萊迪思半導體 (LSCC) 2010 Q3 法說會逐字稿

Good afternoon.

My name is Kristin and I will be your conference operator today.

At this time, I would like to welcome everyone to the Lattice Semiconductor third quarter 2010 conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

This call ising with recorded and will be available for playback two hours after the call ends.

You may access this recording by dialing 706-645-9291, and entering the conference ID number 15840374.

Thank you.

At this time I would like to turn the call over to our host, Mr.

David Pasquale of Global IR Partners.

You may begin.

Thank you, operator.

Welcome everyone to Lattice Semiconductor's third quarter 2010 results conference call, and thank you for being patient at the entrance.

There was technical difficulties on the conference call side.

Joining us today from the Company are Mr.

Chris Fanning, the Company's interim CEO, Corporate Vice President and General Manager, Low Density & Mixed Signal Solutions, and Mr.

Michael G Potter, Lattice's Corporate Vice President and Chief Financial Officer.

Both executives will be available for Q&A after the prepared comments.

If you have not yet received a copy of today's results release, please e-mail Global IR Partners using LSCC@GlobalIRPartners.com, or you can get a copy of the release off the Investor Relations section of Lattice Semiconductor's website.

Before we begin the formal remarks, I will review the Safe Harbor statements.

It is our intention that this call will comply with the requirements of SEC Reg FD.

This call includes and constitutes the Company's official guidance for the fourth quarter of fiscal 2010.

If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum such as a press release or a publicly announced conference call.

The matters that we discuss today other than historical information include forward-looking statements relating to our future financial performance and other performance expectations.

Investors are cautioned that forward-looking statements are neither promises nor guarantees.

They involve risks and uncertainties that may cause actual results to differ materially than those projected in the forward-looking statements.

Some of those risks and uncertainties are detailed in our filings with the SEC including our fiscal year 2009 Form 10-K filed on March 10 and our quarterly reports on Form 10-Q.

The Company disclaims any obligation to publicly update or revise any such forward-looking statements to reflect events or circumstances that occur after this call.

Our prepared remarks will also will be presented within the requirements of SEC Reg G, regarding Generally Accepted Accounting Principles or GAAP.

I would now like to turn the call over to Mr.

Chris Fanning.

Please go ahead, sir.

Thank you, David, and thank you everyone for joining our call today.

The third quarter was within our guidance for all three metrics, revenue, gross margin, and operating expense.

An important achievement for us this quarter is that we grew our new products 10% quarter on quarter, and that new products more than doubled on a year on year basis.

New products are where we have placed significant focus more recently, and we are pleased with the level of customer adoption and design win momentum for these solutions.

In terms of specific results for the quarter, revenue of $77.1 million was flat versus second quarter 2010, and up 57% compared to the year-ago quarter.

Gross margin came in at 59.1%, compared to 61.2% in second quarter 2010, and 54.2% in third quarter 2009.

Operating expense was $30.7 million, compared to $31.4 million in second quarter 2010.

As noted in our release, revenue was impacted by lower sequential sales in our mature product category, an area that has more recently had several strong quarters of growth.

Mature products typically decline over the long-term.

And tend to be more affected by macroeconomic conditions and inventory modulations than the PLD industry, generally.

Growth in our new product segment is being led by two key product groups, mid range FPGAs, and low density PLDs.

The low cost, low power LatticeECP3, our newest mid range FPGA grew more than 50% quarter on quarter.

This is the seventh consecutive quarter of growth since the ECP3's launch.

We continue to see a strong rate of customer adoption for this product family, and are investing to further build out our solutions portfolio for ECP3.

During the third quarter, we introduced a SPI-4.2 solution for the communications market and a video display IP suite to enable customers to quickly implement proprietary image processing functions.

Our low density MachXO also continues to experience very good customer adoption and grew 17% quarter on quarter.

This has more than double the product revenue versus the year-ago quarter.

