Welcome to the Applied Materials fiscal 2009 second quarter conference call. (Operator Instructions) As a reminder this conference is being recorded today May 12, 2009. Please note that today’s call will contain forward-looking statements which are all statements other than those of historical fact including statements regarding the economic and industry outlook, as well as Applied’s performance, operating efficiencies, cost reductions, products, strategy, position, R&D and Q3 guidance. 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 release and in the company’s filings with the SEC. Forward-looking statements are based on information as of May 12, 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 or 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 [Kara] and good afternoon and welcome to our call everyone. Joining me today are Mike Splinter, our Chairman and CEO, George Davis our Chief Financial Officer, and Joe Sweeney our General Counsel and Corporate Secretary. Today we will discuss the results for our second quarter of fiscal 2009 which ended on April 26. Our earnings release was issued at 1:05 Pacific Time today and you can find a copy of it on Business Wire and on our website at appliedmaterials.com. Mike Splinter will lead 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 second quarter and our expectations for the third quarter. After these remarks from Mike and George, we’ll open the call for questions. And with that I’d like to turn the call over to Mike Splinter.

Thanks Mike and thanks to everyone for joining us on the call this afternoon. As we anticipated in February, weak demand drove revenue to the lowest levels we’ve seen since 2002. We focused on the goals we outlined for you last quarter and were able to preserve our balance sheet, make significant investments in our future and deliver clear progress on the cost reduction goals we committed to last November. The global macroeconomic environment is weak although the U.S. economy is showing signs that its rate of decline may be slowing. The market in China is responding to stimulus, driving demand for mobile handsets and infrastructure as well as personal computers and TVs. As a result, factory utilization is rising in semiconductor and display and customer confidence is growing. DRAM prices have increased about 30% since the beginning of the year, largely driven by a 15 to 20% bit output reduction. Still, the economy remains a challenge and a meaningful improvement in the equipment sector depends on a sustainable recovery in our customers end markets. They can keep factories full and encourage new capital investments. In the meantime, we’re making substantial investments in our technology and expanding our core markets, growing our position in solar energy and deepening our customer relationships. We’re also driving new business processes and operating efficiencies to serve us well now and in the eventual recovery. Our employees are engaged in delivering these objectives across the company, and I appreciate their efforts and results they are producing. Now I’d like to give you some insight in each of our business segments. In Silicon end market demand appears to be rising off the bottom but it’s still at very low levels. In Logic our customers report shrinking inventory levels and stronger order flows. Foundry utilization is moving…

Thank you Mike, and good afternoon to everyone. On our last call we said Q2 would be a tough quarter and that we would be intently focused on managing our cash and our cost structure. It was a tough quarter as revenue fell 24% to just over $1 billion and orders declined to $649 million, reflecting a level of demand the company has not experienced for more than a decade. It was also a period of excellent cash flow performance, with cash from operations well below our cash flow breakeven model. We have taken the challenge to preserve our cash position and balance sheet strength while maintaining a high level of investment in products and technology. Consistent with that challenge we remain on track to exceed our cost reduction targets across the company. For the quarter, our GAAP loss was $255 million or $0.19 per share. Our non-GAAP loss was $136 million or $0.10 per share. In our GAAP results the company took pretax charges totaling $166 million in response to the weak industry environment. These charges impacted our earnings by $0.09 per share and included equity investment impairments of $77 million related to our holdings in Sokudo and other strategic investments, inventory writedowns of $47 million across our business in response to lower demand, restructuring and asset impairment charges of $27 million associated with our cost reduction plan, and bad debt provisions of $15 million due to the further impact of customer solvency issues. The company’s reported gross margin for the quarter was 15% which was down 14 points versus Q1 due to lower revenue, mix effects, factory under absorption and inventory writedowns. Revenue and mix effects accounted for 11 points of the reduction as low margin SunFab revenue increased while higher margin SSG revenue decreased. Operating expenses versus…

Thanks George. And to help us reach as many of you as we can, please ask just one question and no more than one brief follow up. Kara, let’s please begin with the first question.

