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Analog Devices, Inc. (NASDAQ:ADI)

F1Q09 (Qtr End 1/31/09) Earnings Call

February 18, 2009 5:00 pm ET

Executives

Mindy Kohl – Investor Relations

Jerald G. Fishman – President & Chief Executive Officer

David A. Zinsner – President of Finance & Chief Financial Officer

Analysts

Parag Agarwal – UBS

Steve Smigie – Raymond James

Romit Shah – Barclays Capital

David WU – Global Crown Capital

John Burton – Cowen

Tristan Gerra – Robert W. Baird

Christopher Danely - J.P Morgan.

John Dryden – Charter Equity Research

Sumit Dhanda – Bank of America and Merrill Lynch

Operator

Operator

Good afternoon. My name is Kristy and I will be your conference facilitator. At this time, I would like to welcome everyone to the Analog Devices First Quarter 2009 Earnings Conference Call. (Operator Instructions). Thank you, Miss Kohl. You may begin your conference.

Mindy Kohl

Thanks Kristy and good afternoon everyone. This is Mindy Kohl, Director of Investor Relations for Analog Devices. If you do not yet have our first quarter 2009 release, you can access it by visiting our website at www.analog.com and clicking on the headline on the home page. This conference call is also being broadcast live on the Internet from analog.com, select Investor Relations and follow the instructions shown next to the microphone icon. A recording of this conference call will be available today within about two hours of the call’s completion and will remain available via phone for one week.

This webcast will also be archived on our IR website. Participating in today’s call are Jerry Fishman, President and CEO and Dave Zinsner, Vice President of Finance and CFO. We scheduled this call for 60 minutes. Jerry, will present the results of our first quarter during the first section of the call. And the remainder of the time will be devoted to answering questions from our analyst participants. Analysts can press star one on their phone at any time beginning now to queue up to questions.

During today’s call, we will refer to several non-GAAP financial measures that have been adjusted for one-time items. In order to provide investors with useful information regarding our results of operations and business trends. We have included reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in today’s earnings release, which is posted on the IR website.

We’ve also updated the schedules on our website, which include the historical quarterly and annual summary P&L’s for continuing ops as well as historical quarterly and annual information for product revenue from continuing operations by end market and by product type.

Next, I’d ask you to please note that the information we are about to discuss includes forward-looking statements, which include risks and uncertainties. The company’s actual results could differ materially from those we will be discussing.

Factors that could contribute to such differences include but are not limited to those described in the company’s SEC filings, including our most recent quarterly report on Form 10-Q filed this afternoon. The forward-looking information that is provided by the company in the call represents the company’s outlook as of today and we do not undertake any obligation to update the forward-looking statements made by us.

Subsequent events and developments may cause the company’s outlook to change. Therefore, this conference call will include time sensitive informations that maybe accurate only as of the date of the live broadcast, which is February 18, 2009.

With that, I’ll turn the call over to Jerry for opening remarks.

Jerald G. Fishman

Well good afternoon. Before I begin making a few comments I’d like to make before the Q&A period. I’d like to take the opportunity to formally introduce Dave Zinsner who is our newly joined Chief Financial Officer after Joe McDonough finally got the opportunity to retire. Many of you know Dave from his years of prior experience in the Analog industry and given his very strong understanding into the markets that we are in and he is an experienced CFO. You know we expect Dave to be a very key contributor to ADI on both strategic and operational questions, and in fact in just a brief period he is been here. He already had an impact on our thinking on a lot of areas and I can say that we’re very, very delighted to have him on Board. And I think you’ll find him to be a great addition to the team here at ADI. As all of you are well aware, these are really unprecedented times.

Falling demand and consumer confidence have significantly pressured technology spending worldwide and continues to do so. This coupled with the very significant inventory reductions with customers and distributors who have negatively impacted the financial performance of the semiconductor industry and of course ADI is part of that industry

Even after a very significant revenue declines across the industry during the past few months today visibility still remains weak and neither the length or the severity of the recession is very clear at this point. While, in a very short-term there is not too much we can do to influence the revenue line, there are things that we have done and we will continue to do in the coming quarters to better position ADI for the point when economic and sales growth do resume.

Over the past year or well before the downturn began. We began a process to fundamentally improve our product mix by focusing our investments on market and product areas that offer the best long-term opportunity for both growth and for profits.

As a result, we exited the cellphone base band chipset business and the PC Desktop Power businesses. In many ways our timing was very fortunate and as a result we’re able to sell these businesses at a good price and also at the same time provide our path forward for our customers as well as to the employees that were in those businesses. As business conditions began to deteriorate last quarter, we implemented a series of both short-term cost saving measures and also permanent infrastructure cost reductions, while continuing to process to consistently improve our product mix and to invest in product areas that we believe will generate the highest level of returns in the future.

As the economy recovers our goal is to produce meaningful leverage for a more focused investments and a much leaner infrastructure and as a result we believe that our gross and operating margins will exceed what we achieved in the last cycle said in another way our goal is to achieve comparable margins at lower sales levels than previously required and higher margins at comparable revenue levels. Now I’d like to turn to and make a few comments about our results for the quarter.

As you know from the press release our revenues were about $477 million, they were down approximately 22% from the prior year and 28% sequentially, which was at the mid point of our updated guidance that we provided recently. That in a single quarter is $183 million revenue decline in a single quarter.

While the magnitude of the sequential revenue declines varied, every end-market and every product area experienced some decrease. Not surprisingly markets that are dominated by products ultimately purchased by the consumer, including wireless handsets, advanced televisions, digital cameras, and automotive applications were down the more sharply.

At the same time products sold to industrial and to infrastructure customers declined relatively less on a sequential basis. As in the most previous quarters my comments this afternoon will refer to information that’s already posted on our investor website, which provides an analysis of our revenues from continuing operations for the past five years by both end-markets and by product type.

This level and format of data provides very long-term perspective, which we believe is useful in monitoring our results, particularly in this very rapidly changing environment. Revenues from our broad base of industrial customers, which in Q1 was 54% of our total revenues were down 22% year-over-year and 24% sequentially. Our fiscal first quarter industrial sales tend to be seasonally weak due to the lower number of manufacturing days during that quarter.

However, the industrial end market was really severely impacted also by the worldwide economic slowdown. Within the industrial category, automotive sales suffered the greatest decline. This should of course come to no surprise, given the current state of auto sales worldwide and the significant reductions in component inventories at all car makers particularly as many car lines were shutdown for extended periods of time at year end.

