CAMP4 Therapeutics Corp (CAMP) 2009 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the CalAmp fiscal 2009 fourth quarter conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). This conference is being recorded Tuesday May 12th, 2009.

I would now like to turn the conference over to Lasse Glassen, with Financial Relations Board. Please go ahead.

Thank you. Good afternoon, everybody. Welcome to CalAmp's fiscal 2009 fourth quarter earnings call. With us today are CalAmp's President and CEO, Rick Gold, and the Company's Chief Financial Officer, Rick Vitelle.

Before I turn the call over to Management please remember that our prepared remarks and responses to questions may contain forward-looking statements. Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors including product demand, competitive pressures and pricing declines in the Company's satellite and wireless markets, the timing of customer approvals of new product designs, the length and extent of the global economic downturn that has and may continue to adversely affect the Company's business, the Company's ability to refinance or extend its bank term loan prior to the December 31, 2009 maturity date, and other risks or uncertainties that are described in the Company's annual report on Form 10-K for the fiscal 2009 as filed with the Securities and Exchange Commission. That 10-K was filed today.

Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions it can give no assurance that it's expectations will be obtained. The Company undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise. With that it's now my pleasure to turn the call over to CalAmp's President and Chief Executive Officer, Rick Gold. Rick?

Thank you, Lasse. Good afternoon and thank you for joining us today to discuss CalAmp's fiscal 2009 fourth quarter results. I'll begin with comments on the financial and operational highlights from this past quarter and I'll then provide an update on several of our key business initiatives. Rick Vitelle will then discuss additional details about our financial results, balance sheet, working capital management and cash flow. I will wrap up with our revenue and earnings guidance for the first quarter of fiscal 2010 along with some concluding remarks. This will be followed by a question-and-answer session.

In looking at our fourth quarter financial highlights and overview, total revenue for the fourth quarter was $21.3 million which was slightly under our revenue guidance range of $22 million to $26 million. Our top line performance reflects the challenging economic environment that has resulted in key customers delaying projects and postponing orders for our Wireless DataCom products. However our ongoing efforts to rebuild our competitive position in the direct broadcast satellite or DBS market is making good progress despite the difficult economic climate. During the fourth quarter unit volumes of our Satellite products to our historically largest DBS customer continued to ramp resulting in a 10% sequential quarter increase in Satellite product revenues.

Looking at the bottom line results of operations included a GAAP loss from continuing operations of $45.8 million or $1.85 per diluted share. Included in the GAAP loss from continuing operations are impairment charges in the aggregate amount of $44.7 million. I want to stress that these are noncash charges that were significantly influenced by our stock price and market capitalization as of the December 31, 2008 impairment test date. Rick Vitelle in his remarks will provide more details on the impairment charges as well as income tax effects.

Excluding amortization of intangible assets, stocks based compensation expense, the noncash impairment charge and the increase in the deferred income tax asset valuation allowance our adjusted basis or nonGAAP income from continuing operations was $3.8 million or $0.15 per diluted share which was $0.01 better than the high end of our fourth quarter guidance range of $0.10 to $0.14. I refer you to our fourth quarter earnings press release issued earlier today for a detailed reconciliation of the GAAP basis loss from continuing operations to adjusted basis income from continuing operations. Fourth quarter GAAP and nonGAAP operating results both include a $9 million pretax contribution from the legal settlement with Rogers Corporation.

Looking at our cash flows and balance sheet, we have significantly improved our liquidity position and enhanced our financial flexibility. During fiscal 2009 we generated net cash from operating activities of $13.8 million including the $9 million settlement with Rogers. The positive operating cash flow allowed us to pay down our bank term balance to $17.5 million as of the end of fiscal 2009, a reduction of $10 million compared to the bank loan balance at the end of fiscal 2008. In addition, we paid down the subordinated note to a DBS customer by $1.5 million in fiscal 2009. Rick Vitelle will expand on this in his remarks, but suffice it to say, I continue to be pleased with our ability to generate cash flow from operations and improve our liquidity position even during these challenging economic times.

