Radware Ltd (RDWR) 2008 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the fourth-quarter (sic) results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, today's call is being recorded.

I would now like to turn the call over to President and Chief Executive Officer, Roy Zisapel. Please go ahead, sir.

Good morning, everyone, and welcome to Radware first-quarter 2008 earnings conference call. Joining me today is Meir Moshe, our Chief Financial Officer and Chris McCleary, our Executive Chairman.

Meir will start the call by reviewing the financial results and afterwards I will discuss the business highlights of the first quarter. After my comments, we will open the discussion for Q&A. Meir?

Thank you, Roy, and welcome, everyone, for our first-quarter conference call. First, I would like to read you the Safe Harbor language.

During the course of this conference call, we make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that such statements are just projections and that actual events or results may differ materially, including, but are not limited to, general business conditions and our ability to address changes in our industry, changes in demand of the stock fallbacks, the timing and demand of orders, and other risks detailed from time to time in Radware's filings. We refer you to documents the Company files from time to time with the Securities and Exchange Commission, specifically the Company's last filed Form 20-F filed in June 2007.

And now, ladies and gentlemen, for the financials. Revenues for the first quarter were $22.2 million, an increase of 20% compared to revenues of $19.7 million in the first quarter of 2007. Revenues of $22.2 million were just below the Company's guidance for the quarter, which ranged between 23 and $24.5 million. While the shipments for the quarter were within the Company's expectations, certain decisions made by the Company with respect to revenue recognition after the end of the quarter caused our record revenues to fall slightly below expectations.

The non-GAAP net loss this quarter was $6.3 million, or diluted loss per share of $0.32. Our gross margin remained at the 80% range.

The non-GAAP operating expenses totaled to $25.2 million.

During the first quarter, the devaluation of the U.S. dollars against the Israeli shekel, the euro, the Australian dollar, and Asian currencies result in an increase of our operating expenses of $1 million. In addition, certain onetime expenses were realized in the first quarter.

The DSOs for the quarter decreased from 65 days last quarter to 49 days this quarter. In the first quarter, the Company generated cash in amount of $800,000. By that, increasing our cash positions, including long-term deposits and marketable securities, to $156 million, and we have no debt.

The headcount for this quarter was 584 employees. Shareholders' equities about $171 million.

Guidance, we expect to reach an annual growth rate in the mid to high teens and return to profitability by the fourth quarter of 2008.

And now, I would like to turn the call over to Roy.

Thank you, Meir.

Let me start with saying that we are overall disappointed with our Q1 results, especially on the profitability and the expense level. While our business continued to grow in mid teens, the combination of plant operation expenses' rise, large currency devaluation, several onetime expenses brought us to a large operating loss.

On the revenue side, as Meir mentioned, putting aside recognition of several large orders that were delayed to Q2, we continue to grow our business in double-digit percentages. Taking these orders into accounts in Q1 would have resulted in high teens growth year-over-year for our business; that's the fastest growth we experienced in several years.

Our international business executed very well and continued to grow in a very healthy way, while we experienced a weak Americas performance.

Going forward, we implemented several operational steps to guarantee our expenses are reduced. Starting Q2 and coupled with the continued growth of our business, we will deliver operational profitability in Q4.

We continue to see strong customer activity and are very encouraged with the customer and channel feedback on our newly introduced OnDemand Switches. Coupled with the new product introductions we made in the last several months, including the [Arcti Zemem], the SIP Director and APM, we believe we are very well positioned in the market.

During the quarter, we won significant sales in both carriers and enterprise accounts. We've added over 150 new customers. As discussed on previous calls, we're doing very well in the high end of the market. I want to share with you [aside] a couple of customers' examples.

The first one is Pantech. Pantech is a leading Korean mobile handset manufacturer, and they have tested our high-end application and delivery solution together with solutions with, from F5 and Nortel. Pantech standardized the Radware ADC solutions for creation of the Next Generation IT infrastructure for their new R&D SIP center.

Pantech selected the AppDirector 6000 and AppXcel 16000 models to create a resilient Next Generation IT infrastructure that can optimally support business critical applications, essential to providing them with a competitive advantage.

