Vicor Corp (VICR) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vicor 2007 fourth quarter earnings results conference call. Your host for today's call is Mr. Mark Glazer.

(OPERATOR INSTRUCTIONS)

I would now like to hand over the program to your host for today's call, Mr. Mark Glazer.

Please go ahead, sir.

Thank you.

Good afternoon, and welcome to Vicor's quarterly conference call. I'm Mark Glazer, Vice President of Treasury Services, and with me today is our CEO, Patrizio Vinciarelli, and Dick Nagel, our Interim Chief Financial Officer.

Before we begin, we'd like to remind all of you that today's conference call is being recorded and is the copyrighted property of Vicor Corporation. Any rebroadcast, reproduction or other transmission of this conference call, in whole or in part, without the prior written consent of Vicor, is prohibited.

In addition, as stated -- whoops, sorry -- we'd also like to remind you that various remarks that we may make during this call about future expectations, trends, plans and prospects for the Company and its business constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements merely reflect our current beliefs, expectations and estimates, which we share with you during our quarterly conference calls. Actual results may differ materially as a result of risks and uncertainties, including those discussed in our quarterly and annual reports filed with the SEC.

A replay of this conference call will be available beginning shortly upon its conclusion through April 1, 2008 by calling 888-286-8010 and using the passcode 27098301. In addition, a webcast replay of the conference call will be available on the Investor Relations section of the Company's website, at www.vicorpower.com/IRwebcast beginning shortly upon its conclusion. However, the information we provide during this call is accurate only as of the date of this call. We undertake no obligation to update any of the statements made during this call, and you should not rely upon them after the conclusion of this call.

We are now ready to begin the Q&A portion of our conference. I would ask that you limit yourselves to up to two questions at a time so that everyone gets a chance to ask his or her question. You may of course get back in the queue to ask additional questions.

Phil, we will now take the first question.

Thank you, sir. (OPERATOR INSTRUCTIONS) From the line of Steven Glass, STG Capital, please go ahead.

Hi. Can you quantify the increase in capacity that you're planning, for the V-I Chip specifically?

The answer to that question is a function of time. We have for this year planned for more than a twofold increase in capacity, and we are looking at plans beyond 2008 that go beyond that.

When I think about the doubling of V-I Chip revenue as rough guidance in the press release, may I ask about the underlying assumptions of that revenue guidance? Earlier in the press release you talked about some specific server applications ramping up. Is the doubling based upon those server applications solely, and if so is there potential upside if these consumer applications or other applications ramp up faster than expected?

So this bottoms up forecast is based on a few specific programs that make up the bulk of the forecast for the year. As suggested in the press release, we are still with V-I Chip in an operating environment in which the business space is limited. It's not nearly as well diversified as it is for the brick business unit. But we are working to expand the business space and build on it, both by expansion within the service space and significant growing contribution from other markets, in particular ATE and consumer electronics opportunities. So looking at this year, there is a few programs that make up the bulk of that. There are potential upsides. They are to some extent speculative, and they would be coming in at best towards the very end of the year.

Thank you. I'll get back in the queue and limit myself to two questions. Thank you.

Thank you.

Thank you. You have a question from Jim Bartlett, Bartlett Investors. Please go ahead.

Yes. I know it'll be in the 10-K, but you said that the V-I Chip; I assume the product revenues more than quadrupled in 2007. What did they end up in 2007, or what was the -- because I know there's some service revenues in there.

Yes. Well, actually, the service revenues or (inaudible) engineering revenues were more significant in 2006 than in 2007. So we ended up with somewhere between a factor of 5 and a factor of 6 increase in product revenues from 2006 to 2007.

You mentioned that the -- there was a prototype large panel LCD TV exhibited. When and where was that exhibited?

That was exhibited at a consumer electronics show in January.

In January. And the Asian production that you anticipate, or V-I Chip manufacturing capacity to support that, what is the timing on that?

Well, this is still somewhat speculative, and the timing is on the time scale of about a year out from the display of the prototype unit.

Okay. So that would be next January, then.

In that general time frame.

That general time frame. All right. Thank you.

Thank you. From the line of Peter Wright, from P.A.W. Partners, please go ahead.

