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Executives

Teri Klein - Vice President, Investor Relations

Edward T. Colligan - President, Chief Executive Officer, Director

Andrew J. Brown - Chief Financial Officer, Senior Vice President

Analysts

Paul Coster - J.P. Morgan

Mike Abramsky - RBC Capital Markets

Nathan Johnson - Pacific Crest Securities

Tavis McCourt - Morgan Keegan

Amir Rozwadowski - Barclays Capital

Jim Suva - Citigroup

Maynard Um - UBS

Charles John - Piper Jaffray

Jonathan Goldberg - Deutsche Bank

Thomas Lee - Goldman Sachs

Larry Harris - C.L. King

Palm, Inc. (PALM) F2Q09 Earnings Call December 18, 2008 4:30 PM ET

Operator

Good day, ladies and gentlemen, and welcome to the second quarter 2009 Palm Incorporated earnings conference call. (Operator Instructions) I would now like to turn your presentation over to Ms. Teri Klein, Vice President, Investor Relations. Please proceed.

Teri Klein

Thank you and good afternoon, everyone. I would like to welcome you to Palm's fiscal year 2009 second quarter financial results conference call. On the call today will be Ed Colligan, CEO and President; and Andy Brown, Chief Financial Officer. Today’s call is being recorded and will be available for replay on our investor relations website at www.palm.com.

I would like to remind everyone that today’s comments, including the question-and-answer session, will include forward-looking statements, including but not limited to guidance on future financial and business activity. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in Palm's filings with the Securities and Exchange Commission, including Palm's quarterly report on Form 10-Q for the quarter ended August 29, 2008.

Palm undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after this call.

Please note that today’s results will be reported on a non-GAAP basis except where specifically noted in the commentary as GAAP results or estimates. Non-GAAP reporting is provided to help you better understand our business. However, non-GAAP financial results are not meant to be considered in isolation or as a substitute for or superior to GAAP results. You should be aware that non-GAAP measures have inherent limitations and should be used only in conjunction with Palm's consolidated financial statements prepared in accordance with GAAP.

Our press release includes a table detailing the non-GAAP measures together with the corresponding GAAP numbers and a reconciliation to GAAP. You can also find this information posted on our investor relations website. The slides that accompany this call include both GAAP and non-GAAP measures and are also available on our IR website. We encourage listeners to review these items.

And with that, I would like to turn the call over to Andy Brown.

Andrew J. Brown

Thanks, Teri, and good afternoon, everyone. As everyone knows, we are weathering a challenging few quarters here at Palm as we prepare for the transition to our next generation products. On our last earnings call, we told you that Centro’s maturing lifecycle and the time needed to ramp our Treo probe products would pressure Q2 results. These factors have been amplified by the deteriorating economic climate, impacting results more significantly than we had anticipated. As a result, total revenues for our November quarter came in at $191.6 million, representing a sharp decline versus Q1.

Smartphone revenue for the quarter was $171 million on shipments of 556,000 units. Smartphone ASPs increased to $305, up 7% from Q1 levels as we started shipping the Treo Pro, and lower-priced Centros contributed less to our overall product mix. Smartphone sell-through during the November quarter was 599,000 units.

Our handheld business generated approximately $21 million in revenue for the quarter, on net revenue shipments of 111,000 units. Handheld sell-through fell to 158,000 units. This represented a 5% decline versus Q1 and a 51% year-over-year drop-off. As we look ahead, we expect this decline in handheld demand to continue.

Gross margins for Q2 came in at 20.1% versus 26.6% in Q1. The largest driver of the decline was a provision for estimated purchase commitments with third-party manufacturers in the net amount of approximately $13 million, which we estimate we will be obligated to pay in light of the reduction in our forecasted demand to our suppliers.

During last quarter’s call, we said we expected measured margin improvement over the next several quarters. While improving our gross margins remains one of our most important goals, the pressure on volumes and pricing we’re seeing in the market today make margin expansion unlikely in Q3.

On the expense side, we have taken actions to contain costs and manage our cash burn while carefully ensuring that we have adequately funding our next generation product development. Cost-saving efforts have included reducing our U.S. and international workforces, consolidating our European operations, and shifting Asia-Pacific sales, marketing, and administration support to our U.S. offices.

