Socket Mobile Inc (SCKT) 2005 Q1 法說會逐字稿

Good afternoon ladies and gentleman and welcome to the Socket Communications first quarter management conference call. At this time all participants are in the listen-only mode. Following today's presentation instructions will be given for the question and the answer session. [OPERATOR INSTRUCTIONS] As a remainder this conference is being recorded on Wednesday, April 20, 2005. I would like to hand the conference over to Ms. Tatia Meghdadi, Marketing and Communications Management. Please go ahead ma'am.

Thank you, good afternoon, and welcome to the quarterly conference call for Socket Communications for their fourth quarter, ended December 31, 2005. Earlier today, socket distributed its earnings release over the wire service, and also by e-mail to all of you who have requested such distribution. Socket has also posted their release on their website at www.socketcom.com. A replay of today's call will be available at CCBN.com shortly after the completion of this call, and a transcript for this call will be posted on socket's website on Friday. We also posted replay numbers in our press release, for those wishing to replay this conference call by phone. Phone replays will be available for a week.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements within the meaning of section 27-a of the securities act of 1933 as amended and section 21-e of the securities exchange act of 1934 as amended, including statements forecasting future financial results and operating activities, market acceptance of our products, expectations for general market growth in handheld computers and other mobile computing devices, growth in demand for our products, expansion of the markets that we serve, adoption of our embedded products by third-party manufacturers of electronic devices and the timing of the introduction and availability of new products. Such statements involve risks and uncertainties, and actual results could differ materially from the results anticipated in such forward-looking statements, as a result of a number of factors, including but not limited to the risk of delays in the availability of new products due to technological, market or financial factors, including the availability of necessary working capital, our ability to successfully introduce and market future products, our ability to effectively manage and contain our operating costs, the availability of announced handheld computer hardware and software, the integration of our products and third party hardware and software solution. Product delays associated with new model introductions and product changeovers, continued growth in demand for handheld computers, market acceptance of emerging standards such as Bluetooth and wireless LAN and of our related connection and data collection products, the ability of our strategic partnerships to benefit our business as expected, our ability to enter into additional distribution relationships, or the other factors described in our most recent form 10-K and 10-Q reports filed with the securities and exchange commission and with that said, I would like to introduce management. On the line today are Kevin Mills, President and Chief Executive Officer; and Dave Dunlap, Chief Financial Officer. At this time, I would like to turn the call over to Kevin Mills.

Thank you Tatia. Q1 net revenue was very disappointing well below our expectations in the level we consider acceptable. The timing of enterprise customer deployment continue to be slowed by Pocket PC model transition. Having said this and decline with the Q1 results are a number of extremely encouraging event, for example Socket has record bookings in Q1 and a solid one-raise shift.

In today's call we will explain some of the dynamics of the first quarter and I will explain why these results do not change our overall beliefs that the mobile device market continues to be strong. Not only it is strong, we are more convinced than ever than our strategic objective of supplying products that improve the efficiency of mobile professionals who use mobile device to allow us to grow the company this year and extend a little further.

In Q1, we continued to experience a number of delays in the Pocket PC markets. As outlined in our last 2 conference calls, the Pocket PC market has been experiencing some turbulence since Dell and HP began their pilot transitions in late 2004. In the case of Dell, the transition began in September and with HP in December. In both cases Pocket PCs were in short supply for extended periods of time. And as we discussed in the February call we found these transitions were behind it. As it turns out we were premature in this assessment. Since February of this year, Pocket PCs have been available without supply constraints. However a number of minor with significant software issues have been discovered with these devices. These problems were discovered during field trials and other testings that accompanies undertake prior to [inaudible] deployment, all their solutions to their mobile workers. A number of these field-identified problems in the Pocket PCs affected our products from an ease of use and reliability point of view. As a result we continued to experience some of the effects of these model changes in Q1.

