Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Immersion Corporation Fourth Quarter Fiscal Year 2011 Earnings Conference Call. (Operator Instructions). This conference is being recorded today, Thursday, March 1, 2012. I would now like to turn the conference over to Ms. Jennifer Jarman of the Blue Shirt Group. Please go ahead, ma’am.

Thank you, Camille. Good afternoon and thank you for joining us today on Immersion’s Fourth Quarter and Fiscal 2011 Conference Call. This call is also being broadcast live over the Web and can be accessed from the Investor Relations section of the company’s website at www.immersion.com. With me on today’s call is Vic Viegas, President and CEO. During this call we may make forward-looking statements which may include projected financial results or operating metric, business strategies, anticipated future products, anticipated market demand or opportunities and other forward-looking topics. These statements are subject to risks, uncertainties and assumptions. Accordingly, actual results could differ materially. For a listing of the risks that could cause this, please see our latest Form 10-Q filed with the SEC as well as the factors identified in today’s press release. Additionally, please note that during this call we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial measure is available in the company’s press release issued today after market closed. With that said, I’ll turn the call over to Chief Executive Officer, Vic Viegas. Vic?

Thank you Jennifer and thank you everyone for joining us this afternoon. 2011 was a productive year for Immersion. While total revenues of $30.6 million was slightly down from 2010, royalty and licensing revenues were up 16% from the prior year and represented 88% of our business, reflecting the successful transition to a scalable licensing model. We kicked off the year by launching our integrator product, which created an automated way for OEMs to deeply integrate haptic effects into their Android UI and then quickly followed with the launch of an easy to use SDK for third-party developers to encourage the adoption of haptic effects into the design of mobile applications. Even more impressively, we saw these products adopted in the market very quickly, confirming that our haptic solutions helped solve real world, user interface problems. During the year haptics enjoyed widespread adoption in the mobile market, with operating systems such as the Android OS adopting haptics as a critical user interface element for todays touch screen-driven devices. As the same time we enjoyed a broadening of our patent portfolio which represents years of Immersion investment and innovation in haptic space. As you may know, we recently initiated a complaint with the ITC against Motorola Mobility to protect several of our patents covering various uses of haptic effects in touch screens. Outside of the mobile market, we continue to see strength for haptics in the Gaming segment and also experienced more engagement with partners and manufacturers in the automotive markets. I will discuss our recent business developments in just a few minutes, but first I’d like to highlight our financial results for the fourth quarter and fiscal 2011. Revenues in the fourth quarter of 2011 were $7.7 million, up 20% from revenues of $6.4 million in the fourth quarter of…

(Operator Instructions). Our first question is from the line of Charlie Anderson with Dougherty and Company. Please go ahead.

So, wanted to just focus in on the growth of the business and royalties in 2012. I think it was interesting how in 2011 Gaming kind of grew almost as fast as Mobility. So, I wonder if you could maybe give us some color around each of the segments, how you expect them to grow relative to the total company growth?

Yes, I’d be happy to, Charlie, and I’m also happy to know that you were at the Mobile World Congress and I’m sure you saw a lot of exciting things. As we look forward, we expect our Mobility to continue to grow and benefit from existing customers launching of new products and continued growth in the marketplace. We expect to see higher ASPs as a result of migration from the existing TouchSense 3000 solution to our high definition solutions, TS5000. So, we continue to see substantial growth opportunities in near term and long term for Mobility. Gaming, as you mentioned, has also had quite a bit of strength and continues to grow at a rapid pace. We hope to continue that as our licensees, existing and new licensees launch new products. Clearly haptics is a key differentiator in the gaming space and are enthusiastically looking forward to new product launches. Automotive also looks to be a substantial growth driver as our tier supply partners are launching new solutions and new OEMs are integrating haptics into their vehicles, such as the Cadillac CUE System. Medical is currently projected to be relatively flat with modest growth, but overall the combination of numerous verticals with good growth opportunities balanced with Medical, we expect to see decent growth in 2012.