As a result of very significant investments that we’ve made in proprietary automotive technologies for new safety setting, control at high-end auto entertainment applications we have a very compelling automobile product portfolio. But even having all these new innovative products of course could not overcome the disasters conditions in today's automotive market.

To a later extent, we’ve also seen weakness in products sold into other industrial end markets, including healthcare and instrumentation. Many of these markets have been impacted by the lack of available debt to finance expansion. However, new product development is continuing in our customer and we continue to see good design win momentum in many different industrial market segments.

In a few industrial markets, the decline has been led severe. Revenues from defense customers declined only slightly and products that sell into the industrial infrastructure particularly, in China were relatively less effected. All in all, the sales decline in the industrial market was slightly lower than the company average in Q1.

In the first quarter, our revenues from communications customers were 27% of our total revenues but were down 3% from last year and 22% from the prior quarter. This end market, which for ADI is heavily infrastructure dependent has performed better than most other major end markets particularly in China where communications infrastructure investments have been accelerated by the government to enhance it’s competitiveness and also to stabilize it’s economy.

In January, China awarded 3G licenses to multiple carriers. And suppliers have begun gearing up to manufacture the equipment for those carriers.

As you know ADI has a very high market share in the cellular base station market and we therefore are well positioned to benefit from these rollouts in future quarters. Our most significant revenue decline in Q1 was in the consumer market, which fell 40% year-over-year and declined to 42% sequentially from the prior quarter. This is obviously the result of our broad base decline in consumer spending on electronics.

We invest in products for the high performance part of the consumer market in applications such as digital TVs, Cameras and also very high end home audio products. In this space, the leading customers still value innovation over price, despite their current challenges and of course there are many. Our goal is to continue to provide solutions to our customers and change these our experience thereby providing good growth and reasonable margins. As a result of the significant declines we saw in consumer products in Q1, our consumer revenues comprised only 16% of our total revenues in Q1 down from 20% of our revenues during the prior quarter.

Revenues from computer customers, which comprised only 3% of our revenues in Q1 declined 35% year-over-year, 38% sequentially inline with a very weak PC market. During Q1, we exited our PC Audio components business, which is about $20 million business for ADI, as part of our continuing efforts to improve our product mix and to reduce investments in products for the PC market.

Geographically, revenues were down the most significantly as you’d expect in areas with a high concentration of consumer customers. Japan, declined approximately 40% sequentially and Asia was down about 30% sequentially. However, within Asia products sold into the communications end-market actually experienced some growth. Europe was down 25%, sequentially mostly due to the fall off in automotive revenues and to a slightly lesser extent of fall off in the core industrial revenues.

While North America declined least down 19% quarter-over-quarter. In order to leave the maximum amount of time for Q&A, I don’t plan this afternoon to comment on the product data trends that we usually comment on, since these are very clearly delineated in today’s press release as well as in the schedules in our Investor website and our intent is that you prefer more Q&A than us residing things that you can read readily in those areas.

As we’ve discussed previously our revenues were $477 million, it was down about 22% year-over-year and almost 28% from the prior quarter. Gross margins were about 56.5%, and that was down approximately 500 basis points from the previous quarter. This decline in gross margins was primarily due to under absorption on significantly lower production rates in our factories to minimize inventories. This was offset slightly by a better product mix as revenues from the higher margin industrial and communications end markets decline less than our revenues for the consumer and computer end markets which have lower gross margins.

As we discussed last quarter, our goal was to reduce operating expenses by $25 million or 10% for quarter with half of that reduction achieved in the first quarter. In fact, our operating expenses excluding restructuring cost were approximately $208 million down more than $30 million sequentially or 13% sequentially down from the prior quarter. We took more aggressive steps to reduce costs of the outlook worsened during the quarters.

These reductions were achieved by more scrutiny on product investments we’re making extended vacation periods and reducing variable compensation and many discretionary costs throughout the company. We also began a process to permanently reduce infrastructure costs, corporate wide inline with the revenues that we think we can achieve over the next couple of quarters.

As a result of a very careful management of expenses our non-GAAP operating income was $61 million or just under 13% of sales which had not be an achievement given a $184 million sequential decline in revenues in a single quarter.

Excluding restructuring charges, diluted earnings from continuing operations were $0.18. The majority of the decline was caused by the decline in sales, which of course then significantly reduced factory utilization and gross margins on top of that. Non-operating income was also down due to the lower interest rates we can achieve on keeping our investments safe in a very troubled environment.

Our tax rate was just over 23% and should remain in approximately that level for the balance of the year on to our current assumptions. Our cash flow from operations was $60 million and capital was about $22 million. We’ve significantly reduced our capital spending plans for the year down from $157 last year to $160 this year and the bulk of that capital expenditures are tied to our fab consolidation projects, which will fundamentally and permanently reduce our infrastructure costs in Analog in the future.

Inventory increased by only $6 million sequentially. As we reacted quickly to eroding order rate during the quarter and also despite the fact that ADI's inventory in distribution declined by $35 million sequentially as distributors reacted to preserve their own cash. The very slight increase in inventory we had with the build ahead related to the consolidation of our U.S. fabs into one location. Since our days in inventory are now at the high end of our model, we will continue to operate our fabs at significantly lower production rates for at least the next few quarters.

Accounts receivable declined by about $80 million from last quarter due to lower sales and our DSOs increased by only one day to 45 days. This is a very impressive result in Analog in an environments where credit is extremely tight and most customers are trying to stretch out receivables.

During the quarter, we paid out $58 million in dividends and in our current stock price is our dividend yields approximately 4%. We ended the quarter with about $1.3 billion in cash and no debt. The slowdown in our order rates exacerbated during the month of December, which caused us to revise our guidance just after the holidays. In January, and so forth in early February, the order rates we’re achieving have began to stabilize albeit at current low rates. Our book-to-bill ratio for Q1 as measured by end customer bookings was approximately 0.9. So, with this point in the cycle given the very shortly times and the continuing economic uncertainty that’s out there, we continue to receive a very significant portion of our new orders, turns orders, rather

Long-term backlog as we’d typically see when supply and demand are in good balance. Therefore we’ve very limited visibility for the next few months. And as a result our current expectation in Q2 as our revenue will decline somewhere at between 5 and 15% sequentially. While we believe that it is important to continue invest in new product development, so there is growth resumes will be well positioned competitively. We also need to face the flexibility that the current economic environment could run here for some period of time or roll even further in the future. As such we think it’s prudent to continue to reduce costs through ADI to respond to what we to what maybe we said expectations of revenues that are available to technology companies like us in the short-term.

