Immersion Corp (IMMR) 2012 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Immersion Corporation Third Quarter 2012 earnings conference call. During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions).

This conference is being recorded today, Thursday, November 1st, 2012, and at this time, I would like to turn the conference over to Jennifer Jarman of the Blueshirt Group. Please go ahead, man.

Thank you, Operator. Good afternoon, and thank you for joining us today on Immersion's third quarter 2012 conference call. This call is also being broadcast live over the web and can be accessed from the investor relations sections of the Company's website at www.immersion.com. With me on today's call are Vic Viegas, President and CEO, and Paul Norris, CFO.

During this call, we may make forward-looking statements, which may include projected financial results or operating metrics, business strategies, anticipated future products, anticipated market demand or opportunities, and other forward-looking topics. These statements are subject to risks, uncertainties, and assumptions. Accordingly, actual results could differ materially.

For a listing of the risks that could cause this, please see our latest Form 10Q filed with the SEC, as well as the factors identified in today's press release. Additionally, please note that during this call, we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial measure is available in the Company's press release, issued today after market close.

With that said, I will turn the call over to Chief Executive Officer Vic Viegas. Vic?

Thanks, Jennifer, and thanks, everyone, for joining us this afternoon. Before I begin, I would like to acknowledge everyone affected by the terrible damage caused by the hurricane on the east coast. Our thoughts are with you, and we hope your families are safe and well.

Over the past two years, you have seen an evolution in Immersion's business and IP strategy. Before we review the results for the quarter, I would like to take this opportunity to step back and discuss this strategy in the context of our overall corporate vision, particularly as it applies to the rapidly growing mobile market.

Broadly speaking, you can view our mobile strategy as consisting of two separate but complementary components, software licensing and IP innovation and enforcement.

First, our ongoing software licensing business has seen great success. This business is profitable, healthy and growing, with our large OEM customers shipping hundreds of millions of TouchSense-enabled smartphones and tablets in the last couple of years alone.

As mobile device manufacturers increasingly recognize the compelling nature and customer value of our haptic technology solutions, we are licensing new technologies, deepening our customer relationships, and expanding our market presence in important new geographies, including Japan and China.

Even as we have been enjoying the growth and profitability of our solutions licensing business, we have been setting the stage for future growth and further success through the second major prong of our mobility strategy, investing in the expansion and enforcement of our intellectual property rights and other technology assets.

There is great strategic importance in the ongoing development and growth of our IT portfolio, which began nearly two decades ago. Immersion's innovative spirit is part of our corporate culture, the foundation on which we imagine and create new technology. When you look at our history, you can see that this has had real and lasting influence on the user interface and gaming experience across a number of consumer platforms, as well as in commercial and professional settings.

In addition, our IP allows us to have greater influence within the haptic ecosystem. We foster valuable partnerships with ecosystem partners like actuator companies, driver partners and chip suppliers, which are all needed to mobilize the industry to improve and advance haptic technologies. Our IT position also enables us to offer rich integration tools that ensure quality haptic experiences across entire platforms, ultimately reducing fragmentation, and increasing adoption.

The recognition of the value of our IT portfolio is critical to establishing a fair price for our software solutions, and sets a baseline for future innovations we are investing in today. It's a future we're excited about, and I would like to share some of our thinking, such as we believe that mobile technology will become an increasingly integral aspect of the way we live and communicate, and its influence will grow as an enabler of a broader, powerful ecosystem of entertainment and lifestyle peripherals that will demand the compelling and intuitive user experiences that our touch-feedback offerings can provide.

In addition, while consumers have come to appreciate and understand haptics as a valuable feature that improves the user experience through touch confirmation, we believe this is just the beginning of how haptics can enhance the way we all interact with the mobile technology that accompanies us everywhere.

Haptics can dramatically transform our experience with mobile games, media, advertising and other content, and we are actively developing solutions, tools, and exploring relationships to make this transformation a reality.

As we invest in these areas of strategic importance, though, we owe it to our current licensees, business partners, and shareholders to protect those investments and the commitments we and they have made and the IP we have generated.

We are pleased with not only how we are progressing through the litigation process as we seek to enforce our IP rights, but also with the growth of our IP portfolio, and the continued innovation coming from the Immersion team.

