O2micro International Ltd (OIIM) 2010 Q4 法說會逐字稿

Good day and thank you for joining us today to discuss 02 Micro's earnings for the fourth quarter of the fiscal year 2010. If you would like a copy of the press release, please call Pamela Campbell at 408-987-5920, extension 8095 and we will fax you a copy immediately. It is also posted on 02Micro's website at www.02micro.com. There will be a replay available through February 3rd, 2011 at 9.59 pm Pacific time by calling 1-888-203-1112 or 1-719-457-0820 pass code 9578342. Following the presentation by management the conference call will be open for questions and answers as time permits. Gentlemen, you may begin.

Good afternoon and thank you for dialing into 02 Micro's fourth quarter financial results conference call for the period ending December 31st, 2010. This is Gary Abbott, Director of Investor Relations. I'd like to remind listeners that the discussion of business outlook for 02micro contains forward-looking statements. Statements made in this release that are not historical fact are forward-looking statements within the meaning of the federal securities laws.

Actual results may differ materially due to numerous risk factors. Such risks factors are enumerated in the Form F-1 and Form F-3 and 20-F reports and other documents filed with the SEC from time to time. Listeners are referred to the 02 Micro earnings press release in the documents filed with the SEC to understand these forward-looking statements and the associated risks factors. The statements made herein are dated information. The Company assumes no responsibility to provide updates to this information.

With me today are Perry Kuo, our CFO, our Head of Sales and Marketing and Director, Jim Keim, and Sterling Du, 02's founder, CEO and Chairman. After the prepared remarks from these gentlemen the floor will be open for your questions. Now I'd like to introduce Perry Kuo, CFO of 02 Micro for a discussion of the financial highlights of the fourth quarter and the December 31st, 2010. Perry?

Thank you and good afternoon. This is 02 Micro's quarterly conference call. This call will cover our financial results for the fourth quarter of 2010. We will now review our financial results for Q4, 2010.

Please note that financial will be presented on a non-GAAP basis unless we tell you otherwise. The non-GAAP result excludes stock based compensation expense, one-time charge and losses from discontinued operations. Our full GAAP results are available in our press release that was issued earlier today.

GAAP revenue in the fourth quarter of 2010 was $30.2 million. GAAP net loss in the fourth quarter 2010 was $636,000 if we exclude stock based compensation of $954,000 and a loss from discontinued operation of $3.5 million. The non-GAAP net income will be $3.8 million.

GAAP net loss per ADS in the fourth quarter of 2010 was $0.02. Non-GAAP net income per ADS was $0.11.

Gross margin was 60.2% in Q4. The gross margin is the higher of our 55% to 60% target range.

R&D expense was $7.9 million or 26.2% of revenue. This amount is excludes stock based compensation expense of $216,000 in the quarter. SG&A expense was $6.8 million or 20.6% of revenue. This amount excludes stock based compensation expense of $725,000.

Income tax was $54,000 in the fourth quarter and is mainly based on the year-end tax accrual adjustment on each taxable location.

In Q4 2010 we repurchased [100,000] ADS units at the cost of $576,000. Q4 2010 revenue by end market breaks down into the following percentages. Consumer was 55% to 60% of revenue. Computer was 25% to 30% of revenue. Industrial was 10% to 15% of revenue. Communications was less than 5% of revenue.

At this time, I would like to provide some additional information. 02 Micro finished the fourth quarter with more than $111 million in unrestricted cash and short-term investment. This represents cash and cash equivalent of $3.31 per ADS. In addition, 02 Micro has no debt.

Accounts receivable at the end of Q4 was $13.2 million. Our DSO is 41 days. It is in our target range of 40 to 60 days. Q4 inventory was $13.7 million at the end of the fourth quarter. This represents 105 days of inventory and inventory turnover of 3.4 times in Q4.

From a cash flow perspective, we generated $3.9 million in cash inflow from operating activities in Q4. Capital expenditures were about $978,000 in the fourth quarter for IT and R&D equipment. Depreciation and amortization was $1.3 million in Q4. At the end of the fourth quarter of 2010 02 Micro had 731 employees, 54% of which are engineers.

At this time, I would like to provide our financial guidance for the first quarter of fiscal 2011. This guidance reflects our best estimate for the current environment and is subject to change. This is the only official guidance we will provide unless we update it with a public announcement in the future.

02 Micro expects Q1 revenue to be flat to down 5% sequentially. We are guiding the Q1 gross margin to a range of 58% to 60%. R&D expense excluding stock based compensation should be $8.5 million to $9 million in Q1.

