Rambus Inc (RMBS) 2009 Q1 法說會逐字稿

Good day, everyone, and welcome to this Rambus first quarter 2009 conference call. Today's call is being recorded.

At this time, I would like to turn the call over to Satish Rishi. Please go ahead, sir.

Thank you, Operator. And welcome to the Rambus first quarter 2009 conference call. I'm Satish Rishi, CFO, and on the call today are Harold Hughes, our President and CEO, and Tom Lavelle, Senior VP and General Counsel. We also have with us Sharon Holt, Senior VP of Licensing and Marketing for the Q&A.

The press release for the results that will be discussed here today have been filed with the SEC on Form 8-K. If you want a copy of the release, please visit our website at www.rambus.com on the Investor Relations page under Financial Releases.

A replay of this conference call will be available for the next week at 888-203-1112. You can hear the replay by dialing the toll-free number and then entering ID number 4808236 when you hear the prompt. In addition, we are simultaneously webcasting this call, and a replay can be accessed on our website beginning today at 5 PM, Pacific time.

Before I begin, I need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending litigation, and demand for our technologies, amongst other things. These statements are subject to risks and uncertainties, which are more fully described in the documents we filed with the SEC, including our 8-K's, 10-Q's, and 10-K's. These forward-looking statements may differ materially from our actual results.

Now I'll turn the call over to Harold. Harold?

Thanks, Satish, and good afternoon, everyone. As we report our results for the first quarter of 2009, it's a good time to consider the year ahead.

2009 will be an extraordinary year. We've seen worldwide economic dislocation as severe as any experienced in a generation. In the case of the semiconductor market, we've seen the market dealing with overcapacity and tough price erosion really since dot-com bust in 2001.

The transition from 8 to 12-inch wafers and the continued shrinking of processed geometries has driven an enormous in fab output. In addition, the continued integration of functions per chip, such as integrating GPUs and CPUs in a single device, means that at a given performance level, fewer chips are required.

But of course performance doesn't stay fixed. In products from PCs to gaming systems to mobile phones, the drive to provide more functions and higher performance has soaked up some of that increase in production volume. Nevertheless, even with strong demand growth, driven by emerging economies in China and India, the balance still tips towards too much supply.

The result has been industry consolidation over the last decade. With the drop in demand in the current recession, we expect that trend to accelerate greatly, [command] expansion bankruptcies, and proposed consolidation of much of Taiwan's DRAM industry, and the Taiwan Memory Corporation is the latest data point. While painful and difficult, it's only through this rationalization that a healthy and profitable industry can ultimately emerge.

That outcome is in the best interest of manufacturers and consumers. Despite the severity of the recession, there are already signs that demand may be stabilizing, albeit at a much reduced level. Both Intel and Nokia expressed that feeling that we have reached market bottom in demand during their latest earnings reports.

For Rambus, the current market dynamics present challenges as well as opportunities. There is enormous pressure on our customers' R&D budgets. At the same time, their need for greater competitive differentiation has never been greater. Our continued focus on innovation and technology development help our customers develop differentiated products that will succeed in the market.

From a revenue perspective, our royalty-based licensing agreements decline when our customer shipments fall. Nevertheless, our fixed payment licenses, and the fact that we typically sign five-year agreements, provide some stability in such times. It's a foundation we can build on in the next upswing in the market. As we've outlined in the past, our business model can be somewhat countercyclical in large downturns.

On the legal front, 2009 will be a year of many pivotal events. We've already seen us prevail in the Hynix I patent infringement case, with Hynix owing us nearly $400 million in ongoing licensing payments. Hynix has filed a Notice of Appeal, but we believe Judge Whyte and the jury has got it right, and that the Appellate Court will agree with us, as they have in the past.

Infineon was overturned at the [CFC], the FTC's allegations overturned at the CADC, and Samsung's attempt to import Infineon findings into its case was also defeated at the CFC. We prevailed in every one of these cases and we fully expect to prevail against Hynix on appeal.

Though later in the year than we'd hoped, the price-fixing trial against Hynix, Samsung and Micron is slated for this year. Given that joint and several liability and the potential for trouble damages, the risk for the manufacturers is significant. We believe they'd be better served to settle and work with us as licensees.

Our ITC actions concerning NVIDIA is also calendared for this year -- another important demonstration of our resolve to protect our IP.

