Good day everyone and welcome to the Adaptec second quarter fiscal 2009 earnings conference call. Today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Ms. Nicole Noutsios. Please go ahead.

Thank you, operator. During today's call, we will first hear from Sundi Sundaresh, our President and CEO, followed by Mary Dotz, Adaptec's Chief Financial Officer. After Mary's remarks, we will host a brief question-and-answer session. Some of the comments today will include forward-looking statements regarding future events and our projections of the financial performance of the company based on our current expectations, including a projection of operating results for the third quarter of fiscal 2009. These statements are subject to significant risks and uncertainties and can cause our actual results to differ materially from those expressed in these forward-looking statements. We refer you to the risk factors section of the documents that Adaptec has filed with the SEC, specifically in our most recent Form 10-Q which contains important risk factors that could cause actual results to differ materially from expectations. In addition, some of the financial measures that are included in this presentation are non-GAAP. For reconciliation of GAAP to non-GAAP measures, please visit our web site at www.adaptec.com, under Investor Relations section. With that, I would like to introduce Adaptec’s President and CEO, Sundi.

Thank you, Nicole. Good afternoon and thank you for joining us for our Q2 fiscal 2009 earnings call. During this call, we will briefly provide a business overview, details on the newly acquired Aristos Logic and updates on our OEM and channel initiatives. Then I will turn the call over to Mary to outline the progress we have made to improve our fundamentals and provide further information on Aristos Logic. We continue to make progress on our revenue growth strategy as well as maintaining a conservative expense structure. Our second quarter revenues were $31.7 million which is above our guidance range. Our gross margins dropped a bit from last quarter to 44% on a non-GAAP basis, but it is still a large improvement from 36% we reported in the prior year second quarter. As we take proactive measures to streamline our business, the expense reductions continue to flow to Adaptec’s bottom line. I am pleased that we are able to report positive net income once again this quarter. Further, the company continues to make progress on its growth initiatives. In the quarter, we introduced Intelligent Power Management and successfully completed Aristos Logic acquisition to further round out our product portfolio and provide a foundation for additional OEM opportunities. To maintain our competitive advantage, Adaptec must continue to innovate and create leading edge products. In the past few quarters, we have been very focused on delivering to a strong product roadmap. Last month, we successfully launched Intelligent Power Management, the industry’s first and only RAID controller-based power management solution for SATA and SAS Storage. Integrated into all of our Series 5 and Series 2 Unified Serial RAID controllers, it allows system OEMs, integrators and IT managers to easily configure storage systems to reduce power consumption by up to 70% without sacrificing…

Thank you, Sundi, and welcome everyone. Before I start, I’d like to reiterate that all the comments here today are based on non-GAAP financial measures, exclusive of discontinued operations and exclude results from the Snap business unless otherwise noted. I encourage you to refer to the reconciliation of GAAP to non-GAAP financial results that is included with the press release and posted to our web site. During the second quarter of our 2009 fiscal year, we’ve continued to make progress on a number of fronts. We completed the acquisition of Aristos Logic that will contribute to our products’ strength and mix and we’ve continued to maintain our tight fiscal control. Further, our balance sheet remains strong and a core asset as we execute on our growth initiatives. Our second quarter net revenues were $31.7 million which is above our guidance of $27 million to $30 million. We are very pleased with this accomplishment. Our revenues are up slightly from the $31.5 million we reported in the first quarter of 2009. This was attributed to strong growth in our channel business and a slowdown in the runoff of our OEM business. Our acquisition of Aristos Logic occurred near the end of the quarter and only provided a very modest amount of revenue to our top line. Although we had a very solid contribution from our OEM business this quarter, we are still facing decreasing revenues in our traditional product lines as our OEM revenues decline. However, we anticipate that our new OEM capabilities will provide long-term revenue growth for Adaptec. We are expecting the ramp to take place over the next several quarters. We are excited for the IBM win and anticipate further progress on our OEM initiatives in the coming quarters. In terms of customer concentration, our top customer IBM…

Thank you, Mary. As we look to the future, we must remain cautious given the challenging economic environment. However, we feel that we have created a solid foundation for future growth. We have a strong product portfolio in the channel and continue to take share. We expect new designs from our OEM business that will help us drive revenue in the coming quarters. We have been seeing steady growth in emerging markets. And finally, we have a very solid balance sheet that supports our growth initiatives and provides us a solid foundation during uncertain economic times. With that, I'd like to open up this call for questions.

(Operator instructions) And we do have a question today from Brian Freed, Morgan Keegan.

Good afternoon. Thanks for taking my call. A couple of quick questions primarily related to the IBM opportunities. With the xSeries design win rolling off and the blade server design win from the Aristos Logic acquisition coming on, can you give us some sense what you think is the relative magnitude of those design wins? Do you feel like the blade server opportunity is comparable in size or is it significantly smaller?

