Socket Mobile Inc (SCKT) 2005 Q3 法說會逐字稿

Good afternoon ladies and gentlemen. Welcome to the Socket Communications, Incorporated Third Quarter 2005 management conference call. [operator instructions] As a reminder, this conference is being recorded today, Tuesday, the 25th of October, 2005. I’d now like to turn the conference over to Ms. Tashia McDotty. Please go ahead, ma'am.

Thank you. Good afternoon and welcome to the quarterly conference call for Socket Communications for the third quarter ended September 30, 2005. Earlier today, Socket distributed its earnings release over the wire service, and also by email 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 www.vcall.com shortly after the completion of this call, and a transcript of this call will be posted on Socket’s website on Friday. We’ve also posted replay numbers in our press release for those wishing to replay this conference call by phone. The phone replays will be available for a week.

Now, before we begin, I would like to remind you that this conference call my contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and 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 of handheld computers and other mobile computing devices. Growth and 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 and 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 and 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 in third party hardware and software solutions, product delays associated with new model introductions and product changeovers, continued growth and 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 availability 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.

With that said, I would now like to introduce management. On the line today are Kevin Mills, president and CEO; and Dave Dunlap, CFO. At this time, I would like to turn the call over to Kevin Mills.

Thank you, Tashia. Socket continues to make progress in many areas. And I’ll get into details later in my remarks. However, I’d like to give you a glimpse of what we’ll be discussing today. And let me say that there are a number of areas of progress in Q3. These include continued profitability. Socket has been profitable for six of the last seven quarters. We’ve seen PDA market consolidation. Palm announcing a move to Microsoft’s Windows Mobile 5 for Treo. Our strategic vertical integrator program is growing and having a positive impact. New products which are in deployment trials and WIFI Companion is being named a software finalist by PocketPC Magazine for best software utility.

Overall, I would describe Q3 as a progressive and adequate quarter. We continued to lay the foundation for getting back on track with revenue growth, and we remained profitable in the seasonally weak quarter. We made a lot of progress in the product development areas, which are discussed in a few minutes.

I’ll start by focusing on the markets and how we see it continuing to evolve since this evolution process is quite dynamic and affects us going forward. The most significant announcement for Socket in Q3 was Palm announcing its decision to put Microsoft’s Windows Mobile 5 on its Treo device starting in Q1 of 2006. This is a very significant announcement for a number of reasons, and one that will have excellent long term implications for Socket. Let me explain.

Palm’s decision makes it clear to the world that Windows Mobile is going to be the corporate choice for mobile business applications. With its tight integration to Exchange mail, it has become the de facto operating standard. Palm’s decision to migrate to Windows Mobile also makes life simpler for a lot of people in the decision process concerning mobile computing deployment. Going forward, developers will be able to develop an application once and it will run on all existing mobile devices running Windows, or the new Palm device. This is a huge advantage for developers since their applications only need to be developed once. This also changes the dynamics for the IT manager, as now he or she does not have to fight the battle over which OS or the battle with various executives who perform the Tiva form factor over the device from a supplier running Windows Mobile. The decision is now clear and this will speed up the market.

The Palm decision also moves the PDA market more in line with the standard computing market. In the general computing markets, the form factor you choose, whether it’s a Dell or HP notebook is 100 percent independent of the operating system. In fact, it’s so obvious to the average consumer that we don’t even consider it when we make a purchase. We select our notebook on weight, physical size, screen size, price, feature sets, et cetera. Typically, applications are not part of the decision process, and all notebooks run the same programs. However, in the handheld world, there are currently a number of OSs, namely Windows Mobile, Palm OS, Symbian and RIM. And the software functions are intertwined with the hardware options. This will become a thing of the past as there are more and more hardware choices with the same OS. Palm, I believe, will do very well in the market because their Treo device is an excellent package -- lightweight and highly portable. And they will continue to have all these plus the advantage of running all the programs that are currently developed for the Windows Mobile OS.