Throughout all these events, our focus is on building long-term value. We do this first and foremost through a focus on innovation. As proof of this dedication to innovation, we have 792 issued patents and another 552 pending applications. Our technologists continue to invent the world's fastest, most power-efficient memory architectures in the world.

To that end, in February, we unveiled some of this great work through our mobile memory initiative. This development effort focuses on high-bandwidth, low power, memory technologies targeted at achieving data rates of 4.3 gigahertz in best-of-class power efficiency. With this performance, designers can achieve more than 17 gigabytes per second of memory bandwidth from a single mobile DRAM device -- that's over 10 times the bandwidth of LP DDR DRAM.

These technologies can enable memory architecture ideal for next-generation Smartphones, netbooks, portable gaming, and portable media products. We showcased these innovations in a silicon demo at Design.Com, as well as Mobile World Congress in February.

Our continued financial strength gives us the wherewithal to make acquisitions to complement our existing -- our extensive innovative development efforts. As an example, we acquired patents from Inapac that broadened our offerings in the mobile memory space.

These patented innovations are used in system-in-a-package, or SIP devices, used extensively in mobile applications. SIP consists of stacked ICs, such as media processor DRAM and flash memory devices, all in a single package. SIP helps mobile system designers achieve high functionality in a very compact space.

Our patent enables SIP devices to be manufactured at very high yields necessary for high volume consumer electronic products, such as mobile phones. In addition, we hired Fan Ho, one of the founders and lead inventors at Inapac, to continue innovating in this area.

We have technology announcements upcoming from our other focused markets of computing, gaming and graphics, and HDTV, coming up during the course of the year -- so stay tuned for those.

In summary, there's a great deal of work ahead in 2009, but much to look forward to. Given the tremendous value of the innovations Rambus engineers continue to create, we're very optimistic about the Company's future.

And with that, let me turn it over to Tom for an update on the legal events. Tom?

Thanks, Harold, and good afternoon, everyone.

There were significant events that took place during the course of the quarter that I'd like to review today. The first is the damages Judge Whyte granted in the Hynix case.

Hynix is ordered to pay Rambus $397 million in damages plus interest. The amount of damages is based on rates of 1% for SDR DRAM memory types and 4.25% for DVR and GDDR memory types for US infringements. We're pleased to have final judgment entered in this case.

In addition, the Court put in place compulsory license for Hynix's ongoing use of our patented innovations at those same rates. However, there are still issues to resolve. Hynix is arguing it should be allowed to accrue, and not actually pay, the forward-looking royalty payments due to Rambus.

We strongly disagree, as we state in our Opposition Brief, this would effectively treat the judgment of infringement as if it never happened. We believe the Court should require Hynix to pay the royalties directly to Rambus or, at a minimum, to pay the royalties into an escrow account.

In addition, while Hynix has filed its Notice of Appeal for the case, it has submitted in its Brief that it should be excused from posting the full $397 million bond. We believe its proposal to bond half the amount and offer liens against Korean-based assets for the other half is unsatisfactory and unfairly shifts risk to Rambus.

This undercuts the purpose of Rule 62, and we believe the Court should reject Hynix's motion. Hynix's contention that it would be impracticable for them to post the full bond amount is reputed by statements it has made to the press and in earnings calls, where it has said that it has ample financial resources, despite the conditions in the DRAM industry.

We believe that the judgment against Hynix in all three phases of the District Court proceedings should be affirmed on appeal. However, because certain parts of the judgment were adverse to us, we filed a Cross Notice of Appeal this past Friday. Briefing on these issues will occur later this year.

In addition, we have filed our Notice of Appeal in the Micron matter from Delaware, and we expect the Federal Circuit to review both of these matters at the same time. The remaining coordinated case with the DRAM manufacturers before Judge Whyte has been stayed, pending the outcome of the appeals.

Moving to the FTC. We are pleased that the Supreme Court's decision denying the FTC's request for Certiorari, which puts an end to the ill-founded Sherman Act antitrust allegations against us. While it's frustrating to be forced to spend millions of dollars defending ourselves and suffer lost business while the action is being litigated, it's rewarding to know that this particular matter is behind us.

Another significant activity that took place during the quarter was the Court's ruling on various Summary Judgment Motions that were argued in the price-fixing case in San Francisco before Judge Kramer. One motion was deferred to a later date, but we defeated the manufacturer's other seven motions, and prevailed on a number of important issues that allow us to move forward towards trial, scheduled to begin in September of this year. On April 27, we will be arguing spoliation claims once again, this time in front of Judge Kramer.