SG&A should be $7 million to $7.5 million in Q1 excluding stock based compensation expense. Stock based compensation should be in the range of $1 million to $1.1 million in the first quarter. Based on the service income of our subsidiaries in different countries, we expect our tax amount to be in the range of $450,000 to $550,000 in the first quarter.

At this point, I would to remind everyone that we have great strength in our balance sheet. We also have new products with excellent gross margins and we are optimistic about our future. Right now I would like to thank everyone for participating and turn the call over Jim Keim to talk more about our business.

Thank you, Perry. As expected, Q4 did see both market softness and ongoing inventory correction. This was evident in traditional notebook areas that impacted sales in all product lines. As we enter Q1 we believe that channel and customer inventories are adjusted and Q1, 2011 will better reflect true market demand. While market demand remains somewhat unclear, we expect to have better market visibility after Chinese New Year ends in mid-February.

Despite the unclear market demand and ongoing inventory corrections, Q4 continued to mark a significant shift in the Company direction. We evidenced ongoing design win activities in all of our analog and mixed signal power management business, including new market areas such as automotive, industrial, solar and general lighting systems.

These design wins are setting the stage for an expansion of future revenues into new application that includes a growing market and application base in not only Asia but Europe and North America. We are addressing this market expansion with the addition of sales and support staff in key markets including China, Japan, Korea and North America. We will highlight some of this new market activity as we now review each product line.

First, let's review intelligent power products. We have been focusing much of our R&D effort in the past 18 months to move our power technology into new customers and new market areas. We now see many design wins across an array of applications. We will briefly mention a few of them showing the diversity of this activity.

As announced this past month, our new USB 3.0 boost charger with protection circuit is in high volume production at a major camcorder producer. We have a major GPU, DC to DC design win for an AMD based graphics mobile device going into production this quarter. Additionally, we have delivered our first prototype production of 500 and 1,000 watt constant ripple current DC to DC modules to an automotive OEM for use in their electric vehicles.

We continue to expand our Intel-based product design wins. These design wins include applications from Intel design boards that find applications worldwide in many different market sectors.

In the notebook area we continue to expand our product offering and design wins. We are now positioned to support both AMD and Intel based applications. First half 2011 we'll see our first production of IMBP7 DC to DC to support Intel's new CPU.

In intelligent lightening 02 Micro has a whole new array of patent pending products to serve a rapidly expanding market that is much larger than our traditionally served markets. These include AC to DC product for LED bulbs and tubes, DC to DC for MR16 bulbs, flashlight and bike light controllers and street lighting products. We have seen excellent progress in the general lighting market with design wins in Japan, China and Taiwan.

We have growing confidence with increasing design win activity that 02 Micro will become a major supplier in this rapidly evolving terminal lighting market. Our new products are all patent pending and incorporate novel design methodology including integrated MOSFETs, triac control and integrated power factor correction circuitry.

Our products can support both isolated and non-isolated design. Application for these products involve customer worldwide including Japan, where we are already shipping production volumes and have a number of ongoing design activities with well known companies.

All of our new products are already in early production stages at multiple customers except for street lighting, which is in the active design stage. We expect all these products to attain an increasing number of design wins and contribute to revenue in 2011 with significantly higher revenues in 2012 and beyond.

In our traditional markets in TV and monitor we continue to be the industry leading in lighting control. We have positioned ourselves well as these markets continue to move from CCFL to LED for backlighting. This includes the recent of granting of intellectual property in both Asian and Western countries to further strengthen our market leadership position. We expect an increasing number of patents to be issued in the coming quarters.

Intelligent battery management continues to enjoy design wins worldwide and are now shipping in volume to leading companies in all major markets including China, Europe and Japan. These design wins include industrial applications for power tools and UPS systems as well as electric vehicles.

While the automotive market will be slow to ramp into high volume, we believe we already established technology leadership in this market with out power tool design ramping into production at leading power tool manufacturers including those based in China, Europe and Japan. While the power tool, UPS and lower-end EV applications should generate revenue for us in 2011, the longer-term high volume market will be automotive. We have already delivered prototype production battery management systems for a leading automotive OEM and are working directly with other OEMs as well as leading battery manufacturers to adapt their battery technology and battery packs to not only automotive but a myriad of other applications.

Based on our strategic positioning and rapidly increasing intellectual property in this critical area, we believe we will continue to see a multitude of new designs and ongoing revenue growth.

