Vicor Corp (VICR) 2008 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vicor 2008 fourth quarter earnings conference call.

I'll be your audio coordinator for today.

Now, at this time, all participants are in a listen-only mode.

(Operator instructions).

I would now like to turn your presentation over to Mr.

Dick Nagel, Chief Accounting Officer.

Please proceed.

Thank you.

Good afternoon and welcome to Vicor's quarterly conference call.

I'm Dick Nagel, Chief Accounting Officer and with me today is our Chief Executive Officer, Patrizio Vinciarelli and Mark Glazer, our Vice President of Treasury Services.

Jamie Simms, our Chief Financial Officer, is under the weather and unable to join us today.

Earlier this afternoon, we issued a press release outlining our financial results for the quarter and year-ended December 31, 2008.

This press release is available on the investor page of our website, www.vicorpower.com.

We also have filed a form 8-K with the Securities and Exchange Commission in association with issuing this press release.

Before we begin, I remind all of you, 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, I also remind you various remarks 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.

Forward-looking statements are denoted by such words as will, would, believe, should, expect, outlook, estimate, plan, anticipate and similar expressions that look forward -- look toward future events or performance.

These forward-looking statements merely reflect our current beliefs, expectations and estimates, which we share with you during our quarterly conference calls.

Forward-looking statements are based on current information that by its nature is dynamic and subject to rapid and even abrupt changes.

Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected or implied in our statements.

Such risks and uncertainties are discussed in today's press release, as well as our most recent reports on form 10-K and 10-Q filed with the SEC.

A replay of this conference call will be available beginning shortly upon its conclusion through March 25th, 2009, by calling 888-286-8010 and using the pass code 74581850.

In addition, a webcast replay of this conference call will be available on the investor relations page of the Company's website beginning shortly upon its conclusion.

However, the information provided during this call is accurate only as of the date of this call.

Vicor undertakes no obligation to update any of the statements made during this call and you should not rely upon them after the conclusion of this rely upon them after the conclusion of this call.

Patrizio and I have prepared remarks after which we will take your questions.

Patrizio.

Thank you, Dick.

Good afternoon, everyone and welcome to our fourth quarter and year-end conference call.

As stated in this afternoon press release, revenues for the 12 months ended December 31, 2008, increased by approximately 5% to 205 million for 2008 from 196 million for 2007.

Our net loss for 2008 was 3.6 million or $0.09 per diluted share compared to net income of 5.3 million or $0.13 per diluted share for 2007.

Turning to the fourth quarter 2008, our revenues are 51.3 million fell short of the 53.9 million for the corresponding period a year ago, but we are essentially unchanged from third quarter $51 million.

Gross margin in dollars decreased to 20.8 million for the fourth quarter as compared to 21.3 million for the corresponding period a year ago and 21.9 million for the third quarter 2008.

Gross margin as a percentage of revenue increased to 40.5% for the fourth quarter 2008 as compared to 39.4% for the fourth quarter of 2007 and decreased on a sequential basis from 42.7% for the third quarter 2008.

Our net loss for the fourth quarter was 3.5 million or $0.08 per diluted share compared to net income 1.5 million or $0.04 per diluted share for the corresponding period a year ago, and net income of 610,000 or cents a share for the third quarter 2008.

While our sequential quarterly revenue was relatively unchanged, our book to bill ratio for the fourth quarter of 2008 was 0.93 to one as compared to 1.20 to one for the third quarter 2008.

Backlog at the end of 2008 was 52.7 million as compared to 56.4 million at the end of Q3.

As we cautioned before, our quarterly book-to-bill ratios and backlog levels are not necessarily accurate for the sequential quarterly performance.

Our third quarter 2008 bookings were uncharacteristically high because a few customers accelerated the booking of all this that we had anticipated would be received over subsequent quarters.

Similarly, our backlog is of a healthy level because even though the placement of certain orders was accelerated, the shipment of some portion of the associated product has not yet occurred.