We have now shipped 50 million MachXO devices, up from 25 million from just 11 months ago.

And today the MachXO is our largest revenue product line.

Our programmable Mixed Signal products continue to account for over 5% of our revenue, as we continue to grow our investment to address this important market opportunity.

With the introduction of the Platform Manager products earlier this month, we have released the first products in our third generation of programmable power management solutions.

These products provide value to our customers in that they reduce an engineer's bill of material costs and board space requirements, increase their design's reliability, and provide effective, time efficient troubleshooting capability to mitigate time to market risk.

Based on our results, we believe that we are continuing to gain momentum in our targeted markets, and we are optimistic about our business moving forward.

Now, what I would like to do is give you some additional color on the quarter.

All life cycle categories experienced year on year growth and as I previously mentioned our new products grew 10% quarter on quarter and doubled year on year.

Growth was driven by our nonvolatile MachXO, our mid-range LatticeECP2, LatticeECP2M, and LatticeECP3 families.

The revenue mix of new, mainstream and mature was 46%, 32%, and 22% of revenue respectively in the third quarter.

This compares to new at 41%, mainstream at 35%, and mature at 24% in the second quarter of this year.

Revenue from SPGA products represented 32% of total revenue in the third quarter, flat when comparing on a dollar basis to the second quarter, but up over 60% on a dollar basis year on year.

PLD products represented 68% of total revenue in the third quarter, also flat when comparing to second quarter on a dollar basis, but up over 50% year on year.

On a geographic basis, revenue from Asia, including Japan was up 2%, and increased to 69% of total revenue compared to last quarter's 68%.

Revenue from North America fell 2% quarter on quarter, and was flat at 14% of revenue.

Europe fell 4% quarter on quarter, and dropped from 18 to 17% of revenue.

On an end market basis, communications was 50% of revenue in the third quarter, compared to 49% in the second quarter.

Sales to Asian telecom gear makers increased, offsetting declines in shipments to non-Asian manufacturers around the world.

Computing fell 10% quarter on quarter, with gains in servers offset by declines at several storage companies.

Industrial and other came in at 26% of revenue in the third quarter, compared to 25% in the second quarter.

There was a mix shift in this category with declining mature product revenue offset by an increase in applications that use our new products.

Consumer declined from 11% in the second quarter to 10% of revenue in the third quarter.

And finally, before turning the call over to Michael, I wanted to also note a very important announcement we recently made.

Lattice announced that Darin Billerbeck will join Lattice as President and CEO on November 8th.

Darin has 30 years of experience from some of the semiconductor industry's largest companies, Intel and AMD, and most recently and CEO of Zilog.

Darin's strong R&D experience will enable him to further optimize the execution of our strategic road map and continue to maximize the return for our stakeholders.

I know I join all Lattice employees in welcoming Darin to the Company and I personally look forward to working with him as I resume my responsibilities as General Manager of Low Density&Mixed Signal Solutions.

I will now turn the call over to Michael for a more detailed financial review.

Michael?

Thank you, Chris.

As noted earlier, revenue for the third quarter was $77.1 million, flat with the prior quarter and up 57% from the year-ago period.

Gross margin for Q3 was 59.1%, compared to 61.2% in the prior quarter.

This was in line with our guidance but at the low end, reflecting the impact of lower sequential sales in our mature product category.

Although the decline in mature product revenue was offset by an increase in new product revenue, newer products tend to have lower gross margins than our mature products.

Total operating expenses for the third quarter came in at $30.7 million, compared to $31.4 million in the second quarter.

We expect to see an increase to $34 million in Q4.

The majority of the expected increase is related to new product launch expenses and associated mass costs.

Q3 net income was $15.4 million or $0.13 per share, as compared to $16.7 million or $0.14 per share in the second quarter, and compared to a net loss of $4.1 million or $0.04 per share in the year-ago period.

All per share amounts are on a fully diluted basis.