Another example comes from the carrier side, where we announced that China Mobile has purchased over 40 AppDirectors to provide accelerated performance, high availability and expanded security to their Unified Application Platform. This platform is the unified value-added services platforms that all mobile subscribers are approaching when using any mobile service such as mobile business assistant, voicemail alerts, call meetings and so on.

This is a very strategic win for us as it positions Radware application switches in front of the world's largest mobile operator in terms of subscribers, clearly speaking to the scalability, performance and stability of our product.

In Q1, we continue to win awards for our products. Our DefensePro product won the best application product security solution in the Info Security Product Guide for 2008. This award joins a long list of awards we recently received, including the Product of the Year for the AppDirector from INTERNET TELEPHONY magazine; Test Load Balancer Award from IDG TechWorld magazine for our AppDirector application switch, where we won a head-to-head test with F5, BIG-IP and Coyote Point equalizers.

In addition, in the past quarter, we have made several significant advancements in our solution and product strategy. The first one I would like to discuss is the introduction of our new SIP Director.

We see customers both in the carrier and the enterprise segments deploy Next Generation applications around video streaming, videoconferencing, messaging, presence, instant messaging and collaboration. These applications are all based on the SIP protocol and create new challenges for application delivery. Our SIP Director is the first solution in the market for application delivery for SIP environments. Based on this unique solution, we announced a global partnership with BEA.

As part of the partnership, Radware AppDirector and SIP Director have been certified with BEA WebLogic Server and across the latest versions of BEA WebLogic Communications Platforms. These include BEA WebLogic SIP Server and BEA WebLogic Network Gatekeeper.

The newly integrated and certified service provider solutions provided by Radware and BEA offer a secured, scalable, and highly available platform. It is designed to allow an unparalleled SIP call capacity and performance of BEA WebLogic using the Radware SIP Director. In Q1, we continue to release first to market capabilities. We're the first vendor to deliver -- to provide application delivery for IMF's infrastructure.

IP Multimedia Subsystem or IMS provides carriers with a unified service infrastructure to support Next Generation carrier transformation, fixed mobile convergence and an accelerated time-to-market for new value-added services. Radware is, again, the first vendor to offer service providers the ability to scale IMS applications for millions of users, while at the same time, ensuring the applications and services are always available and secure. We have deployed the IMS solution at leading Tier 1 carriers in North America and internationally together with some of our OEM partners.

Central to our product strategy is the Q1 launch of our Next Generation application delivery platform, the OnDemand Switch. We believe this product is setting a new bar for application delivery products for the enterprise market in terms of performance, scalability and operational simplicity.

Key benefits of our new platform is breakthrough performance. OnDemand Switch is a purpose-built hardware and provides between 2.5 to 10 times better performance of competitive offerings. OnDemand Switch provides the best transaction response time in the industry, providing our customers with the best accelerated mission-critical applications.

On top of that, we offer our customers on-demand throughput and service scalability. Whenever they want, when they want with a simple license upgrade, they can grow the throughput of the platform from 200 MB all the way to 4 GB.

It's clear that these advantages -- breakthrough performance, scalability, on-demand, full investment protection and operational simplicity are key to running the successful application delivery, and we are very excited from the launch of this platform.

Recently, Tolly Group, a well-known independent testing lab, tested and compared the Radware OnDemand Switches and F5 BIG-IP platforms, the 1500, 6400 and 6800. The report is available on our website but the key points are the following.

The Tolly lab, on a test that was based on F5 performance methodology, meaning we followed the recommended performance testing scenarios that F5 recommends to their customers, Tolly found the following -- OnDemand Switch delivers 5 times more transactions than BIG-IP 6800 and 32 times more than BIG-IP 1500. OnDemand Switch delivers six times faster response time than BIG-IP 6800 and on small transactions, 120 times faster response time. Versus BIG-IP 1500, the parameters are even higher, 200 times faster response time.

OnDemand Switch is much more resilient to attacks within F5 BIG-IP platforms. For example, it can sustain an attack 12 times bigger than the F5 platform without losing a single transaction. Bottom line, we have clearly a superior product in the market across all metrics of performance, response time, scalability and security. For the same price, customers are getting 6 to 200 times faster and stronger product. Add to that the business benefits we bring with OnDemand Switch of investment protection, on-demand upgradability and CapEx and OpEx savings, and we are strongly positioned for market share growth in the industry.