For Socket, Palm’s decision could also bring approximately 3 million units into our total addressable market in 2006, which is a significant number, as our addressable market is still below 7 million units today. Lastly, the mobile market for PDAs is transitioning. Over the past few years, we have seen articles outlining the demise of the PDA. These statements are far from the truth. We are beginning to see some positive articles about the PDA markets, particularly in Europe. Many of the newer PDAs include a phone connection and are referred to as connected PDAs. These devices allow a person to get email and corporate information over a wide area or local area network. These devices certainly seem to be taking hold. I think most people have discovered via trial and error that an all-in-one device is a difficult proposition, and does not work for everyone. But a mobile phone and a connected PDA cover their mobile computing needs very well.

This is very similar to the experience initial fax machine users had when they purchased their device. Initially, they decided to share the phone line and share their data and voice calls. This got old in a hurry, and quickly everyone decided to get a second telephone line. I believe we are doing exactly the same thing within the mobile computing space. The only negative in the Palm announcement is that it could stall a segment of our market a little in Q4. As people who are hoping to deploy mobile solutions maybe tend to wait and see the Palm device. For me, personally, when I ran an IT organization for a multi-national firm, I would’ve been tempted, so hopefully this will not impact our numbers too much in Q4.

On the product front, we have made significant progress in Q3. Starting with our data collection business, an area we continue to believe in very strongly, we introduced a number of new products, got more units into trials and pilot programs, and also continued to expand the reach of our existing products. In August, we announced our relationship with Tiva and their deployment of a solution based on Socket’s bar code scanning with first stop convenience stores. Tiva is one of Socket’s many SVI partners who have completed their development and are now deploying their solutions to their customers. Socket increased the number of SVI partners like Tiva from 36 at the beginning of the quarter to 45 at the end of the quarter. This is a 25 percent increase in the number of well experienced and dedicated value-added resellers committed to the mobile market deploying advanced applications based on Socket products. We expect more of these partners will complete their developments, enter into customer trials and pilot programs, and successfully deploy it to their customers, just like Tiva did, in the coming months.

Our SVI program continues to be an investment and an area of focus for the company. We believe by properly servicing and supporting these important resellers and their customers, we can increase our sales and marketing share over the long term. We also announced in September that our SD scanner is now supported by SAP’s NetWeaver Mobile. Obviously, many months of work were involved prior to this announcement. Just like [inaudible] before them, SAP is a platform provider with its own community of developers and integrators. By working with and getting SAP to support our bar code scanning tools, we will, over time, be able to reap the benefit of their applications and customer solutions.

The process of integrating your products into a firm’s development tools and offering these solutions to developers is longer for companies like SAP, but we believe the long term payoff will be worth it. To date, we are the only third party add-on bar code scanning provider approved by SAP, and we are in the process of including our RFID solutions as well.

In Q3, we announced a number of new data collection products like the 7E, an entry level version of our cordless scanner. This product was designed for those customers who only read a limited number of bar codes and need a lower price point. We expect this product will enable us to address a segment of the market that we were not able to service well in the past. We also introduced a newer version of our 7P, a ruggedized version of the cordless bar code scanner which meets the IT 54 Standard. This product is designed for outdoor applications where the bar code scanning process can be subjected to rain, wind or snow. It’s also designed to be used in hospitals, where it may be used during a process that needs to be disinfected or wiped during its normal usage. The 7P addresses this segment and the outdoor market which we were unable to service with our standard 7M bar code scanning product. These new members of the bar code scanning family, like all our bar code scanners and our RFID readers, are fully supported by our SDK. And so any developer who supported our bar code scanning products can now upgrade their existing customers to these new scanners without modifying their application. All of these cordless or Bluetooth scanners are all supported by our Symbian and recently introduced BlackBerry software.

