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Executives

Carolynne Borders - Director of Corporate Communications

Steven Bilodeau - President & CEO

Aaron Fisher – Sr. VP Products & Technology

Analysts

Jed Dorsheimer – Canaccord Adams

Christian Schwab – Craig Hallum Capital Group

Vernon Essi – Needham & Co.

Josh Baribeau – Canaccord Adams

Standard Microsystems Corporation (SMSC) Q2 2009 Earnings Call October 1, 2008 5:00 PM ET

Operator

Good afternoon ladies and gentlemen and welcome to the SMSC first quarter fiscal 2009 results conference call. (Operator Instructions) I will now turn the conference over to your host, Carolyn Borders of SMSC.

Carolynne Borders

Good afternoon and thank you for joining us today for SMSC’s second quarter fiscal 2009 conference call. You should have all received a copy of our press release issued this morning. You may also find the release on our website at www.smsc.com. If you dialed in on the phone line, please note that there is also a slide presentation that accompanies today’s call which can be found in the Investor Relation section of our website.

Representing management today are Steve Bilodeau, Chairman, President and Chief Executive Officer, and Aaron Fisher, Senior Vice President of Products and Technology.

Following management’s discussion we will open the call to a Q&A session and I will also note that a replay of today’s call will be available on our website.

If you are participating in our online web cast, please move on to slide two for a quick note on our Safe Harbor statement. Certain matters discussed in this teleconference are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected or forecasted.

Such risks and uncertainties include but are not limited to, those discussed in this teleconference and those found in the company’s Form 10-K, 10-Qs and other filings with the Securities and Exchange Commission. I’d also refer you to the forward-looking statement language contained in today's press release regarding risks and uncertainties.

Today's presentation also includes non-GAAP financial measures, which should not be considered an isolation or as an alternative to results of operations data or any other measure of performance derived in accordance with US GAAP.

However, these non-GAAP financial measures are presented because SMSC believes they provide useful supplemental information for management and investors and allow them to perform meaningful comparisons to the company's past and present results.

Guidance is presented on a non-GAAP basis only, given that the GAAP basis charges for equity-based compensation related to stock appreciation rights cannot be projected reasonably. GAAP and non-GAAP numbers along with a reconciliation of the two are available in today's press release and in the appendix of this presentation.

And with that I’ll ask you to advance to slide three in the presentation and I’ll turn the call over to Steve Bilodeau.

Steven Bilodeau

Thanks Carolynne and thank you for joining us. Before we launch into a discussion of SMSC’s second quarter performance and third quarter outlook, I’d like to inform you of the key company development which we summarized in a press release earlier today.

Specifically I am delighted to announce that Ms. Christine King has been appointed President and Chief Executive Officer of SMSC effective on October 20. As many of you know I announced my plans to retire in June and since them the SMSC Board of Directors has been working diligently to find the best possible candidate to lead SMSC into its next phase of growth.

I am happy to report that we believe we have accomplished just that. Chris is 35-year veteran of the semiconductor industry and an Engineer by trade. She is also a seasoned public company CEO with extensive semiconductor industry knowledge. Having taken AMI Semiconductor public, leading it through the assimilation of multiple acquisitions and growing it from approximately $280 million in annual sales to over $600 million prior to its merger with ON Semiconductor earlier this year.

Prior to AMI she served as Vice President of Semiconductor Products and Vice President of the network technology business unit at IBM. While at IBM she launched the company’s ASIC Products and networking businesses growing ASIC group into the number one ASIC in the world at that time with $1.7 billion in annual revenues.

The Board of Directors and I are excited that Chris has agreed to join us at SMSC at this pivotal time in our growth. I think you’ll agree that she is an excellent fit and is uniquely qualified to lead SMSC on its intended path to become a billion dollar company.

Chris is not with us today but will be in the saddle on October 20 and I know she is anxious to meet with all SMSC employees and stakeholders.

Now, on to the business climate and second quarter results, if you please join me on slide three, I’ll get started.

Turbulent macroeconomic conditions heightened by the current liquidity crisis in the financial markets are having an adverse impact on the economy, businesses, consumers and consequently the semiconductor industry. Lower confidence is affecting the consumption of end products within which our semiconductor products are used.

And the factors that drive traditional seasonal revenue growth during SMSC’s third quarter have not materialized. Overall semiconductor industry growth rates for calendar 2008 have continued to decline and [wait] for fab utilization has dropped precipitously in the last month which is a leading indicator of the softening demand.

