PDF Solutions Inc (PDFS) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the PDF Solutions, Inc. conference call to discuss its financial results for the third fiscal quarter ended Wednesday, September 30th, 2009.

At this time all participants are in a listen-only mode. Later we will conduct a question and answer session for which instructions will be given at that time. If you need assistance during the conference please press star and then zero on your touch tone telephone. As a reminder this conference is being recorded.

If you have not received a copy of the corresponding press releases, they have been posted to PDF's website at www.pdf.com.

Some of the statements that will be made in the course of this conference are forward looking including statements regarding PDF's future financial results and performance, growth rates and demand for its solution. PDF's actual results could differ materially. You should refer to the section entitled Risk Factors on page 10 through 18 of PDF's annual report on Form 10-K for the fiscal year ended December 31st, 2008 and similar disclosures in subsequent SEC filings.

The forward-looking statements and risks stated in this conference call are based on the information available today. PDF assumes no obligation to update them.

Now I'd like to introduce John Kibarian, PDF's President and Chief Executive Officer, and Keith Jones, PDF's Chief Financial Officer.

Mr. Kibarian, please go ahead.

Thank you and welcome, everyone. In the third quarter we achieved total revenue of $13.9 million, which includes gain share revenue of $5.4 million. These results reflect a general improvement in manufacturing volumes and business activity in the quarter. Also, we continue to benefit from the restructuring plan we put into place at the end of 2008, a move from the non-GAAP loss of $0.14 per share in the second quarter to a non-GAAP profit of $0.02 per share in the third.

To add some color to these top-level results, let me start by saying that because PDF Solutions remains focused on delivering technologies that add value across the IC life manufacturing life cycle, leading IC companies continue to engage PDF Solutions. This continued interest and commitment from our clients was evidenced in the following business activity during the third quarter, a new 32-nanometer DFM engagement, an extension to an existing 32-nanometer integrated yield ramp, and an extension to a 65-nanometer integrated yield ramp.

As we anticipated on our second quarter conference call, robust manufacturing volumes at our clients in the third quarter resulted in increased gain share results for us, up over 100% quarter-over-quarter to $5.4 million. Our clients' volume estimates for the nodes currently contributing to gain share remain positive and they are at near peak utilizations. We expect the number of contracts contributing to gain share to be approximately constant over the next quarter.

In the short term the timing of starts and stops of particular nodes in volumes could result in slight decreases in gain share in any particular quarter. In the medium term we could see increases as more facilities contribute to gain share or as capacity is added to facilities that are already paying gain share.

On the cost side, while total costs in the third quarter increased over the second quarter, this was primarily the result of costs associated with improved business. The other key contributor was restructuring charges of $1.7 million, which was due to further adjustments to the cost structure of certain European operations and the management organization of our product development and sales.

We believe these changes will enable the further integration of our software and characterization vehicle technology into industry leading solution sales. Our aim is to adjust our cost structure to keep our fixed costs approximately the current level along variable cost of scale with increased business.

We held approximately $34 million in cash at the end of the quarter, the balance after making payments during the quarter associated with the restructuring I just discussed. Going forward we expect to be cash flow positive through the end of the year. We are well positioned to leverage the opportunities the general economic recovery presents.

We believe our third quarter results demonstrate that we are making beneficial cost structure technology and client investment decisions for the healthy growth of PDF Solutions. We will continue this in the fourth quarter when we will continue our investment in our YieldAware FDC for logic memory and solar manufacturers, refine our yield ramp solution for 32- and 28-nanometer high-k metal gate processes, demonstrate the benefits of our pdBRIX technology based on our joint development with IBM and others and continue to drive adoption of our expanded solutions laying the ground work for future gain share.

There has been significant positive news in the past about the semiconductor industry and, in particular, logic and foundry manufacturing, which is the segment of the industry that PDF Solutions is most sensitive to. While we do see many positive signs, we remain cautious about the selling environment and whether these segments will experience a sustained upturn or whether it will be less consistent. As a result, we are not providing public guidance for our total revenues or earnings for the fourth quarter of 2009.

Thank you for your time and attention. Now I will turn the call over the Keith, who will discuss in detail our financial results for the third quarter. Keith.

Thank you, John, and good afternoon to everyone. As a reminder of the statement made in our Press Release, in addition to using GAAP results in evaluating PDF's business, management also believes it is useful to evaluate its results using non-GAAP measures, which excluded stock-based compensation expense, amortization of acquired technology and intangible assets, restructuring charges, and the related tax effects as applicable.