At the current share price, we expect diluted share count to be approximately 120 million to 121 million shares.

Moving on, our balance sheet was further strengthened in the quarter.

We generated an additional $15.4 million of cash from operations, ending the quarter with a cash, cash equivalents and short-term marketable securities balance of $229.1 million.

And we continue to have no debt.

Not included in the liquidity discussion I just went through, is the remaining balance of our auction rate securities, with a fair value of $9.7 million.

For the third quarter in a row, we actually experienced a gain on redemptions.

However, due to the illiquid market for these types of investments, auction rate securities continue to be classified as long-term marketable securities.

Accounts receivable at October 2nd were $49.2 million, compared to $47.3 million at the end of last quarter, and days sales outstanding were 57 days, compared to 55 days last quarter and 52 days in Q3 2009.

As noted on prior calls, although our actual collection times have not materially changed, the DSO metric has been and will continue to be impacted by our transition to higher sell-through transactions which cause higher gross billings.

Inventory of our October 2nd, 2010 was $31.7 million, up from $26.8 million last quarter, and up from $27.1 million in the year-ago period.

Months of inventory now stands at three months, compared to 2.7 months at the end of Q2, 2010, and 3.6 months in Q3 2009.

Our inventory increased sequentially in the third quarter of 2010, mainly due to wafer deliveries of new products, specifically our LatticeECP3, to address near term customer demand.

We spent approximately $3.8 million on capital expenditures during the third quarter, up from $2.8 million in Q2, with the quarterly depreciation and amortization expense at $3.7 million, compared to $3.5 million in Q2.

Finally, the strength of our balance sheet has allowed us today to announce a $20 million stock buyback.

The purpose of the buyback is to manage the dilution and to build shareholder value.

The program itself reflects our Board's and Management's confidence in Lattice's prospects, combined with our solid financial position.

This concludes the financial review portion of the call.

I will now turn things back over to Chris for the fourth quarter business outlook.

Please go ahead, Chris.

Thanks, Michael.

In summary, we continue to believe we have a strong portfolio of solutions that meet our customers' needs and that our competitive position will be further strengthened as we execute on our product road map.

Let me now turn to our fourth quarter expectations.

We expect revenues to be down 2% to 7%, compared to the third quarter.

Fourth quarter gross margins are expected to be in the range of 58% to 60%.

Total operating expenses are expected to be approximately $34 million.

Now, the majority of the increase is related to new product launch expenses and associated mass costs.

As noted in our earnings release, we expect continued profitability in the fourth quarter.

This concludes our prepared remarks.

Operator, we will now be happy to take any questions.

(Operator Instructions).

And your first question is from the line of Richard Shannon with Northland Capital.

Gentlemen, how you doing?

Doing good.

Hi, Richard, how you doing?

Just fine, thanks.

I guess my first question is regarding the commentary you made in the press release regarding some customers managing inventory and its impact on the fourth quarter guidance.

Kind of curious to the extent at which you see that inventory management impacting that versus any sorts of near term demand issues and if you could comment specifically on any end markets where you're seeing some of those, that would be great to know as well.

Sure.

I think specifically that's probably a bit more focused on our mature product area.

We saw mature products decline 11% sequentially, as we've indicated.

And what we're seeing is we're seeing customers, basically with the mature products having grown 41% in the first half of this year versus the first half of 2009, which is pretty substantial growth for products that are 10 years and in some cases 20 years old, we saw them decline 11%.

And I would more typically expect mature products to grow or decline 5% in any quarter during more normal conditions.

So I think what we're seeing is we're seeing customers managing their own end product inventory, it's across the board in all end markets.

We're just seeing it happen a lot more in the third quarter and we can see that in the backlog entering into the fourth quarter.

Okay.

So the inventory management is almost exclusively focused on mature products then, is that -- ?

It's focused -- I wouldn't say exclusively, but we're definitely seeing it there more so than in other places.

