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Executives

Thomas Shields – COO and CFO

Ronald Michels – CEO

Analysts

Quinn Bolton – Needham & Co. LLC

Edward Snyder – Charter Equity Research

Dale Pfau – Cantor Fitzgerald Securities

Anthony Staff – Craig Hallum

Todd Koffman – Raymond James & Associates

Aalok Shah – D. A. Davidson & Co

Harsh Kumar – Morgan Keegan & Co., Inc.

ANADIGICS, Inc. (ANAD) Q3 2011 Earnings Call October 26, 2011 8:30 AM ET

Operator

Good morning. My name is Nashanta, and I will be your conference operator today. At this time, I would like to welcome everyone to the ANADIGICS Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Tom Shields, you may begin.

Thomas Shields

Thank you, operator. Good morning, everyone, and welcome to the ANADIGICS’ third quarter 2011 earnings conference call.

Before we get started, please remember, any comments made in this call by management, as part of prepared remarks or in response to your questions, may contain forward-looking information. Such information is subject to risks and uncertainties as described in this morning’s press release and in the company’s various filings with the SEC.

I would now like to turn the call over to Ron Michels, for his opening remarks.

Ronald Michels

Thank you, Tom. Good morning, everyone and thank you for joining us. I’m very pleased to report that our third quarter revenue was up 5% sequentially, which is led by a 9% increase in our wireless product line. This improvement was directly attributable to further quarterly increases in market share with a number of our key wireless customers, which offset the previously expected quarterly declines with RIM. Broadband declined 6% sequentially primarily due to lower demand in WiMAX.

Let me begin today by talking about the progress we’ve made with our customers. Our renewed commitment to reinforcing customer relationships is beginning to gain momentum. We’ve doubled our market share with Samsung year-over-year, and are in a number of new Smartphones such as the Galaxy S2, the WAVE 3, the Galaxy Tab 4G, and the Galaxy Note.

At ZTE, we are a leading provider for their Smartphones and have a key design win in the higher volume ZTE Blade. At LG, we’re shipping in to the COSMOS-2 and the Revere. And continue to ship into the Revolution.

Turning to our progress on our reference design partnerships as I’ve discussed in the past, we’re targeting increased business opportunities across platforms using Qualcomm reference designs. And last quarter we specifically mentioned being in a reference design for the LTE Fusion family and Gobi 3K. Now, we’re pleased to report that we also have two parts in a data card reference design for the Viking family, which is our ALT6701, which is a HELP PA optimized for LTE. And our AWT6631 HELP3, which is our first win, which is optimized per average power tracking.

We’ve had great success with new product development over the last six months, and have delivered early hardware and data for consideration on Next Generation designs. In conjunction with these efforts, we are also supporting key OEMs with the same early hardware and data. The goal is to see the value chain, both reference design partners and OEMs with our latest technology in advanced reference refreshes, which are anticipated for the first half of 2012.

Overall, we continue to be impressed with the milestones that our dedicated reference design team has achieved. And we remain confidence that will prove to be critical; a critical strategic advantage for ANADIGICS going forward.

Let me give you a quick update on our ILD Triple-Layer metal process. As a reminder, this process provides three benefits, lower product cost, smaller product footprint, and increased factory capacity. We are now sampling new wireless products based on this technology, and anticipate mass production of these products to be in the second half of 2012.

Let’s talk about how we’re going to expand our market share into pads and MMPAs. We estimate that our served available market for wireless in 2011 to be 830 million. This increases to 1.8 billion in 2012, and 2.3 billion in 2013. And that’s with the entry of the pads and the MMPAs.

Now let’s get into greater detail about our new products that will key – and the key contributors that will fuel our growth for 2012. Last quarter I mentioned a new product family that our engineers were really excited about, which is about the Dual-Band PAs that we’re working on.