Got it. And then in terms of the buyback, you guys continue to expect to be buying at the rate you were in Q4 potentially, given the litigation element now and you had that cost at hand. How are you sort of balancing the two?

I would expect us to be less aggressive in terms of the stock buyback. We currently have some amounts of monies in a 10(d)(5) plan, which depending on pricing could be triggered, but the amount that we would be repurchasing going forward until there is more visibility on the litigation side, I think we will be preserving cash and not aggressively pursuing buybacks.

Got it. And then just lastly for me, I think maybe in the next week or two you’ll have the opportunity to add additional defendants to your ITC case. Are you expecting any activity between now and then either on the adding people or potentially people wanting to say they hit that milestone?

Yes, the ITC case or the ITC process does allow for the addition of additional defendants. I’m not at liberty to state whether we will or will not add new defendants. That is not the only vehicle for us to add defendants. Over time we have other vehicles, other ways to approach people if they continue to infringe on our IP. So we’ll take advantage of whatever vehicle is available to us.

Thank you and our next question is form Jeff Schreiner with Capstone Investments. Please go ahead.

You listed some interesting content providers in terms of integrating haptics into their provided, into their recent releases. Are these content providers paying some type of license or royalties to Immersion at this time? And how is that type of business going to evolve over the next 12 to 24 months in terms of how much of the revenue is coming from maybe content providers versus maybe the handset provider?

Sure. The content providers are excited by the way haptics infuses life to their products. In Mobile World Congress I think the feedback I’m getting is the booth is swamped by lots of people but primarily developers looking to develop relationships, get access to our SDK and learn how to add haptics to their content. So we’re very excited about the opportunity there. We have waived all royalty fees through 2012 for content developers who are using our SDK. We do benefit from a number of marketing relationships and promotional activities. So we think that it’s a great relationship. But currently in order to really gain traction we have waived the fees through the end of 2012. All of the revenue from Mobility will be coming from the licensing of our TouchSense software, primarily through OEMs.

And then I was just also wondering in terms of what’s the expectation in fiscal 2012 in terms of the contribution from higher-fidelity or HD haptic solutions? And you’ve talked in the past about those providing potentially a higher contribution for Immersion. Is that still the case, if you can give us any color on that as these move into the design to begin shipping in 2012?

So I would say that the design opportunities, the engagements that we have more today than ever before with our high definition solution. Our current OEMs and our prospects appreciate the benefit and the fidelity of our high definition solution. In terms of what happens in 2012, I think given the number of design win opportunities we’re pretty confident you'll see multiple smartphones and tablets launched during the year. Depending on timing, depending on volume, I’m not sure that it will translate into a substantial change in our ASPs for mobility. But it will provide some level of benefit. I think the visibility and the experience in the marketplace will be great incentive for others to catch on and to accelerate their own design activities with Immersion.

Okay. Just two more quick ones for me and I’ll step back. You talked about automotive and it seems like you’ve also stepped up to highlight that in questions about future growth areas and certainly it was one thing a great growth opportunity for Immersion and it seems like it could certainly be another growth opportunity in the future. I guess relative to what revenues are now, I think single digits in fiscal '11 for automotive. What’s the opportunity here for five years from now for the automotive aspects or for haptics could really generate there?

Well, we’re very excited about the automotive space and have for some time. I think the only lull that we experienced was the 2008/2009 timetable where the world economy was in dire straights and the automotive industry in particular was reducing their investment in new and innovative solutions. But as these car companies add new capability and more complex interfaces, haptics adds that extra intuitive aspect that provides more confidence and the ability to manage multiple sources of information while keeping your attention on the road. So the benefits I think are pretty clear. The advantage we’re starting to benefit from right now are support from the Cadillac program, and other high profile projects, so within the supply community they’re getting more request for proposal, more design opportunities and as a result we see great things. Whether it’s rotary knobs on a center con, on the arm rest or a full touch panel replacing the center stack of buttons and knobs or thumb wheels on a steering wheel, all those present a great revenue opportunity for us over the next three to five years and based on the design wins that we believe are pending we expect that to benefit our revenue in 2012 as well.

