Good afternoon. Welcome toGenesis Microchip's Second Quarter Earnings Call. Today's call is beingrecorded and is copyrighted property of Genesis Microchip. Any rebroadcast ofthis information in whole or in part without the prior written permission ofGenesis Microchip is prohibited. We will be conducting a question-and-answersession at the end of today's Company's prepared remarks. At this time I would like to turnthe call over to Pam Goncalves, Senior Director of Investor and CorporateCommunications. Please, go ahead, ma'am.

Good afternoon, everyone andthank you for joining us. With me today are Elias Antoun, President and CEO,Hildy Shandell, Senior Vice President of Corporate Development, and LindaMillage, Principal Accounting Officer. Today's discussion containsforward-looking statements, including, without limitations, forward-lookingstatements regarding the company's revenues, gross margins, operating expenses,ASPs, unit shipments, inventory levels, new products and design wins,production schedule, profitability, market share and new market. Theforward-looking statements are subject to risks and uncertainties that couldcause actual results to differ materially from those projected. Those risks anduncertainties include, our ability to gain and maintain design wins, and rampnew products into volume production on schedule, changes in expected productcost and manufacturing yields, changes in our expected operating expenses,seasonal consumer demand for flat-panel TV and Monitor products into which ourproducts are incorporated, growth rates of the TV market and the market forDisplayPort products, our customers share those markets, and successive ourcustomers products into which we’re designed. Changes in the mix and pricing ofour products sold, and our inventory levels and customers inventory levels ofour products. Other risk factors are listed intoday's press release and the company's SEC reports, including but not limitedto the company's annual report on Form 10-KA for the fiscal year ended March31st, 2007, and the 10-Q for the quarter ended June 30th, 2007. Theforward-looking statements made today are the company's targets and notpredictions of actual performance. In the past the company's performance has deviatedfrom its target as of the beginning of a quarter. Participants are cautioned not toplace undue reliance on these forward-looking statements which speak only as oftoday's date. The company does not undertake to publicly update or revise theseforward-looking statements even if experience or future changes make it clearthat any projected results expressed or implied in this discussion will not berealized. Any statements made by persons outside the company speculating on theprogress of the quarter or other aspects of the company's business will not bebased on internal company information and should be assessed accordingly byinvestors. During the call the company willrefer to both GAAP and non-GAAP financial information. A reconciliation of GAAPand non-GAAP results in accordance with the SEC's Regulation G is included intoday's press release which has been posted on the company's website. Please note that an archivedversion of the broadcast will be available on the company‘s website at www.GNSS.comin the investor events and webcast section shortly after the conclusion of thecall. Additionally a replay of this conference call will be available through November 8th, 2007 bydialing 706-645-9291. The replay access code is 20136617. And now I'd like to turn the callover to Elias.

Thank you, Pam. Good afternooneveryone and thank you for joining us today. I will first discuss the financialresults of the quarter, and then I will provide an update on our overallbusiness, followed by our guidance for our third quarter of fiscal 2008. Revenues for the second quarterwere $57.5 million, representing an increase of 31% from the prior quarter andexceeding the far end of our guidance. Non-GAAP gross margins were 33.5%, adecrease from the previous quarter, which is largely attributable to write-offof mask sets which I will discuss in a moment. Non- GAAP operating expenses werein line with our guidance at $25.2 million, and we recorded a non-GAAP loss of$0.12 per share. Revenues from our TV controllerbusiness were $35.1 million, an increase of 55% from the prior quarter. Our TVcontroller business represented 61% of total revenues in the quarter. Shipmentsof flat panel TV controllers were 3.9 million units, an increase of 45% from theprior quarter. The increase in unit shipments was in line with expectations forstrong seasonal demand across most of our geographic markets. Our Torino solution ramps up atall four of our Tier-1 OEMs and at our lead customer in China. We also experiencedparticularly strong shipment for Cortez Plus and Cortez Lite. ASPs in our TVcontroller business increased 9% primarily attributable to a more favorableproduct mix. Revenues from our monitorcontroller business were $22.4 million and increase of 5% from the priorquarter. Unit shipments of monitor controllers were 10.9 million units, whichrepresented an increase of 10% from the prior quarter. LCD monitor controllerASPs decreased by 5% in this quarter, attributable to a lower price productmix. GAAP gross margins were 33.1% inthe September quarter, down from 38.5% for the June quarter. Non-GAAP grossmargins, which exclude stock based compensation charges were 33.5% down from38.9% in the last quarter. During the September quarter weassessed…

(Operator Instructions) And yourfirst question comes from the line of Jay Srivatsa with Roth Capital Partners.

