Good morning. My name is Christy and I’ll be your conference Operator today. At this time, I’d like to welcome everyone to the ADTRAN fourth quarter earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s prepared remarks, there will be a question-and-answer period. (Operator Instructions) As a reminder ladies and gentlemen, this conference call is being recorded today, Wednesday, January 20, 2010. During the course of the conference call, ADTRAN representatives expect to make forward-looking statements, which reflect managements best judgment based on factors currently known. However, these statements involve risks and uncertainties including the successful development and market acceptance of new products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies, and other risks detailed in our Annual Report on Form 10-K for the year ended December 31, 2008 and Form 10-Q for the quarter ended September 30, 2009. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements, which maybe made during the call. At this time, I’d like to turn the call over to Mr. Tom Stanton, CEO. You may begin your conference.

Thank you, Christy. Good morning, everyone. Thank you for joining us for our fourth quarter 2009 conference call. With me this morning is Jim Matthews, Senior Vice President and Chief Financial Officer. I’d like to begin this morning discussing by talking about our Q4 performance before we move on to a review of 2009 and I’ll end with some comments on 2010. During the quarter, our Carrier Networks Division benefited from the deployment of new applications within our Tier 1 customer base, market share gains, and other market segments, and the continuing impact of wireless infrastructure upgrades. Our Enterprise Networks Division saw the benefit of its growth areas dominating its legacy product base. From a product perspective, our growth areas delivered another solid revenue quarter, combining these areas demonstrated a strong performance growing an impressive 42% year-over-year. Specifically, in our networking revenue was up 46% year-over-year setting another record at $23 million. This is particularly notable given that internetworking revenues have typically seen a sequential decline in the fourth quarter. With this continued growth, internetworking revenues now represent 76% of total Enterprise Network Division revenues. Broadband Access revenues grew 46% over the prior year as a result of the record level achieved by our Total Access 5,000 platform and continuing deployments of Fiber-To-The X products. Revenue for the Total Access 5,000 platform was up both year-over-year and sequentially across all market segments and with every major customer. Fiber-To-The-Node revenue, although up year-over-year, declined sequentially as expected. Optical Access revenue grew 30% over the same period last year coming in at $16.3 million. This growth was due to market share gain and increasing shipments to all major market segments as carriers invested to increase bandwidth for wireless infrastructure. HDSL performed as expected and was sequentially down in the quarter. Looking back…

Thank you, Tom, and good morning, everyone. Revenue for the fourth quarter increase 11% to $124.2 million compared to $112.4 million in Q4 of 2008. Broadband Access product revenues for Q4 of ‘09 increased 46% to $28.3 million compared to $19.5 million for Q4 of ‘08. Optical Access product revenues for Q4 ‘09 increased 30% to $16.3 million compared to $12.6 million for Q4 of ‘08. Internet working product revenues for Q4 of ‘09 increased 46% to a record $23 million compared to $15.7 million for Q4 of ‘08. Carrier Systems revenues for Q4 of ‘09 increased 31% to $56.9 million, compared to $43.5 million for Q4 of ‘08. Business Networking revenues for Q4 of ‘09, increased 30% to a record $27.9 million, compared to $21.4 million from Q4 of ‘08. Loop access revenues were $39.4 million for Q4 of ‘09 compared to $47.5 million for Q4 of ‘08. HDSL product revenues were $35.4 million for Q4 of ‘09, compared to $41.7 million for Q4 of ‘08. As a result of the above, Carrier Networks Division revenues were $93.9 million and Enterprise Network Division revenues were $30.4 million of Q4 of ‘09. International revenue was $7.7 million for Q4 of ‘09, compared to $8.1 million for Q4 of ‘08. To provide the reporting of each of these categories, we had published them at our Investor Relations page at www.adtran.com. Gross margin was 59% of revenue for Q4 of ‘09, compared to 60.1% for Q4 of ‘08. Our research and development expenses were $21.2 million for Q4 of ‘09, compared to $20.4 million for Q4 of ‘08. Selling, general and administrative expenses were $25.9 million for Q4 of ‘09, compared to $25.7 for Q4 of ‘08 and stock based compensation with a tax was $1.8 million for Q4 of ‘09, compared…

Thanks Jim. Christy, at this point we’re ready to open up for questions.