The Press Release contains a reconciliation of such measures to the most directly comparable GAAP measures in giving access to press release in the investor section of our website located at www.pdf.com.

Revenue for the third quarter ended September 30th, 2009 totaled $13.9 million, an increase of 45% when compared to the last quarter and a decrease of 26% when compared to the third quarter of 2008. The quarter-over-quarter increase in revenue was driven by increases in both gain share and Design-to-Silicon yield solutions, reflecting higher production volumes and improved business in the quarter.

The decrease from the same period a year ago continues to reflect the significant change the general environment under went when compared to last year, including investments at advanced technology nodes.

Design-to-Silicon yield solution revenue totaled $8.4 million for the third quarter, an increase of 16% from the prior quarter and a decrease of 37% from comparable period last year. During the quarter we signed a new engagement for a 32-nanometer design for manufacturing solution. Additionally, we signed an extension for a 32-nanometer, Logic Yield Ramp process, an extension for another customer's 65-nanometer yield ramp process.

During the third quarter eight service engagements from seven customers each contributed a $150,000 or greater in revenue. This represents a net decrease of one engagement and one customer from last quarter, given that even through we started a new engagement with a new we wound down two engagements with two existing customers.

Gain share revenue totaled $5.4 million for the third quarter, an increase of 137% from the prior quarter and flat compared with a comparable period last year. Gain share revenue was generated from six customers and seven engagements and there was no change in either of the number of contracts or the number of customers in this metric from the second quarter.

Total expenses from operations for the third quarter of 2009, excluding stock-based compensation expense, amortization of acquired technology and tangible assets and restructuring charges, totaled $13.2 million, an increase of approximately $481,000 or 4% from the last quarter and a decrease of approximately $5.5 million or 29% from the comparable period last year.

The increase, as compared to the second quarter, was due to the slight up tick in sales related expenses and project hardware costs associated with improved business environment. The decrease from the same period last year was primarily the result of our ongoing cost reduction initiatives implemented in the second half of 2008.

Gross margins were higher in the third quarter as compared to the prior quarter as a result of increased gain share revenue.

Research and development expenses, excluding stock-based compensation, totaled $4.3 million for the third quarter, a decrease of approximately $317,000 or 7% from the last quarter and a decrease of approximately $3 million or 40% from the third quarter of last year. The decreases from last quarter and last year were both due to cost-cutting measurers.

Selling, general administrative expenses excluding stock-based compensation expense were at $3.9 million during the third quarter of 2009, an increase of approximately $225,000 or 6% from last quarter and a decrease of $822,000 or 18% from the third quarter of last year. The increase in SG&A expenses as compared to the last quarter was due to increased sales activity and the decrease from last year was primarily a result of cost cutting measures initiated in the second half of 2008.

In light of the improvement in the overall business environment and as a result of significant cost-cutting measures we have undertaken to date, we are happy to report non-GAAP net income for the third quarter ended September 30th, 2009 totaled $442,000 or $0.02 per share. This represents our first profitable period on a non-GAAP basis since the third quarter of 2008. This result compares to a non-GAAP net loss of approximately $3.7 million or $0.14 per share during the second quarter of 2009, a non-GAAP income of approximately $192,000 or $0.01 per share for the comparable period last year.

On a GAAP basis, net loss for the quarter was $2.8 million or $0.11 per share. This net loss included $1.1 million in stock-based compensation expense, $446,000 in amortization of acquired technology and intangible assets and restructuring charges of $1.7 million.

Now turning to our balance sheet, cash including both short-term and long-term investments totaled $33.9 million, a decrease of approximately $5.2 million during the quarter. The decrease was due to restructuring payments of $2.3 million as well as the adverse effect of lower collected cash reflected from the short-fall in receivables created by lower bookings in the second quarter.

At the outset of the year, it was our goal to maintain our cash balances at a level consistent with our balances at the end of 2008, or approximately $40 million. During the middle of the third quarter we made a conscience decision to increase and accelerate the scale and scope of our cost saving activities above our original plan. This will create long-term synergies for the Company but have had a short-term impact on our current cash balances. We anticipate that the Q3 balances will be the low point of our cash balance going forward.

Our accounts receivables of $18.3 million increased $1.3 million, which is primarily due to improved business during the quarter. We are pleased that the collectability of our receivables remains healthy.