Thanks for taking my questions.Just a couple of questions. Elias, you look ahead beyond December quarter, whatkind of run rate do you think you need hit to breakeven?

Jay, well first good afternoon,our goal is still to try to get to breakeven at the $65 million revenue runrate and we’re going to be a little bit behind in the December and the Marchquarter. But our goal is to try to get the $65 million revenue and breakeven atthat level.

Okay, second thing has to do withthe end markets, one of your competitors made a comment that there seems to bea shift in TV sales to kind of the mid to low end as supposed to the high endof the TV market. What are you hearing from your customers in terms of thattrend?

Jay, what I don’t want to do ischaracterize the shift to low end versus high end. What we’re seeing--first we sawa bifurcation between WXGA and 1080p, probably 10 months ago, and in theprocess of upgrading Chaplin to Douglas we tried to take care of that, and wethink that's part of the reason we're seeing increased opportunities for Douglas. Having said that, we are sensingvery possibly that the Tier-1 OEMs which, for all intents and purposes, are thekey focus. The Tier-1 OEM have learned from one design cycle that they cannotcompete purely on pricing and cost and they are cycling back to focusing onvideo quality and audio quality, and to the extent that we can bring that tothem across there portfolio meaning WXGA and 1080p up and down we believe thatactually the markets from a Tier-1 perspective its shifting in that direction.

Okay. Last question. In terms ofyour hiring, where are you in terms of filling some of the positions that havebeen opened up due to the departures are you done or do you foresee yourselfhiring a few more key hires, where you added that?

So with the addition of Robertand Rick we have pretty much closed the requirements that we have at theexecutive ranks. We have a very solid and I am very happy to say low turnoverrate in the ranks just below the executive staff. Other than that we don’treally have issues. We have normal turnovers, but in general we are doing verywell and whenever we need to replace we are replacing, but with the addition ofRobert and Rick, I think we are doing pretty well.

Thanks, Elias. Good luck.

Thanks, Jay.

Your next question will come fromthe line of Heidi Poon with Thomas Weisel Partners

Hi guys. I just would like to geta little more color on the display port ramp. You mentioned that you will startshipping in the December quarter. When do you expect to ramp with othercustomers assuming that you have wins with other major tier OEMs.

Hi, Heidi. So our firstcustomers, first product will ramp in the later part of this quarter. Marchquarter will be probably our second customer and then we expect to see multipleplatforms with more customers starting to ramp in the second half calendar '08,basically in the July timeframe. We are also seeing an expansion in platformswith the customers that we already have on Board.

What is the expected margin andASP impact as you have more and more DisplayPort product for shipping?

We expect DisplayPort in generalto help margins to I guess create a positive impact on margins. But we expectthat to happen primarily in the second half of next year as the volume start tobe meaningful.

So, does that mean going back upto may be above 40 and low 40s range next year?

I am not able to answer that muchforward into the future Heidi but, again our expectations are to start creepingup and DisplayPort will be a contributor to that.

When you are looking at secondhalf '08 shipments these are wins that you already have, right?

So, on the upper right handcorner platforms, the platforms that are kind of on the higher end, these aredesign wins that we either already have or are pretty much coming in fairlyquickly as we speak. But we also expect to start ramping some volume with whatwe call the direct drive monitor, the entry level monitors. Those are designwins that we expect to close on in the beginning of calendar '08 and those tendto turn into production in the shorter cycle than the MFMs. So, you will see a variety ofplatforms ramping into production in the second half of '08, some of which wehave the design wins today, some of which the design wins will be probablyclosed in January, February, and March.

Great. And also I would like toknow in term of your TV controllers are you pricing fairly aggressively toachieve the design wins that you've been able to achieve in WXGA or what do youexpect to do in the next few quarters, such that our gross margin will not beimpacted further?

Well, pricing to market Heidi.So, we’re clearly not -- what I believe, we’re clearly not more aggressive thanwhat the market is out there. The two quarter ahead that we’re talking about onthe gross margins right now are quite associated with some additional cost wereincurring in order to make sure we support our customers time to market, andthat’s kind of the best I can say right now. I think as we ramp up more andmore DTV platforms in the second half of the year, our ASPs should improve,gross margin we should start seeing a recovery. But it is really hard toforecast that far into the future. But again I would reiterate, we’re pricingto market.

Okay great and follow on may bejust on OpEx so should we expect the OpEx to go back to maybe $24 million to$25 million non-GAAP level after these two quarters. But do the additionalexpenditures for supporting this customer’s ramp?