Also in the data collection arena, we introduced the world’s first combination RFID Reader and bar code scanner plug-in card in Q3. The new product allows customers to read both RFID tags and scan bar codes. We worked closely on this product with the people at St. Clair Hospital in Pittsburgh, and specifically pulled in our schedule to meet their needs. Put simply, the combination product addresses the need for a single device that handles both technologies and offers some future [inaudible]. We feel the problems encountered by St. Clair’s Hospital are typical of many mobile environments in that they generally want to use bar codes to track and dispense their medications for cost and convenience reasons; however, there are a few exceptions whether reusability and the requirement to have better traceability makes RFID a better choice that better suits their needs.

The combination bar code scanner and RFID Reader solves this requirement and they are currently completing their pilot deployment. Everything is on track and once successful, [inaudible] will begin to purchase these new combination devices.

We also announced this morning our intention to enter the wearable markets with a revolutionary Ring Scanner. This product is designed to be worn on the index finger of a user, and via Bluetooth will communicate to a Bluetooth enabled mobile or stationary computing device. The beauty of the Ring Scanner is that it frees up the mobile worker’s hand from the scanning operation, thereby allowing the worker to handle boxes or other objects that require both hands and to freely move about while still having the ability to bar code scan and track items. This product is an opportunity outside our traditional white collar bar code scanning market, but the product combines a number of elements that are in line with our core strengths like bar code scanning, Bluetooth technology, small physical size, low power, battery management and software. It’s a natural extension of our bar code scanning product family, and incorporates many things that we have learned in the mobile data collection world over the past few years. We are excited about the product and believe it will be a large contributor to our revenue next year. We are already engaged with a number of substantial customers for the product, and their initial feedback to our design is extremely positive. We expect to deliver pre-production units to key partners in Q4 so that they can be tested and approved for deployment. Again, the beauty of this product just like all our bar code scanning and RFID products is that it’s supported by the same STK. This allows our SVIs and their customers to select the bar code scanner that best suits the application they are focused on and they can use the same application with many diverse products and different configurations.

Finally, on the development end, we introduced our new SD Wireless LAN card in Q3, this being the world’s smallest SDIO wireless LAN card, coupled with our WIFI Companion software is a very compelling solution for the mobile market. And its timing couldn’t be better as it coincides with the Palm launch of its Windows version of the Treo, a device that does not include WIFI and does include an SD slot.

On top of all of these new product developments, we also have to update our drivers to support the new Windows Mobile 5 OS. This is a difficult process, and I’m happy to report is near completion. This Windows Mobile transition which happened in September seems to have gone significantly better than last year’s transition. And even though there are still a few outstanding issues, we are confident it will not impact our business like last year.

So overall, we had a very busy and productive summer from a product point of view. On the dynamics of the quarter, Dave is going to talk about these in more detail in a few minutes.

As we look to Q4, we remain very optimistic about the road ahead. A number of the factors seem to be lining up to suggest that mobile computing has finally found its [inaudible]. It seems the simple driving force behind mobile computing market today is the elimination of the many processes that are currently controlled via paper and pen, such as order books and ticket issuing, and to replace them with an electronic equivalent. We are seeing this across multiple industries and we expect the market to continue to grow going forward as solutions which enable this to happen are deployed.

I’m a little cautious about Q4 since there are some lingering issues still associated with the transition to Windows Mobile 5, and there are things outside our control which have bitten us in the recent past. There is also an unknown situation with the impact of the Palm announcement. Having said all this, I think we can expect to see moderate growth in Q4. We will also allow our expenses to be moderately higher as we continue to invest in the SVI program, but our focus will be to remain profitable. We’re doing all we can to grow our revenues and stay well positioned for the market that finally seems to be developing as we predicted a few quarters ago.

I would now like to turn the call over to Dave Dunlap, Socket’s CFO, for his comments.

