Good day everyone and welcome to the Ceragon Networks Limited, fourth quarter and full year 2012 results conference call. Today’s call is being recorded and will be hosted by Mr. Ira Palti, President and CEO of Ceragon Networks; and Mr. Aviram Steinhart, CFO of Ceragon. Today’s call will include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved and actual results could differ materially from forecasts and estimates. These are important factors that could cause actual results to differ materially from forecasts and estimates. Some of the factors that could significantly impact the forward-looking statements in this include the risk of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations on facilities, risks associated with increased working capital needs and other risks and uncertainties which are discussed in greater detail in Ceragon’s annual report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events and circumstances after the date any such statement is made. Ceragon’s public filings are available from the Securities and Exchange Commission’s website at www.sec.gov or may be obtained on Ceragon’s website at www.ceragon.com. :

Thank you for joining us today. With me on the call is Aviram Steinhart our CFO. Our revenues in Q4 were consistent with our guidance and our operating expenses declined, showing the effects of the initiatives we implemented in Q4. As expected our operating cash flow improved dramatically and we have net positive cash flow of $13 million. We are also pleased to report that our book-to-bill ratio in the fourth quarter was above 1. We see no significant changes in the market since our last call. The quarter-to-quarter shift and geographic mix relate to typical customer ordering cycles and the revenue recognition patterns, rather than a change in demand trends. Near term we still expect macro economic uncertainty and difficult economics of adding capacity to hold back spending growth, but we see spending priorities shifting more in our favor over the next 12 months. Telecom equipment is a healthy, but not end user business, especially in the current environment. But we are executing well and we have achieved a number of important goals. This achievement are not apparent in the financial results as we had to adjust results for the first three quarters of 2012, to reflect the impact of change in acceptance procedures with one of our large customers. However from a business execution perspective, this achievements are very real and they position us for much better profitability in 2013, followed by return to growth and improved operating leverage. Therefore I’d like to go through some of the strategic business accomplishments of the past year. We increased our market share in the long-haul business and became the clear number one. We successfully converted all the former Nera short haul customers to the Ceragon solution. As a proportion of the orders in our backlog shifted towards all Ceragon products…

Thank you Ira. Before I go for the Q4 results, I would like to expand briefly the impact of the delay in revenue recognition for one customer that we announced of January 4. Adjustments are presented in the table and the handbook in this morning’s press release. Its fully adjusted comparative information is available in the slides on the financial report page in the Investor Relations section of our website. All comparative information we are giving is on as adjusted basis. To recap what happened, in late December 2012 we learned that the major customer was requiring additional acceptance procedures and implementation for part of equipment it had purchased from us and was previously accepted. After investigating the appropriate account improvement, we decided to differ a portion of the revenue previously recognized in 2012 related to this equipment and feel the additional acceptance procedure completed, currently expected during 2013. The deferral impacts the revenue and the related cost commissions using the accounts receivable and accounts payable for the first three quarters of 2012, which have been adjusted accordingly. According to the account cause we were not able to differ all the costs associated with the $50 million of revenue that’s moved out of Q1, Q2 and Q3 for future periods. Therefore our gross margin was affected disproportionately and the deferral had the sense of taking away most of our [Nera copies] (ph) for 2012. There will be very little discussion of 2013, because under the new procedures, actually the same amount of revenue being shifted from 2013 to 2015 will also shift from 2013 to 2014 and so on. So with this background on the adjustments, I will quickly go through the results for the quarter. In the fourth quarter revenue was $106.8 million within the rate of our guidance.…

Thank you Aviram. During 2013 we expect to continue our efforts to further penetrate new tier 1 customers, execute on the 3H Holistic HetNet Hauling vision and gain traction with our new IP-20C product. The sectors we mentioned on the last call to provide potential upside are still there, because season links pickup after the customers finalize the budget for the year, because of the share gains or mix changes we haven’t exceeded and we could see a certain and expected up-tick of the new product. The fact is we don’t have any reason to believe these are any more likely to help-in than before. So we are excluding them from our assumption. Taking a little longer view, during the next few quarters we believe we are on the verge of the next major wave of change in the microwave hauling market. Just as the shift from low to high capacity, from PBM to IP has driven dramatic growth in our revenue over the past years, we expected the shift to HetNet architectures and ultra high capacity to buy growth over the next decade. We’ve done a lot of work and we are very well positioned to capitalize on the markets as it shifts and as the changes are occurring. Now, I would like to open the call for questions. Operator.

Thank you. (Operator Instructions). Our first question will come from the line of George Iwanyc of Oppenheimer. Please go ahead.

Thank you for taking my questions. So just looking at the outlook for 2013, we see some shifting in priorities helping out later in the year. In the near term, are there any push outs or lengthening of sales cycles still happening?