The data points that we’ve seen indicate that the back to school season was muted and that the upcoming holiday season does not appear robust at this time. In our view orders from corporations for IT including enterprise and commercial PCs have dropped sharply below expectations this quarter, particularly the United States with the liquidity crisis appears to have impacted many Fortune 100 companies and others.

If you look at the companies affected, you see names like Lehman Brothers, Fannie Mae, Freddie Mac, General Motors, Merrill Lynch, Wachovia, etc. and it seems understandable that corporate spending is being sharply reduced during the current unprecedented environment.

All of these combined factors are very much influx and therefore visibility is simply not what it normally is this time of year. In fact, we’ve seen a sharp reduction in visibility in just the past 30 days. Until the US market stabilizes and it’s clear that the spillover into other key global regions has been stemmed, we will continue to be faced with a highly unprecedented environment.

Let’s move on if you would with me to slide four for a closer look at SMSC’s second quarter results. Despite this challenging macro environment, SMSC’s second quarter revenues and non-GAAP earnings were inline with our prior guidance.

Revenue of $97.2 million in the second quarter of fiscal 2009 was approximately flat from the same period last year but increased 5% sequentially driven largely by growth in our high performance analog or HPA product sales.

As expected HPA products which are sold into cell phones, portables and mobile applications more then doubled from last year’s second quarter. It’s important to note that last year’s second quarter total revenue was actually stronger then normal due to an unusual increase in Notebook PC sales during that period.

Non-GAAP gross margins for the period were about flat versus our expectations of a modest sequential improvement as a result of unfavorable mix and some unplanned variances. Non-GAAP operating expenses which were up about 3% from the first quarter of fiscal 2009 were inline with the expectations. Non-GAAP EPS of $0.46 was also inline with prior guidance.

As expected this represented a 22% decline from the same period last year as flat revenue and improved margins were offset by R&D investments, executive transition costs, and unfavorable foreign exchange fluctuations.

On a sequential basis non-GAAP EPS was up 18%. GAAP EPS in the second quarter was $0.38, down slightly from Q2 last year but increased 90% sequentially. Now let’s take a look at performance for the first half of the fiscal year on slide five.

Metrics for the first half of fiscal 2009 were also positive despite the state of the market with revenues growing 6% over the equivalent period last year and GAAP earnings per share increasing 9%. Non-GAAP EPS was down about 4% reflective of the same operating and foreign exchange impacts just discussed for the second quarter.

Our capital position is solid with cash and investments totaling $179 million, working capital of nearly $165 million and a book value of $19.49 a share. Additionally inventories are down approximately $5 million from the end of the first quarter.

And lastly cash flow from operations continues to be strong at about 10% of sales. Please turn with me now to slide six; this slide depicts sales into target vertical markets which totaled 40% each for mobile and desktop PCs, consumer electronics and infotainment in the recent second quarter. The industrial and other segment combined contributed 20% of sales during the period.

You’ll note that sales into the PC sector were down about 5% from the same period last year which in part ties to the current state of the economy but also reflects the above normal Notebook consumption that provided for a significant upside in last year’s second quarter.

The industrial and other category rose due to year-over-year PC mix declines and Ethernet sales into the industrial market being significantly higher.

Our HPA solutions which includes analog sensors and high speed [inaudible] met our expectation of doubling revenues in both the first and second quarters of this fiscal year as compared to the prior year quarters.

HPA sales are also on track to meet the goal of doubling sales for all of fiscal 2009 versus the prior year. We continue to be very excited about our future opportunities for these products and expect solid growth next year as well.

I’d like to hand the call over to Aaron Fisher to discuss the highlights of our end market starting with slide seven.

Aaron Fisher

Good afternoon, thanks Steven. Steven mentioned that last year’s second quarter was stronger then normal due to an usual increase in Notebook PC sales during that period. As a result the year-over-year comparison is somewhat skewed and shows a downtick.

However on a sequentially SMSC’s PC sales in the second quarter grew in absolute dollars. The current negative economic climate is impacting commercial and enterprise computer segments for both desktops and Notebooks. Typically PC product sales help drive the large volume increase that marks the peak of our seasonal cycle and SMSC’s fiscal third quarter.