(Operator Instructions) Your first question comes from Brett Hodess - BAS-ML.

I’m wondering if you can go into a little bit more detail on the very broad range in the silicon area. Obviously it’s only one or two customers, but are those customers’ plans still really in high flux at this point? And what would cause them to, you know, be on the positive side or the negative side of that from your standpoint at this stage?

Well, Brett, I think this is a very dynamic environment so as George characterized one or two customers can make all the difference in the world. And shift in the end market over the next couple of months could cause customers not to take shipments or to cancel orders, those kind of things can happen very dynamically in this environment. You can remember back just a couple of quarters when orders started to go down with the realization of the global economic crisis, they can go up that fast as well, but I just think it’s very dynamic right now.

Brett I also think that we’re seeing an increase in the amount of turns business in the quarter and so the uncertainty that is associated with that is higher than we might see in more normal times. And the other piece is we’re just starting from just such a low base that when you see a wide range like that, part of it is just where we’re starting from.

Your next question comes from James Covello - Goldman Sachs.

I guess the question I would have is relative to the memory segment in the back half of this year, what do you think the benchmarks are going to be for your customers to start to add some additional capacity? Is it a certain profitability level? Is it a certain price? What do you think about that? And kind of tying in with that which I think is the same question, what about the issue of latent capacity in the memory segment that everyone’s worried about kind of trumping the kind of robust price increases that we’re seeing?

Yes, Jim, I think the real thing that’s going to push capacity in the second half of the year is adoption of DDR3. At least that’s going to be one of the major factors. Those projects have to be on leading edge or near leading edge capacity. And most of what we might think of as latent capacity, there’s been a lot of capacity taken offline that’s not coming back on 200 millimeter, but to the degree that there is latent capacity most of it’s on older generation technologies and I don’t think can produce at the right cost or really the right level of technology. So, but I think the fundamental for memory guys is demand really going to pick up? Is there going to be strength in PCs and cell phone demand? I think that’s really what’s going to drive them.

Your next question comes from Stephen Chin – UBS.

Just a question on the solar business, I didn’t hear you talk much about any upgrades for tandem solar equipment now that you have your first signoff. And you didn’t call that solar as potentially seeing order growth, so what is your outlook for orders for upgrades to the tandem equipment now that you have your first signoff?

What I would say about that is every single junction customer would be considering a tandem junction upgrade and I think that just depends on the individual timing for each of them and how their factory is running, the degree of success that they’re having in the marketplace. But clearly eventually all those factories have to move to tandem junction. And we’re not making the specific forecast by factories, so I don’t know what you want to add to that, George.

No, I think that’s right. And we are expecting to continue to see customer’s signoff factories for the remainder of the year. We’re very pleased with the overall momentum that we’re seeing there. And the year is 2009 for us is really playing out pretty much as we saw it when we started looking at the end of last year. So we’re very pleased with the overall performance. Obviously as we said, 2009 was going to be our year to absorb the learning curve and we’re certainly going through that but we’re pleased with what we’re seeing otherwise.

Great Steve. Do you have any follow up or are you good? Thanks. Kara, can we take the next question?

Your next question comes from Satya Kumar - Credit Suisse.

What was the magnitude of the inventory writedowns and do you have any charges from the EES group? And the follow up in that, given the learning’s that you’ve had with lowering the product times in SunFab, what is now the clean breakeven target for the EES division?

The EES inventory impact was about 60% of the overall inventory writedown and it related to the, some excess inventory with OEM suppliers. In terms of the bad debt that was not, there was no bad debt impact on EES in the quarter. In terms of breakeven we haven’t guided to a new breakeven level. You know obviously we expect thin film to improve substantially from these levels. We’ll start to see that quite frankly in the latter half of this year and crystalline silicon is already effectively operating breakeven or higher depending on the individual quarter once you pull out the M&A charges.

