芯源系統 (MPWR) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Monolithic Power Systems Inc. Q4 and full-year 2010 earnings conference call. My name is Tom and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of today's conference. (Operator Instructions)I would now like to turn the presentation over to Meera Rao, Chief Financial Officer. Please proceed.

Thank you. Good morning and welcome to the fourth quarter and fiscal year 2010 Monolithic Power Systems conference call. Michael Hsing, CEO and founder of MPS and Steve Pratt, Director of Marketing are with me on today's call.

In the course of today's conference call, we will make forward-looking statements and projections that involve risk and uncertainties. These statements will cover a number of areas of turning our business outlook, including our business and financial outlook for the first quarter of 2011, projected first quarter and full-year 2011 revenues and gross margins, our expectations for first quarter litigation, stock -based compensation, and GAAP and non-GAAP operating expenses. Our target operating ranges for gross margins and inventory, our expectations for revenue growth, and gross margins beyond Q1 2011, our expected average non-GAAP tax rate for 2011, our belief that MPS is well-positioned for future growth, the expected seasonality of our business. Our expectations for future cost-reduction and new product introductions, potential customer acceptance, and opportunities these present, and the prospects of expanding our market share. Forward-looking statements are not historical facts or guarantees of future performance or events and are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed or implied by these statements. Risk, uncertainties, and other factors that could cause actual results to differ are identified in our SEC filings, including, but not limited to, form 10-K filed on February 16, 2010, and a form 10-Q filed on November 3, 2010, which is accessible through our website, www.monoliticpower.com. MPS assumes no obligation to update the information provided on today's call.

We will be discussing operating expense, net income and earnings on both a GAAP and a non-GAAP basis. These non-GAAP financial measures are not prepared in accordance with GAAP, and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures, is included in our earnings release which we have filed with the SEC. I would refer investors to the Q3 2010 and Q4 2010 releases, as well as to the reconciling tables that are posted on our website. I'd also like to remind you that today's conference call is being webcast live over the Internet and will be available for replay on our website for one year, along with the earnings release filed with the SEC earlier today.

We would like to start this call by reviewing our fourth quarter and fiscal year 2010 business highlights. Following this update, I will discuss our financial highlights, operating results, and our expectations for the first fiscal quarter of 2011. Michael Hsing, our CEO, will conclude by discussing our business conditions. We will then open up the call to your questions.

Let's start with the financial highlights. In the fourth quarter, net sales were $47.1 million, about the same as the fourth quarter of the prior year, and a decline of $18.8 million, or 29%, from the prior quarter, when MPS reached its record quarterly revenue. For the full year 2010, revenue came in at an all-time high of $218.8 million, compared to $165 million in 2009, representing a 32.6% growth year-over-year.

Fourth quarter revenues declined from the prior quarter for several reasons, as we discussed in our last earnings call. First, due to a product shortage earlier in the year, our TV market share in Korea was reduced. This reduced fourth quarter revenue by about $7 million. Secondly, distributors ordered about $3.5 million less, as they used up existing inventory, shift in the prior quarter. This resulted in about a $7 million delta between the two quarters. Finally, end demand for consumer products declined, more than seasonally, by about $4.7 million. This was due to a combination of seasonal decline and lower demand from some of our TV and notebook customers, who had overbuilt inventory.

In the manufacturing area, our in-house desk capacity is still underutilized and contributed to gross margin of 50.5%. This has driven our fourth quarter guidance range of 50% to 52%. We expect to remain in this range for the next few quarters. Bottom line, non-GAAP net income was $6.7 million, or $0.18 per fully diluted share. For 2010, our non-GAAP net income was $44.6 million, or $1.18 per share. Finally, today we announced an increase to the stock repurchase plan we had previously announced in August 2010, from $50 million to $70 million, to be executed through the end of this year.

Moving to the profit and loss statement.Revenues. Fourth quarter 2010 net revenues were $47.1 million, a decrease of 29% sequentially from the third quarter of 2010 and up slightly from the $46.5 million recorded in the fourth quarter of 2009. For the fiscal year 2010, MPS revenues were $218.8 million, up 33% from $165 million in 2009.