This year we are not seeing this typical seasonality. Commercial sales are typically driven by large corporations, the US Fortune 100 companies and others and these businesses seem to be clamping down on IT spending.

This is having a direct and material impact on our sales of embedded controllers and IO devices used in commercial applications with our current Q3 expectation now dropping about $10 million below our previous view.

That said, a bright spot in this vertical relates to the sale of SMSC’s analog solutions for mobile PCs. As you may recall these products perform among other things the thermal management functions that allow mobile PCs to squeeze the most out of the performance of a given CPU chipset.

Our thermal management products have a much broader exposure to the PC industry, being widely deployed in both commercial and consumer segments. This fact along with very healthy design win activity leads us to expect a record year for revenues from this product family.

Looking longer term our growth opportunities continue to be robust and when the market recovers to more normal patterns and levels we are well positioned to grow sales through market share gains and greater content per system.

If you’re following online, take a look now at slide eight. To date this year SMSC sales in the consumer electronics vertical have continued to grow. While the CE market is generally exposed to the same macro drivers as the PC market, SMSC has faired well primarily due to strong sales of our USB transceiver base solutions into portable products such as Smart Phones and GPS devices.

We’re finding that customers are leveraging one base platform design to create multiple end product SKUs and our current expectation is that over two dozen devices will be on the market with our solution by the end of the fiscal year.

This product line is on track to meet our objective of doubling revenue this fiscal year and because this growth is driven by growing market share it can still be healthy despite a weakening market. Overall our HPA products are expected to approach 20% of SMSC’s revenues on a run rate basis at the end of this fiscal year.

Again longer term, in addition to the HPA products we expect to continue to drive attractive sales growth in the consumer electronic segment by virtue of new USB and Ethernet solutions.

Lastly we’ll turn to slide nine for some comments on the automotive market; currently SMSC has lower exposure to the US auto market and no exposure to the US auto makers who appear to be suffering the worst impact from lower consumer spending and the shift towards more fuel efficient vehicles.

Despite this the European market has also begun to soften and this is impacting near-term sales. As we’ve stated before the growth in our automotive business is expected to accelerate towards the end of our next fiscal year.

This is when we expect Asia sales to ramp to higher levels. In the meantime we continue to see strong design win activity with our newer grades of MOST network devices, MOST 50 and MOST 150.

These faster networks will usher in a new class of [in-cab] and infotainment most notably, video entertainment. In additional MOST 150 is a key enabling technology for additional video based automotive systems which would represent a new area of potential growth for our products.

We are also experiencing a strong customer pull for USB and Ethernet products. These devices which leverage our strong position in the consumer and industrial segments are expected to expand our overall content per vehicle.

Net net in automotive we are combining a better market penetration, feature driven node expansion and USB Ethernet content to open the door to significant automotive revenue acceleration in the coming years.

With that I’ll turn the call back to Steven.

Steven Bilodeau

Thanks Aaron, if you’re following online, we’re now on slide 10. Earlier in the call we summarized our view of the macroeconomic environment. The severity of the financial crisis is in our view causing a correction in demand for SMSC commercial products as IT spending drops sharply and consumers have become more careful and deliberate in their spending.

Our below average bookings for this period corroborate this market behavior with the approximate $10 million anticipated decline in expected Q3 sales of commercial products, slowing European auto sales and a question mark on whether the CEN market demand will hold up, the back half of our fiscal year is uncharacteristically unclear.

SMSC has for years run its business with a long-term focus. With this mindset has enabled us to effectively weather historic economic and semiconductor ups and downs. Our design win momentum however is strong and we are optimistic about the long-term health of our business.

We also have no debt and a strong cash position which will help us to weather this uncertain market cycle. If you’ll turn to slide 11 we’ll walk through our current outlook for the third quarter of fiscal 2009.

We’ve talked a lot about the lack of visibility in the market which is unprecedented in my tenure as CEO but for perhaps similar times in 2001. Given these extraordinary economic conditions, we frankly gave serious consideration to not giving guidance at all.

However we concluded that it would be a disservice to not at least offer a view of how we expect our business to perform this quarter. We determined that the prudent way forward was to rely on our typical operating processes and provide you the best data available as of now.

Our guidance assumes that the government takes action that quickly stabilizes the markets so that business demand does not further deteriorate and consumer confidence improves so that there is at least a modest seasonal pickup.