On a relative basis, the blade server opportunity is smaller than the System x opportunities that is just driven by its volume; if you look at IDC, data blade servers has low unit volumes than rack and pedestal servers. That said, the ASPs on one tend to be a little higher than the others. So on a relative basis, blades will drive lower revenue than the System x.

Okay, so in terms of the ASP per system, does it tend to be higher on the blade servers than the System x or lower?

Could you repeat that question, Brian?

In terns of the revenue contribution on a blade server versus the System x pedestal servers, is the contribution higher or lower on a per unit basis?

Actually, let me think about that. I'm not quite sure exactly on – in terms of, if you're talking about contribution but –

Yes, I guess, is the opportunity per server higher in dollar value for you guys with the Aristos product given the greater complexity than say the current x series product or is it – I'm just trying to pick up kind of relative ASP.

Okay. I got it. I understand the question better now. The opportunity per server is higher.

Okay.

Okay.

And secondly, Aristos obviously gives you some opportunity to attack some of the external storage and potentially the mass market with this technology, do you see it as a pretty significant opportunity for your long-time, longer term to go down that avenue?

We definitely see an opportunity in design wins with external storage system vendors and we are pursuing opportunities and working with some as we speak and when the time is appropriate we will announce them.

Okay. And then if you look at Aristos, I know you guys published an 8-K today with some of their historics, but in terms of what should we think of as the incremental quarterly impact in terms of increases to operating expense and revenue from Aristos at least for the quarter you are guiding, the December quarter.

In terms of the next quarter, we don’t expect much in terms of a top line contribution yet. We just gave the announcement of the design and as I mentioned we expect it to ramp later in the year. On the expense side, what you can expect as I have mentioned is that, our G&A expenses, we are going to keep those flat even with the addition of the Aristos efforts and then on the R&D front, I would encourage to refer to that 8-K for some of the Aristos information. However, we did undertake as I mentioned a restructuring effort this past quarter. So we have reduced our operating expenses in terms of some of our traditional products as they have ramped down.

Okay, great. And then lastly, the question, I think people are most concerned about given your cash balance, we have seen the Aristos acquisition, do you feel like you've made the necessary acquisitions to position yourself going forward? Do you think there are still pieces either a technology or design perspective you need to acquire to be appropriately competitive in the current environment?

The Aristos acquisition is clearly strategic one for us and as I have said in the call, it addresses a number of key drivers from giving us access our customer base and core technology to help us with our road map. Right now, we are focused on integrating that acquisition and making that successful. That said, the market conditions and climate right now, I think there are bunch of interesting assets that are coming up at diminished values and we will review them opportunistically.

Okay, great. Thanks for your time.

Thanks, Brian.

(Operator instructions) We will go next to Michael Cody with B. Riley.

Thank you, good afternoon, just a quick follow-up on one of the Aristos questions, regarding revenue contribution in the December quarter not from the recent IBM design win but from Aristos’ legacy business, they did have some revenues, do you expect a contribution from those revenues or are any of those revenues that were highlighted in the 8-K today declining or falling off?

Thanks Michael. Good question. Yes, in the December quarter, from their legacy products, we do expect to see a minimal amount in terms of a revenue contribution.

Okay, fair enough. And then on the gross margin, it is nicely up year-to-year but it was relatively significant dip sequentially and with the strength in the channel business, I was little bit surprised to see that. You mentioned OpEx being flat and that is great considering the Aristos acquisition and the restructuring you are doing, but any indication where the gross margin will be?

I would expect that gross margins, again, will be fairly flatter in middle of what you have seen for the company going forward.

Okay. And in terms of Aristos and previous design wins, it would appear that they were pretty far along with IBM when you acquired them on maybe a number of things, where are you in terms of announcing, I don’t expect a definitive date, but are there things that Aristos had gone that you don't need to integrate into Adaptec in order to announce another design win, or will it require some further work before you are able to get that done?

Pretty much if you think about Aristos' technology and their OEM engagements and actions to date, none of those require real integration with Adaptec, most of those are ASIC and software sales if you will. So, they have been executed independent of Adaptec. Now going forward, we clearly have a desire to tie our road maps together and pursue opportunities we see jointly. But that will happen in the future, so there’s a bunch of activity in the pipeline that was in place prior to the acquisition that is now being enhanced with the acquisition with our sales and marketing efforts and those can be driven just with the Aristos road map.

Okay. Thanks. That’s clear that up very nicely. I think that’s it for me now. Thank you.

Thank you, Michael.

Thanks you, Michael.

(Operator instructions) There appear to be no further questions. At this time, I would like to turn things back over to Mr. Sundaresh for any additional or closing comments.

Thank you everyone. I’d like to thank the Adaptec team for delivering a successful quarter and thank you all for listening. We’re poised to take advantage of our acquisition and our solid product line to execute in the future.

That does conclude today's conference call. We’d like to thank you for your participation and you may disconnect at this time.