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Anaren, Inc (NASDAQ:ANEN)

F2Q08 Earnings Call

January 29, 2008 5:00 pm ET

Executives

Lawrence A. Sala - Chairman, President and Chief Executive Officer

Joseph E. Porcello - Senior Vice President-Finance and Chief Financial Officer

Analysts

Richard Valera - Needham & Co.

Mike Walkley - Piper Jaffray

Steve Ferranti - Stephens Inc.

Kevin Dede - Morgan Joseph

Chris McDonald - Kennedy Capital

Operator

Good day, everyone and welcome to the Anaren second quarter earnings release call.

At this time, for introduction and opening remarks, I would like to turn the call over to Mr. Larry Sala, President and Chief Executive Officer of Anaren Incorporated.

Lawrence A. Sala

Good afternoon and thank you for participating in the Anaren fiscal 2008 Second Quarter Conference Call. I am joined again today by Joe Porcello. I will provide a brief overview of the results of the second quarter after which Joe will review the financial highlights and we will then take your questions.

Certain statements made during this conference call will be forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those discussed. You are encouraged to review Anaren’s Securities and Exchange Commission filings to learn more about the various risks and uncertainties facing our business and their potential impact on our net sales, our earnings, and our stock price.

Net sales for the second quarter were $32.4 million, up 6.7% from the second quarter of last year. Operating income for the quarter was $3 million or 9.2% of net sales. Excluding stock-based compensation expense, operating income for the quarter was $3.9 million or 12.1% of net sales. Profit margins improved from the first quarter of fiscal 2008 due to improved production yields and a decline in professional expenses.

Wireless Group net sales for the quarter were $17.9 million, up 5% from the second quarter of last year, but were down 15% from the first quarter of fiscal 2008. Wireless net sales declined as projected from the first quarter of fiscal 2008 due largely to the decline in demand for custom assembly products from one customer. Demand for custom assembly products remains volatile and development and qualification continued on several new standard and custom assembly products and opportunities.

Sales of consumer component products were $750,000 for the quarter, down 59% from the second quarter of last year due to the previously reported significant decline in demand from our largest consumer component customer. The Group captured new consumer component design wins for a satellite television set-top box and a cellular telephone application during the quarter. Customers that exceeded 10% of Wireless Group net sales for the quarter were Nokia and Richardson.

For the Space & Defense Group net sales for the second quarter were $14.5 million, up 8.9% from the second quarter of last year. New orders for the quarter were $10.2 million and included contracts for passive ranging and radar subsystems. Product development activity for the Group remained focused on radar and jammer subsystems. The Space & Defense Group backlog at December 31, 2007 was $60 million.

Joe Porcello will now review the financial highlights.

Joseph E. Porcello

Good evening. The highlights of the second quarter income statement and the balance sheet at December 31, 2007 are as follows: the gross profit margin for the second quarter of fiscal 2008 was 32.1% and included $218,000 of equity-based compensation expense. Absent the equity-based compensation expense, gross margin was 32.8% for the quarter.

Current second quarter gross margins were negatively impacted by a less favorable product mix compared to the second quarter of last year and $250,000 charge to establish reserve for anticipated warranty repairs of a custom assembly product in the Wireless Group. We expect gross margins including stock-based compensation expense to fluctuate between 32% and 34% during the third quarter of fiscal 2008.

Investment in research and development was 7.1% of net sales in the second quarter of fiscal 2008, down 10 basis points compared to the second quarter of fiscal 2007. Current R&D spending is supporting a number of wireless consumer and custom assembly product opportunities and it is not expected to decline in the near future.

Operating income was 9.2% of net sales for the current second quarter, down 4 percentage points from the second quarter of fiscal 2007 and included $942,000 of stock-based compensation expense. Absent this non-cash equity, expense operating income was 12.1% for the quarter. Compared to last year the decline in second quarter fiscal 2008 operating income resulted from a less favorable wireless and defense product mix with higher material content. The $250,000 warranty reservation and the $204,000 lease charge related to expected future lease costs in excess of the expected sub-lease income generated from the company’s Frimley UK facility.

Net income was 7.9% of sales or $0.17 per diluted share for the second quarter of fiscal 2008, including $0.05 per share in equity based compensation expense. This compares to net income for the second quarter of 2007 of 12.4% of net sales or $0.21 per diluted share which included $0.03 per share in equity-based compensation expense. Excluding the equity-based compensation expense, net income for the second quarter of fiscal 2008 was 10% of net sales or $0.22 per diluted share.