That said, should economic conditions continue to deteriorate or should current [and] expected demand vanish for a host of possible reasons, the guidance we are currently offering may be materially different from our actual results.

With that, for the quarter, we currently expect sales to be in the range of $90 million to $93 million. Non-GAAP gross margin is anticipated to be flat to up 50 basis points from the second quarter of fiscal 2009. Additionally we still feel comfortable that our gross margin improvements throughout fiscal 2009 will offset the gross margin contribution from the Intel IP payments that are ending in Q3.

Hence, our expectation is that the gross margin percentage in Q4 of this fiscal year without the Intel payments will be higher then the gross margin percentage in Q4 last year with the Intel IP payments. Non-GAAP OpEx is expected to be flat to up 2% sequentially as we temper costs in light of economic conditions.

OpEx includes the additional investments to fund our strategic roadmap and assumes exchange rates remain at current levels. Interest income should be about $1 million in the quarter, we expect the non-GAAP tax rate to be about 30% to 32% and modest growth in cash plus investment balances excluding additional stock repurchases.

Non-GAAP EPS is expected to be in the range of $0.30 to $0.35. Today’s guidance also excludes the impact of executive transition costs and the potential favorable impact of the R&D tax credit should it be passed by Congress.

The [inaudible] this fiscal year the R&D tax credit is expected to benefit FY09 earnings by $0.06 to $0.08 per share. Executive transition costs are estimated to be $0.06 to $0.10 per share and be distributed over a few quarters with the bulk likely in Q3.

Lastly I should remind you that the guidance is always presented on a non-GAAP basis due to our inability to predict the impact of stock-based compensation on bottom line results. If you move to the last slide in our presentation I’d like to wrap up with a reminder of the strength of SMSC’s capital position because I think it’s a relevant point during time of economic uncertainty.

Cash and investments totaled $179 million at the end of the second quarter and net shares outstanding have remained essentially flat as we reinvest free cash flow. In fact, in the first half of the year SMSC repurchased roughly 600,000 shares of stock for $17 million.

We’re continuing to transition our exposure in auction rate securities to more liquid assets. Having reduced these holdings from approximately $101 million as of May 31 to $82 million at the end of the second quarter. Most of the remaining ARSs are tied to high grade, government backed student loans.

To date we have viewed any impairment related to ARSs as temporary however if markets continue to deteriorate we may have to reevaluate our position.

Lastly inventories decreased by approximately $5 million since the first quarter of fiscal 2009 and we expect them to trend down next quarter.

It is my belief that companies with strong cash positions, healthy cash flow, leading market positions and innovative technology are best positioned to weather downturns. We count ourselves among those companies and expect to stay focused on executing our growth initiatives.

With that, we are ready for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Jed Dorsheimer – Canaccord Adams

Jed Dorsheimer – Canaccord Adams

Should you see sales materially fall below the expected levels of the $10 million lower, how quickly can you reduce costs?

Steven Bilodeau

At this point in time given our guidance, we’re not expecting that to happen. So that’s the first point. We’re providing the guidance with the best knowledge that we have. As far as reducing costs we’re again also focused long-term on doing the right things for the business to grow the company and the value of the company so we don’t expect any need for any major cost cutting at this point in time.

Jed Dorsheimer – Canaccord Adams

In terms of your gross margin guidance in Feb of this year to have it up, what revenue levels are you assuming?

Steven Bilodeau

We’re only giving specific guidance of the flat up half a point for the current quarter.

Jed Dorsheimer – Canaccord Adams

So are you assuming a $90 million type of revenue level to provide the year-over-year increase in gross margin? I’m just trying to gauge that because as consumer likely follows commercial and you see a falloff in sales obviously gross margins would be impacted. So I just wanted to get your thought process in providing that guidance.

Steven Bilodeau

Well again the two comments we made on margins were for the current quarter and those obviously are based on the guidance we gave for the revenue in the current quarter. We did make a comment of our confidence in gross margins being better then last year in the first quarter and I guess I would say if revenues are in a similar area as they are now that we would hold that to be true.

Operator

Your next question comes from the line of Christian Schwab – Craig Hallum Capital Group

Christian Schwab – Craig Hallum Capital Group

There’d be no reason for Q4 not to follow typical seasonality even though Q3 was disappointing, right?