Intelligent e-commerce will see revenue from high volume PCI express design wins at multiple top-tier notebook OEMs. However, our long-term focus is to position the Company's move into advanced product in industrial applications that can generate both higher Company revenue and profitability. As announced previously, our first engagement is a joint development program with a major printer manufacturer with revenues expected to begin late this year. Additionally, we continue to expand our design activity to more customers.

To summarize, we see a rapid expansion of design activity in new markets that includes all product areas, notably intelligent battery, intelligent lighting, intelligent power and intelligent e-commerce. We believe that our new products will continue to constitute a growing percentage of our overall business, increase our long-term revenue base and make our Company less prone to adverse economic conditions and increasing competition and commodity products.

At this time I will turn the call over to Sterling Du for some additional remarks.

Thanks, Jim. At this time I would like to give an update on our business since we made some important change in 2010. First, as we previously discussed, we discontinued our internet communication securities segment in order to keep cost under control for the future. By doing this we'll show better profit and margins in our core power IC business. This improved profitability is visible in our financial results from continued operations.

During 2010 our revenue from continuing operations increased by 10.9% to $137.8 million. We also controlled costs and increased our non-GAAP EPS on continued operations from $0.14 in 2009 to $0.74 in 2010. Second, we focus all of our core business sector on growth initiatives in our computer segment, like backlighting business remains robust. We continue to be a leading supply of LED driver to the market. We participate in a tablet PC segment, which is the fastest growing sector. We also have increased our DC/DC content with major notebooks OEM.

In 2010 our PCI Express Group saw revenue decline but this group should return to growth in 2011 with new design wins going into production in the middle of the year. In our consumer segment we are having good success with LCD TV despite a slowdown in the second half of 2010. Unit growth of the market was strong for the full year and it is expected to remain strong in 2011.

LED TV continues to be popular and we have a leadership position in LED trials. In addition, the connected TV in the 3D TV segment are growing quickly and we also expect to do very well in those markets.

In LCD monitor, we expect the market to continue to shift to LED backlighting, which gives us a mixed benefit. This should follow the same path that LCD TV and the notebook follow and position O2 Micro as a leader in this market.

In 2011, we also expect to expand our consumer presence. A few weeks ago we put out a press release about a camcorder win. This particular unit used our USB charger IC. However, we have additional camcorder design wins of other IC including DC/DC PCI express targeted for the Q4 this year. This is especially important because it represents a major step into new markets for backlighting products. Moreover, entering new markets is a key to our growth in 2011.

In our industrial segments our lighting products continue to address opportunity in automotive, commercial and general lighting applications. We have improved our LED drivers significantly and focus our efforts on reaching the general lighting market. So I would say lighting is an important new area for the next few years and that we're working hard to carve out an important plan for 02 Micro.

We've also targeted the automotive market for lighting applications and continue to work with the top tier OEM for headlighting, tail lighting and other automotive applications. We've also focused our battery power products on automotive in industrial applications. In 2010 most of our business came from the power tool and e-bikes. This market should grow nicely for us in 2011, although we are making a strong effort to bring this further into new markets especially in automotive.

In conclusion, 02 Micro showed good progress in 2010. We expect to continue to show strong progress in 2011, as we enter new markets and ramp up new areas of business.

At this time I'd like to thank you for participating in our call and turn back to Gary. Gary, please.

Thank you Sterling. At this time, operator, we'd like to poll for questions.

(Operator Instructions). The first question comes from Tore Svanberg with Stifel Nicolaus.

Yes, a few questions, first of all just on your Q1 guidance can you just talk a little bit about your assumptions there? It does seem like the inventory correction you experienced in PCs and TVs is sort of behind you, so I just want to understand what the assumptions are behind the guidance. Thank you.

Well, Tore, the assumptions behind the guidance as we basically see the market stabilized and quite flat, we obviously have a Chinese New Year in the middle of this quarter, which always has some impact. So basically we have just guided for a normal, stable market situation for this quarter, so fundamentally that's where our guidance comes from. As I mentioned in my portion, we are hoping to have better visibility right after the Chinese New Year is over. We would certainly hope to see some up side, but that remains to be seen and at this point our customers are very conservation and we remain conservative as well.

Very good and it seems like there's a lot of different reports out there on the TV market and certainly the growth prospects for this year. From your perspective, first of all do you think sort of that inventory correction is behind us now and what are your customers telling you about the growth in that segment this year?