From the positive side, the issues have been addressed by the Pocket PC manufacturers and new [roms] have been created for certain models that are working their way into the markets. Even though lot of the issues discovered were critical for normal functionality of Pocket PC in some cases there were worked around. These issues certainly slowed a number of enterprise deployments. These type of issues are both an annoyance and source of additional support for all parties providing pieces of the mobile solution. We now feel that these issues are behind this and there is good market acceptance for these new Pocket PC devices.

In Q1 we experienced delays in a number of bar code scanning opportunities when we saw our scanning revenue fall significantly below our expectations. At $2.2 million, it was about $1 million less than expected. Due in part to the field testing already mentioned as the timing of companies deploying a mobile worker solutions. As we have outlined for sometime, our ability to determine the exact timing of corporate barcode is extremely difficult to nearly impossible. However we have never measured the health of bar code scanning business based on the deals that goes in a particular quarter. With more by the number and size of the opportunities in our opportunity pipeline. In Q1 despite the short stand associated with this revenue short fall, we continued to see very healthy business for our bar code scanning products which grew by 73% and 56% for the last 2 years. In Q1 we booked over $7.6 million with new business with over 3 million of these bookings received in March. This did not give us enough time to get these orders through the channel and into the hands of our end user customers. We shipped $6.8 million towards distributors in Q1, but unfortunately 800,000 did not clear the channel prior to the end of Q1. We also saw our backlog increase by 800,000 from 1.2 million at the end of Q4 to over 2 million at the end of Q1. So, despite low as unexpected revenue a number of significant indicators like bookings and shipments were at record earning a record level. As I turn my attention to the various product families I would like to discuss the dynamics and outlook for each.

Barcode scanning product family remains our largest product category representing 36% of our revenue. This division continues to be driven by software development by a large community of VAR integrators. In Q1 we continued to see our pipeline grow as more applications were completed and offered to the markets. In Q1 we highlighted one of these new applications on our web sites. This application controls the dispensing of medication to patients in the hospital which help not only save lives but improve the efficiency of the nurses dispensing the medication. This application is currently deployed in 3 hospitals allowing doctors nurses and the pharmacy to control the process of delivering medication. The application is simple. The nurses scan the patient's bar coded medical wristbands, scan the medication to be dispensed and the application confirmed with the right medication for the right patient at the right. This system has already proven it’s worth involving catching potential errors increasing the quality of care and preventing costly and in some cases potentially deadly mistakes. This is one of the many types of application that continued to be developed and deployed using our software developer kit and that will continue to drive our barcode scanning business.

In Q1 sales of our compact flash based bar code scanning products were weaker than expected primarily due to timing related issues. Sales of our [inaudible] barcode panels remained stable and our new category of cordless scanning continue to grow well. In Q2, we will be repositioning and revamping our entire bar-code scanning products to provide more choices and pricing options in the bar-code scanning category. We will introduce, entry level, mid range and performance bar-code scanners in each of the three form factors we support. Our entry level scanning solutions will provide excellent value products for the light scanning requirements, which many of our customers demand. The new product should be available at significantly lower prices than we have seen in the past and we anticipate adding excitement as well revenue for a mix of bar-code scanning products.

Our mid range products are based on a class –1 laser engine making them very affordable and ideal for indoor scanning applications. Our performance products are based in the class 2 laser engine, which provides a longer read range and ideally suited for indoor and outdoor applications. In addition to providing entry, mid, and performance options for the Pocket PC market, the three cordless bar-code scanners will also work on the tablet PC and the Symbian OS 60 and 80 smart phone platform. We expect to continue to expand our platform support going forward as market condition and customer demands warrants the development of it. These tiered product options of entry level mid range and performance coupled with a very strong software developer kit which support all of the bar-code scanning and RFID readers allows customers to mix and match their scanning requirements through their applications. This capability will be provides enhanced value and choice to our customers for their bar code scanning needs and budget constraints.