(Operator Instructions) Your first question comes from Jim Suva - Citi.

Just a quick clarification, when you talked about the tax rate being higher in 2010, I assume that’s because the tax research and development credit has not passed, is that fair? What type of tax rate should we expect before and then after such change in legislation?

Sure, Jim. Yes, that is because the legislation has not yet passed. We’ve been told to expect it to pass sometime during the second or third quarter of next year. Assuming it does pass, we expect a credit in the area of about $2.8 million for the total year 2010.

Then on your gross margin, you saw really nice improvement in the December quarter. Should we expect to see nothing outrageously of a decline, but maybe like a 50 basis point decline in March quarter, how should we think about the seasonality and your great improvement in gross margin this quarter looking forward to the March quarter in 2010?

We certainly don’t provide that level of granularity and the color we give on gross margins, although we do anticipate gross margins to continue to be in the high 50s for the first quarter. Jim, I think that’s about the best we can do at this point.

Your next question comes from Paul Silverstein - Credit Suisse.

Tom, in terms of the growth of your Optical business relative to the wireless backhaul in the implications for the decline of HDSL and other copper based systems, ADSL, etc., I know you’re going into this issue in the past, can you revisit and give us more insight in terms of the trade off between the growth in optical and decline in copper relative to the wireless backhaul opportunity?

We can tackle that from a couple of different perspectives. First of all, let me get the premise right. When we’re talking about wireless backhaul, I don’t think ADSL is apportion of that, I think we’re talking about HDSL, and the impact of HDSL, as things move to the fiber, and we saw a strong indication of that, I think in the third quarter where we saw a depressed HDSL number, but a very meaningful up tick in our optical number and a similar nice fourth quarter with our Optical business, but still yet a depressed HDSL number. So we think the net of that can very well be positive as people move, we need to continue to win market share and get our piece of the Optical business, but we think that can be a positive move and I’ve talked about the kind of average price per unit, I think it was fairly lengthy discussion on the last conference call about that, but we think the net is still very positive for us.

Your next question comes from Sanjiv Wadhwani - Stifel Nicolaus.

Thanks, a couple of questions. Tom, what are you thinking about carrier CapEx in 2010 just broad strokes?

We see the same reports that you see, Sanjiv, and I think our focus has been more so all them carriers tend to move their dollars up and down on a year-over-year basis. We tend to try to focus on where they’re actually going to spend the dollars. So we think that, there will be a more robust spending in 2010 in wireless backhaul, I think most people are of like minds on that. If you get to some of the smaller carriers actually or let’s say some of the Tier Two and larger Tier threes, we think that there’s actually incremental movements up in CapEx or definitely shifts towards the type of products that we can sell, so in general I don’t think it’s going to be a robust environment, but I think you have to be at the right place to be selling the right products.

Then for 2010 as far as HDSL expectations are concerned, are you expecting it to be down maybe not as much as 2009, or as much as 2009, any color there?

Well, the short answer to your question is, we do expect it to be down. We would be surprised to see it down at the same level and kind of explain that. I think that what happened to us and thus trying to understand what’s going on in the HDSL business, I think 2008, if you’ll recall, the third quarter 2008 was very, very strong quarter. I think it may have been the second highest HDSL quarter in the history of the company. A lot of that was wireless backhaul and I think there’s chance of what we were seeing in 2008, was a shift towards more backhaul being part of the underlying HDSL number. As we entered 2009, I think that the underlying let’s say the non-wireless backhaul portion of the HDSL was probably hurt by the economy. I think that probably was happening in 2008 also and the last half of 2008. I think as we kind of rolled into this year, we saw that kind of refocus on the fiber optic piece of wireless and I think the underlying HDSL business was just depressed, because of the economic conditions, so we don’t expect, we didn’t see that a real big upturn in HDSL in 2009. So I don’t think we have the same cliff to fall off of in 2010 and because of that, we think that the numbers won’t be depressed as much although we aren’t going to try to put an exact figure on it.

One last question for Jim, 10% customers for Q4?