To summarize, we today have a leadership position in the market as it relates to our product offering. Our revenues are now growing in the mid teens, and we believe we will be able to sustain an accelerated growth. We continue to progress with our strategic relationships with leading vendors in the market and to continue to grow our customer base.

Coupled with better management of our operational expenses and focusing on our business leverage, we believe we are going to reach operational profitability in Q4. With that, I would like to open the discussion for Q&A.

(OPERATOR INSTRUCTIONS). Stanley Kovler, Merrill Lynch.

Thanks for taking the question. I have just two clarifications and then a more detailed question.

First, I wanted to better understand if the revenues grow in the high teens, back of the envelope, I'm getting EPS and sort of a loss in the mid-20s, if that's the way that you see it as well? And I was also wondering if you can provide the geographic breakdown.

On the geographic breakdown, the U.S. contributes 24% of the revenues this quarter while the international was 76%, [divided] between EMEA, 36% and Asia Pac, 40%.

Can you repeat the first question again?

Sure. I just wanted to understand if I added a certain amount of revenue to your top line to get you to sort of a high teens growth rate, that the EPS that I'm getting when I adjust the revenue to what it could have been, without the revenue recognition issue, that it would have been a loss in the mid-20s for EPS. About $0.25, $0.26.

So you mean on our projections for Q4? We're basically targeting continued growth in the mid teens while we are going to focus on reduced expenses, already starting in Q2, as I mentioned in my remarks. Those two factors together are bringing us to operational profitability in Q4.

Okay. But you're not providing a detailed outlook for the June quarter? Nothing specific that we should be looking for or that you are targeting?

No, we don't.

Okay. The main question I have is really about the environment in general and especially in North America. And I was wondering if you can also provide perspective of how the environment is different from the U.S. internationally, if you are seeing any impact.

Various companies in the space have already reported results and they were sort of mixed, where some companies had extremely great results and even within the U.S. and others, you had very challenging quarters. So I was wondering if you could provide a perspective of maybe first of all, a seasonality of the quarter, how things tracked. Obviously, DSO was very low, so curious about that. And just sort of gauge where we are going in terms of the spending; how the spending environment is doing this quarter and next quarter.

We have seen a challenging market for us in the Americas and a very strong demand internationally. From a seasonality point of view, As Meir mentioned, we didn't recognize some of the shipments we've done in the quarter. And as a result of that, our seasonality was better than usual. Altogether, it was normal, if you take all the shipments that we have done.

So overall, we have seen a very strong environment internationally, a challenging market in the Americas that we think some of it was an immediate reaction on the financial side to some of the events there, that we believe some of it, at least, is clearing and started to clear towards the end of March, but it was too late for the quarter. And some of it probably will stay for us for some time.

So as a result of that, we are focused on very tight operational management of the U.S. operations to see that we are back to our normal revenue levels there, while continued to invest internationally to finance the growth and the demand we're seeing there.

Right. So did you believe that the revenues in the U.S. have bottomed? Should we expect some sequential improvement into June as well as internationally?

Yes, we do.

Great. Thanks. That's all for me.

[Eran] Jacoby.

With regard to your annual outlook, you are looking for growth in the mid to high teens. Is that the overall growth that you expect in the Layer 4-7 market? Or do you predicate this growth on more new products coming in or more telco initiative towards the second half of the year? Where do you see this growth coming from?

Okay. So first of all, we think, as I've mentioned, based on our product and solution strategy, that we can definitely take market share in the application delivery. If you look on Q4 results, we already started to do so, and we had the highest growth rates. We believe that we have now the OnDemand Switch, and that was before the OnDemand Switch introduction. We believe that now, with the OnDemand Switch introduction, with the third-party validation of our leadership, with an open invitation for any customer and channel, to test us versus any other application delivery controller in the market, we can definitely enjoy the internal growth of the market as well as a lot of the customer replacements -- upgrades projects that are taking place.

In addition to that, and we've discussed it in this call briefly and in previous calls, we are seeing a lot of demands from the next generation applications -- so SIP for collaboration, for messaging, for voice over IP on one end; and service-oriented architecture for back-end integration of applications. Those two trends are rising in the enterprise and in the carrier space. We are, today, have a first-to-market advantage in both of these markets, and believe me, we'll be able to capitalize on that. So, to gain a lion's share of these investments.