The effective income tax rate for the second quarter of fiscal 2008 was 28.4% compared to an expected tax rate of approximately 25%. The increase in the effective tax rate was due the impact of reducing previously recognized tax benefits of certain state net operating loss carry forwards during the second quarter as the company has reassessed the likelihood of realizing those benefits. The expected effective annual tax rate for the remainder of fiscal 2008 absent one-time events should be approximately 25-26%.

Balance sheet highlights include: cash provided by operations was approximately $5.9 million in the second quarter of fiscal 2008. Capital expenditures were $2.8 million in the quarter and were driven by the plant expansion and renovation in East Syracuse. These payments included $480,000 of fixed asset additions which were included in accounts payable at September 30th.

Cash, cash equivalents and investments were approximately $47.7 million at December 31st, down $26.8 million from June 30th. During the second quarter, we purchased 969,000 shares of Anaren common stock for $15.2 million. There were approximately 1,742,000 shares remaining under the current Board repurchase authorization at December 31, 2007.

Accounts receivables were $20.7 million at December 31st, up $933,000 from June 30. Day’s sales outstanding were 58 days. Inventories were $27.3 million at December 31, up 12.1% from June 30 due to the increasing level of long lead time defense business.

Lawrence A. Sala

Thanks, Joe. For the third quarter of fiscal 2008, we expect a slight decline in sales for the Space & Defense group and comparable demand for the wireless infrastructure and consumer component products. As a result, we expect net sales to be in the range of $29.5 to $32.5 million for the quarter. With an anticipated tax rate of approximately 26% and anticipated equity-based compensation expense of $0.05 per diluted share, we expect net earnings per diluted share to be in the range of $0.14 to $0.18.

We will now take questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Richard Valera - Needham & Co.

Richard Valera - Needham & Co.

Larry, you actually guided for flattish wireless business which is probably pretty good considering how sort of choppy the environment is. Can you just talk about how you see the demand level out there? How your visibility is relative to how it’s been, and sort of what you are hearing from your customers on the wireless demand side?

Lawrence A. Sala

Well, I think, in general, our standard products which we sell pretty broadly to all the players in the marketplace, we are seeing pretty stable demand and we have for several quarters. The custom side which is tied as specific customers and platforms has been far, far more volatile and has certainly I think slowed down over the last quarter obviously with some customers.

We see more slowness in India recently than we have seen in probably the last 12 months or so. But it’s not always crystal clear to us because our customers go through platform transitions and other issues that we don’t necessarily see directly the end-market as well as with our custom products.

So in general, our customers after our last annual purchase negotiations which really happened late last calendar year, we are expecting I think low single-digit year-over-year growth. And really didn’t give any particular guidance with regard to the first half or second half being stronger or slower. I think for us in the first half of this year, our success in selling to some of our Chinese customers. The first half of the calendar year is always a stronger half of the year for our China customers. So I think that’s helping us have better expectations over the next quarter or two than we otherwise would have.

Richard Valera - Needham & Co

And how about the ferrite design wins, when do you sort of expect them to start contributing materially and maybe driving maybe a little sequential improvement in the revenue of wireless?

Lawrence A. Sala

We expect the first one to start driving material revenue late this quarter and grow throughout next quarter, and hope to have a second one coming in either late next quarter or early in our first Q1 ‘09 quarter. The issue though is we never have excellent real clear visibility as to how other platforms are transitioning out of production. So exactly how incremental it would be is difficult for us to project. But we have, as we have mentioned before, four or five projects that we hope will transition into production over the next 12 months. And ultimately those should be quite incremental to our base of business, but over that time some of our base will erode.

Richard Valera - Needham & Co

And then in your consumer side, you mentioned a cellular handset win, which you didn’t make a big deal of it. One point you thought that could be a pretty significant area, is this are fairly small win though, but could it lead to something bigger?

Lawrence A. Sala

Well, yes it is, and that’s why we aren’t making a big deal about it. For us, it’s a single component in a single platform as we understand it at this time. We are excited to be competitive enough to get into this type of an application. It’s a similar type of product to this one that we’ve been successfully selling into the wireless LAN space.

