MACOM Technology Solutions Holdings Inc (MTSI) 2008 Q4 法說會逐字稿

Welcome and thank you for joining the Mindspeed Technologies fourth quarter fiscal year 2008 conference call. At this time, all participants are in a listen-only mode. (OPERATOR INSTRUCTIONS).

Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd like to introduce Mr. Bret Johnsen, Chief Financial Officer, who will chair this afternoon's conference call. Mr. Johnsen, you may begin.

Thank you, Fran. I would like to welcome everyone to our conference call, discussing the results of our fourth quarter of fiscal 2008, which ended on October 3, 2008. On the call today with me is Raouf Halim, our Chief Executive Officer.

I will begin with a review of our fourth quarter financial results. Raouf will then provide his perspectives on our fourth quarter and the outlook for our current quarter. We will then open the call for your questions. Before we begin, I want to remind you that our comments today will include statements regarding -- sorry, relating to our anticipated future results, including the financial outlook and expectations for our fiscal 2009 first quarter, and other market business and product trends that are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.

These may include statements about trends and expected performance of our business units, deployments and our ability to benefit from them, inventory turns and levels, product features and their benefits, future sales of non-core patents and royalties related to prior and future non-core patent sales, the value of our intellectual property portfolio, market share, demand for our products, customer relationships, equipment tender wins and production ramps, customer orders, the impact of technological developments in our industry, growth prospects in various markets and for various products, research and development expenditure levels, savings, costs and other implications from our restructuring, design wins and their impact on future performance, our balance sheet strength and liquidity position, availability of our line of credit, our expectations for fourth quarter revenues, gross margin, operating expenses, operating income and special charges, backlog, and order trends, and other expected operating results.

The Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Actual results may differ materially from those projected in any forward-looking statement as a result of certain risks and uncertainties, including, but not limited to, those noted in our earnings release and our Form 10-Q for the quarter ended June 27, 2008 and other filings with the SEC. During our call today, we will be making reference to non-GAAP financial measures, which include stock-based compensation, employer taxes on stock-based compensation, amortization of intangible assets, employee separation costs, special charges and reverse stock split related charges. For a complete reconciliation of non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today. Copies of both documents are available in the investor section of our website at www.mindspeed.com.

Now, turning to our financial results for the fiscal fourth quarter of 2008. Today, we announced record revenues for the fourth fiscal quarter of $51.1 million. These revenues include $12 million from the sale of non-core patents within the quarter. Revenues, excluding those from patent sales, were up 3% compared to the prior quarter. Our results were within the revenue guidance range of up 2% to 5% we provided at the beginning of the quarter, without the benefit of any patent sales.

For the full fiscal year of 2008, we had record revenues of $160.7 million, an increase of 26% over the prior year. Excluding patent sales, revenues from our family of multi-service access voice over IP processors increased 11% sequentially, contributing 39% of total fourth quarter product revenues while revenues from our high performance analog products decreased 6% sequentially, representing 26% of our total product revenues. WAN communications product revenues were up 2% sequentially, contributing the remaining 35% of total product revenues. In terms of revenue contribution by geography, excluding patent sales, the Asia-Pacific region contributed 56%, the Americas 29% and Europe contributed 15%. No end customer represented 10% or more of our product revenues this past quarter.

Non-GAAP gross margin was $38.3 million or 75% of revenues. Included in this amount is an $11.9 million or 8% net benefit from the sale of patents in the quarter. Also included in this number is a 140 basis point benefit from the sale of products written off in fiscal 2001.

Total non-GAAP operating expenses were $24.1 million, comprised of research and development expenses of $13.4 million and selling, general and administrative expenses of $10.7 million. This is consistent with our guidance and resulted in non-GAAP operating income of $14.2 million, including the benefit of our patent sales. Other income and expenses in the provision for income taxes in the aggregate totaled net expense of approximately $600,000. We delivered non-GAAP net income of $13.6 million, resulting in basic earnings per share of $0.59, including the benefit of $11.9 million or $0.52 per share from patents, based on approximately 23.2 million average shares outstanding for the quarter.

Turning now to the balance sheet, cash and cash equivalents totaled $43 million at the end of our fourth fiscal quarter of 2008. As anticipated, we delivered our fourth consecutive quarter of positive cash flow, generating $13.1 million in cash, driven by $11.9 million from patent sales and $1.2 million from positive cash flow from operations. Accounts receivables were $14.4 million, resulting in net days sales outstanding of 36 days, excluding the benefit of patent sales, compared to 41 days in the prior quarter.