Despite the regulator or booking trends, we believe that our fourth quarter bookings were influenced to some degree by the further deterioration of general economic conditions.

We felt the impact of the economy most directly due to the quarter in our gross margin, which was significantly lower in the fourth quarter versus third quarter due to unfavorable changes in product mix and charges associated with establishing or increasing reserves for inventories we have built up in anticipation of forecast sales that have not materialized and have been cancelled or been reduced.

Our operating income for the full year and for the fourth quarter was reduced by high expenses, particularly marketing, accounting and legal expenses.

In addition in the fourth quarter we incurred a higher income tax provision.

That is subsidiary, which we owe the minority interest experienced a profit that we could not have set through the Company's net of revenue loss carry forward.

As I stated in prior calls, we are addressing our expenses and focusing on returning Vicor to consistent profitability.

Our most significant step toward this goal was the reduction in force completed in January.

We are proceeding with a number of projects to engineer some of our least efficient business processes enough to see resolve from these efforts later this year.

Now, I will turn to the fourth quarter performance and outlook for each of our business units.

Revenue from our big business unit remains steady, increasing slightly sequentially over the third quarter 2008 but decreasing by processing some amount achieved in the fourth quarter 2007.

The Brick unit is approximately 21% decline in orders for the fourth quarter but I again, caution listeners to not interpret this decrease nor its magnitude as indicator of official revenues for the reasons discussed earlier.

We do not disclose the share of any particular market we compete in but I cannot lie that the Brick business unit is sustaining its market position domestically.

However, our international business showed further signs of weakness during Q4.

What we also do not disclose to profitability by individual business unit, the Brick unit continues to perform relatively well.

Our strategy, manufacturing flexibility and efforts on cost reduction allows us to maintain significant profitability.

I comment in the past regarding the impact of the recession on our customers in turn our accounts receivable were not yet concerned about the quality of our receivables nor with the ability of our customers to pay us on time.

While we did receive a few more requests for payment accommodation in the fourth quarter than in the third quarter, our DSOs are steady and we have not yet experienced a meaningful change in the quality or aging of our receivables.

I'll now turn to our V-I Chip unit, which continues to make products in component product in (Inaudible).

I have discussed on the last three earnings call the status of some high volume shipments have been delayed by a major customer.

The revenue ramp we expected to start in mid-2008 had been pushed out in 2009 and our bookings reflect this pushout.

While we achieved fourth quarter revenues decreased approximately 24% sequentially on a year-over-year basis at approximately 15 million V-I Chip was approximately 69% ahead in 2008 relative to 2007 revenue levels.

V-I Chip initiatives with our Brick unit to design and market V-I Bricks maintain its momentum during the fourth quarter.

As we discussed, V-I Brick Incorporated innovated the technology to form factor that offers the mechanic internal module flexibility of a traditional Brick.

In addition, complimentary circular can be added to the package to enable innovative performance integrated solutions, while doing so in the smallest footprint available.

Engineering and marketing themes from our V-I Brick business unit have been identifying new opportunities for V-I Bricks and we will be rolling out the range of integrated V-I Bricks later this year.

Turning to Vicor, they continue to report they continue to make progress on the execution of its synergistic (inaudible) while still in the early stages of evolving to a merchant supplier model, positive trends.

Vicor is rolling out new products that compliment V-I Chips and factorized powers of seeing the advantages of incorporating Vicor for management products into power systems solutions.

I will conclude in my formal remarks by reminding listeners that Vicor remains well capitalized and well positioned to make it through the present recessionary environment.

Also, with our efficient big business model and the momentum we are seeing this technology products pioneered by Vicor and V-I Chip were well positioned for long-term growth and long-term profitability.

I'll now turn the call over to Dick Nagel who will address the P&L and balance sheet in some detail.

Dick.

Thank you, Patrizio.

As Patrizio has addressed both consolidated and unit level revenue, I'll focus my remarks on expenses, profitability and liquidity.