We see that each new product which include higher performance laser engines in both the indoor and outdoor options at new lower prices will help us expand the markets and help us drive this business going forward. A bar-code scanning business despite its lumpiness continues to be a very strong and important part our revenue for this year.

Our connectivity business, which represents the 35% business in Q1 performed as expected. We saw a revenue increase of 16% over Q4 levels as more of the devices without wireless LANs came to market. We saw stronger than expected demand for Ethernet as some of our customers switch from modem to Ethernet as a better and quicker way for these mobile workers to connect. Modem sales were somewhat lower due to the switch to Ethernet but still at Q4 levels which is very encouraging, especially if there were some [mechanical] issues that some of the Pocket PCs have prevented the modems from working and these issues did not get resolved until the end of February. Our Bluetooth sales were in line with out expectations as we continue to service the legacy and industrial market. Our GPS sales were disappointing as we transitioned out to the retail markets and focused more on the industrial space. We announced a significant arrangement with [inaudible] a European based company that offers advanced navigation and location specific content in the smart phone and Pocket PC market. [J5] will be delivering our hardware in our products that serves the consumer market. Socket will be able to maintain its current revenue level with this arrangement while we build industrial GPS signals.

As we look at the Q2 outlook for our connectivity products, Socket will be releasing its first stand alone socket products in this category the WiFi Companion This will happen in the next few weeks. This is an excellent software product that will be available for all Pocket PCs with built in WiFi The WiFi Companion addresses a number of issues and shortcomings with the current available software. In particular signing and connecting to available WiFi network as well as having better control data and security over those connections. The WiFi companion addresses these important issues and allows customers to use their built-in radios in a Pocket PC much more effectively. Our years of experience in the WiFi area has enabled us to built [inaudible] software that has added tremendous value to our Compaq Flash and [inaudible]. Today with nearly 44% of Pocket PCs now shipping with built-in wire line we have an opportunity to add significant value to this segment of the market. The WiFi Companion is the first of number of steps will be taken to provide enterprise ready WiFi software for the corporate market. This software will be available with our hardware but also as a stand –alone software product. We expect this will help us maintain our growth in the connectivity category. I [inaudible] sale which represented 14% of the business in Q1 with slightly down in Q4 levels because of the timing of [inaudible]. Our quick bluemodule shipment were at record and overall Bluetooth connectivity represented 85% of the entire revenue in this category as sales continue to be driven by the many design apps which we have secured. In Q1 we announced our next generation of quick Blue blue tooth modules announcing that are blue tooth 2.0 Quick Blue modules were available for customers. We expect new modules which incorporate [inaudible] radios, latest [inaudible] chips and supports the higher data speed associated with the enhanced data rate standard or EDR which will enable us to continue to grow the business.

Our [inaudible] expectations as a large order was rescheduled, so it did not ship in the quarter. We expect this business to recover in Q2 as this order is expected to ship shortly; however, this [inaudible] continues to be under pressure as a high speed serial interface to wide area network radio are being superseded by higher speed interfaces such as USB. Longer term we expect the [inaudible] business to be of less importance to us. Finally, our legacy serial business was in line with expectations and remains relatively flat.

So in summary, Q1 was a disappointment especially regarding revenue and not maintaining profitable operating levels; however, there are several significant achievement within the numbers such as our record booking levels and solid shipments that suggest the issues are temporary and not a sea change. We continue to see a great deal of opportunity, we continue to work hard to convert these opportunities into sales. Our immediate goals for Q2 are to return possibility and to get our growth back on track for the year. I would now like to call over today Dave Dunlap Socket’s chief financial officer for his comments.