Morning George. In the near term we do not see any significant change in the demand patterns, okay. We do believe the demand patterns will stay about the same and that’s why we based our focus through the year on average booking from the last four quarters. We do not, in light of the typical rating conditions, no significant improvements for the first half of the year and when we look at the guidance for Q1, we took into account revenue recognition cycles and other parameters, which are local to the quarter and not based on the demand trends. George Iwanyc – Oppenheimer: Okay, and then looking at the larger tier 1 customers that your looking at, is that creating an opportunity for larger contracts and larger commitments at the same time or are the order flows kind of staying at the same levels that you’ve seen over the last four quarters?

Well, the tier 1 customers, yes, it creates an opportunity for larger orders and larger flow with the customers we have won already when we are there and with our new, this software technology and that is opening the doors for a lot of very interesting, at this point discussions, but as people are looking very extensively at network architectures and looking at what we call holistic HetNet hauling solutions for their new architectures, I think will open the door for us with a few more tier 1 operators. George Iwanyc – Oppenheimer: And looking at ultra high capacity and markets, does that change the price point in any dramatic way or is this a shift that helps to stabilize or keeps ASP’s stable?

The ultra high capacity at this point is a premium product with higher ASP’s, but we said during 2010 we don’t expect this to be a very large part of the mix. It will contribute to revenues in 2014, we believe in the range of 20% of the revenues. Not everything on top, but will provide some part of that growth, but at this point its positioned as a premium product, as a premium solution. George Iwanyc – Oppenheimer: Okay, and one last question. With the small step down in spending this quarter, is that the safety about what we should expect for the next few quarters, unless there is a dramatic change with top line?

We started it and there should be a cost reduction as we mentioned in the last call. What your seeing is a direction of shift this quarter with some of the needs and going to Q1 and beyond, to deliver we believe the OpEx, focus the OpEx between $32 million to $33 million a quarter. George Iwanyc – Oppenheimer: Great, thank you.

We’ll go next to the line of Mike Walkley of Canaccord Genuity. Please go ahead.

Yes, thank you very much. This is Matt Ramsay on for Mike this morning over here. Thanks for taking our questions. I guess the first one, just about the revenue deferrals and push outs at leading customers there, it looks like the majority of the impact was kind of roughly $7 million in the first two quarters of 2012 and so its kind of a two quarter push out timeline on that level of revenue. Is that the right way to think about it? And number two; maybe you could give an update Ira on the relationship with the customer. If anything’s changed since, better or worse since the last time you spoke. Thanks.

I’ll start with the relationship and I’ll let Aviram answer the other half. Relationship is excellent with the customers. We are continuing to see significant order stream from that customer and has to do with internal procedures and change in acceptance procedures. The issue is more – our accounting piece knocks this side of the section where the equipment is online and running and delivering the service. It’s mainly a procedural issue internally and the relationship is excellent and just keeps expanding to the customer.

You got it, the adjustment. Yes, that’s correct. $7 million, a little bit more than $7 million in Q1, around $7 million in Q2, $1 million in Q3, overall $15 million. $2 million actually were reversed in Q4, so overall the shift between 2012 to 2013 are $30 million. If you recall, on January we said that there will be between $11 million to $40 million shift. This is the $30 million that will shift. $50 million between Q1, Q2 and Q3. $2 million we recognize in Q4 and the rest basically we’ll move to 2014.

Great, thank you for the additional color there. And I guess one more long-term kind of question for us. Ira I though it was very interesting that you talked about that you kind of front-haul opportunity, as the industry kind of moves to LTE Advanced and heterogeneous networks. I’m just wondering if you could give us some overall commentary on your views of the timing and the growth of that market, maybe the time that it presents to Ceragon, maybe the applicability of the small cells to macro cells, maybe what percentage of the global, something around the global macro cell base. It actually has small cell applicability and what that kind mean for you guys going forwards, because it sounds like some pretty exciting new product.

If we look forward, we expect and we can see the stocking, the kinds of changes into the (inaudible) networks access to solutions. What we see worldwide right now is all sorts of experimental deployments and experimental trials and with those types of organized networks with different operators, my belief is that we’ll start seeing significant roll-outs towards the end of this year or really beginning of next year. Also from a geographical perspective, this is more applicable at this point to the U.S. and Europe, unless to U.S., Europe, Japan, Korea less to the developing markets as the pressure for LTE Advance builds for delivering a lot more data and a lot more bandwidth in U.S. and Europe and we have a very interesting discussion around those with a lot of the tier 1 operators in those markets.

Great. Thank you very much for taking our questions. We look forward to seeing you in Barcelona.

Thank you.