Sure, Sanjiv. AT&T came in at 20%, Verizon at 12% and Qwest at 18%.

Your next question comes from Todd Koffman - Raymond James.

You called out really strong Total Access 5000 revenue in the third quarter. Was that more than 10% of revenue and then totally unrelated to that in the conversation about HDSL, you’ve been doing around $35 million now a quarter for the last few quarters. How does that split between wireless backhaul versus traditional business, wireline connectivity?

On your first question yes, we’re definitely over 10%. We’re going to just for competitive reasons probably not give more granularity than that. We don’t expect it to fall below 10% going forward. So we’re pretty comfortable with that characterization. As far as the piece on HDSL and that is wireless versus non-wireless I really do wish we knew the numbers. We ship to warehouses and from there, it goes on to the field and we’re not privy to exactly what the locations are with the specific uses. I would say there’s no doubt in 2008 that the HDSL number was more shifted towards wireless, I would say in 2009 it was less shifted towards wireless, but it’s hard for us to get anymore granular than that.

Your next question comes from Vivek Arya - Banc of America.

Two questions; first, Tom, what’s to prevent HDSL from declining level digits in 2010, also because it appears that your newer products are cannibalizing and in some instances a lot of HDSL sales and in some other cases, the carrier small and medium size activity has not picked up. So could you please help us understand what would have stabilized HDSL sales?

Let me just give you my perspective on the market. I think it is predominantly a Tier 1 market. So we don’t see nearly the activity in the Tier 2 or the Tier 3 and never have. I think that their business connectivity models are just different and so a lot of business deals fall into the Tier 1 carriers. If we look at the Tier 1, there’s an underlying use of HDSL, which is business connectivity, inner office connectivity, just general connections and for instance if you look at how CLECs actually do business predominantly that’s T1 connected utilizing lines from the incumbent carrier. There’s an underlying level of business there that although we would expect it to decline overtime. We don’t expect to see the same type of decline that we saw in 2009 attributed to that. The wireless piece comes and goes, so there are times where we’ll see an increase in specific areas and then there are other times where we won’t. We think in 2009, we saw a very strong focus on fiber connectivity, you saw that in our fiber business. We thought that was actually a positive thing for us. In 2010, we’re not saying that that fiber focus will change. We very well could remain at the same level that we saw in 2009. We think that will be positive for us on the optical side of the business. We don’t think of course it will not void the HDSL piece of the business, but we’re right now under the belief that the hit that HDSL was going to take in wireless has probably been taken.

Secondly, on Broadband stimulus, if you look at the kinds of carriers and other entities that have up light for funding, does that line up of who you thought would apply to funding? I’m really trying to get at, is that a sustainable source of upside or do you think it could be a one or two quarter lift and then just sort of a one off thing to you or do you think that it can actually sustain over the next few years?

Let’s talk about Broadband stimulus and step back just to get our understanding anyway or relate to you our understanding where Broadband stimulus sits. The first round as you know, we’re going through right now and I think about 18 awards or so have been awarded. So very small number of the first round total available funding has been awarded today, although we expect that to continue on and at this point in time, I think the NTI and Russ are saying they will have all the first round of funding to be sent out by end of February. If you look at the current take on the first run as far as if you look at the 18 people that have been awarded, which is a very small set to be looking at, it’s not substantially different than we would have expected, probably a little bit more than half our last mile at this point in time and what’s been awarded and what we expect to be a last model component, which of course will probably fare the best. The second and third round of the funding is still scheduled for later this year with all of those awards being made by the end of September. I think September 30 is the current target date. I don’t expect that to change. That has been something that’s stayed consistent throughout all of this. There are some rules that have just come out recently. I think in the last week or so regarding where that’s going to be spent or at least the target areas of where that’s going to be spent and a large percentage of that is towards areas that we play in. So I’d say at this point in time, the way the new rules have come out, they’re aligned with where we thought they were going to be. Now all of these awards are made by September 30. The last piece of news I had on when they had to be spent or how long the implementation cycle could be would be somewhere around two years. So I think we’re talking about awards being made, some dollars being spent, but the dollars continuing on for at least some period of time.

