Welcome to the Applied Materials Fiscal First Quarter 2009 Conference Call. During the presentation, all participants will be in listen-only mode. Afterward, you will be invited to participate in the question-and-answer session. As a reminder this conference is being recorded today, February10, 2009. Please note that today's call contains forward-looking statements, which include all statements other than those of historical facts including those regarding Applied's performance, cost reduction actions and anticipated savings, business strategies, cash generation and deployment, breakeven levels and Q2 expectations, as well as customer utilization rates and spending and industry outlook. All forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Information concerning these risk factors is contained in today's earnings press release and in the company’s filings with the SEC. Forward-looking statements are based on information as of February 10, 2009 and the company assumes no obligation to update such statements. Today's call also contains non-GAAP financial measures. Reconciliations of the non-GAAP measures to GAAP measures are contained in today's earnings release and in our financial highlight slides, which are on the investor page of our website at www.appliedmaterials.com. I would now like to turn the conference over to Michael Sullivan, Vice President, of Investor Relations. Please go ahead sir.

Thank you, Kierra, and good afternoon everyone. I'm pleased to be joining you in my first earnings call here at Applied Materials. I know, many of you already and I hope to meet to many of you for the first time at our Analyst Day next week. The event will be held in New York on Wednesday, 18th from 9:00 clock Eastern until 12:30 pm with a live webcast. If you have any questions about the event please dial phone number on today's earnings press release. Our released was issued shortly after 1:00 pm today on business wire. And is also available on our website at amat.com. Joining me on the call today are Mike Splinter, our President and CEO, George Davis, Chief Financial Officer and Joe Sweeney, our General Counsel and Corporate Secretary. Today we will discuss our results for the period ending January 25th. Mike Splinter will lee off the call with comments on the market environment and our company's strategies. George will follow with a discussion of our financial performance for the first quarter and our expectations and financial strategies for the future. After these remarks from Mike and George we will open the call for your questions. With that I would like to turn the call over to Mike Splinter.

Thanks Mike and welcome aboard. In our November call we said the weakening global economy will have significant impact on all of Applied businesses and likely affect our customers for a year or more. With that in mind we moved rapidly to lower our annualized spending more than $400 million. We are now implementing further actions including multi-week shutdowns in Q2 and Q3. And my executive staff and I will be taking additional pay cut as well as foregoing bonuses for 2009. As George will explain shortly we are on track with our cost reductions goals. Over Applied's long history we have developed proven strategies for managing challenging business conditions with an eye toward future opportunities. Our experience, flexible cost structure and balance sheet discipline are the foundation for our plans. Here is what we are doing. First we are preserving our strong balance sheet with a focus on cash flow, so that we maintain the ability to shape our future and support our business priorities. Second we are investing in our technology, products, people and customer relationships to enhance our leadership and to position for future growth. Third, we are using this period to drive operating efficiencies that will lower our cost profile today and increase our leverage during the recovery. So how bad is it? Our leading semiconductor customers say that the fall off in chip demand and pricing is the most severe they have ever experienced. Losses are mounting almost universally, fab utilization is at historic lows for both memory and foundry customers ranging from 30% to 70% to those factories that are completely shut down. We estimate that output has been reduced by about 25% over the past six months including about a 10% permanent reduction in memory capacity. There is essentially no demand for incremental…

