Quicklogic Corp (QUIK) 2008 Q4 法說會逐字稿

Good day everyone and welcome to the QuickLogic Corporation fourth quarter 2008 earnings conference call. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Tom Hart, Chairman, President and CEO for QuickLogic. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us today for the QuickLogic fourth quarter and fiscal year 2008 earnings conference call. Joining me today is our CFO Ralph Marimon. Ralph will take you through our fourth quarter and fiscal year [2000] financial results and then I'll share my perspective on our business. Finally Ralph will detail our guidance for the first quarter of 2009. I'll wrap up and then we'll take questions. Ralph?

Thank you, Tom. Before we get started, I'd like to read a short Safe Harbor statement. During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties including but not limited to stated expectations related to revenue growth from our new products, statements pertaining to our design activity and our ability to convert new design opportunities into customer activity. Market acceptance of our customer products, our expected results, and our financial expectations for revenue, gross margin, operating expenses, profitability and cash.

QuickLogic's future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our annual report on Form 10K, quarterly reports on Form 10Q and prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements.

For your information this conference call is open to all and is being webcast live. It can be accessed from the investor relations area of the QuickLogic website located at www.quicklogic.com.

In spite of the challenging macroeconomic environment we're operating in today, we are encouraged with the progress we made during Q4. New product increased 7% sequentially which this is line with the guidance we provided in October, and as Tom will cover during his part of the presentation we have seen material improvements in both the quality and quantity of the opportunities we are pursuing.

For the fourth quarter of 2008 total revenue was $5.9 million which was just below our guidance. Our new product revenue totaled $1.5 million versus our guidance of $1.4 million to $1.8 million. This represents 26% of our total revenue. Our non-GAAP gross profit margin for Q4 was 52% which is slightly below the low end of our guidance. This was driven by a shift in product mix which carry a lower gross margin than our legacy product and to additional manufacturing costs including slightly higher inventory reserve charges. Non-GAAP operating expenses for Q4 totaled $4.2 million as compared to our guidance of $4.5 million to $4.9 million.

R&D expenses totaled $1.32 million while SG&A came in at $2.84 million. R&D expenses were below guidance as a portion of the forecasted increase in third-party chip design costs has now moved into the first quarter of 2009.

Other income was a net expense of $117,000 and was higher than our guidance of $60,000 due to lower yields on our invested funds and unfavorable foreign exchange losses. During the quarter, we recorded a tax benefit of $30,000 due to a refundable R&D tax credit in the US.

Our non-GAAP net loss was $1.2 million or $0.04 per share compared with a net loss of $196,000 or $0.01 per share in the third quarter of 2008. This increased loss was driven by lower revenue, a lower gross profit margin and higher operating costs.

We had excellent working capital management in the fourth quarter. Our ending cash position of $19.4 million reflects a sequential increase of $543,000 from the third quarter. Improved AR collections, lower inventory levels and better performance in other working capital accounts contributed to the increase in cash.

Our GAAP results for Q4 included a write-down of our investment in Tower Semiconductor. At the end of our fiscal fourth quarter Tower was trading at $0.13 per share and our carrying costs was $0.86 per share. In accordance with our accounting policy we took an impairment charge of $981,000 to reflect the market price of the Tower holdings at the end of the fourth quarter.

In addition to the Tower write-down, our GAAP results primarily include stock-based compensation charges of $370,000 and additional restructuring charges of $50,000. Our fourth quarter GAAP net loss was $2.6 million or $0.09 per share. Please see today's press release for a detailed reconciliation of our GAAP to non-GAAP results.

Now let's turn to our results for the full year of 2008. Total revenue for the year was $32 million, which was a decrease of 7% from 2007. This decline reflects our anticipated decrease in legacy product revenue, partially offset by an increase in new product revenue. New product revenue increased 28% to $8.1 million from $6.3 million in 2007 and was driven by increased shipments for CSSPs based on our PolarPro and ArcticLink solution platforms.

Non-GAAP gross margin increased 54% in 2008 versus 45% in 2007. The increase in gross margin is due to cost reductions on new and legacy products as well as improved inventory management. Operating expenses declined 20% to $20.1 million from $25.2 million due to the strategic realignment that we implemented during the second quarter of 2008. The non-GAAP net loss for the year was $3 million versus $9.3 million in 2007. This decrease was primarily due to the improved gross margin and lower operating expenses.