Thank you. I guess I wasn't clear. What was the product revenue in V-I Chip in 2007?

What I can tell you is that it grew by close to a factor of 6 relative to the prior year.

Did you tell us in the previous call that in September you did $2.4 million? Was that the number I recall?

Well, it was disclosed as part of the 10-Q for Q3. I believe that's the number, but you would just have to check that.

Right. But I think year to date through September you did about $4.8 million, if I recall, if I remember my 10-Q. Is that fair?

Yes, that's about right.

Okay. And any comment -- I assume December was a sequentially up quarter versus September?

Yes.

Okay. So it's not unfair to assume that -- and I think in the prior call you thought in terms of $20 million was a good thought for calendar '08. Is that the way we should think about the V-I Chip?

In gross numbers.

Yes. Great. Gross numbers being both product and service?

Meaning, you know, as a very rough --.

Rough number. As a rough number. Okay.

-- [interpretation] at this point in time, again, recognizing that given the very small number of programs that make up the V-I Chip revenue base as of this time, there is a significant amount of unpredictability --.

Okay, but --

-- on the upside and the downside.

Fair enough. Now, this one point of clarification, if you weren't to make $20 million, is it more likely to be a demand issue or a supply/capacity issue?

We are putting capacity in place ahead of demand. We are committed to staying ahead of the demand curve, and we're executing to that plan well. So I do not expect to have limitations when it comes to capacity.

So to the extent that if $20 million weren't made, it would be more of a demand issue as opposed to a supply issue.

That's correct. Certainly in that ball park. Obviously, if under some scenario -- I'm not suggesting that to be probable -- but as we look further out into 2009, if demands were to get to growth levels that are very, very high, then capacity could under some scenario become an issue. But we are running the business planning capacity ahead of demand. So to the extent that we have proper visibility from our customers, both existing customers and new customers, we believe that we can service their needs on time.

Great. Thank you.

Thank you. From the line of Ron Opel, (inaudible) Capital. Please go ahead.

Patrizio, how sensitive is the doubling of V-I Chip revenues, that forecast for 2008, how sensitive is that to changing economic conditions on a global scale?

Well, I would say that the changing economic conditions on a global scale are probably more of a factor with respect to the base brick business than they would be with respect to V-I Chip in the short term. And the reason is that obviously with a statistical business such as the brick business, there is no [defying] the economic environment, and there is a first order dependency on the general level of economic activity. With a less statistical business, the rise and fall and the level of success of specific programs plays so much more of a role than the overall level of economic activity that that would take a back seat to the former as a primary factor in the growth rate.

And with respect to demand for bricks, are you seeing a sharp deterioration in general?

As suggested in the press release, we saw some softening in the second half, in the latter part of next (sic - see press release) year. And that's as far as I can go. I wouldn't characterize it at this point as a sharp deterioration. But we did see some softening in the second half of last year.

Thank you.

Thank you.

From the line of (inaudible), please go ahead.

Hi. Can I ask a little bit about the revenue for 2008 for the V-I Chip? What kinds of industry are you designing to in terms of the programs?

I'm sorry. I didn't understand. What?

What industry? For example, is it general computing, is it test, is it industrial, consumer products or -- and so on?

Well, for 2008, when it comes to major programs that make up the bulk of the revenue, it is primarily high-end server applications. We have (inaudible) design wins in other end markets, but it will not be until 2009 that they begin to play a more significant role with respect to (inaudible) capital revenues.

Right. So for your revenue in V-I Chip to [ramp], what is the gating item for that to [ramp]? Is it introduction of new products by your customer, or what might it be?

I would say that at the top of the list would be the designing cycle -- for instance, programs that went into production in 2007 had been in gestation for a significant time period prior to that. Likewise, we have designing activity today, we had it last year, that takes a considerable time period to get to fruition. Now, there are opportunities that have, in effect, a shorter time to fruition that can be more speculative in many ways. And then again there are at the other end of the spectrum opportunities that have a very long gestation period that may not come into major significance until 2010, 2011. We are involved in all these kinds of opportunities, from some that will have an impact later this year, next year and the year after that, with a varying degree of contribution to the total revenue picture in respect to time frame.