We are confident that the strategy we are executing is the right path for Immersion, and we look forward to updating you as we move ahead. In a few minutes, I will discuss our recent business developments, but first, I will ask Paul to provide a detailed review of our financial results for the third quarter. Paul?

Thanks, Vic. Revenues in the third quarter of 2012 were $7.1 million, up 10% compared to revenues of $6.5 million in the year-ago period. Revenues from royalties and licenses of $6.4 million were up 8% compared to the third quarter of 2011.

Revenues from product sales were $529,000, up 53% from product sales of $345,000 for the third quarter of 2011. While revenue mix per line of business is expected to fluctuate on a quarterly basis due to seasonality patterns, in the third quarter of 2012, a breakdown by line of business as a percentage of total revenues was as follows.

49% from mobility, 24% from gaming, 16% from medical, 7% from auto, and 4% from chip and other. These percentages are based on total revenues, including revenues from royalty and licensing, product sales and development contracts.

Gross profit was $6.9 million, or 96% of revenues, compared to gross profit of $6.3 million, or 97% of revenues in the third quarter of 2011. Cost of revenues in the third quarter was $273,000, compared to $192,000 in the third quarter of 2011. Excluding cost of revenues, total operating expenses were $9.8 million in the third quarter of 2012, compared to $7.3 million in the third quarter of 2011. This includes non-cash charges relating to depreciation and amortization of $500,000, and stock based compensation of $808,000.

Excluding these non-cash charges, OpEx on a non-GAAP basis was $8.5 million during the quarter compared, to $5.8 million in the third quarter of 2011. OpEx in the third quarter of 2012 also included litigation-related costs of $3 million. As you are aware, we expect litigation expenses to vary quarter to quarter. This amount was higher than anticipated as we progressed through the height of the discovery phase, which is expected to conclude shortly, placing us within four to five months of our trial. Currently our estimates for OpEx excluding non-cash charges in the fourth quarter, is in the $8 million to $9 million range. As you know, in addition to normal GAAP metrics, we use a metric called adjusted EBITDA to track our business. We define adjusted EBITDA as earnings before interest, taxes, depreciation and amortization less share-based compensation.

Adjusted EBITDA in the third quarter of 2012 was negative $1.6 million compared to positive adjusted EBITDA of $454,000 in the third quarter of 2011. Net loss for the third quarter of 2012 was $3 million, or $0.11 per share, compared to net loss of $1.4 million or $0.05 per share in the third quarter of 2011.

Our cash portfolio, including cash and investments was $47.9 million as of September 30, 2012, compared to $52.4 million at the beginning of the quarter. Cash use during the quarter was $4.5 million. This primarily reflects expenditures on our patent litigation as well as activity within our stock repurchase program. In the third quarter we repurchased 581,200 shares of our common stock at an average cost of $5.51 per share, for a total of $3.2 million. As of September 30, 2012, we had approximately $20 million remaining under our authorized stock repurchase program.

We expect to have stock repurchase activity during our fourth quarter, and we'll continue to balance the attractiveness of our current stock price with a need to remain adequately resourced to fully exploit our IP monetization efforts.

With that, I'll turn it back over to Vic.

Thanks, Paul. During the quarter, we were very pleased to see DOCOMO launch the MEDIAS N-08D tablet by NEC. This tablet not only includes Immersion's TouchSense 5000 software, but it's the first implementation of our HD Reverb technology, which automatically translates the audio and games, video and music into corresponding haptic effects, creating a more engaging and compelling user experience.

We were delighted to be invited by NEC to participate in the press conference announcing this product with DOCOMO. This launch comes on the heels of the August launch of the Fujitsu Raku-Raku F-12D smartphone with Immersion's HD haptics. During the quarter, the Raku-Raku smartphone went on to be a top seller in the Japanese market. We are pleased to see continued momentum for our new solutions with the OEMs in Japan.

We also continue to penetrate the China smartphone market, primarily through our chip partners who are having success selling our solutions into this market. As we have started ramping our efforts in the region, we've seen three OEMs in China ship over 5 million handsets with Immersion technology thus far this year.

Xiaomi, one of the most disruptive innovators in the China smartphone market, has incorporated Immersion haptics through our partner Imagis in their flagship M1 and M1S devices earlier in 2012. Most recently, Xiaomi announced their powerful N2 Android smartphone with Immersion haptics, which came to market in October. We're pleased with the progress being made in China and are actively engaged with additional OEMs. We expect to continue to see additional handsets with Immersion technology emerge from this rapidly growing market.