This Dual-Band family is referenced-to-design driven, and leverages our new proprietary 2-state design architectures and small form factor that reduce board space by 20%. Our product will feature the world’s smallest Dual-Band PA footprint, with the lowest DGO9 average current. We’ve already begun to sample this and see – begun to see strong customer interest in this, and will be sampling very shortly.

During the PADs, which is our Power Amplifier and Duplexer in one package, I mentioned last quarter that our PAD progress was ahead of schedule and that we’re seeing a high level of interest from both current and potentially new Tier 1 customers. We sampled prototypes in August. A and have increased sample quantities in support of early builds to key OEM target customers.

There’s a number of key differentiators in our PADs versus the competition. First is smaller RF footprint, providing a 50% board savings versus less integrated solutions. And the second is performance improvement. And that’s why optimizing the TA Duplexer Match, which enables faster design, implementation, and time to market. Our plan is to be in production in the first half of 2012.

Let’s talk MMPAs. Our MMPAs are a combination of QuadBand EDGE and Dual-Band WCDMA LTD functionality. This product achieves single-band performance in a multi-band part. We’re on track with our development schedule. And in late September, we delivered Alpha samples to Qualcomm. Customer samples will follow in the first quarter of 2012.

Lastly, we’re working with Qualcomm to leverage our unique architecture to scale functionality to the next generation products.

Switching gears to Broadband, we will start with the wireless infrastructure market. Wireless infrastructure is the new opportunity for ANADIGICS. The strong growth potential is being driven by capacity constraints from increased 3G high data rates, and new small cell architecture for 4G that will maximize the use of limited spectrum. The near-term opportunity is for high power Femtocells and low powered small cell bay stations.

We mentioned in our last call that we are close to finalizing a definitive agreement with a Tier 1 OEM for these products, and we’re happy to report that that agreement has been finalized and our initial deliverables are on schedule.

Turning to CATV infrastructure, we started sampling our 1 gigahertz Gain Line Amplifier, MMICs. And are transitioning from 870 to 1 gigahertz with our hybrid Line Amp line.

In summary, I’m encouraged by the progress our team is making in terms of our customer relationships, and our technology developments. Although there continues to be uncertainty in the market and short lead times, we’re seeing multiple signs that our new strategy is taking route. Our commitment to reinforcing customer relationships has led to increased sales and key customers. Our reference design team is working closely with the largest reference design partner on new smaller footprint Dual-Band PA products. We’ve increased sample quantities for our Dual-Band PADs for support prototype builds at key OEM target customers.

Our MMPA has sampled and we’re working on the next generation. Our commitment to improve our process technology is evidenced in our successful interpretation of the IOD Triple-Layer Metal Process.

So in summary, I’ve confident that our current strategy is right on, and we’re now starting to see evidence that it’s working. Our product development is on track, and we’re expanding our available market, which will be driving force beyond the future for growth.

On behalf of the entire ANADIGICS team, I would like to emphasize our commitment to reestablishing our company as a technology leader in our industry. So with that I’ll turn it over to Tom for the financial updates. Tom.

Thomas Shields

Thank you, Ron. As Ron mentioned, our reported revenue for the third quarter of 2011 was 37.3 million. The revenue breakdown was wireless of 28 million and broadband of 9.3 million. Wireless was up sequentially by 9.1%, and broadband was down sequentially by 6.1%.

As indicated by Ron, the revenue decline in broadband was primarily in WiMAX while all other product lines were flat through last quarter.

Our top customers in the third quarter were Samsung, ZTE, RIM, Cisco, Huawei, LG, World Peace Group, and Richardson Electronics.

The reported third quarter of non-GAAP loss per share was $0.12, an improvement of $0.02 over last quarter. This improvement results primarily from lower operating expenses of 1.1 million compared with our second quarter. The operating expenses total 15.5 million with R&D of 9.5 million, and SG&A of 6.0 million.

Our gross margin as percent of revenue for the third quarter was 20% and flat to last quarter. Our FAB utilization remains in the low 50s.The cash used in operating activities during the third quarter was $800,000 and capital expenditures were 1.5 million.