Great. My last question is the gross margins seem to have dropped a bit. What is the reason for that?

So in 2007, we had some significant shift in product mix, particularly with respect to bricks and configurable products. That was a factor. We actually installed some new equipment to facilitate better productivity with bricks. That installation, which took place in the third quarter, did not go flawlessly, and that cost us to some extent both in productivity and yields that fell short of expectations. Also with respect to V-I Chip, as you can imagine, the [deficiencies] aren't as consistent, and we had some setbacks in the third quarter in terms of yields with V-I Chip. So it's been a combination of factors which we believe to be nonrecurring. We're very focused on ensuring that we achieve very high and consistent yields both in bricks and V-I Chip manufacturing.

Thank you.

Thank you.

From the line of Dick Feldman, Monarch Capital, please go ahead.

Patrizio, getting back to the margin question, as you pointed out during the third quarter, margins on the V-I Chip, which you broke out in the 10-Q, were not stellar. Your loss increased with increasing revenues. How did you do in the fourth quarter, and as the V-I Chip volume builds, what type of incremental contribution do you think you'll see in terms of revenue?

So, as I mentioned, Dick, the issues in the third quarter involved not just inefficiencies and poor yields with V-I Chip, but also some inefficiencies and poor yields with bricks. We made improvements in the fourth quarter. We're continuing to make improvements. As I mentioned earlier, these are what we expect to be nonrecurring factors, and the operation teams on both fronts are very focused on further productivity yield improvements. So that's what I can say with respect to both of those issues.

We did not perform to plan last year with respect to gross margin expectations, and we obviously did not perform to plan with respect to top line growth, either. As the year progressed, there was an early indication, at least in our bookings, of a softening of the demand on the brick side, whereas V-I Chip came out ahead of expectations. But obviously it was in that time frame enough of a contributor to the [total] top line to make a difference. So there was a shortfall on top line growth due to a shortfall in brick revenue. And with it there were some setbacks in terms of operating efficiencies that are getting readdressed.

In '08, as the brick business perhaps shows no growth or very, very modest growth and the V-I Chip business moves ahead sharply, is that one of the things -- reasons why we're not going to see any big margin improvement, because the V-I Chip business probably still will have lower margins?

Well, we are anticipating growth in the brick business in 2008. We're actually anticipating relatively healthy growth. We questioned that to some extent, particularly in view of the recent economic environment and development in terms of general economy, but the forecast is appreciably up from 2007. And obviously we'll have to wait and see how that comes out. In the short term, growth with respect to bricks and configurable products is still relying totally on legacy products. We are not going to see a strong contribution from new products enabled by the "V-I Chip-inside" architecture until late this year into next year and beyond that.

And to your point, in the near term, the margin opportunity will be dependent on how well we do in terms of further cost reduction with V-I Chip, and that's something that is progressing well, where we see significant further opportunities for cost reduction and margin improvement. What happens with respect to top line growth in the brick business unit, that's a cash cow that can achieve greater productivity and greater margin. And last but not least is the opportunity for, again, contribution to -- in the brick space with the brick paradigm with the "V-I Chip-inside" product opportunities that is now beginning to be very aggressively pursued.

One last question, and that would be, you made reference to three licensees in the press release. Are any of these relatively new? And what can you tell us about them?

Not much, because we are restricted from a confidentiality perspective. What I can tell you is that one licensee came on board last year. Another licensee came on board recently this year. We are having dialog with other prospects. So, as discussed in the past, licensing is very much a part of our strategy with respect to making the most out of the opportunity for V-I Chip technology. And we are executing on that front.

Have any of these licensees made any firm capacity commitments yet?

All that I can tell you is what is in the press release with respect to this, and, as you can see in the press release, there are plans taking place with respect to a second Japanese licensing.

Okay. Thank you.

Thank you.

Next question from the line of John Dylan, private investor, please go ahead.

Hi, Patrizio.

Hello.

Hey, how you doing?

Good.

Good. Hey, a couple questions. On the license, just one step further. Do you expect any license revenue in '08 from any of the licensees?

Yes. Some.