Also during the quarter, Samsung rolled out new versions of its flagship Galaxy S III smartphone, the world's top-selling smartphone last quarter, which includes Immersion's TouchSense 3000 software and Reverb technology for mobile gaming. In addition, Samsung also launched its new Galaxy Note 10.1 which also includes Immersion's TouchSense 3000 software and is now available in retail stores worldwide.

As popular smartphones with our technology continue to enter the market, we're pleased to see continued adoption of our Haptic SDK. HandyGames, a top development studio in Europe, with a series of popular, casual game titles under its umbrella, was thrilled with the capabilities of Immersion's haptic SDK. During the quarter, they used our SDK, to rapidly to rapidly add compelling haptic affect into our half dozen titles, all of which post millions of downloads and excellent consumer reviews, including the popular apps Farm Invasion and Cloud & Sheep.

Turning to corporate developments, we recently announced that our Vice President of Sales, Joe LaValle, will retire effective January 2, 2013. In evaluating our organizational strategy, we decided to integrate our sales, marketing and field support functions. The goal of this integrated team is to create a nimble, customer-facing organization that supports Immersion strategy of both IP licensing and solution sales.

We have appointed Dennis Sheehan, formally our Vice President of Marketing, to be our Senior Vice President of Sales and Marketing to lead this new organization and to build out the regional sales and customer support teams required to accelerate the adoption and licensing of our IP and software solutions. With Dennis's strong background in licensing and technology, we're confident he will drive efficiencies throughout the organization to ensure we're providing excellent support to our worldwide customers.

Moving to our efforts to monetize basic haptics, we remain positive about the progress of our ITC litigation, which is moving forward as planned. We are nearing the completion of the discovery phase in the case. The hearing is scheduled for late March, with an initial determination due in June and a final determination in October.

In the meantime, we continue to engage in discussions with current and new customers to license basic haptics. The final result and timing of these discussions remains unknown. However, we continue to believe there is potential for Immersion to monetize unrealized opportunities for basic haptics in the current fiscal year, and are maintaining our revenue guidance of $32 million to $38 million for 2012, with a positive adjusted EBITDA.

This forecast is predicated on our existing base business supporting the lower end of the range and the potential haptics licensing revenue from litigation settlements and other unlicensed companies providing the upside.

In closing, we remain committed to fully monetizing our IP in a way that fairly values our technology. As we evaluate opportunities to license our IP, we are focused on achieving the most favorable outcome that will set the stage for long-term growth.

We see the value of haptics-enabled interfaces expanding as content is driving a richer mobile experience, and we continue to innovate and develop new solutions and IP to capitalize on this trend.

With that said, we'll now open up the call to your questions. Dennis?

Thank you, sir. (Operator Instructions). The first question comes from the line of Charlie Anderson with Dougherty & Company. Please go ahead.

Good afternoon and thanks for taking my questions. So, you kept the guidance and it's pretty wide for Q4 and you sort of outlined the range of scenarios. I wonder if it's two primary scenarios or if there are sort of stages in between the $32 million and $38 million that you can achieve? And I just want to clarify that you said that you'll do adjusted EBITDA no matter what you do in the range as well? Thanks.

Yeah, thanks Charlie. So, yes, we do expect to be positive adjusted EBITDA for the year. In terms of the range, as we said, the base business, we believe, supports $32 million or more, there is upside to the base business and we hope to achieve better than $32 million based on that base business, and then, to the degree that we're able to either settle with existing defendants in litigation or license new companies to a basic haptic license or license existing customers to the basic haptic license, we believe that those offer the upside that gets us at the upper end of the range.

I will update you that, as of now, we believe there have been close to 400 million basic haptics phones that are unlicensed that have been shipped, and its those phones that we expect to monetize and turn into revenue. But I would say that the more important aspect of our ITC action and the enforcement of our basic haptics is to establish the value of this IP and generate the ongoing revenue from continued sales of these basic haptics products.

And then in terms of China, that was interesting that you mentioned the inclusion of M1 and the M2 and the 5 million units. I wonder if that's all incremental versus what you did a year ago, you were kind of zero in China, and then on that M1 you said it was through a Imagis, I wonder the M2, are they going directly to you or are they still with Imagis?