While these actions have little impact on Q2, we were still able to drive our operating expenses lower than expected to $101.1 million. We expect by the fourth quarter of this fiscal year, the restructuring actions I’d noted plus other cost containment initiatives will allow us to drive quarterly operating expenses to the low- to mid-$90 million range.

Net loss for the quarter was $80.2 million, which translates into a loss per common share of $0.73, a decline versus Q1’s net loss of $12.8 million, and a loss per common share of $0.12.

Adjusted EBITDA for the quarter was negative $55.8 million versus our Q1 figure of negative $7.4 million.

On a GAAP basis, as expected, we accrued an $8.3 million charge for restructuring activities and expect additional charges in Q3 and Q4 as we complete the actions. In addition, we took a non-cash, net charge of $396.7 million to create a valuation allowance for our U.S. deferred tax assets. GAAP requires us to take this charge, given our history of recent losses. However, we still expect to be able to utilize our NOLs to offset future U.S. cash taxes once we become profitable.

On the balance sheet, our cash and short-term investments for the quarter decreased to approximately $224 million, and cash flow used by operations for the quarter was $20.4 million. Inventories decreased to $28.5 million from $35.2 million in Q1 and inventory turns decreased to 19 times versus 21 times during our August quarter. Accounts receivable decreased from $141.6 million to $98.2 million as a result of lower revenues and DSOs were 46 days.

We are taking the necessary steps to get through this transition period and address the impact of the economy but the factors that pressured our Q2 results are still in play, in some cases more so. Given this, we currently expect the next couple of quarters to be challenging, particularly the February quarter.

So while the short-term position we are in is obviously not ideal, we believe Palm's core investment thesis, which is based not on our legacy products but on our next generation product portfolio, is intact. We think a combination of our cost actions we have taken, along with the introduction of new products based on our new platform, will drive significantly improved performance and shareholder value.

I will now turn the call over to Ed to give you a broader business update.

Edward T. Colligan

Thanks, Andy, and thanks to everyone for joining us on today’s call. Before I start, I would like to spend a few moments on the announcements we made earlier this week regarding Palm's CFO transition. First, I would like to thank Andy Brown for everything he’s accomplished over the past four years at Palm. He has been a key part of our transformational efforts and was particularly instrumental in our recapitalization transaction. I am very thankful to Andy for his counsel and strong partnership over the years. Andy will be with us through January, helping to ensure a smooth transition for Doug Jefferies, who will step into the CFO role effective January 7th.

I wish Andy all the best and welcome Doug to the Palm team.

Now let me turn back to my comments on our business -- clearly we are operating in an extremely tough climate and we expect to face continued challenges in the coming months. We are managing through a number of issues at once -- a Palm OS architecture and product line that is maturing, consumer spending that is down, and the expenses associated with new products that are still in development but have yet to impact our revenues.

We understand that a pipeline of new products is necessary to maintain momentum and we’ll soon be replacing our aging product line with our next generation products. Until then, we’ll have a few rough months ahead but we are optimistic that as we enter fiscal 2010, we’ll see the success of our new products positively impact our income statement.

In the meantime, we think the best thing we can do for our company and our shareholders is to maintain discipline and continue to execute against the long range strategic plan we’ve established. Staying focused in this way doesn’t mean we’re not taking aggressive steps to address near-term pressures. Andy talked about the actions we’ve taken to conserve cash, focus our resources, and reduce costs. But we are doing these things in a prudent way that doesn’t compromise Palm's future.

Most importantly, we are maintaining our stride on the product development front and successfully meeting each milestone we’ve established for Palm's next generation platform and devices. Our new platform is nearing completion and our first next generation phone is set for launch in the first half of calendar year ’09 as planned.

Fundamentally we know that our success with carriers and consumers will come from delivering a differentiated product with capabilities that will stand out in the marketplace.

For our enterprise customers, the Windows Mobile platform is the industry standard and we differentiate our products by making them easier to use and more intuitive than other Windows Mobile based products. The Treo Pro has received critical acclaim from users around the world because of our great execution in this regard. In November, we released the Treo Pro in New Zealand, as well as seven new Latin American markets. In the U.S., the Treo Pro is recently certified on AT&T’s open network and is also being offered as a generic SKU in conjunction with T-Mobile. This quarter, we expect to launch the Treo Pro in partnership with a major U.S. carrier.