I'll next provide updates for our Satellite and Wireless DataCom businesses. We continue to make progress in our Satellite business which generated revenues of $8.1 million in the fourth quarter for a 10% sequential improvement compared to the prior quarter. Shipments to our historically largest customer continue to ramp with Satellite revenue in the first quarter of fiscal 2010 expected to increase sequentially for the third quarter in a row. In addition, we continue to ship significant quantities of refurbished products to this customer that, although not generating revenue, increase our market penetration and decrease our remaining product rework obligation. As another sign of the improving fundamentals in our DBS business, our engineering team is making good progress on several new development programs involving next generation products for our two principal DBS customers, which we expect to begin shipping late this fiscal year. Overall we expect our Satellite product market share to be materially higher in fiscal 2010 as we continue to ramp up our production lines.

Now let's move on to an update of our Wireless DataCom business which provides communication systems, products and services for applications in the public safety, utility, mobile resource management, or MRM, and industrial monitoring and controls markets. During the fourth quarter the Wireless DataCom business generated revenues of $13.2 million, which is a 36% decrease on a year-over-year basis and a 28% decline on a sequential quarter basis. The drop in Wireless DataCom revenue occurred across over all our addressable vertical markets. Despite the weakness in this business during Q4 we're not aware of any customer defections or lost awards. However a number of orders have been pushed out by customers, thereby extending the average sale cycle for Wireless DataCom products. In addition, several of our run rate customers reduced their orders during the fourth quarter to work down their inventory levels.

Although the recession has presented our Wireless DataCom business with significant challenges in fiscal 2009, actions taken this past year have us well positioned to resume our growth as market conditions stabilize. Our Wireless DataCom product portfolio has been substantially refreshed and extended as a result of product development activities over the past several quarters. It bears noting that we are working closely with strategic launch customers that we have identified for each of these new products.

In our Wireless Network business we're now positioned to offer industry leading products in three key wireless data communications categories for a broad spectrum of mobile and fixed applications. Our product portfolio now includes unlicensed frequency broadband products for data intensive applications, license frequency narrowband products for mission critical data and cellular-based products for customers looking to utilize the ubiquitous public network infrastructure.

We recently released our new Dataradio Sentry 4G Wireless IP Router designed to support bandwidth intensive industrial and public safety applications such as streaming video, broadband mobile data, SCADA/Telemetry and Smart Grid communications among others. The Sentry 4G is designed to leverage the performance and cost efficiency of the 802.16e Mobile WiMAX standard while offering customization to allow the use of alternate frequency spectrum. Sentry 4G systems, once deployed, allow utilities and public safety agencies to control and manage their wireless communications network without having to rely on third-party service providers. We are working closely with strategic public safety and utility launch customers and expect to announce key wins in coming months.

In addition, earlier this month we announced the receipt of a contract award for our Dataradio Integra, a narrowband license frequency product for a large scale deployment of a nationwide Smart Grid network for the Provincial Electric Authority in Bangkok, Thailand. The initial contract is for 5000 units that are scheduled to be deployed over the next 18 months.

Also in our Wireless Networks business we are gaining significant traction with our 882 EV-DO 3G broadband cellular router which is now being deployed in large quantities by a major cellular carrier to monitor the functionality of backup power generators at cellular network tower sites.

In our Mobile Resource Management business we released five new products last month including our first portable battery-powered product, significantly refreshing our product portfolio. Our MRM products address applications in vehicle finance, stolen vehicle recovery, local fleet management, cargo tracking and personal security. These new products allow us to offer better choices for our customers to address their specific tracking needs with the right feature set at attractive price points. We're also excited about several new MRM channel initiatives that we believe provide excellent growth opportunities in fiscal 2010 and beyond. This week we announced the product-- a partnership with MOC Products Company to market a vehicle monitoring and tracking system for stolen vehicle recovery applications through new car dealerships. This unique partnership leverages MOCs extensive automotive dealer channel relationships developed over more than 50 years and CalAmp's proven GPS-based asset tracking technologies to provide consumers with stolen vehicle recovery solutions superior to those currently available through new car dealers.

We also recently partnered with Autonet Mobile to supply hardware for their launch of a vehicle-based wireless Internet service. Autonet Mobile has partnerships with several of the major automotive manufacturers as well as after market distributors and retailers. It's an exciting business model and we're pleased to be a part of the roll out. We commenced production shipments to Autonet in our fiscal 2010 first quarter.