Just one last question on margins, as I look at the performance over the last three years, your gross margins have been around 59% to 60% very strong in that range. Operating expenses have been about 38% or so of sales, operating margins have been about the delta 21% or 22% of sales. What’s going to bring them out of that 21.2% band? Is it just faster sales growth? Like, what will it really take to help you grow margins beyond this 21%, 22%? Thank you.

This is Jim. As we implied in our press release, we do expect 2010 to be a growth year in terms of revenue. We also expect OpEx to grow, but not as high a rate as revenue, which would cause the operating income line to move towards the mid 20s for the total year. So that’s our thought on it at this point.

I’ll just at this kind of one less positive comment in that kind of the range that we’re in right now is not a range that’s uncomfortable to us and we have to continue as we grow the revenue line to invest in being able to continue that growth.

Your next question comes from George Notter - Jeffries.

I wanted to ask about the TA 5,000 customer count. I think you said its well over 100 customers now. Can we get the comparable numbers? Do you have that number for Q3 and then maybe the year ago quarter as well?

We don’t. I will tell you it was less and substantially less. We picked up an awful lot of customers this year. So if I look at it from a year ago number, first of all, when I said its way over 100 or substantially over 100, I really mean it’s not 110. My nervous about getting granular on that is there’s a lot of competitors that try to dig into what’s going on with the Total Access 5000 and I’d like to be prudent about when we talk about it, but it’s substantially more and we picked up an acceleration of customer acceptance through the year. So we picked up more in the second half of the year than we did in the first half of the year.

Then I want to ask about Broadband stimulus also. I think you said on the monologue that you’re not going to get the benefit in Q1. I know if you go back to October, you were saying you would get the benefit starting in Q1 and I don’t know that I heard you say exactly when you think you’d start to see that kick in for you from a P&L perspective. Is there a new target now, would that be Q2 or would be Q3 and then also, how do you think about the timing of revenue recognition? I know that for Russ deal traditionally it’s taken some time to get those over the goal line from a Rev Rec perspective. What are your thoughts there? Thanks.

George, this is Jim. If there were statements earlier on about a potential impact in Q1, it was about the slips we’ve seen in the last few months and there’s been at least two slips in terms of the timing of the announcement of the awards.

Sorry to be defensive of about that, but I think we’ve tried to caution people we’re dealing with the government and carriers and those two things don’t necessarily mean all of the timeliness will be met. We’re in effect because of the fact that its government and carriers that we’re talking about, are trying not to forecast specific dates on when we would actually see a benefit for the revenue, which is one of the things I’ve tried to mention as far as total impact and total timing. It’s real easy to go to different sites and talk about it and see how many awards are actually have been made. Once those awards are made, then you have to then deal with the carriers on exactly when they implement those awards. We can say definitively 18 awards have been made. At this point in time, the expectation is that all of the first round awards will be made at the end of February. You can surmise if there actually may be a benefit in Q1 because some of those first round awardees are ADTRAN customers that we could see a benefit in Q1. Where we are right now is we’re not going to try to forecast that because there’s nothing in stone that we can say that this is the trigger point and this is actually where money starts flowing.

Then just a follow-up was timing of Rev Rec. Does it take longer to get revenue recognition on a Russ deal once you ship the product to the customer?

Typically, George, it does not. We’re not expecting a delay beyond what we see now in terms from the shipment date.

Your next question comes from Cobb Sadler - Catamount Strategic Advisors.

I had a question on the gross margin. It looks like it was up about 90 basis points quarter-on-quarter and affected last quarter by Russ orders. So I’m assuming you had less rush Russ orders this quarter. Was that the sole increase in gross margin or more product mix?

This is Jim. I think it would be fair to say that we had less expediting costs in the fourth quarter than we did experience in the third.

On the EF&I vendors into the smaller carriers, have you done any work or do you guys have any idea what their lead times are versus normal lead times? I’m just wondering if they’re overwhelmed with the amount of stimulus orders they’re getting now.

I’m not aware of anybody being overwhelmed by stimulus orders. We did see and this is a broader topic, we did see some tightening and overall supply chains in Q4 especially at the beginning of Q4, which loosened up towards the end of Q4, but specifically to EF&I, I’m not aware of any.