For the rapidly expanding consumer market, we think Palm's breakthrough new platform will bring a truly differentiated smartphone experience to users. Our ability to develop hardware and software in tandem, and to integrate them seamlessly will be one of our most important areas of differentiation and competitive advantage with both carriers and consumers.

Owning both elements will result in a fundamentally better smartphone and will give us the control and flexibility necessary to support new applications and services, as well as efficiently address the technological demands of future generations of users.

Very few companies have a comparable capability or Palm's depth of experience in the mobile communications market. Our system will also offer rapid prototyping and development to meet our carrier partners’ demands more effectively than any other platform. As we started early disclosures to potential carrier partners, we’ve been extremely pleased at their positive reaction to our new platform and products.

The same is true on the developer side -- the Palm OS footprint presently reaches millions of users around the world and Palm's established developer ecosystem understands the loyalty of our customer base and attachment to the Palm brand. This is evidenced by the fact that 30,000 applications for the Palm OS are still available today. Those developers we’re already working with on our new platform are universally excited by our development approach. There are many ways that they will leverage our new platform to create powerful applications unique to Palm devices.

The exciting dynamics of the smartphone market can sometimes overshadow the fact that while this industry has come a long way, it is really just getting started. Even in the midst of this economic slow-down, consumers continue to migrate towards smartphones as the range of innovative devices and applications continues to expand. Nothing we’re seeing indicates that this segment won’t see strong growth in 2009 and continue to outpace other sectors of the economy for many years to come.

While we are expecting a difficult February quarter, our cash position is sufficient to navigate this period while still preparing for a timely launch of our new platform. We need to closely manage our business in response to market conditions but we are confident we can emerge as a vibrant and capable competitor.

Admittedly and understandably, many find a forward-looking, larger picture perspective tough to maintain in times like these. But from Palm's point of view, the fundamental growth picture for our industry and the innovative new platform and devices we are poised to introduce, give us great reason to be optimistic. Once we reach critical mass with our new product shipments in fiscal 2010, we will return to profitability and deliver increasing value to our shareholders.

With that, I would like to turn the call back over to the Operator for any questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Paul Coster with J.P. Morgan. Please proceed.

Paul Coster - J.P. Morgan

I’ve got a few sort of housekeeping questions and also a big picture question -- first of all, can you just repeat the sell-in versus sell-through and what it means in terms of channel inventory at the moment for the handsets?

Andrew J. Brown

The handsets -- okay, Paul, got it. Yeah, so we shipped in 556,000 units and we sold through 599,000 units, so we reduced our inventory slightly.

Paul Coster - J.P. Morgan

And the operators presumably are reducing their inventory as well -- is that correct? Just as a function of sell-through or what?

Andrew J. Brown

Sure, that’s correct.

Paul Coster - J.P. Morgan

Okay. You said margin improvement was unlikely -- was that margin improvement versus this sort of pro forma gross margins, or GAAP gross margins, including the $13 million inventory write-off?

Andrew J. Brown

Well, the pro forma gross margin did include the $13 million inventory write-off and that was at 20.1%, and I’m talking relative to that number.

Paul Coster - J.P. Morgan

But will there be write-offs for the next few quarters or is it just margins have come down to that level as you sell the sold inventory out?

Andrew J. Brown

No, no, Paul, we’re not anticipating it at this point in time. We believe we’ve appropriately accounted for the component liabilities that we have as we see the demand picture today.

Paul Coster - J.P. Morgan

Okay. Cash burn in February and April -- can you sort of quantify it or give us some kind of sense of your philosophy in terms of how much cash you intend to preserve?

Andrew J. Brown

Well, like we said, I think we’ve got a couple of challenging quarters, particularly the February quarter. We’ve taken some significant actions to both reduce our burn and our expense structure but we think it’s still going to be a challenging period, quite frankly.

Paul Coster - J.P. Morgan

So it sounds like it’s going to be up, if anything, from the cash burn.

Andrew J. Brown

Yes, most likely the -- yes, the cash burn is likely to be greater than what we’ve seen over the past couple of quarters, correct.

Paul Coster - J.P. Morgan

Okay, and then the big picture question really for Ed, how do you respond to the argument that you are too late with Nova or the next generation platform and products?