As a single platform single component win, it’s probably something on the order of about $0.5 million annual sales opportunity for us. We’re hopeful that it can be designed into multiple platforms and turn into a much more meaningful revenue stream for us, but until we really get some visibility, that’s likely to happen soon. We really only see it as a small incremental win.

Richard Valera - Needham & Co

And any word from your historically largest consumer customer? It sounds like they did get re-qualified with their biggest customer, have you seen anything there yet?

Lawrence A. Sala

No, we really don’t expect to, I guess, in the near future. They did announce that they are re-qualified and that they will be both repairing and returning product that has been returned to them due to failure as well as gearing up new production.

So we are waiting to get some insight into how much product needs to be retrofitted, how much new product will actually be produced, how much inventory they truly have on hand of ours to get some insight into when they will actually be generating new demand for us. But our expectations are that it will not have any sort of material impact on our consumer group this fiscal year.

Operator

Your next question comes from Mike Walkley - Piper Jaffray.

Mike Walkley - Piper Jaffray

Great, thanks guys. Congratulations on the strong margin this quarter, just a quick housekeeping question for me. Can you give us the break out of stock-based comp in your other OpEx lines? I know you gave it for gross margin.

And just to clarify, the $204,000 in future leases, that’s a one-time charge this quarter and it’s not a charge that’s going to be amortized overtime?

Joseph E. Porcello

The cost of sales has got $218,000 in it for the quarter, marketing $57,000, research and development $146,000, and G&A $521,000.

The same lease we had in the fourth quarter of last fiscal year, at that time, we thought we would have a tenant somewhere around the April timeframe. We’ve had quite a bit of traffic through the facility. We have a tenant we believe for maybe half the building, which we hope to enter into negotiations with, but the other half of the building is still empty. So we’ve taken an additional charge to carry us out through June at this point.

Operator

Your next question comes from Steve Ferranti - Stephens Inc.

Steve Ferranti - Stephens Inc.

Just following up on some of Richard’s questions, specifically regarding the custom assembly business, am I correct in that you actually had started seeing some revenues in your ferrite component business over the last quarter or two, is that correct?

Lawrence A. Sala

No, I mean we’ve had for more than a year, a significant amount of custom assembly revenue coming from our production program we’ve had on our ferrite custom assembly. But we haven’t really had any significant new ferrite product introductions in the last six months. Now the first new ferrite custom assembly revenue that we would see in the last year, we expect to just start ramping up in the next couple of months.

Steve Ferranti - Stephens Inc.

And can you give us some sense for sort of that base custom assembly business sort of excluding the pipeline that you’ve got in the ferrite side of things. I mean, can you talk about sort of life cycle there, where we are in terms of life cycle on those programs and how good you feel about visibility there in terms of sort of the core base of business in that segment?

Lawrence A. Sala

Yes, I mean we have quite a bit of concentration in the custom assembly side of our business. It’s a large part of our concentration as we’ve discussed. And for the ferrite product especially, we expect that product that’s been in production to come to the end of its life cycle sometime over the next two or three quarters. We don’t have absolute guidance as to the rate of ramp down and how much of that production we will receive. But we do know that some of the new design wins we have are going to be replacing that platform over the course of the next twelve months.

So I would say something on the order of a little less than half of our custom business will go through its life cycle over the course of the next six to twelve months. And we will be transitioning some of these new programs in to replace that as well as other programs on other platforms that would be incremental to that.

Steve Ferranti - Stephens Inc.

I understand. And are these sort of newer opportunities somewhat more diversified in terms of customer base?

Lawrence A. Sala

Yes, far more. So of the six or more we’re chasing, there is only one of them is actually replacing existing revenue streams and a far more diverse base of customers than we’ve had historically on our custom products.

Steve Ferranti - Stephens Inc.

I understand. And just turning to the consumer side on the handset, when I didn’t catch earlier if you had sort of pointed us toward when you think we might start seeing the ramp in that project. And can you give us a sense for is that a platform win or a single sort of model of phone, any sort of color you can give us there?

Lawrence A. Sala

Yes, it’s a single component win for us, so it’s not a tremendous amount of dollar content. And it’s, our understanding is, it’s a module that is currently being used in one platform but has application to many platforms.

So, as I just mentioned earlier, we are expecting something on the order of about a $0.5 million annual revenue stream due to the one platform design-in. And that revenue stream should start ramping up for us sometime later this quarter. We’ve already gotten our initial production orders. But, we would expect to see more consistent and repetitive orders as we move throughout this quarter.