You don't see any sorts of material changes in demand in any particular area that's baked into this guidance number, then?

No, nothing really -- there's no one category, Richard, that we see a large drop in demand.

We actually don't see a very large drop in demand and we do have backlog being booked even into Q1 by some customers.

So we feel that people have been able to get good service from us over the last year.

Other people's lead times kind of extended during that time period and ours remained consistent so it's a little bit easier for them to know we can supply them and I think they were looking at where they are, the uncertainty that is in the marketplace and people waiting for what's going to happen the end of this year and the beginning of next year and just tweaking their inventory.

Okay.

Fair enough, then.

A question on operating expenses.

Without the mass costs and the product launch costs I think you have referenced, would the OpEx have been expected to be relatively flat to the third quarter and I guess the corollary there is kind of how do we think about OpEx going beyond the fourth quarter.

It would have been a few million dollars lower than the guidance we gave.

There's a few other activities we're doing at the end of the year.

So it would be approximately $2 million related to the mass and launch expenses and the rest is some miscellaneous other items.

Okay.

Fair enough.

One last quick question from me.

I know you delineate some revenues from two large telecom OEMs in your filings.

Can you tell us what that number is for the third quarter?

It went up in Q3 and I think it's about 13s% of our revenue in Q3.

Okay.

Great.

I will jump in line.

Thanks, guys.

Thanks, Richard.

Your next question is from the line of Nick Clare with Robert Baird.

Hey, guys.

I'm calling for Tristan Gerra.

Okay.

What can we do for you.

I was trying to make sure you could hear me there.

Could you guys touch on what percentage of your revenues this quarter were coming from the 65-nanometer node?

So, the product we have at 65-nanometer today is our ECP3.

So that's the one product that we have out that's at that node.

Okay.

It's a small percentage, but as we indicated earlier it grew 50% quarter on quarter.

And that's the one family that we have at that node today.

Okay.

And what could you say if your 90-nanometer revenues, are they still growing or have they reached a peak and if they are, when would you anticipate the peak to come?

So we don't really divide our product categories up by node.

We divide it by new, mainstream and mature.

So our largest product family which is our MachXO is at 130.

And that's continued to grow and do quite well for us.

We do have some products at 90-nanometers, our XP2 family for example, and our ECP2M as well as those continue to do well for us so I don't think we're seeing a peak at even 130 so I don't think I'll be talking about a peak at 90.

It's not as relevant to us in the markets with we compete in and in our lower power, CPLD market, we don't really focus much on those.

Could you talk about the range of your lead times during the quarter and if they're still above normal levels, what would you be looking at time frame wise for those to normalize.

In general, our lead times have actually remained pretty consistent for the entire 2010 time period with very few exceptions.

I think our operation staff has actually executed very well this year with our foundry partners and our assembly and test partners.

Our lead times tend to be anywhere from four to eight weeks depending on the product.

It's something that we manage pretty proactively and we have not I think experienced the similar lead time challenges that some of the other folks in the industry have had earlier this year.

Okay.

And then I guess one more from me here.

So assuming that China's flat next year, do you think that you can grow the China business because of market share gains or I guess how could we look at quantifying that?

So I think -- I'm not sure I would agree with your assumption, but let's just take that hypothetical.

We obviously have business with two major communication accounts in China.

I think we all know that.

But we actually do a fair bit of business with many other customers within the China market.

We've got a very strong sales team there, distribution network there.

It's clearly a focus for us to grow our business in China overall.

And given our design momentum and customer adoption rates with both ECP3, with the MachXO, with our power management products, I'm pretty confident that we'll see continued success in China.

And I would also caution you to remember that we report our revenue by a ship to address, so if -- even if it's a Western Company, if the ship to address is in China, we list that as China revenue and also we've talked about in the past, many of our Chinese customers, so Chinese companies that we ship to into China export a lot of the products they assemble in China.