We ended the third quarter with an overall combined balance in cash and cash equivalence and marketable securities of 100.6 million. We continue to be pleased in the strength of our balance sheet position.

Depreciation expense was 4.5 million and the EBITDA loss for the third quarter was 3.5 million, an improvement of 1.3 million from last quarter.

With that, I’ll now open the line for questions. Operator.

Question-and-Answer Session

Operator

(Operator instructions). Your first question comes from Quinn Bolton with Needham.

Quinn Bolton - Needham & Co. LLC

Hi guys, congratulations on the sequential growth in the wireless business, especially given the trends at RIM. I wanted to see, you know, it's been a pretty choppy market here over the last few months and in the overall semi-conductor industry, Tom, any guidance you can give us how you're looking at the fourth quarter, you know, is that looking to be up in the wireless business or any further info you can provide on that would be helpful.

Thomas Shields

Sure, and thanks. Well, Ron mentioned that there's certainly a number of platforms that we're designed into, so we're hopeful that in fact those platforms do extremely well in the marketplace. As you know, we don't give guidance so there's not much really I can tell you directly relative to any size or shape or expectations for the fourth quarter. But we remain pretty much optimistic.

Quinn Bolton - Needham & Co. LLC

Okay, you know, speaking about the new product ramps, the dual-band PADs, and the MMPAs it sounds like they’re sort of sampling now or, you know, sampling, you know, over the next quarter. When would you expect production revenue on some of those new platforms? Is that sort of a second half of 12 production revenue ramp or for MMPAs is that potentially later than that second half timing.

Thomas Shields

Actually I guess we're a little more optimistic than that. I think on PADs we hope we see some revenue first half of the year. And then on the MMPA, the second half.

Quinn Bolton - Needham & Co. LLC

And then just speaking about MMPA, obviously targeting Qualcomm with that solution; how many of the Qualcomm reference designs as they, you know, bring additional base bands to market, do you think use a MMPA architecture? Is that something where you see, you know, going forward, you know, the majority of Qualcomm reference designs will move to a MMPA for cost and performance reasons? Or is this, you know, still sort of just one solution in a fairly large number of reference designs that Qualcomm will offer to customers?

Thomas Shields

Yeah, I think - we know of three reference designs going forward that will include it. I would say that it's a hard question to answer, but it's probably for the next year or two will be more of a 50/50 as far as reference designs that will include it and ones that will just use discreet implementations.

Quinn Bolton - Needham & Co. LLC

Okay, and you had mentioned you're now providing alpha samples to Qualcomm, how long does it usually take them to do their sort of evaluation work? You know, when do you think you might be in a position to announce that MMPA reference design? Is that sort of a 1 or 2 quarter event or could it potentially be longer?

Thomas Shields

Yeah, it takes them about, when we give them a sample, about a quarter usually between the engineering teams of ANADIGICS and Qualcomm to come up with a matrix of data on that part. So just, I'll mention that we - our plan on all these products is to be sampling Qualcomm and then OEMs parallel. And - so it's two different paths to win business, which historically we're successful with both paths.

Quinn Bolton - Needham & Co. LLC

Is the intent then that perhaps you could - perhaps your first wins with MMPAs may actually come through a direct customer that uses the MMPA alongside a Qualcomm base band even though you're not officially on that reference platform yet?

Thomas Shields

Absolutely.

Quinn Bolton - Needham & Co. LLC

Okay. Okay, great. Thank you very much.

Thomas Shields

Thanks Quinn.

Operator

Your next question comes from Edward Snyder with Charter Equity Research.

Edward Snyder - Charter Equity Research

Thank you very much. Several questions. Tom, I'll start with you. Could we get a little - maybe a little more color on a breakdown of broadband specifically? I know that WiMAX was weak, but maybe some more color on WiFi, CATV, and then to the extent that you can, how did RIM shake out for the quarter? I know they were down as you guys suggested. Was it what you anticipated or did we see a little bit more of a downward trend? And then I've got a few for Ron too.