Then on the internetworking side, can you break it out? Were you strong on the enterprise switching side or the IP telephony side and what’s responsible for the growth there? Any new distribution partners or what’s behind that strength there?

Really, it was fairly broad based. Internet working in general has continued to grow. We saw good growth last year out of our switching products. Of course, the 900e, which is our IP gateway products, continues to just really shine so I’d say it’s fairly broad based.

Your next question comes from Simon Leopold - Morgan Keegan.

Let me start off with hopefully a simple one. Accounts receivable have been creeping up slowly. Just wondering if we should read anything into that and what’s sort of behind the trend?

Simon, receivables is up more in the fourth quarter than it typically would be and as we entered the fourth quarter, we did see extended lead times on certain components that caused us to ship later in the quarter, although our order flow for the fourth quarter was fairly typical. It was fairly linear until the beginning part of December and then it fell off as it would normally do, but the revenue recognition was loaded a little more heavily to the back as we resolved the lead time issues as we approached the end of the quarter.

So resolved means that we should anticipate maybe a little bit lower DSO in the next couple quarters?

I would anticipate it. Somebody drops in an awful lot of XYZ and we don’t have it we might have an issue, but it was there is no doubt that the supply tightness actually moved out some meaningful shipments into the second half of the quarter instead of the first half.

Understanding that the forecast for Q1 and normal seasonal effects, that all makes sense. So no pushback there, but just wondering if there are some other aspects to it, particularly some of the maybe project activity around the TA 5000 for sell side backhaul at some of your larger customers has there been any deferrals or delays in projects that a quarter ago you expected would be ramping.

No. There haven’t been any deferrals or delays. Now in general when we’re talking about the Tier 1s and where they are over their timeliness versus where we would like them to be if I look back over the last year or so there continued to be movement, but not substantial movement, there are no big delays in Q1 that we were expecting.

So, given the disclosures on the top customers, AT&T was down sequentially by a chunk and just wondering what might be behind their purchasing less in the December quarter.

Seasonally they’re almost always down number one and number two they were a very strong optical customer in the third quarter and I would say we typically see them go down in the fourth quarter and we saw that and if you had to pick a product area I’d say it’s probably optical.

Then just one last one; you talked about your outlook for international sales and the prospects there which make sense. Just wondering how much of that would be based on trying to go direct and maybe put a little bit of pressure on your operating expenses and how much might be betting on or partnering with a larger Tier 1 partner to go International.

Our comments around OEM relationships would be very similar to government relationships in that when you have two large entities that are trying to drive, that you’re betting on for revenue you can be surprised so all of our comments after the majority of are feeling right now has been around the direct channel, because I think that’s more near at hand or at least more drivable from us. There are specific opportunities with OEMs that are not international in nature that we feel very confident in, but my comments about International are direct.

Your next question comes from Blair King - Avondale Partners.

I have just a couple of questions that try to come back to the margin discussion. It sounds like, Jim, that there was a fairly linear order flow in the fourth quarter which helped drive the sequential gross margin improvement. Would you expect similar order flow pattern in Q1?

Blair, it’s very hard to say at this point. The normal flow in Q1 is typically it starts off slow in January and it increases as we go through March, it’s normal work flow, but in terms of whether or not we incurred less or more expediting costs in the third quarter because of customer request dates is very hard to predict at this point.

Then you’d mentioned last quarter that the OpEx line would grow sequentially given some development projects that were taking place and I guess the question is if there’s any granularity around the OpEx line that you could give us for the first quarter relative to some of the projects that were taking place in the fourth quarter, if those have completed or we should expect to see the OpEx trend continue to move a little bit higher.

We do believe in the first quarter that OpEx would move slightly higher on a sequential basis.

Your next question comes from Greg Mesniaeff - Needham & Co. Greg Mesniaeff - Needham & Co.: Just wanted to focus a little bit on the internet working and enterprise revenue segment, I’m wondering if your plans call at any point for introduction of a wireless mobility product and if so, if you can give us some read on what you guys are thinking in terms of either developing something internally or maybe looking to acquire some technology?