Vicor's consolidated gross margin was 20.8 million for the fourth quarter of 2008 compared to 21.3 million for the corresponding period a year ago and 21.9 million for the third quarter of 2008.

Gross margin as a percentage of revenue increased to 40.5% for the fourth quarter of 2008 compared to 39.4% for the fourth quarter of 2007 and decreased in a sequential basis from 42.7 for the third quarter of 2008.

As Patrizio stated earlier, when speaking to the performance of our individual business units, the Brick unit's gross profit margin was down slightly from the third quarter to the fourth quarter reflecting a change in the mix of products sold.

Returning to the consolidated income statement for the quarter, we generated an operating loss of $1.673 million in contrast to the operating income of 399,000 generated in the third quarter.

Our operating loss was largely a consequence of the lower gross margin and higher operating expenses, particularly marketing and legal expenses.

Research and development expense, which is largely associated with our V-I Chip unit increased 2.6% sequentially from 7.8 million in the third quarter to 8 million in the fourth quarter and which represents a 5.8% increase over the $7.6 million expense for the fourth quarter of 2007.

As a percentage of consolidated revenues, research and development increased from 14% for the fourth quarter of 2007 to 15.6% for the current quarter, primarily due to increases in compensation expense.

We expect to spend a similar dollar amount on R&D in the first quarter.

Selling, general and administrative expenses increased 5.6% sequentially from 13.7 million in the third quarter to 14.5 million in the fourth quarter.

In addition, SG&A expenses for the quarter increased 2 million or 16.5% over the 12.4 million expense for the same period in 2007.

As a percentage of consolidated revenues, SG&A expenses increased to 28.2% for the current quarter from 23% for the fourth quarter of 2007.

A significant portion of the Q4 '07 to Q4 '08 increase in SG&A expense associated with increased compensation costs due to new hires in the V-I Chip unit and our Japanese unit and increases in legal expense.

Turning to interest income, cash returns on our investments for the fourth quarter of 2008 totaled only $353,000, while such income in the fourth quarter of 2007 was $990,000.

Vicor generated cash from operations of approximately 2.5 million, up 92.3% from the 1.3 million generated in the third quarter of 2008.

Capital expenditures for the fourth quarter totaled 1.7 million, down approximately $700,000 for the third quarter of 2008.

As Vicor paid its semiannual dividend during the quarter, our cash and cash equivalence balance ended the quarter of $22.6 million.

As announced, we had definitely suspended payment for the cash dividend on our common stock in January of this year.

The Company's total cash inclusive of restricted cash in short-term investments amounted to $24.6 million.

When combined with our auction rate securities at the carrying value, our cash and investments totaled $60.2 million at the end of the year.

We have no debt and we believe that we have more than adequate resources and liquidity to fund our operations.

I will now update listeners on our investments in auction rate securities.

As it has been well documented and discussed during the prior quarter's call, Vicor has approximately $38.2 million at par value invested in auction rate securities that are currently illiquid as the broker dealers through which the Company invested in the securities stopped supporting the auctions in early February 2008.

I invite listeners to review our form 10-K for extensive discussion of these investments and our valuations thereof.

For the fourth quarter we impaired the value of these securities by an additional amount, bringing the total aggregate impairment to approximately 5.6 million.

Because we accepted a settlement proposal from UVSAG of the broker dealers through which we had purchased $18.3 million of auction rate securities, we changed the treatment of these securities and recorded a charge to our P&L related to the other than temporary impairment of their value.

However, we recorded a gain roughly offsetting the charge and approximately equal to the value by which we impaired the securities.

The gain was associated with receipt or contractual right in effect a put option allowing us to sell us the securities in question to UBS at par during the period beginning June 30, 2010.

As such in most respects, our path for the liquids in the UBS auction securities is well defined and resolved.

In contrast, we do not have such a path of liquidity for the auction rate securities we purchased through Bank of America.

As we have discussed in the past, we treat the impairment of these securities totaling $20 million at par as temporary, as it is our intention to hold these securities until they are redeemed or can be sold at par.