Thomas Shields

Thanks Ed, it's Tom. Yeah, as I mentioned in my remarks, essentially, WiMAX was the product line that was down causing the decline in total broadband. The other product lines were flat to the second quarter. And WiFi, as we eluded to, also was flat relative to the second quarter. In terms of direct revenue, essentially set-top box was $2.3 million, infrastructure was $4.7, WiFi was $1.3, and the remaining was essentially WiMAX. As it applies to RIM, we’re pleased with RIM's shipments during the quarter and it was directly in line with expectations.

Edward Snyder - Charter Equity Research

Great, and then Ron you're working with Qualcomm on reference designs as you mentioned before, and you're also doing a lot of work on PADs, but Qualcomm's never issued a reference design that uses PADs. I know they are used by the OEMs as in alternative. Are the evaluating your pads and if so do you have any indication that they're going to change their approach to reference design and maybe start employing PADs? And on your PADs, your first device is that you expect it to be commercially - to do commercial sales, will they be dual or single band devices?

Ronald Michels

Okay, on the first question, they have evaluated our PADs. We've had actually several meeting where we go over the data. Most of the data has been - most of the characterization data comes from ANADIGICS, but they have done some as well. And you're correct, we don't know of to date that there's a reference design that this will drop in to. So this falls into the category of a part that will sit next to a Qualcomm part.

Everything that we design today, by the way - and there's over 50 products that are in the pipeline, some are brand new platforms and some are derivative products of existing products. Every one of them is - we now have a checkpoint to make sure they're compliant with Qualcomm's specifications. This is something we haven't done in a while here at ANADIGICS, so - in the past, of course, fall into that category of being Qualcomm compliant.

So no, there's no reference design that it will drop in to. There have been discussions about if the pull is as large as we think it's going to be that maybe something would happen in the future. As far as our designs, they're all dual-band PADs. We're not doing anything that's single band.

Edward Snyder - Charter Equity Research

Excellent. And then along those same lines, I mean, the teardown of the iPhone 4S has come out and Apple's continuing with their PAD [Inaudible] - there's some debate whether or not they're going to ban it completely after the seedily-made phone came out. But they seem to be the biggest - they are the biggest consumer of PADs far and away, but getting in there is tough, I'm sure. They've got several suppliers at this point. I know given the relationship that you can't talk in detail about it, but are you targeting performance along the lines of what they've already shown in terms of their teardown or do you look at the PAD market as expanding beyond just Apple in growing? There's kind of a debate going on in the industry on how big PADs could actually be, and since they're not on a Qualcomm reference design it comes down to talking to OEMs and trying to get color. So anything you could provide there would be very helpful.

Ronald Michels

Yeah, so on that teardown, of course, there’re single-band PADs. The - to answer your question, we see it as a nice sized market. It may even be a very large market. And so we're putting a lot of effort into it, and I think that what the team would say here today is that, you know, we're sampling these things way ahead of schedule - a quarter ahead of where we thought we would be, and now the development guys are pulling their hair out trying to be able to get enough samples together for all the customers that are asking for these things.

So we have to pick and choose who we're sending samples to, so we don't get overloaded. But I think we're getting confirmation here that this concept of dual-band PADs is a very big thing. So in anybody who uses the Qualcomm chip sets will be, I think, a potential customer for this.

Edward Snyder - Charter Equity Research

That seems to be the same [Inaudible] I think developing the same thing and there seems to be a lot of interest from the handset OEMs on it because now the band pairs have kind of settled in here there's not many more changes - it would make a lot more. What is your footprint on the dual-band PADs? I don't know if you're willing to give that out given that you're sampling now, but are we talking 6x6 or 3x3?

Ronald Michels

Oh, yeah, sure we can mention that. That's 4 ½ x 6.