Great. And the new VIC-in-a-Brick product, any -- it sounded like that's pushed out. I was kind of expecting products right around this time. Do you have some products that are going to be announced soon, or when will they be announced, and I'm just curious as to why you're not expecting revenue for this till late this year?

Well, I think your expectation is pretty accurate. It's right about now, and this product is being released and going to be introduced at the coming international electronics shows. And beyond that there's going to be additional products to be rolled out later in the year. Bear in mind that from the moment products become available for customer sampling, and from the moment they are released, a twofold action, to the moment where production revenue can be generated, in our business there is significant lag that at a very minimum entails six to nine months and more typically entails a year or more.

Understand. I was kind of wondering, though, since it's a standard brick format, I kind of thought that you might be able to get some low-hanging fruit, possibly.

Well, there are always low-hanging fruits to the extent that in the power industry there are always opportunities relating to system requirements that can only be addressed with advanced technology, with higher density, higher efficiency, greater flexibility. And both V-I Chip and V-I bricks have those advantages. But that's not your typical scenario. Typically, you have to work hard and be patient with respect to being on the forefront of designing activities that have a (inaudible) time scale of a year, if not years. So we have to be patient with respect to that.

Understand. Okay, another question. A couple years ago you had a diagram that you put out which showed basically a laptop computer using V-I Chip technology where you could basically shrink the adapter to almost nothing. And I keep looking for this product because I want to buy it. I'm just wondering, are you having any luck with that at all? Are you seeing --

There is activity going on on the general front. As you might imagine, the thin LCD TV application, the challenges from a power system perspective, what stands in the way in terms of power system capability there, is not unlike the challenge in a mobile device. The power system solution has to be dense. It has to be thin. And there is a common (inaudible) the opportunity in both, and there are large OEMs that have seen that opportunity and are pursuing it with us and our licensees. But that is something, again, that we can't forecast as a near-term opportunity.

Okay. So I just want to make sure I understood correctly. So you are working with some people on licensing technology for the laptop market?

We see opportunities in mobile application just as we see opportunities in other kinds of consumer electronics applications such as in particular large thin displays. Both of those are natural fit opportunities for the technology. As you know, a V-I Chip at its core is only a quarter-inch thick, and that's -- in every technology, when it comes to any kind of system that relies on being able to achieve thinness and density and general efficiency and thermal management flexibility attributes that with conventional technology are very, very hard if not impossible to come by.

Yes, like I say, I want to buy a product like that, because it's kind of a hassle, and I'd be willing to pay more for it instead of lugging around a big adapter, so I'm really looking forward to that product coming out. Thank you. I'll get back in the queue.

Thank you.

Thank you. From the line of [Don McKenna], [B.B. McKenna and Company], please go ahead.

Hi, Patrizio.

Hi, Don.

I'd like to take you back if I could for a second to the revenue for next year. Did I understand you to say that you are anticipating a relatively healthy growth in the traditional brick part of the business?

And to be clear, next year is this year, right?

Yes, I'm sorry, 2008. Yes.

Yes, what I said is that the brick business unit forecast for this year was and remains relatively healthy. Now, time will tell with respect to it coming true in spite of setbacks that are taking place in the general economic environment, and in spite of the fact that what has been designed in historically are products that leverage relatively bold technology base.

So I was in answer to an earlier question pointing to the fact that from my personal perspective, I see tremendous growth opportunity once we deploy and leverage the V-I brick and generally speaking the "V-I Chip-inside" packaging architecture, which within the brick paradigm is a multibillion dollar established power component paradigm, is, I think, a very significant leverage in both the DC to DC area and in the AC to DC area. In a broad range of applications, I see very significant opportunity for bricks and configurable products leveraging V-I Chips in years to come.

When I look at the press release and it in one part says that for the entire year we're anticipating revenue growth at a rate higher than annual revenues in 2007, 2007's growth was about 2%.

Right.

When you're talking in terms of a rate of growth significantly higher than that 2% is what your anticipation is?

Well, my anticipation based on existing forecast is for revenue growth this year to be much above that. But, again, when it comes to the brick business unit we are limited by the economic environment and the older generation products' capabilities until new products leveraging much more advanced technology are fully deployed. And when it comes to the V-I Chip opportunity, the limitation is the relatively small application base that for this year will still be the primary limiting factor.