With regard to the Complaint we filed in the ITC against NVIDIA Corporation and other companies whose products incorporate the accused NVIDIA products, the Markman hearing was held in late March to determine the construction of certain terms in the patent claims we have asserted. Administrative Law Judge [Pessix] will make a determination of how to construe the claims -- the claimed terms, excuse me -- at issue, prior to the evidentiary hearing that is set for August of this year.

While all of our cases are important, this one bears special attention since the patents involved are post [Harmals] Horowitz, some with priority dates after 2000.

During the course of the quarter, we received a number of inquiries about the status of the re-exams at the USPTO. I'd like to provide some perspective here. As part of the multi-pronged approach to delay paying Rambus for our patented inventions, our litigation opponents have filed requests with the USPTO to bring into question the validity of some of our patents. We have seen this tactic for years.

As mentioned on previous calls, once patents are issued by the USPTO, they are presumed valid until all challenges by infringers have been exhausted. One study indicated that it takes up to 6.5 years for re-exam claims to work their way through the Patent Office, and then the cases can be appealed to the Federal Circuit and possibly to the US Supreme Court.

So, this is a very long process, and the patents remain valid during the whole process. Of all the re-exams that have been filed pertaining to our patents, the results have been inconclusive thus far. We believe the claims our litigation opponents are making with the USPTO are without merit.

I'll remind folks that many of these patents that are part of the re-exam process have been tried in front of juries, reviewed and upheld by the Federal Circuit, and found valid and infringed by a District Court and juries. We will continue to follow the process and submit our replies to the Patent Office per required schedule, and we'll keep you informed of any material events related to this activity.

Now I'll turn the call back to Satish to review the financials. Satish?

Thanks, Tom. As reflected in our press release today, we finished the first quarter with revenues up $27.3 million, down 27% from the previous quarter, and down 31% from the year-ago quarter. As compared to the previous quarter, revenues were lower primarily due to the collection of the FTC-related amount held in abeyance that were collected in Q4, coupled with lower PS3 royalties and lower patent royalties.

The decrease in revenue from a year ago was due to the decrease in patent royalties from Elpida, lower PS3 royalties, and lower contract revenue.

Operating expenses for the first quarter were $45.3 million, down 22% from the previous quarter, and down 31% from the first quarter of last year. These operating expenses include a credit of $13.6 million related to reimbursement from insurance providers and former executives associated with the cost of restatement, and approximately $8.4 million of stock-based compensation. To provide a better comparison period-over-period, I am excluding these expenses and credits [really] from my discussions.

Excluding stock-based compensation, restructuring, and restatement expenses, adjusted operating expenses in this quarter at $48.8 million, were up 4% from their previous quarter and down 5% from the year-ago quarter. The increase from the previous quarter was primarily due to higher year-end related professional fees and litigation expenses.

The decrease from the quarter a year-ago was primarily due to lower engineering and SG&A expenses, offset in part by high litigation costs. Excluding litigation, our adjusted operating expenses were up 5% from the previous quarter and down 20% a year ago.

Adjusted engineering expenses of $16.9 million were essentially flat to the prior quarter. SG&A, excluding litigation, at $13.9 million was up 12%, due to a higher year-end related accounting, and audit expenses and general legal expenses. And litigation at $18 million was essentially flat to the (technical difficulty) prior quarter.

As you recall, we provided guidance of $25 million to $31 million for Q1, litigation expenses at the last earnings call. At that time, we were expecting the trial on the [coordinate] cases to start in Q1, and the San Francisco pricing trial also to start sometime in March. With the deferral of these trials, litigation expenses, although high, were lower than expected.

As compared to the quarter a year ago, adjusted engineering expenses were lower by 26%, primarily due to the reduction in force. SG&A, excluding litigation, was lower by 10%, due to lower accounting, audits, marketing, travel expenses, and also a reduction in force. And litigation was higher year-over-year by 36%.

Our adjusted operating loss for the quarter was $21.4 million, or 126% higher from the previous quarter, and 82% higher than the first quarter of 2008.

In May of 2008, the Financial Accountings Standard Board issued FASB stock position [FSB APB14-11], addressing the accounting for convertible debt instruments that may be settled in cash on conversion. Rambus's [zero] coupon convertible notes fall within the scope of this accounting pronouncement.

In accordance with the new accounting pronouncement, we are required to value and bifurcate the convertible into two separate components -- a liability component, and an equity component going back to the date of issuance. The liability components based on fair value offer similar liability, excluding the equity conversion feature.