The best guidance I can give youin OpEx right now is what we have in the December quarter.

Okay, great. Thank you.

Thank you

Your next question will come fromthe line of Daniel Gelbtuch with CIBC.

Just wanted to get someinformations and color about your TV roadmap, I guess with Douglasand beyond. Is there any plans to demand and number two, does integration of HDMIwould be and there is new products like HR264 et cetera is that in your roadmap right now?

Yes, Daniel. Let me answer itsystematically. So, we already have launched the development of our nextgeneration single chip HDTV solution. And it is targeted again to be asflexible as possible for our customers design capabilities, I can say thatwe’ll be integrating HD H.264 we’re considering demand integration that’s notyet final it's still early for us, we still have some time to make that decision.And also I would like to circle back and say that we already have a HDMI1.3integrated in our Sequoia and Douglassolution. So, for us that would be just the second generation of HDMI1.3.

Okay. And as far as you mentionedthat you already have two Tier-1 OEMs and then you are about to add two others,when you say two others you’re adding does that include ODM based wins or isthat direct OEM?

Two others we are talking aboutour direct OEM additions.

Thank you.

Thank you.

Your next question will come fromthe line of Mahesh Sanganeria with RBC Capital Markets.

Thank you. Elias, just tocontinue on that, can you give a little bit more color on your Douglas, did yousay that you have four design wins at four Tier-1 customers?

No, let me reiterate, Mahesh. Wehave two design wins at Tier-1 customers. We have one more design win, so wehave two design wins at Tier-1 customers that will ramp in to production in theshort-term. We have a new design win a third one at a Tier-1 customer and thenwe expect to close on a fourth design win at a Tier-1 customer, directengagements in the near future. And then we have migrated three design wins in China from Chaplin to Douglas.

So, total Douglasyou have potential going into '08 may be at least seven or eight customersramping?

May be, up to seven at the...

Okay, right. So and these are canyou give us an idea of four Tier-1, is that all targeted to Europemarket or they are going in multiple markets. I think you made some comment canyou go over that one?

Yes, our first two Tier-1 OEM'sare targeted for the European market. The next two Tier-1 OEM's the one thatwe've already locked up if targeted for the U.S. ATSC market and then thefourth one which is again stealing discussion. Hopefully, we can close on thatin the near future. From what we can tell right now is targeted for the U.S.ATSC market.

So, that is a part, which is veryinteresting because I think last discussions. We have had or you have talkedabout, you had kind of given up on U.S. market completely saying that it's amarket for low video quality, high screen size but low cost. But is there achange in the sentiment from TV OEM's that TV quality is becoming moreimportant in U.S.?

Yeah, so that’s what I tried toallude to in the script that we’re sensing from the Tier-1's that theiropportunity to differentiate really lies with video quality and audio qualityand display technology. And we’re sensing that the Tier-1's are coming backacross the board and want to put solutions that are competitive from a bondperspective, but deliver quality above all. So in the last I would say six toeight weeks we have experienced interest in Douglasfor the U.S. ATSC market that we did not anticipate 10 to the 14 weeks ago.

Okay that makes a very clearthat’s very interesting. And can you give us which region this OEMs are Japan or Korea or…

It's really difficult for me toanswer this question right now Mahesh, until we feel a lot more comfortableabout how close we're to closing the deals.

Okay and then other thing youmade comment on that your inventories are going to go up in December quarter tosupport the ramp of at least some of these products. Can you elaborate a littlebit on that?

Yes again inventories will go upalthough we don’t except inventories in terms of numbers of week of inventorythat will go up dramatically. We’re moving into high value products if you willwe’re moving into 300 millimeters wafers, 110 nanometers that will be ramping Douglas and Sequoia. So the value of these things will behigher because we’re prepping for ramps up for Douglasand Sequoia and so you will see some inventory ramp by the end of the Decemberquarter.

Does this Douglasramp does that alter your seasonality a little bit for the first half of '08?

Yes. So the simple answer is yes.What we are hoping is that the drop of from December quarter to March quarterwill be slightly modulated mitigated. At this moment in time we don’texpect--we don’t know enough yet -- but we don’t expect that there will be asurge in revenue from December to March, but we expect that there will somemodulation due to the ramp up of Douglas and Sequoia.

Ok, thank you very much, that’svery helpful.

Thanks Mahesh.

Your next question will come fromthe line of Quinn Bolton with Needham.

Hi Elias, I apologize because Imissed the first part of the call, but was wondering if you could just, you'dmentioned in prepared comments just before wrapping up that you guys haveprepared the Douglas DisplayPort WXGA and 1080p just kind of wondering if youcould expand on that point. Obviously you got different price points I thinkgoing into those two TV segments?