During and subsequent to the fiscal 2009 fourth quarter we took actions to reduce the costs and expenses of our Wireless DataCom business and to streamline its operational structure. Our public safety and industrial monitoring and controls business units have been realigned into one operating unit by combining R&D groups, merging sales management and consolidating manufacturing operations. As part of this restructuring, facilities have been rationalized and we have reduced our workforce by 14%. In the aggregate we expect to realize savings of approximately $6 million annually due to this restructuring and additional cost savings initiatives. During the fourth quarter we recorded a work force reduction charge of approximately $625,000 and we expect to incur an additional charge of approximately $420,000 in the May 2009 quarter. We expect the benefit of these cost reductions to be fully reflected in our operating results beginning in the August 2009 quarter. We believe these changes will improve operating efficiencies and profitability of the Wireless DataCom segment and increase focus on the attractive utility and transportation verticals while maintaining a strong presence in the public safety and industrial markets.

Despite the challenging economic conditions I believe we're taking the right actions to position our Wireless DataCom business for long-term profitable growth. The critical mass we've developed along with our broad technology platforms and focus on middle market customers gives us a competitive advantage that most other players in our market cannot offer.

One year ago I outlined four key organic growth initiatives for our fiscal 2009 to lay the foundation for growth in future years. These were strengthening our sales engine and distribution channels in both domestic and international markets, penetrating adjacent vertical markets and applications, moving up the value chain to offer more services and integrated solutions, and exploiting technical and operational synergies between our lines of businesses to provide more comprehensive product offerings to our customers. During fiscal 2009 we made excellent progress on these initiatives despite the challenging environment. In addition to some of the items already mentioned in this call, we revamped our sales organizations, added regional and national distributors and grew our international sales from 6% to 11% of consolidated revenues. We partnered with Arcadia Networks to offer turnkey private license mobile data and voice communications solutions for the utility and energy sectors.

We recently helped our public safety customers secure federal fiscal year 2009 appropriations funding totaling $1.7 million which we expect to contribution to revenues for CalAmp beginning in the second half of this fiscal year. We entered adjacent verticals in stolen vehicle recovery with our MOC partnership, smart metering with our WiMetry platform and personal trackers with our battery-powered MRM product line. And finally reorganized our Wireless DataCom Division to better exploit the technical and operational synergies and bring converged, fixed mobile wireless communications solutions such as the Sentry 4G to the utility and public safety markets. With that I'll now turn the call over to Rick Vitelle, our Chief Financial Officer, for a closer look at the fourth quarter financial details.

Thank you, Rick. I will provide a summary of our gross profit performance, working capital management and cash flow results for the fiscal 2009 fourth quarter. Consolidated gross profit for the fiscal 2009 fourth quarter was $13.6 million compared to $7.5 million for the same period last year. Included in gross profit in the fiscal 2009 fourth quarter is a $9 million gain from the settlement of litigation with Rogers Corporation. Excluding the litigation settlement, gross margin in the fiscal 2009 fourth quarter was 21.5% compared to 25.3% in the fourth quarter of last year. The decrease in gross profit excluding the Rogers gain was primarily attributable to lower revenues from our Wireless DataCom products as the global economic crisis caused several of our key customers to delay their purchases.

Now taking a look, a closer look at gross profit performance by reporting segment. Wireless DataCom gross profit was $4.2 million in the latest quarter or 32.1% of Wireless DataCom revenue. This compares to gross profit of $6.8 million or 33.2% of revenue in the same period last year. During the most recent quarter Wireless DataCom gross margins were impacted by 1.6 points due to workforce reduction charges and 1.8 points due to write-offs of non-favorable inventory. In addition, Wireless DataCom gross margin was also impacted by the lower absorption of fixed costs on the lower revenue amount. We expect gross margins to climb to the high 30% level for our Wireless DataCom business as market conditions improve and revenues rebound.

Gross profit for Satellite products was $9.3 million which included the $9 million gain on the Rogers settlement. Excluding the effects of the Rogers settlement, gross profit for Satellite products was $349,000 or 4.3% of Satellite product revenue in the latest quarter compared to gross profit of $722,000 or 7.8% of Satellite product revenues in the fourth quarter of last year and $253,000 or 3.4% of Satellite product revenues in the third quarter of fiscal 2009. Despite a slight sequential quarter improvement in the most recent quarter, the gross margin for Satellite products remains significantly lower than historical levels. This is due primarily to the low level of Satellite revenue that has resulted in lower manufacturing overhead absorption rates which adversely affects gross margin. As Rick Gold noted earlier, during the fourth quarter our GAAP basis loss from continuing operations of $45.8 million or $1.85 per share included a noncash impairment charge of $44.7 million.