Inventory increased $5.6 million to $16.2 million, resulting in inventory turns of 3.1, down from 4.7 in the prior quarter. This inventory growth was primarily driven by unanticipated forecast changes within the quarter from customers mainly in China. We expect to return to inventory turns of greater than 4.0 within the next few quarters.

Now, I would like to highlight some of the important steps we have taken this last quarter to significantly strengthen our balance sheet and overall liquidity position. First, as I mentioned, through the sale of patents and continued positive cash flow from operations, we generated $13.1 million. Second, as previously announced, we completed the refinancing of $15 million of our convertible debt, extending the maturity date out five years to the year 2013. And third, we obtained a $15 million revolving line of credit with Silicon Valley Bank to provide additional liquidity. With these important steps, we are you now in a much better liquidity position at the end of this last quarter with $43 million of cash and cash equivalents, plus an additional unused $15 million line of credit.

Additionally, we announced today that within this current first quarter of fiscal 2009, we repurchased $20.5 million of our convertible senior notes due in November 2009. The aggregate cost of the repurchase was $17.3 million, resulting in a gain of $2.9 million recorded in the current quarter. The repurchase will also reduce our interest expense for fiscal year 2009 by $1 million. Our total remaining debt now consists of $10.5 million of convertible senior notes due in November 2009, and $15 million of convertible senior notes due in August 2013. I would now like to turn the call over to Raouf for his comments on our fourth quarter results.

Thank you, Bret. I am very pleased with our results this past quarter and for our full fiscal year. We delivered record quarterly revenues with another particularly strong performance from our voice over IP processor business which has grown more than 70% over the same quarter last year.

In terms of macro economic trends, we experienced considerable strength across all geographic regions this past quarter with the exception of China. The expected slowdown with the August Olympic Games, has continued into our current fiscal quarter. In all other regions, however, we benefit from service providers continuing to upgrade to next generation network technologies, such as voice over IP and fixed mobile convergence. Our WAN communications portfolio also benefited from strength in wireless infrastructure deployments.

Amongst the highlights of our fourth fiscal quarter, our design win traction and market diversity was exceptional again this quarter, with design wins in North America up almost 50% year-over-year. We scored almost 30 design wins for our Comcerto voice over IP processor family, the highest level in the past two years. Shipments of our multi-service access voice over IP processors grew more than 10% sequentially with record revenues from both our carrier and enterprise product lines. Our voice over IP business represented almost 40% of our total quarterly revenues.

We had yet another record quarter for shipments of our broadcast video chip sets with revenues up more than 50% sequentially. We delivered our sixth quarter of non-GAAP operating profitability, and our fourth quarter of positive cash flow. We also sold $12 million of non-core patents during the fourth quarter, and we will potentially earn future royalty revenues from some of those patents. We intend to continue pursuing additional sales of non-core patents to monetize the rich breadth and significant depth of our intellectual patent portfolio and to derive future royalty revenue streams whenever possible.

Finally, in anticipation of weakening market conditions as we entered fiscal 2009, we took immediate action at the start of the current quarter to lower our non-GAAP operating expenses by approximately 3%. The operating expense savings from this restructuring will be almost entirely realized in our current first fiscal quarter. Most importantly, to expand our strategic growth initiatives, we are shifting a larger percentage of our total operating expenses to research and development activities.

I will now cover a few specific business highlights from our fourth fiscal quarter. Please note that all product portfolio revenue numbers exclude the benefit of any patent sales. Starting with our multi-service access processor portfolio, revenues increased 11% sequentially with record shipments of our Comcerto voice over IP processors in key carrier core access as well as enterprise customers in Europe and North America, including Alcatel-Lucent, Nokia Siemens Networks, Cisco, [Jambam, Cedar Point] and many others driven by combination of wire line, wireless and cable infrastructure deployments.

The strong demand for our Comcerto voice over IP processors in Europe and North America more than offset weakness we are currently experiencing in China. China Telecom, the country's largest wire line operator, currently is leading infrastructure deployments, temporarily slowed installations just before the start of the Olympics. Since then China Telecom has been evaluating the results of its first major fiber access installation, in preparation for its second phase and is expected to renew deployments incorporating our voice over IP processors in early calendar 2009.