On a GAAP basis the loss for the year was $9.4 million versus a loss of $11.1 million in 2007. As I mentioned earlier, the lower net loss is due to the higher gross margin and lower operating expenses. As with the quarterly results, please see today's press release for a detailed reconciliation of our GAAP to non-GAAP results.

Cash management was excellent during 2008 as our cash balance declined by only $1.5 million during the year to $19.4 million. Cash from operations increased by $1.1 million during the year and was offset by a paydown of approximately $2 million in outstanding bank debt plus $530,000 in capital expenditures. I'll rejoin you in a few minutes to discuss our guidance for Q1, but first Tom will update you on the status of our strategic efforts.

Thank you, Ralph. Well, in spite of what's been one of the sharpest declines in demand in the history of the semiconductor industry, I'm pleased to share with you the QuickLogic has made material, strategic and tactical progress since our last earnings call.

As Ralph mentioned new product revenue was up 7% sequentially in Q4 and for the full year of 28% over 2007. Even more impressive is the fact that full year revenue for our newest CSSP platforms; namely ArcticLink and PolarPro, more than doubled in 2008.

The implication here is that the lessons we learned from our earliest CSSP platforms and applied to these newer platforms have been well received by our targeted customers. Among the major benefits customers can derive from embracing our CCSP strategy are higher design flexibility, shorter time to market, lower fixed designs costs. New features can be added without requiring major design changes enabling longer product life cycles. While these benefit are always important, their importance increases during economic down cycles.

This is particularly true in our targeted application sectors for SmartPhones, portable media players, personal navigation devices, broadband data cards and the emerging market for mobile internet devices. Don't get me wrong. I'm not suggesting the economic slowdown is good news for QuickLogic.

The rate at which our customers are releasing new designs, end of product has slowed, and become even more unpredictable than usual. And that complicates our forecasting and slows our growth. However, with these challenges there are opportunities and I believe we're leveraging them to the fullest.

During our last earnings call I gave you a high level overview of our sales funnel. Let's take a closer look now so that you can begin to get a better feel for where we believe our business is going to be coming from and let there be no doubt we do believe the business is coming.

In order to track our selling activity, we've developed a web 2.0 application using a highly customized version of salesforce.com as the platform. Using this platform, we track what we call SSOs, single sales objectives. Each SSO is a specific opportunity that has been tightly qualified to meet the detailed criteria of our sales process.

In addition to giving us a realtime method to track our opportunities through the design process, the collaborative nature of its architecture improves the efficiencies of our efforts and helps us allocate resources to those opportunities where we have the best chance of generating revenue.

The following is a brief status of the SSOs in our sales funnel as of the close of Q4, 2008. The number of SSOs and their potential revenue has more than doubled over the past year. 81% of our SSOs are in our targeted SmartPhone portable media player, personal navigation device, broadband data card and mobile internet device applications. Together these SSOs represent 82% of total SSO potential revenue.

On a geographic basis 52% of our SSOs are in Asia-Pacific region, 20% are in Europe, 15% in the US and 13% are in Japan. We also categorize our SSOs by customer tier ranking. 27% of our SSOs are with tier one accounts, 35% with tier two and 37% are with tier three and other accounts. On our revenue potential basis, however, tier one represents 44% and tier two 32%.

Now in addition to active SSOs, we also track lost SSOs. Through this effort we improve our batting average and we learn more about which design opportunities are most likely to be winners. As you might expect during economic down cycles, the number one reason for an opportunity loss is that a customer cancels a project.

As a matter of fact, from a potential revenue point of view, in the last six months customer canceled projects were responsible for 51% of our lost SSOs. Architectural changes were responsible for 33%, while price accounted for only 13% of lost SSOs. 49% of total SSOs involve our visual enhancement engine. We call it VEE technology. Since VEE was only introduced 10 months ago, I believe this statistic speaks volumes as to the desirability and potential of VEE.

VEE is a radically new approach that can optimize the performance of virtually any kind of display. While our focus for VEE today are on the ultra high volume applications that are currently dominated by LCD technology, we've also discussed VEE with OLED [Mems], [Pico] projectors and even e-paper display manufacturers. The story short here is that VEE can improve the power consumption and performance of virtually any type of display technology.