Looking at our revenue by product type. Fourth quarter DC to DC product sales were $42 million, down 24%, or $13.3 million from the third quarter of 2010, and up 16.6%, or $6 million, from the $36 million recorded in the same quarter a year ago. This dollar growth was led by our general purpose DC to DC products, LDO, and Current-Limit switch product families. The largest end markets for MPS in the DC to DC product family continue to be flat-panel TVs, set-top boxes, routers, and general consumer electronics products.

Lighting control revenues for the fourth quarter were $4.2 million, which was down from the $9.4 million in the third quarter of 2010, and also down from the $7.3 million in the same quarter a year ago. Lighting control inventory, particularly white LED, represented a much higher portion of the distributed inventory build-up in Q3, compared to other product types, and therefore saw bigger than average decline in revenues from the prior quarter. Order revenues came in at $858,000, down sequentially from the $1.2 million in the prior quarter, and down from the $3.3 million recorded in the fourth quarter of 2009.

Let's move down to the gross margin line. Our fourth quarter gross margin was 50.5%, in line with our expectations for the quarter. The gross margin was down from the 58.7% in the fourth quarter of 2009, and down from the 54.7% in the prior quarter of 2010. Underutilized capacity in our in-house test area negatively impacted gross margin by approximately 3%, in comparison to Q3 2010. Without these unabsorbed costs, we would be operating in the mid- to high-end of our target gross margin range of 50% to 55%.

Now let's look at our reported expenses and operating margin. Our GAAP operating expenses were $19.8 million in the fourth quarter. This includes $19.1 million in R&D and SG&A expense, which includes $3 million of stock compensation expense and litigation expense of $659,000. Compared with the third quarter of 2010, GAAP operating expenses were down by $2.8 million. The expense mix changed as follows -- R&D decreased by $1 million; SG&A decreased by $1.4 million; Litigation decreased by $305,000.Stock compensation expenses, which are included in the R&D and SG&A numbers that I just mentioned, declined by $1.1 million quarter-over-quarter. As a result, our GAAP operating profit was 8.4% in the fourth quarter of 2010, compared to a GAAP operating profit of 20.4% in the third quarter of 2010. Compared to the fourth quarter of 2009, our GAAP operating expenses were down $3.1 million. R&D expense was down $110,000, SG&A decreased by $1.3 million, and litigation expense was down by $1.7 million, compared to the fourth quarter of 2009.

Let's review our non-GAAP operating expenses. Excluding stock compensation, our non-GAAP operating expenses for the fourth quarter of 2010 were $16.8 million, down $1.6 million from the $18.5 million we spent in the third quarter of 2010, and down $1.9 million from the $18.8 million we spent in the fourth quarter of 2009. The decrease in non-GAAP fourth quarter spending from the prior quarter was mainly due to lower variable compensation, in line with lower Q4 revenues and earnings. The decrease year-over-year was primarily driven by lower litigation expenses. Our combined non-GAAP R&D and sales SG&A expenses were on par with the fourth quarter of 2009. Our non-GAAP operating margin was 15.5% in the fourth quarter of 2010, compared with 26.7% in the prior quarter of 2010, and 18.5% in the fourth quarter of 2009.

Switching to the bottom line, on a GAAP basis, our Q4 2010 net income was $3.6 million, up $0.10 per fully diluted share. On a non-GAAP basis, our Q4 2010 net income was $6.7 million, or $0.18 per fully diluted share. This result is computed with a non-GAAP tax rate of 7.5%. For the fiscal year, excluding stock compensation, our non-GAAP net income was $44.6 million, or $1.18 per share compared to 2009 non-GAAP net income of $24.9 million, or $0.68 per share.

Now let's look at some of the major changes to the balance sheet. Cash, cash equivalents, and investments, were $196.9 million at year-end 2010, down from $204.4 million at the end of the third quarter of 2010, but up substantially from the $185.1 million we had on the books at year-end 2009. In Q4, MPS had operating cash flow of about $10.7 million and cash proceeds of $1.1 million from option exercises. We purchased capital equipment and outfitted our new R&D building in Chengdu, China, for a total of about $4.8 million in the fourth quarter. MPS announced, in July 2010, a $50 million stock buyback program. Under this program, we bought back shares for a total of $14.5 million in the fourth quarter of 2010. IIn the third and fourth quarter of last year, we bought -- of 2010, we bought back approximately 1.9 million shares for a total of $31.5 million.