As John mentioned earlier, we remain cautious as to whether the current upturn and improved selling environment will be sustained consistently. Thus, we are not providing specific revenue or EPS guidance. We do anticipate that our expense structure will remain relatively level.

Please keep in mind that the statements I just made, including general expectations about our future financial results and performance, and that PDF's actual results could differ materially from those expectations. You should refer to our current SEC filings and understand that the forward-looking statements made during this conference call are based upon information available to PDF today. We assume no obligation to update them.

Now I'd like to turn the call back over to the operator for questions. Operator?

(Operator Instructions). Our first question comes from the line of Matt Petkun with D.A. Davidson and Company.

Hi, good afternoon and nice quarter, big improvement in the gain share obviously but it's good to see the solutions line item moving in the right direction. John, the gain share -- we must have captured some of the wafer start activity in Q3 as well as Q2. I'm talking about your customer's wafer start activity in this number. Is that correct?

Yeah wafer out activity. That would be correct.

Okay, so cause on the prior call you had talked about sort of the wide effect, but it probably wouldn't be prudent -- well, it could be accurate to assume that Q4 has the same wafer start increase that your base customers had in Q3?

Yes I think our point is basically we feel that this represents relatively high utilizations for the accounts and, as we look out over the next few months, we don't expect those utilizations -- they don't have -- although there are folks that report 110% utilization, which was always kind of somewhat mind numbing to me, 100% is 100%, so people getting up towards high utilizations I think that says that they're relatively at their max until they add capacity. We expect capacity coming on in accounts as they get through the middle part of 2010. But with those factors I think they're by and large tapped out.

Okay and when you look at the potential for existing maybe solutions deals turning to contributing on the gain share line, there's nothing big or incremental in terms of the number of gain share deals that could layer on outside of the macro demand, is there in the near term?

In the near term over the next quarter or so we don't expect that. As we look out into 2010 we do expect that.

Okay and what would be driving those into 2010, just no transitions or what?

No transitions.

That's the primary trait right?

And there will be some new factories involved.

Okay, and then the, if you could provide any other -- that's a lot of useful data I think in trying to come up with a model for gain share.

Right

But on the solutions line item that's one where I actually think that you guys have way more visibility than you're willing to let on, at least to a certain extent. You had two nice extensions this quarter and a new engagement and we don't know the dollar content for those but it should give you some sense if it's up, down or sideways for that line item in Q4.

Yes, of course, it does give some indication for us, Matt. We also have had an awful lot of activity over the last few months and so it's very hard for us to really kind of go in and forecast it where we think it's going to be and we just at this point because we've really got to give it total revenue number, there's just too many moving parts as we look out into the -- even if we felt comfortable about Q4, which we may very well, we would have to then go back and say we're going to now make that going forward basis and the reality is I will wait and see what people's utilizations look like in November and December before I start thinking what Q1 is going to really look like.

Okay but maybe, again, if we take a step back and you think about the things that drive the spending on engagement activity, that line item for you guys was down about 37% year-over-year and I don't know what -- it's not wafer starts that we're correlating this to. What should I be thinking about in terms of what's going to improve that line item going forward? Obviously getting new engagements but I don't have a good sense of what it's correlating too.

Yes I think getting new engagements does correlate to peoples' move or confidence in their ability to invest in the future products and technology. In the late part of 2008 and early part of 2009 we just felt that cuts for us had no sense of a future and we're stalling purchases as long as they could. In Q2 we started seeing that activity pick back up, as we talked on the conference call in July, and we see that again in October with the activity we described here. We see people, you know, if you look there's two of these are related to 32-nanometer. That says that people have some confidence about the future of their business.

I think if you see the manufacturers like the foundries discuss their increase spending in capital equipment or their increase in investment in R&D, that's probably a surrogate for saying that there will be increased activity with PDF.

Okay and then just a final question, I think I've asked this question in the last couple of quarters but we have a lot more clarity now, or at least some more clarity, about the nature of the customer universe headed into next year with consolidation. Can you kind of give us your sense of how both the logic markets and the memory markets provide opportunities for guys going forward?

Yes that's a good question, Matt. So I think the logic market is one where -- it was maybe moribund in the '06, '07 time period as the competition had somewhat ossified and the integrated device manufacturers were rapidly becoming asset light. We've seen a lot of activity across the entire foundry market primarily with an awful lot of renewed competition due to the restructuring that's gone on in that market place and the difficulties folks have had with bringing up the 40-nanometer node and I think the fact that that's highlighted how important solutions like PDF are to the interface between these manufacturers and their customers. So that market, as we've done our strategic plan for 2010, that market we actually feel, at least for 2010, will remain a healthy market.