During our second quarter, we continue to take proactive measures to avoid inventory buildup by further lowering our manufacturing output. As a result, our factory utilization is expected to decline to approximately 40% in Q2 down from the mid 50s last quarter and that off course will temporarily pressure our growth margins.

We are now concluding the consolidation of our 6-inch and 8-inch fabs in Ireland. And we are accelerating our plans to consolidate our two remaining U.S. fabs. We expect to have that completed towards year-end. These two actions will significantly reduce our manufacturing cost going forward to the tune of a few percentage points of gross margin. As the result of restructuring actions and further spending reductions we expect Q2 operating expenses will be down again by an additional 3 to 4% from Q1 or a combination of 16 to 17% on a cumulative basis over the two quarter period.

Assuming this level of cost reduction and revenues, we expect that the midpoint of our revenue guidance, gross margins will be approximately 53% to 54% and diluted earnings from continuing operations will be in a range of $0.08 to $0.09 excluding restructuring charges that will determine in Q2.

While no one can certainly today predict how long or how deep this recession will be, it’s possible and some say likely that there has been a fundamental reset in the revenues that technology companies will likely achieve in the coming quarters. This has caused many companies to enter “survival mode”. In fact, as I talk to many CEOs of other technology companies and also many industry analysts, there seems to be a sort of defeated sense out there that survival is the key objective that no growth, or the growth is no longer possible, since there are no new killer applications on the horizon and then a never ending series of cost cuts is inevitable and is in go on forever.

At ADI, we tend to think about the future somewhat differently. I mean, certainly we must react and we have reacted to the new reality of lower revenues which may last a few quarters or few years certainly no one can be certain to that. And that forces us to continue raising the bar for investments in new technology.

As I mentioned earlier we are fortunate that we began this process of focusing our more sustainable and profitable markets 18 months ago well before the economic crisis developed. In addition we began a process to significantly reduce our infrastructure costs, corporate wide by not only changing the way and the locations, the way we manufacture our products, and sell our products, but also the way we deliver services to our customers and to our employees. This process is ongoing and we’ll continue to reduce our operating costs as well as our product costs.

We make good progress to-date, but there is much more left to do. The cost reductions that we achieved in Q1 which surpass the internal objectives we have along with those planned in Q2. Demonstrate that our management and also I would add our employees take the current situation very seriously and have committed to lowering ADI’s costs worldwide.

Offensively speaking lower costs will enable us to deliver higher margins when growth resumes. Defensively speaking we must position ADI to remain financially strong even if revenues continue to decline in the short-term. At the same time we’d note that innovation has been the foundation of ADI for over 40 years. Developing better products than our competition that provide tangible advantage to our customers has been the corner stone of decades of solid returns to our investors.

This division continues and iPhone are very encouraged by the feedback we get from our customers around the world, which is incredibly positive and supportive. As ADI continues to be viewed as a technology innovator and leader, a dependable partner, a trustworthy company, and financially stable, which in this market is a very important differentiative.

Now more than ever, it’s important for us to look for every opportunity to keep engaged with our customers through this cycle, to ensure that they not only know what we are planning to for the future, but also how we can help them build great products that will begin to generate revenue momentum for them moving forward. And there are plenty of opportunities across virtually every end-market segment to do just that.

Our innovations are continuing to play an increasingly important role in achieving fundamental improvements and productivity in industrial applications, new medical imaging techniques to either early diagnosis and reduce medical costs, new safety fuel efficiency and entertainment features in automobiles, reduced energy consumption, and the energy conversion distribution, and management market, much more efficient with wired and wireless communications infrastructure, new features in portable products, and of course the next generation of mind expanding consumer products.

Our job and in fact the challenge that we’ve given the organization is to strike the balance between innovating in areas with the most pay back, while ensuring a relentless focus on reducing our infrastructure costs corporate-wide. Ultimately our goal is to use this cycle to gain both products and cost advantage over across those competitors and emerge not only as the most innovative signal processing company, but also the lowest cost provider of these products and services for the market.

Mindy Kohl

Thanks very much Jerry. We’re now ready for the Q&A period and I’d ask everybody in the queue to please limit yourself to one primary question and then one follow on question and we’ll do our best to give you another opportunity to have more questions if there is time remaining. Operator, we’re ready to open the line for questions please.

Question-and-Answer Session

Operator

(Operator Instructions)

Thank you. And our first question comes from Uche Orji, from UBS. Your line is open.

Parag Agarwal – UBS

HI this is Parag for Uche. Regarding the revenue guidance it appears better than most of your analog peers. Just wondering if you saw any escalation of order in February versus January, and especially after Chinese New Year.

Jerald G. Fishman

Well as I mentioned in the comments we were happy to see that the revenues sort of stabilized in January in early February. At the running rates that we’ve been running, so at least they during a period will be declining anymore which I think is not surprising in my opinion at least, now some of the revenue declines that we’ve seen are certainly the results of just lower demand but there is another part of the revenue and order declines that we’ve seen that are just massive inventory reductions at our customers. I think eventually, they reached a point where the inventory turns are very high and their inventories have gotten down to levels where they might not be replenishing their inventories which I don’t think they are right now, but I think in many areas they’ve seized try to force to inventories down any further. So as we go about through these cycles in the past that’s not a surprising result after the kind of changes that we saw in the order rates over the last three months and it tends to stabilize when we pressure to reduce inventories declines basically. So, having said that it was encouraging to see that at least the order rates began to stabilize in January and early February. I wouldn’t read into that that rock to the races that’s certainly not the way we are thinking about it, not the way we are one in the company. But it’s certainly is nice to see that curve at least begin to flatten out and continue with sickening decline if you look at every single week.

Parag Agarwal – UBS

Okay. And also if you could provide a color on as to what your guidance, which end-markets do you expect to be strong in the second quarter as opposed to the first quarter?

Jerald G. Fishman

Well, I mean our sense is this is, purely a guess is that, the consumer-facing markets will continue to be very challenging. There can be any uptick or any enthusiasm from consumer customers for the last couple of months and if you listen towards you hear from most of those customers the layoffs they are experiencing and these are the larger more successful consumer companies. I don’t think there is any reason to be enthusiastic that there is going to be a sharp bounce back in the consumer markets or any products that actually touch a consumer. I’d say that we’re more enthusiastic about the infrastructure market and marginally even the industrial markets just some of the declines that we saw in revenues were much greater than the declines in revenues of our customers, which indicated that they burnt some inventory off. I think to answer your earlier question maybe one of the reasons we’re doing a little bit better than some of our competitors as far as the declines that we have a larger percentage of revenues in the industrial and infrastructure markets, which are even though they are down significantly relatively less affected than the consumer markets as you can tell by the roll off of our consumer sales and the roll off of our sales in Japan. I think what’s really going on if you look across all the competitors is most of the differences you see have to do with different market segment focus, more so than any fundamental changes in share or any other things that you might want to read into that.