Your next question comes from Timothy Arcuri – Citi. Timothy Arcuri – Citi: First of all, what sort of, you know, pipeline do you have left in terms of thin film orders? By my numbers it seems like you’ve recognized roughly $750 million worth of SunFab orders so it seems like maybe you have kind of $1 to $200 million more left in that pipeline. So that’s the first question. And then the second question is if the financing environment doesn’t get better, you know for your customers in the solar business, what sort of contingency plans do you have to basically keep that business growing if your customers can’t get money?

Maybe I can jump in first and come at it, Tim, from maybe a slightly different angle than you did. But to date we have shipped nine full factories and we have five that are signed off. We have five lines that are in the process of being shipped or will be shipped. And so if you look across the, and to date we’ve had one signoff in fiscal year ’08, we’ve had four more signoffs in ’09. My expectation is we’ll probably have at least three signoffs or I think three is a good estimate, additional signoffs before the end of this fiscal year. So when you think about from a revenue perspective and we have about 25% of the expected revenue from these fully secured projects has been revenue through Q2. So we’ve got a substantial amount of additional activity, not only in terms of factories to signoff but bonus performance opportunities on our existing factories. So there’s no question that obviously we would like to see the pipeline grow from where it is today, but I think the reasons for that pulling back and the financing market situation are well understood.

Are you done?

Yes.

I’d just add two things, Tim. For us I think the two big things we need to do is continue to drive the performance of SunFab up and continue on the pretty dramatic learning curve we’ve been experiencing over the last six months. And then the other thing is to work downstream to help increase the market size and the market opportunity. And whether that’s working with utilities or the government to set the right policies, those things are absolutely critical to expand the market. Timothy Arcuri – Citi: I guess, Mike, I’m just wondering whether you would throw money at your customers and you would kind of, you know, self finance any deals.

No. We’ve said all along that we view that customers should be able to secure their own financing if they have the right end market strategy, and we don’t believe that we add anything by playing the role of a bank.

Your next question comes from Atif Malik - Morgan Stanley.

George, assuming that you hit your high end of the revenue guidance flat and given what you said about, you know, Q3 orders from SSG and AGS could be higher, is it fair to assume that your revenues will be higher in Q3 given your backlog mix?

No. Malik as we said we think revenues will be flat to down for the quarter. Let me make sure I understand. Are there specific revenues you’re interested? Obviously SSG we believe will be up and AGS we believe to be up but overall because of the fall off in display and the absence of as many SunFab signoffs we’ll be down in the other segments.

What I meant to say was the quarter after July will your revenues maybe be higher given your order mix in the July quarter?

Oh, Q4. Well, we’re not going to guide to Q4 but it’s a positive trend for sure.

It’s pretty clear that your solar technologies are viable given the customers and add. They appeared to signoff and they paid you the revenue. The question on economics, I mean when do you think the company will be able to come up with some kind of, you know, endorsement by system installers and named degraders who have, you know, bought this panel from your customers and kind of endorse your map on $1 per watt and balance the system costs? I mean, are we looking into the next two to six months or is it longer?

Well, hopefully it’s not any longer than that, Atif. You know these are still the early days of the panels getting out into the field so we have to, and today most of the panels are quarter size panels that are moving out into the field. So this is going to take a little bit of time to really get the volume out there, the reliability data and the trust going. But we’re working hard in that area.

Your next question comes from Steve O'Rourke - Deutsche Bank Securities.

There were some pretty significant cancellations, de-bookings this quarter. How well scrubbed is backlog and how much risk is there to backlog looking forward by business?

Well I think you’ve seen over the last two quarters a lot of backlog adjustments. We had fairly significant in crystalline silicon in the first quarter and we’ve seen in the cancellation side really the effects of certain semiconductor customers just changing their plans based on a change in their strategy. So that led to a cancellation. The de-bookings really for the first time we’ve seen bookings in our services area of any material size, and that makes up about half of it. And it really reflects what we’ve seen over the last two quarters in terms of a big drop and run rate of the factories, our customers’ factories. We expect quite frankly that there’ll be some recovery there over the next two quarters but even as you can see with the order outlook, people are still cautious on the services side and I think that’s just potential upside over the next two quarters.