Edward T. Colligan

I think it’s ridiculous. I mean, it’s early in the space. There’s an enormous amount of opportunity left. If you look at just the replacement market in this business, every year there’s phenomenal numbers of even just replacement devices, so the chance that there’s not another opportunity ahead or we can’t build a platform position here I think is not real. So it’s incumbent upon us to create really compelling products and a differentiated enough platform that people will recognize that and come to Palm. We have millions of users that recognize our brand of delivering them fantastic solutions over the years. We expect they will look to us again and we hope as feature phone users migrate to smartphones that we will get more and more of them as well.

Operator

Your next question comes from the line of Mike Abramsky with RBC.

Mike Abramsky - RBC Capital Markets

Thanks very much. Could you just talk a little bit about why you saw such a massive contraction in terms of shipments quarter to quarter vis-à-vis -- I know you talk about the economy but you do have Centro priced at $99 and it would seem that those are pricing -- that pricing is more aligned to kind of what is going on out there. What are the headwinds that are specific to Palm that you are facing?

Edward T. Colligan

Mike, I think -- you know, I did try to address it in my notes around the maturing product line. The Centro is a year-and-a-half old now and there’s no question that there’s a momentum created around new products in the market, especially through carrier promotions around those, so whatever is the latest and greatest is the thing that tends to get a lot of promotional dollars focused on it and that can drive the business.

I think in addition to that, there are a number of low-cost devices that came into the market that certainly put pressure on us, again both new and under-cutting Centro in some way on pricing early on. So we are doing everything we can to prop up Centro in the marketplace and extend its life. We knew at some point it was likely that Centro would hit the wall. When we made the effort of transitioning to the new platform, we had to take that leap of faith that we are going to go get there and we are going to make it happen at that point in time. We are trying to do a promotional effort right now to try and drive Centro sales at Christmas and that’s having a positive effect but there’s no question there’s a very competitive market and in addition to that, we certainly could have -- didn’t need an economic environment that we are facing today with regard to consumer spending, so those are really the issues.

Operator

And your next question comes from the line of James Faucette with Pacific Crest.

Nathan Johnson - Pacific Crest Securities

This is Nathan Johnson calling in for James. A couple of quick questions -- besides the phones that are pending here on the new platform, do you guys expect any other sort of major product refresh here in the next several months or is it really kind of you guys are going to be holding off releasing anything until the new platform is ready?

Edward T. Colligan

Well, as I said, we will continue to release Treo Pro around the world. We expect to announce a major new carrier partner here in the U.S. this quarter, and -- but those would be the product refreshes that would happen in front of any products on the new platform.

Operator

And your next question comes from the line of Tavis McCourt with Morgan Keegan.

Tavis McCourt - Morgan Keegan

Thanks. I was wondering if you could give any kind of update on the auction rate securities. It looks like there was another write-off this quarter. We’re hearing from some of our companies that banks are coming back and at least trying to make some of those investments whole. Is there any -- are you having any conversations with your bankers about that?

And then secondly in terms of the new operating system, to what degree are existing application developers working on that? Will you expect to launch this with third-party apps already available or will there be kind of a lag time between the commercial availability and kind of a large amount of third-party apps?

Andrew J. Brown

Well, on the auction rate securities, I mean, certainly we’re doing our utmost to make those liquid as soon as possible but right now, we’re to seeing really any liquidity in the marketplace for these instruments quite frankly whatsoever. Tavis, if you are seeing anything out there, certainly call me. But at this point, we’re not seeing any liquidity for these instruments.

Edward T. Colligan

And on the OS front, there are existing developers that we have briefed. We want to be sure that we have a robust set of applications as we launch the product, but we haven’t made it a broad-based thing at this point in time and that would be further out.

Operator

And your next question comes from the line of Amir Rozwadowski with Barclays Capital. Please proceed.

Amir Rozwadowski - Barclays Capital

Thank you very much. Good afternoon, Ed, Andy, and Teri. I was wondering, is there any chance we can get sort of a breakout of where sort of your Centro shipments versus the Treo shipments were this quarter? I mean, should we consider that we’re still at a position where a majority of your shipments lean towards the Centro side of the equation?

Andrew J. Brown

Well certainly while the majority of the shipments lean toward Centro, we’ve certainly seen an up-tick in Treo Pro because it was -- it started shipping this past quarter. But we’re just not at a point where we are going to go into product-by-product breakout of our shipments.