So the end market is not necessarily in China.

Okay.

All right.

Great, well thanks a lot, guys.

(Operator Instructions).

Your next question is from the line of [Sundeep Ashkar] with Morgan Stanley.

Thanks for taking my question.

Just following up on the commentary about customers managing inventories in September, could you tell us which end markets you saw this in?

Was it weighted towards communications or industrials or any other segments?

I think what I -- Sundeep, what I had said earlier to a similar question is that we're seeing that across the board.

It really comes down to many end markets, it's not com centric, it's not computing centric, it's really spread across the end markets and geographies.

Some customers did it much more than others.

Really comes down to an account by account basis.

But we don't see any secular trend in one end market versus another.

We also didn't see any large cancellations or significant pushouts.

There's always some pushouts and pull ins that happen during a quarter.

But this wasn't a quarter where you start seeing cancellations all over the place.

It was just a quarter where there wasn't as much strength toward the end of the quarter as normally expected and when you inquire into our distribution channel they'll tell you, and you can see from our results every week, people are taking inventory but they're just being cautious and they're confident they can get supply from us so they're not stocking in their own factories and warehouses right now.

I think that's very helpful.

Just to follow-up, I guess on your commentary about the ECP3 demand and inventory buildup on your books because of that, is it fair to assume that those orders are still on your books and you expect to ship them going forward?

That's a good assumption.

Again, remember, this product came out a year and-a-half ago.

As you know, in this industry it takes a while for a product to be designed in and then to generate meaningful revenues.

So we're winning designs.

We're seeing good customer adoption.

We're anticipating when those won designs are going to go into production and we're obviously gearing up inventory as a result.

Started a little bit last quarter, but the other thing to note is that there's been some different densities released over the past year or so and as each one gets introduced into the marketplace, we need the initial stocking inventory.

Timing-wise, most of it is on our books now versus being deployed out into our customers at the end of Q3.

All right.

And one last one from me, if I can.

Your industrial segment had been growing at a pretty nice double-digit clip for a few quarters.

That seems to have slowed down which is consistent with what we're seeing in the industry.

How should we think about this business going forward, I guess in Q4 and also beyond?

Well, I think, again, in industrial, the decline in the industrial market came predominantly from some of our mature products and so I think that, again, is industrial customers managing their end inventories.

That said, we're seeing good growth from our newer products in the industrial end market.

Just the net-net wasn't what we had hoped.

It was kind of a curious quarter in terms of our industrial numbers stayed relatively flat but the mix certainly changed and if you look at it, we saw a lot of our mature products more into the US and into Europe which is affected by summer holidays, particularly Europe.

Whereas in Asia, a lot of our newer designs are manufactured and they use our newer parts and that revenue even in the industrial segment was pretty good for the third quarter.

Thanks very much.

Your next question is from the line of Apurva Patel with Ticonderoga Securities.

Hi, guys.

Thanks.

First question on 3Q 2010.

In your press release you highlighted that there were some weakness of the mass, especially in September.

If that weakness was not there especially by your customers would you have expected your revenues to be higher and if so, how much?

Can you quantify it?

Well, that's kind of a difficult question because we had forecasted a range.

We came in at the lower end of the range.

I would expect that we would have been somewhere higher in the range if things had been a little bit more robust than they ended up being.

They came in as they did so we had the number we had.

That's one of the reasons why we used the range and in particular our forecasting has become a little bit more difficult as we have transitioned from sell-in to sell-through over the last year and we made another distributor transition during this year.

So it's a little bit more difficult to forecast.

Normally at the end of a quarter, at the end of third quarter if I look back historical numbers we have a little bit more strength than we had this time.

When we inquired from our direct customers and our distributors, they both basically gave us the comments which reflected and we saw some customers were managing their inventories at quarter end.

Understood.

Second question on inventory, I mean, thanks for the color in terms of your increasing inventory from going from mature to new products.