Well, we believe the inventory correction is over. What our customers are telling us is they have very little visibility. We do know that China has put strict controls on its growth, particularly in some of the residential home market. That is impacting the China growth. We obviously know there are significant issues in Europe and remain significant issues in other major markets as well. That's causing our customers to be very conservative and indicate they have little visibility and that's basically where we are at at this point. We again hope to have more visibility post Chinese New Year time frame.

Very good and just moving on to some financial questions, so your SG&A has come down quite significantly, especially as you aggregated the VPN business. I'm just wondering your new guidance, your new SG&A guidance, does that also include some legal expenses or is that now also fairly behind you at this point?

Thank you Tore. This actually includes some modification expense and also some modification income, which we already received in January.

Okay and then on the R&D line I think last quarter was $7.9 million; you're getting a little bit higher. Can you talk a little bit what's behind that? Is it mainly just new product tape outs or anything else you could add there would be great?

Yes, I think that in the Q1 especially we have some very key (inaudible) tape out in Q1. So these are very important for the future growth for 02 Micro and I expect the Q2 could be lower than the Q1.

Okay very good and moving to Sterling, Sterling, you mentioned the conversion in monitors from CCFL to LED. Is that something that would actually happen this year or more into 2012?

Yes it will be happen this year. The conversion to LED sometime is due to the further cost of CCFL solution, a slow down a little bit penetration but the bigger trend is going to continue and stronger and stronger.

Okay and then also you mentioned some key design wins in DC to DC for AMD and Intel processors; I was just wondering how the Company is positioned in the Intel Huron River platform. Maybe you can quantify what type of share you're expecting or how many platforms you been designed into.

I don't have the detailed numbers for the share of this platform but as many platforms out from Intel some of the platforms have utilized more of IC in the referent design some less. But nevertheless, our design activity and our product overlay in IA architecture, which is an X-86 architecture, remain very strong because we're providing from CPU, GPU to regular system DC/DC to charger and we also have a booster coming out, which is already in some design already.

So, together with our LED backlighting controller and our -- we have a new memory controller, memory meter controller including the USB 3.0 and there's upcoming this second half of this year an (inaudible) make 02 Micro a product solution for I architecture even extend to the tablet PC remain very strong.

Okay and then just lastly, it just sounds like you're a little bit closer now to your automotive business finally starting to take some form, so will you actually start to see some production volumes for your automotive battery management products this year?

We see some production this year but the number, unit number, will be quite small. We all know that this is going to take time for each country to adopt this [ED] as the infrastructure is not really -- is premature at this stage. But we're pretty clear that we'll make some inroads and the significance of this meaning is going to pave the way in the next five or ten years we are one of the players in this market, so if we make to see this production I believe probably is 100 units this year and that will be significant meaning to us.

Very good. Thank you very much.

[Andrew Hong], [Stern & Gee].

One of your competitors indicated that a major TV OEM may be bringing some LED drivers in house so I was just wondering whether you've seen any indications of this with any of your customers.

Well, we know one who has done some in house historically and we think we know who that is. That's not unusual for them. We have business relationships with that customer that have both historic and ongoing. We don't see any real loss to our percentage business, which we've had at that customer for many years but nevertheless they do have internal capability and do use that in some of their systems Andrew.

Okay and then if you look at the TV business specifically I think for 2010 most people think that LED TV penetration was in the range of the 18% to 20% and for 2011 the targets are in the range of 40% so I am just curious are those mixes kind of consistent with your mix between CCFL inverter and LED driver?

Yes I would say so. We had earlier seen projections, Andrew, of a more rapid switch to LED but I think some pricing in the CCFL has kept that at a higher level and slowed down some of the penetration but generally we see the same type numbers that you're talking about.

Okay and can you repeat the employee count at the end of the quarter please?

731.

So if I am correct at the end of the September quarter you were at 839 and now you're going -- that's down to 731? Is that correct?

Yes.

Yes.

So does that -- I guess my question is like with that reduction in headcount should we or can we anticipate operating expenses to come down a little bit over time?

This is from the discontinuation of the 02 Security going down.

Andrew, the expense for the discontinued operation is captured in that line so what you see for Q4--

Looking forward.

Yes looking forward.

(Operator Instructions). Vernon Essi, Needham & Company.

Hi and I would like to say thanks for the discontinuance of that division. It's obviously helping the P&L here so I think it's the right move. In terms of your sort of target model over time this is sort of a tough question but I feel I've got to ask it. Is your gross margin is probably about 500 basis points above where sort of your peer group is and your revenue has not been growing very strongly in the last couple of years.