As Kevin has noted, the pace of business for socket has been accelerating as the next generation Pocket PC’s begin to deploy. Socket’s connectivity and data collection products were an integral part of mobile handheld solution [inaudible] availability of new Pocket PC’s slow down the deployment of these solutions. That is particularly true for our bar code scanning units that typically requires the integration of handheld computers, software applications, and our bar-code scanning products involved extensive customer qualification, field trial and extended deployment. Our best evidence of the enterprise markets are now moving in the into high gear and deploying the new Pocket PCs, as a phase of orders received during our first quarter particularly in March. We received orders for 7.6 million during the quarter, a record for the company. We ship 6.8 million to our distributors and they added $800,000 to our backlog which was over $2 million at the end of March another record. Of the 6.8 million shipped to distributors only 6 million qualify for revenue recognition. We require products to sell out of the distribution channel before we will recognize the revenue and so we deferred revenue recognition on $800,000 of products, which was still in channel inventories at March 31, 2005. Each product as they sell out along with our higher backlog level giving us a good start for the second quarter; however, $6 million in revenue are bottom line for the dropped to a loss for approximately $400,000 or one cent per share, breaking a string of four consecutive profitable quarters.

By product family the largest drop in revenue as compared to the previous quarter is our bar code scanning product family. Our workhorse in-hand scan compact flashplug-in scanner has the greatest drop but we experienced a climb in sales of all members of that family for the reasons I have discussed. [inaudible] products which [inaudible] grew 16% over the previous quarter. Our wireless LAN, Bluetooth plug-in products and our Ethernet wire products were the greatest contributors to that group. Productivity products compared to the first quarter a year ago were down by 19%. Fewer Pocket PC models have a higher percentage of built in blue tooth issues and wireless LAN and so sales of our plug in cards for these categories is at lower levels that we were selling a year ago. To take advantage of this strength, we have developed stand-alone Bluetooth products such as our Bluetooth modem, GPS receiver, and cordless hand scanner that will work with Bluetooth enabled hand held, whether or not they use our plug in products. We are making available the software expertise we have developed, the wireless LAN management to our about to be introduced WiFi companion software. Extended products revenue was lower than the previous quarter by 12% due as Kevin mentioned in the rescheduling of chip orders from the chip customer, partially offset by continued growth in the blue tooth modules. Our customers for embedded Bluetooth models include major bar-code scanning companies such as Hand-Held products, Intermac, and Symbol Technology. Recent design wins such as the decision by Fed Ex to deploy new hand held devices from handheld products will benefit [inaudible] in the second half of this year. Our peripheral connections product business is a legacy serial card business that continues to follow with historical pattern [inaudible] but as net margin percentage contributor.

Our revenue expectations for the second quarter are the strength we are stating in our bar-code scanning products guideline, resumption of growth in our [inaudible] products and the expectations we have on future orders for Bluetooth models to our embedded products customers, [inaudible] return revenue growth and profitability in the second quarter and beyond. First quarter expenses increased over the previous quarter by about $ 300,000 which was as expected because of the cost in the quarter by both the financial audit and an audit of our internal control is mandated by Sarbanes-Oxley section 404 and due to higher sales and marketing expense because of a very active trade show schedule we participated in during the first quarter. This spike thought of the first quarter [inaudible] point in the second quarter will be lower. To maintain our margin for the health 51% and managed our expense, our operating outlook for the second quarter is for resumption of growth, maintaining our margins at the 50% level, reduction of operating expense and return to profitability. Our balance sheet remains strong, out cash increased during that quarter by $1.2 million to $7.2 million, our current ratio was 1.6 to 1. We have equity of $16.6 million and no long term debts. Our cash increases were primarily due to good working capital management with excellent collection of receivables, lower inventories, higher payable based on the timing of purchases and increases in our deferred income, which left both deferred revenue and deferred cost of revenue on our balance sheet.