Such temporary impairment of approximately $3.3 million does not reflect a charge to our income statement but is recorded as an unrealized loss net of tax and accumulated other comprehensive income loss in the shareholders equity section of our balance sheet.

This concludes management's prepared remarks.

So we are happy to take your questions.

Operator, shall we open the call to questions, please.

Yes.

Thank you.

(Operator instructions).

Your first question comes from the line of John Dillon with JB and Associates.

Please proceed.

I wonder if you can give us an update on the LCD market.

Not at this time, but maybe later in the year.

Okay.

No update whatsoever?

Not that I can really talk about at this point in time.

Okay.

I'll get back in the queue.

Thanks.

Yes.

You are next question comes from the line of Richard Baxter with Ardour Capital.

Please proceed.

Hi.

Can you please high marketing and legal expenses like what was driving them this quarter and will they be reoccurring?

So on the marketing front we participated with relatively major presence, a couple of booths at Air Tronica in Munich.

We also had an international sales meeting.

So there were a number of events that drove up marketing expenses within the quarter.

As you may be aware also, we had pending litigation that led to a jury award in the fourth quarter and as you might imagine, there was significant flaw through the spigot of legal expenses at that point in time.

Okay.

Thanks.

Operator.

Next question comes from the line of Don McKenna with DB McKenna and Company.

Please proceed.

Hi.

I was wanting to go back to the workforce reduction that when the press release came out on that, it indicated that it was going to be completed by the end of January and that you would identify in this conference call what the anticipated expenses were going to be.

During the last conference call, I think we talked about where the bulk of that was going to come from and it was -- if I remember right, out of the R&D section yet you identified the R&D expenses to be approximately the same in the first quarter as in the fourth.

Can you give me some clarity on those issues, please.

Yes.

So we estimating, we are currently estimating the cost of the workforce reduction step to be approximately 3.1 million and there will be booked in the first quarter and it will obviously impact our first quarter bottom line.

What would the annual savings be on that?

I'm not going to share an estimate with respect to that at this point in time.

But the expense is approximately 3.1.

With respect to, you know, were -- the impact of that comes from it is really the result of looking throughout the enterprise.

It doesn't particularly relate to R&D.

I think if we go back to earlier comments I made with respect to overall level of operating expenses, you might recall that I commented that they are well above our long-term model for profitability having been in recent quarters upwards of 40%.

As we look more finally within that, I don't consider the R&D expenses at 15, 16% to be particularly high.

I think given the general business model, those happen to be in the right ballpark, where there's greater opportunity and significant opportunity is within SG&A, where we can envision significant reductions coming in the future.

Okay.

Thank you.

Next question comes from the line of Daniel Gorman.

Please proceed.

I know there was a discussion that there were motions that were going to be made in front of the trial court.

Have they been completed and an appeal filed so it's at an appellate level or is it still in front of the trial judge?

The judge very recently has ruled on the trial motions.

He made the decision to reduce the jury award by $4 million and the case is now right before appeals pursuantly for both sides.

Was that from 13 million down so it would be 9 million?

Is that -- or what was the number?

It was from 17.3 to 13.3.

Okay.

Thank you.

Thank you.

Next question comes from the line of Jim Bartlett with Bartlett Investors.

Please proceed.

Yes.

Of the 2% plus reduction in the gross margin sequentially, what part of that was product mix and what type of mix elements are in -- what part was it that was inventory preserved, increases?

There was a little bit of both, roughly comparable quantities, so, you know, let's say approximately 1% in product mix and the rest of it having to do with some additional reserves that were deemed to be appropriate under the circumstances.

Yes.

And what is the outlook in 2009?

With respect to --

The gross margin.

With respect to gross margin?

Well, I think that's going to be very much a function of the top line.

I wouldn't pay particular attention to the change in gross margin for the third quarter to the fourth quarter.

It is of itself with the top line being very similar, the particular change is, you know, not all that significant.