That’s correct. So thecapabilities of Douglas, Quinn are a super set. Basically the capabilities Douglas can deliver 1080p at a very, very competitivebond cost to the OEM's. As such the 1080p capabilities are super set of WXGA.We are at a slight bond disadvantage for a WXGA platform. However because of theimage quality and the enhancements we have made to Douglasin that area and the audio capabilities that it brings, because customers cansave on the audio functionality. We are seeing that customers are willing toundertake the slight bond disadvantage that's related to Douglasin return for enhanced image quality, enhanced audio quality, and a commonplatform.

So, you have Douglas and bothWXGA and 1080p sets you have a common platform and in the WXGA you might have aslight bond disadvantage, what do you think the OEMs will pay because of thesuperior video quality?

That's right. And then also weare pricing then to Douglas obviously wellslightly differently. We tend to take a little less for WXGA and little morefor 1080p and we try to balance it out.

Okay, great. And then you madesome comments about the DisplayPort, any sense you might give us where youthink it could be in terms of percent of monitor revenues by the end of 2008,is that 10% to 20% I don’t know if you --?

(inaudible) in monitor revenues.

Yeah.

It's really difficult to answerat this point Quinn, but let me just say it will be a substantial proportion ofour monitor revenues. I am not able to quantify that accurately right now.

So, substantial greater than 10%but little less than 50 or substantial meaning like the majority?

Don't corner me, but I will saygreater than 10%.

Okay, great. And then just lastlysounds like you've got with the ramp up of new products, you talked about thegross margin sort of trending little bit lower than you would like here in thenext couple of quarters but sounds like the DisplayPort ramping that shouldstart to drive margins higher, the monitor business as you come into the secondhalf, and I imagine if you get Douglas ramped to higher volume do you thinkthat also perhaps bring some margin recovery is that a good way to look at itbeyond the March quarter?

And the ramp of 1080p platformswith Sequoia, and so on. Yes.

Okay, great. Thank you.

Thank you.

Your next question will come fromthe line of Steve Park with Wedbush.

Hi. Just have a quick questionregarding the gross margins, I know it’s right now right around kind of the 35%or is this something that cam get to 37% or 38% in the next quarters or so oris that more than it be by around 35-36%.

I will not categorically say yes,Steve. But our goal is to achieve breakeven at $65 million in revenue whichtranslates to 37% to 38% gross margin, of course, we would like to get betterthan that but our goal is to get there beyond the March quarter.

Okay. Guarding kind of therevenue goal there is that something that you guys can hit over the next fiscalyear there or is that something out possibly?

I am not able to answer that atthis point.

Just one last question, withDisplayPort ramping. Do you think there is going to be some OpEx increase afterDecember with the DisplayPort there by an when did you--?

The best guidance again I cangive is our December quarter OpEx that we have today, we continue to manageOpEx very closely, though we also need to make sure we invest in ensuring thatour customer succeeds, so that ultimately we succeed also.

Okay. Great, thank you.

Thank you.

Your next question will come fromthe Tayyib Shah, with Longbow Research.

Hi guys.

Hi Tayyib

I would like to get some morecolor on the Douglas design win activity for2008 production. The traction with three Tier-1 customers, how many of thoseare top four TV OEM's globally?

Yeah. Definitely, Tier-1's andthey are in the top six or seven.

Okay. So, is there any one ofthem who is in the top four?

Absolutely.

Okay. And then most of thedesigns that you won are they mostly below 40 inch designs or are they abovethat range?

Our engagements with our top twoOEMs Tayyib are multi-platform engagements, which is why we support them acrossthe Board WXGA up to 1080p and our typical direct Tier-1 OEM engagementinvolves 32-inches all the way up to whatever size they want.

Okay. And how fragmented is themarket for Douglas right now at the top OEM?Do you expect most of them to use multiple DTV chip vendors next year? Andthen, aggressive price competition between those competitors or is it going tobe just one dominant supplier for each top OEM?

That strategy variescustomer-to-customer. We engage with customer that want to select one strategicpartner and do all their work with them and that’s actually, a significant partof our business, and then we deal with customers who want to put two or threesuppliers up against each other and then see who comes out and typically we trynot to engage at that level.

Okay

But it varies, that strategyvaries customer-to-customer.

And finally, if you do a get thefour top tier design wins that you’re targeting, any thoughts on where yourshare of the DTV market can be next year?

I cannot answer that questiondirectly, it will still be relatively small, first of all it will be increasingdramatically, but hopefully by calendar '09 we will be one of the top three orfour suppliers in the DTV market, that our goal is to be one of the top threeor four suppliers in that market.