In your prepared remarks, you gave a range for wafer fab equipment and said the high end of that range would require a sustained pick up in the second half of the year. Do you have a building sense of confidence that that can happen?

Well I think as George said there are some positive trends, but boy, Steve, it’s pretty tough to be over confident in this environment where economies are still very, very weak. We’ve certainly seen some pick up in China. Will that be sustained over the summer? I think it’s very hard to tell at this point. So, you know, are we happy that utilization is up and customers are getting some confidence? Yes. But all the buys so far are technology buys. I think we would have to see a little bit of capacity buy before the end of the year to get to a number like $11 billion.

Your next question comes from C. J. Muse - Barclays Capital.

One question to clarify, what were the M&A charges for EES? And when do those run off? And then my primary question is in terms of your EPS guide, what kind of range should we assume for gross margin, tax rate and losses if any for the JV? Any help on those three fronts would be very helpful particularly given the higher tax rate and the benefit there in the last quarter.

C. J., that was a very good question of asking four questions but I think I can go pretty quickly here. First off on the EES M&A charges, they’re running about $20 million a quarter, again about $15 of that in cost of sales. That will continue to decrease over the next couple of years as it is lower this year than last year. I n terms of our EPS guidance again as we’ve said we’re going to have a better mix outlook, so that will be favorable to gross margin. So you could see, you know, we had, depending on where revenue comes out with the mix we said it could cost us 11 points last quarter. So something between where we were today, I think 11 points is probably possible just on revenue and mix. In terms of the tax rate, I would just hold it constant at this point. There’s, you know, in this environment predictability is a little bit challenging.

Your next question comes from Christopher Blansett - J.P. Morgan.

It’s really to the solar side of the business and you have a large number of crystalline silicon customers. I wasn’t sure if you could give us an update on their utilization rates and what you think their ability to raise capital is at this time?

Well, I’m not sure I can give you a very detailed update. The big, I think what we see so far is, you know, a lot of the little companies around the world and China in particular have begun failing just because they can’t sell their product. But the bigger companies are still able to finance and still able to add capacity. We gave you an estimate that revenue, or that spending, capital spending would be down about 50% year-over-year. But the big players can still get money and still finance their capacity.

I guess the second question, you kind of related to the technology buys in the semiconductor industry. You indicated in the upfront statements that some of your solar customers are buying equipment in kind of the same bent as a technology purchase. Could you give a little more detail on that and what it is giving them at this time?

Well, you can relate yield in semiconductors with efficiency. And in solar there’s very, very high motivation always to improve the yield in semiconductors. There’s equally as high a motivation to improve efficiency in solar. Of course, all of those things have to net out to be cost reductions in the end product, but there is lots of interest in different kinds of capability, lowering the resistance of metal lines, improving contact capability on solar. These kind of things that do help with the overall efficiency of the cells are very much in demand because it can improve existing capacity as well as make new capacity more saleable.

Your next question comes from Patrick Ho - Stifel Nicolaus & Company Inc. Patrick Ho - Stifel Nicolaus & Company Inc.: First question, in terms of the memory marketplace with, you know, the Taiwan sector kind of consolidating and finally, I guess, sorting itself out. How does that impact you guys as we look to the next upturn in terms of capacity buys?

Well, okay, so there’s kind of the two camps, so the different technologies and obviously the one that I alluded to in my prepared remarks of converting this back cell, I think we feel like we do very well in that segment and should gain in a number of different places including FE and DPM and PVD and etch as I outlined. In the other segment, there’s no real conversion so market shares are static. But as we get back to capacity buys it will be a net positive for us. Patrick Ho - Stifel Nicolaus & Company Inc.: In terms of the solar ramp especially on the SunFab side of things, when do you believe, I guess, the infrastructure cost investment and I guess the learning curve costs, when will that I guess sort of end? And when revenues do pick up, it’ll flow to the bottom line. When do you see that type of model hitting for the SunFab business?