I guess I am wondering is there any trade off or elasticity that you could possibly see by changing that mix and if you could just discuss if you've explored that from a strategic standpoint because it seems as though you should be able to grow revenue a little bit better in this environment. I understand you've got sort the Lunar New Year comp ahead of you but can you kind of discuss that a little bit and if there is really a trade off or if that's just sort of a simple conclusion from a Wall Street perspective?

Well, that is a complex question. I think we agree on that.

Well I know you're not going to answer it in 30 seconds that's for sure.

Well, let me simply say, Vern, that yes we have taken a look at portions of that equation if you please and part of that was early on beginning to phase back some of the e-commerce business and we did phase that down rather dramatically I might add, which did impact overall growth numbers but it does help our long-term margin situation and, as we now focus on moving forward into power management in the analog mixed signal, what occurs is we have looked at moving into new markets, particularly more into industrial and automotive type markets, which do take time to position. So that transition has begun.

We have seen design wins. As we've indicated, we will see some revenue this year but again, that transition time and we would expect the real revenue growth to come in ensuing years like 2012, 2013. So that's kind of a general overall view. I don't know if you'd like others to try to refine that more.

Well, no, no. I think that's fair. I guess if we were to look out in your ranges on your end markets and you're not being fairly detailed about that, which is fine, but I they always seem to be trending in that same sort of windows that you provide. Would it be fair to say that if we were to look out say to 2012 your industrial business would be well north of like 20% of your revenue mix, maybe even 30% as the expense of say notebook and computer? Is that sort of what you're getting at?

Hey, Vern, without giving sort of percentage and within that target yes. I mean our goals could grow the business. I hear your question and obviously I know which company took that approach that you're referring to. I think philosophically, Vern, and I am sure our team would agree with this, we're not trying to lower costs and lower margins to grow in places that we already have a dominant or strong position.

We're going to maintain our share and our profitability and I think philosophically what you've heard if you sort of synthesize all the comments from Jim and Perry and Sterling what we're really trying to do, and it's going to make us a bit growth cyclical from your point of view, but what we're trying to accomplish as a Company is to grow in new high margin businesses so we're going to maintain our growth and our margins and grow with the market probably in back lighting. But I think over years to be a $200 million or $300 million or more company we're going to have to grow in new markets and that's where we're investing today for the long term.

Okay and just as a follow-on question to sort of dive into one of the end market segments you spend a little more time talking about on this call relative to the past was the general LED lighting. How -- first of all, just I guess as a curiosity question, how will you define that in terms of your market segmentation? I assume this would be lumped in sort of the industrial bucket and can you give us an understanding of what kind of revenue range that would be operating in say in 2011? I mean, it seems still very small at this point but are you -- it sounds like you're getting some traction there. What kind of numbers are we looking at?

Well, basically the general lighting goes largely to the industrial and automotive sectors and that revenue base can be very significant long term for us. you need to understand that, like in automotive where we are doing work and in industrial areas, those markets have quite a long cycle time from the initial getting the design win to going into initial production and then to high volume production. We would expect to see good revenue growth in the 2012, 2013 time frame from our design activity that's going on now and we have already delivered initial prototype production into for instance automotive headlight and taillight type situations as well as into some of the industrial.

As I've indicated, we also have done work in areas like street lighting. We have a lot of ongoing design activity. We are working with some key customers but that has yet to go into the prototype production stage but we would expect to begin to see that as well, certainly into prototype production by late this year and into some production early next year. We see a huge opportunity with the LED switch as well as the whole automotive market now beginning to turn to lithium ion type technology looking at the whole battery area.

This is a huge opportunity for a young company like ourselves to be moved into this market and actually do so fairly rapidly but we need to remember that that rapidly is not three months, six months. It really takes time to get through the design in cycles, through the prototype production cycles and into the production. So the revenue traction will be there in terms of 2012, 2013. There will be some minimal contribution this year. That's my general comment.

That's great. Okay thank you very much, guys.

Andrew Hong.

Along the lines of automotive, like if we were to look at an electric car, can you give us a sense of your potential revenue opportunity per vehicle so like if you think about the battery charger and then LED driver for the display and then LED driver for headlights and brake lights and internal cabin lighting, do you have an idea of what it could be per car?

The question you're asking we apply to a different sector of the automotive, the LED headlighting, tail lighting they are for today's traditional conventional car and it depends on the format. Some car makers would deliver as a module and that's probably more than double-digit $10 apiece but that's very small volume. On similar case we already (inaudible) in the ICs, and the IC probably reaches $1 minus/plus, sometimes less than $1, so that's for conventional.