Okay, so basically we have torely on the next years design cycle to get more share in that phase?

That's correct.

Okay thank you

Then I would like to emphasizethat ramping up our customers with Douglas at this time of the year positions Douglas quite well for next years design cycle.

Thank you

Thank you

Your next question will come fromthe line Adam Benjamin with Jefferies

Thanks guys, first just to drilldown a little bit more Ely, on these wins that you have with Douglas.Are those wins with existing TV customers that you are shipping to today or arethey new customers?

Two wins are with existingcustomers, which we talked about last earning call. One win, is with a customerthat we have done some TV business with but we have never done DTV businesswith and then the last one would be with a totally new customer. That one isnot closed yet.

Okay.

We still have work to do.

Thanks. With respect to Chaplin,can you just go through what was the change there in terms of moving to Douglasfrom Chaplin and why it appears that some of your customers weren't takingChaplin and now they are moving more aggressively or you are moving them towardDouglas?

Just to put things in context, Douglas sampled in August and we had already committed itto two customers. At that point in time, we felt that's about the limit of ourbandwidth to support early access Tier-1 OEM's. In the meantime, we hadgarnered some Chaplin design wins that required a different kind of support.But as our progress with Douglas really accelerated -- this is again we'retalking about less than three months, the quality of Douglas, the execution onDouglas, and ramping up our capabilities there started to out pace Chaplin, andthe increasing opportunities for Douglas we had to face a decision of do youwant to support two products or are we better off supporting one product andbiting the bullet on the other one and that’s a decision we made.

Okay and just a follow upquestion. Ely, you used some terminology regarding the March quarter modulationand I wasn't quite sure what you meant. Were you talking about more moderateseasonal decline in the March quarter than in past, is that what you werereferring to?

That's right.

Okay and was that for the totalbusiness or was that just referring to specifically the TV business?

Well it's for the total businessAdam, but the TV business is the one that causes the biggest impact, becausethe September quarter is heavily dominated by Christmas shipments. The Decemberquarter has still some impact before the Christmas shipments and then someimpact for Chinabecause typically the New Year is in February. But by the March quarter all ofthat is gone and seasonal it's quite down from that perspective. Now themodulation comes from the fact that we'll be ramping up DTV platforms thatuntil now the company has not had, so that would help a little bit.

Okay so in March, just to definemodulation you’ve historically last couple of years has been down about 25%,some seasonality for consumers down 10%. Is it somewhere in the middle there orclose to towards the 10?

I am not able to give youguidance that forward in the future, Adam at this point to that specificity.

Okay. But I am in right ballpart?

Still to not answer that, I thinkyou are thinking correctly, but I cannot answer that to that specificity.

All right. And then just one lastquestion, you talked about the break even point is 65 million, 37% to 38% grossmargin, in terms of timing there, is that something that you are not willingcommit on but is that something that your goal is to achieve in calendar year'08?

Our goal is to achieve this asquickly as possible that’s the best I can say, right now.

Good answer, Elias

Thanks.

Thanks. That’s all I have.

(Operator Instructions). We havea follow-up question from the line Mahesh Sanganeria with RBC Capital Markets

Elias, just some moreclarification on that modulation term. If I look at historically from yourperspective, I can come up with any consistent answer but I would say 10% downis a more seasonal I would think the average seasonal 10% down is that correct?

Mahesh, it's actually my inpre-March quarters here, I have seen it vary. So, it's very hard for me answerthat question.

Okay.

This is quite different in thethree data points that I have.

Well, but the last time was thisMarch was unusual because you were ramping down Philips is that fair to say?

Certainly Philips had an impacton module 7 results, yes.

Okay. All right. I will give up.

Thanks Mahesh. What I've justlearned is I should never use the world modulation again.

(Operator Instructions). And atthis time there are no further questions, I will turn the call back over to Ms.Goncalves for closing comments.

Thanks again for joining ustoday. Please note that in November Genesis will be participating in road showswith RBC in New York and Longbow in San Francisco and Southern California. At CES 2008 in Las Vegas, we will be hosting an investorevent on January 8th, as well as participating in Visa's DisplayPort pavilionevent from January 7th through January 10th. As a reminder, a replay of theconference call will be available through November 8th. In addition, a copy oftoday's earnings release is available on the Company's website at www.gnss.com.This concludes today's conference call. Thank you.

Thank you. Ladies and gentlemanthis does conclude the Genesis Microchip's second quarter earnings conferencecall. You may now disconnect.