Edward Snyder - Charter Equity Research

And then one more for you, Ron. MMPAs, we've only seen one design out that's actively using them. Our feedback is that most OEMs are looking at some form of this, can you give us some color on - you mentioned it's a quad-band with two wide-band CDMA, a dual-bands. Can you give a little more color on perhaps what yours includes and maybe the footprint size?

Ronald Michels

Yeah, sure. So it's quad-band EDGE, two bands of LTE. The size is 5 x 7 ½, which is pretty much we think what most OEMs are looking for today. And then also it's worth mentioning that we're pretty excited about how this architecture scales to add more bands to it as well. Our performance that we're getting with the amount of bands that are included today, which is six bands, is quite good. And with most specifications it pretty much echoes what we get with single band parts. So we're pretty pleased about this and very excited about how it's going to scale to include more bands going forward.

Edward Snyder - Charter Equity Research

Excellent, and then finally, Tom, what's your thinking on OpEx - more importantly, what are your targets? Are you looking at as a percentage revenue, as a fixed growth rate, or are you going to manage it on an absolute basis? Just trying to get a feel for how we model you the out periods.

Ronald Michels

Well, as most the folks know, R&D expenses largely variable because you spend money directly on R&D materials relative to where to go forward, we've always suggested in the past we always expect it to have a run rate of $500,000 increase in R&D on a quarterly basis. It was somewhat low relative to what reported for Q3, but it'll go back to normal starting in Q4.

Edward Snyder - Charter Equity Research

And then that applies to SG&A too, I take it, right?

Ronald Michels

SG&A is essentially what I reported, $6 million. We hope to keep that flat, slightly up as we get into next year.

Edward Snyder - Charter Equity Research

Okay, and then final question, on a utilization log here of course, do we - you've done some cost reduction, should we look at historic references for gross margin on revenue run rate? Or do you think you'll do a little bit better back - if you get back to $40 million at some point next year, we're going to be looking at gross margins above 30% or - just trying to get a feel for where you think the breakout will be.

Ronald Michels

Well, certainly we'd love to get back to historical levels of the expansion and gross margin on the sequential revenue growth. It's kind of early today, when we think about 2012, to give any judgment on it. Clearly gross margin is critical to the organization by far given where our revenue is on a quarterly basis. That's our number priority. Secondarily, would be gross margin, but we remain optimistic relative to all the initiatives that are well underway that can help us continue to improve the gross margin as percent of sales next year.

Edward Snyder - Charter Equity Research

All right, thank you guys.

Ronald Michels

Your welcome, thanks Ed.

Operator

Your next question is from the line of Dale Pfau with Cantor Fitzgerald.

Dale Pfau – Cantor Fitzgerald Securities

Good morning, gentlemen. I missed that breakdown on your broadband revenues. Could you, unfortunately, just go through that real quickly again for me?

Ronald Michels

Yeah, Dale, what we said, basically, when you look at broadband for the third quarter, essentially, all the product lines were flat to Q2 with the exception of WiMAX, which was – went down and that was principal product line was down, leading to a 6% drop quarter over quarter.

Dale Pfau – Cantor Fitzgerald Securities

Okay. That’s very helpful. And could you talk about, you know, I really appreciate the information and the fact that you’re getting a lot of traction out there with the trials and so, where are people most excited about using your new PAs? Are these new platforms, are they retrofits, are they second source, primary source? Could you give a little color on where you’re fitting into the eco system out there?

Ronald Michels

Sure. That’s a good question. So if we use Samsung as the example, and you know all of it pretty much ties into all the design wins we’re getting, no matter who it is, what we’ve seen the most traction with lately between the last earnings call and this earnings call is new LTE and WCDMA wins. So prior to that, we were increasing market share in CDMA and now it seems to be a flood of new things that we’re getting design into that are more – WCDMA and LTE, more of those types of standards, which is good for us because it’s where our strength is and it’s where things are reading down the road with all of our multi-band parts that we’re developing.

So they’re all new platforms and a lot of these things that were design wins that I mentioned earlier in the call with Samsun are not just new platforms, but they’re very high visibility platforms. Several of them, of course, like the Samsung Note and the Galaxy 2 is in the other one.