And then in terms of the split between carrier and enterprise this quarter?

Okay. The carrier was 30%, three-zero percent. And this, it [was unnamed] by 70%.

Okay. That's -- so 30% to 70%.

And then my last question, in terms of the Americas, you mentioned weakness, but you were actually down 9% quarter over quarter, which I think is your most significant quarter-over-quarter decrease in the Americas, at least for the last several quarters. Is this an execution issue or is it softness in the environment? What do you see there?

My personal opinion is that we should have grown the revenues regardless of the economy, so I will contribute it to our execution issues, although -- and I strongly believe we can take market share in each and every quarter. Although, we have seen several customers that simply cut their budgets, cut their expenses, delayed projects; that was a very common scenario that we have seen in the Americas in Q1, specifically, in the financial sector, but not limited only to that.

And then revenue that wasn't recognized in the quarter, was that mostly in the Americas or was that -- how was that geographically?

It was overall.

Okay, thanks; that's it for me.

Matt Robison, Ferris Baker Watts.

This is Leo Shroy calling for Matt. Just got a couple questions here. First one regarding expense -- you mentioned that there will be some operational steps that could kick in as soon as Q2 that the Company is looking to take. Can you just give a flavor of where, in terms of which expense items you guys are targeting, when you talk about operational steps, and which levels should we expect it to go to? Is it somewhere closer to the fourth quarter? Somewhere in between fourth quarter and this quarter? If you can give a little flavor on that, that would be great.

So first of all, the operational steps are already behind us. We've done them towards the mid and end of the quarter when we've seen that our operational expenses are higher than anticipated. And in addition, we're going to manage our future investments that we were looking for versus a growth in the revenues much more tightly to guarantee that we are moving into Q4 profitability.

The expenses that we are looking on are the normal. The additional headcount, additional investments, marketing expenses, G&A expenses, and subcontractors. So we're not foreseeing anything major; the fact we're focusing it already in Q2 is obviously meaning that it's already done and behind us. And we continue to manage it from this level going forward.

Sales and marketing, could it decline in Q2 despite the tradeshow activity?

Decline in Q2; in terms of tradeshow activity for Q2, we are participating also in Q2 in several large tradeshows. So we are not focusing it there. For example -- (multiple speakers)

(multiple speakers)

Yes, please?

Sorry, yes. I was just wondering, in terms of -- despite the tradeshow activity, where the sales and marketing expense would be -- would it be declined in Q2 -- that was my question.

Okay, in marketing per se, we're not forecasting a decline in Q2. But we have several marketing in terms of events and tradeshows. But we have several other expenses, like special commissions, special activities related to a large project and so on that we are forecasting a decline in Q2.

Okay, great. And so also a question about share buyback. Are you guys looking at any potential share buyback plans?

This is Chris McCleary. How are you doing? Our Board still is not in a position to implement a share repurchase plan as a strategy for our cash asset. However though, we did change our bias. On the last couple of quarters, we had decided specifically not to execute a share buyback, but we changed the bias now to reviewing the situation on a more dynamic real-time basis with regards to our cash position, the market condition and our share price. So we have changed our position with regards to our bias, but we haven't implemented a share repurchase plan as part of our strategy at this time.

Okay, great. And just one more question on interest income. I see a slight decline in interest income sequentially. Can you give a little flavor on that as well?

Yes, this is due to the decrease in the interest rates. So -- and we keep all our cash in very short terms. This is a result of that. It will be continuing to decline next quarter since rates are down.

Okay. And my last question would just be, can you provide a breakdown on deferred revenue from your balance sheet item? Just deferred revenue, specifically, how much it was for the March quarter?

Deferred revenues went up this quarter, but as you recall, we don't break it for the market on a quarterly basis; only on a yearly basis. So I can confirm that this quarter, deferred revenues is up.

Okay, and most of the increase was based on the revenue recognition issue that you mentioned in the call?

This is part of that.

Okay. Thank you. Thanks for taking my call.

Ehud Eisenstein, Oscar Gruss.

Thanks for taking my question. Can you elaborate on the onetime expenses in OpEx?

Yes, onetime expenses in OpEx, it was -- I can give you -- this is a list of several items, like $700,000 marketing activities that is not in normal course of business, should not return this quarter in the third quarter, for example. We had additional subcontracts who helped us to split R&D activities again, additional equipment cost, etc.