When you’re talking about wireless mobility, you mean, I can tell you…? Greg Mesniaeff - Needham & Co.: A wireless LAN type of a system approach.

As in WAP based or wireless access point type product? Greg Mesniaeff - Needham & Co.: Yes.

So the answer to that is yes. We’ve actually had a first generation of our wireless access product that we’re delivering now and of course we’re working on subsequent products to that or subsequent branding out of that product offering and actually a new generation of that. We also, now we’re shipping one, other ones will be shipping this year. We also have introduced our first 3G connectivity product on our router products, which show how kind of typically used for fallback on our routers and allow people to be actually connected through the 3G network. Greg Mesniaeff - Needham & Co.: Along the same lines as you continue to pursue your strategy in the UC market, how are you going about that? Are you trying to forge partnerships with some of the computer vendors or can you give us some color as to what your approach is?

We announced, I think last quarter, our first UC product, which is actually a Microsoft based desktop clients and server model that it works in conjunction with our 7100 series IPCP access, what that allows us to do is actually get the unified communication type services to the end user. So they can do things like click to dial and very advanced call routing. It also, because of the nature of the product and at the same time, this is kind of a higher level product than maybe a smaller size SMB would traditionally buy, we announced the increased capability of our product to handle up to 2000 users, so it’s a fairly big move in Q4. All of that is ADTRAN product.

Your next question comes from Larry Harris - C.L. King.

I noted in terms of the gross margin guidance as you’ve previously indicated you expect it to be in the high 50s, but I was just wondering as maybe some of the mix changes, maybe HDSL becomes a less a percentage of revenue, the optical products are perhaps a greater percentage, same thing with internet working. Do you think that will have any sort of quarter to quarter impact in terms of gross margin?

Larry, this is Jim. Any impact in that regard, we still believe that it will be within the high 50s in terms of gross margins. Certainly there’s going to be variations quarter-to-quarter, but again not outside of the high 50s range. As being a book and ship business certainly is hard to predict mix from quarter-to-quarter as well and that’s why we’re so guarded in terms of being specific on gross margin, but if you look at our various product categories, our general product categories, they’re fairly consistent in terms of the gross margins that they provide.

I would add that what tends to be the bigger swing for us and when I say bigger swinger for us it may move it a point one way or another will be expedited charges. So when we typically see a lower gross margin from quarter-to-quarter a lot of types what we’ll find out is that order placed for a product that wasn’t expected, which is not atypical of our customer base. We’re having to kind of scramble to get the material inhere and get them built.

Just another question relative to embark, I guess they undertook the Centurylink transaction, but I noticed there hasn’t been any commentary with them as a 10% customer over the last couple of quarters. Has there been any change in terms of relationship with that account or are they taking a second look at their capital expenditures?

Now that is such a customer specific question that I would really get in trouble. If I answered it as much as I would like. I will tell you let me just say Centurylink is a very good customer of ours. We’re very hopeful for the future, but I really can’t say much more than that.

Your next question comes from Bill Dezellem - Tieton Capital Management.

A couple of questions here first of all, would you please discuss the reasons that you believe the TA 5000 customer wins accelerated through the course of 2009 and tying in with that, what is the typical lag time from a customer win to the time that you begin to receive meaningful revenues from the customer?

Sure. I think one of the biggest reasons for the increase in the order rate has been just actually our delivery of new features, so a Total Access 5000 does a significant number of different things from aggregation to Broadband DLC to Fiber-to-the-Prem. So there’s a lot of despair at thing, which is one of the real benefits for the product, because it can actually be put in place and do business class services as well as residential class services. There’s really not a product out there that can compete from feature perspective with the overall capabilities, but having said that when you have such a capable box and you have multiple tiers of customers, we’re selling to Tier Ones, Tier Twos and Tier Threes, you’re having to juggle, which features get done what and we just continue to work on a backlog of engineering priorities associated with specific customers for that product line. As time goes on it opens up new opportunities or it allows the customer to actually start purchasing something as we make the commitments we may have given them six months or a year before, so I think that’s probably the biggest rationale for what we actually saw there.

The lag time?