Thank you, Mike and good afternoon to everyone. As a reminder we published our preliminary results on February 2, so today I will review our final results for the first quarter. As Mike said, the company faced an extremely difficult environment during the quarter. Orders were down 59% and revenue was at the bottom of the target range. I will cover our results and then discuss the actions we are taking to reduce spending and preserve our balance sheet. GAAP earnings per share was a loss of $0.10 and included $133 million in restructuring charges which lowered earnings by $0.06. We also took $48 million provision for doubtful accounts and an additional $20 million inventory charge which together reduced earnings by $0.03 per share. On a non-GAAP basis, which excludes charges primarily related to acquisitions, equity compensation and restructuring we had a net loss of $3 million or essentially a breakeven on an EPS basis. Operating expenses of $588 million were up 22% and reflected the impact of the restructuring charge and bad debt charges offset by $40 million in cost saving actions and approximately $45 million in reductions related to lower expected variable compensation. Operating expenses on an ongoing basis were down 11% quarter-over-quarter reflecting the cost reduction efforts throughout the company. Backlog decreased by 16% to $4.05 billion. Backlog adjustments totaled $369 million. Financial debookings resulting from order push outs beyond our 12 months recognition window totaled $278 million. Of these debookings $210 million related to China based wafering customers and approximately $50 million from our semiconductor customers. We had $94 million in cancellations almost all from semiconductor customers. At quarter end our EES segment represented 34% of backlog. SSG was 25%, AGS was 23% and display was 17%. Revenue in the quarter declined 35% from the previous…

Thank you, George. To help us reach as many of you as we can, please ask just one question and no more than one brief follow-up. Kierra; let's begin with the first question please.

(Operator Instructions). Your first question will come from the line of Jay Deahna with JP Morgan

Thanks very much. A couple of questions, good afternoon. Given the pick up recently in memory prices, are you seeing any signs of life there or any indications that may be one or two to big memory guys might want to get their process going may in 3Q a little bit early, so that would be the first half topic. Then the second topic on solar and more for silicon in particular, how are you doing on the tandem junction, and are you thinking about accelerating your revenue recognition policy to 2% of completion or shipment at some point by the end of this year for SunFab?

Okay, I think there were three questions, Jay so let's if we can get all three of them done. Memory prices, yeah in the last couple of weeks we've seen a bit of a pick up I think, 10% or 12% last week and maybe 7% in the last week or so. I think this is more due to cutback of our supplies, shutdown of factories than to real demand pickup at this point, but I think it's still too early to say. I wouldn't say that we are seeing anybody getting anxious to add capacity. I mean people are still working on next generation of technology though. How are we doing on the tandem junction? In the lab, we are now seeing efficiency is 9% and as we continue to work on that that will continue to grow up, and our fab will have a signoff in Q2 I think for our first factory.

And then Jay on the revenue recognition, I would say we need to really get through these first SunFab startups and then that will probably be the direction we will go as percentage of completion, so my guess is it would four factory signoffs after 2009 will be my best guess at this point.

Great.

Thanks Jay. Kierra, can we have the next question please?

Your next question comes from the line of Timothy Arcuri with Citigroup.

Hi, a couple of things. First of all, George can you talk about breakeven in the silicon business and in solar and kind of how that’s going to layout in the next few quarters, and I guess as a follow-up, there is a lack of capital out there for your solar customers, has that made you at all reconsider your business model relative to being a little bit more vertically integrated on the thin film side?

Okay, I will take the first two and then may be Mike jump in on the second. So on solar and SSG breakeven, I think you saw, we continue to have very strong gross margins as I mentioned in SSG even at these revenue levels. And I think by any historic standards that team has done a great job in getting their variable cost where it needs to be and certainly it's helping us through this. That being said, we are going to continue to invest strongly in that business. It's important for positioning coming out. So we are in a breakeven at the expensive R&D is really not part of our operating model. But again, we start from a very strong position in SSG. In EES, what we are really dealing with here know is the crystal and silicon margins before you take a look at the impact of acquisition charges are actually quite, and is at a level that we were hoping to achieve coming and as part of the acquisition. It's really these initial on SunFab signoffs where we are really absorbing all the margin in the learning curve on these first few deals. I think what you will see is two things one the SunFab profitability will increase over the year as we move through the startup process. And then you will see that combined with the crystal and silicone. I think you will see some improvement in profitability there. Not ready to call the breakeven yet, because its makes such a huge factor for that business.

Hey, Tim despite the credit crunch we are still talking to a number of customers in our pipeline that are planning, either new customers or repeat customers that are planning projects, so at least at the current time, we are not changing the business model there.

Okay. Thank you, Tim, and our next question please, Kierra.