Obviously, a piece of it relating to inventory reserves was influenced by the economic environment but the part that has to do with, you know, product mix is just one of those random changes that they place, you know, quarter after quarter.

So getting back to where the margins are going to be as the year progresses, that's very much going to be driven by demand in our key end markets, the state of the economy at large as it influences those and based on that manufacturing efficiencies in factories.

Another question relative to the last conference call you talked about the AC-DC product delay till early 2009.

Could you sort of give us an update on the status of that within the V-I Chip -- I guess it was V-I Chip and Brick products.

No released product yet but we believe that we are getting very close and in that vein I answered an earlier question with respect to the LCD market opportunities.

So there are opportunities out there.

There are opportunities dependent on the release of products that have been in the pipeline but are not completed yet.

And the -- could you give us any updates on the -- what's happening in the server market?

Both reference to the earlier adopter and other potential OEMs?

Well, we see growing opportunities in that market and I think that's all I can say at this point in time.

Okay.

Thank you.

Next question comes from the line of Robert Katz with Sinbad.

Please proceed.

Hi, Patrizio.

I have a question.

What do you see -- what does the market look like today?

What does the bookings orders look like we are already into March?

Are you seeing a leveling out or is it still spotty or have we reached the bottom, do you think?

Oh, I wish I knew the answer to that question.

I think it's very hard to tell.

I think that, you know, we are going to have to take a wait and see attitude with respect to that and the depth of the recession or whatever you want to call it.

I think it's fair to say that particularly with respect to what we call the base level business, which is made up of literally thousands of customers and applications, the impact of the current economic environment that is visible.

We haven't seen the same thing with respect to the larger orders which, obviously, there are much fewer, but those being fewer and less statistical can, you know, value from time to time in ways that are difficult to forecast.

So as we look at it in terms of the large orders on the one hand and the smaller orders on the other, you can clearly see in the smaller order the impact of the current economic environment in terms of significant reduction in demand.

We have not seen that with larger orders but those are ones that are in a way harder to forecast going forward.

Your larger orders are typically more com focused, communications focused from --

They are in various markets and so far, so good in terms of there having held up and done relatively well, you know, better, frankly, than we might have anticipated that we know what was about to happen in the environment at large .

So

Where do you anticipate seeing a recovery from?

Is it the new V-I Chip finally taking hold or are you basically at the mercy of the economy and just economy turning around?

I would say that there is no escaping from the economic environment.

You know, we are not privileged in that regard.

I think we are to some extent, as you put it, at the mercy of the economy as just about every company is.

I think what we have going for us on a relative basis is that with a newer products and V-I Chips in particular, we have growth opportunities that subject to the customers' applications, you know, getting to the customers' applications, you know, getting rolled out on plan, should mitigate in adverse economic environment.

So I would say that on a relative basis we are better off than most companies because of unique growth opportunities.

Obviously, you know, with the V-I Chip, 15 million last year on a $200 million revenue base, you know, the percentage is small enough that the growth opportunity with V-I chip in the short term isn't going to make that much of a difference but it is a difference for development.

So that being said, do you feel you have cut back enough in your business to right size the Company in this downturn or you're still not sure how deep this gets and there may be more right size?

We think we have done what we needed to do under the circumstances.

We feel comfortable with that and again, it's not the end of our effort to reduce costs, but we think we done what needed to be done on a Company-wide basis and now we are looking at, you know, opportunities in effect function by function that are more specifically tailored to areas where opportunities for efficiency improvement could come about.

Is there a level of losses that you are sort of holding the line on saying I'm not going to let my P&L deteriorate beyond a certain point?

Yes.

I would say that's the zero line.

We --

That is a -- okay.

We really want to get back to our model that has us deliver margins in the 50% ballpark with operating expenses below 30%.

Obviously, we have quite a lot of work to do to get there.

Particularly in the current economic environment where the top line growth for a while is going to be under pressure.

So given the current economic environment, there will be quarters ahead of us where we will be below the zero line, it sounds like?