Steve Ferranti - Stephens Inc.

And, are you still seeing traction on the wireless LAN side and can you kind of describe sort of life cycle of those programs as well in terms of once you are designed in? I’m assuming it’s a 9 – 12 month kind of life cycle on a given product before the next design cycle pops up?

Lawrence A. Sala

Yes. On the life cycle, I mean, we’ve certainly seen continuing interest in broadening penetration with our wireless LAN products. And we’ve recently seen some end platform introductions that we believe our products have application in. So, we are trying to confirm that as we speak. So, we’ll have better visibility as we exit this quarter.

As far as life cycle goes, we just don’t have enough experience in that business yet to be able to act really predict on the life cycle of any particular design win. Our products have fairly standard building blocks– that are used with many different types of chipsets in these applications. So, it’s our feeling our product will have a very long life in that end market. But as far as any one particular chipset reference design, you really don’t have enough insight to be able to predict a life cycle yet.

Steve Ferranti - Stephens Inc.

Can you give us an idea of how, I mean are you seeing the opportunities sort of build upon these initial wins in these new segments?

Lawrence A. Sala

Yes, absolutely. I mean, everyone seems to lead on to numerous other reference design opportunities. So, we are optimistic that we’ll see a continuing growing annuity base of business in these different market segments.

Steve Ferranti - Stephens Inc.

And just one last housekeeping question for me. Can you give us a tax impact of the warranty reserve charge and the lease charge in the quarter, looking for an after tax number there? And then, with regard to the warranty reserve what specifically was that involving?

Lawrence A. Sala

The warranty reserve was for a custom product that we are in the process of repairing at this point. And we had expected costs of bringing some product back and doing a little repair to and selling it back out.

Steve Ferranti - Stephens Inc.

And we had a vendor component that failed and a vendor has to repair their part, we have to do some testing and return product to the customer. Do you have a net number for that?

Lawrence A. Sala

If you apply about it 25.5% rate to both of those that’s about the net reach.

Operator

Your next question comes from Kevin Dede - Morgan Joseph.

Kevin Dede - Morgan Joseph

Good afternoon guys, nice job on sales in the quarter.

Larry, I was just wondering if you wouldn’t mind refreshing our memory on your acquisition strategy, especially in light of recent evaluations?

Lawrence A. Sala

We’ve probably been the most active in the last six months of at least identifying in China resource opportunities that we’ve had in the last six years. We are really looking more around our space and defense business than we are our wireless business. I mean, we’ve been looking for different technology bolt-ons that give our engineers more tools to provide more integration to our military customers.

So we are certainly finding valuations to be more interesting than they’ve been to us in the past and it’s certainly becoming a more active part of our growth strategy than its been. So, obviously it takes a lot to get one to fruition, but we certainly have more resources applied and are seeing more things that look reasonably possible to us than we have in a long time.

Kevin Dede - Morgan Joseph

So, space and defense, focus on integration of modules?

Lawrence A. Sala

Well, the integration modules is certainly an area moving our current technology forward to be bigger integrator where we play, you know, base technology like amplifiers, filters, switches, signal sources, that would allow us to attack other sub-system opportunities in the military space.

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[Author:MSOffice]

Operator

Your next question comes from Mike Walkley – Piper Jaffray.

Mike Walkley - Piper Jaffray

Larry, just on the space and defense a little stronger than expected in the quarter, should we still expect kind of that $13-14 million range when you say slightly down? And could you also give us an update on the LTCC, how the qualifications going and how we’d should think about that, maybe it’s an ‘09 opportunity for you guys?

Lawrence A. Sala

Yes, absolutely we still have the same expectations because of the size of some of these programs and products, orders and sales can be lumpy on a quarterly basis. But, yeah, that’s typical run rate we are expecting for the rest of the year.

And we’ve been pretty pleased with our progress on our LTCC product. We have been qualified on the one significant opportunity that we were pursuing, and expect some sort of award of some limited, initial prototype production in the next quarter or so. We’ve got a couple of other military, smaller run production opportunities that we didn’t expect, that we are actually working on right now. So we’ve been fairly successful going after military opportunities with our LTCC technology.