The memory market is one where we are still scratching our head. We do -- we did notice increased customer contacts and activity going on with the memory customers, as we went through the third quarter, but structurally there are still many of the manufacturers who, if you kind of look at them financially, you really wonder how strong they truly are and what their invest profile is.

And we saw that in the foundry market where there was really clearly one dominant supplier and in the '06, '07 time frame and that really I think led to a lot of ways that the suppliers worked with that supplier. And I suspect that could happen in the memory market and that's not based on any PDF, just generally, you know, you asked a question about the general market. I don't know that there's the same level of competition in the memory market that we're seeing in the logic market right now and that does impact suppliers, no matter what anyone will tell you. So we are a little bit more cautious on the memory market than we have been in the past.

And in the alternative energy or other related fields we've been participating with our early pilots with customers and seeing good technical results and we're starting to build some confidence but we've not put any of that into our own projects -- you know, business planning in terms of revenue on the 2010 time frame until we understand the scale of the business that that represents and the repeatability that it would represent across the marketplace. But technically we feel very comfortable about the yield that we're a solution in those other markets.

Okay great. Thanks so much, John.

Casey Rajkumar, RBC Capital Markets.

How would you categorize the visibility that you folks have into wafer starts for the customers in Q4 compared to the start of Q3 and Q2? Has it improved, gotten worse or stayed about the same?

Casey, the customers remain very confident about their Q4 volumes. I think it's us putting the kind of scope, healthy amount of skepticism on them because we've seen an awful lot of capacity going in and folks talking about a lot more capacity and we're just scratching our head trying to figure out what this really all means. They all seem to be confident about their 2010s at this point but they always tend to over shoot and the foundry customers, they can be left eating wafers or holding on to wafers and not shipping them and hence, not paying us a royalty.

So sometimes we find that those guys are the last to figure it out whereas the IDMs tend to have a lot better visibility at times, so they seem to be very, very confident. You know, I think there were a couple of times that we've scratched our head and wondered what really December and January looked like and from a manufacturing standpoint on these factories, so we're a little bit skeptical. Probably we're more cautious about them than they are about themselves.

Is the feedback from your customers, which you may or may not choose to take to heart, is the feedback from the customers that the Q4 starts are going to be flat to Q1 or are they same to Q1 it's going to be down from Q4?

They're very careful about how they describe that, Casey. My intuition is they will be down.

Okay now in the Q4 quarter is the problem that you're having in providing guidance largely tied to the lack of confidence in trying to make estimates for the yield ramp part of the business or does it pertain to the gain share part of the business as well?

I think there's two elements to it, Casey. One is the longer-range perspective of setting, establishing a precedence. If you establish a precedence on a Q4 and then we look and see that Q1 the visibility in our customer base goes away again, then we're back explaining to folks why visibility has changed, whereas yes it looks positive right now but as an engineer, you know, two data points you can fit a line one data point, which is really Q3, you can fit anything you want.

So rather than jumping and providing guidance in Q4 we'd rather have a couple of data points Q3, Q4, etcetera, some visibility into the 2010 and then you've from our standpoint we have a little bit of trending and we understand a little bit more about how to interpret. One of the transitions that's gone on in this change is the nature of our gain share has shifted a lot from the majority of that being IDMs to a good chunk of it's being foundry business and we just believe those customers have less visibility than our IDMs had in the past and we'd like to understand it a little bit more before we start understanding how to interpret and forecast them.

Have you folks restarted talking to your memory customers now that at least from a [coupon] participant point of view they seem to be more interested in buying tools process node [fashion] underwear let's say to quarters back?

Yes absolutely we do see a lot of activity, or more activity. I mean, a lot may be an overstatement. I think we see more activity. Like I said, I just -- I really wonder about the health of that marketplace as a supplier so we're a little bit skeptical about what state the customer base is really in but yes we do see activity.

But in the same breath from to be cautious, as John talked about as we look forward, from a planning perspective that's more of an up sight.

And in the past were your discussions with the memory customers mostly with the DRAM folks or have you had conversations with the NAN folks as well?

We've had selling activity at all of those. We probably had the biggest penetration in the DRAM market because they were more potential customers and so they'd be actually a bigger marketplace to sell into.

Have you guys had any conversations with the NAN folks?

Yes we have.