Steven Bilodeau

It’s a little bit hard to say because as you know normally our seasonality is we see a sharp decline from Q3 to Q4. But that’s usually following a sharp increase in Q3 which didn’t happen this year. So I’m not sure, unless things get worse, I’m not sure we would expect any where near as big a decrease as we might normally see.

Christian Schwab – Craig Hallum Capital Group

So assume a flattish to slightly down would probably be appropriate given the visibility in hand?

Steven Bilodeau

I would love to answer that question but just given the visibility I’m just not going to give specific Q4 guidance.

Christian Schwab – Craig Hallum Capital Group

You are not seeing any, the demand, the lack of seasonality and demand is that equally impacting both desktop and Notebook or are you seeing one impacted much more then the other?

Steven Bilodeau

Well just to be real clear, what we’re seeing for PC is the commercial portion which we’re more exposed to then the consumer at this point given the restructuring we did over the last couple of years. We’re two-thirds, three-quarters commercial exposed versus consumer and the commercial portion is not usually that seasonal but because of the current economic problems, we’ve seen at least a sharp cutback in the appetite for corporate spending.

So the consumer portion of the PC industry we’re really not commenting on. We’re not that exposed to it. Where we have felt a little bit of the other softness is in the automotive market where the US woes seem to be spreading into the European market as well and I think as we said our consumer electronics seems to be generally hanging in there.

And that has the advantage of having many new products that we’ve come out with and we’re launching a lot of new designs.

Christian Schwab – Craig Hallum Capital Group

When you said $10 million below planned, you were referring to just PCs look to be $10 million below planned, correct?

Steven Bilodeau

Yes.

Christian Schwab – Craig Hallum Capital Group

Not $10 million below planned for the total quarter of the company.

Steven Bilodeau

No we were saying our view at the end of Q1 is where we thought, remember we didn’t give guidance for Q3 but our internal view of where we would be in Q3 is now $10 million lower just for our commercial PC products. That‘s where the big reset in demand has been for SMSC.

Christian Schwab – Craig Hallum Capital Group

Can you quantify that then? What should we be looking for PC IO revenue then next quarter in November? Since you’ve given the $10 million you could probably share that.

Steven Bilodeau

We have other segments in the PC that are doing better, like our analog products. Aaron mentioned that our analog products are doing great so they’re up so that might offset some of this. But remember we don’t usually give guidance at a product line level.

Christian Schwab – Craig Hallum Capital Group

But given the historic times that we’re in can you give us a rough idea?

Steven Bilodeau

I would say down, but overall you’re talking about?

Christian Schwab – Craig Hallum Capital Group

Yes, you did $39 million in August, obviously you were looking for growth in November to get down to the $90 to $93 million, PC revenue has to be down.

Steven Bilodeau

But it won’t be down the whole $10 million, it’ll be, just because we have other things offsetting it.

Christian Schwab – Craig Hallum Capital Group

Right and you expected it to grow.

Steven Bilodeau

That’s right.

Christian Schwab – Craig Hallum Capital Group

Should we assume that that business is off $2 or $3 million, or should we assume that that business is off $5 or $7 million?

Steven Bilodeau

How about it’s in the low 30’s.

Christian Schwab – Craig Hallum Capital Group

Regarding visibility, could you just rephrase that, on visibility, that you think visibility is similar to what we saw in 2001 or do you think it’s actually worse then what we saw in 2001?

Steven Bilodeau

I don’t think its worse, but as I said it hasn’t been that bad since that time. In other words, its pretty, there’s just no visibility right now and the last time I can remember feeling that way was around then. That doesn’t mean though it was as bad. I don’t think it’s as bad as then yet, but who knows what happens over the next few weeks.

Christian Schwab – Craig Hallum Capital Group

I would say that you’re not alone from following many others who sell into the PC space and what they’re seeing as far as order patterns and visibility.

Operator

Your next question comes from the line of Vernon Essi – Needham & Co.

Vernon Essi – Needham & Co.

Just wanted to clarify, you were talking about a gross margin year-over-year growth and I thought I heard you say in the fourth quarter, were you referring to the February quarter or was that a first quarter comment?

Steven Bilodeau

The two guidance items that we’ve given related to gross margin is that the current quarter we’re in now which is Q3 fiscal 2009 should be flat to up half a point sequentially. That’s one piece. And the other piece is what we’ve been talking about all year which is that the improvements that we’ve made in gross margin throughout the year will actually enable SMSC to post total gross margins on total revenue this Q4 which has a higher gross margin percentage then last year. The important difference being we have our Intel IP payment is going away and we’ll still have higher margins then we had last year.