Additionally, we expect that China Telecom will be joined by other major carriers deploying fiber based access networks in 2009. We are actively engaged with or Chinese equipment customers, all of whom have passed testing requirements with this next equipment tender which we expect to be awarded this current quarter. We continue to believe that we are at the beginning of a multi-year roll-out of GE PON based optical access networks of a significant scale across China, serving high density residential installations as well as office complexes. In fact over the next few years, China Telecom is expected to grow the number of subscribers connected to its fiber based network from 5 million to 10 million next year and to approximately 40 million subscribers over the next five years.

During the fourth quarter of fiscal 2008, we announced the availability of our next generation access network line card solution, developed in collaboration with [Zarnex] semiconductor, and featuring our Comcerto 300 series of access voice over IP processors with Zarnex latest voice edge carrier ship set. We believe our joint solution will provide customers with a combined platform delivering one of the most comprehensive, efficient and feature-rich line card solutions in the industry. In addition during the quarter, we announced that [Excelarsky] had developed an embedded gateway solutions -- has integrated its carrier class XL gateway framework software development kit with our Comcerto 300 series to. accelerate signaling and call control application developments for carriers access voice over IP gateways. The combination of our Comcerto voice over IP system and media processing software with Excelarsky's application development framework offers our customers highly scalable hardware and software referenced designs to rapidly develop next generation access network equipment, such as IP based multi-service access nodes or M-SANs, IP D-SLAMs, IP DPXs, and multi media routers.

In the broadband residential gateway market, we announced that we achieved industry leading performance for power sensitive applications, resulting from our ongoing collaboration with ARM and designing Comcerto 100 broadband gateway processors. We scored a large number of significant design wins this past quarter for our Comcerto voice over IP processors across both enterprise and carrier applications, including multiple wins at Nortel, at [Wow-way] and DTE amongst others. In our high performance analog portfolio, revenues declined by 6% sequentially, primarily as a result of softness in shipments of optical [PND] products for fiber to the premise applications in the Asia-Pacific region.

We had yet another record quarter for shipments of our broadcast video chip sets with revenues up more than 50% sequentially. Key customers for our switching signal conditioning and video products included Alcatel-Lucent, Wow-way, [Infinara, Eret Harris, Itsagamie, Miranda] and Black Magic amongst others. For the past several years, we have made strategic investments to broaden our family of switching and signal conditioning products serving a diverse set of markets, with a range of new features and performance enhancements. Today our portfolio supports data rates from 155 megabits to 5.6 gigabits per second.

Our patented amplified signal conditioning technology provides enhanced signal integrity, [jitter] and reach performance, while our adaptive equalization automatically adjusts for modifications in the transmission channels such as when cables or blades are changed out. Our family of switching and signal conditioners is ideally suited for multiple applications including multi rate back plane oriented systems, blade servers and broadcast video equipment. During this past quarter, we almost doubled shipments of our signal conditioners into enterprise, local area networking and compute applications.

During the quarter, we announced enhanced 144 by 144 and 72 by 72 cross point switches, designed to provide improved performance for the broadcast video and data communications markets. These next generation cross point switches integrate an improved version of our patented amplified signal conditioning technology, which provides enhanced signal integrity, jitter and reach performance for multi raid back lane oriented systems. We also announced a family of 3 gig high definition and standard definition serial digital interface or SDI devices for applications for broadcast video serial transport applications. This new family enables a more cost effective migration to the rapidly expanding high definition market from existing standard definition infrastructure equipment.

We had another strong quarter for design wins across our high performance analog portfolio of switching and signal conditioning products as well as for optical PNDs. Key customer design wins during the quarter including [Tuitomo, Calyx], Delta, Tel Lab, WTV, Uplink, Thompson Multi Media and multiple wins at Wow-way and [Egris] amongst many others. In our WAN communications portfolio, revenues increased 2% with strong shipments into a combination of 2G and 3G wireless infrastructure deployments. Fourth quarter design wins for our WAN communications portfolio included key customers such as Alcatel-Lucent and GTE amongst others. In conclusion, I'm proud of our excellent business performance this past quarter.