So now I'd like to provide some additional details on the fourth quarter impairment charge. Our annual goodwill impairment test resulted in the full impairment of the Company's $28.5 million goodwill balance along with partial impairments of other intangible assets in the amount of $13.5 million and Wireless division fixed assets in the amount of $1.6 million. In addition to amounts written down as a result of the annual goodwill impairment test, the Company also recorded an impairment of $1.1 million related to our preferred stock holding in a private company. The aggregate amount of these impairment charges was $44.7 million. It should be noted that the outcome of the annual impairment analysis was largely influenced by the Company's stock price as of the impairment test date. At December 31, 2008 the affected date of the impairment analysis, the Company's stock price was $0.45 per common share which equates to a market capitalization of $11.3 million based on the 25.2 million common shares outstanding.

The tax deductible portion of the $44.7 million impairment charge results in an income tax benefit of $12.9 million and a corresponding increase in the deferred income tax asset balance. Based on an evaluation of the deferred income tax asset carried out pursuant to applicable accounting rules, the Company increased its deferred tax asset valuation allowance by $16.4 million. This results in an income tax provision of $5.9 million for the fourth quarter and $3.8 million for fiscal 2009 as a whole.

Now moving on to the balance sheet. Our total inventory at the end of the fourth quarter was $15.1 million representing annualized inventory turns of approximately 3.7 times. This compares to total inventory of $19.4 million at the end of the immediately preceding quarter which represented annualized inventory turns of approximately 3.4 times. The improvement in the fourth quarter was a result of inventory reductions across all of our businesses due to a relentless focus on working capital management. The accounts receivable balance of $13.7 million at the end of the fourth quarter represents a 56 day average collection period. Our primary sources of liquidity are our cash and cash equivalents that amounted to $6.9 million at the end of the fourth quarter, up from $5.7 million at the end of the third quarter.

Net cash provided by operating activities was $10.5 million in the fourth quarter and included the $9 million cash receipt from the Rogers settlement. For fiscal year 2009 as a whole, net cash generated by operating activities was $13.8 million including the Rogers settlement. Total debt at the end of fiscal 2009 amounted to $21 million compared to $17 million of bank debt, $17.5 million of bank debt and a non-interest bearing subordinated promissory note payable to a key DBS customer with a principal balance of $3.5 million. During the fourth quarter the principal amount of the bank loan was paid down by $7.7 million and the subordinated note payable to the DBS customer was paid down by $943,000. As of today, after giving effect to principal payments made subsequent to the end of fiscal 2009, the total debt balance is $18 million comprised of $15.8 million on the bank loan and $2.2 million on the subordinated note.

As a result of the sixth amendment to the bank credit agreement in January 2009, the banks waved previously assessed fees and interest. The effect was to reduce interest expense in the fourth quarter by approximately $500,000. The bank term loan has a maturity date of December 31, 2009, and consequently the entire term loan balance is classified as a current liability in the consolidated balance sheet at February 28, 2009. After giving effect to the next two quarterly term loan principal payments, the balance on that loan is projected to be within the Company's estimated borrowing capacity against accounts receivables and inventories. Based on this, we believe that we will be able to refinance the bank term loan prior to the end of calendar 2009 from the proceeds of an asset-based loan, possibly supplemented by proceeds from another funding source. With that, I'll now turn the call back over to Rick Gold for our guidance and some final comments.

Thank you, Rick. Now let's turn to our financial guidance. In our portfolio of business there are signs that conditions are beginning to improve within several of the vertical markets we serve, principally MRM and utilities, while some of our other businesses have not yet begun to rebound. Our pipeline of opportunities is growing but because of the long sales cycles we expect our Wireless DataCom business to remain sluggish in the near term. However, we expect to see higher Satellite revenue in the May 2009 quarter which would be the third consecutive quarter of sequential growth in this business. Based on our current forecast, we believe fiscal 2010 first quarter consolidated revenues will be in the range of $22 million to $24 million with a GAAP basis net loss in the range of $0.15 to $0.19 per diluted share. The adjusted basis nonGAAP results of operations for the first quarter, which exclude changes in the deferred income tax asset valuation allowance, amortization of intangible assets and stock-based compensation expense, are expected to be a net loss of $0.06 to $0.10 per diluted share. Notwithstanding this anticipated net loss, we expect to continue generating positive operating cash flow in the first quarter.