Now in a typical SmartPhone LCD application, VEE radically improves the viewing experience in all ambient light conditions. Most dramatically in direct sunlight, where most content isn't viewable. VEE produces a superior image quality with up to 85% less backlight power because backlight power is one of the three largest power drains for a SmartPhone and wireless service providers want to sell video-oriented services that require continuous backlighting.

The interest level in VEE is significant. I'm pleased to report that several handset manufacturers have initiated design efforts. As video becomes more ubiquitous on hand-held devices such as SmartPhones and [MIDs], so will VEE.

During Q4 we introduced a new proven system block which facilitates a connection of our VEE powered chip directly to Qualcomm mobile processors with an EVI2 display interface. This proven system block was developed in conjunction with SmartPhone customers that have active designs underway today.

Since introducing VEE, we've received an amazing amount of press coverage. In total, we briefed 88 editors who have written 398 articles so far about VEE. Following our press release about the new EVI2 interface, finance (inaudible) from Germany wrote, "Unlike typical global enhancement algorithms such as gamma correction, VEE is context sensitive and adapts on a pixel by pixel basis. The technology also adapts to the effects of ambient lighting on display viewability giving developers an alternative to simply boosting backlight intensity for levels for bright daylight viewing; a common use case in the handset industry. The result is a savings in power with a corresponding extension of battery life." I couldn't have said it any better myself.

A relatively new category of hand-held battery powered products that I referred to earlier the mobile Internet device, or MID as Intel calls it, typically has a four to six inch LCD display. Smaller than a notebook, but larger than a SmartPhone making it ideal for portable video viewing. Larger displays mean larger LED backlights, hence more power required. This makes the power saving benefits of VEE even more valuable for MIDs.

At CES 2009 in Las Vegas last month, it was a veritable hotbed for MID and netbook introductions. With SmartPhones in hand that have been modified to include VEE technology, the QuickLogic team met with a number of tier one and tier two vendors serving VEEs and other target markets that have committed to evaluate VEE for their next generation platforms. The short story is, VEE is you have to see it to believe it.

Now we took several steps during 2008 to lower our costs and broaden the market appeal for our CCSP platforms. Including the development of wafer level chip scale packaging, known as WLCSP. This has lowered our manufacturing costs and enabled us to provide our customers with much smaller packaging for our solutions.

Along with wafer level CSP we began to program the programmable fabric in our solution platforms at the wafer level. This process reduces programming time by an order of magnitude and notably reduces the time and cost of both wafer probe and final test. The most obvious benefits here are lowered costs and faster through-put in both programming and test.

However, for many of our customers there's a more subtle benefit that is even more important. Since we fully program our chips in-house we can also fully test them to our customers' specifications. This reduces customer test time and allows our customers to use our CSSPs as though they were fixed function ASSPs.

To further our VEE and CCSP marketing efforts we will have a booth at Mobile World Congress in Barcelona February 16th through the 19th. As was the case in CES in Las Vegas, we will be demonstrating VEE on reference platforms using an HTC SmartPhone and a Hewlett-Packard PDA that incorporate an embedded VEE CSSP. These demos look great and were a hit in Las Vegas.

If you're planning to attend Mobile World Congress, which is the largest show of the year for mobile operators and handset manufacturers, please stop by and see the VEE demo for yourself. For as we all know, seeing is believing.

While VEE is very exciting and for good reason has gotten QuickLogic a lot of attention, let's not forget that 51% of our design activity is aimed at connectivity solutions where our CSSP enhances the capability of a mobile processor. In other words, CSSPs benefit not only our targeted end customers, they also benefit process manufacturers, which includes some very large semiconductor companies like Qualcomm, [Marvel] and many others.

We have focused on semiconductor companies that are marketing applications and baseband processors used in our target applications. Our activity with partners continues to be very robust.

Now on March 30th, we'll be presenting at the Global Press Summit in San Francisco, where we will announce to a gathering of over 50 members of the domestic and international press our next generation solution platforms with availability beginning this year.

Now our marketing folks will shoot me if I spill the beans on our big announcement now, but you can bet VEE will be front and center where as you know, video is not only the growth engine driving the internet, it has also led handset manufacturers to focus much more intensely on improving viewing experience and reducing backlight power consumption. Ralph, back to you.