The equity component is the difference between the initial proceeds that were received from the convertible debt issuance, and the amount allocated to the liability component. That excess is treated at debt discount and is amortized as a non-cash interest charge over the expected life of the instrument, which was five years at issuance.

In addition, because of the retrospective application of the pronouncement, Rambus has recast the financials to reflect the adoption of FSB APB14-1. Of all this to explain to you that, in this quarter, we have a $2.7 million of non-cash interest expense and we have $4.8 million of non-cash interest expense in the previous quarter, and $2.9 million of non-cash interest expense in the quarter year-ago from the application of this accounting pronouncement.

Moving on to something more interesting -- overall cash, defined as cash, cash equivalents, and marketable securities, excluding restricted cash, was $348 million, an increase of $2 million from the fourth quarter of 2008. We received $5 million as reimbursement from an insurance carrier and $4.5 million in settlement from former Company executives. In addition, we also paid $2 million to settle the derivative lawsuit.

As of this quarter, the face value of the convertible debt outstanding is $137 million, but the net amount has been re-classed to reflect the debt discount. So, on our balance sheet, we are showing a smaller number than $137 million; we're showing $128 million. But our net cash position, which [as total calculated] to be as $348 million less $137 million, is $211 million, and we are very comfortable with our liquidity and our cash position as of today.

Tom has already talked about the Hynix situation and the bond. When Hynix posts the bond, we will not be able to recognize that amount on our financials until the appeals process is complete. Similarly, we will not be able to recognize the revenue for the compulsory license if it's placed in escrow until the appeals process is complete; but we may be able to disclose the amounts received in escrow every quarter.

However, posting of the bond and delivery of the compulsory license will give substantial assurance to the Company that a significant credit risk has been reduced.

Now I will give you some thoughts regarding the second quarter. This guidance reflects our reasonable estimate and our actual results could differ materially from what I'm about to review.

We expect second quarter revenue to be between $27 million and $30 million. We expect operating expenses, excluding stock-based compensation, to be between $43 million and $48 million, and this number includes an estimate for litigation expenses of between $12 million and $16 million.

Litigation expenses are difficult to predict, because we cannot control timelines and requests from the Courts, nor do we control the actions that our adversaries may take, which may cause us to incur additional unplanned expenses in any particular quarter.

Before we open the call for questions, we'd like to address a few inquiries we've received from shareholders via email through our website.

So, the first question that I'd like to have addressed is -- the question is -- It's been a number of years since the last licensing agreement was signed. Why are you unable to sign licensing deals, particularly now that the FTC case is closed?

I'll take that one, Satish. I'm going to assume the question is about patent license agreements, as we have signed a number of technology license agreements over the past few years with Toshiba, Panasonic, Sony, IBM, and other customers.

The last new patent license agreement was signed in January 2007, although we have amended other agreements more recently. We continue to engage with a number of potential patent licensees. Frankly, we could have been closing more new agreements, and we could still do so today, but we have to consider whether the terms today would meet our business objectives or whether we're better off waiting and creating conditions that improve the terms.

We also have to consider the impact on existing licensees and the potential risk to our ongoing litigations.

While we have set aside the FTC's antitrust allegations, potential licensees can always look for other reasons to delay. As you know, the next phase of the DRAM patent infringement cases have been delayed, pending resolution of the conflicting conclusions on spoliation between the Delaware and California courts.

We nevertheless believe that potential licensees, as well as their customers and those who benefit from the use of our technology and consumer products, will be better served if they voluntarily enter into a license with us, as opposed to having the courts impose a compulsory license on them, as was the case for Hynix.

Thanks, Sharon.

The next question is -- How do you expect DRAM manufacturers to build products based on new initiatives, say, such as the mobile memory initiative, if you continue to litigate with them?

I'll take that one too, Satish.

Our focus is on the long-term. We're planning for success and we fully expect to ultimately license the DRAM manufacturers. The premise of the question is spot-on, though -- we will need the DRAM manufacturers to produce the solutions we defined. In fact, as we introduce new technologies, our interests and those of the DRAM manufacturers, are very well aligned.

We want them to benefit from the licensed relationship with Rambus, both from the standpoint of having access to breakthrough technologies and in terms of sustainable financial success. But we can't stop innovating and wait until there's resolution of the current litigation. Doing so would cause a huge gap in the solutions from our innovation efforts that could last for many years to come.