Thank you, Kevin. We are pleased to report a third quarter profit of $195,000 or a penny per share, on total revenue of $6,548,000.00, up 6 percent from the same quarter a year ago. Revenue was flat with the previous sequential quarter. The quarter was our sixth profitable quarter out of the last seven quarters. Our third quarter revenue is historically flattened by the effects of European summer vacations on European regional sales. Revenue in Europe for the third quarter was 20 percent of total revenue, compared to 30 percent of total revenue for the second quarter. This decline of 10 percent as compared to the second quarter offset corresponding increases in revenue in the Americas and Asia. We experienced a similar pattern in the third quarter of 2004, with sales in Europe dropping from 27 percent of total revenue in the second quarter of last year to 18 percent of total revenue in the third quarter, and returning to 25 percent in the fourth quarter of last year.

Data collection revenue tends to be lumpy and tied to major customer deployments. In the third quarter, bar code scanning revenue reached record levels in the Americas, but we had no major bar code scanning deployments in Europe, contributing to the seasonal European revenue decline. Measured by product family, total sales for data collection products for the third quarter were 39 percent of sales; connectivity serial products were 13 percent of sales. We experienced worldwide sequential quarterly growth in our connectivity products, our OEM products and our serial products offset by an 11 percent reduction in sales of our data collection products. Data collection product revenue in Americas increased with most of the sales declines attributed to lower summertime sales activities in Europe, particularly in the deployment of bar code scanning products in Europe as I had just mentioned. We maintained our gross margins on sales for the third quarter at our 50 percent target levels, and we kept our expenses flat. Our operating expenses for the third quarter were 3.1 million, compared to 3.1 million in the second quarter and 3.1 million in the third quarter a year ago. The head count of regular full-time employees at Socket at the end of the third quarter was 74 employees, up two employees from the beginning of the quarter. Head count increases were in the sales and marketing areas including additional support for our strategic vertical integrated program. We expect moderate increases in expenses in the fourth quarter for research and development based upon planned development expenditures and in sales and marketing as we further increase our sales and marketing activities around the world. We continue to maintain a highly leveraged business model, with the infrastructure in place to manage our worldwide distribution channels and contract manufacturers in place with the capacity to expand production. Thus, we are structured to move higher volumes of products through our distribution channels with only moderate increases in our expenses.

Our cash balance at September 30, 2005 was 6,570,000.00. For the nine months ended September 30th, we’ve generated 1.7 million in cash from operations including positive cash flow in all three quarters, paid down our bank line by $700,000, invested $400,000 in property and equipment, and increased our cash balance by $600,000. Our current ratio at September 30, 2005 defined as current assets divided by current liabilities was 1.8:1 and we have no long term debt. Our backlog at September 30, 2005 representing orders received by the end of the quarter that are shippable in the next quarter was 1.2 million.

This year, Socket has focused its efforts on many of the key steps needed to mature and grow the market for mobile data collection and mobile connectivity. Our announcement this quarter enabling RIM BlackBerry devices to work with our cordless hand scanner completes the expansion of the major mobile computing product platforms we support to now include Windows Mobile pocket PCs and Smartphones, Windows notebooks and tablets, Palm PDAs and Palm’s Treo Smartphone with a Windows mobile version out early next year, as discussed by Kevin. Symbian Series 60 and 80 Smartphones such as those from Nokia and the RIM BlackBerry with Bluetooth wireless technology. In addition to a choice of mobile computing platforms, we’ve expanded our data collection product offerings to fill in the matrix based on performance requirements, entry level, mid-range or high performance, and form factor -- compact flash, SDIO, cordless with Bluetooth wireless technology and RFID.

Kevin mentioned several new additions to this matrix this quarter, including an entry level cordless hand scanner, a ruggedized high performance cordless hand scanner, and a combination CF bar code scanner and RFID Reader. The third leg of this strategy has been our focus on enabling developers to easily integrate our products into their applications with our software developer kits and the available engineering support, and to educate developers on the capabilities of our software. We have five software developer kits covering Bluetooth, wireless LAN, GPS, bar code scanning, and RFID. The beauty of our Socket Scan software is that it supports all of our bar code scanning and RFID products on all of the mobile platforms, so developers only need to develop one version of their software to enable their application to support our entire data collection product line. The strength of our bar code scanning software, our familiarity with and the breadth of mobile computing platforms we support, and our experience with small mobile devices all contributed to the decision to enter the wearable bar code scanning marketplace with our just-announced Ring Scanner.