So they’re new and we are pretty much the only source and that’s the way RF works, it’s very hard to say there’s multiple sources for any of these PAs. And we’re winning business because of our LTE performance and because of our – we’ve traditionally had very good DT09 performance and we’ve even sharpened some of that performance up, it look even better than it used to. And that, of course, you know, results in better talk time and that’s why we’re winning a lot of the business that we’re getting.

Dale Pfau – Cantor Fitzgerald Securities

And on LTE, there’s so many bands out there, which bands are the favorite ones that you’re seeing some pick up in design wins?

Ronald Michels

That’s a good question, and you’re right, there’s a lot of them. I think there’s like 15 bands. So what comes to mind is Band 13 is a lot of the traction that we’re getting, Band 12 and 17, so I would say those three. Okay, and also Band 20. So 13, 12, 7 and 20.

Dale Pfau – Cantor Fitzgerald Securities

13, 20, 7 or 17?

Ronald Michels

17, I’m sorry.

Dale Pfau – Cantor Fitzgerald Securities

And are you seeing competition for those bands or are those relatively unique greenfield opportunities for you?

Ronald Michels

No, there’s competition. You know, we have four major players that are in there with ANDIGICS and we’re all competing for a lot of the same sockets. It comes down to customer relationships, it comes down to application support and performance.

Dale Pfau – Cantor Fitzgerald Securities

And how about pricing pressure when you’re going in, particularly in the new sockets? Are you seeing more or less pricing pressure than you expected?

Ronald Michels

No. I think it’s about what we thought it is. And we don’t go in and undercut everybody else, we win the business on performance.

Dale Pfau – Cantor Fitzgerald Securities

Great, well, keep up the good work. Thanks.

Ronald Michels

Thank you, Dale.

Operator

You’re next question comes from Anthony Staff with Craig Hallum

Anthony Staff – Craig Hallum

Hey, guys. Ron, you mentioned new deals signed and I believe you said [inaudible], can you give us a sense of when that revenue is going to be in? Also, in past calls, you guys have called out Huawei. I’d love to hear your – where you stand right now with Hauwei and Greater China. Thanks.

Ronald Michels

Okay. First, on the infrastructure business, that agreement has been recently signed, it has a set of milestones which will lead to production. And that product will be primarily – it will begin in A4 of 2012 and be primarily a 2013 revenue and gross margin driver for the company, a substantial one.

The other question was on Hauwei just in general. We do business with Hauwei on two front, we’re in cell phones with them, which is our – most the business we do, and then also we sell some of their infrastructure as well.

Anthony Staff – Craig Hallum

And Greater China, I’d love to hear your thoughts about you where you guys stack up there.

Ronald Michels

Yeah. So basically, I mean, we have ZTE, we have Hauwei, those two customers are our primary growth areas, both Chinese customers. We also sell to distributors, which is another piece of the business that goes to China. And the size, I would say, it’s 2/3s Hauwei and ZTE and 1/3 of the distribution business. That business, on all three fronts, is growing for us and it’s responsible for a large percentage of why the company’s recovering as quickly as it is.

Anthony Staff – Craig Hallum

Okay, thank you.

Ronald Michels

You’re welcome.

Operator

Your next question comes from Todd Koffman with Raymond James.

Todd Koffman – Raymond James & Associates

Thank you very much. I was wondering if you could give a little more color on the customer breakout. You rattled that, Tom, you’re 7 or 8 top guys. I was wondering if you could give any more colors that rate from your contributions from your top customers, particularly Samsung?

Thomas Shields

Hey, Todd, it’s Tom. Well, certainly, all the customers that I mentioned are very important to the company’s top line. But you know, being specific, essentially what we try to do is anyone who is equal or above 10% or in the high-single digits, those customers that I mentioned all fall in that range.