Your next question comes from the line of Patrick Ho with Stifel Nicolaus.

Thanks a lot. First question, in terms of the cancellation, you took a lot this quarter, do you plan another round of it in the April quarter and then leveling it off there? And the second question is, in terms of the memory consolidation, potentially is going to happen a lot of the Asian DRAM chipmakers, how do you feel you are positioned with the potential winners from that or the consolidators of that industry?

So, on the adjustments that we took to backlog reflect really our best understanding of the market conditions and our customers' situation today. So, we are not staggering them as we go, so we have to see what we learn during this quarter. And if there's further cancellations, or if we get push outs beyond our window, then we will go ahead and de-book. But we had anticipated as you may recall at the end of last quarter that while we hadn't seen any cancellations given that what was going on in the crystal and silicon markets around the world, that we expected to see some activity and certainly as you saw from the large component of wafering customers that the pushed out that we saw a fairly significant already in our first quarter. Whether that will continue or not, we will have to see, but this is our best view at this time.

Patrick, the consolidation that's likely to take place in Taiwan, it's still uncertain who the consolidator is going to be. So it's a little tough to speculate that, one might be a Japanese company, one might be a US company. And I think we are well-positioned assuming that their technology would be proliferated throughout Taiwan, we are in very good shape with both of those companies.

Okay. Thank you for your questions. Kierra, next question please?

Your next question comes from the line of Stephen Chin with UBS.

Hi, George. The question on the solar business, I know Mike you said the crystalline equipment sales could be down 50% this year. But given the new SunFab signoff this quarter, and maybe another signoff next quarter. Are you still budgeting for the solar division to grow sales, year-over-year and fiscal 2009. And my second question is that we are talking to press yesterday probably would temporarily close the Australian manufacturing plant for four weeks in June. Can you clarify what your plant in Australia, and should we model a negative growth margin stepped down in the July quarter to manufacturing growth. Thanks.

So, yes, we should assume that SunFab will scale and revenue should increase throughout this year. What is going to happen here though, is we are going to have a gap over few quarters after essentially after our current projects go through may be some of the follow-ons go through. Because of the credit crunch right now, we are not seeing new contracts being signed. So we will see that sometime later, may be it will be into 2010.

And then on the margins for SSG, I think it's too early guide you to specifics, but clearly we said that we think the overall revenue will be down 30% in display and SSG was down most significantly. So that will lead to factory absorption. We have a variable model but it's not quite that variable.

Steven, thanks for your questions Kierra.

Your next question comes from the line Satya Kumar with Credit Suisse.

Alright thanks George I was wondering if you could clarify this how many SunFab lines are out there to which you have shipped the equipment and you have not recognized revenue on if you could help quantify the dollar value of the potential unrecognized revenues will be great. And secondly on the balance sheet you do not have the highest inventories both in dollars and in days and the receivable days have also increased. During the last downturn AMAT was very good with generating cash. This cycle it appears fundamentally different just given the high credit risk for your customers both in memory and solar. How should we think about cash generation this cycle particularly with the versatile balance sheet items?

Yeah first of all let me deal with the sign-off question. We signed off three and we said that effectively eight factory so there is five more. We are not guiding to the revenue but many of them have both sign off revenue at sign off and then a bonus potential. And we will talk more about those as each are realized. On the inventory side actually we have continued to have very strong cash flow discipline and I think if you look at the free cash flow that we had in 2008 even with a very different mix we are right on top of the kind of free cash flow that we are generating in 2004 for instance. So I would say this quarter obviously we are experiencing the inventory effects of having businesses that were in expansion mode as we were experiencing a very severe downturn within SSG and also a fall off in some of the services related revenue as well. So I would not say its really a change of the mix of our backlog as you know is very different than historically we are at as I said 34% of our backlog today is EES. And if you think about that over half of that is SunFab lines which are fully secured by LCDs and cash. Display which is really coming off of a big ramp up. And then the ramp down is at 17%. You got AGS at 23% of our backlog and SSG 25% so when you look at the mix of our business today. The inventory really reflects and the inventory management reflects the impacts of the different end markets there. We certainly expect to drive down inventory overtime. And we had working capital impacts this quarter. But we think they are reflective of the underlying business.