And probably my last question, have you guys had any meaningful conversations with the asset light customers? That's something you folks were talking about a couple of quarters ago.

Yes that's a good question, Casey. We do see that in our business and we do see a fair amount of activity in that business, both the asset light and purely fabless. I suspect in the fourth quarter we'll see some business with those customers.

Thanks, guys.

We have a follow-up from the line of Matt Petkun with D.A. Davidson and Company.

Hey, John, I was hoping if you could again take a step back and this downturn has done a lot to maybe change that you guys -- how you guys look at your business but when we're looking, and I know that you're addressing this, we look at just CapEx spending for 2010 and our estimates have roughly 50% of the CapEx being spent by five guys roughly. And I know you don't directly correlate to who is adding capacity but I guess I am wondering how you are viewing pricing in your pricing models for both solutions and gain shares in a world where there is fewer guys but each of those guys maybe relies more on you to increase their ultimate opportunity for yield.

Yes that's a very good question. You know, Matt, we've believed for a long time that this was a trend and that was why early on we got a lot of pressure from folks about how gain share wasn't going to be accepted in the marketplace and wafer feeds etcetera were a problem. Let's just charge a fixed price. To us that felt like a recipe for short-term success and long-term failure because in the long-term there isn't a fixed price you can charge for someone that's got 200,000 wafer starts a month of capacity that rightfully you get paid the value on the software and solutions that you deliver to the account.

So the wafer fee is absolutely paramount to the success of a company I think in anywhere in engineering are related to -- software related to the factory. Software in the factory will only be a viable business on a wafer fee model. I've seen nobody out there with a software business in the factories that's not on a wafer fee model that's survived and grown and thrived and so that's very critical and what we've been doing in this downturn is building relationships with the folks we think are going to be surviving.

Some of them end up being in the top five. Some of them for geopolitical reasons are just in countries where you know that country is going to invest in semiconductors and hence that account, though they may not be in the top five today, will be an important account in the future. And so those are the folks that we've really focused on and I think have done a pretty good job of building business and building inroads with and we've been building that on a wafer fee basis by and large because we believe that is critical to the long-term ability of this business to reward its shareholders and its employees and, of course, the customers because I think it's always a lie when folks tell the customers they can deliver on a fixed price and in the end never be able to invest in R&D the way you need to to make these solutions really work.

Okay so if we take what you said there and we extrapolate that to what your results could, and this is not -- let's not pick a year because then you'll think I am talking about guidance but I am not -- do you see your model within the next five years being call it $40 million solutions business but the gain share $40 million run rate let's say that that's your normalized run rate solutions but the gain share doubles from current levels or would solutions business be growing as much as gain share?

We believe the long-term growth will be in gain share or wafer based business. Of course, the solutions revenue we work hard to grow it and we're mindful of where its historical maxes have been and I think you picked a number somewhat related to that but I think yes if you were going to set out a long-term model you need to be one that looks at the gain share revenue as being a more significant portion of our business.

And I think to add to that, John, frankly any other fields that we go into, be it memory or LED or flat panel, there would be also the same business model that we introduce on the logic side of the business where there's a gain share model associated with it.

Yes for sure on the memory side I think this is on what our initial perspective is on the alternative business is alternative energy and others. They may be monetized a little bit differently though.

Okay thanks again, John. Thanks, Keith.

Steve Bowman, Divistar Capital.

Just a point of clarification first, Keith, I think you said that the expense structure should remain relatively level from where it was in the third quarter and I guess I am just kind of confused since you guys did take further restructuring actions in the third quarter.

Yes, Steve, so this is that we have additional costs as potentially as we sign new engagements, as we incurred in the quarter. When we have new deployments we have hardware costs and then we also have increased selling costs associated with that and then also part of the restructuring costs that you see you also have things that are bundled in sometime, one-time costs to unwind business agreements that cut off the flow of any future expenses and whatnot. So, as the Company moves forward, we find new engagements, we will have costs associated with implementing our hardware infrastructure, selling software that will slightly increase our expense base and as you compare it against Q2 and then, as you sell that, reflected in Q3.

Okay got it. And then, John, kind of to move back to the previous caller's question, if I look at what you guys have historically done in the solutions business I guess if I go back a couple of years it looks to me like you guys were sort of $65 million or $70 million in that business. Is that -- it sort of sounds to me like you don't that you guys are going to go back to that level, that future growth is going to come from a slightly different business model than maybe you had in 2007. Is that correct?