In the corporate governance area, we continue to comply with the rules and the sprits of Sarbanes-Oxley, I am ensuring that the companies governance procedures are in full compliance with the act. We successfully completed the audit on time and received an unqualified opinion from our auditors which support the internal control certification that Kevin and I made in each of our quarterly and annual reports. We continue to focus on improving the quality of our internal control as we build and maintained the corporate of the structure needed to support future growth. As a reminder, our annual meeting of stockholders will be held at Sockets office in [inaudible] California tomorrow, April 21 at 9 am. All present directors were standing for reelection and the board has recommended for shareholder ratification, the reappointment redeployment of the independent public accounting firm of [inaudible] to perform our financial and internal control audit for the ear ending December 31, 2005. We will publish the result on our web site after the meeting.

On Thursday, tomorrow, Kevin Mills and I will be involved with stockholder meeting, followed by a regular scheduled meeting of our board of directors. The transcript of this call will be posted on our web site on Friday. We will be available by e-mail or telephone on Friday, should you wish to follow up on any matters covered in this call.

Let me turn the call back to the operator and open up the call for your question.

[OPERATOR INSTRUCTIONS]First question comes from Laura Engle of [Sendat] Securities.

I had a question about, you discussed, the bar-code scanning being the largest business area and transfer expansion of the bar-scanning products and specifically giving the example of the hospital medicine dispenser.Can you give some guidance on how you are Dave increasing in revenues and market share like how many new products there might be, other areas these products might address, or even just specifically the extent of possibilities for the hospitals medicine dispenser

Okay, let me explain, we sell the product by providing excellent software development tools in the case of this particular hospital. They know more about how medicine is dispensed and we will [inaudible]. So they need to have Pocket PCs, the ability to scan and then if there is software [inaudible] control. They used our development tools to incorporate our scanning technology into their applications. Then they can use their standard Pocket PCs. Whether it be with an [inaudible] or with blue tubes to connect with to barcode scanning. Traditionally, our barcode scanning products have been, I would say moderately expensive. We are bringing to the market an entry level scanning in each category so that if you have a lighter scanning requirement we can enable you to scan at a much lower price. So the entry level scanners we will cover SDas well as CS as well as blue tooth. As scanning performance goes up you need to go through a laser and we will have both class 1 and class 2 lasers, and that will allow people to mix and match. From the software development point of view, the software is agnostic. It will support all of the scanning options. So, as a developer you no longer have to concern yourself with knowing exactly the situations that the software is going to be used. For example currently I believe they are using class I lasers in this hospital application we talked about. That application is very applicable to home health care, where you might have people outside as well as inside scanning. They would be able to switch to our class 2 laser and use the same software without any modifications with a more powerful laser. That is really the advantage we offer in terms of this mix and match.

In terms of the applications we feel lot of applications being developed particularly in areas of process control, like the health medication areas, in field, sales, mobile sales [that application, and in the automotive world. We do have about 6 categories listed in our web page. We have about 50 different application that have been completed in different segments. We continue to have a very strong pipeline of people who are developing applications that will allow people to use our bar code scanning technology.

Your next question comes from Dick Siragusa with Advest. Please state your company name followed by your question.

Kevin continuing with the hospital market and the first question is am I correct in the fact that the government is going to require hospitals to convert to barcode scanning within the next 2 years.

Yes, there is a law that requires that by the end of 2005, that every hospital have either a system or a plan to have a system in place to control the dispensing of medication.

Okay what percentage of that of those hospitals today would you say have it.

I would say a very small percentage may be less than 5%.

Okay. So then what is this [inaudible]. What is the potential market size for Socket's software scanners. It sounds huge to me.

It is huge, right and it is [inaudible], but the application that this company has worked on is very forceful. Currently, there are 5000 hospitals in the US and they have an average bed size of 167. Just to put things in perspective for you, in the hospital we visited, that they are using this particular application, they have 300 beds and they basically dispense[inaudible] 1.3 million doses of medication a year. The hospital that we [inaudible]. We believe that every hospital will have to have something. We believe it is a very big opportunity. Whether we all get served by this particular software application or other similar applications or just incorporated into SAP or Symbolor TAT I should say are other types of [inaudible] offer. We really do not know and we really do not care. What we are able to offer is that you can use standard Pocket PC devices to do this both in the hospital and out of the hospital. We think this is one of many large applications, and will be driven by the excellent software and need to control. We would agree, this is a very large opportunity.