The lag time unfortunately varies from customer to customer. Tier Threes, the smaller the carrier, the faster the conversion or the faster they start acceptable products. So we have had some instances where we are awarded the product win and we will get an order next week, the following week. If you’re talking about the Tier Ones, you can be awarded the product and you will ship it two and a half years later.

Back to your point about the feature backlog, are you seeing that your R&D group is catching up with the feature request or as time progresses, are customers identifying even at more things and therefore, you’re either just holding your own and not decreasing that feature backlog or your in fact are seeing the future backlog increase?

To take a snapshot at this point in time, I would say that we are more than holding our own. I think we’re gaining through a very major development. We’ve had some very strong feature releases in 2009 that really unleashed a lot of backlog, which is why I think you saw that acceleration through 2009 or the acceptance rate of the product. The reason I say, that’s if you take a snapshot, because if you look at 2010, there are yet other markets that aren’t necessarily directly correlated with where we’re selling today, but the Total Access 5000 was envisioned and architected to be able to play in and that will lead to a whole new set of requirements, a whole new set of customer applications that we have yet to embark on, in a meaningful way. We started development, but we haven’t hit that crossover or that crunch time point yet.

Does that tie in with the international market or is that something entirely separate and if it’s entirely separate, would you discuss in further detail what you really meant there?

It is both for the U.S. market and for markets outside of the U.S., and I would rather not discuss that at this point for obvious reasons.

Then one final question, it appears as though you were right on the verge of your growth rate accelerating as the traditional products become a smaller percentage of your revenue, gross products become a larger percentage of your revenue, and you’re saying that traditional products will decline at a slower rate in 2010 than 2009 and clearly the growth products are getting some real strong traction with the positive 42% revenue growth. Is that a correct way to be thinking about your business as we go through 2010 that the growth rate should be accelerating?

I can tell you that’s exactly how we think about the business. If we look at what happened to our traditional products from ‘08 to ‘09 we believe that there is a recessionary impact and a conversion impact on the wireless side that accelerated that decline having said that we were okay with that decline. We knew that those products were going to decline and we thought coming out of the year, the performance of our growth products were strong enough to where we were very comfortable with how the year turned out having said that, 2010 should not be a recessionary year and we expect growth, so I think the way that you characterize it is actually the way that we tend to look at it ourselves.

Your next question comes from Ehud Gelblum - Morgan Stanley

Tom, I think you mentioned before the Broadband stimulus money once it gets released in September of this year, September 30 that it would be spent over two years. Is that what you had thought before, I thought there was going to be spending requirement would be tighter as opposed to two years?

Well you bring up a good point and you’re probably talking about a super term discussion that we had which we subsequently did come out and say no, the awards are so the answer to your question is we do have a better understanding of what that process is and that process is one that allows at least a two year timeframe for the build out to happen. The only thing that hasn’t changed of course is the September 30 date is when the awards have to be made by at this point in time.

So it is relatively new that this spending could spread out?

From a week at for super term.

Now, as question seems to have been pretty strong for a little over about a year, they’re in the $20 million to $25 million per quarter rate. I know this comes up every so often, but is that when you look at that the strength of their spending over the last year, does that, is there some sort of an initial project build that’s been going on and at some point over the next couple quarters the initial product budget build ends and we go to more of a run rate basis that might be lower than $20 million to $25 million a quarter for them?

Again very customer specific question - let me just say we’re very comfortable with where we are with question and I think that Quest is one of those customers we expect to have a long term relationship with and that we have a lot of things going on and we don’t see with the mix of products that we’re now selling to them, by the way they are a very good 5,000 customer and use that for multiple applications and really kind of started rolling into that in the second half. We’re very comfortable with our long term prospects and our medium and short term prospects with Quest.

So you think it should stay toughly at the same level, you expect it to?

I don’t want to talk about Quest specific Capital Expenditures so I’d rather not get anymore specific on that.

As you look at HDSL, before but trying to get a little bit more granular the two main end markets were HDSL the enterprise connectivity and wireless backhaul. Both are conceptually moving to Ethernet services. It appeared that the wireless backhaul is moving faster, I think, would you characterize that and would you say that I know you don’t have great visibility. Would you think that the split between enterprise connectivity is the market for HDSL and wireless backhaul, do you think the split has changed over the last year?