Hey, I don't think --

Unless --

I'd be saying anything I shouldn't be saying in suggesting the existing quarter is going to be in that range given a 3.1 million expense for the actually workforce, so --

Right.

On a run rate, though, I'm just trying to get a better feel.

Have you right sized the company for Q2 or the same as Q1?

Well, I think that's going to be very much a function of how things evolve over the next few months on the demand side.

I think that we, you know, back at the beginning of this year took a very hard look given our visibility at that point in time and that visibility needs to be in effect updated by evolving circumstances.

So depending on the wide range of possibilities in terms of the depth and length of the recession, various, wide range of outcomes are possible ranging from a growth scenario in a more optimistic economic recovery environment that which I personally do not anticipate to at the other end of the spectrum should the economy take quite some time to recover, which is where I would tend to expect things to come out.

A more difficult situation to deal with achieving our financial goals might take a little longer.

Thank you very much.

Thank you.

Next question comes from the line of Ron Opel with Marston Capital Management.

Please proceed.

Patrizio, I think last time you gave the number of licensees, it was three.

Has that changed at all, and are there, in spite of the economic environment, are there continuing conversations concerning licensing?

Yes.

We are sealed, capped at three licensees with a potential for more and that's all I can say at this point in time but given, as you've heard me say in the past, given the opportunities with -- that the technology IT markets both large and small, we envision as part of our longer-term model for profitability to be able to derive a significant contribution from licensing income but --

Has there been any licensing V-I Chip related license revenue so far?

I guess, Dick, do you care to comment about that or?

Not meaningful.

Through our arrangements we have some support-type service revenue that's being amortized, but nothing --

Over long --

Yes.

Long time scale given the nature of these licenses that go out 15 years.

Correct.

The chip test market, that was held up last year as promising.

Have you achieved some design-in situations there and is that moving forward?

Yes.

We are doing well from a designing perspective, but, you know, the test equipment market is for all practical purposes that.

It's that in this country, it's that in Japan, it's scary.

I mean, there are empty factories, layoffs.

So it is not a market where from the top line growth perspective we can look forward in the near term to 20 significant decap because things are going to have to get back in shape in those markets that drive capital equipment investment and test equipment investment for us to be able to see the fruits of significant designing effort to the second place and is ongoing.

And following up indirectly on the question on TVs, not wanting to ask the question directly at all, but in a general sense are you still -- do you still believe that there is significant potential for Factorized Power application and V-I chips in consumer products?

Yes, yes.

I think we are all aware of the fact that in per panel displays there's been a -- there's been a brutal development in terms of both selling prices, you know, companies exiting the business.

It's now a days a very, very difficult market for all these reasons but having said that, given the compelling attributes of the technology and trends, technological trends with respect to any flat panel displays, we see major opportunities in that general area.

And just one final one.

Given the emphasis of the current administration or the purported emphasis anyway on the development of energy and efficiency of energy, is that -- could that possibly have any effect with respect to accelerating progress with respect -- with the automobile companies?

Well, generally speaking, yes.

Hard to put a value on that, but I think it's safe to say that we like efficiency, we like alternative and strategies that rely on hybrid or pure electric solutions as they raise the value proposition with respect to power conversion within an automobile.

So all of those initially as long-term as they might be bode well for the business opportunity, again, unfortunately in the long term.

This may be target companies that aren't going into bankruptcy.

You have to among other things be careful not to invest development in their own companies.

Thank you.

Thank you.

You have a follow-up question from the line of Jim Bartlett with Bartlett investors.

Please proceed.

Could you give us an update of rough percentages by market segment, particularly IT, data com, government defense aerospace, telecom, industrial?

I'm not going to disclose specific percentages.

I can tell you that there hasn't been as of this moment any fundamental shifting in the makeup from recent times.

Obviously going back a long time if we go back to the 2000 time frame, we have a major shift away from communications but prior to that time frame it was 60% of our business was in communications and now it's a smaller, much, much smaller percentage.