Todd Koffman – Raymond James & Associates

So the high-single digit or above 10%, just again, was Samsung, RIM, ZTE, Cisco, Hauwei and World Peace?

Thomas Shields

Yes, LG, I also mentioned.

Todd Koffman – Raymond James & Associates

And is it fair to say that you’re top customer, your biggest customer is Samsung?

Thomas Shields

That is correct.

Todd Koffman – Raymond James & Associates

And I want to ask, you know, you’ve talked about some of the successful gains or wins you’ve had when you opened up the call with Samsung, you called out some – the Galaxy, whatnot. And you know, I’m guessing that, you know, you’re absolute value of business with Samsung is, you know, I’m just going to guess and say 10 million in the quarter and that might be high, and you look at the other players out there and you know, they’re doing, I don’t know, 50, 60 million a quarter. You call them out as like you have an anchor position and I’m wondering, given that it sounds like you feel that you’re technology and relationship is so strong, why have you, even going forward, seem to be such a diminished piece of their requirements for power amplifiers products?

Ronald Michels

Yeah, so let me answer your – it’s a good question, let me answer it in a few different – slice it a few different ways.

First of all, we don’t play in the GSM market. So our competitors who have larger revenue pieces with Samsung, you know, a nice piece of that is GSM, which we’re not in.

The other part of it is, I think what is important here is the platforms that we’re in with Samsung that are high-visibility platforms that ANADIGICS has not been a part of for a while. It takes a long time to build share back. This is a, you know, sequential process and we take it step by step. So we’re in a lot of these high platform phones with a single band or a dual band part and there’s more sockets. And as we move forward, we’ll be in more of those sockets. You know, what we feel is this is progress and this means there’s no reason the technology is good. We know the technology is good because we’re in these phones, so winning more sockets and getting a bigger piece of the Samsung business has a very, very high probability associated with it.

Todd Koffman – Raymond James & Associates

That’s very helpful. Thank you very much, and good luck.

Thomas Shields

Thanks, Todd.

Operator

Your next question comes from Aalok Shah with Davidson and Company.

Aalok Shah – D. A. Davidson & Co

Hi, guys. Good morning. Congratulations. A couple quick questions. In terms of the headcount reductions in the quarter and where you are with restructure, could you guys give us a sense of where you guys are now with the restructuring plan?

Ronald Michels

Right, so we now start doing the last quarter’s earnings conference calls that we did at a 10% workforce reduction and we anticipated our target was roughly $40 million of annualized savings and we are hitting those targets.

Aalok Shah – D. A. Davidson & Co

Okay. And is there further restructuring that we should be expecting on them going forward at this point?

Ronald Michels

Not at all. We’re pretty much baseline where we need to be. Obviously, we’re very strong relative to the workforce that we current have and we feel very good relative to our position.

Aalok Shah – D. A. Davidson & Co

Okay. And then back to the China commentary, can you give us a sense of how your presence is within the TDS CDMA markets at this point?

Ronald Michels

We’re actually very strong in that market.

Aalok Shah – D. A. Davidson & Co

And if you look at the 9% sequential growth in your wireless business, is there a way to slice it down as to where that growth is really coming from? Is it – is it the TV market? Is it North America with some WCMDA products? Can you give us a better sense of how the quarter – where the strength is coming from?

Ronald Michels

Well I think, as I mentioned earlier, we’re gaining market share in – I don’t have the geographic breakdown that possibly you’re looking for, but I think we’ve had more design wins in WCDMA and CDMA and then you know, as far as the company’s market share, we’ve substantially grown the CDMA market share. Actually, it was a couple percent a year ago and it’s 16% today, and WCDMA has gone from 3% to 15 in the last four quarters.

So I can’t really break it down beyond that. Is that helpful for you?

Aalok Shah – D. A. Davidson & Co

Yeah, that is. And Ron, just real quickly, I’m sure that the facility in New Jersey is still underutilized. Have you thought about maybe going back to the GSM market? Is that something that you’d consider or even the CDMA market?