Electrical vehicles we didn't deliver any LED car. We delivered, as Jim indicated, some of these [DC] and some of BMU and those also quite varies, depends on what kind of data they use and also the number of [better] parts and that could be ranging from the small solution. It could be $5 minus/plus, go to $20 or so or above. And I'd like to remind you again that electrical vehicle is a very small volume and eventually what kind of cars in these sectors is going to be very popular. It really depends on now only the consumer needs but also the infrastructure government is going to place in the next few years, so still early to do meaningful sticking at this moment.

Ryan Kerr, Sparta Asset Management.

Great job on divesting that business and showing us the pure profitability that's accompanying it and I am still trying to get to the bottom of just one kind of question here. On your R&D and SG&A guidance with respect to this quarter it sounded like there's maybe a tape out in there of some amount of money and maybe a little bit of legal expenses in the other line. What can we think of as a normal -- with this VPN business gone -- as a normal R&D, SG&A kind of lines going forward? Can you give me a sense of that?

R&D will be in the area of the $8 million to $8.5 million and SG&A will be in the area of the $7.5 million plus/minus.

Okay so the tape out that you were referring to is just maybe $0.5 million, is that right?

Yes.

And we do have time remaining for one more question. That question comes from Graham Tanaka with Tanaka Capital Management.

Congratulations on making a tough decision on Security. I just wanted to get a feel, better feel, for what '011 could be top line without the security line and you've already showed us that last year that there was a loss of $9.8 million. By the way, of that loss of $9.8 million how much of that was write off as opposed to operating loss for the Security?

We didn't break out the latter, Graham, but we did show a charge in the third quarter. An impairment charge was related to Security and there was some charge in the fourth quarter as well so--

That's history now. I just want to get a feel for it so the top line for Security last year was what? And I am only asking because I want to kind of get a feel for what if you have a growth of a certain amount this year what the top line could be relative to what you reported the top line sales for that.

In other words, if we do continuing operations and say you're up 10% here what base do you use for last year?

I understand. I don't have that directly in front of me right now. You can see the revenue for the year is given but the quarterly numbers I don't have in front of me. I can give that to you off line or we can talk about it.

So last year's sales of $137 million included how much for Security?

That number has been reclassified because we've treated the Security business as discontinued operation.

So in other words that's the continuing operations, the $137 million?

As reported yes.

Okay got it, got it. Okay so thank you. And then in terms of continuing operation diluted earnings per ADS thank you for showing that, that's $0.63 correct for last year?

Yes.

So in other words if you're just flat this year in terms of margins, cost, revenues you might be around $0.63? I am only asking that because the Street estimate is, as you know, it's $0.40 something cents, $0.45.

If everything were exactly the same that would be correct. Obviously it won't be exactly the same.

Okay no I just want to get a feel for that. Okay and then the -- again, congratulations for making inroads in industrial place space. I see that that's 10% to 15% of sales last year and the growth rate there is going to be about what this year? Could that go from 10% to 15% to 15% to 20% or higher than that percent of sales?

We don't want to give numbers out, Graham, but we -- over the long term that's the key to growing our business.

Right okay. All right no I understand. And then the other is related to what sort of Vern and Tore and the others were asking about in the new product areas. And thank you, Jim, for characterizing it as huge. We just sort of want to get a feel for the market size, the total available market for you as you get these design wins. Is there some way we can sort of bracket that and get a feel for say not this year but '012, '013? Could just the auto alone be 10% or 20% of sales?

Auto alone will not, as Sterling indicated. Auto alone will not ramp that quickly. I would expect other areas like 2012 general lighting to ramp more quickly.

Oh really? Okay.

And I think we can more bracket that as we know the details of the design wins and when the production would take off so I think we're in a better position to do that as we go into the second half of this year frankly.

Great. Okay again congratulations on the new product wins, design wins. We're looking forward to it and for the year. Thanks.

Operator, can we wrap up the call?

Yes, sir. That does conclude the question and answer session.

All right. Well, thank you everyone for participating and I am available if there's any questions or follow-up. Have a nice day.

Thank you and that does conclude today's conference. As a reminder, a replay will be available through February 3rd by calling 1-888-203-1112. Again that's 1-888-203-1112 or 1-719-457-0820. The pass code is 9578342. Again, that's 9578342. Once again, thank you for your participation. Have a wonderful day.