Thank you.

Kierra we will take the next question please.

Your next question comes from the line of Jim Covello with Goldman Sachs.

Great good afternoon guys. Thanks so much. Mike if I heard you right I think you said you believe that there has been about 10% of memory capacity has been permanently taken offline that's one of the big points of debate I think right now about some of those capacities come offline. How much of it is permanently gone versus. How much could come back on pretty quickly if pricing would continue to increase. How do you measure what's coming offline permanently versus what can sort of come back. And then as part of that my follow up would be the, fact that the spares business is down so much more than it would be in previous cycles, as part of that because customers are taking their, the stuff that's been shuttered in kind of tearing that apart using the spare parts to replace, what's left in the fab running and is that part of the reason that some of this capacity is gone. Thank you.

Yeah, Jim. The way we are looking at this last year, we believe that 200 millimeter was some place between 17% and 20% of overall memory capacity. We think that it will be under 10% this year. And we think that that's permanent and then we think a little bit 300 millimeter, I think I am referring to will come offline this year. That's what we are looking at as being permanent. On the spares, I just think customers are using every means possible not to spend money and some of that is taking spares off, idle equipment or shuttered equipment. But if those pieces of equipment are going to come back online or in service, in upcoming months or quarters, I think we will see a snap back on spares.

Yeah, I think, Jim, that on our view based on this pattern that spares utilization or spare had kind of sign change in spares sales will be a good leading indicator for capacity utilization coming back. Thanks Jim.

Thank you.

Kierra, back to you.

Your next question comes from the line of Gary Hsueh with Oppenheimer & Company. Gary Hsueh - Oppenheimer & Company: Thank you for taking my question. Just a quick question here on EES, orders versus the revenue run rate. It sounds like in terms of that credit crunch and in terms of the crystalline silicon business, everything is headed for a downturn there. The orders relative to the revenue intake is pretty much in line. Can you give us a near term sort of picture on what sort of stabilizing in relative terms the EES business relative to silicon and display? And a quick follow up for George. George, how much of that $400 million in annual operating expenses are you actually going to be taking out of the EES division as opposed to other divisions?

Right. Gary I think the big stabilizing factor right now for EES business is still Europe has terrific feed in tariffs and while Spain may be maxed out, Italy, France are ramping up there as well see increased demand out of those countries. So I think that's the big stabilizing factor in the EES market. And then of course I think there will be some anticipation soon on what's going to happen in the US. George you want to comment on orders versus derivative.

Sure, I think one of the other factors is that even with some of the finance or debookings that we saw in the wafering side there still are selective crystalline silicon customer around the world who have capacity build out plans that are preceding and they are moving ahead and ordering leading edge equipment. Both from our wafering and from our metallization business. We also see an increase demand for our ATON tools. As capacity in these crystalline silicon factories gets larger and the value proposition for that tool increases. In terms of the cost reductions and the impact on EES, clearly that's a growing part of our business. But if you look at relative to Q4, we are pulling back on some of the spending there obviously also with some of the customer developments have slowed. But also as with every business, we are looking at every R&D program, every aspect of spending and looking for ways, minimizing those cost and EES is doing that part as well. But there still will be a significant investment in that business for the year.

Thank you Gary. Kierra.

Our next question comes from the line of C. J. Muse with Barclays Capital

Yeah good afternoon thank you for taking my questions, I guess first question considering EES is mostly coming from backlog and you guided through the crystalline silicon side could you give us an idea of what you think EES can grow in calendar '09 relative to the $1 billion credence in '08. And then secondly on the M&A front could you talk about your outlook for consolidation for the overall space and then in terms of the Applied specifically whether your focus is on silicon versus solar and I guess as part of that discussion whether any divestitures are on the table as well? Thank you.