Mike, I think it’s still a little early to say what this business could be in the next year or so. But our expectations is it ought to be at least $1 million or more next year for us as a product line and have expectations where- we’d like to see that LTCC product line be at $10 million revenue stream for us in the future. And we believe that the programs we’re pursuing certainly have all of that potential and more for us.

Mike Walkley - Piper Jaffray

And lot of questions on the consumer side was on the design wins, talk a little bit about the second one, I think you said it was a set-top box one, was that for satellite?

Lawrence A. Sala

Yes, we continue to see good success with our broadband WLAN products. So, you know, we’re hopeful that even though we lost, hopefully just temporarily here, our largest satellite television customer, we are seeing numerous other design opportunities for both set-top box and other satellite dish opportunities.

So yes, our broadband WLAN product line, we thing it’s still exceptionally competitive from a size, cost, and performance standpoint. And it’s continued to see good opportunities.

Mike Walkley - Piper Jaffray

No, I know you don’t give longer term guidance, but do you think fiscal ‘09, would you get back to kind of fiscal ‘07 revenue run rates for that revision?

Lawrence A. Sala

We are hopeful, and we’re hopeful that this last quarter was a bottom in that market. But, the visibility is exceptionally limited and we’ll see how things play out.

Operator

Your next question comes from Rich Valera – Needham & Co.

Richard Valera - Needham & Co

Larry, with respect to the space and defense business, I think you mentioned before that you thought you’d have a book-to-bill of one or better for the full fiscal ‘08 year, is that true and do you still expect that is the case?

Lawrence A. Sala

It is still true. Obviously, same thing as I said, very lumpy big orders. So quarter-by-quarter we have, obviously, an enormous book-to-bill in the first quarter in that and less than one in the second quarter. We’re still ahead on a book-to-bill basis for 6 months. But yes, if we don’t, it would be because something we expected in the fourth quarter is related to the first. But in general our expectations haven’t changed.

Richard Valera - Needham & Co

And update at all on any kind of counter ID activity, or is that kind of debt at this point?

Lawrence A. Sala

Yes, it’s really not a material revenue stream for us. We said way back when things started slowing down last June or so that we thought this fiscal year reach to $1 million or $2 million in crew work. And that’s still our expectation to be somewhere in that range. But nothing significant or new that we’ve seen yet.

Operator

And we’ll take our next question from Chris McDonald - Kennedy Capital.

Chris McDonald - Kennedy Capital

When you think about the opportunities in the consumer side of business, are there any single opportunities that are of the similar magnitude to what you’re working on with CalAmp as far as these smaller in size?

Lawrence A. Sala

I guess that initially most are smaller in size. But there are a number of them that have potential to grow to be material revenue streams like the CalAmp revenue stream for us. So, even something like the handset opportunity were to progress to where it’s a multiple platforms, it certainly could be a meaningful revenue stream for us as well as some of these wireless LAN design is.

So, there’s areas where we have more dollar content and the volumes are lower, and areas where we have smaller dollar content, but the potential volumes are very, very high. So nothing that we think is going to quickly turn into that kind of revenue stream, but multiple opportunities that over time could grow to that type of revenue stream.

Chris McDonald - Kennedy Capital

And the timing of some of those design wins is over the course of next two or three quarters roughly?

Lawrence A. Sala

Yes, the next six months I think is certainly a reasonable timeframe.

Chris McDonald - Kennedy Capital

And then back to the ferrite opportunities; are you at the point where you have visibility on the magnitude at least to these first couple that might start layering in just from a revenue standpoint?

Lawrence A. Sala

Yes. I mean, we’ve got reasonable visibility, understanding that in all of these opportunities there is typically at least two sources of supply and at some times three and depending on how competitive we are and our quality and our ability to ramp, we get some allocation of that production.

So we have good idea about the total opportunity, and we are always relatively optimistic about our competitiveness. But, it all comes down to how much of the allocation we can win and continue to capture.

Chris McDonald - Kennedy Capital

Is that something you can be specific about?

Lawrence A. Sala

Well, they vary significantly. So some of these early opportunities we believe are total opportunities of maybe $15 million types of annual programs and others are more like $5. But typically, they’re somewhere in those two relative ranges.

Operator

And we’ll take our next follow-up question from Steve Ferranti.

Steve Ferranti - Stephens Inc.