When do you expect that inventory on your own balance sheet to come down or when do you expect your customer set to adopt more of the new products, increasingly faster than as you mature or mainstream products tend to taper down?

Right now our forecast for Q4 for inventory, which we don't really go into detail normally, is to be relatively flat.

And we don't really talked about future.

We don't talk about past Q4.

I do know that this is all new product that's in new designs at the inventory build so it's something that we expect to move out into the channel and turn into revenue in relatively short order.

Thanks, Michael.

Another question.

What were the turns in 3Q 2010 and what was the book-to-bill in terms of in total would be great and what do you expect for 4Q 2010.

We don't really view our book-to-bill ratios being particularly relevant.

It's very distorted by distributors placing orders at full distribution price and then selling at the end customer price.

So I would say that our turns were relatively low, compared to historical averages, in Q2.

Which is what we expected.

Turns were slower near the end of the quarter, sorry, Q3.

Q2 actually they were lower too but in Q3 they remained lower.

We expect turns not to be very high in Q4 as well.

Traditionally we've run as much as 50% plus of our business has been turns and it's been in the mid-20s to the low 30s for the past few quarters.

Two more questions from me.

What do you expect in terms of end markets, any color or direction in terms of 4Q 2010.

Do you still expect strength to come from communications and industrial and computing to be mixed and to be down.

As far as end markets go, communications grew in the third quarter.

We still are winning business in the communications sector.

We're obviously pretty focused on wireless with some business in the wireline segment.

We see the ECP3 and the XO continuing to be adopted by customers there.

As I mentioned earlier, computing, although it declined for the quarter, we actually did well in the server segment within computing, just the decline was driven more by customers, et cetera.

I think we already covered the industrial end market.

And as far as consumer goes, we continue to be focused on opening up opportunities in the consumer market.

We are with our Mach4000ZE product which is a very low power CPLD product, we're continuing to kind of engage and win new business.

That's been a fairly recent event in the last 12 months or so.

We're starting to kind of build up a portfolio of customers in that end market.

And I also think what you'll see from us later on this quarter is some product announcements that will open up even more opportunity there for us as well.

Thank you.

One last question.

(technical issues) Do you think that assumption is still within China or is that consumption also being consumed in especially India.

Could you repeat that question again?

You were breaking up.

Communications business, you had two large customers.

But with the two large customers, are the consumptions being locally in China or is that also being consumed in India or starting to consume in India.

Sure.

So, one, we have many communication customers, more than just two of them in China.

And as far as those particular accounts go, I think it's pretty well-known that 70%- plus of their revenue is sold outside of China.

So we're seeing revenue being driven by within China business and certainly outside of China.

Great.

That's all from me.

Thank you.

Great.

And your next question is from Bill Dezellem with Tieton Capital Management.

Thank you.

We had a couple of questions.

First of all, would you please compare and contrast your overall market conditions by the three geographies, Asia, Europe and North America?

And if you would, exclude the impact of the mature products, new products, really what I'm trying to focus on is more how you're viewing the overall conditions as opposed to the impacts from your specific products.

Well, again, so I guess a differentiating comment.

As Michael has already mentioned, we report our revenue from where we realize the revenue in terms of geography.

I think folks know that a lot of the business that's designed in North America and in the European markets will oftentimes be manufactured by companies in Asia.

And so our business is reported out based on where we sell product to.

But clearly, the design activity is a bit higher in Europe and the Americas as might be represented by those numbers.

If you look at the geographies, frankly we still see some pretty strong design activity within the Americas market and the European markets.

I mean, we have very good sales engagement in both of those territories.

Have a good distribution network.

We're out engaging people on a host of new designs in all end markets.

I mean, we're seeing companies really I guess progressing at a very strong rate of design and we're winning, we think more than our fair share of design wins.

In the Asian market, not only do we see -- this would include Japan.