Now, turning to the outlook for our first fiscal quarter of fiscal 2009. Our backlog is currently weaker than it was at this point during the prior quarter and visibility is challenging. We are expecting revenues from multi-service access and WAN communications portfolios to decline somewhat in the current quarter. As I noted in my product line remarks, shipments of our Comcerto voice over IP processors are being impacted by delays in the next round of fiber based access network deployments in China, but are expected to resume in early calendar 2009.

Additionally, we are experiencing demand softness at several of our largest North American and European telecom customers for our WAN products. However, we expect revenues from our high performance analog products to increase in the current first fiscal quarter, based on the initial ramp of our signal conditioners in the blade server market as well as continued growth in shipments of our broadcast video products as customers continue their production ramps.

As a result, we expect first fiscal quarter revenues to be down 6% to 14% from our fourth fiscal quarter revenues excluding patent sales or between $36.8 million to $33.6 million. We expect non-GAAP gross margin to be approximately 67%, and we expect to lower non-GAAP operating expenses to approximately $23.5 million as a result of our restructuring actions. We expect to deliver breakeven non-GAAP operating income for the current quarter.

Finally, as a result of our restructuring actions, we anticipate incurring special charges of roughly $3.2 million of which roughly $2.5 million will be incurred the first fiscal quarter of 2009. These charges are primarily associated with severance costs for affected employees and the impairment of certain excess days at one of our facilities. That concludes our formal comments today. Operator, let's open the line for questions.

Thank you. We will now begin the question-and-answer session. (OPERATOR INSTRUCTIONS). One moment, please, for the first question. Our first question is from Sandy Harrison with Signal Hill. Your line is open now.

Thanks. Good afternoon, everyone.

Hi.

Hey, Raouf, you went through the China stuff quickly and I think that there's a lot of different concerns, thoughts and what peoples' beliefs are. What's going on in China, as far as the different players and what that impact could potentially be for you guys. Could you spend a second going through that a little more carefully about what makes you think -- or what makes you feel comfortable that we're going to see some of these second generation roll-outs and just what are some of the other things that are going on over in Asia right now?

Certainly, Sandy. As relates to China specifically, there are two different dynamics right now that are making the picture a little bit cloudy as you refer to. The first one of those is of course carrier consolidation. They're essentially down to three major carriers, plus of course China [Sat Com]. We don't have much business in the satellite industry ,so for all intents and purposes we're seeing the service provider universe in China consolidate down to three.

The consolidation is clearly throwing a little bit of a monkey wrench into the ordering patterns by service providers in China. They're also being told by the government they need to share their existing infrastructure and make the networks available to each other. In the past when the government has made the same request of service providers in China, it has not worked out too well. It has resulted in a significant amount of confusion in the short-term and as I said, a reduction in the ordering pattern and deployments, but ultimately not a whole lot of sharing came about. This time it might be different. It's hard to tell.

However, the infrastructure sharing that I'm referring to is primarily in wireless infrastructure, not wire line. We don't have too much of a footprint in wireless infrastructure so for us, it's a very secondary factor. The other dynamic in China specifically that I mentioned in my prepared comments is of course the slowdown in GE PON or optical access networks in China.

We expected all along that China Telecom, who is essentially the only service provider deploying this kind of network technology today. We expected China Telecom would slow down installations around the Olympics, just to make slur the network was extremely stable and there were no glitches during the Olympics which of course they did. But they have not restarted their installations since August. We believe what's going on is that the network operator right now is examining the installations, addressing issues and concerns that have come up during that first wave of deployments in China and is getting ready for the second wave which we're being told by all our customers and we're also hearing from China Telecom, will recommence if you will around the January/February timeframe of next year.

We're very engaged with our Chinese equipment customers. They include all the big names in China. They're all very engaged with China Telecom and they're expecting to be awarded their portion of the tenders this quarter. I think we'll have a better picture as we get closer to the end of the quarter, Sandy, of how it's shaping up.

But it's fair to assume that the Chinese government and the China carriers aren't facing as much of a credit crunch or a financing crunch; it's more technology discussions.

Absolutely right. Yes. They don't have the issues that we're suffering from in North America or the EMEA. That's correct.

As you look at a couple of your opportunities in North America, you highlighted companies such as Zarlink and others, how are those relationships framed? Is it joint marketing? Is it taking advantage of different relationships, of leveraging each other's strengths? Or how do you typically work those agreements?