Hi guys, just to sort of follow up on the sort of the opportunity pipeline there. Can you kind of describe what you are seeing on the standard product side as we get ready for these sort of an incremental opportunities to start layering on board?

Lawrence A. Sala

I guess in general, standard component wise, we always have relatively high penetration in everything other than our ferrite products. So, from a ferrite product standpoint of talking about components that we get designed into the power amplifier, we see a good array of opportunities and would expect at least quarterly to be turning out a ferrite product design for an amplifier application. That really is something we would call a customer assembly but ferrite component designed for one particular PA.

We’ve been pleasantly surprised at the growth, both in terms of customer penetration and utilization of our standard products over the last couple of years. We really thought for a period of time that amplifier architectures were moving and power transistor technology was moving in a direction that would reduce demand for some of our standard components.

And to our surprise the opposite has kind of happened over the last couple of years. So we are seeing good demand and good growth in demand for our standard products even though our customer penetration has been high for many years.

Steve Ferranti - Stephens Inc.

Okay and so I guess it would be safe to sort of characterize it as your kind of base, the standard products, I will imagine within pretty closely tracks sort of what the broader wireless infrastructure growth would be. And then on top of that we have got this ferrite component which is sort of an incremental opportunity?

Lawrence A. Sala

Yes, that’s absolutely true. I think our content outside of ferrites has been very consistent and relatively stable and predictable. In any thing, in terms of ferrite component design wins into PAs would be incremental for us.

Steve Ferranti - Stephens Inc.

And just turning to your balance sheet, what do you feel like is your minimum level of cash you need to run the business?

Lawrence A. Sala

Well, our minimum to run is different for us in terms of minimum to have the flexibility we like. I mean, I guess as we stand, we feel like we would like to maintain $40 million on our balance sheet to be able to execute an acquisition based on the size of things we are looking at in our desire to get something done. So, that’s really, I guess, the kind of number we have been working around. But, its more acquisition driven than it is running the business driven.

Steve Ferranti - Stephens Inc.

I understand. And what’s your strategy going forward in terms of the buyback program. You have been pretty aggressive, what’s your thinking there kind of where we stand today?

Lawrence A. Sala

Well, I guess we have got 1.7 million shares authorized. And if our stock looks attractive I think we will be pretty aggressive executing it. And as long as we can maintain the balance sheet strengths that we like to have to have the flexibility on the M&A side we are looking for.

Steve Ferranti - Stephens Inc.

And then, I guess, just one last one from me. At what point looking forward I guess do you get the sort of, I think you alluded in a previous call to kind of targeting a 5% type of CapEx target, 5% of revenues. Is that still the case, and what point do we start heading in that direction?

Lawrence A. Sala

Yes, I think as we are into this fiscal year, we should be about there. So, we are expecting that things will continue to taper down through the rest of this fiscal year. We are done with all the big construction outlays. We are done with most of the bigger capital outlays.

And we still have the last phase of our renovation to complete between now and the end of the fiscal year or so. It came down this quarter as opposed to the last several and we’d expect to see it continue to walk its way down for the rest of the fiscal year.

Steve Ferranti - Stephens Inc.

One last one, it popped up to me as you were answering that. Can you give us a sense for how much effort has it taken on the consumer side of things to get to the point where you are seeing handset wins? I mean my sense is that, you’ve done a lot sort of, behind the scenes heavy lifting to this point and really just now starting to see this fruit of that labor. Is that accurate?

Lawrence A. Sala

Yes, I think that is are accurate. I mean there are a couple of things; obviously the whole single customer concentration on the satellite side has caused us a lot of restructuring our efforts. And we probably have pursued mistakenly too many opportunities to chase custom opportunities that could provide quick revenue streams for us, or perceived to be quick revenue streams for us.

Now we are focusing more on trying to develop larger standard product lines where we have high competitive differentiation in size and in performance that are applicable to many different applications that can build into very material revenue streams. So, as I said, it’s basically the same product now, we are selling into wireless LAN applications and we are selling into cellular telephone applications and seeing many other opportunities to leverage that product line and that technology. And now, we will also now try to develop other standard families of products like that.

So, it has taken us quite a bit of time to get to this momentum heading in the right direction in multiple market segments, and we will see, hopefully the next six months continues that momentum.

Operator

And it does appear we have no further questions.

Lawrence A. Sala

Well, we clearly appreciate for taking the time, and we look forward to speaking with you again next quarter.

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