We see a lot of activity in the Asian market not just in building product but there's a lot of indigenous design, and the rate of indigenous design is increasing in the Asian market from where it was, say, five years ago.

We still see a lot of design activity, there's still lots of opportunity out there and we continue to engage customers at an accelerating rate.

And then next question is relative to new product introductions coming in the next quarter or two, would you please broadly speaking discuss the functionality that you are trying to bring to the market and how that functionality compares to what you currently are or are not offering the marketplace?

Sure.

I think without getting into specific details, because I'd prefer to have the product announcements happen when they happen, but I think what you'll see at a very high level is you'll see some continuing themes from our current strategy.

In the FPGA arena, with our mid-range FPGAs, we're very focused on very low power, low cost solutions and we're focused in on specific markets and I think you'll continue to see that trend as we move forward.

In the low density business, with our Mach4000 and our MachXO products, what you would see is us continuing to gain share in those markets and perhaps develop more PLD TAM, more users, bring more users into the PLD market and we can do that by offering low cost design platforms that do much higher integration than what's offered in the marketplace today, and then some other features that you might be able to offer that would allow you to address some applications that programmable logic can't address today.

In the Mixed Signal arena, I think with the power management products that we offer today, I mean, the clear value proposition is that we hope customers reduce their cost, we provide them a more reliable technical solution, and through programmability, we allow people to troubleshoot their board and/or take risk out of their designs in the fact that they don't have to redesign a board, they can rather fix a problem using the programmable logic that we've embedded in our Mixed Signal solution.

Those are kind of the tenets of our product strategy you if you will.

I think what you'll see over the next quarter or two is you'll see new products that build on those basic tenets of the strategy and perhaps take some new twists that will open up more market opportunity to us.

Just a follow-up to that and then I'll get off here.

Have your important customers already seen the beta version of these products and so -- and if so, how long have they had an opportunity to be thinking about how these products could fit into their design strategy going forward?

I think what we've done on these products is a fairly traditional approach which is you engage customers early, you engage them on a number of fronts when you're doing your market research and coming up with the specifications for the product and then as you are beginning to think about rolling out the product in a public fashion you engage some particularly high value customers early.

We've certainly done that.

The feedback has been very appealing to us, well received and I think these customers have a very good idea of what the product capabilities are.

They're enthusiastic about the products and personally I can't wait until we public announce them so that we can get into all the good details with folks like yourself.

Thank you.

(Operator Instructions).

And your next question is from the line of David Duley with Steelhead.

Thanks for taking my question.

You made some comments about mature products earlier in your comments and I was wondering if those comments also applied to the mainstream products as I believe they also declined sequentially.

Maybe you could give us a little color on what declined in the mainstream area.

Sure, David.

Good of you to call.

The mainstream did decline, you're right.

It declined at a lower rate than the mature did.

Without getting into all the product detail, I think mainstream products tend to be out there.

There's no hard rule but five to 10 years of product introduction.

What we've seen is we saw more of a decline in the products that have been out in the marketplace a bit longer, at the later end of that range.

So that kind of makes intuitive sense when you compare that, contrast that to the mature segment.

Okay.

And when I look at the results of some of the large competitors in your space, you notice that it seems like their Asian revenues were a little faster and their communication revenue grew a little faster.

Do you attribute that they have more land line exposure than you do of r maybe some color on what's going on in land line and wireless throughout Asia would be helpful.

I thinks there's seldom one specific reason why so I think one is we're more exposed on the wireless than the wireline and I think those competitors had disclosed earlier this week that they had seen some wireline growth as well as the wireless growth.

They're selling products that were designed in two and-a-half to three years ago at a time when the mid-range solutions that we offer today were not available, so they're clearly going to be experiencing a little bit more dollar per content for some of those designs than we will enjoy today.

But as I mentioned earlier, we're winning our fair share, if not more than our fair share of designs today, and so that certainly bodes well for the longer term.

Would you think that your content in the wireless space and/or the wireline space would continue to grow with your new products?