Our strategic vertical integrator program has been highly successful in both educating and supporting developers, and the program has been growing nicely. A number of applications are enabling the productivity enhancing benefits of electronic data collection and data transfer from field locations to enterprises in a number of market segments, including field force automation and data entry, merchandising and inventory shelf management, healthcare, particularly the administration of medications, and mobile printing. At the same time, we continue to invest in updating the key wireless technologies used in mobile computing and own and control some of the best Bluetooth and best wireless LAN software in the market today.

Socket’s customers are able to add software advances to their current Socket products as we make them available from time to time, which extends the useful life of our products by keeping them current with technology advances. We’ve continued to follow the basic formulas for success with our mobile products -- ease of use, small form factor, and low power consumption. And today, our focus is on creating management software to enhance the ease of use of our wireless LAN, Bluetooth and Socket Scan software, improving the ability of a non-technical user to stay in touch while mobile. Products such as our WIFI companion have been well received, and we expect to continue to develop and to grow our revenue from additional mobile management software tools. Our goal is to enable every enterprise to keep their mobile workforce in close touch with the enterprise through electronic mobile computing, productivity enhancing applications, and a variety of networks including mobile phone, wireless LAN, Bluetooth and phone networks. We believe that Socket will continue to be a major player in this effort. We are poised to grow as our markets expand and mature, and we look forward to continuing to report our progress to you.

Now, let me turn the call back to the operator and open up the call for your questions. Operator.

[Operator instructions] And our first question will be coming from Brian Swift of Security Research Associates. Please go ahead, sir.

Yes. I got a couple of questions. One, in the press release, the second table where you were describing percentage growth decline, I’m a little confused by the OEM and serial products. They both look like they went from sequentially up the same amount, .8 to .9, but you have them -- one is 24 percent, one is 5. Is there something else that we should be looking at there that --

No. In the press release, Brian, that’s just a rounding difference. We’ve just gone to 1/10 of the number there. And if you go all the way out to the number, it gives you the percentages that you actually see there.

A low 8 to a high 9.

That’s correct. For example, our peripheral connection products, the number was 861 instead of .9, although it rounds to that. And the OEM products, the number was 897 and that also rounds to .9. The differences are in the rounding.

All right. My next question relates more to the -- we’ve had some [inaudible] in the first half of the year because of the need to correct the software bugs that were in the new platforms out of Dell and HP, and it seemed like there would’ve been somewhat of a pent up demand here to -- now that those have been corrected; it would show up here later in the year. But it sounds with your words of caution relating to -- the good news is we’ve got platforms with -- primarily with Palm, but in addition with RIM and Symbian. The mobile -- the Windows Mobile 5 transitions is it’s like, “Okay, now there’s another issue that they’re going to push things out a quarter.” It’s almost like we’re wait until next quarter until -- for a year now. When is this going to --

It’s going to end, we hope, as soon as possible, Brian. I think the -- we certainly had a bad experience when they converted -- upgraded the RAMs last year. And not only did they upgrade the RAMs, but they required the manufacturers to make new hardware. So both Dell and HP did a transition from -- in the case of Dell, from the X5 to the X50 series, and in the case of HP from the 2200 series to the 2000 series. And the fact that there was a hardware transition coupled with the software transition, they had a lot more issues. We are hoping that the transition this year, if you will, will go a lot smoother. Some of the things that make it smoother is the fact that you can upgrade the existing hardware to the new OS. So they don’t have the inventory concerns and related issues where they stopped production and they were out of product. I believe there still is a lot of pent up demand. I think that we didn’t benefit particularly well during Q3 because in the case of HP, they only released their updated, their fixes if you will, on June 27th, and they released a new OS on September 15th. We have worked very hard all summer to get all of our scanning and other products converted over to support the new OS. And I’m happy to report our scanning products now work across the board. We did encounter some minor issues. We were able to provide software workarounds and while we continued to work the issues in the background, so everyone could proceed. We’re as anxious as you are to get past this situation, but there’s not a lot we can do other than to monitor the situation and report it as we see it.