Accounts receivable ended the fourth quarter at $18.3 million, compared with $32.3 million at the end of the third quarter of 2010, and $15.5 million at the end of the fourth quarter of 2009. The decrease in receivables from the prior quarter was a result of lower fourth quarter revenues and our collection of third quarter receivables. Day sales outstanding decreased to 36 days in Q4 2010 as a result of the elements I just described. In Q3 of 2010, the DSOs were 45 days, and in Q4 of 2009, our DSOs were 31 days.

Our internal inventories at the end of the fourth quarter were $25.8 million or about 101 days of inventory on a historical basis, and this result tracked to our inventory model of 100 to 110 days. This compares with $19.5 million, or 60 days of inventory at the end of the third quarter of 2010, which was well below our business needs. We are pleased to note that inventory in our distributor channel shrank in both dollars and days as our distributors sold through excess inventory in the fourth quarter of 2010, and total days of distributor inventory was at the upper end of the target range of 30 to 45 days.

I would now like to turn to our outlook for the first quarter of 2011. Our revenue guidance is in the range of $40 million to $44 million for the first quarter of 2011, reflecting, for the most part, a seasonally down quarter. We expect gross margin to be in a similar range to the prior quarter. Stock -based compensation expense in the range of $2.8 million to $3.2 million. We expect non-GAAP research and development and selling general and administrative expense to decline to the range of $16.3 million to $17.3 million as a result of tight cost controls for variable expenses. This estimate excludes the stock compensation estimate mentioned above. We expect litigation expense in the $500,000 to $700,000 range. And finally, we expect our non-GAAP tax rate to remain in the range of 5% to 10%, based on our sales and profit patterns globally.

I will now turn the call over to Michael Hsing, our CEO, for a discussion of the business conditions.

Thank you, Meera. 2010 was an exceptional growth year and a profitable year, as we broke through the $200 million mark. Many internal issues became apparent.

One example of the issues we faced was that we were unable to give a customer accurate delivery schedule under a tight production capacity situation. More significantly, we were too focused our revenue growth and allowed our revenue stream to become too concentrated in the TV market. When we were unable to meet our delivery commitments, those customers reduced our share in their orders. This was a substantial contributor to the revenue reduction in the fourth quarter, and that means that we will face difficulties in growing revenues in 2011. It is clear to us that we must overcome these production issues, improving our manufacturing and the forecast system, and more importantly, diversify our customer base.

Following are the initiatives that we have taken. First, we have completed a global sales and marketing restructuring, that begins two years ago. Now we have seasoned country managers and additional marketing executives in place. Next, we are installing supply chain management and the CRM tools, that will be operational in this year. In addition, we are in the process of adding a third foundry. We expect these internal systems and the capacity improvements will eliminate our 2010 customer service and the production related issues.

Forward-looking to our 2011 business, although we have difficulties to grow the total revenues, we are excited to see many opportunities in the existing markets and additional new growth markets. These opportunities fit our diversity growth strategy.

The following are a few examples. In the new, fast-growing LED lighting market, we released two product families based on our proprietary high-voltage process technology. AC/DC LED drivers for commercial and residential lighting, and DC to DC LED drivers for street lighting. These two product families meet all the requirements for LED lighting. Our LED drivers' advantages includes -- one, ease-of-use, which means that the customers require less engineering effort to pass FCC and UL qualification; two, a few external components; but they not only provide a smaller form factor for fitting into a light fixtures, but also reduce the bill of material costs; three, efficiency is much higher than our competitors solutions.

High efficiency translates to a lower bulb-case temperature and increases the bulb lifetime and the long-term reliability.This is extremely important for industrial, street lighting and other commercial customers. Only after a few months in the market, we have many [design wing] and our new customer design activity is increasing day by day. We expect to see a meaningful revenue in later 2011.

In our existing markets, we released our next generation to 2-amp to 4-amp DC to DC step-down converter family that utilize our patented MeshConnect technology. As we mentioned in the prior earnings call, this technology eliminates the gold wires in the package and therefore significantly reduces the manufacturing costs. These products allow us to compete respectively in our existing business, such as flat TV -- flat-panel TV, monitors, set top boxes, graphics cards, and the Blu-ray players. The revenues will start to ramp in the second half of 2011.