Typically, those agreements --every one of them is different and obviously they're subject to NDAs so I can't be too specific, Sandy. A good example is the case of Zarlink, where we ave a very strong strategic alignment in the access universe. Access networks are moving very rapidly to IP based infrastructure. The world has been moving to IP for a long time. No big surprise for anyone. The days of ATM are numbered. The world has been moving toward IP for a long time.

We see the opportunity very consistently with Zarlink. Their subscriber line interface technology is extremely compatible with our multi access DSB technology. Therefore, we have engaged with them for a number of years in fact, in a joint marketing collaboration as well as joint reference designs fashion which allows us to partner in terms of our road maps and their road maps, get strategic alignment, the bigger bang for the buck, also accelerate our customer's time to market and that's worked very well for both of us. A number of other partners in the ecosystem whom we work with in much the same fashion.

Bret, for you, when you look at your -- at the wide range of guidance, is that basically what you're expecting from turns or not from turns at this point? Or is there something else in there we should be thinking of as we build our picture?

I think the wide range of guidance is really just an indicator that visibility is pretty challenging this quarter. We always have a certain element of turns in our business going into the quarter and this is no different.

Okay. All right. Thanks, guys.

Thank you. Our next question is from Quinn Bolton with Needham & Company. Your line is open now.

Raouf, did you a good job just summarizing the demand picture at China Telecom. Was wondering if you might be able to provide any commentary about the other Chinese providers for their fiber deployments, specifically and Unicom and China Mobile. Then, I've got a couple follow-ups.

Quinn, to date, we have not seen any material deployments from either one of the other two major service providers in China as far as GE PON based access net works are concerned. China Unicom has had some very limited field trials of the technology which we understand went quite well. However, they have not had anything near the scale of deployment that China Telecom has already undertaken and is likely to expand.

Having said that, we believe that in 2009, all three are in fact going to embrace this optical access model. We expect to be shipping into all three service providers, based on every indication we have from the customer base in China. We're quite encouraged by both of those. In the case of China Mobile, perhaps things are a little more complicated right now because of, again, the mandate to share their network with other service providers. That's throwing a little bit of a monkey wrench into their plans as they get sorted out. It will take a few months for them to figure out when and how and when they're going to start deploying next generation technologies.

Based on customer conversations or feedback from the carriers, it sounds like sometime maybe second half of the year you thing you will start to production with those other two carriers?

I think that will be a fair -- yes, I think that will be a fair assessment at this point. Yes.

Just a question -- the impact that you talked about with China Telecom slowing down, is that priorly in the Comcerto family or is it spread across Comcerto and the optical PMD and the high speed analog portfolio?

There is no impact whatsoever on the high performance switching signal and conditioning products. The primary impact is the slowdown that I referred to in our prepared comments, to the Comcerto voice over IP processor family. That's where I would say the vast majority of it -- 80% or more, is evident. It's also secondarily impacting our shipments of optical EMD products for optical modules.

That business as you know has a very strong position in Japan, and China has not been that big in terms of deployments relative to Japan so the impact is much more muted. Having said that, if you look at the trajectory of our voice over IP business, it's grown quite dramatically over the course of the past four quarters. Even with the extreme slowdown in China this past quarter, this business was up more than 70% over the same quarter a year ago. We're looking forward to even better things going forward as the business continues to broaden and diversified customer base, and then eventually China recovers on top of that sometime in 2009, probably early 2009.

I don't know if you could break it out this specifically, but can you give us a rough sense of how much of the MSA or the voice over IP revenue does come from the China region?

That's an excellent question. I don't actually have that number with me. For last quarter, it was very small. I don't know really exactly how much it was. But it's -- we didn't ship very much into China last quarter -- very likely less than 10% of our portfolio.

Unfortunately, Quinn, I don't have the number in front of me. Last quarter as I mentioned in our prepared comments, the voice over IP grew very nicely on the back of strength both in North America and Europe in wireless infrastructure and wire line, and cable infrastructure. It really wasn't the China. China wasn't a factor for us last quarter and won't be this quarter either, but we're looking forward to it coming back.

It's a combination of both China and then some of the North American and European slowdown, resulting in the lower MSA outlook for the December quarter?