Parag Agarwal – UBS

Thank you.

Operator

Our next question comes from Steve Smigie with Raymond James. Your line is open.

Steve Smigie – Raymond James

Great thank you, just following up a little bit on the revenue questions. What do you think your industrial business would have look like excluding the auto declines?

Unidentified Company Representative

Excluding like.

Steve Smigie – Raymond James

The automotive declines, declines in the market?

Unidentified Company Representative

It’s wasn’t terribly different, the automotive parts when went into the quarter was only 7 or 8% of our total sales and so maybe with 15% of our industrial sales. So it’s not, I mean it’s was better but there was a block there.

Steve Smigie – Raymond James

It’s about 21% in that range.

Unidentified Company Representative

Yeah 21.

Steve Smigie – Raymond James

Yeah. Okay thanks and then

Unidentified Company Representative

Better it would, sequential 20% numbers aren’t so great either.

Steve Smigie – Raymond James

Okay and you mentioned exposure to the Chinese telecom build out and obviously it’s pretty significant exposure, so can you talk a little bit about what sort of potential revenue you can get for that or how big that can potentially be for you guys?

Unidentified Company Representative

Going into the downturn of the basestation or the wireless infrastructure market was about 15% of our sales roughly. It’s broadly spread out between what’s going on in China and also some of the larger European and even some of the U.S. basestation manufacturers. The place where it seems to be the most momentum now is in China but not necessarily just Chinese companies but by other companies, that are serving the Chinese market, which includes many of the European companies as well. We are extremely strong in the Analog part of the basestation market where some how our or other analog products wonder into virtually every basestation in the world and therefore we are talking in the phone call somewhere or another there is one of our products stuck there. So, I think that charge to quantify their number that they’ve seen pretty optimistic about the next couple of quarters. But we’ll have to just wait and see how all that materializes. With Analog I don’t think any one of these markets moves the needing a lot but certainly the basestation market if it materializes the way some of the customers are saying its likely to materialize that order be at least $0.01 part of strip going forward, Its very hard to quantify the details of that.

Steve Smigie – Raymond James

Thanks very much.

Operator

Our next question comes from Romit Shah from Barclays Capital. Your line is open.

Romit Shah – Barclays Capital

Yeah, thanks for taking my questions. Jerry I remember on the last call that in the month of November you guys said seen some stabilization before I think its ultimately rolled over

Jerald G. Fishman

Yeah

Romit Shah – Barclays Capital

And you’ve got some similar firming again this quarter. Do you think the odds are less that I am, we’ll see another led down in the April quarter or much like a January.

Jerald G. Fishman

Well, that always we can predict that it’d be lot easier to run the company. but I think what really happened already in our last quarter was the world just stop for two weeks or three weeks over the Christmas. And, usually it slows down and we account for that and we usually have, a good November and crappy December and early January. And I think the difference this year was that it just stopped, over those weeks of Christmas they were very few customers that actually were open and there were virtually no customers who wanted any inventory. So, I think that the rollover in Q1 was very seasonal and I think it really happened is, after that seasonal roll off happened in the world came back to what we, the kind of rates that we saw sort of in November and its always its very hard to tell the answer to that, but Q1 is a very different quarter for us in terms of what happens every week and this year was whatever effects you usually see were magnified by a tremendous amount because all our customers were closed to two weeks or three weeks. We had manufacturing lines, every car company shut down. We had consumer lines that that were shut down every place. That tends to magnify the effects of what typically happens in December for us.

Romit Shah – Barclays Capital

Gotcha. So I mean just you mentioned that backlogs point sorry book-to-bill was 0.9 and just factoring in revenue down 10%. Is it fair to assume that you are assuming trends will be flat this quarter?

Jerald G. Fishman

Approximately.

Romit Shah – Barclays Capital

Okay. And then I just had one followup.

Jerald G. Fishman

Sure.

Romit Shah – Barclays Capital

Did you guys disclose what power management was as a percentage of sales?

Jerald G. Fishman

It’s in the numbers we put on the website. I think it’s about 5% of our sales. It suffered about the same fate as direct to the analog product lines roughly

David A. Zinsner

It’s roughly 6%.

Romit Shah – Barclays Capital

6%

Mindy Kohl

Yes.

Romit Shah – Barclays Capital

Okay. Yeah, I mean the reason I bring it up is, it seemed at some point you’re going to come to cross roads with this business, you guys talked about innovating in areas with the most pay back and just given your cash balance being at well north of $1 billion and then you desired to get, the same time margins up, it feels like at some point you’re either going to have to take more aggressive steps so that say making an acquisition or just get out of the business altogether just hoping you could give us your most updated thoughts on how you are thinking about our management?

Jerald G. Fishman

Well, I mean we’re thinking about it that it’s a market that is very important to addendum to what we’re doing to around that our product portfolio, there are lot of different ways to get at that. It’s been a long slug but you don’t get into businesses very quickly in the analog business, which is why a such a good business. So, I guess we still have to wait and see how the whole thing develop that’s really all I can say about.

Romit Shah – Barclays Capital

Okay, thank you.

Operator

Our next question comes from David Wu with Global Crown Capital. Your line is open.

David Wu – Global Crown Capital

Yes, good afternoon. Jerry can you talk a little bit about, I miss the – did you talk about how much turns was a percentage of revenue last quarter and what the lead times, really are at this point.

Jerald G. Fishman

We didn’t talk about specifically, when asked the question I think we said it was about 40%, mid 40s and we are expecting to the mid point of guidance about the same amount this quarter

David Wu – Global Crown Capital

I assume lead times sure like everybody else.

Jerald G. Fishman

You bet.

David WU – Global Crown Capital

The other question I have honestly is since nobody knows you’ve been very, very good in cutting operating expenses ahead of plan. So, to speak if the revenue space at the second quarter run rate for the rest of this year would we think about management would do any further cost reduction in operating expenses.