You know, Steve, I didn't mean to insinuate that. If you look at the business right and you kind of move out over many years and you grow the business past its previous peaks where do you think that growth is going to come from, I think that growth is going to come from the wafer fees. That doesn't mean that we don't think, as I said in comment, yes I don't -- I do believe you can the fixed fee portion but the fact is we very much work on growing the wafer fees more than we grow the -- we try to grow the fixed fees.

Yes I think just to add to that, as we structure our contracts going forward, one of the things that we've been successful is to extend the life and the period of time in which we get paid for gain share and we are starting to see as people extend the lives of their production out that those volumes only continue to increase and, as a result, our revenue will continue to increase through the life of that particular node or for that particular contract, so this is just more a reflectioning of the gain share model taking hold and then driving to the bottom line for the Company, which is what we intend to do in how we structure our business.

Got it. Well, I certainly would like to see the gain share model take hold since that is obviously such attractive revenue for you guys to have. Just one quick kind of follow on question on the solutions business, what do you guys think the capacity of the solutions business is currently, given the restructuring actions you've taken over the last 12 months? Could you do $15 million a quarter in that business if the business was there?

Yes that's a good question, Steve, so a lot of the restructuring we did was actually not on the service deployment part but really looking at the standalone software business and taking out a lot of cost associated with the delivering on the software business model so we didn't really change intrinsically our cost to -- our capacity to deliver on the solutions side of the business very much. We will, of course, when we sign new engagements ship hardware and do things that do drive up our costs, as Keith alluded to.

And we will, as the business were to grow substantially from this point we would need to add capacity on the service deployment but our service deployment is actually a relatively small portion of this Company. You know, I think that's always been one of the things that folks haven't fully understood about the business. The service deployment is not a lot of folks.

Okay well, I am raising my hand right now since I didn't really understand that so thanks for --

Yes I think we have a fair amount of leverage in that part of the business. You know, I've always -- when we acquired companies we acquired software businesses and you go and look at truly the intrinsic profitability of delivering solutions in that way to these factories and I question how anyone could really make a business at that.

Okay thanks very much, guys, and congratulations on the return to profitability.

Our final question comes from the line of Gus Richard with Piper Jaffray.

Just a little bit of color on the sort of your pipeline of business, can you sort of just aggregate it between design for manufacturability, yield ware, memory versus logic?

Yes so the memory versus logic, it's primarily in the logic market, Gus. The three parts would be the integrated yield ramps and the yield to our FPCs. We have in a number of accounts bundled those as a way of lengthening out the total, increase the total dollar value of the contract so a customer who is coming to the end of 65-nanometer in 2010 we've extended that delivering yield to our FPC and combined that with their 45-nanometer integrated yield ramp, for example, and increased the total dollar value in that account so it's hard for us to separate out now the integrated yield ramp from the yield to our FPC with any of the foundries or the manufacturers. The company that focuses primarily in R&D we can still separate those two things out.

So that is by far the biggest bulk of the business, both in terms of wafer fees and in terms of the design of silicon solutions. There is a growing portion, which is on the DFM piece. Some of that -- a lot of that related to BRIX and some of that related to just modeling and characterization because, as it turns out, the vehicles and systems we have for character for bringing up a process node are very appropriate for being able to figure out the parameters the designers need to design to and that's a growing but still very under 20% part of the business I would say.

And then can you just talk about how many logic customers you have at 32-, 28- at this point?

You know, we've taped out vehicles for four.

Okay and sort of how are those engagements going at this point? How in terms of time line and sort of yield ramps?

Yes it's like when you -- the ordinality of the energy got small and we speak about their -- about timing. Unfortunately it gets to be -- we get to be nervous about the accounts. I mean, I think by and large folks' projections are for 32- to see the day of light as you get through 2010 and into 2011. I think that's what folks are marching towards. It is, as you can imagine, a very challenging node with a lot of choices to be made still and if you go back and look at material transitions they tend to be very good for our business so it's one where we expect to see an awful lot of activity prospectively.

You know, nodes that we start later than people say and they finish longer, they take longer to die than people say so anyone assuming on any given node that that volumes are going to be later than people say and it's going to be around longer than people say, you've always made a safe bet. I'd take that bet any day of the week. Even if it wasn't as difficult a node as 32- and 32- is going to be a very hard node, no two ways about it.

Okay I think that's it for me. Thanks so much.

At this time there are no more questions. Ladies and gentlemen, this concludes the program. Thank you.