In enterprise networking and the telecom market, we are pleased with the designing progress with our high-current, high-voltage DC to DC converters and Intelli-Phase products. These are unique products that offer unmatched power density and efficiency. Currently, we are engaged with all major networking players worldwide. Since the new product introduction in the second half of last year, we won projects in 3G and 4G base stations, and power modules for line calls in all top three networking companies in Japan ,as well as all top three networking company in China. Other regions, we believe, will follow. This is very encouraging news, and it demonstrates that as long as we provide a leading edge pull product, we can bring in those customers with high gateway to entry.

Now we are in (technical difficulties) in that we can proliferate these pull products as well as the push products into a new platform. However, I have to point out that the cycle time from designing to production is very long in enterprise segments. We expect to have a slow and steady ramp up in revenue.

In summary, in 2010 we saw significant growth, and 2011 will be a year to focus on building a solid foundation and execute on a plan to return to our long-term growth model in 2012. I believe, once we complete our 2011 initiative, combined with our technical advantage, we'll be a better position to transition from a $200 million company to a $500 million company. Now I'll open the microphone for questions.

(Operator Instructions)

And you're first question comes from the line of Ross Seymore with Deutsche Bank. Please proceed.

Hi. This is Bob Gujavarty for Ross Seymour. And I had question about how comfortable you have about what you have an inventory. Is that stuff kind of long-lived type products, the general purpose DC to DC or do you anticipate every having to take some write-downs in inventory?

We believe that most of our inventory our products that are going to continue to sell, and evaluate every quarter whether we need to write down a write-off any of them. I don't expect anything unexpected to happen now.

And just directionally, do you think in absolute dollars the inventory will start coming down or just a pretty steady at these levels?

Right now, we are in the lower end of our operating range, so even if we had a little more inventory or held at the same levels, we would be quite comfortable.

Great. And given that as well, what do you think about CapEx for the year? How do you think about capacity? Sounds like you have enough to -- to offer a CapEx plan for the year?

Sure. Typically we spend about $10 million on CapEx. 2010, we spent more. We spent about $25 million, combination of a new R&D building rebuilding in China, as well as adding additional test capacity for higher demand. I expect that this year we would be down to more like a $5 million to $10 million-year.

Great. Thank you very much.

The next question comes from the line of Steve Smigie with Raymond James. Please proceed.

Great. Thank you. I was wondering if you could talk a little bit about plans for operating expenses going forward. Obviously you trimmed them into Q4? Does that keep working down through the year percentage-wise? How can we think about that?

Well, our operating expenses, clearly we have a variable expenses that we control very tightly when revenue has come down, as we just demonstrated in Q4, and we expect to do the same in Q1. But as our revenues go up, we will have higher costs that we will incur on commissions, we also have a higher costs on new products. I don't expect a significant increase, but it will be flat to slightly up.

We will continue to invest in R&D because that's always been our focus. We've done it in good years. We've done it in bad years, and will continue to invest in R&D. We're investing for the future.

Okay. It sounds like you said you're going to keep gross margins sort of around this range for the next few quarters. Dollar wise, just looking at the inventory, I know what you're saying, it's at one of your lower levels, but dollar wise is looks higher relative to history? So it seems like you might not have to build anything for a little .

I know you're outsourcing most of your manufacturing, but there's a little bit of back end stuff. So just curious, you know, is it more likely to trend at the lower end for the next few quarters? When does that pressure really start to pick up

As we get full counts from our customers, we always plan inventory accordingly. And one of the things that we are finding is that capacity in our foundries are still fairly tight.

So we are kind of going to make sure that we have enough product to support our customer business, even if it means we go a little above our normal range.

Okay. And then just finally, you mentioned some success with the networking products. Can you talk a little bit about how you are differentiated their that allowed you to get those wins and the what the overall opportunity is for that?

Yes, as I said in the script, these are very unique -- unique product, and we offer a single-chip, 25-amp's, PWM chip, and step-down converters.

And for the networking companies, they can put in a module, and they can use they're line cards and also in the multiple systems. As well as in the 3G and 4G base stations. That's what a lot of demand for those base stations now.

Okay. Great. Thank you.

Your next question comes from the line of Dan Morris with Oppenheimer. Please proceed.

Hi, guys. Calling in for Rick Schafer today. Looking at your outlook, your gross margin outlook in particular, with the revenues coming down, can we assume that underutilization charges are actually going to have a bigger impact than the three points of this last quarter?