So we should expect OpEx to stay in the same as is, going forward? In other words, when you project an operating breakeven, it's under the 25 area, correct?

Actually, Roy tried to tell him several times that we are managing it down. So it will be less than $25 million.

I see. And have you recognized any revenues from the large federal account that you announced back in October of last year in the quarter?

Yes, we did.

And what magnitude?

It was in seven digits, so.

In seven digits?

Yes.

Okay. And on the U.S., it looks like it's reached an historical negative levels. I'm trying to understand where the optimistic coming towards going back to mid teens growth for the year.

First of all, if you look on our overall business, we are growing year over year. And the recognized revenues is on 12; on the overall it's even higher than that. It's -- if you look on the shipments of the business and you follow it quarter by quarter, so in the Q1 2007, we were flat year over year. In Q2, we started to grow in single digit numbers. In Q3, that growth went into 14%. In Q4, to 16%.

In this Q1, over last year, as I've mentioned, it depends on the recognized or the complete booking is mid to high teens. So we are definitely seeing our business now behaving in the mid teens. We believe that with the product introductions and a big clearance of the U.S. weakness, we can accelerate it even further. We feel well about our competitive position. We get good signals from the market. We are progressing on strategic relationships. So we are definitely optimistic on the revenue side.

Take that with a better expense control that we can definitely do, and with some onetime expenses that we don't foresee to come back in the coming to two to three quarters, we can reduce operating expenses, increase the top line. At 80% gross margin, there's a lot of leverage in the business, and we expect that to show in the next quarters.

I see. And do you have a Board number for this -- the non-direct revenue or the revenue that comes through strategic relations in the March quarter versus last year?

We don't break it out. But I believe that during the year, we would announce specific and strategic alliances and once they are done, we will be able to share some of these statistics.

Going forward, you mean?

Yes.

Okay, thank you.

Rohit Chopra, Wedbush Morgan.

I had a few questions. One of them -- I guess the first one is, did competition have any factor this quarter on sort of keeping revenues where they were?

We don't think so. We actually believe that we're getting stronger versus the competition. We are in the beginning of a product cycle that was validated as a leader. And I think we didn't see strengthening competition in the last two to three quarters. We are actually taking market share right now.

Okay. And do you have any comment on -- F5 has indicated that they have a new lower-end or a mid-range product coming out in the second half of the year. Is there -- are you guys trying to do something to try to impact or blunt that introduction that they have?

So first of all, I think they have started to speak ahead of time because they have seen the OnDemand Switch. And there's no reason to speak nine months ahead when you're in the middle of the product cycle. I think the market is aware of the comparison that we have done with the Tolly report. As I've mentioned, it shows 5 times, 6 times better transactions per second. In some instances, 120 times faster response time. The report is available on our Web site. It's available on the Tolly Web site. So definitely, we feel very good about this low, mid-range, what they call application and delivery switches. And I think it's that caused them to preannounce that delivery.

We're working very hard in the market with our channels and with prospects and customers to show them the leadership of our product and that there's no need to wait nine months for a good, stable application delivery product.

All right. And then some housekeeping questions really quickly for Meir. Deal size in the quarter, depreciation and CapEx?

Okay, deal size this quarter was $80,000; almost the same as we had in the second half of the year. The CapEx was $1.7 million and depreciation $1.2 million.

And lastly, again, for Meir, were there any auction rate securities that are in your cash balance?

No, nothing.

Okay, thank you.

Scott [Sorrell], S-Squared Technologies.

Wanted to focus in on the operating expenses if I could. Given your commentary about operational break even by the December quarter and kind of mid to high teens, you are talking about $28 million to $29 million in revenue. To get there from an operating expense standpoint, you've got to be somewhere in the $23 million or below area.

And it was just unclear to me given your earlier comments, whether or not sequentially, we will see operating expenses come down in the June quarter or, if due to tradeshow activity, it will still remain high. And the absolute dollars, Meir, for onetime expenses; you highlighted some of them. But if I look at the sequential uptick, normalized for stock comp expense from December to March, it's a pretty significant number. So what is the absolute number that comes out pre currency impact?