Vernon Essi – Needham & Co.

So you’re talking about specifically the fourth quarter?

Steven Bilodeau

Yes.

Vernon Essi – Needham & Co.

So you’re bogey is on a pro forma basis 52% last year you expect it to outperform that sans Intel in February?

Steven Bilodeau

Yes.

Vernon Essi – Needham & Co.

I know this is a really tough environment and I think you’re qualifying these questions with yes at the end of it we’ll see what happens. I think things are going to continue to slip personally, but in terms of the competitive side of the equation, especially in PC IO, have things changed on the market share front? I know you made a decision to sort of up the margin and get out of the white box side, but have you seen more competitiveness on that front and how is that market shaping up, I know its an awful environment but I’m curious if its more just end units demand or if there is a market share shift happening as well?

Steven Bilodeau

Just to be crystal clear, this drop that we’re talking about in Q3 has nothing to do with market share loss. This is totally related to a sharp decline in demand for designs we have already won and I’ll also note that our design win momentum is excellent. We’ve got more new products and we’re getting more design wins then I think we ever had, but the environment out there is just so uncertain as far as how many you’re going to sell per design win that that’s where the loss is.

Also just to note, I just wanted to go back. You made the comment that I’m saying yes at the end of these comments, but that yes is based upon the guidance with the caveats and the assumptions that we put down around the guidance and I agree with you, it’s pretty cloudy out there.

Vernon Essi – Needham & Co.

A lot of data points coming together sort of real time, but the markets are having a lot of trouble here right now. In terms of, it’s obviously one of the bigger factors for you on the margin front is going to be your foundry partners, how is that fairing out? I hear utilizations on their end are dropping so I’m wondering if you’re getting any favorable price concessions on that side of the equation or has that been relatively stable?

Steven Bilodeau

I think the foundries are obviously dealing with a precipitous drop in utilization I think across the board so they’ve obviously got some struggles ahead of them but there’s no specific price drop that I think would be appropriate for us to talk about on the call.

Vernon Essi – Needham & Co.

Your inventories are also down and you’re reining things in, should we expect obviously that to just on a DSO or the turns calculation rather, should we expect that to continue or might you opportunistically build inventory at all in this situation?

Steven Bilodeau

I’d model it sort of flat.

Vernon Essi – Needham & Co.

I missed the auction rate numbers, what was the total quarter-on-quarter, the two figures?

Steven Bilodeau

We were $101 million to start coming into the quarter and we ended at $82 million.

Operator

Your next question comes from the line of Josh Baribeau – Canaccord Adams

Josh Baribeau – Canaccord Adams

As we look at your cash balance and the auction rates, would the full $82 million, how much of that is risk of seeing impairments? The full amount, half, a quarter?

Steven Bilodeau

Well the issue generally with ARS is I think if you’ve got them, there’s a risk because the market for, whatever the dollar amount is has some level of risk and our view at the moment is the impairment and liquidity is a temporary situation right now.

Josh Baribeau – Canaccord Adams

I guess the right way to look at it, you basically have about $8.00 a share in cash and about half of that is auction rate, so looking at it differently sort of a worse case scenario, you’ve got $4.00 in hard cash, correct? And the other amount may or may not have any impairments associated with it?

Steven Bilodeau

Yes.

Operator

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Steven Bilodeau

Thank you. Clearly the day’s events unfolding on Wall Street and Washington are unprecedented. These events along with the softening of the US and world economies have created an environment of limited visibility for the time being. However I want to remind everyone that SMSC enjoys a rock-solid capital structure, excellent end-market diversity and strong, innovative technical resources.

Further SMSC continues to run its business with the long-term strategic focus that we believe will enable us to outgrow the market as the economy returns to normalcy.

Before I sign off, since this is my last earnings call, I would like to say that it has been a sincere pleasure to have served as CEO for SMSC for the past 10 years. I am extremely proud of what SMSC team has accomplished over this period but I am even more excited about what I believe SMSC can achieve over the next few years under Christine King’s leadership.

Lastly I’d like to thank all SMSC’s stakeholders and in particular its employees for their support over the years. Thank you.

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Source: Standard Microsystems Corporation F2Q09 (Qtr End 08/31/08) Earnings Call Transcript
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