In concluding our prepared remarks I'd like to recap some key points drawn from our recent results and latest developments. Our Satellite business is in the midst of recovery with ramping production, shipments and significant growth opportunities including new products currently in development. While the sluggish economy is impacting the growth of our Wireless DataCom product sales we believe the recent cost reduction initiatives and new product introductions will improve our competitive position in our targeted vertical markets. And we significantly improved our balance sheet and liquidity position during fiscal 2009 through cash flow from operations. I believe we're continuing to make good progress towards our goal of returning CalAmp to sustainable profitability. That concludes our prepared remarks. Thank you for your attention and at this time, I'd like to open the call up to questions. Operator?

(Operator Instructions). Our first question comes from the line of [Sarah Shaw] with [FF Capital]. Please go ahead.

Hi, guys. At what level of revenues does the Satellite business generate both positive operating cash flow and positive operating profit?

So the Satellite business is currently generating positive operating cash flow and has for the last couple quarters. In terms of a positive operating profit, we've discussed that a couple calls ago, I believe, and on an adjusted basis, in other words, pulling out stock based compensation, I guess that is the only thing that would be pulled out of that one. We had said then that the break even was somewhere around $15 million a quarter. With some of the cost savings actions that we've taken across the Company that level is a little bit lower now. I would estimate it's currently at about the $13 million level.

Okay. And then moving over to the Wireless segment, you seem to be replacing a rather large bet on the auto industry in light of the [MLC] partnership in Autonet. And just given the continued negative outlook for the industry are these really good distribution channels for CalAmp?

Well, I think we have a number of different distribution channels that we're working in that market. It includes the OEMs, it includes the after market, it includes dealers and it includes some consumer channels and some of those are direct and some of those are with partners. So clearly the new car business is not doing great right now. But within that segment the whole area of telematics and electronics in cars is a growth -- is one of the highlights really within the automotive market and a number of the people that we're talking to are looking for ways to increase their revenues even as the overall automotive market is in a down cycle. So it's an area that we participated in through MRM for a number of years.

And I would also just mention it's not just cars it's also other kinds of vehicles. In the transportation sector right now buses, school buses, are an area where both from the standpoint of tracking as well as communications that is a growth segment. So we're very cognizant of the fact that in the near term particularly with some of the OEM channels there there's going to be a lot of pressure, but I think long-term the trends are good. And I think through some of the other channels that we're developing we're already seeing that the MRM market is, as I mentioned earlier, is one that is rebounding.

Okay, understood. And then just for last question regarding the cost savings from the Wireless restructuring. Since announcing the restructuring last quarter it seems like the savings have gone up pretty significantly from $2.5 million up to $6 million. What additional actions, besides the ones you'd already announced last quarter, resulted in this increase in the savings?

So what we talked about last quarter was really a first round of structural changes. We did have some additional head count reductions after those structural changes were in place. There were also some savings on the non-payroll side through facility rationalization and consolidation and all of that is aggregated in the $6 million number. I should mention also that those -- that the impacts of those, the benefit of those we saw a little bit of it in the fourth quarter. We will see a little bit more in the first quarter of 2010 but it's really not until the second quarter that those are all fully in place and that we'll-- they'll be fully advisable in the operating financials.

Okay, that's it for me. Thanks.

Thank you.

Thank you. Our next question comes from the line of [Sam Bergman] with [Jay Berry Asset Management]. Please go ahead.

Good afternoon, gentlemen, how are you?

Fine.

Couple of questions. First of all, can you tell me when you plan to see some of the money from-- well the money trickle down to public safety from the infrastructure projects that are going with the stimulus?

That's a good question. There's several different pieces of that. The $1.7 million that I mentioned in my comments a few minutes ago, those were actually earmarks that were in the Federal fiscal 2009 budget. They were not in the separate stimulus package. But there are a number of buckets of Federal funding to support those kinds of initiatives and a number of our customers are beginning the process now of lining up to access that funding. So I think it'll be later this fiscal year because it's a two-step process, really. It's that the money has to be authorized for the individual municipality or agency as well as -- and then subsequent to that we have to turn that into a purchase order for CalAmp equipment. But I do think given what's happening in the public safety space that has been the hardest hit of all of our market segments over the last few quarters as municipal tax funding has taken a big hit but it's clear that Federal support there is going to be an important element in unlocking some of that. And it's both indirect and direct. The Federal Government itself is also a customer through some of their agencies and we're in the process now of pursuing several leads in that area as well. But I think the short answer to your question is it would be in the second half of this fiscal year.

All right, In the DBS business in this last quarter, how much inventory on the balance sheet is devoted to DBS?