Yes, Patrick, we said that we thought that we needed to get through 2009 and my view really hasn’t changed on that. Certainly by the end of our fiscal year we’ll see stronger profitability on the lines being signed off. We certainly see very attractive profitability on the bonuses as they’re signed off. So we’re very close to that time period.

Your next question comes from Analyst for Gary Hsueh - Oppenheimer & Co. Analyst for Gary Hsueh - Oppenheimer & Co.: In terms of solar business could you provide a breakdown in terms of orders and revenues between crystalline and the thin film business?

Yes. We haven’t been giving out the specifics in that regard. I can tell you that if you look at the order run rates, again we had the bulk of our orders for this year were in Q1 for thin film. We’ve had kind of constant, we’ve had kind of a what I would call a steady state order book for crystalline silicon really throughout the year. So you can see a lot of the volatility in the order rate for EES is really the order book for thin film. Analyst for Gary Hsueh - Oppenheimer & Co.: With the recent silicon orders from foundries and [memory] could you give a quick comment on your progress in getting market share in the silicon space?

I think I just gave you a bit of that in the DRAM space, but also in the DRAM space we’re as most of the manufacturers move to copper we will gain in PVD. We’re also gaining in the contact etch and some damascene etches that multiple DRAM guys in Asia. And logic is really going to be focused around high k and better lithography, immersion lithography inspection, both mask inspection and in fab inspection. So we think we’re going to see progress in all those areas.

Your next question comes from Mehdi Hosseini - FBR Capital Markets.

Mike, I wanted to go back to your earlier comment talking about production costs of your thin film modules coming down to list at $1. Can you please help me understand what kind of minimum capacity would that require? And would you be more flexible with your customers in terms of material or component and supplies?

Okay, so that quota 10% and $1 is meant to be essentially a one line number. We feel that if we have a multiple line factory we would actually do better than that. So that’s in tandem junction something approaching 80 megawatts, single line performance. So I think that pretty much takes care of that question. On flexibility, does this mean kind of an open standard, mix and match equipment on the line? Is that what you’re asking?

Yes. More flexibility in terms of helping your customers to reduce costs at a faster rate as crystalline or other thin film technology prices that [inaudible] needs to come down?

Well, I don’t know that those two are mutually exclusive. We are working really hard and really fast in putting every dollar of our R&D in thin film to help drive down the overall cost per module. So, but if anybody in the SunFab network has a good idea to help reduce costs, of course we’re open to that. We want to promote the learning to be as fast as possible, so all of the SunFab customers have engineers, have people that are working on cost reduction.

But you have to be certified by a [inaudible] material, right? Those vendors?

Well, certainly before FAT they do. We have to insure that we can deliver what we promised of course.

Your next question comes from Edwin Mok - Needham & Company. Edwin Mok - Needham & Company: My first question is on the display side. Mike, you said that you expect a broader recovery in 2010. Do you anticipate customers not coming back with ordering in the calendar second half of this year or do you think it’s going to be more like middle 2010? How do you we look at that?

Well we think the order progress will start in the second half of 2010 because we just believe that LCD TVs continue to take share in the overall TV market. And as the economy improves and the TV market grows a bit, I think capacity will be strained. So as soon as that happens we’re going to see orders. And we think those capacity orders will be for Gen 8.5 initially. And then in 2010 we think we’ll see the progression move to Gen 10. Edwin Mok - Needham & Company: Let me just clarify. That was second half of 2009 or 2010?

Second half of 2009. I’m sorry, I said ’10. Thinking ahead I guess. Edwin Mok - Needham & Company: And then my follow on question is on crystalline silicon, solar increment business. Recently there was some talk about some of your competitors winning business in China. I was just wondering if you can kind of talk about your competitive position in your [bachene] line and your wafer line. How do you guys view that and do you see increased competition in those areas?

I’m not sure I caught the end of the question. On bachene and then you said something else?

And on the wafering side.