Let me take the growth year-over-year in EES. We generated approximately $800 million of revenue in EES in '08 and remember that also included some revenue from the glass and web business which is in their as well. We do think it will grow year-over-year as you know we are quite reluctant to forecast any parts of our business out multiple periods and this is no exception. But as we look at backlog today and the activity today we do believe it will be up over the $800 million year-over-year and it will be the one group.

And M&A space where we want the people disciplined and patient in this area. We do think that in semiconductor equipment there does need to be some consolidation or at least fewer players than we have today in market where capital intensity over a long haul has been modestly going down. It’s going to be harder to support so many companies. Another hand getting a consolidation to happen has been quite difficult if you look over the history of this market. I think there needs to be a triggering event what that will be is hard to say. And as far as our focus on silicon versus solar, we are committed to both of those phases and as long as our company would have strategic fits. And its good for our shareholders, we would be interested. No real divestitures, major divestitures planned at this time.

C.J., thank you for the questions. Kierra?

Our next question comes from Mehdi Hosseini with FBR.

WFB market probably around $10 billion to $12 billion.

Mehdi, I am sorry to interrupt but we didn’t catch the first part of your question. Would you mind starting that over?

Sure. Mike talked about WFB market size of about $10 billion to $12 billion in 2009 and to hit the high end of that target the business has to pickup significantly in the second half. First, what gives you the confidence that will happen, what I see in the horizon is anything like that. So, why not just be more conservative. And number two, George you talked about breakeven point of less than $1.2 billion, does that include additional restructuring that is coming or is that included or not?

Sure, let me just answer for you now the breakeven number as you know we were on an ongoing basis effectively breakeven this quarter. So its not meant to include any extraordinary items, any extraordinary reserves. It's really the ongoing operations of the business.

Mehdi, as far as the WFB, this is kind of projection, how we are handling things internally, we are not restructuring to plan on an uptick in the second half. We have brought down the spending. We are bringing down the breakeven point as the cost savings go through, bit as low as George describes. So we are not really planning internally on any snap back or increase in spending, but in normal years, where there is a buying increase in the second half of the year, you would expect some increase in spending to support that. But, whether it will happen, whether the downside would be 50% as we are projecting or 60%, I don’t have much more visibility than that.

Sure.

Mehdi, thank you. Kierra, next question please.

Yes sir. Your next question comes from the line of Brett Hodess with Merrill Lynch.

Good afternoon. Really two questions, on the SunFab, the GAAP that you might get next year because of the credit crisis, I was wondering how some of the longer term contracts like the 8-K you had out last year on the $1.9 billion contract. How does that play into the GAAP, are those things getting pushed out further or are those still on track some of those larger longer term projects?

Well, it's hard to describe what's happening with one customer, but they are working, they have finished their building and they are looking at their own schedule and demands. So, we are staying very-very close to them and working to make sure that the factory comes up on time and it's sized to meet their off take agreement.

And then just a quick follow on the inventory. It sounded to me George that you are saying that either inventories, or days of inventories would rise again in the coming quarter for the same reason. You have got these longer lead time products that were still being built as the demand shut off and pushed out deferred?

What I said was that we believe that all of the same sort of pressures will exist in the quarter. We actually believe that we will have better inventory performance in Q2 than we had in Q1 and again we had fairly significant inventory increases in both display and EES. And we think any of the increases will be far more moderate or the decreases in those areas.

Well thank you for your questions. Kierra, next question please?

Your next question comes from the line of Steve O'Rourke with Deutsche Bank.

Hi, thank you, good evening. A question on backlog and kind of risk assessment. You have got 34% of backlog of with EES, some significant de-bookings this quarter. How you gauge the backlog risk moving forward when you consider the state of the industry. And secondly the HCT de-bookings, the wafering de-bookings is pretty significant. Is that gone or pushed out. How are you looking at it?