We have to keep innovating and we have to plan for success. And that's why efforts such as our mobile memory initiative and the other technologies we will announce later this year are so important. They showcase our capabilities and inventions, and provide us a vehicle for our continued dialogue with the industry, which is critical to our future success.

In the meantime, we continue to be engaged in active dialogue with the DRAM manufacturers, including some of those in the litigation. For instance, Samsung continues to ship XDR DRAM even though they are involved in litigation. We want to work with these companies, and this is reflected in how we treat them in our communications.

We sit in the middle of a complex ecosystem, where we need to create pull for our technologies from consumers, device manufacturers, as well as chip suppliers, to make it all work. We want them to understand that Rambus is continuing to innovate, and that as a licensee, there are many ways in which we can help them move their roadmaps forward, win new business, and prosper.

Thanks, Sharon. Let's take one more question before we open the call.

The question is -- What do you see as a prospects for settlement going into the price-fixing case in San Francisco?

Satish, this is Tom. I'll take that one.

Of course, we're always hopeful of settlement and we're working very hard to that end. As we've outlined in the past, we are making good progress in the legal front with a final judgment in Hynix I; putting the Sherman Act allegations by the FTC to rest, finally; and overcoming the Summary Judgment Motions in the price-fixing case itself.

The decision in the Delaware case, the spoliation ruling, has delayed many of the ongoing proceedings, but we believe we can overturn that decision on appeal. As a whole, the legal actions are moving forward, and that helps increase the likelihood of settlement.

A word of caution, however -- we do not control the pace of the courts or the actions of our litigation opponents. As stated in our original Complaint in the price-fixing case, we believe the conduct of the defendants in this matter deprived Rambus of royalties, in an amount to be determined at trial, which potentially amounts to more than $1 billion.

The prospect of trouble damages, and joint and several liability create a situation where we believe the defendants would be far better served settling, rather than going to trial.

Thanks, Tom. On behalf of the management team, I'd like to thank those who submitted questions. We plan to address questions from stockholders, as we did today, on a periodic basis at this forum.

I'd also like to remind everyone that we will be holding our annual meeting of the stockholders next Thursday, April 30, at 9:00 a.m. at the Cabana Hotel in Palo Alto.

Operator, we are now ready to open the call for questions.

Thank you. (Operator Instructions). Michael Cohen, MDC Financial Research.

Great. Thank you for taking my call. In the April 7 announcement of the patent acquisition from Inapac Technologies, I was wondering, were there any licenses that went along with those patents that you also acquired?

So, Michael, this is Sharon. No, we just acquired the patents and we're in the process of bringing them in, adding them to our portfolio, and assessing what we want to do in terms of continuing to develop the technologies and licensing them ourselves.

Just to add -- Inapac had what we would call a product business.

Okay. So they didn't have existing licenses out there?

Yes.

Okay, great.

Yes, I'll just add, Michael, as Harold mentioned during his prepared remarks, we also brought over one of the inventors when we acquired the patents. We hired Fan Ho into our own Research and Technology Development organization to help us continue to move that technology forward.

Great, fantastic. And my next question would probably be for Harold. This is a question I've asked in the past and I periodically come back to.

We heard about the systems level licensing strategy, I guess that was in the first half of 2005. And then I periodically ask to see if it's still on the table. The last time I asked it, I said I hadn't really heard anything about it, and I was told that it was just me not noticing and that it's still on the table. And I still haven't really heard anything being talked about it from the Company. I was wondering, is the systems level licensing strategy still there, especially with regard to PCs?

Michael, I'll take it and Harold may want to have some comments as well. One of the things that we continue to do as we move our licensing efforts forward is obviously to take a look at what's in our portfolio, and where we believe we can best focus our licensing efforts to monetize the patent portfolio that we have.

Most of our efforts over the last couple of years have been focused at the semiconductor level. We will, certainly, continue to look for opportunities, but it's really an issue of prioritization. And we believe that our efforts were better spent elsewhere.

I would also recall -- I would also point out -- and I think we've discussed it on previous calls -- that the LG/Quanta Supreme Court decision has complicated our go-to-market strategy vis-a-vis the system licensing. We haven't given up on it, but I think we need to be very creative but also, at the same time, cautious as we go forward, Michael.

Okay. And I do acknowledge that LG/Quanta changed the patent exhaustion issue.

It seems like -- I guess, how come we haven't seen prior to that decision even, an incentive being provided to systems companies to only use licensed DRAM, and that way kind of get the manufacturers into a pincher where the customers themselves are actually demanding that they take a license with you?