And on the wafering side. I think we’re very pleased with where bachene is and performance of the products and kind of next generation roadmap that we have for those products, and the progress they’re making in China. In the wafering systems I think it’s a little bit more challenging. Our share isn’t as high there so the competition between us and our prime competitor is more on a case by case basis who has the most value. But I like where we’re going. As I said we just introduced our new product this quarter and it really drives cost down, so we think we’re going to make a lot of progress with this product.

Your next question comes from Mahesh Sangareria - RBC Capital Markets.

I just want to get some clarification on the orders, maybe some color on what you are looking into for the July quarter. First on the services, the orders are down 60% year-over-year. The way I’m looking at your revenues are still running at like 100 plus per month. What did that February was unusually low and your back up to 100 plus run rate in income supporters for the services?

I’m not sure I can tie out to the numbers you just used. I can tie out to the year-over-year numbers. I think the order rate that we saw in Q2 is reflective of caution, and quite frankly we think there’s upside to that going forward in the second half of the year as we see sustained increases in utilization rates from the very low levels that we’re coming off of. So I think it may be a better conversation to take a look at service orders after this coming quarter, and I think that they’ll be as the outlook on the end of the year is there, customers will have more confidence in their utilization rates and their spares requirements.

Just quickly on the, again on the order rates for silicon systems group your rate for fab equipment expectation of $8 to $11 billion. For the last two quarters you were running at $1 billion a year rate, and if you take out your market share at 20% so that’s a $5 billion run rate. So are you looking at a 200% of change in the orders in the second half or the next quarter to get to the $8 billion even?

Okay, so, you know, off of this low kind of base that we had in Q2 you can have almost any number for, one of the numbers, you know, you kind of look at crazy numbers at this point. Our orders from foundry were up like 700% this quarter. But when you’re talking from various such low bases it almost doesn’t make any sense. I think the fundamental here is that as we said to get to $11 billion you’ve got to have some sustained growth. And we’re really, that $11 billion is in the calendar year not in our fiscal year so you can add a couple of months on to the end of that. But you’ve got to see a sustained growth, quarter over quarter through the end of the year.

Your next question comes from Analyst for Daniel Berenbaum - Auriga USA.

Could you give us an update on your strategies for the solar business, especially what sort of a cost per watt requirements do you get from customers and how are you going to meet them? Then I’m going to have a follow up.

Well I assume you’re talking about the thin film solar business?

Yes.

Sure. So the idea is to both attack on all fronts, of course, but to improve productivity, wafers are glass sheets per hour, and to drive efficiency to 10% and beyond. And then to look at every material and component that makes up the cost per watt and continually try to reduce that over the next 12 months. But certainly we have to be in that kind of a range of product out for contracts to sign in the next year or so.

Are there any kind of commitments to customers if you don’t meet their requirements on SunFab solar lines? Are there any penalties if you don’t meet the specs?

I’ll take that question. The contracts have performance requirements that, all of the contracts have some minimum performance requirements and it’s, and in many cases it has a performance type matrix so that we share in the upside with the customer and we actually as I said earlier we got our first payment under such a performance bonus in Q2. So yes there are minimum requirements. We’re clearly getting the signoffs when we said we would, which means we’re meeting those minimum requirements. We’re confident that we’ll continue to be able to do that and actually we expect to exceed those minimum requirements and perform against the bonus potential on a number of these facilities.

Your next question comes from Raj Seth - Cowen and Company,

Question for you, Mike. Excuse me. On memory if I assume that there wasn’t a lot of slack capacity in memory and I know that’s probably not realistic short-term, I’m curious if there’s a level of bit growth that would require aggregate capacity to be added in the context of pending shrinks. I mean, I guess I’m coming from a perspective that shrinks buy you some unit growth and some bit growth. I’m curious if you can provide a little perspective on what that might be.

Sure. I think there’s two things at work here. One is the conversion to DDR3 and then there’s just the market growth. So I think the conversion at capacity to the next generation node will largely be taken up and moving to DDR3 and then in the bit growth has to, we think has to be greater than 30% or so and closer to 40 to 45% level to really drive new capacity.