Jerald G. Fishman

Well, I mean we haven’t decided that yet. It’s the best answer I can give you. Right now, we have some long-term objectives of what we’re trying to do particularly in the infrastructure of the company to permanently reduce the infrastructure which I think is relatively independent of the revenues. We just see opportunities to change the fundamental cost structure of the company. And we had teams around the company, working hard to figure out how to do that and, we’re going to continue that process irrespective of what the short-term revenues are. But I think all we can really say is what we’re planning for next quarter. And we’ve given some ideas on that – that could be down another 3, 4%, which in combination with last quarter is a pretty healthy those in, we believe for a long time that the operating expenses of the company were high relative to the revenues. We were achieving even when business was good. So, we’ve been working on, very important infrastructure things to fundamentally reduce the expense ratios of the company and whether the revenues are 4 something or 6 something, we are going to keep working on that. Of course when they’re four something we tend to work on it faster.

Romit Shah – Barclays Capital

Sure would that be R&D or SG&A where you can reduce your infrastructure cost?

Jerald G. Fishman

Well I think it’s heavily in SG&A, but we were also cutting the R&D levels down due to reducing investment scenarios that we think are no good for us for the future. I think on the infrastructure side there is some opportunity on the R&D side but there’s we believe more opportunity on the SG&A side.

Romit Shah – Barclays Capital

Thank you very much.

Operator

Our next questions comes from Tristan Gerra with Robert Baird. Your line is open.

Tristan Gerra – Robert W. Baird

Hi good afternoon. If we exclude the inventory deleveraging. Where do you think your utilization rates will be this quarter. And that’s with the assumption that you would have set inline with end demand and have no more inventory level internally?

Jerald G. Fishman

I’m not sure I didn’t hear the first part of your question.

Tristan Gerra – Robert W. Baird

So, you are cutting production in a greater amount than

Jerald G. Fishman

Great.

Tristan Gerra – Robert W. Baird

Than end demand because of the increase of inventory days internally. If we were address for that where do you think your utilization rates will be approximately?

Jerald G. Fishman

Well, maybe one way to, I don’t know the answer to that, but maybe one way to answer the question is that. If we are think at anymore sales, and we had our manufacturing consolidations pretty well done, the utilization will go from about 40% to about 50%, mid 50 or 55%. Let’s say 50% to be safe. So, utilization just by virtue of the consolidations have the opportunity to grow about 10 points if the revenues don’t increase another penny.

Tristan Gerra – Robert W. Baird

Okay, and is it – assuming that demand continues to stabilize is it safe to assume that this quarter will mark a trough in terms of gross margin or is there a delayed impact of you cutting utilization rates further this quarter that could impact gross margin into the following quarter to next quarter?

Jerald G. Fishman

I think the way we – I think it about it these are very rough estimates, but that we are trying to keep the inventory dollars flat here and no worse than flat lets say and at the current levels of utilization in Q2. If the revenues stay flat, that would keep the inventory levels relatively flat and that’s what we are attempting to do. Is that a reasonable assumption?

David A. Zinsner

That’s reasonable, although I would say that the consolidation of Cambridge when it’s completed plus the impact of Limerick does and you mentioned this in the script does increase the gross margins by few hundred basis points. So, once those are complete, if revenue was flat and we just modulated – if we benefited from the improvement utilization just by the simple fact consolidation our gross margins actually will be a couple hundred basis points better than where they are today.

Jerald G. Fishman

Yeah, this way of consolidations take I think quite a bit of time given we run such complex in multi levels of processings in our feds, but the dollar saving when these two consolidations have done are quite significant and long-lasting. So, that’s why we are fortunate we started on a couple of these early the ones we started on later we’re accelerating. These are important fundamental manufacturing cost reductions at Analog.

Tristan Gerra – Robert W. Baird

Okay. Thank you.

Operator

Our next question comes from Craig Hettenbach from Goldman Sachs. Your line is open.

Craig Hettenbach – Goldman Sachs

Thank you. Jerry, you mentioned some companies operating in survival mode, any thoughts in terms of for ADI, you still solidly profitable lot of cash in the balance sheet in terms of your level of investment whether it’s to increase in areas where you are strong or areas where you’d like to get stronger, I’d just like to get your thoughts there? Thanks.

Jerald G. Fishman

Well, certainly the core franchise business that we are so strong in that our share is so high, it is the part that’s attracting the most investment. So we are doing what we’ve always what we’re doing now let’s say on to the revenues that we’re getting right now is we are making sure that we do everything that we’ve to do to enhance our position in those businesses that we’re already strong that are the real franchise of Analog Devices. so, we fill those buckets first to the extent that we need to invest in to continue to build our position comparatively in those businesses. And then we say how we got left and where we have left we spend another stuff, that’s the way we are thinking about.

Craig Hettenbach – Goldman Sachs

Okay if can follow-up on that as it relates to Power Management. is it fair to say that some of the assets that would be available out there. Our companies that have exposure to high volume, but often commoditize markets and as such you’d preferred to go organically in terms of having a more spread out exposure on the Power Management side?

Jerald G. Fishman

Well certainly we don’t have much interest in making acquisitions or making a lot of investments and very highly commodity – highly commoditized places in Power Management I think you and everybody else knows where they are. The interest we have in making a investments in Power Management are in the more differentiated products and to sooner trying to generate a portfolio of products which we have been working on that for 2 years that replicates the portfolio and the customer base we have in converters and amplifiers. And even though some of those products might ultimately sell into a high volume markets like the Camera business, the kind of Power Management we’re doing now in Cameras is very aligned to the rest of the signal processing stuff that we’re working on that we have a great product portfolio. So, I don’t think we have much interest to be very specific in very highly comoditized power management products for high volume business with very little competitive differentiation.

Craig Hettenbach – Goldman Sachs

Great.

Jerald G. Fishman

We don’t have high tolerance to that insight and we don’t have high tolerance to that on acquisitions.

Craig Hettenbach – Goldman Sachs

Got it. Thank you.

Jerald G. Fishman

Okay.

Operator

Our next question comes from John Barton with Cowen. Your line is open.

John Burton – Cowen

Thank you Jerry you comment about OpEx being down in April quarter 16, 17% relative to the October quarter. Obviously some of those cuts are more temporary in nature be it bonuses what have you somewhat more permanent in nature. Could you help me kind of characterize of the 16 to 17% were permanent what’s temporary and the temporary portion of it. At what point would just start to let this cost come back into the model, be at a revenue trend or how everyone will look at it?