We’d also mentioned, Brian, in the last conference call that we had hoped that in the third quarter the pent up demand would overtake our seasonal weaknesses. And in fact, in the Americas, we were at record sales levels for bar code scanning products as an example. And we have reported growth virtually across all of our products except for bar code scanning. So the one area that we didn’t see that demand overcome the seasonality was in Europe. And then as we looked at it, not only was HP almost end of the quarter before the RAM updates were there, and then you had that big break in the late July and August time period; there just -- it wasn’t time for field trials and the other steps that generally normally take place. And we commented last time that -- we indicated that there was some risk of that, but that the fourth quarter would be much stronger because of the additional time needed. And we clearly see the pent up demand. So we’re hopeful now that -- and the only thing, again, that Kevin’s cautioning is whether some of these opportunities will wait further for additional updates. But at this point, we believe most of those opportunities will be moving forward on their own pace, and once field trials are done, typically we see deployment.

Now, on the longer term, I think Palm’s announcement is a huge plus for us because IT people in general are not what I would describe as brave. And they do not like to push a technology, certainly into the mobile space that isn’t tried and trusted. They would basically like to be on the right OS. And there has been always and continue to be two camps, one which was Palm based and one which was Microsoft based. And in any deployment, there was a certain percent of people who had a preference for Palm. The fact that now you can have the same programs but still have the nice Palm form factors, I think will make it much easier for people to deploy these solutions. Because the IT guy doesn’t want to get into argue what I would describe in some states religious differences between different OSs.

Okay. Because on the surface it seems like you have increased the number of platforms by adding Palm and now even RIM and Symbian which you’ve never really had. You didn’t have it in years past. And then you’ve also announced a lot of new -- you’ve expanded the product family significantly. So it seems like that would be suggesting that you’re going to start having some pretty substantial growth.

All I will tell you is we’re working hard on it, Brian, and we’re as anxious for it to happen. We’ve increased our SVI program. We’ve added more people there. We are actively involved in outreach program where we are spending, I would say in the $100,000 a quarter range to get people to be aware about all the products we have and how well they work. It takes a little bit of time, but we’re working hard on it.

Okay. I’ll let somebody ask a question.

Okay. Thank you, Mr. Swift. And actually, if there are any other questions at this point, if you could please press the star followed by the one. As a reminder, if you’re using speaker equipment, you do need to lift the handset prior to pressing the numbers.

And gentlemen, we have a question from Steve Baskim. Please go ahead with your question and state your company, please.

This is from UBS. And Dave had a question for you. In the assumptions that you’ve made here in the last one year, were the recent Palm and RIM parts of the equation that have come in here assumed in that, or are these kind of bonus or added to any assumptions that you guys have made on an ongoing basis?

Well, we didn’t assume Palm from a Windows OS perspective. But as you know, we do have our SDIO bar code scanning products that work with current Palm devices, both Bluetooth and our SDIO products [inaudible] PDAs. So we have factored in Palm revenue, but we think the Windows OS move will generate revenue much more substantially and much faster because it reduces the decisions that have to be made. We also had not really counted on a lot of revenue for RIM, but RIM has been a target of ours and it’s certainly been factored into our development program. But we also recognize that building application software using our SDK is the next step. And there needs to be time for application developers to port their programs over to the RIM BlackBerry type devices. So how rapidly that happens will drive how quickly our revenues increase. But that should be happening -- it’s certainly enabled now and should be happening fairly quickly because we do know that many people are dedicated to the RIM BlackBerry devices and view them also as an excellent data collection device where they don’t have to have an extra device but could use the device they normally carry for data collection. So we believe that we’ll see some excellent revenues in 2006, but we’d not counted on a lot of revenues from the BlackBerry opportunity this year.