Are we looking at like in other words when you have a hospital, very often you have a network. It might be 12 or 20 hospitals in the network, and they convert to scanning and Socket is one of the contractors. Are we talking about big tickets here?.

We are talking about big opportunities. I do not think that Socket will be [inaudible] of the contract.

No no, I meant subcontract

[Inaudible] that will provide Socket [inaudible] will be awarded contract. We expect this to be a [inaudible]. So this is just one of the many areas that we see opportunity. I think that they all come under the category of process improvement and control. Now that there is easy to use scanning, whether it be scanning or RFID the applications are the same. We have been working with software developers for at least 2 years on some of these applications, and now that we are getting [inaudible] market, which we feel will drive [inaudible].

This is for Dave. In that research report that is out on Socket, I think the forecast is for 10 cents a share for the year 2005. So, we think that is still attainable.

Well, we think we are going to be moving in that direction Dick. This quarter of course [inaudible] forecast. I think that forecast also calls for about $7.5 million of revenue in this quarter. So, the question how much of that can we make up through the next 3 quarters. We are expecting that we will have a very solid growth picture as we moved into the second quarter and beyond, and we are looking to move right back to profitability, but how fast do we grow, we do have to make up that million and a half to get that 10 cents.

It sounds to me like doable, is it?

I always believe that it is doable. On the other hand it is probably, we need to strike back up that growth path. So ask me next quarter [inaudible], and I will tell you just how doable it is, but we are expecting to. Now that we are seeing the orders coming in and clearly the new Pocket PCs are reaching the point of deployment, we expect we will see some nice catch up. Let us see how fast this happens.

[OPERATOR INSTRUCTIONS]. Our next question comes from Jack Buckman. Please state your company name followed by your question.

Just as a followup on that question on the hospitals and then another question, you said that that is a large market. So the whole US market, how many scanners do you think even if you were able to get everyone would be used. You said there is like maybe 5000 hospitals of average with so many beds.

Yeah, let me answer this. All what we do know, the hospital that has 300 beds, they have staff of 120 nurses, each of which have a scanner. So if you just take that as your average, you are talking about, it should be somewhere in the region of 50 scanners per hospital [inaudible] 5000, between 250,000 scanners.

Yes, and what is the length of usability of the scanners, is it a 3 year cycles that they usually be..

As you remember Jack, that this is a new requirement, this application does a few things. It controls the dispensing of medication. All of the people [inaudible]. So when the nurse goes [inaudible] the patient and they gave the example of, if for example a doctor has prescribed potassium and the results had come back from the lab, and now the potassium levels were higher than expected, and the doctor wanted to discontinue any further medicine related to potassium. On his screen he can say this patient should not get potassium any more, and even if the nurses administering the medication are moments from administering the medication, the system will now basically say do not administer the medication. There is a number of benefits, both accuracy and also the effectiveness of carrying out the orders.

They are very very obvious. I was really just wondering what are the opportunities for repeat orders.

I think that every hospital by law will have to have some system. This seems to be a system that was developed by a hospital and they obviously understand the problem. The hospital in particular have their own software development team and it is their intent to sell it to other hospitals. They are just starting the process. It is a good example of the type of productivity, improvement, and process controllable [inaudible] that can be achieved with scanning and that we are [inaudible]. Again, this is one of [inaudible] good example, and is very tangible for everybody to see.