It's primarily China. There is definitely a softening in telecom worldwide, but as Sandy probed earlier. Certainly we're seeing telecom slowdown in North America and certainly EMEA. But voice over IP being a very important technology category in the CapEx budget for service providers is being impacted a little bit less than some of the legacy technologies like ATM, train relay, and so forth. For us -- if you're referring specifically to the current quarter, frankly, most of the issue is in fact China.

Okay. Great. Then just a quick one for Bret. Brett, in the press release it looks like you guys provided a basic share count. Was just wondering if we should be using the same number for fully diluted or whether there's a different number for fully diluted, especially considering the net income that you generated from the patent sales this quarter.

Ye. We're putting together our fully diluted EPS and those will be out in our SEC filings. It will be a different number.

Okay. Great. Thank you.

Our next question from Dan Morris with Oppenheimer and Company. Your line is open, sir.

Great. Thank you for taking my questions. Just wanted to ask you a little bit more on your high performance analog there. Sounds like the optical TMB was down this past quarter and that wasn't really related to China. Can you give us a little bit more color on what happened there?

Actually, Dan, it was in fact related largely to China, not entirely, but largely related to the China fiber to the home slowdown last quarter, and continues to be soft just like the Comcerto voice over IP business in the current quarter. However, we are expecting that the high performance analog business will be quite frankly, a star for us certainly this quarter and possibly beyond.

Not as much driven by fiber to the home technology, but really more our share capture for new products in the blade server enterprise LAN WAN segments with next generation signal conditioning products. I talked about those in our prepared comments -- , very exciting switching signal conditioners, ranging all the way up to 6.5 gigabits. We have made significant inroads in blade servers, SAN equipment and other LAN enterprise equipment. This is a new category for us and looks quite good.

Okay. Great. Looking at the inventories situation, inventories picked -- they increased quite a bit this quarter. Could you just talk a little bit about the inventory situation in general, but specifically in -- in China you said you thought there was some inventory. Is there extra inventory of customers or is it mainly just stuff that you're holding?

It's mainly stuff we're holding. There is a little more in the channel of course. What happened last year is that inventory levels in the channel got drew down significantly as many of these markets started ramping. I would say our inventory levels -- channel inventory levels were low as we worked our way through, particularly our second and third fiscal quarters as thee markets started to ramp. Once again as we discussed, in fiscal Q4, our customers in China shut down hard and much harder than they had forecasted. Consequently, we ended up with with this inventory bubble in our books that you referred to earlier. It's unfortunate, but we are expecting that as these shipments resume over the course of the next few quarters, we'll burn off all that inventory, get back to turn levels of four or better.

That's helpful. Looking at your voice over IP business, just roughly speaking, could you just tell us a little bit about what your exposure there is between enterprise and carrier. And as we look into 2009, how that balance might play out?

Yes, certainly. Roughly 25% of the business now, roughly, is enterprise. And roughly three-fours is carrier. As we looked forward to 2009, we believe that our continued design win capture in the enterprise space and this primarily platforms like IP PBXs or convergence of voice data gateways of various kinds, routers, PBXs, integrated access devices and so forth -- that that continued design win stream as it converts to revenue will continue to grow that business over the course of fiscal year 2009.

In the carrier business, we are expecting once again that this business, which has broadened considerably, will start recovering in 2009, particularly driven by the FTTX deployments in China. Again, I would point out that this business has grown better than 70% quarter over same quarter a year ago. We certainly don't expect it to come back to what it was before. We do expect a decline this quarter, but it would not be huge -- not a huge decline as I referred to, somewhat of a decline. Let's call it low teens kind of a decline in this current quarter, compared to last quarter.

I do expect both businesses will grow in 2009, particularly in the second half of 2009. We have a number of things, again, design wins, continuing to ramp in both enterprise and carrier; design wins, share recovery in China particularly as they start to resume shipments. I would say the other thing in the voice over IP portfolio is the continued ramp of our broadband home gateway solutions which I referred to briefly in my prepared comments. That should be also a driver for us in the second half of 2009.

All right. Thank you very much.

And as that concludes our question-and-answer session, I'd like to turn the call back to Mr. Johnsen for closing comments. Sir?

Thank you. That concludes our conference call today. On behalf of all of us at Mindspeed, thank you very much for participating this afternoon and good bye.

Thank you, everyone for participating in today's conference call. You may disconnect now at this time.