Okay. Thank you.

And thank you for your question, sir. Again, ladies and gentlemen, if there’s’ any further questions, press star one at this time. And a follow-up question coming from Brian Swift. Please go ahead.

Yes, thank you. Could you give us an update a little bit about your embedded design wins? In other words, sometimes you list how many of them you have and kind of -- whether -- what kind of progress they’re making in terms of deployment. What’s the update on that sector?

Well, first of all, on the embedded, which we’re now referring to as OEM to eliminate some of the confusion, our Bluetooth modules were at record levels in Q3. Essentially, we’ve seen that business continue to increase. We did $770,000 thereabouts on the embedded modules. And our chip business has continued to, I would say, diminish. So even though the number looks reasonably flat today, it’s all made up of design wins. We continue to get design wins. In Q3 alone, we got two design wins, one in wireless LAN and one in Bluetooth for Symbol. We’re now designed into the new Symbol MC1000 Series which was just launched. I don’t have the exact numbers in front of me, but I’ll be happy to follow-up with you, Brian, and to give you those numbers. But I would say that the OEM business continues to be healthy, very healthy actually. And it’s our intention and plan to expand our Bluetooth offering to have a wireless LAN offering starting in Q4. And we have been raising essentially for the transition from [inaudible] to G, but we should be in a position in Q4 to offer our OEM customers the wireless LAN embedded solutions. And this coupled with the software we have done particularly right by Companion and other types of utility software make our solutions quite compelling. So we believe that we had a good growth opportunity in the OEM space.

And what’s the status of that X project, either [inaudible] or the summer. You had talked about --

Yes. The deal is between handheld products and FedEx and we’re continuing to see orders suggesting that it’s being deployed. But the numbers haven’t been [inaudible] what we expect. Now, we’re in a position to supply, but it FedEx who is determining the pace and they’re working in conjunction with handheld products. And we’re a supplier, and we’re designed in, but we have no influence. I would say the numbers are still relatively small and we probably have supplied less than 5,000 of these units.

And the total was how many?

The total that was published by handheld products and FedEx were a number of 60,000.

And none of them giving you any kind of window as to when that might accelerate?

Well, actually, I think, Brian, we have received now strong indications that they are picking up the pace. I think they’ve indicated they want another major [inaudible] order delivery in the fourth quarter. So we’re looking forward to confirming and fulfilling that.

Okay.

Any further questions, Mr. Swift?

No.

Okay, thank you. Gentlemen, there are no further questions at this point.

Okay. So in closing I would just like to say that Q3 we were extremely busy and we were happy to remain profitable in a seasonally weak quarter. And we continue to see our markets develop in a way that’s in line with our expectations. And we remain well positioned to service these markets going forward. We are increasing both our spending and in-house employment in the sales and marketing areas, and we are doing everything we can to drive our sales into these new markets. And we believe we will be successful, even though we -- it has been going sideways over the last few quarters. We believe that these problems are understandable and we will be able to grow as we move forward. I’d finally like to thank our employees for their continued hard work and dedication and our shareholders for their patience and support. And wish everyone to have a good day. Thank you.

Thank you. Ladies and gentlemen, this concludes the Socket Communications, Incorporated Third Quarter 2005 Management Conference Call. If you’d like to listen to a replay of today’s conference, you may dial 303-590-3000 or 800-405-2236 using the pass code 11041405 to access that call. Again those numbers, 303-590-3000 or 800-405-2236 using the access code 11041405. You may now disconnect. Thank you for using ACT Teleconferencing and have a pleasant day.