Concerning your first question, I want to be very clear. We are forecasting operational expenses to go down already in Q2. Okay? And we will maintain it then through the end of the year, coupled with revenues increased in the area in the range that you have mentioned in your questions.

Right. In terms of the absolute dollars, though, will it come down to, adjusted for currency impact in the second quarter closer to what we saw in December then? Is that how we should be thinking about and modeling then December and then out into September? Closer to the $22 million range?

I'm not sure it will go all that way, but we will see a reduction.

Okay. And could you talk a little about linearity in the quarter, particularly in the North American marketplace; and also what U.S. carrier revenues look like?

Okay, about the linearity this quarter, 57% of the revenues were recorded in March. The rest, 43%, was in the first two months of the quarter.

Concerning the carrier market, we saw a lot of activity, but we saw delayed purchasing decisions in North America carrier.

Do you expect some of those decisions then to get made in the second quarter or to be determined?

We expect, but we will -- we don't have good visibility, I would say, at this stage, to whether that would really happen or not. Those are generally larger deals, and I think they can provide upside to the quarter. But we don't count on them as part of our forecasted revenues now.

And just last item. It didn't sound like you were actually going to detail deferred revenues in the quarter, but could you at least tell us whether or not they were up, or give us an idea if they were up substantially?

Yes, just as I said, deferred revenues went up this quarter. This is -- and by the way it went up in each and every quarter in the last three, four years. So again, it's up. The breakdown of numbers was [with], only on a yearly basis, can give you by then all the numbers.

Thank you.

In addition, sorry about that -- in addition, specifically for this quarter, we have those several projects that were deferred. So in this specific quarter, we have multiple contributions to the deferred revenue, the regular service agreements accrual as well as those projects.

Thank you.

[Jae] Park.

I'm actually filling in for Ittai Kidron, but I had a couple of questions. Just wanted to dig a little bit deeper into your revenue recognition and get a sense of why some of this was delayed, what type of magnitude it was and when you might be expecting this to come back around.

Okay. Actually, this is orders that have been shipped to the clients before the end of the quarter, but we did not get confirmation of receipt of the customer destination prior to the end of the quarter. This is very clear it arrives in Q2. Just we're talking about capital pace of delay, so it would be recognized in Q2.

Okay, great, great. And then in terms of some of the U.S. dollar weakness, what type of steps are you guys taking to kind of fight these effects going forward?

Actually, this is a constant expense. This is the P&L, so you can project maybe one quarter. But what will happen the second quarter or the third quarter, actually there is no steps can be taken except for real age on this currency against the constant fluctuation. So we have to live with that level of expenses.

Okay. Okay.

The steps we're taking is aligning our operational expenses, so the total brings us to a healthy mode and to a profitable Q4.

Okay. And one last housekeeping question. In terms of your geographical split, the U.S. was how much in terms of total revenue?

24%.

Okay, thank you very much.

J.D. Padgett, the Boston Company.

I had a couple of questions. One was just with respect to the sales force in the U.S., what's the headcount there now and hiring plans?

The headcount is stable. It's around -- it's varying, but it's 20 to 25 quota-carrying sales guys and channel managers. We have some hiring plans there, but we definitely want to see the revenues growth coming first to where we expect it to. And then a break from that, we will continue to enhance.

Basically, our approach is that we are -- in places that we are growing, we're adding the resources. In other places, we're looking for the business to come, for the profitability to come, and then we build on top of that.

Okay. And then the other question, is there a way that you could just help quantify what you would hope to see the operating expense level would be in Q2? I know in the past, you guys have sort of projected forward and helped us understand what we should expect there.

Actually, we are targeting $24 million, so this is a reduction of $1.2 million for this quarter. As already mentioned before, we have started to implement the plan back at the end of Q1. So we are still quite comfortable that this level is achievable.

Okay. And then maybe that would come down a little bit from there in Q3 as we move beyond the tradeshows and you have more time to focus on the cost structure?

This is -- [let you know] quarter by quarter significant portion of that is scheduled for Q2. We take it from there, also, based on our achievement in Q2, etc. But this is -- we are monitoring the expense level right now very closely.

Okay, thank you.

There are no additional questions in queue at this time.

Okay, thank you very much for attending the call today and we are looking forward to meeting you and speaking to you next quarter. Have a great day.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference service. You may now disconnect.