I think definitely the split has changed over the last year. I think that we saw an increase and for fairly obvious reasons that we saw an increase in 2008 towards the tail end of 2008 as people just wanted to connect up or needed to connect up their wireless network and HDSL was the game in town and they really started hitting hotspots or trouble areas that may have been more rule than they would necessarily hit where they have fiber or can actually transfer fiber. We saw that happen in 2008, we saw that not happen in 2009, but we did see fiber connectivity happen in 2009, which we tend to characterize as being more than what you saw with HDSL. That conversion that you’re talking about the Ethernet, I think is absolutely happening. I would say that where we are with Ethernet over copper and where we are with some of our fiber products. We have fairly good visibility to that and although people are getting today their Ethernet connectivity as a service that they buy from the carrier, because the lack of a native Ethernet infrastructure in the U.S. It is still predominantly delivered by far predominantly delivered over a TDM infrastructure and that there will be sometime for that shift to happen and our goal is to make sure that we’re positioned right when the native services start being delivered, but it is predominantly today over TDM infrastructure and it will take some time for that conversion to happen.

Then as you look into HDSL for 2010, you said you obviously expect it to be down, but not as much as it was this year. How do you expect the skew between those two, the story to change next year? Do you think that the wireless end market falls faster than the enterprise or vice versa?

I think it’s a really good question. You know where we are with our Ethernet over copper market share in the U.S. So you can kind of understand what our feelings are there. I think that you’ll see in the larger areas you’ll see conversion to native Ethernet. I think you’re seeing a little bit of that today. I think you’ll see that accelerate in 2010. Our hope is that you’ll see a meaningful acceleration in the copper connectivity using native Ethernet because of the way we are with market share, but the timing of that has been very, very fluid. So I’m not sure if I really answered your question.

Do you think falls off faster?

Which one do you, I think will be adopted faster, fiber or copper?

No, as you look at wireless versus enterprise, markets for HDSL, you can get the buying falls, but which falls off faster?

I think we saw a good chunk of that falloff this year in wireless, in ‘09.

Wireless should be more steady than enterprise as the end market for HDSL?

You’re kind of saying which baby do I like the least and only I don’t see the native Ethernet copper infrastructure having enough mass in 2010 to substantially change the profile of the business customer. We’re expecting it to go down, but it’s going to be, the decline of that will be driven by the availability of a competing technology. So we characterize what happened in 2009 as being more wireless demand decreased, not Ethernet conversion because the majority of those Ethernet services were by far the majority were deployed over a TDM infrastructure.

Right, but you are expecting HDSL slightly to be down again?

We are expecting it to be down. We’re absolutely expecting it to be down, but I won’t tell you if it’s more wireless driver or Ethernet business driven because I don’t know.

Your final question comes from Brian Coyne - Wedge Partners.

I’ll take a chance to comeback to the gross margin question. I guess really just your longer term view of the opportunity for that to expand and I guess if you think about the HDSL decline in 2010 not being as much as it was in 2009, you’ve got growing volumes of your other products growing and perhaps some product specific cost related to the Total Asset 5,000 development, maybe they don’t run quite as hot in 2009. The portion that shows up in R&D is capitalized. Why shouldn’t we think you’ll be comfortably over the 60% range on the gross margin side after the next three, four, five quarters?

I would say the reason for that is No.1 history. So if you look at where we’ve operated in the past. This is a company that has gone through several over the last three to four years, several legacy product transitions. We talked about what happened on the enterprise side, us finally flipping over to by far the revenue being driven by our growth products after being a TSU/CSU manufacturer for years. If we look at the, as those transitions happens, what you’ll see us do is continuing to use the flexibility we have in order to Gartner market share at a faster rate, so if things were to stay static, I would agree with your argument. We continue to plan on aggressively pursuing market share with our new platforms and using the flexibility that we have to continue to grow the top line.

Got it, that’s all I had, thank you.

Okay, alright well, thank you very much everyone, for joining us on our call and we look forward to talking to you next time.

Thank you. This does conclude today’s conference call. You may now disconnect.