So, the Chinese opportunity really has taken a hold this year. I believe whatever revenue we derived last year would have been rather insignificant. We are engaged not only via our chip partners like Imagis, TI is another that's very active in the Chinese market, but we are also actively engaged in developing solutions and porting software to platforms for various models in the Chinese market.

So, we have a multi-pronged approach in China. We are seeing success through our partners because the delivery mechanism of a chip with our capability already embedded in that chip is one that can be exploited quickly and easily, but I think that as we begin to see success in the use of haptics in the market, there appears to be growing demand for even more advanced capability and/or more advanced solution. So, we are very optimistic that we will be working directly with these Chinese OEMs and allowing them to use our TS 3000 and TS 5000 solutions.

I wonder, also if you could just update us on sort of the market for piezo. Where are the prices for some of those components or the yields improving our more people testing, looking at that solution, any color there would be helpful?

Yeah, we're pleased with the progress. Obviously we wish things were moving quicker, but we are adding to the ecosystem partners. There are more companies now focusing on and working on piezo solutions. Many of those companies are looking at ways to reduce the size and the cost to enhance the offerings for new phones. We recently announced, as we said in the call, additional products that are now out with the piezo solutions so they now include the NEC tablet as well the Fujitsu phone, in addition to the PanTec Element tablet.

So we're seeing multiple products launching in the market. The experience is quite compelling, they're gaining great reviews. And that's triggering interest from other OEMs, it's rejuvenated the efforts of the actuator vendors to continue to aggressively market their solutions and we're starting to see some price reductions as volume increases. So, we're pleased with the ecosystem and its ramp up although we wish we had more phones in the market with TS 5000.

Sure, and then question for Paul, you guys had a little bit higher than normal legal expense in the quarter, a lot of discovery period, and it sounds like you're expecting on Q4. I wonder is that sort of quiet down in Q1 and then ramp back up in Q2, would be kind of the way to think about it relative to how we've seen it play out in 2012?

Well, as you know, Charlie it's always tricky to predict legal expense with a lot of precision given that much of the expense can be a function of the other parties who are participating in the litigation. Generally speaking, this was a high quarter, it may come down a little bit from that in the fourth quarter because, as I mentioned in the prepared remarks, we're reaching the end of the most intense phases of discovery, including depositions. It will stay at a relatively high level, though continuing up through our trial date, which is in late March and going into early April, and then, after that it would begin to taper off somewhat.

Perfect, and then last question from me. You guys bought a lot of stuff back in the quarter. It sounds like if you think there is a good value at these levels, you will continue that with caveat of you want the reserve some dry powder for the IP monetization. If you can just talk about maybe the confidence that's driving some of the share buybacks and how the case is progressing and how confident you are in the opportunity with the ITC case?

Well, as far as the attractiveness of our stock price, we're absolutely convinced that's a good buy and we -- all other things being equal, we're very happy to be repurchasing shares under the repurchase program. That is why the amount was up higher last quarter as we mentioned. It is not so much a function of the litigation confidence as wanting to be shared, we got all the --- I think you phrased it as powder dry, all the powder dry that we need to make sure that we can continue on to all phases of the litigation if necessary. We're feeling very good about where we stand in the litigation right now, but it is a balance between trying to make sure that we've got enough of a cushion here on the cash front that we feel comfortable.

Perfect. Thanks so much.

Thanks, Charlie.

Thank you. (Operator Instructions). And our next question is from the line of [Mark McMahon] with FBL. Please go ahead.

Mr. McMahon, your line is now open, sir, you could depress the mute button or take the phone off the speaker.

Sorry about that, congratulations on the quarter, the 10% growth, I just got two questions for you. In terms of the deals that you made with the Android app developers to forgo I guess licensing revenue through the remainder of 2012, how is that going to work, exactly, come January 1?

So, I believe we'll be also offering the use of the SDK without charging the app developers in 2013.

So, is that a strategic decision to try to drive user experience to drive demand on to the phones, I mean, could you talk a little bit about why you're giving away essentially a pretty valuable product from what you've discussed before?

Sure, sure. It's clear that adoption and use of our SDK by the app developers is growing dramatically. They're seeing the benefits in the experience and the demand and take up in the content on these devices. So, it's a very satisfying experience, one that they want to continue.