That is pushed out at this point and so it's PW for those on the call that aren't familiar with certain HCT that was the name of the company. And we acquired we call it Precision Wafering Services and that is PWS. For the backlog for PWS that was pushed outside of our 12 month window. We still see a number of customers that are actively taking tools at this time and supporting the backlog that we have. And some of the backlog we have is already shipped and just waiting to signoff. So there is a number of factors that give us comfort and remember half of the EES backlog is related to Thin Film and is fully secured and predominantly shipped.

Your next question comes from the line of Edwin Mok with Needham & Company. Edwin Mok - Needham & Company: My question, one last question display [initial guidance] you just on display your order came down to basic and minimum level and the last cycle back in '07 you were able to maintain revenue on a high level because you are shipping the older backlog. How do you look at this cycle? Do you expect revenues will stay at this $100 million something level. And then my follow-up is on crystalline silicon equipment. I was just wondering do you guys see any ASP pressure given the slowdown in the end-market there?

So on display on the revenue we were able to it's all revenue more moderated, and that really was more a reflection of the order and accept it’s pattern in the last downturn. This is different because of the absolute low level of capacity that some of our customers are experiencing. So we would expect revenue to go below previous lows and also orders are already down at low levels in Q1 and will go lower. So display is really in a holding pattern until customer start to see a recovery in consumer demand.

And what we are seeing in the crystalline silicon has really moved towards a better technology. What customers are looking for is better productivity say on (inaudible) cell systems, lines they are looking to be able handle thinner wafers which are going to help them reduce the cost of the cells. So, they are really looking now to technology and I think for us this is a very-very good thing because we know how to keep that treadmill going, and keep moving our developments from one generation to next.

Okay, Edward, thank you. Kierra, next question please?

Your next question comes from Atif Malik with Morgan Stanley.

Hi, thanks for taking my question. So, George your SSG gross margin that are bottomed at a much lower revenue level versus the 2001 cycle, especially relative to your peers. Is this an artifact of separating those tiers or services or is it really real?

I am not sure what your point is there? Atif Malik – Morgan Stanley: The 45% gross margins on SSG, how should we think about the gross margin trajectory from here. I mean is this where the bottom is for the gross margin of the SSG business?

Well I think it depends on the level of revenue, I think 45% at the level of revenue we are at today is very-very strong. And I think if we make sure also when you compare us to competitors that you are taking their account of fact that we are generally a quarter ahead in terms of where our revenue is, because we revenue on shipment. But we think we made a lot of progress over the last five years reducing the cost of sales relative to our margin. And we have taken out as much as 7 to 8 points in that regard to number of step. So, I think we are in very good shape from operating and gross margin perspective. Obviously, we had little bit of impact on the operating margin this quarter also from bad debt reserves. But the fact is, we know our operating margin really reflects our continuing investment in technology.

Okay. Quick follow-up on display, are you actively engaged with the display vendors for solar thin film projects down the road?

Anybody who is thinking about solar thin film is talking to us.

Thank Atif. Kierra, can we take the next question please?

Yes sir. You next question comes from the line of Tim Summers with Wunderlich Securities.

Thanks and good afternoon everyone. You mentioned that your SSG orders in the quarter were about $246 million. You annualized that you had $1 billion and Mike, you said (inaudible) this year even to low end was $10 billion, which would give you a market share of 10%. I think we all know your market share is a lot higher than that. Does that suggest that orders in this quarter are perhaps unofficially low and you are going to see some sort of bounce going forward? Or how can you reconcile your (inaudible) numbers with this quarter's SSG orders? Thanks.

Well, I don’t know that I can reconcile the $10 billion to $12 billion with this quarter's orders for you. And you can't measure market share on a quarterly basis. So, I think you know where our market share is closer to 20% of WFE. So, this quarter, people have stopped ordering. It is as unusual as certainly anybody I have talked to in this industry has seen. This is the worst downturn in the history of semiconductor equipment business. So, now what's going to happen from here, I think it is premature to say that there is going to be some bounce back, I won't say that, no one is seeing what I am seeing today. I would like to see one of course, what we need to see one to get to $10 billion, yes, so the borders are just incredibly and unusually low.