Jerald G. Fishman

Well that’s a very complex question because the actions that we’ve taken go across all those dimensions and even actions that we’ve taken in the fabs for example as consolidation you can view some of those as temporary volume gets big enough and some of them is permanent. So, it’s very hard to come to those conclusions precisely. But what I can say is that what we are trying to do and what we will do is, some of the actions that we are taking are temporary, bonuses are down to zero and those kind of things. But there are many other actions in terms of the product line rationalizations we’re going through, the reductions in SG&A infrastructure and many other what we used to think were discretionary expenses, which might define as temporary reduction but they are permanent reduction because we’re never going to let those items go back for those levels. So, it’s very challenging to be precise about how many dollars and what percent was permanent and what’s temporary but the thing I can tell you is that, there are some temporary things but what we are fundamentally trying to do is get the infrastructure cost down in the company. And that’s the actions we’re taking are geared towards accomplishing that objective as well as some temporary measures which alleviate short-term pressure. But I can’t really be precise about exactly the categorization of each of those expenses in one of two of those category. This clearly costs in both of those areas. No, I think that the second part of your question is about when do some of those once that are temporary start coming back. I think at revenue levels that is significantly higher than what we are running at right now.

John Burton – Cowen

Okay.

Jerald G. Fishman

That’s the best I can qualify it.

John Burton – Cowen

Fair enough. So just as a followup, I am really curious your perspective on customers behavior, beyond that of just cutting inventory, with the economic slowdown. Are you seeing any change in behavior in the design activity meaning, our customer is trying to, redesign for cost more quickly I think trying to make whole designs to last longer, pointing out production life cycle and, would however you look at that what is it mean to, the designing capabilities of ADI as a company?

Jerald G. Fishman

I think, it’s a wide spectrum of what you see out there with the customers, but I would say that companies and our customers are included in this tend to play out their character in recessions. So the companies that are very innovative, that are used to making their way out of new products and primary new technologies, and those tend to be the companies that are the most financially stable anyhow. Our bewaring away get new products out and they’re working hard to try to be responsible and get their quotes down and the like and as a result they’re trying to work with fewer vendors and more preferred vendors. I’d say one of the very interesting phenomena that we do see now is that the large customers in fact even the medium size customers or lot was willing to work with vendors that they don’t think are financially stable. And the reason for that is obvious either along these products to some of the source for at least once we do. And secondly, they think that companies when they get under real pressure that are financially unstable do really stupid things or force to. So, I think what’s really happening is, I have made a comment earlier, I think in my opening remarks that we are financially stable and having been around a long time, the kind of vendor to innovative companies that they can depend on is a big deal now. And we’re seeing opportunities that we may or may not have seen in the past that in the past might have gone to less stable smaller companies than us. But I think generically, the innovative companies are continuing to innovate as we are, they’re being careful, they’re trying to reuse technology more than they did before. So we have a good position, it’s a little easier at the margin to keep it, and I think those companies that are in desperate financial shape and there is some out there like that, are I mean they basically is not doing anything at all. So we try to get our sales force focused on companies with the future instead of those with the past.

John Burton – Cowen

Okay.

Jerald G. Fishman

And that’s always a challenge. But I don’t know, I think companies like us or companies in the semiconductor industry and also our customers tend to play out the their characters during bad times to the extent they were able to.

John Burton – Cowen

Last question if I could maybe for Dave. Can you talk about keep in money safe and then seeing pressure and interest rates for this quarter, how much more interest rate pressure can we expect based upon your position as you go into April and July?

David A. Zinsner

Well, I think next quarter our interest income is going to probably run around 4 million, it was 8 million this quarter so that should give you kind of a sense of the rates are falling and we’re certainly trying to keep our investments in the highest quality, they can possibly be and give up the return on the cash. So at the moment next quarter should be about 4 million, and my guess is a little track similar to that depending on how the rates move around.

John Burton – Cowen

And that gets almost to zero.

Jerald G. Fishman

Yes, almost to zero.

David A. Zinsner

Yeah I think there is no doubt that, we do favor no risk in the cash and for another point of so yield you got to take on the ton more risk that we don’t understand well enough to take on. So we’ve given very clear direction to our treasury folks that have wherever we do don’t lose money.

John Burton – Cowen

Thank you very much.

Jerald G. Fishman

Yep.

Operator

Our next question comes from Chris Danely with J.P. Morgan. Your line is open.

Christopher Danely – J.P Morgan

Thanks for taking my question everyone. Can you just talk a little bit about OpEx trends after this quarter assuming this quarter is the bottom and we are in the sort of flattish to slightly up moved for a while then also in term of the gross margins, can you also talk about when you expect to complete the fab consolidation and how the gross margin should trend after this quarter with the benefits thereafter?

Jerald G. Fishman

I’ll take the first part and then Dave talk about the gross margins. First of all just to remind everybody the midpoint of our guidance was down 10% next quarter not flat, but I don’t want anyone to get confuse that just because we’ve seen a stabilization nor is that we think we are going to have flat revenues although that would certainly be a welcome result if we achieve that. On the OpEx line, we are continuing to pressurize the OpEx cost in the company in the dimensions that we talked about earlier. One is on the investments we are making at R&D, and secondly on the infrastructure costs for the company, which were really pressurizing probably more than we ever have in the history of the company. And so, I think we are going to continuously do that and that’s relatively independent what the revenues are unless with the starting increasing revenues coming up, which now we expects in the coming quarters.

David A. Zinsner

So on the gross margin side as I talked about before the Cambridge consolidation and the Limerick consolidation that will be whereas a couple of 100 basis points to us about two-thirds of that comes from Cambridge and Wilmington, and the other third comes from Limerick. Limerick is almost complete, it will take sometime for the old inventory to burn through, and so we’d expect that benefit to start hitting us in the first quarter of next year, and then the Cambridge and Wilmington consolidation expected to be completed by the end of this year, and again the inventory will take some time to burn off. So sometime in late 2010 we should start to see the benefit from that.

Christopher Danely – J.P. Morgan

And Dave is that calendar of fiscal sorry?

David A. Zinsner

That was fiscal.

Christopher Danely – J.P. Morgan

Okay. And the Jerry just on the OpEx, so after this quarter should I mean, are you guys going to try and hold the OpEx flat to slightly up, is there more room to cut I guess from the general perspective how should we be thinking about it?

Jerald G. Fishman

Well, it’s hard to predict Chris. The, I mean, right now we have a pretty good beat on what this quarter is going to be since it’s based on actions we’ve really taken. We are going through a tremendous, we think of the infrastructure cost in the company, which began about a month and a half ago, when we are indeed deep in it. So what I think it’s putting for us to sort of get to the point where we really know the answer to that, which will be during this quarter and then we will communicate our expectations going forward. But we are in a pretty deep think on the infrastructure cost for the company. We think it’s both an opportunity to do with this environment and an imperative and we wouldn’t be very smart if we look at pass without moving on that. So that’s what we are going to do and I think it will take us another quarter or so for us to be able to delineate exactly what that means and it will flow through into OpEx.