Okay. Now a little bit more dicey question, and that is on the revenue growth areas. I think we have had short falls in the projected revenue at least from the research reports around there for like 3 quarters in a row, just because extraordinary reasons, but I think that we are starting to get credibility gap. As to what we think is going to happen and that is how it happened. Do you have any plan in hand as to how maybe to help that credibility gap to the outside investors, because the stock price is the one that is getting hurt. I mean, the company is so much better off than it was 3 years ago, and yet the stock prices so much worse off than it was 3 years ago. A couple of reasons for that obviously because of market itself.

We acknowledge that our expectation of how long these transitions would take, that they are taking much longer, and even though when we talked in February, we felt we were through the issues and we felt the units coming in from [inaudible]. There has been a number of software related issues, minor but significant that it caused it to be delayed. The only thing I would say is that we now [inaudible] customers. The new devices seem to be stable and well accepted, and I think we will get back onto growth path. Obviously, our expectations are disruption in the market. We underestimated, but hopefully it is behind us now. We can get back on track as being better and predicting what will happen as well as having [inaudible] revenue.

One of the best tangible indicator Jack is [inaudible] in orders has gotten through the cycle of availability of Pocket PCs and then [inaudible] as they get these individual issues stick [inaudible] we are now seeing the order rates picking up very nicely as Kevin indicated $3 million plus the orders in March driving us to record orders received during the first quarter. from $6 million and a record backlog going in the second quarter. We also are going to have opportunity to recalibrate everybody publicly we are attending on the 16th of May the American Electronics Associations MicroCap conference and we will be web casting the presentation we make to the participants in that conference and it does provide an opportunity for us in the public form to be able to update post on how the quarter is going about midway to the quarter.

That was one other thing that I was hoping that you were going to get is that it would be more frequent communications, you know how the quarters are going because I think that [inaudible] forget because everybody is thinking okay we are going to get back to our traditional 30 - 35% growth rate and then we not only going to have the 30 - 35% growth rate but we actually have a contraction and I know that it can happen but if we had just the investment community been made aware of it a little bit and I know that you have always have hard thing [inaudible] last month is always your biggest month of the quarter and you are hoping as much as we are that you are going to hit it but you do not know to the end but I think something like that would really help the investment community just to be able to have a little bit better idea where we are going and how we are getting there you know on a more frequent basis.

Thank you. We have a followup question coming from Dick Siragusa. Please state your company name followed by your question.

Relative to the last comment preceding me about the credibility and so on and so forth. I always believed the problem creates the opportunity and I see a lot of opportunity in Socket and I am also thinking that Wolf Axelrod actual should be lending a helping hand here and playing a strong role in resolving the credibility problem and in taking advantage of the opportunity that lies ahead and I am wondering where has Wolf Axelrod been what are they doing. They are planning an important role for Socket?

They are in a lead role Dick in order to outreach particularly to the institutional investors and fund manager and analyst support that process and a lot of that work is behind the scene. I believe since our press announcement hit the wires they have been on the phone to tracking us to bring them update, encouraging to do [inaudible] participate in this conference call. We also as you know have been making quarterly visits to this group spending a week, we will be doing that week after next. If that all arrangement is done up under the auspices of Wolf Axelrod and we get some extremely good feedback from a lot of folks in the investment community and as you know our institutional investment has been growing over time, but about 2 years ago we were at 1 or 2% now we are in the 9 to 10% range. We obviously believe that will grow faster as we regain our growth path but we are seeing a lot of interest in what we are doing in that kind of large number institutional investments funds.

Okay we will see. Thanks.

Gentleman at this time we have no further questions. Please continue if any further remarks you would like to make.

So, on closing I would like to say that Q1 was not the start we expected but we continued to be very optimistic above the mobile computing markets and our position in this. We have the advantage of a very talented and experienced team that continue to work very hard delivering new and exciting products that will help us get our revenue and a possibility back on track. Finally, I would like to thank our employees for their continued hard work and dedication and our shareholders for their patience. Thank you and have a good day.

Ladies and gentlemen, this concludes the Socket Communications first-quarter management conference call. [OPERATOR INSTRUCTIONS]