We believe that it continuous to add value to the consumer but also to the OEMs, because their products are now able to provide this very dynamic experience. So, it is a bit of a pull strategy that by having good creative content, it is creating demand and a positive experience, and it helps us in selling our solutions into the OEMs.

So, for the foreseeable future, for at least 2013, we'll continue with the same strategy, and we continue to invest in other content areas, things, as I said, like short-clip videos, advertisements, audio and others, and those content opportunities all carry with different types of monetization. So, we will continue to evaluate, but currently the use of the SDK on these app development efforts, we will provide for without charging them normal royalty.

Okay, and I think I had a similar question couple of quarters back, but could you talk again about the competitive landscape, how you feel that your position with your patent portfolio which again if you could explain a little bit about the exploration of any sort of patents that would be coming up or when they would be able to be able to use broadly, and then how your technology is positioned versus Senseg, which seems to get a lot of media coverage for what they are supposedly developing?

Sure. Today, we believe we are the dominant supplier of haptic technology not only because of the strength of our patent portfolio, which now numbers in excess of 1,200 issued or pending patents, but also with the quality of the solutions that we offer and the tools that we make available. Senseg, in particular, is a company, I believe, focused on providing a form of friction technology using electrostatic capability. It's technology that's been available for quite some time. It is limited in its usefulness limited based on -- you have to be moving your finger.

So, it's not really effective for confirmation, gameplay, lots of the content that we're focused on, and many of these solutions that are demonstrated, whether they are deformable surfaces that are presented by companies like Tactus, or electrostatic friction by Senseg and others, or even patent applications by Apple and many others, many of these are limited in capability, they are subject to some of our patent portfolio, potentially, and the cost of implementing those solutions, are still not in the area of feasibility.

So we see these not so much as competitive capabilities but more new forms of actuation technology that we believe would still require use of our solutions, our tools or our intellectual property.

So, what about the exploration of any certain patents, or is there anything on that approaching because we're going on 20 years since you first started out?

Yeah. The company was founded in 1993 and even some of the more -- earlier patents that may have been acquired by the company. On a pretty regular basis, some number of those expire literally every quarter. Much of the early development efforts was around virtual reality and some, let's say, industrial-type applications.

So, in terms of important aspects of the portfolio, I can speak to, for example the basic haptics capabilities, most of those patents have all issued in the last 12 months, so they are relatively new. Other than that, it would require a full analysis of 1200 patents, I think over 600 have issued. So, I'm not aware of any meaningful patents that are expiring that substantially change the revenue nature of the company.

Yeah, and one thing that we've been focused on over the last several years certainly has been to fill in the white spaces in between our patents, and then to focus increasingly on hardware and system-agnostic IP protection, so that if you've got -- we've got a patent that covers the way that haptic effects are implemented, ultimately the experience of it, as either in an application or in an user interface, regardless of whether or not you've got underlying hardware that's using electrostatic friction or whether there is a deformable surface. So, if anything, I think our recent patent activity has been broadening our ability to cover the landscape.

So, there is no chance that any of these manufacturers or OEMs or just playing a waiting game for, waiting you out for some explorations that you wouldn't no longer be able to --- come after them for?

You never can say never. I'm not aware of anything in particular, I haven't seen that as a strategy or haven't heard that in our negotiations, so I don't believe that's a significant threat, no, and as I said, many of our most valuable IP has issued very recently and should have quite a few years left to take advantage of.

Okay. And I guess, one final point, because of the fact that you mentioned basic haps in all the phones that have shipped to-date, you've launched this lawsuit, HTC, Motorola, again an example of this kind of standout was Apple, and there is always, every year somebody is writing in Wired or some other publication that -- is this the time that Immersion is going to be in it. Do you have any strategies or any reasons for how quiet it is in terms of either litigation with them or partnership with them or integration with them or anything along those lines?

Well, I feel comfortable that we have had enough dialog with them, they are aware of our current offerings and the direction that we're headed. So, I'm confident in saying that. It's not that they're ignorant of Immersion of what we're doing. They are --- they appear to be active in the IP field filing patent applications.

But in terms of their current use of haptics, I believe it is still limited to inclusion in their iOS operating system, which many developers are beginning to use in creating games that provide haptic effect on the gameplay, and they also offer a form of alerts that is -- offers the ability to differentiate.

Their use of haptics is dramatically different than the Android operating system, and I think for now we're really only prepared to discuss the aspects of the Android operating system as to its infringement and use of haptic technology that's covered by our IP.

