Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year and 2012 Earnings Conference Call. My name is Chanel, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, to Mr. Steve Snyder, Chief Financial Officer.

Thank you, Chanel. Good afternoon, and thank you for joining us today. Before I begin my remarks, all of us at Digi want to express our concern and support for all of those who have been impacted by hurricane Sandy. Our thoughts are with all of you during this difficult time. First I need to go over a few details. If you do not have a copy of our earnings release, you may access it through our Financial Releases section of our Investor Relations website at www.digi.com. Second, I'd like to remind our listeners that some of the statements that we make in this presentation may constitute forward-looking statements. These statements reflect management expectations about future events and operating plans and performance and speak only as of today's date. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under the heading Forward-looking Statements in our earnings release today and under the heading Risk Factors in our 2011 annual report on Form 10-K, as well as our quarterly report on Form 10-Q for the quarter ended March 31, 2012, each of which is on file with the SEC. We undertake no obligation to update publicly or revise these forward-looking statements for any reason. Finally, certain of the financial information disclosed on this call includes non-GAAP measures. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures, are included in the earnings release. The earnings release is also an exhibit to our Form 8-K that could be accessed through the SEC Filings sections of our Investor Relations website at www.digi.com. Now I would like to introduce Mr. Joe Dunsmore, Chairman, President and CEO.

Thank you, Steve, and welcome to the call, everyone. On today's call, I will cover 2 topics. First, I will discuss our performance for the fiscal quarter and year. Secondly, I'm going to discuss incredibly exciting announcement of our acquisition of Etherios, a platinum partner of Salesforce.com. This was our 39th consecutive quarter of profitability for Digi. Earnings per share were $0.09, which was toward the high end of our guidance range and exceeded the street consensus of $0.08 by $0.01. I am very happy with this result, especially in the context of the challenging broader earnings environment facing companies this quarter. Our revenue of $47.2 million came up very close to our guidance range midpoint of $47.5 million and slightly short of the Street revenue consensus of $47.6 million. Wireless product revenue for fiscal Q4 was $20.3 million and was 43.1% of our total revenue for the quarter. Revenue breakdown this quarter for growth, portfolio of products and services was 51%, and for mature product portfolio was 49%. Gross margins of 52.5% continued to be strong. Next, let's talk about performance for the fiscal year. 2012 was a challenging year. It was a year where we saw our revenue decline. This decline followed consecutive years of 11.8% growth in 2011 and 10% growth in 2010. I've discussed throughout the year the reasons for the revenue trough, the smaller-than-expected return on our Smart Energy investment, the unexpected downturn in the Rabbit product line and the European region softness were 3 of the major impacts. In retrospect, these challenges have provided a significant opportunity to be more introspective about our business strategy and execution. The introspective deep dives that we have done this year resulted in strategy adjustments that included a reduced though continued investment in Smart Energy, increased investment in…

Thank you, Joe. Revenue for the fourth fiscal quarter of 2012 was $47.2 million compared to $51.8 million for the fourth fiscal quarter of 2011, a decrease of $4.6 million or 8.9%. Other highlights for the fourth fiscal quarter of 2012 all in comparison to the fourth fiscal quarter of 2011 are as follows: Revenue in North America was $28 million compared to $28.9 million a year ago, a decrease of $900,000 or 3.3%. Revenue in EMEA, which is Europe, Middle East and Africa, was $11.3 million compared to $14.4 million a year ago, a decrease of $3.1 million or 22%. Revenue in the Asian countries was $6.6 million compared to $7.2 million a year ago, a decrease of $600,000 or 7.6%. Latin America revenue was $1.3 million in both the fourth fiscal quarters of 2012 and 2011. Wireless revenue was $20.3 million or 43.1% of total revenue in the fourth fiscal quarter 2012 compared to $22.7 million or 43.8% of total revenue a year ago. Revenue from wire products was $26.9 million or 56.9% of sales in the fourth fiscal quarter 2012 compared to $29.1 million or 56.2% of net sales in the fourth fiscal quarter of 2011. As previously announced, we're also reporting the revenue split between our core growth portfolio and our mature point products. The core growth portfolio includes all wireless products, as well as the ARM-based embedded module product line, which leverages the iDigi platform with both wireline and wireless connectivity. Revenue from the core growth portfolio on the fourth fiscal quarter of 2012 was $24.1 million or 51.1% of net sales compared to $27.4 million or 52.8% of net sales in the fourth fiscal quarter of 2011. Revenue from the mature point products was $23.1 million or 48.9% of net sales compared to $24.4…

[Operator Instructions] And our first question comes from the line of Matthew Kempler, Sidoti.

So first on Etherios, can you just give us a more concrete example of what Digi can now do with Etherios that they couldn't do on their own?