Christopher Danely – J.P. Morgan

Thanks. And as my followup. Jerry you talked about your inventory trends, when you talk to your distributors or your end customers, how do you think they feel about their inventory levels and when do you think that they will be comfortable with their inventory levels?

Jerald G. Fishman

Well, again it varies from customer-to-customer and market segment-to-market segment in the areas where the inventory that customers have of our products doesn’t wrought. And I think, they are down a levels that are pretty low and they are sort of comfortable with them. In the areas that inventory does wrought, which tend to be in some of the higher volume consumer markets, who knows? I mean. we have forecasts from the – our consumer customers for this quarter that look okay, but we have forecast from consumer customers last quarter that looked okay. So I think that one we just can to wait and see how it plays out, but certainly a reasonable portion of the decline that all semiconductor companies see, I expect is it fairly significant inventory reductions to customers and for those that are in good shape I think that’s going to come to an end and I think to those that are in bad shape it may contribute for.

Chris Danely – J.P. Morgan

Great, thanks a lot.

Jerald G. Fishman

You know the one follow on to that Chris still there?

Chris Danely – J.P. Morgan

Yes.

Jerald G. Fishman

The decrease in inventory and distribution that we had last quarter was in some sets it wasn’t all that surprising when we thought about it, but it was a pretty big number and that doesn’t impact our revenues because we only report sell-though. So what inventory happens in distribution doesn’t really change anything on the revenues, but it certainly does impact the amount of inventory that we have in the analog. So I think the fact that the inventory was only up very slightly at ADI and at the same time that distributors basically talked us for $35 million of inventory reduction in a couple of months is an indication that of what really went on with our production levels and our inventory management this quarter.

Chris Danely – J.P. Morgan

Yeah I’m just trying to figure out when – when we are going to hit the bottom?

Unidentified Company Representative

Well, I think we’ll hit the bottom after week hit it.

Chris Danely – J.P. Morgan

So is there any specific reason.

Jerald G. Fishman

Remember though, and all we can do is speculate. We have conversations with our distributors and our customers they seem to indicate the inventory levels are low, but we are still generating a large, large part of our orders every week and turns business. So I don’t think anybody is out there willing to commit to a lot of inventory for the future right now. So, we look at every week which was sort of a trend that began about three-months ago and I think customers distributors are just living handsome out, when a distributor gets an order they could ship, they give us an order and until they do they don’t. That’s just the way it is.

Chris Danely – J.P. Morgan

Okay. Thanks a lot.

Jerald G. Fishman

Okay.

Operator

And our next question comes from Doug Freedman from Broadpoint. Your line is open.

Doug Freedman – BroadPoint

Great, thanks guys for taking my questions. Quick one for Dave Zinsner, if you wouldn’t mind, you’ve been with the company a little bit over a month now, can you give us an idea of what do you found most surprising in that, your first introduction?

David A. Zinsner

You got to be kidding. Let see, really on I mean I had a lot of due diligence that I did before that. So, I came in kind of an understanding what I was getting into. Having said that, actually there were couple of questions about power management, and whether we should give up. That was actually one area that really surprised me, I mean, I came from a company where 60% of their revenue came from power management and I sat in a room a couple of times, the guy here running power management and I was actually very impressed. And I think investors get impatient about the growth in revenue, when it comes from a very small base, but we are generally focused on general purpose power management that takes a long time. It takes 18, 24 months of a cycle – a design cycle to get to revenue, once you get it, it can last for 12 years and it’s very, very good margin business. So, I think that that is probably the most surprising area, how much potential I think we have in the power management space at ADI.

Doug Freedman – BroadPoint

Great, thank you.

Jerald G. Fishman

Okay, Dave. You can keep your job.

Doug Freedman – BroadPoint

Can you give us a little bit more color possibly in the communications space, one of the highlights is there is actually a build going on over in Asia infrastructure, how much of an impact does that having? If you can help us get a handle on that and also are you expecting any impact form the LTE and what the timing? Is there any color you guys can offer in that market space would be helpful?

Jerald G. Fishman

LTE stands for what?

Doug Freedman – BroadPoint

It’s the next generation for GSM.

Jerald G. Fishman

Well I didn’t see the infrastructure market as I think, I answered the previous question going into the cycle it was about up 15% of our sales, a reasonable portion that in China, but it’s not the majority of it. The builds are beginning, we are getting orders from the large infrastructure companies that are not only in China, but source to Chinese market, but it’s not going to move the needle very much, because it’s only 15% of our sales. So, I think what the standard is, be it China or be the next generation or GSM or whatever that turns out to be. I think, we are going to do very well in the base station business as we always had. But I don’t think it’s going to move the needle, but and I would tell you the one is does do well, those products we have largest customers, we make good profits on those products. We have good relationships with those customers. They really want to deal with fewer vendors that can solve the problems for them and I think will do well. But it’s very hard to quantify how that’s gong to move the needle at ADI.

Doug Freedman – BroadPoint

All right. So, we shouldn’t think of that as a market segment that’s going to grow as a percentage of sales much outside of the smaller…

Jerald G. Fishman

No, I think it will grow as a percentage of sales. It has been growing by the way as a percentage of sales in a stable market, it’s going to probably grow more as a percentage of sales when the consumer stuff and probably other stuff is declining or at least not growing. So I think that’s going to be a higher percentage of our business in the short-term than it has been.

Doug Freedman – BroadPoint

Can you spend a little bit of time and talk about possibly the behavior of some of your competition and if there is anything that’s going on right now that you find surprising or something that investors should be paying attention to?

Jerald G. Fishman

Well, I think as I mentioned we talk to different questions. I think most competitors play their hands and they reflect who they are in up markets and they reflected they are in down markets, those tend to sell products on value tend to keep your prices up and those would sell their products based on price and to get very price aggressive. As we’ve looked through the margins that we are achieving, we don’t see a lot of evidence of any extraordinary price pressure in the products we have, because it doesn’t do any good, because it’s very few direct equivalents to our products, at least our most successful product in the marketplace. I think there is a lot of companies, lot of competitors some direct and some indirect that are reevaluating their strategy and trying to figure out as we started about 18 months ago, where the areas where they want to make investments so what are the areas that no matter how much you invest doesn’t turn out to be very good business. I think virtually every company out there that we compete with is beginning to go through that process of, the R&D is getting scares the return to getting is hard is come by, where do you want to put your money and how do you want to sell your products and how do you want to manufacture and so I don’t think anybody out there is that we know any of the good competitors ursing around just say and lets wait for they to get better but, but typically every competitor plays out who they are in these cycles.