And the second question to you would be just in general terms you used to talk along the lines of having so many opportunities it was a matter of prioritizing which ones were going to have the best return. Do you still find yourself in that kind of a position?

Absolutely. There is far more opportunities than bandwidth to go after them, properly support them with the wherewithal to accomplish that. And that's a key driver for our strategy, which, as I reminded you of a little while ago, relies in part on partnering with companies that in their own space have the right attributes in terms of market presence, economies of scale, to expand the reach for the technology and our ability to grow overall.

Thank you.

Thank you.

Thank you. From the line of Daniel Gorman, private investor, please go ahead.

Yes. I had a question on the OLED technology. Would the V-I Chip be the only chip that could be put in any screens or TVs that were large that were under one inch thick? And, secondly, are there any other advantages other than size for some of the newer technologies for LED and OLED?

Okay. As you may know, the OLED technology is leading edge technology that at this point in time has limited opportunity [in terms of relatively] small displays. Sony has introduced an OLED product in a small panel with a power system that is not part of the panel. It's in the base of the panel. So, yes, the OLED technology supports a very thin display, but with conventional power system technology, the power system cannot be part of that thin display and needs to be housed somewhere else.

In terms of the market opportunity over the near term, though, it isn't OLED, it's LCD that will represent the lion's share of the business opportunity. And there, too, the technology is there from a display technology perspective to achieve panel thicknesses in large panel displays, as much as 53-inch panels, that would go below one-inch thickness. But the power system technology using conventional approaches does not support that. With V-I Chip in the prototype that was displayed, we demonstrated capability to support a one-inch solution with the power system as part of the display.

With capabilities that we also can support, we can actually go beyond that and achieve an overall solution in half-inch thickness for a display with power requirements that are substantial, ranging up to 50-inch and beyond. So what's unique about V-I Chip technology when it comes to this type of market opportunity is that the power system, V-I Chip technology, does not stand in the way of achieving the limits of thick -- thinness that the display technology itself, whether it's OLED or LCD, can support in the near term or longer term.

Thank you.

Thank you. From the line of Steven Glass, STG Capital, go ahead.

Yes, thank you. When I think about the TVs that were displayed at CS, just to be clear, was there one or was there probably more than one that included V-I Chips at CS. I saw a lot of beautiful TVs.

As far as I know, there were a multiplicity of units of one model.

Okay. So, but there's one type that you had the V-I Chips in at CS. And when I think about the probabilities of that model ramping up this year, where would you place those probabilities?

I can't comment with respect to that.

(Inaudible). Okay. You know, we're two-thirds -- actually 85% of the way through the March quarter -- is there any color on March quarter revenue trends at this point?

I can't comment with respect to that --.

Okay.

-- until the next conference call.

I see. No guidance at all?

No guidance.

Even though this conference call is later than most of your conference calls. I was hoping to get a little bit of color. When I think about AC to DC and the timing of that, how high a priority is that, and what type of time frame would be a range of expectations there?

Well, I think it's appropriate to give it a high priority. That's what we've given it, and implicit in earlier comments with respect to demonstrating a capability in supporting systems that operate from the AC line, is a developing AC to DC capability. So that's very much at the center of (inaudible) selectivity with respect to broadening the reach of V-I Chips.

Now that you have multiple licensees for the V-I Chip, some of which were signed more recently -- congratulations -- and some signed previously, when I think about the magnitude of potential licenses this year compared to the revenue that you expect from V-I Chip, the relative magnitude of that, how should I think about that?

Well, I think that the most significant factor in the short term is the [power] revenue growth. I think as we look at 2009 and beyond, I think there are scenarios where the royalty income could become quite substantial. But I think that would be a speculative forecast at this point in time. It will depend on what happens on a number of fronts with programs that have potentially very significant leverage but by their nature are iffy and speculative.

I see. I see. Okay. Thank you very much.

Thank you.

Thank you. The line of Jim Bartlett, Bartlett Investors, please go ahead.

Yes, could you provide us with a little bit more input on the use of V-I Chips in ATE?