We will go next to the line of Peter Misek with Jefferies. Jason North - Jefferies & Co.: :

Hey, I think with the comments we made about India is at this point its not picking up, and also the regulatory environment there has changed significantly over the last year. We did have and we continue to deploy very large quantities of go-to-one customer in India, but not all operators in India at this point are rolling out as quickly as the net customer. And the interesting part is that it’s a customer who is using LTE technologies ruling them out extensively throughout India; probably the second largest LTE network worldwide, mainly for delivering broadband services, data services in the mobile world. Jason North - Jefferies & Co.: Okay, the accounts receivable came down significantly. How do you see that proceeding? Is that going to stabilize around these levels or how is that going to work?

Yes, the accounts receivable reached $149 million, a significant reduction from previous quarters. We had a very strong collection, which put the DSO down at 122 days. Going forward we should I believe stabilize around this level. There will be fluctuation between quarters, but I think this is the level we should look at going forward, this is around the level we should look at going forward, around the 120 to 130 basis outstanding. Jason North - Jefferies & Co.: Sorry, was it 122, 130 you said.

Yes. Jason North - Jefferies & Co.: Okay great. Thank you.

Thank you. We’ll go next to line of Joseph Wolf with Barclays Capital.

Hi, thanks. Just as a follow up on the new product developments, you mentioned about the geographies and where it will go. I’m wondering, if we think about the spending and that 120 comment, if there is a pick up that’s in there, the 120 you will have to start rehiring. How does that layer into the development of new products and the discussions that you’re having with your customers about what they are looking to do in this current environment. Are you seeing a delay with an interest towards new or is it just an ultimate delay. I’m wondering how they are balancing the plans going forward, given the lack of real spending.

At this point we reduced expenses, expenses to this $32 million to $33 million level. We factored in the new products and the new requirement, the spending changes in there. We do not expect that level of expenditures, including R&D to change in any from the current decreased level, anywhere significantly before you reach the $120 million level of revenues. I think the challenge is always and that is really keep up the priorities, and we do shift priorities internally to see how the people mature in their understanding on how to deploy our holistic net holding solutions and the whole set of products. We are shifting priorities in the way we would release additional products into the market.

Can you give us a percentage of that quarterly spend, which has kind of been refocused to the new product development.

If you look at our R&D spending, it’s almost at this point 75% is new product development.

Okay, which will imply that all the cost; you mentioned all the cost reductions are out there, so most of your development is now future focused.

Its, yes, most of it is future focused, yes.

Alright, great. And just any specifics or any geographies that we should be picking up on as your commentary, as you look out for 2013 areas. It seems like you are pretty conservative about the whole sector, but is there anywhere specific we could focus on where you could be surprised at the outset of this point.

We believe that Latin America and Africa are still growth engines for us. Yes, there is lumpiness between quarters on the revenue recognition, but if I’m looking at trends within those growth and our increasing customer base and booking trends, I think those two will be over the year on an aggregate basis, some of the growth engines that we’ll have.

Just one final question; if that’s the growth engine, you mentioned where the prioritization is for the new products in the more developed markets. How does your product develop handle the fact that these growth engines are the ones for the newer stuff that we deployed last.

I think we have in the current generation of the product, is that we got a regrouped competitive product out there, which keeps us in the business. Yes, we are still investing in the current generation of product and small improvement and meeting the requirements. But I think that I mentioned for example on the call that we gained significant position as the number one long-haul provider worldwide. Its in those markets was our excellent evolution of long-haul product line and we will keep investing in those products, but I think it’s the right percent of investment if you keep winning the business within the Latin America and Africa, and my expectation is that further down the road the wealth is in these new technologies.

Great, thank you Ira.

Thank you.

We’ll go next to the line of James Faucette of Pacific Crest.

Thank you very much. I just wanted to ask Ira, I just heard your comments related to how carriers are being more careful with their investment. How are you seeing that impact the change or impact in change where you fit into and where Ceragon products fit into the priorities. You mentioned you think there is some shift to Ceragon. We are just trying to understand that I guess in the past we’ve seen carriers build out back-haul networks in advance of LTE builds, but I just don’t understand, are they building that out entirely before the year or how you are seeing changes there. Thank you.

First, I have not seen carriers build back-haul networks in advance of deploying LTE in most places around the world. I think what we are seeing is the people as they roll out new networks, they adjust and build the capacity and the back hauling and in the front hauling solutions is they roll out the new networks and new capacities. So really riding almost hand in hand with deployments of new base stations, new capacities with base stations and new architectures in most places around the world, and with the people shifting to biggest networks, some of it is less related to us, like things like WiFi offload coverage within buildings, but also if you look at them deploying they need to aggregate tons of sales, pull them in, pull them in from a lot of places into very high capacities and then also to situation where our new technology will help them pull in as a hold in requirements to those locations.