Yes. So Etherios, as I mentioned, it's really important to understand the salesforce business and ecosystem. With their sales cloud, they have over 100,000 customers; with the service cloud, they have 34,000 customers and Etherios is a trusted partner of salesforce.com, the 2 founders came out of salesforce.com, they were architects within salesforce, they have a deep understanding of both the business and the technical platform. And they are very trusted partners who are out implementing very sophisticated service cloud implementations, typically highly customized service cloud implementations. So they've got significant experience with many, many -- they've got over 100 customers, many, many customer implementations of the service cloud. And in addition to that, they've developed with The Social Machine concept also a piece -- a product, a piece of software that they call in to CRM that allows easy cloud-to-cloud communications from the iDigi Cloud, for instance, into that platform to enable iDigi-enabled devices now to bring data back to the service cloud. So it's -- probably the most important of this, Matt, is the relationship, the experience, the trust, the momentum. And when you combine that with our ability to bring onboard devices, and Marc Benioff's stated objective to now bring devices into the cloud, at this last Dreamforce, this conference in San Francisco attracted 90,000 people. In his keynote, he featured their relationship with GE, and Jeffrey Immelt's focused on the next big thing being the man-machine communication element. And so they're all over this. Etherios is writing the ecosystem. Digi combines our end-to-end capability and it provides a tremendous opportunity.

Okay. And then, their service revenue stream, is that all consulting-related or is there a recurring component piece from The Social Machine?

It's all professional services-related. And The Social Machine software is in a prototype phase being rolled out in that phase right now. And both with The Social Machine and Digi also has a program where we've got the Digi connector connecting to the force.com platform, both of those are in the process of being rolled out, and we're in the process of defining the pricing strategy with salesforce for both of those products.

Okay. And then changing gears and talking about other relations since you've already mentioned some of the chip manufacturers, it seems like those products have launched at least in the fourth quarter -- fourth calendar quarter, can you just give us a sense of how those relations are progressing and what do you see coming in the next year?

Yes. So with Intel, relationship has got tremendous momentum. As a reminder, it started with integration of their M2M solution builder kit working with iDigi, and really driving that into the marketplace. And so we've done that integration. We've launched that into the marketplace. We now have multiple agreements in place, alliance agreements in place now with Intel defining a very deep relationship with Intel. And we're very actively working with them in a co-marketing way where we're seeing a lot of lead generation coming from their significant relationships. So -- and we're actively partnering on these opportunities. So I'd say it's very, very deep, very active and very positive. So the momentum with Intel is extremely positive. On the Freescale front, we started with the Kinetis Microcontroller Group, and we're looking at expanding that beyond the Kinetis Microcontroller Group to the microprocessor group, and we're working with them. We've got, as I've said before, we've got revenue-sharing agreement in place and we're out in the marketplace, they are launched. We're out in the marketplace, they make their customers aware, their kit customers aware that iDigi device capability is available. And we're in the process of -- over the next 2 months, we'll be kicking off much more aggressive co-marketing campaign to drive that. So I'd say Intel right now has a tremendous momentum and Freescale has good momentum with -- expecting to pick that up over the next 2 months with more significant co-marketing campaigns.

Okay. And then -- and just taking a look at the guidance that was provided. On -- for the first fiscal quarter, on organic base, because it looks like we're guiding to roughly flat year-over-year versus a very easy comparison, and you mentioned that bookings had improved in the last quarter. If you can just give us on view of why we're looking for business to be flat against maybe in comparison when bookings were picking up.

Yes. So I think it's a couple of things. First of all, we always see, because of the holidays, we always tend to see the -- and so we did $47 2 million, we tend to see a little bit of a seasonality impact sequentially, so that's very normal. And certainly, the current economic environment doesn't really help that, I'd say it's -- we expect it to stay consistent so we don't see any help from them and the European softness doesn't help that. The good news is as we look at the bookings and backlog trend that the real strong bookings improvement that we saw in fiscal Q4, this last quarter, is boosting our backlog for second fiscal quarter and beyond. So we're seeing that momentum tracking at an improved rate versus prior year as a result of the pretty significant boost in bookings that we saw in fiscal Q4. So we saw a big bump up in fiscal Q4 that has us very optimistic about the ramp expectation for the year.

[Operator Instructions] And there are no further questions. I would now like to turn that call back over to Joe Dunsmore for conclusion remarks.

Yes. I just like to say the -- reemphasize once again that I am as -- more enthusiastic about this acquisition of Etherios as any that we've done. I think it's a great fit for our strategy and really excited about plugging into the salesforce.com ecosystem and working with a great team at Etherios, great team of people based in Chicago and Dallas. And I look forward to talking to everybody again in 3 months. Thank you.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.