We are making inroads with leading ATE manufacturers, not just in the U.S. but in other parts of the world. The attributes of V-I Chip technology in factorized power systems are a very natural fit for the demands of advanced test systems. It's not just a matter of high density, small size to fit in test [paths], but it also relates to the power system architecture, what we call factorized power, and the ability to more flexibly architect the power system to, in effect, facilitate the test equipment design in ways that are not handicapped by the power system. So we have identified this for some time now as a key end market, and we are pursuing it aggressively. We believe that we are going to achieve a very significant market share in that market based on developments on a number of fronts.

Would there be any revenue in 2008?

There will be some revenue in 2008, but as emphasized earlier I think other programs in the server space in the very short term are, in effect, the elephants in the room.

You mentioned the press release when you talked about Picor, and the question of IP rights to separate licensees. Could you expand on that for us?

Well, in each of our licensing relationships, three parties played a key role -- the V-I Chip entity, because of its power conversion technology; Picor, because of its ASIC application-specific integrated circuit technology; and the related entity in which we have an investment because of its power semiconductor technology. So these are the three legs that support the overall capability that is incorporated in a V-I Chip. And they play synergistically in many ways, including our licensing activities and licensing initiatives. And these entities have independently of Vicor and V-I Chip brought about because of their own relationships some of these licensing opportunities.

Your first licensees, are they showing any activity relative to their V-I Chip license?

Well, I guess all that I can tell you in that regard is that they obviously -- in the consumer electronics space they are obviously a key competitor with other competitors in, among other things, LCD TVs and flat panel displays, and that's all I can tell you with respect to that. So you can infer from that that logically they would have an interest in any power technology that advances their competitive standing.

Thank you.

Ron Opel, (inaudible) Capital, please go ahead.

On the VICBricks, do you expect that virtually all of the design-ins -- successful design-ins will be in new -- not new applications but in new OEM products, or is it possible that they could replace existing Vicor brick relationships or competitive brick relationships?

I think it's essentially all of the former and very little, if any, of the latter. The opportunities is an incremental opportunity, because the appeal of these products has to do with enabling brick factorized power system solutions where customers have [unprecedented] flexibilities in terms of deploying, as an example, a pre-regulator independently of a point-of-load device and managing their power distribution challenge in ways that the traditional brick paradigm hasn't been able to support.

Part of the opportunity -- a very important part of the opportunity -- has also to do with the AC to DC part of the system, and overall the opportunity at large relies on the ability to support a power system solution from the wall plug -- from the AC wall plug all the way to the point of load seamlessly, through building blocks that process power from AC line to a 48-volt bus, which is safe, it's isolated, it's easy to distribute [with the new] system, which can be fed through a pre-regulated building block on the way to a point-of-load VTM as the current multiplier that can supply a variety of demanding contemporary electronic loads.

So a good deal of the opportunity has to do with the system solution and the ability to span with that system solution all of the needs of a typical power system. And all of this is, in effect, novel, unprecedented. The opportunity when it comes to bricks is to enable these kinds of capabilities within the confines of the very first [power component] paradigm, which was that of a brick, which is a very different paradigm both in terms of mechanical and thermal management attributes in mounting [characteristics], different from the V-I Chip paradigm. And they have their own space and their own relative strengths.

If -- again, with respect to the VICBrick, why would a customer for a given piece of OEM equipment not just go ahead with V-I Chip rather than doing it with a VICBrick?

Well, because the V-I Chip is a surface mount device, and what I mean by that, what's generally meant by that is this is a device that you can pick and place with automated equipment and populate on a PCB. That has obviously a lot of appeal and a lot of advantages, but it also has certain limitations in terms of mechanical and thermal management flexibility.

Bricks, on the other hand, can't be picked and placed by automated equipment and surface mounted to a PC board, which is a limitation of the brick paradigm. But as a redeeming feature they can be easily bolted down to a chassis or mechanically and thermally managed in ways that are appealing to certain types of applications.

So Vicor invented the brick paradigm, and the brick paradigm, which is today a multibillion dollar market, still has its opportunities. They've been limited up to this point by the limitations of distributed power that doesn't support the level of generalized defactorization that factorized power supports. So we expect with the availability of bricks that support a more flexible and efficient power distribution architecture to in effect expand the market opportunity for bricks, where bricks make sense and V-I Chip may not make as much sense given the differences in application attributes. They have their respective space, and they are very complementary spaces.