It's-- we don't actually break out the inventory by product line but it is a-- it's a significant piece of our inventory. It's certainly the largest single piece of that. And if you look over the last year, Sam, at the reductions, the bulk of that reduction has come in the Satellite area. So it's-- I don't have-- again we don't break it out by segment but it is the largest single piece of that number.

In the DBS area do you expect -- I know you said sequentially you expect next quarter to be a little stronger. How many quarters out do you have visibility in terms of sequential growth of the DBS business?

We-- if you look at the way our business works both on the DBS side and the Wireless side, we don't have a whole lot of direct visibility beyond the current quarter. The one exception there is in public safety where some of those jobs are longer term jobs, but most of those -- in most of the other cases we have blanket purchase orders in place and then we get releases on a monthly basis. And depending on the specific customer and the specific arrangement we may have one to four months of visibility there. So I think we're still in the mode in the Satellite business of ramping the products we have as well as working on the development of next generation products. So I think it's-- although I-- we can't give any specific guidance beyond the current quarter, we certainly believe that there's significant additional growth possible there even in a market that overall is relatively flat.

Okay. In the wireless radio modem business, what does the pipeline look like there right now?

In which specific market, segment? Are you thinking of the-- in industrial markets?

No, in metering.

In metering, okay. The-- we participated at a couple levels there. It's-- we have a-- we've historically been very involved on the transmission and distribution side with make some major utilities and OEMs in that area and more recently we've been expanding to the actual metering infrastructure primarily on the industrial side. There we probably have the most robust pipeline of opportunities that we have anywhere in the Company. I will say that those-- it's not a-- it's a fairly long sales cycle. So as an example, the order that we recently announced in Thailand, that had been in the works for several quarters. So it's a robust area. It's-- like I say, it's probably the healthiest pipeline we have anywhere in the Company. The market is good from a macro standpoint and we believe we have a very well targeted product portfolio right now particularly with some of the recent introductions there. That's one we're very bullish on for fiscal 2010. But again, these are large customers and some of the opportunities are quite substantial and there's multiple partners involved. So they don't happen overnight.

And last question. In terms of all the R&D projects that are completed right now, which one has the most growth potential?

Wow, it would -- that's a tough one. I think of any single project it would be some of the utility platforms, the WiMetry platform potentially. However, I have to caveat that by saying that a couple of our other products as an example the Sentry platform that we mentioned, it has opportunities in multiple vertical markets. So we have customers now that we're engaged with with Sentry in the public safety business, in the utility business and in the transportation business. So it's conceivable that over time that product platform could be even more significant. But I'm looking at specific products and specific markets it would probably be in the utility area.

Can you tell me how the Sentry product is used in transportation?

It's for communication. So it's -- as well as location. But it-- it is-- it offers access through multiple, what's the word I'm looking for, multiple standards. It's 3G capable as well as WiMAX capable. It also operates as a Wi-Fi hot spot and it has location capability. So there's a number of applications there for people who are looking for data communications platforms, police. But it has-- it can handle streaming, streaming data, streaming video even. So there are people in the transportation sector, which I think was your original question--

Right.

Where they're now looking at outfitting transportation, public and private transportation vehicles with communications equipment that goes well beyond just a simple cell phone or just a simple SMR kind of licensed radio.

Thank you very much.

Thank you.

Thank you. (Operator Instructions) Our next question comes from the line of Jim Quinton with Barrett & Company. Please go ahead.

Hi, Rick, thank you very much for taking the call. Was just wondering on your projection of the revenues of the first quarter of $22 million to $24 million, what percentage of that is the Satellite business?

We have not been breaking that out by segment. But we did indicate that we expect the Satellite number to be sequentially up in Q1 compared to Q4 when it was $8.1 million.

Okay. Okay thank you very much. I appreciate that.

Okay. Thank you.

Thank you. And there are no further questions at this time. I'd like to turn the conference back over to Management for closing remarks.

Okay. Well, again, thanks everybody for joining us today. And we look forward to speaking with you again next quarter.

Thank you. That does conclude the CalAmp fiscal 2009 fourth quarter conference call. If you would like to listen to a replay of today's conference call you may dial 303-590-3030 and enter in the access code of 4074352. You may also dial 1-800-406-7325. Again the telephone numbers are 303-590-3030 and 1-800-406-7325 and the access code is 4074352. Thank you, so much, for your participation today. You may now disconnect.