We expect that -- you're asking about Q1?

Yes.

In Q1 I think are going to be in a similar range.

For the underutilization charges?

Yes.

And you didn't really mentioned high wafer pricing as impacting gross margin in this last quarter. Was that still a factor or have you finished that?

It's still a factor for this quarter because we are still selling for products that we had bought earlier.

And when well that higher priced wafers get flushed through, do you think?

Well, for the wafer pricing to come down, the general economy has to slow down, and there has to be less demand on the fabs. So exactly the timing of when our lower-priced, wafer prices will come down will depend upon general economic conditions.

Okay. So wafer pricing has yet to come down, is what you're saying?

Yes.

And as far as you're lead times, are they back to normal now or are there any other products are still in allocation?

I can help answer that question. This is Steve.

So for the most part of our gross lead times or more in line, especially with the industry. So we've been able to improve our lead times by about four weeks. As in the past, we had a large number of our products have a long lead times. We are down to a very, very small percentage of products that have a lead time issue.

So lead times are about six to eight weeks, back to normal?

Correct.

That you very much.

The next question comes in the line of Patrick Wang with Wedbush securities. Please proceed.

Thanks, guys. First question, what's your guidance, what kind of backlog you guys have for today and what kind of terms are you expecting?

We don't usually give -- indicate what our backlog of terms are, but we are comfortable that we would be able to meet the revenue guidance that we've given.

Okay. What I'm trying to get a sense of is if you guys are guiding a little bit more conservatively, given the fact that you've missed a couple of quarters in a row now, or if this is you're typically 50/50 backlog in terms of business?

For us, this is usual business. Our Q1 is always our seasonally down quarter, and we also have lower Korean TV and monitor business, as we kind of explained. And I think we see this as the bottom.

Okay. Okay, that's fair.

What do you mean, we missed it two quarters? Two quarters on the guidance?

I mean, I don't want to get down to the nitty-picky, I just want to say there's been a couple of -- there have been a couple of quarters of, I guess, challenges here. I just want to get a sense of how you guys are approaching the guidance and if you are going to provide us a little bit more coverage than typical. But I guess that's neither here or there.

I also wanted to ask about channel inventories. You said that you guys were at the upper end of 45 days of channel inventories. I'm just curious. How much more channel inventory do you need to work through to get to a comfortable level, and what do you think your inventories are going to be, exiting the first quarter, assuming you hit the midpoint of guidance?

Forty-five days is mildly high but not very high. As you know, we have covered MPS for many years, and the second quarter is always higher. And we don't see any exceptional difference now.

Okay. And then just lastly, I just want to get a better sense of your gross margins here. It seemed like -- it seems like you guys are trying to keep it at the low 50s type range for a couple of quarters.

I'm just getting -- I want to get a better sense of if revenues do come back in the second and third quarter, that these revenue headwinds go away, it's most likely that utilization should inflect and that you should be able to work for some of your higher cost wafer inventory and agreements out there.

What would cause you guys to stay at a 50% gross margin for a period of a couple of quarters?

I think you answered it yourself in utilization. If you go up on the revenue, utilization will be better and, as Meera said, it will have a 3% impact and also, the wafer parts.

It's okay, got you. Last quick question here.

You talked about a couple of drivers for revenue growth through 2011, the OD drivers, the Buck converter, and networking. I'm just curious if you guys have a target in terms of a percentage of revenues you think that represents for 2011?

That's my last question. Thanks for a much.

First of all, the networking driver, the networks -- network products, I don't claim it as a driver, revenue for 2011. I said this is very encouraging news, and that we opened a door, in a very difficult -- very demanding market segment. And other products we have -- -- the other products are doing well with the exception of one or two TV makers.

And it's just lining up enough in the history, in the past, all the other products will progress well, and, for example, we have a new product for Blu-ray players and DSL's, and POS, et cetera. And a new market in enterprise storage, automotive, off-line lighting as I mentioned, and Steve you can add something.

yes, let me add something. Patrick, you had mentioned the LED component. As a percentage of sales 2011, that is new market, and so it's relatively small, around 5% for 2011, but keep in mind the exponential growth in that. So beyond 2011 is when it's going to get really exciting.

Okay. Thanks so much. Good luck, guys.