Thanks, Tom. About the only things that are clear today are that visibility is limited and customer forecasts particularly for new product introductions are unpredictable. This adds uncertainty to our forecasting ability. Given this uncertainty we have taken a conservative position with regard to our first quarter revenue and are forecasting a 15% sequential decline from the fourth quarter to $5 million plus or minus 10%. We expect this decline to occur in both new product and legacy product revenue, but the mix is still too uncertain to forecast in detail.

On a non-GAAP basis, we expect gross profit margin to be approximately 56% plus or minus 3%. The actual gross profit margin will be very dependent on the mix of product shipped. Operating expenses will be essentially flat with the fourth quarter or about $4.2 million plus or minus $300,000. We are anticipating the same or slightly higher expense related to our third-party chip design activity.

Our net interest income and expense will be a charge up to $100,000 during Q1 and any tax provision will be negligible. Our stock-based compensation in Q1 will be approximately $400,000. We expect to use approximately $2 million in cash during the quarter primarily due to the lower revenue level and the expected loss.

As we've mentioned in this and previous calls, we believe that our operational realignment which we undertook in the second quarter has positioned QuickLogic to weather this downturn. And that our opportunity-rich funnel positions us for solid growth as new designs move into production. As we move forward, we are fully committed to continuing our focus on new product revenue opportunities, continued execution of our platform roadmap, cost control and asset management. Now I'd like to turn the call back to Tom for his closing comments.

So while revenue visibility is pretty murky right now, we are confident we're on the right track. We believe we have the right vision for QuickLogic with our pioneering, customer specific standard products; CSSPs.

We believe we have developed the right strategies to realize our vision. We believe we have the right plans in place and underway to implement those strategies. Especially as they relate to our focusing on customers that build significant volume of products where CSSPs can add meaningful value to their products. And finally, we have the resources and the right team in place to execute those plans.

During this last year, we've implemented extraordinary changes here at QuickLogic as we progressed from being a small supplier to being an early stage CSSP solutions provider. Owing to the dedication and persistence of the QuickLogic team, we've become a stronger company, a company whose innovation and entrepreneurial spirit leads it to pioneer a semiconductor approach to mass customization of prosumer products unlike any other.

As I've said before, today we're a start-up company that has the benefit of a 21-year foundation with an extraordinary collection of talented and dedicated team members. My heartfelt thanks to all of you, team members, customers, partners and stockholders, who continue to believe in us. Your continued confidence is appreciated and not misplaced. We are worthy, you'll see. Our first quarter 2009 earnings conference call is scheduled for April 28th, 2009, at 2:30 PM pacific daylight time. Okay, now let's open up the call for questions, Kevin, please.

(Operator Instructions) And we'll go first to Edwin Mok with Needham & Company.

Hey. Thanks for taking my questions. So first question is regarding the reported results. So it looks like end of life product gone up a little bit and eventually jumped sequentially. Can I ask is that just a one time event and do you expect to see much end of life product revenue in the coming quarter?

Well, as we've said in the past we expect end of life to have an end of life. And people keep buying the stuff and as long as we still got the inventory, we'll keep shipping it to them.

So it's not something that's forecastable at this point because it's not knowable. When you tell a guy you're done building stuff and then he keeps ordering from you, pretty difficult to forecast that. So we view it as a bluebird.

I see, great. Maybe I'll say it a different way. How much inventory do you have on hand on end of life? Or have you written down those inventories already or --

It's substantially written down already.

Okay, great. That's all I need. In terms of guidance, margins -- actually on your guidance your margins improved sequentially from the fourth quarter. I know that like you said product mix is not clear right now. But baked in your guidance. Are you assuming that product mix will shift back to a high end mix on new product?

No. We haven't made that forecast yet. What we're assuming is we're going to be a little bit more efficient on the gross margin line and the direct margin will be very dependent on what we ship. So we made some assumptions in there as far as product mix, but we're also assuming we'll be a little bit more efficient especially on the inventory side.

Great. Okay. That's good improvement on that and then on cash you use $2 million for your guidance. Do you expect to use some cash on inventory or on your receivable side?

Yes. We're being conservative on that. But we would expect, again it depends on the timing of the quarter and it depends on the timing of the mix. So it's possible, we buy inventory in advance simply because we're not sure of the mix. And also if we end up shipping towards the latter part of the quarter, we won't have time to collect the receivable. So we're being a little bit conservative on the cash, but just trying to hedge our bet a little bit.