Great, and then when you talk about the shifting priorities then from carriers, as it relates to back haul, I mean can you expand a little bit on that and how you expect that to impact Ceragon, particularly with the new products that you launched.

We are seeing some diffident shifts, which all of them have to do with higher capacities and its really breaking the barrier between capacity and bandwidth. I think that the operators are looking for all sorts of solutions which will help them deliver a lot more bandwidth to where the different types of cellular base stations are and aggregate their rules and the solutions we are coming out with and the IP-20C is just the beginning. There is all sorts of solutions that will enable them to do exactly that or a little bit of a different CapEx spend and a gradual CapEx spend, and also simplifying a lot of the instillation issues. Its really trying to allow them to bring in more bandwidth to more base stations.

Great, thanks very much.

Thank you James.

Thank you. (Operator Instructions). And we’ll go to the line of (inaudible). Please go ahead.

Hi. First of all, good luck to you in 2013. Second of all, can you give a sense, 2012 was already a tough year for the industry and can you give a sense relative to 2012, whether or not you expect the overall industry to see or at least your customer base to see growth.

Overall for 2013 I think that we indicated both for us and the customer base, that we are basing our guidance for 2013 as $420 million to $440 million. The same average running rate that we saw in the bookings within 2012, which really says we expect the market not to grow in our 2013. We expect that our factors which can leave the second half or beginning of 2014 for additional growth.

Second half of 2013 or 2014.

No second half and towards the end of 2013, beginning of 2014.

Got you. And then on the competitive landscape, are you seeing any changes and could you just stack up again the larger players that are selling microwave back-haul within their overall solution and the independent players. Maybe just talk about what you are seeing with respect to the changes in any of the top two or three competitors that existed a year ago.

: If you are asking about changes within the mix, not really. The only place where we are seeing some weakening from the reports is MSN, a little bit weakening within the markets and we are always gaining a little bit in the mix between the top three. We do not see a shift between which is underlying questions our there, between the generalist selling and end-to-end solutions versus a specialist where we service best of grades. The market over the last year and also this year, the notation forward, the stage about 50/50 between the two nodes of selling. : If you are asking about changes within the mix, not really. The only place where we are seeing some weakening from the reports is MSN, a little bit weakening within the markets and we are always gaining a little bit in the mix between the top three. We do not see a shift between which is underlying questions our there, between the generalist selling and end-to-end solutions versus a specialist where we service best of grades. The market over the last year and also this year, the notation forward, the stage about 50/50 between the two nodes of selling.

We’ll go next to the line of Daniel Meron with RBC Capital Markets.

Thank you. Hi everyone. So I might have missed it earlier and I wanted to know, you guys referred to the ultra high capacity. Is there a way to quantify the additional growth that we should be seeing in your business? Is that going to accelerate your growth rate?

As I said on the call, we do not expect the new implying capacity products or some of those solutions to effect significantly on 2013, both growth and we do expect those products to be at the rage of 10% to 20% of our revenue in 2014. About half of that probably will be growth on top of the 2013 run rate.

Okay, and as far as the impact on the gross margin, I mean is someone trying to look at just how should we think about Ceragon with a new product. Does that change the margin profile, the growth profile, etc. (Multiple Speakers) are going to be positive, but we shouldn’t expect the whole new Ceragon with much higher margins or much higher growth rates.

Hi Daniel. As Ira mentioned, when you give the model for 2013 the assumption regarding the new products in terms of contribution on to the revenue is not signification. 2014 will be more significant. The profile margin this quarter gets higher, but the impact is not significant in 2014 as the revenue is significant.

What I’m asking is 2014. I understand this is not going to be a 2013 story. I’m trying to get a reason 2014 and what we should expect then beyond this criteria. Thank you.

I think that as I said, we expect to keep on growing into 2014 and resume growth in 2014, and as the given growth has also been hearing with numbers, what we believe will reach our target within 2014 in some place and for operating or increasing the operating margin from the average of this year 5% to be higher. You are asking also on the gross margin profile of the new products, we do believe that they will affect the gross margin, but at this point I don’t know how much exactly. A little bit of pushing the gross margins up by 5% we think or towards the 2014 timeframe. No, it will not be a whole new Ceragon with 50% gross margins and hoping that the market with the telecom equipment and the business we are in is that type of a market.

Okay, thanks. That’s very helpful Ira and maybe if you can refer to the cash duration that you expect in 2013? You guys did a great job in the fourth quarter in lowering your receivables. How should we think about some of these metrics once we go into the New Year? Thanks.

We look at 2013 to be close to the year with relatively good flex revenue. The way to look, the way DSO stays at the same level and the profit is around 5%, this is the level of cash we should generate during the year.

Okay, that’s very helpful. Thank you. Good luck.

Thank you gentlemen. That does conclude your Q&A portion of the call. I will turn it back to the speakers.