Ron Michels

No. The – remember with the MMTAs, that, in essence, gets us back into that market; but no separate parts.

Aalok Shah – D. A. Davidson & Co

Okay, and any sense of – can you give us any sense of qualification of what the utilization rate was in the quarter?

Thomas Shields

Yeah, I mentioned that it was essentially in the low 50s.

Aalok Shah – D. A. Davidson & Co

Okay, great. Thanks a lot.

Thomas Shields

You bet. Thanks, Aalok.

Operator

Please hold for your next question.

Thomas Shields

Operator?

Operator

Your next question comes from the line of Harsh Kumar of Morgan Keegan.

Harsh Kumar – Morgan Keegan & Co., Inc.

Hey, guys. First of all, congratulations. Very good quarter. A couple of questions. I’m curious, there’s been a lot of dislocation in the semiconductor market. I’m curious about your view of the markets that you play in, particularly the Smartphone market, if you’re seeing anything different from either history or what you expect?

Ronald Michels

No. Absolutely not. I think that we’re pretty excited about where the market is going. The shift from low-end to high-end phones, and basically, our success in China. So we don’t really see anything that tells us that we’re not happy.

Harsh Kumar – Morgan Keegan & Co., Inc.

Great, great. I want to come back to another question that was asked earlier about guidance. I know you won’t give a number, but I’m curious, Tom, maybe you could help us with the level of bookings, or any metric you feel is appropriate and helps us modeling the December quarter, where you are maybe ending the last quarter versus the previous quarter and bookings.

Thomas Shields

Well, essentially, you know, without giving any guidance, which we don’t, we suspended guidance, we don’t give any reference on backlog, and one of the responses that I did provide suggested that we remain optimistic relative to our business going into fourth quarter.

Harsh Kumar – Morgan Keegan & Co., Inc.

Fair enough. And the last question was, if I just do a real back-beyond-the-road kind of math, I come up with a breakeven revenue number of about 45-ish million. Am I somewhere in the ballpark with reference to our thinking, Tom?

Thomas Shields

We continue to model various mix in our own internal model. We continue to work on a 2012 plan, so it’s essentially still in rough-draft form, so I can’t comment on that at the moment.

Harsh Kumar – Morgan Keegan & Co., Inc.

Okay, fair enough. Thanks, guys.

Operator

Your next question comes from Quinn Bolton with Needham.

Quinn Bolton – Needham & Co.

Hi, Ron. Just a quick follow up or clarification. I think when you’re talking about the MMPAs, you were saying that you got almost single mode efficiency, but I might have misheard that. Just wonder if you could clarify the efficiency of the MMPA versus the discrete solution?

Ronald Michels

No, you heard that correctly. It’s very close to getting us to performance, not only in efficiency but many of the specs that we get in a single mode. That’s why we’re excited about the particular architecture that we’ve chosen.

Quinn Bolton – Needham & Co.

Maybe this gets into a lot of competitive detail, but is your MMPA multiple single dye all in the package or are you using more of a converged architecture where you’ve got multiple bands going through the same PA dye in that package?

Ronald Michels

Yeah, I would say it’s a hybrid of both of what you just mentioned. So it’s not just stacking all of the discrete parts inside of one package. If we did that, it wouldn’t fit. But it’s not a complete converged solution and so it’s a hybrid between the two, which we think gives us the best trade off.

Quinn Bolton – Needham & Co.

Okay, so it’s not just a repackaging exercise, saving just on the package costs, you’ve got some mitigration at the semiconductor PA level as well?

Ronald Michels

A lot of it, yes.

Quinn Bolton – Needham & Co.

Perfect. Okay, thanks for the clarification.

Operator

There are no further questions. Are there any closing remarks?

Ronald Michels

Yes. I just would like to thank everybody for being on the call today and I'm confident that our strategy is starting to work for us. As always, we remain committed to returning our company’s profitable growth, so thank you for being on the call today and we look forward to updating you on our future progress.

Operator

Thank you. Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.

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