(Operator Instructions)

The next question comes from the line of Doug Freedman with Gleacher. Please proceed.

Hi. Thanks for taking my question. Michael, if I could focus on some of the things that you're on improving, the operations of the company in terms of sales and marketing and then your production control systems. I'm a little surprised to see that you're able to do that and not see an impact to the OpEx lines, actually with OpEx actually coming down.

Are we going to see any impact of the actions that you've taken coming through the model in terms of a spending? How much have you actually been spending?

Those tools that I mentioned in the depreciation is negligible. And other restructuring, I don't see as it can cause a lot of money for the company. And MPS changing is more in terms of business projects and streamlined the Company's priorities.

Okay. Are you working on doing anything to improve some of the quality systems in the company? And I have a follow-up of for Meera on share count and if you've bought any shares back yet. What is the expected share count Q1 and if you've bought any shares this quarter?

Okay. Let me answer the question for the quality side. MPS quality is, we are shipping always many hundred millions of units. And the return rate is surprisingly low, 3ppm. And these are 3 ppm mostly concentrate on a couple of the customers.

And we are working with a program to eliminate these -- that we call it. And those don't cost that much money to fix, eliminate these issues. These are our system -- and Meera can answer the second part of the question.

Sure. Your question was the share buyback this quarter. We will be starting from the open window, which is Monday. Does that answer your question?

And the share count we should expect -- we should be using for Q1? And did have a nice reduction in the fourth quarter, so I want to --

Yes. I would expect it to be flat to slightly down. It's going to be factored on how many shares we actually buyback, what the price, what the float is out there, and also how many shares are granted in the quarter for new hires, refreshers, and stuff like that. But I would just indicate directionally that it's flat to slightly down.

Thank you. That's all my questions.

And is question comes from the line of Tore Svanberg with Stifel Nicolaus. Please proceed.

Yes, thank you. You quantified the reduction from share losses in the TV area. I think you mentioned to $7 million in Q4. Do you still have some outstanding share losses there going forward or are we pretty much done?

Pretty much done. The other one is I don't count it as that special event, and we always have some small offers in the wings, okay? And as I said earlier, in all the other markets we work, our product real well.

Okay. So going forward now it's the pro-business, and there's no other sort of the bigger puts and takes, we're just going to move on from here?

That's right. That's exactly what we said, yes.

Very good. And just coming back to questions about underutilization. So what is the current utilization for your back end and, you know, when are you expecting that to back off? You talk about growth in Q2, but based on your inventory level, I'm just trying to understand when exactly you would start to wrap the back end back up.

We expected always -- we expect the second half always seasonally always higher than the first half. And all the design wing activities we see are very promising. And that's how I can put it in that way.

Tore, Q2 is when we start -- really starting to get back on a ramp up mode.

Okay. Great. And then last question, I know you can't comment on backlog and so on, but can you just talk about how business has been so far this quarter please?

I'm sorry?

How is business so far.

The business has been going fine, and like I said earlier, we feel comfortable that we will be able to close the quarter in our guidance range.

Thank you. Yes, we don't see any abnormality. Okay?

Okay. I guess I'm just trying to get to the linearity of bookings. Obviously, Q4 was a little more decline in bookings, but maybe you've already started to see an uptick or maybe a more normalized environment right now.

Yes. It's more normalized.

Okay. Thank you.

Your next question comes from the line of Brian Piccioni with BMO Capital Markets.

I had some audio trouble, so I'm sorry if this question has been asked, but you ran into some trouble with one of your customers, as you have already mentioned the call. I was wondering whether you were making headway in terms of restoring that relationship and if not, how long do you figure you'll be in the penalty box? Thank you.

Let me answer that answer this question, Brian. This is Steve. Look, the trouble we got into with the Korean customer is longer term. It won't correct itself overnight.

So we don't expect that to get back to any normalcy in 2011. And we're going to do -- we continue to do everything we can to build our relationship and our trust back with the customer's site. Continuously.

I have to say although some of the other divisions and even the same division, are still open to looking at our leading edge products.

Okay. And has there been any sort of follow-on? Have your competitors been making -- taking advantage of the problems that you ran into, which is kind of spread out to other customers? Or is it is it still largely isolated to this one Korean vendor?

The competitive situation hasn't changed. And that particular example, that's an isolated case. With all the other customers across our consumer markets and applications, it's still a competitive landscape. It hasn't changed.