Tim, did you have follow-up?

I am fine, thanks.

Okay, thank you. Kierra, please?

Your next question comes from the line of Daniel Berenbaum with Auriga USA.

Yeah, hi guys. Thanks for taking my call. I understand you don’t give the guidance, but just to give me some perspective on visibility. How much of your business now is turns business, and how much would you normally have visibility on quarter ahead. And then follow-up question is when you talk about wafer fab equipments are going to be $10 billion to $12 billion. It sounds like one customer could be 30% or more of that wafer fab equipment spending, may be a second customer brings you up to a 50% of that. I mean are you seeing any issues from that concentration of spending at your top two or three customers?

Yeah, I would say certainly the turns business is a factor, but I don't know that I could tell you it's any materially different than is at various times, because it fluctuates so much based on where we are in the cycle. So I wouldn’t take anything from the drawdown of backlog in this environment.

On a concentration, this has been a movement for a number of years now. 10 yearsis probably to a smaller number of customers having a big part of the WFE spend. This particular downturn, I think will cause that to further get concentrated. We have been focusing for quite some time on those key areas where the R&D decisions are being made. So for those I think if you pick the top five customers that spend capital in the semiconductor area, you get to a very high percentage of our revenues. We have been concentrating on the R&D areas where the decisions are being made for a several years now to enhance our share and position.

Dan, thank you. Kierra?

Your next question comes from the line of Weston Twigg with Pacific Crest.

Hi, I just had a follow-up in response to a Satya's question earlier, you mentioned that equipment has been shipped to eight SunFab factories, but that’s the same number you mentioned two quarters ago and now that have signed off three SunFab why haven't you shipped to any more customers?

See, we do have some additional equipments shipping to two more customers and actually two more factories I should say, and that will begin in actually this quarter, so it’s just the function of the timing and the readiness of the factories.

Okay. And so future customers are moving ahead with plans, or do you have any customers that are postponing their SunFab plans?

We have already said that, we have a number of customers that are experiencing financing issues, and so those customers are working out their financing arrangements and then a number of our customers have had fully secured financing going into this, and they are proceeding ahead essentially on schedule. And that’s where our focus is right now, and then as Mike talked about we need to see some recovery in the financing markets to get some of these other customers. And quite frankly, there is a large backlog of customers prior to the really the poor economic crisis back in the pipeline.

Okay, thanks.

Thanks, West. Kierra?

Your next question comes from the line of Timothy Arcuri with Citi.

George, can you actually break inventory out by product group?

We have. We can provide that information. Essentially, I think it's probably more instructive to talk about it this way. If you look at semiconductor systems, they are down about a $100 million year-over-year, and their inventory as you would expect in this environment. It's really display that has grown year-over-year and EES, driven really not only by the addition of the crystalline silicon businesses, but predominantly by SunFab, where we have grown year-over-year. We are also seeing AGS with slight increases of inventory and that really was a function of the dramatic falloff in their revenue relative to what their normal demand signals would have told them. But those things are all being worked and so I think really I think people focus on the inventory you really have to take a look at growth our EES business, which adds about $600 million of inventory year-over-year to the company.

Thanks Tim. Kierra, we have time for one more one question and then we will give our concluding remarks, please.

Your final question will come from the line of Edwin Mok with Needham & Company. Edwin Mok - Needham & Company: Hey, thanks. Just a quick question on $321 million orders for EES how many SunFab launch did you guys spoken to last quarter?

We did not make a SunFab contract in the last quarter, we did have orders, George what was?

We had approximately $120 million in orders related to orders related to SunFab projects. Edwin Mok - Needham & Company: Okay. Edwin Mok - Needham & Company: Great, thanks.

Thanks, Edwin. And what we would like to do is to thank everyone for joining us on the call this afternoon. A replay of this call and a supporting slide package will be available on our website today, beginning at 5:00 pm Pacific Time. And we will keep it there posted until February 25th. So thank you for you continued interest in Applied Materials.

This concludes today's conference call. You may now disconnect.