Okay. But what you just mentioned did sound a lot like that they are potentially infringing on your basic haptics, with like the alert system, that sort of thing?

With regards to Apple, we've never made that statement, no, we've not taken a position that it's infringing or that it's not infringing. We have taken a position that the Android operating system, as currently shipping is using basic haptics which is covered by our patent portfolio.

Okay, all right. Thank you very much.

Thanks Mark.

Thanks.

(Operator Instructions). Next question is from the line of [Robert Cats] with [Synvest]. Please go ahead.

Hi, Vic and Paul. I have two questions. One, how many royalty-paying units shipped in this quarter? The second one would be, to make your lower end of the range, where do you anticipate that revenue growth coming from, which are the three different segments?

I'll take the last part of the question. The fourth quarter is seasonally a strong quarter for us because it includes new gaming products that are typically launched in the quarter for the holiday selling season. We believe that -- something similar with the mobility market, that we'll see some continued growth there in particular the Galaxy III. This will be our first full quarter of shipments because we are a quarter -- we recognize a quarter in arrears.

So, those two areas in particular I think we see revenue growth and feel quite confident in achieving the low end of the range with the basic business, and then the upside obviously will come from the conclusion of discussions and licensing efforts with the other parties.

Robert, can you maybe clarify your first question, was it related to how many units shipped during the quarter?

Yeah, how many units shipped during the quarter to pay your royalty?

We don't have an exact number handy but I think Robert, if you're thinking in the 40 million plus range, you're in the right general order of magnitude.

Robert, it's difficult because there are so many different industries, so it would include cars shipped, gaming product shipped, phones launched, tablets launched. So, we don't typically track those, we treat each of those segments separate and don't really look at the total number of units but we do look at the units on our per-vertical basis.

I just wanted to give you --- I didn't want to get into each vertical because that's probably really sensitive to you to start giving you that information so was just trying to put all together into one number, kind of blended royalty?

Okay, so, my number would be on the low side of that.

Okay. And in terms of the average royalty then, where do you see that trending?

Well, again, each industry is different but clearly we have a corporate goal, and we're executing, I think, well on this with new agreements that we are moving our ASPs higher. We can do that by offering more value. Typically, we innovate and improve our base solutions, and then we have them offering new capability like Reverb is one, Integrator is another. And each time we roll these new products out, we are able to charge a premium for those products, and as a result that helps raise the ASPs.

Right. And if you were to look at the cellphone market in total, you were saying there was obviously the royalty -- people who are not paying, ow many units on a quarterly basis are shipping, what do you say, with haptics in it?

I would say that the number of basic haptics phone shipped that are unlicensed are now in excess of 50 million units a quarter and growing.

And once you're able to get a royalty for the basic, do you have -- can you disclose what kind of rate you're looking at for basic royalty?

Well, that's not something I think we're ready to share. We have targets in mind. We have, as part of our discussions, proposals that have been made available. So, we're comfortable with the rate, but as we said in the script, our goal here is to establish a value for our IP and then sell solutions at a premium price to that. So, we are looking at this as a substantial revenue opportunity, and one that would dramatically increase our overall revenues.

And in terms of the next generation piezos shipping in volume, do you have any inside into anything that might start for the high fidelity haptics on the cellphone side?

At this point, I don't think I got enough visibility to tell you when, let's say TS 5000 begins to exceed our TS 3000 solutions. We --- it is clear there is greater value, customers continue to invest in efforts to evaluate the solution, and as the cost to implement comes down and the value proposition grows, we think that there will be a transition. We think we'll get there. But when that happens is not clear -- that I can predict that right now.

Thank you and good luck.

Thanks Robert. I'm also happy to hear --- it sounds like you're okay, because I know you're on the East Coast.

Thank you, and at this time I'd like to turn the conference back over to management for any closing remarks.

So, thank you all for being on our call with us today. We look forward to updating you again on our next quarterly call. Thank you and have a good day.

Thank you, sir. Ladies and gentlemen, if you'd like to listen to a replay of today's conference, please dial 1-800-406-7325 or 303-590-3030 using the access code of 456-9142 followed by the pound key. This does conclude the Immersion Corporation Third Quarter 2012 earnings conference. I'd like to thank you all very much for your participation. And you may now disconnect.