Since then in that shift, there hasn't been any significant change in the makeup.

Obviously, going forward as opportunities in vast markets some of which we talked about earlier in this phone call, as those opportunities may materialize, there's going to be some significant change in the makeup, but no significant change in recent years.

And how did the year end up in terms of percentage export and if you could just give us a little more flavor on the US --

As mentioned earlier in the fourth quarter, we saw particular weakness in the international markets and relative (Inaudible) relative in domestic markets.

So Europe, both Europe and Asia being considerably weaker, then?

Yes.

I mean, Japan in particular is in a very, very difficult situation as we speak.

So -- and Europe is in the same general ballpark.

Thank you.

You have a follow-up question from the line of Don McKenna?

I've noticed that Intel recently has been identifying some new integrated circuits that they have been putting on much reduced power consumption levels.

Does that take away from your V-I Chip that the consumption on an operating basis for some of these larger mainframes is going to be that much reduced that the benefits that the V-I Chip were for power management as they have before?

I would think of Intel as being more focused in the mobile lower end -- end of the market than mainframes so -- and in that general area what we see is that surely it is a desire for credit efficiency for lower costs in terms of computing power per unit of electrical power.

But that desire is offset by the drive to deliver more computing power.

So we don't see the power consumption going down at least in the higher-end markets, and because of other trends in terms of operating voltages becoming lower and currents becoming much larger, we see a very good fit for factorized power and our V-I Chip technology in particular.

Generally the trends in computing very much favor and align themselves with our power component paradigm and power distribution architecture.

Thank you.

And I also noticed your open market purchases recently and the announcement of your 10B5 program.

Can you give us details of what that -- what the terms of that were?

I'd be a fool if I did and so I won't.

Except for saying that I have a problem.

That's all I can say.

All right.

Thanks.

You have a follow-up question from the line of John Dillon.

Please proceed.

Hey, Patrizio.

I wonder if you can talk about are you seeing new design wins even in the downturn and especially in the V-I Chip or V-I Brick area?

Yes, we are.

And, we are very busy in many ways through variety of (Inaudible) with V-I Chip, products with Vicor production and big products based on a V-I Chip inside strategy in pursuing these new kinds of opportunities.

And are you still prioritizing the opportunities then?

I'm sorry.

Am I still what?

Prioritizing the opportunities.

Well, I think you are referring to the fact that with V-I Chips in particular and the V-I Chip market strategy as I commented on the past, we have in effect a lot more opportunities than it would be sensible to support and invest in at one time.

So we have to be very selective with respect to which opportunities to pursue and we are very keen on doing that in terms of having a very focused key account strategy in pursuing V-I Chip opportunities in particular.

Great.

And do you see growth of V-I Chip business this year?

Some, but modest under the general environment and I am afraid to say that under most reasonable scenarios we are really looking at this point at 2010 as being the much more significant time for growth.

And before you talked about when you were working with some of the server companies, computer companies, that they were adopting the complete factorized power architecture.

Are they still moving with that?

Yes.

Excellent.

Okay.

Thanks very much.

Thank you.

The next question is a follow-up question from the line of Ron Opel.

Thank you.

I saw something here recently that described a demonstration or a couple of demonstrations at the consumer electronics show involving 3D displays, 3D television displays either with or without glasses.

I think different parties are different -- are working on different approaches and it occurred to me that that probably has to be a pretty computational and perhaps pretty power intensive kind of capability and a possible fit for factorized power architecture.

Could you tell me if I'm barking up the wrong tree?

I think you're barking up the wrong tree but don't take it personally.

I'm not aware of any V-I Chip designing or, you know, participation in 3D TV but I think it's -- it's from a job perspective, disability that will come to my mind but from my visibility.

I'm not aware of engagement.

Thanks.

Eric, we will just take one more question.

We are actually showing no current questions in queue.

Thank you.

Talk to you soon.

Thank you for your participation in today's conference.

This concludes or presentation.

You may now disconnect.

Have a good day.