Amir Rozwadowski - Barclays Capital

Okay, no, that’s helpful, Andy. Thank you very much. And then sort of broader picture, Ed possibly, obviously we’re in a challenged economic environment and as you sort of approach the launch of the new platform, has there been any changes in terms of your strategy of how to approach the launches of the new devices, given sort of the economic realities right now?

Andrew J. Brown

Yeah, I think we have to take that into account. You know, launching a new environment like this, we have to be thoughtful. I think the biggest thing is to be even more focused, so you will likely see us be more focused both regionally, carrier-wise, you know, where we put our energy and our efforts and our wood, we want to put it behind fewer arrows. So that being said, this is one of the few growth markets I’ve seen in the environment at all economically and so I think we can’t be too shy in the sense that there is a real opportunity here. There is a lot of share to be gained and we’ve got to go after it, so it will be a real balancing act but I think the biggest change I would make is just being as focused as we can possibly be and doing what we do do really well.

Operator

And your next question comes from the line of Jim Suva with Citigroup.

Jim Suva - Citigroup

Great. Thanks very much. I think you made some comments about 2010 profitability. Just to be clear, are you saying that the full fiscal 2010 you think will be profitable, and are you talking profitable at a total EPS line or kind of an operating line or how should we think about the -- or is it more as we exit ‘010?

Edward T. Colligan

I was commenting more that we will return to profitability in ‘010. I’m not going to give a specific quarter or timeframe there. I just think as we gain momentum on our new product shipments, I think one of the things we’ve done is put our expense structure in a position where we can return to profitability more quickly. But that being said, we’re going to invest in the marketing and selling of these products to build our market position to gain momentum. We really believe it’s a long-term play here and that we don’t want to -- we want to manage that level of profitability and really make sure we’re investing appropriately in future products and in the necessary marketing to really gain a strong position in the marketplace.

Operator

And your next question comes from the line of Maynard Um with UBS.

Maynard Um - UBS

Thanks. Just a few questions, if I could -- I think you mentioned the Treo Pro coming to a U.S. carrier this quarter. Just curious why you wouldn’t see a gross margin benefit associated with that? And then secondly, given the tough market, just curious if you think you might be able to return to the mid-30% gross margins with your new products. And then lastly, when do you think you might look to shut down or close down the handheld business and what kind of impact do you think that will have on cash flow? Thank you.

Andrew J. Brown

Okay, Maynard, maybe I’ll start on this one. So on the gross margin front, I mean, as Ed had mentioned earlier, it’s very competitive out there and we have an aging product in the Centro and therefore we are being more aggressive on pricing on the Centro. In addition, our volumes have come down, so it’s a combination of those things. Clearly the Treo Pro helps but not sufficiently to really move the gross margin north, certainly not in the short-term.

Okay, I’m sorry -- I had a little bit of a brain [fake] there, Maynard. Bear with me here. So it’s a longer term gross margin -- so on the longer term gross margin, I mean, we’ve set a target of having gross margins really between about 33% and 36% long-term and we think that that still continues to be a realistic goal. It will take time to get there and it’s a combination of bringing products out that have -- A, that are really compelling, so you can really drive great ASP; the second thing is to drive cost out of them and that’s both from a bill of material standpoint and other things like warranty, and so we think that given as what we see currently in our product portfolio, we think that’s still a realistic goal.

Edward T. Colligan

And finally in the handheld business, it continues to sell, it’s selling this holiday season. We will push those out into the marketplace as long as there is sufficient demand. One of the things that’s kind of a self-fulfilling prophecy is we’re not developing new ones and so there’s an inevitable end but I think right now we’re playing it out. It is a product line that has significant and strong margins and so we’re going to continue to sell them as long as there is demand for those products.

Operator

And your next question comes from the line of Charles John with Piper Jaffray.

Charles John - Piper Jaffray

Before my questions, Andy, I would like to wish you good luck in your future endeavors and Doug, welcome aboard. Just a few questions from me -- it sounds like you have made good progress with your next generation OS. Could you give us a sense of how these new operating systems, these products are going to be differentiated from the ones we currently have in the market? Is it going to be more about the graphical interface or are you looking more for specific form factors like touch screens or full QWERTY keyboards?