One other one for George, George can you talk a little bit about your R&D priorities? I’m sure you can’t get too specific, but perhaps within SSG where you’re focused and solar versus silicon. Can you talk a little bit about where your priorities are short-term?

Yes, Raj, the priorities are really independent of each of the segment. We take a look at the opportunities in each area and then go after them from that perspective. So it really lines up with where we want to compete. We’ve said in the silicon systems group we want to grow share in addition to our strong positions that we already have, we want to grow share in etch and in inspection in metrology and so we’ve increased our R&D efforts in those areas over the last couple of years. And we’re continuing to invest aggressively there. Now Mike talked about in solar we’re continuing to move and crystalline silicon our next generation products for both bachene and PWS those are priorities for us. Thin film solar there’s nothing more important in our mind than driving the efficiency roadmap ahead and staying on track. We’re on track now. We’ve had very good results in the lab that suggest we’re certainly on track for 9% this year and on our way to 10% next year. In display our focus on R&D is really on not only next generation products for our existing positions in PVD and color filter but the competitive entry into PVD through our pivot tool, and that’s a strong area of focus for us. So that’s kind of a recap, and we’ve spent a lot of time over the last two years prioritizing and prioritizing again the projects that we look at inhouse which has allowed us to really fully fund the strategic opportunities that we see without having to compromise our business model.

On the solar side how much are you spending as a percentage of the total R&D spend if you can?

We haven’t broken it out that way, but it’s, you know, it’s probably 25% to a third. In that ballpark.

Hey, Raj, thank you for your questions. And Kara I think we have time for two more questions and then we’ll give our concluding remarks please.

Yes sir. Your next question comes from Timothy Arcuri – Citi. Timothy Arcuri – Citi: Just a quick one. You know if I look at the margin in, you know, in the solar business that you’ve actually shown the last four quarters you know it looks like basically you’re spending about $1.4 billion total expenses in that business over the last four quarters or so. And I’m wondering out of that number, how much of that is related to the thin film business? So if, you know, just to kind of help us decide here, you know, if you were to segment those two businesses how much of that total expense number relates to thin film versus crystalline?

Yes, I can’t tie out to the numbers that you have there. I think your numbers are high Tim. I would say also that you have to take into account the fact that we had a, last year we had about $120 million in M&A charges that were in those numbers as well. Clearly we’re committing R&D dollars there and we’re going through the start up of these factories, but those costs are really being captured as we signoff the factories. So I think your numbers are high and we can, if you want to again call the RO team I’m sure they’ll be happy to walk you through some of those assumption in a little more detail.

Thanks Tim. Kara to you.

Your last question comes from C. J. Muse - Barclays Capital.

I had one more question. George on the display side you talked about seeing potential orders in the second half of the calendar year starting to come in. You know you’ve got basically phase two I guess Gen 8 and a sharp Gen 10 phase three potentially coming. Can you talk a little bit about what you think the magnitude is looking to the second half and the first half of 2010 and what orders could look like relative to the strong level of CapEx we saw in 2007?

That’s a good question. I wish we had the visibility to give you a clear answer on that. And it might be a fair criticism to say calling the bottom when orders are at 13 is not too brave, but we certainly do see, you know, pick up. Clearly the conversations that we’re having with our customers at all levels suggest that they’re readying for capacity additions at Gen 8.5. But again they’ve just come off a very difficult period. They had a big pick up in factory utilizations in the second quarter. Demand quite frankly looks pretty good for panels but at very low prices. So I think they’re going to have to have confidence in the Christmas season at the end of the year before we see commitments that would be material orders in the second half of this year.

Thank you C.J. And Kara with that we’d like to just thank everyone for joining us on the call this afternoon. A replay of this call and the supporting slide package will be available on our website today beginning at 5:00 Pacific Time and we’ll keep it posted there until May the 27th. Thank you for your continued interest in Applied Materials.

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