Okay, great. Now moving on to the product side. Tom, thanks for providing such a detail there on SSO. I'm just curious actually. In terms of SSO, last quarter you guys said that you had around [40%] SSO under the technology. I was wondering what was the number this quarter and did they grow in the fourth quarter?

I didn't look at it -- I looked at it on a percentage of the total. I didn't look at it on a -- see if we can pull it up. [43] this time.

I see. Okay, great and then also with SSO I thought you gave some information regarding loss and what customer activity has impacted your loss of SSO. Just curious, how many of your SSO in the last year if you can quantify it or in percentage were in terms of number that you have lost, and just trying to figure out the losing rate in those SSOs that you have on your pipeline.

I haven't looked at it on a whole year. What I can tell you, Edwin, is that the rate of loss per each quarter has gone down. So we're targeting better opportunities to start with and when we start them through the pipeline, we're keeping them longer in the pipeline. We're advancing them better each quarter through the last year and we're losing fewer of them.

I see. And can you give maybe a range? Are we talking about like 20%?

No, I can't because I don't want to do it off the top of my head and I didn't calculate it that way, but I'll tell you what -- I will for our next call.

Okay. That's great. Looking forward for the information and then you mentioned the tier one customer accounting report make up part of your revenue potential versus the number of customer which makes sense. Obviously they have a high volume rate. Can you maybe give us some color in terms of average revenue? Even if you can't give a hard number maybe just a range. Are we talking about in the millions, in the hundred thousands, in the tens of millions?

Well, first of all, by definition tier two -- sorry, tier three is $.5 million potential per year or above. So nothing's below that. And for tier one I think we're typically talking about something that's over $2.5 million.

Great. That's exactly the color I was looking for, just the size of the opportunity. And then let me see, one last thing. You mentioned that the CSSP platform revenue has doubled in the past year, right? Probably driven by PolarPro as well as some of the ArcticLink stuff. I'm just curious, did you actually have any revenue in this in 2008? And I guess a follow-up to that is if you remove the rest of your newer product, are they more -- did they grow in 2008 for your other new products?

We had no significant VEE revenue in 2008. We had earlier in the year we had projected that we were going to have some, but we had zero. I think we had samples quantities for customers, but no significant revenue. So that's yet to come for us. We are forecasting significant VEE revenue in 2009.

Great. So it sounds like you still expect that to grow quite substantially in the coming year, then.

Yes, we do.

Okay. I think that's all we have right now. I'll jump back off the queue and circle back if I have some follow-up. Thanks.

Okay. Thanks, Edwin.

And we'll go next to [Brian Coleman] with Hawk Hill Asset Management.

All right. Thanks. I wanted to first clarify the current number of SSOs is [43]?

No. [43] involved VEE.

[43] involved the VEE. Okay, good. And then that's 49%. So I can back into your total number, then.

Yes. It's 88. I'll do the math for you.

I appreciate that, 88. Yes, okay. I was a little startled. I was looking at 56 at the end of the second quarter. We're now at 88. So that's good progress. Can you give us at the end of the second quarter when you were first providing some of these SSO metrics, you had said that 1/4 of your SSOs were in the design win and production win stage of the pipeline. Can you give us an update on that figure?

So we said that 25% of our total SSOs were in design and production win? I don't --

Yes. Were in the later two stages.

I think if you include verification perhaps, but not in just design and production win. I'd have to go back and look at that. If you include verification, which is the third stage back --

Okay.

-- it is 25%. And that's what I thought I said.

Okay. Where would that updated figure be now?

It's 30% today.

Okay, 30%. And if I can, I know you may not have all these numbers right at your fingertips, but if I was to look at the 56 engagements you had at the end of the second quarter, and if I would just kind of look at a same store sales basis on those 56. Would you be able to give me some kind of sense on how they progressed through the pipeline and which one of those -- what percent may have been canceled? And just to get a flavor for how the pipeline looks and if we were to take a sample set of it over the last six months?

Actually, we haven't shared that level of detail publicly and probably to be honest with you don't plan to. As you are probably well aware, I've talked about this before. The legal counsel advises us that if you -- the more numbers you give people, the further you dig yourself into a hole. And, of course, these are not subject to any of the kind of rigor that you get out of financial accounting. So there's only downside for us here rather than any upside.