Doug Freedman – BroadPoint

And then my last question if you wouldn’t mind, is there an opportunity coming up do you believe to repatriate some of the $1 billion I believe you stated is overseas cash?

Jerald G. Fishman

Well there is always a hope, but who knows? I mean, we’ll know about it when we read in the newspapers. It’s just is very hard to predict. We think there is a very compelling reason for our government to do that bring cash into the United States, but most companies are not going to repatriate the cash and if they really need to pay taxes on it right now. So we think these are great justification for doing it but we don’t make the rules, so we’ll start to wait and see what happens.

Doug Freedman – BroadPoint

All right, great, thank you.

Jerald G. Fishman

But if the rules do change, we’re ready.

Doug Freedman – BroadPoint

Okay, so you would seize the opportunity. Great, thank you.

Jerald G. Fishman

Well, we have less time will you happened in I expect we would get.

Operator

And our next question comes from the line of John Dryden with Charter Equity Research. Your line is open.

John Dryden – Charter Equity Research

Welcome Dave, converters were inline to the corporate decline in sales but amps outperformed dollar over other products by 500 basis points or more. Is there any particular explanation with respect to market mix that resulted in the outperformance by amplifiers?

David A. Zinsner

Now, I think these are just quarterly variations that as we’ve look to it – they are not really definitive, in the consumer market they tend to be a little bit more converter intensive, the audio, video stuff that might banging around a little bit more, but I’d say there is no definable rationale to either it would be excited or worry about.

John Dryden – Charter Equity Research

Okay, and then can you break up the 470 basis points decline in GM by lower utilization versus the inventory reserve with the reserves end-of-life products all DSP or some other reason because your HPA products are typically 7 years or more in life and for 2Q is the Limerick applicability was outlined in the 10-Q to be about 25 million. Is that still inline with your previous results in the 10-Q as far as savings from the consolidation?

Jerald G. Fishman

Good luck.

David A. Zinsner

Bob, your answer for second question is $25 million is still the expected savings for Limerick consolidation. I would say that most of the reduction in gross margins had to do with activity rates. There was as you mentioned, a little bit more reserves, but I would say that that was kind of a minor impact of the gross margin decline, most of it again was activity based. We did see kind of an offsetting benefit from mix, since consumer and computing were down, more than a corporate average amplifiers, and data converters or rather industrial and comp infrastructure were down less than a corporate average, we benefited a bit on the mix side.

John Dryden – Charter Equity Research

Okay, thanks for taking my questions.

Operator

And our next question comes from Sumit Dhanda from Bank of America and Merrill Lynch. Your line is open.

Sumit Dhanda – Bank of America and Merrill Lynch

Yes, hi. Most of my questions have been answered. Just to go back, on the expectations, on the cost front, Jerry perhaps just another way of asking it on the last conference call, you’ve suggested that the savings would be $25 million a quarter over Q1 and you bring down that the cost run rate or the expense run rate by $25 million a quarter over Q1 and Q2. You are attracting to model $40 million type number. You said half of those would come back, half of those prior savings will come back. Is it fair to apply the same kind of expectations to this $40 million decline that we’re seeing now and sort of the 25?

Jerald G. Fishman

Moreover I think it’s very hard to being definitive in terms of this and we estimated that I was sort of a rough estimate of a lot of different moving parts. You know I’d say that, we’re - this both categories and these numbers and some costs will comeback, we will get some rate to that eventually, the bonus will start to pay a little bit more, but I think where we’re really trying to emphasis right now is, permanent reductions to our infrastructure cost and those would be areas like manufacturing infrastructure, which I think we talk about quite a bit and also in the SG&A area as well as keeping rising the bar on the R&D investments, we are making going forward. So, its very, we don’t have an analysis that we could go through with you the percentage and the amount of dollars that are permanent and temporary, but I think all I can do, talk to you about our strategic intents on that, which is some of these things we do which are temporary just to try to preserve our (Inaudible) profitability and stability here. But the things were, we spend most of our time thinking proud and most of our time working on harder things that will permanently reduce our costs because that’s a program, we started on long before this happens, which has been accelerated by this decline not initiated by it. So, its shows an answer for your question definitively, but certainly, we are just take out of that is – that we’re working on the infrastructure costs of the company and that’s going to – and that’s why in the, almost a very first thing I said, this afternoon, our goal is to get higher margins on the same revenue level and better margins of this revenue level. So, I mean that’s the only way you do that is by fundamentally improving your gross margins and fundamentally getting your cost out. Or else when you get back to the same revenue level, you got the same margins, which were not bad but nothing to write home about either, comparatively. So I think the fact that we were making this statement, that at the same revenue levels, we think we can make more money. I think is a statement that defines our intent of permanent versus temporary cost reduction.

Sumit Dhanda – Bank of America and Merrill Lynch

Okay and then just as a follow up, just to be clear some of the infrastructure related savings, as it relates the SG&A line for your comments or yet to show up and then would you care to take a stab that at what you think a long-term margin module might looks like lets say at a $600 million or $650 million type revenue run rate whenever that might occur again.

Jerald G. Fishman

I mean right now we don’t have it definitive enough that I would comment on and I think that’s, the thing start to stabilize and we start to get our gain back here a little bit, we’ll put out some new models for you at that time. But I think right now, we’re just focused on and trying to get a lot of stuff done and I think it would be a little premature to comment on that.

Sumit Dhanda – Bank of America and Merrill Lynch

And then the savings to SG&A associated with the corporate infrastructure, cost reductions, so yet to show up in terms of although you said the details are forthcoming at some point.

Jerald G. Fishman

Well, a little bit shown up and some more to come.

Sumit Dhanda – Bank of America and Merrill Lynch

Great, thank you so much.

Jerald G. Fishman

Okay, well I want to thank everybody for joining us today and we are looking forward to talking with you again during our Q2 call, which we’ve now scheduled for Tuesday, May 19th. Thanks very much.

Operator

This concludes today's Analog Devices conference call. You may now disconnect your lines.

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Source: Analog Devices, Inc. F1Q09 (Qtr End 1/31/09) Earnings Call Transcript
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