Is relative price a significant factor in a customer's decision making?

It is a factor, as are thermal and mechanical management flexibilities. So the big counterpart of V-I Chip costs more, but it provides a different set of attributes that in certain applications are going to be appealing to customers that they are going to deliver a value proposition that makes sense. And, again, that doesn't take away from the V-I Chip opportunity, which is huge.

To be clear, I expect that the V-I Chip paradigm is a more -- is a smaller scale power component paradigm will over time become more dominant and pervasive. But the fact that there exists an established brick market and that in certain applications it made sense and continues to make sense represents opportunity that should not go unnoticed or not pursued.

So I think we have an opportunity to, in effect, have our customers, old and new, make a judicious choice of what makes the most sense on an application-dependent basis. I think we're going to find that depending on the specific requirements of the application they are going to go one way or the other. Over time, V-I Chips will be much more significant than bricks, but because of the established market over the next several years, bricks might become very significant.

Yes, but it's only V-I Chips that make sense, I would think, for consumer electronic products going forward.

I wouldn't draw that conclusion, not necessarily. It depends on the application.

Thank you.

Thank you.

John Dylan, private investor, please go ahead.

Patrizio, how are your bookings running this quarter?

As suggested earlier, you're going to have to wait until some time in April for me to be able to comment on that.

Can you say if you expect sequential growth in your bookings for the next several quarters?

Well, implicit in the press release statements is that we expect year-over-year growth. To be clear, given that the book to bill in the fourth quarter was below 1, that is an indicator of near-term performance in terms of top line growth quarter to quarter. And we all ought to pay attention to that. But based on our visibility at this point, we forecast an appreciable growth overall this year. And, as I mentioned earlier, we see that with respect to bricks, and obviously we see a much more substantial opportunity with respect to V-I Chips.

So I think the answer was yes, and you do expect sequential bookings growth for the next several quarters is what I think I heard out of that. Is that --?

We expect growth for the year as a whole. The fourth quarter book to bill was below 1. The third quarter book to bill was very strong. The fourth quarter book to bill was weaker. And that was simply a reflection of the malaise that has surfaced within the economy at large. And that has been a factor, but in spite of that, we see significant growth for the year as a whole.

Great. Thank you.

Thank you.

One more question, if there is one?

Yes, sir. The last question from Don McKenna, B.B. McKenna and Company.

I did want to just acknowledge the reinstatement of the dividend and pass along the appreciation for doing that. But I also want to see if you could take a couple minutes to just bring us up to date on automotive?

I don't know that I can tell you much about that beyond the fact that it remains a key opportunity. It is in time the most significant market opportunity. It has, as we've discussed in the past, the longest gestation period. Technically, it shares the same kind of technical challenges that are present in some of the other markets where we've made earlier inroads, specifically with contemporary systems for newer kinds of vehicles.

The power conversion -- the (inaudible) power conversion demands of automotive systems share the same challenges that are found in high-end servers and some consumer electronic systems that operate from the AC line. In automotive system you don't have AC, at least in the typical system, but you do have in hybrid and electric vehicles high voltages that need to be converted to low voltages. Weight, density, efficiency are for obvious reasons very much of a factor. And these are the kinds of technical attributes that represent a very good fit for V-I Chip technology, either in V-I Chip or in brick form.

Any ideas as to if things go the way you would like to see them what year you might start to see some revenues from (inaudible)?

Nothing has changed with respect to the fact that that is a very longer term opportunity. Because of advances in V-I Chip technology, it is getting closer in, but it is still relatively far away. And our focus in terms of marketing activities, sales activities, specific customers and industries, has been, in terms of spotlight, elsewhere. But we have interest in that general space. It is something that given the limitations I alluded to earlier with respect to having many more opportunities than we can reasonably pursue, is something that in time we are going to be pursuing in earnest.

Thank you.

And thank you all for participating. We look forward to updating you at the end of the first quarter when we release our numbers.

Have a good day.

Thank you. And thank you, everyone, for your participation in today's call. This concludes the call. You may now disconnect. Thank you.