% sequential increase, we should see that have effect on Q2?

I don't think you can draw that straight a line to it. I think that we think that Q2 will be up. We're not going to give guidance or specific guidance out that far, but we do expect obviously Q2 to be up and a substantial significant portion of the orders that we received in Q4 are scheduled for shipment in Q2.

So, I think that -- I think we've said all along, our order rates tend to fluctuate very significantly quarter to quarter based on really when our customers complete the paperwork and get the actual orders to us. We do see a significant amount of turn business every quarter and then we have some orders that are placed for shipment that go out two quarters.

The order rates do not necessarily transcend to the state of the business as such. I think our business and our revenues and our shipments are much more predictable than our order rates.

So in other words, the Q1 guidance is not reflective of new system bookings in Q3, which were down. There's not a connection between the two?

No, not a direct connection. No.

And last question is in regard to SEN, do you think that there's a possibility in '07 that you'll be able to generate some cash flow through maybe them paying out dividends?

Actually, we received a fairly substantial dividend from SEN today and it amounted to 40%. They divided it out 40% of their fiscal '06 earnings, and we received that dividend today and we expect going forward as they accumulate excess cash, that we will continue to receive dividends from SEN.

Thank you. Good luck.

C.J. Muse, Lehman Brothers.

Thanks for taking another question. I guess you may be hesitant to offer any advice on this, but your thoughts for SEN in 2007? Should we think about them sort of flattish year-over-year?

Yes, we expect that our business and SEN's Japanese business will remain steady through 2007, so.

I guess last question for me, could you provide an update on customer wins? I guess in the last call you talked about six design wins at five customers. Could you provide an update I guess as of today?

Well, if you count what we've talked about, we've had eight orders and four shipments for Optima's and Optima HD Imax's.

How many separate customers?

Five.

Fred Speece, Speece Thorson Capital Group.

The income from SEN jumped proportionately from where it's been in the past to their orders. Is there some explanation for that? And then I would like to hear more about why you are not including that in the guidance and how much was the 40% dividend in dollars? Please?

Yes, Fred, I think that the jump that you saw in this quarter is reflective of the fact that SEN had some revenue acceptance that was pushed into this quarter from the last quarter. The last quarter was actually down from what we expected it to be fairly dramatically, and we did anticipate that this quarter was going to be up. So, SEN's reported earnings were kind of in line with our expectations. Actually, the revenues were a little short of what we expected. We weren't getting much of a benefit or feedback from reporting on SEN's forecasted or future revenues, so we stopped doing that.

We think it's meaningful to Axcelis to look at SEN's performance, but we weren't getting much recognition of the significance of SEN's revenues and their growth. So we stopped doing it.

In fact, Fred, people were telling us it was confusing. So we just thought we would simplify everything and then we'll give you what has happened during the quarter on each call.

We've had conversations about that relationship. And again, how much was the 40% in dollars? The dividend?

It was more than $5 million U.S. after the Japanese withholding tax.

And one last question on SEN. What's the balance of the cash in the SEN total JV?

They ended the year with $70 million plus. I'm doing a very quick yen to dollar calculation in my head.

[Jay Data, Independent Insight].

You talked about your new orders, 69% of them came from 300 mm. Can you break it up into Optima HD, MD and other platforms?

There's no Optima HD. There was a relatively small amount of Optima MD, and the rest was all of our core business products. That would be our high-energy products and our 200 mm and our dry strip -- our 200 mm high current, our dry strip products and our curing products. And that was -- the core businesses accounted for almost all of that.

You also talked about higher margins in Q1 from Q4. So are you seeing benefits of some cost management here in Q1 faster than you expected?

Fluctuation is mainly product mix that we see. It's not any significant change in the cost structure.

I am a little confused about the dividend that you got today from SEN. If you got this dividend on December 30, 31, what would be your cash balance on the balance sheet?

We would have been up to about $220 million including everything -- restrictive cash, cash and equivalents, and marketable securities would have aggregated about $220 million, $222 million, something like that.

So right now, on the balance sheet that you are showing, it's 204, so that would have been 220?

It's actually -- it's roughly 216 if you include the restricted cash. We have some cash on deposit which the bank guarantees and supports letters of credit, so it's roughly 216 total cash and it would have been about 222.

So the dividend if I minus it out is about 6 million?

It's north of five. I'm rounding here to the 216 instead of whatever. 221.

Mark Bachman, Pacific Crest Securities.

I was wondering. You presented at a conference at the end of November and you had made a comment that you hadn't shipped any 300 mm high current product at all in '06. I think that what you meant by that was that you didn't revenue anything. Did anything change in December to change that?

Not significantly. We had one tool that we recognized as revenue that had been in a field in December. But it --

And then I was just hoping, Mary, if when you're talking about market share, I just wonder, are we maintaining market share numbers for both the high current and the overall market? In '07.

I'm sorry, what are you asking me? We're maintaining what?

Are you maintaining your 45% market share goals for both high current and the overall market in 2007?

Yes, we are.

Satya Kumar, Credit Suisse.

Just a quick question on the timing of the orders that you could expect from this customer that placed the follow-on orders. Is this possible that you could get multiple repeat orders in the Q1 timeframe from this customer that's already placed a repeat order?

Yes.

And secondly, what is the possibility that you could see repeat orders from any other customers in this quarter for Optima HD?

The answer is yes to the first one. We could certainly get additional repeat orders from that customer and it is very possible that we could also get repeat orders from additional customers in Q1 as well.

There are no more questions at this time.

Okay, thank you very much for joining us. We appreciate your time.

That does conclude today's conference call. Thank you very much for your participation and have a wonderful evening.