Edward T. Colligan

Charles, I’m not going to get into details about the products. Suffice it to say, we consider all of those different elements in trying to look at what our customers would want, what we think would be really important breakthroughs in the market, analyzing the competitive environment and understanding what things have been successful there, taking the combination of those things and putting out what we think will be the most compelling product and platform on the market. That’s what we are doing and I am very excited about how the development is coming along and I think we will achieve our goals.

Operator

And your next question comes from the line of Jonathan Goldberg with Deutsche Bank.

Jonathan Goldberg - Deutsche Bank

First a housekeeping question for Andy -- could you just repeat the OpEx goals you mentioned earlier? Was it $90 million a quarter?

Andrew J. Brown

Yeah, so what we said was by Q4 of this fiscal year is the mid- to low-90s. That is correct.

Jonathan Goldberg - Deutsche Bank

Okay. So then Ed, I just want to check on the status of the operating system. It sounds like the OS is ready. What gives you confidence that you will be having a device in the market in the first half of next year?

Edward T. Colligan

I’m just -- you know, I look at the pace of development and how we are executing against our plans and that’s -- I look at the schedule that we’ve got on the table and feel like we’ll be able to deliver as planned.

Operator

And your next question comes from the line of Thomas Lee with Goldman. Please proceed.

Thomas Lee - Goldman Sachs

Thanks for taking my call. Just a couple of questions -- first just on the cash balance, have you given a -- or can you give kind of a range, kind of what you expect that balance to be exiting the February quarter? And it sounds like based on your comments, Ed, that you seem to feel relatively comfortable with where your cash balance is, at least as you kind of -- as we go through the first half of next year when the new product comes out, but is it fair to say -- I mean, a lot of that obviously beyond kind of calendar, first half calendar ’09, a lot of that depends on just the success of the new OS product in terms of whether you might have to look at other alternatives in terms of reassessing kind of your -- you know, the health of this capital structure?

And then just as a follow-up on just the new products, can you just help us -- help me understand in terms of why, given kind of the competitive environment that’s out there, what I guess about this new product is -- why would the market be receptive to another operating system and any color that you can share on that would be very helpful.

Edward T. Colligan

Thank you, Thomas. On the cash question, we have $224 million in cash. We have taken actions to manage our expenses and to preserve as much cash as we can. We are going to manage that as carefully as possible. We really need to watch that carefully. We recognize that cash is king right now in this environment. But we are also very confident -- if we needed to, we could raise additional cash if we needed to but that would be to enable us to even further drive the business and this launch and other efforts that we have going forward.

So I think on the cash front, we have a nice stable and we feel like if we needed to augment that, we could do that and we are confident we can do that.

On the new product front, again I can’t get into details about it. We will roll it out to the world as soon as we possibly can. We are obviously excited to do that. I think a lot of people think oh, what’s in the marketplace is the best it’s going to be. I think the best is yet to come and so -- and that is not just us and me being boastful. It is in this space in general and the amount of innovation that’s going to happen in this space, the opportunity to bring unique applications over higher performance networks with really unique device designs that are going to compel more and more people who buy standard smartphones today to move to these more sophisticated devices.

We believe we can absolutely be one of the strong players in that space. We have the brand, the product development capability to do that and we intend to do that.

Operator

And your final question comes from the line of Larry Harris with C.L. King. Please proceed.

Larry Harris - C.L. King

Yes, thank you. A few questions -- one, there was the discussion relative to I guess the initial hardware being available in the first half of the next calendar year. Would it be fair to assume that we would have initial shipments say beginning in the May quarter? Also, should we continue to think or maybe this is an incorrect assumption, that the new OS would be targeted more at consumer application and the Window Mobile products, which I assume would continue, would be more oriented at enterprise?

Edward T. Colligan

On shipment dates, we’re not going to give exact dates but yes, it will be in the first half of the year and we’re just not going to comment on exact dates at this point in time. And the new OS, yes, I would say initially absolutely targeted towards more consumer-oriented applications, more pro-sumer oriented applications, and that Windows Mobile would continue to be our platform of choice for enterprise deployments of these types of devices.

Okay, with that, I think we’re finished with the questions. We really appreciate you all being on the call today and I would like to once again thank Andy for his incredible service. Thank you very much, Andy, and we’ll look forward to talking to you again in the near future.

Operator

Thank you for your participation in today’s conference. This concludes our presentation. You may now disconnect. Have a good day.

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