Okay, great. Thank you.

Your next question comes from the line of Jason Smith with Craig-Hallum. Please proceed.

Thanks for taking my question. I was wondering if you could describe how much of your revenue came from your MiniMonster product in Q4?

The MiniMonster, I didn't track anymore. Maybe Meera can tell you that. We in the last couple of quarters, we broke through $10 million quarter. And I believe we're in a similar kind of -- I believe this quarter will be in line with our revenue.

Okay. And then Meera, how should we look at litigation, both this year and next?

We are expecting -- currently we don't have any cases, major cases, like in '02. So we expect that any costs will be enforcing our patents and technology. So I'm expecting that is going to be somewhere in the $500,000 to $700,000 range per quarter going forward.

Okay. Thank you.

Your next question comes from the line of Arnab Chanda with Roth Capital.

A question for you, Michael or Meera. Historically you have you have a pretty big seasonality in your business, Q2 and Q3 tend to be very strong and Q1 in Q4 are kind of weak.

We obviously have some problems in your Korean business, are we still going to see that sort of big improvement in Q2 or is that something that is more likely to happen the second half?

Well, Q2 is too - a little for us to tell, but I can tell you we don't see a dramatic difference from the past.

Okay, great. And then maybe this is a question for Meera or even Michael.

So -- there's been some -- maybe I haven't understood your gross margin for historical, your gross margin for the future. On the one hand, it seems like if your utilization goes back up, you should get some benefit from that, that you have lost.

On the other hand, are you going to let that happen? Are you going to use that as pricing leverage to gain more market share and grow fastest? If you could talk a little bit about that.

I don't think -- we learned a lesson in 2009 and 2010. And we're going to have a very diversified growth and I don't do any short-term fixes. That will ultimately affect our long-term growth.

I'm sorry, I didn't quite understand that. What is the long-term growth? Could you talk about that?

The long-term growth is growth in our long-term growth model.

Which as we explained, I think July of last year was in the 50% to 55% range. So if the question as the revenues go up and we are able to stop the costs, then we would be able to move to the higher end of the range.

Okay, great. Thank you very much.

And is question is a follow-up question from the line of Steve Smigie with Raymond James. Please proceed.

Thanks a lot. Just a follow-up on an earlier question. Just what's quick accounting on the CRM and the other software stuff you're putting in. How are you going to run that cross-through Capitalize that and then depreciate it, or how does that work

Yes, it would be something that is capitalized and depreciated.

So it would go through the COGS or --

I think some of it will be sales, some of it will be COGS, but -- and I think the expenses would start somewhere maybe in the last quarter or the second half of the year.

Okay. Great. And then Michael, just -- I'm looking back at your growth over time, if you look back -- sort of the 2004, 2005 timeframe, you had pretty substantial growth.

You had a slowdown in 2006 and then pretty quickly recovered after that. It was 30% growth in 2007, 20% growth in 2008, probably within 30% if not for the financial downturn.

Is that how we should be looking at this period here? You had a couple, maybe three quarters of the slower growth to begin the back half of '11 to 2012, assuming a normalized macro that sort of back at that 25%, 30% top line growth?

That's how it will play. And of course this year's challenges is different from 2006. As I said in the script, I think we will very much stick with our principles and diversified growth, which we didn't quite do in the last couple of years.

And the other one is that we improved the internal systems. That's our model. We see a whole lot of opportunities, and we should go after those. And that's our plan -- we're going to plan to get into our model, our long-term growth model in 2012.

Okay. So should we assume then, that -- it sounds like you're going to diversify and do things somewhat differently. Does that mean -- won't be quite as quick as before, or it will be as quick but just in different areas.

I believe that we still can grow with this kind of gross margins and we should stay about 25% range. And whether it is the beginning of 2012 or later 2012 is still early to say.

But the analog market is very segmented. And there's a lot of high volume products. And we see those products. We see those are opportunities and we believe we can do that.

Just to add to that. Compared to 2010, where our growth came from just one market, what we're trying to do is diversify so that our growth comes from many high-growth market opportunities. Market segments, rather.

All right. Thanks, guys.

Since there are no further questions, I will now turn the call over to Meera Rao for closing remarks.

Thank you all for attending this conference call. We look forward to talking to you next quarter. Bye-bye.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.