Well, maybe I'll catch up with you offline. I just want to get a qualitative sense of really just for my own understanding, not trying to hold you to any kind of specific numbers or grill you on it every quarter or anything. I'm just really trying to understand what to expect really in terms of how SSOs progress in the funnel. And what you would come to expect as a normal rate of attrition and ones that get canceled. But maybe we'll just catch up on that offline at some point.

Okay. Maybe the thing to do is for you to come down here since you're close and meet with our VP of Sales and let him lead you through the whole process.

Yes. That's a good idea and I'm going to do that in the next couple weeks, I think. Another question for you on the PSB that you announced that works with the Qualcomm EVI2 display interface. I think you indicated that you worked with a SmartPhone customer on developing that. And I'm curious as to whether you had it work as well with Qualcomm and maybe you could just give some kind of qualitative discussion about what your relationship with Qualcomm is.

Well, the challenge here is, is that all of these big guys put you under NDA and don't want to be talked about relative to any kind of activity that you're -- unless you're a customer of theirs. And even then they put a batch of restrictions on you as a customer. So let me just tell you that you couldn't do it without their help.

Okay.

And I have to let it go at that.

Okay. And then one, if I was a SmartPhone customer out in the market looking for a VEE enabled handset, when would I be able to find one in the market do you think, best guess in 2009? Which quarter would I be looking -- would I be able to go out and go to a store and actually buy a VEE enabled handset?

Boy, I can't -- from an engineering perspective you could get one much sooner than that. I have no idea when the handset guys -- that's part of the problem with visibility. We have no idea when they're going to introduce.

I can tell you it's in their best interest -- video is becoming more important. And as you look at TV as an example now, I'm sure you've read about Qualcomm chomping at the bit to do media flow. And we're fighting like mad to make sure that the digital TV didn't get pushed out to June.

So it's in everybody's best interest to do this sooner rather than later. But boy, I can't predict when they're going to do it.

And is the macroenvironment then a -- is it impacting their decision to launch products. And so is it a marketing -- kind of a marketing consideration? Or is it a -- I mean, it sounds like the SSO funnel is growing nicely and you're making nice progress. So it doesn't sound like an engineering issue necessarily. But where do you see the macroenvironment impacting the customers?

Well, I mean, Brian, the deal here is that if you look at customers who build things; nobody comes out of these downturns with old product, okay? So they don't stop designing things. What they do is they typically reduce the number of projects that they're working on, or they take those projects and don't put them into production. So we're not seeing a significant reduction in design activity.

What we see is at least in the handset -- well, each of those segments is different. Let me back up a minute. If you've been reading at all about broadband data cards. You know that they're projected to grow like a house afire. They're targeting I think something like 40 million of these [dongles] in 2010, I believe; 2009, yes. So I mean that's growing very significantly. And if you look at all of the operators, they're pushing data out like mad.

So I think the downturn is not going to dramatically reduce what's going on in data cards. We're very well positioned in data cards. We haven't talked a lot about it in any detail because again we're under NDAs, but as soon as these products start coming to market, then people tear them apart and look at them and see that our parts are in there and then we can talk about them.

But as for SmartPhones, I can tell you that people are very concerned about video quality and VEE does a hell of a job for it, and we believe there's going to be some significant revenue for us on a forward going basis. The problem is I don't know when.

Okay, all right. That sounds good, and we'll catch up offline and make some -- make a plan to stop in and visit. Thanks.

Okay. One other thing by the way, before I go, before you go.

Yes.

If you use any of these SmartPhones, the only real knock on most of them is battery life. And VEE makes an unbelievable difference in battery life. So it's in the handset manufacturer's best interest to have devices that last longer and so we're not bucking the tide anywhere here. Actually things are going in our favor. What's unclear is what's happened in the global consumer marketplace and on a macro level it doesn't look good. There's pockets that are growing very rapidly and we believe we're well positioned in some of those pockets.

Okay. Thanks.

Okay. Thank you.

(Operator Instructions) And we'll pause just for a moment. And it appears we have no further questions. I'd like to turn the call back over to management for any additional or closing remarks.

Okay. Well, thank you for your interest in QuickLogic and we look forward to chatting with you in April at our next earnings call. Thank you and take care.

And that does conclude today's call. We do appreciate everyone's participation. You may disconnect at this time.