Well, as you recall, that is the basis of the Fujitsu deal. That's how we went forward. Fujitsu pays less to the extent they use licensed DRAM. That is the template that we had followed.

I think the other thing that I would point out there, Michael, I mean, if you look, a lot of our efforts in terms of trying to drive adoption of our technologies in the market are focused with system companies I'd say in many cases are the ultimate benefactor of some of the new technology Rambus creates.

And we do spend a lot of time in the various markets we serve, with the system companies, trying to show them how our innovations can help their end products, which certainly has the effect of creating pull. They go to their chip suppliers, whether it's the memory guys or ASIC suppliers to create demand for Rambus technology.

That's a relationship we have to be mindful of in order for our long-term success to happen. In many cases, we want to establish very positive relationships with the system companies. And so we've got to look at that as we also consider our licensing strategies.

Okay. Has there been any notices of infringement sent to any systems companies?

We don't comment on to whom or how many notices we've sent out.

Okay. Is there anything in Intel or AMD licenses that would prevent a system level strategy with regard to PCs, in terms of them trying to indemnify their customers?

No, there's nothing -- this is Tom -- there's nothing that would prevent us from doing that contractually, that's for sure. But as Harold said, we have to be creative and careful moving forward on a system strategy, to the extent we do it at all.

And my last question is, I guess, to you, Tom. You mentioned that the damages in the upcoming antitrust trial could -- the actual damages pre-trebling could be more than $1 billion. In the court documents, I saw that to be over $4 billion. And I'm kind of wondering why in your comments you were only saying $1 billion as opposed to $4 billion actual?

The numbers, obviously, have to be proven at trial. We have our number that you saw in court and we're intending to prove that number.

Okay, excellent.

But maybe as a non-math major, numbers bigger than a $1 billion all sort of run into each other for me. But it's a very large number, is the point. And that's before trebling, as you pointed out.

And I'm very much looking forward to that trial. And I thank you very much for your answers. Thank you.

(Operator Instructions) Hamed Khorsand, BWS Financial.

Just wanted to get an understanding -- in Q2 with your legal expense guidance of $12 million to $16 million, what's exactly going on? Because it seemed like a lot of your cases won't occur until Q3.

This is Tom, Hamed. Good afternoon. As you may know in getting ready for two major trials, which we're looking at right now, specifically the ITC trial, it's an evidentiary hearing, but it's, for all intents and purposes, a trial, in August of -- third week of August, I believe it's August 17 in Washington, DC -- that's an extraordinary amount of work that has to be done to prepare, from depositions through document production through document review, to getting experts ready to go -- all those expenses are ongoing almost from the day you get started with an ITC case.

So that's a huge case in terms of pushing it forward, because you know we filed it in Q3 of last year and it will be in trial in Q3 of this year, which is extraordinarily fast in the legal world.

In addition to that, we have the San Francisco price-fixing trial, which is currently scheduled to start September 28 in San Francisco. So, those are two major trials.

In addition to the appeals, the motions, all the other activities going on with the cases that we continue to push forward, we also, by the way, have an NVIDIA Northern District case that -- on which discovery continues. So there's an awful lot of legal activity that precedes a major trial, and we have two of them coming up in the relatively near future for us.

Okay. And then looking at your operating expense and then was your debt that you would need to borrow -- you're probably going to pay off in February -- I mean, how comfortable are you guys with the amount of cash you have? I mean, if you bat that out, your net cash is significantly less than what the cash balance is. (multiple speakers)

Hamed, our net cash is $211 million. (multiple speakers)

Yes, but you're generating OpEx of -- let's say you said $40 million; that gives me about [five-quarters] of cash.

That's -- if [the] amount of that is, all your OpEx is cash expense. If you look at our burn rate, our burn rate is a lot lower than our cash expense. So I think if you're doing the math, you don't look at OpEx; look at what you're burning in cash. Then you'll see our cash flow statement next week when we file our 10-Q.

Even last quarter, our cash burn was about $10 million to $12 million in Q4. [The republishing of where] the number would be next quarter. So we are very comfortable with our cash position.

Okay. Thank you.

And there are no other questions at this time. I'd like to turn the conference back to our speakers for any closing remarks.

Thank you all very much for your questions and your continued interest. We look forward to seeing many of you at our annual stockholders meeting next Thursday in Palo Alto. Thank you once again.

Thank you, everyone. That does conclude today's conference. You may now disconnect.