Certainly our expectation as we continue to win designs with the ECP3.

We're winning sockets that we previously were not able to compete for.

So we're seeing that product do well.

The customer interest is very high, given -- again, we have I think a low power leadership position.

We have a very good overall solution, holistically with not just the silicon but with our software and IP portfolio and we've been very focused on this for the last two years and I think certainly seeing the payoff within Lattice and we're obviously seeing the ECP3 grow.

It's our best ramping product ever and we would certainly expect that to continue.

And your next question is from Richard Shannon with Northland Capital.

Hi, again.

Just a couple quick follow-ups.

I guess first on Nu Horizons, on their announcement of being acquired by Arrow.

Want to get your latest feedback on what the impact of that acquisition will be, whether you expect to have good exposure from the FAEs at new horizons and also what you're seeing in the six months that you've engaged them outside of Asia.

I actually think the impact of the acquisition will have a neutral to positive impact on Lattice.

It kind of depends on how Arrow determines it will integrate the acquisition.

And of course, they're not expected to close on that acquisition until later this quarter.

Now, first, I guess remember, Arrow and Lattice actually had a strong long-standing partnership before we made the move to Nuho and at that time when we made the move we explained that the move was more inches gaited by the focus and resources that Nuho was going to be able to provide us on a worldwide basis and that we simply did not want to add a third major distributor so we parted ways at that time with Arrow.

I believe that the Nuho resources which are very good technically and have very good experience selling PLDs are largely retained, then this would be a very positive outcome for Lattice and additionally, if Arrow maintains Nuho as a separate selling entity in any of the three major geographies, then I would view this too as a positive outcome for Lattice given the continued focus that our line would receive with that organizational structure.

I think those are the two most important variables in the mix.

We won't know for certain until Arrow makes their intentions public once they close the business which of course they have to wait until they do that, but I think if they do a good job retaining the resources and if they decide to maintain a separate selling entity, I think that would be very positive for Lattice, given that Arrow would then of course bring the scale and the size that they have in the distribution arena.

Okay.

Great, Chris, I appreciate that feedback on that.

My next question is in your wireless business.

Obviously have very nice design wins with OEMs out in Asia.

You talked about having design wins with eight of the top ten wireless OEMs out there.

Kind of curious when we see the impact of broadening that design win base both by OEMs and also by geographies.

Again, we're pretty focused on that wireless area and those ten major wireless providers certainly offer a very significant total available market.

So I think if we continue to focus there, we will do very well with the ECP3 as we see our customer adoption there continue to grow.

We're obviously considering going a bit more broadly with all of our solutions as we continue to develop our distribution channel.

We continue to work well, as evidenced with our MachXO growing.

I think there's some definite sales opportunities for us to leverage the LatticeECP3 into other markets and other OEMs and we're certainly mindful of that, and we're looking at how to go about doing that successfully in 2011.

Okay.

Great.

Then just last quick question.

I think you mentioned that ECP3 grew over 50% sequentially.

I think if I remember the comment from last quarter, does that mean the revenues from that product is over $3 million now?

It's about the right neighborhood.

Okay.

Perfect.

Thanks a lot, guys.

And your next question is from Apurva Patel with Ticonderoga Securities.

Hi, guys, just wanted to follow up regarding your stock repurchase program.

Do you expect it to be active this quarter, from 4Q 2010 into next couple quarters?

How should we think about that?

We expect it to be active this quarter and it's a 12 month program for $20 million.

Great.

That's all I have.

Thank you.

And that was our final question.

Mr.

Pasquale, do you have any closing remarks.

Just want to thank everyone again for attending the call.

Reminder to everyone to expect some very interesting product announcements that are coming out later in this quarter.

And Michael and I will be available after the call to anyone wanting to get any additional questions answered.

So thanks again, everyone.

Thank you.

This does conclude today's conference call.

You may now disconnect.