Okay. And final one for me just in terms of the seasonal kind of lift you’ve seen in March the last two years, how pronounced and directionally can you help us maybe relative to the last two years should we be expecting maybe the March quarter to look like?

Well, we currently are aware of a fair portion of our Q1 revenue. Many of the reports are in. We’re feeling as we have in the past; we’re seeing relatively strong first quarter revenue. Again, it may be the best quarter of the year, it could be arguably close to what we hope to have in Q4 but we do see it as a seasonally strong quarter as we have in the past.

Thank you. And our next question is from the line of Darice Liu with Brigantine Advisors. Please go ahead.

Good afternoon, Vic. Just to follow up on the prior question regarding seasonality. Q1 has historically been the strongest quarter and then Q2 and Q3 we see some dips and then Q4 you see a bit of a return. Should we be modeling that going forward?

For the foreseeable future I would say yes, we still see strong Q1, strong Q4. We see some softness in Q2 and Q3 not because the business is changing it’s just the nature of the timing of product launches and the seasonality selling of the holiday fourth quarter selling season.

Okay. But despite that seasonality should we be modeling the OpEx increasing on a quarterly basis because of your defense strategy?

The activity that the ITC are relatively straight lined if you will there’s obviously preparation efforts, there’s discovery, there are various activities that will go on. I believe that it should be relatively consistent throughout the year and not experience a lot of seasonality.

Okay. And then to a prior point you made regarding the products developed with SDK their weighting the royalty fees until the end of this year. I was wondering what the structure of those agreements are in terms of when January 1, 2013 rolls around even if products were developed pre-2013 on SDK will you be receiving royalty payments for those products or is it just for products developed starting January 1, 2013?

It’s the latter. Its products that launch in 2013. We may begin charging the normal royalties that we have currently in the shrink-wrap license agreement.

Okay. And then in terms of piezo, the Pantech Element was launched. Can you talk about other design activity for the piezo?

Sure. There’s quite a bit of activity in the tablet and so we would clearly expect to see a number of new tablets and new OEMs launching tablet products with our piezo-based solution. We are working closely with our Ecosystem partners on reducing the size and the cost of the piezo module and we think we’re getting very close to the point where smartphone OEMs are beginning their design efforts and we’d like to think that we’ll have some OEMs shipping smartphones with our high definition solution as well.

Okay. Just to clarify; is the Pantech the only tablet with piezo? Or are some of the tablet products you mentioned earlier also using piezo, Toshiba or Samsung?

No, today Pantech Element tablet is the only tablet with the Immersion high-definition solution.

Thank you. And our next question is from the line of Matt Vandixon (ph) with Craig Hallum Capital Group. Please go ahead.

Just wondered if you get deeper on the process on that Motorola Mobility suite, do you plan on doing the legal aspect to that on contingency? Or is that something you’d bear the cost of?

We bear the cost on the action.

Okay. And then just can you give us an update on the Haptify business? Are you seeing any success in your games there? Do you have any plans on launching new apps?

On Haptify?

Yes.

Yeah, Haptify is still very active. We are using that group to continue to support and develop their own content as well as the content from third parties. .What we have benefited from is rapid interest and adoption from third party content developers. So many of our technical support people are supporting third party activities and Haptify has become, I’d say, a little less of a focus because the market itself is growing rapidly for us.

Thank you. (Operator Instructions) Our next question is from the line of Larry Solomon with Capital Research. Please go ahead

Yes, Vic, you said that the litigation expense would be $2 to $2.5 million a quarter and that the process would go on for 16 to 18 months, which implies somewhere between $10 and $15 million of expense. And I’m just wondering whether you’ll be able to recover that, given the royalty rates for your products. And if you’re successful, will that be reimbursed in addition to the royalty? And would you expect punitive damage? And then also, are there other major handset and cabinet vendors that have similar infringement to Motorola that by winning this case you would automatically have a strong case to proceed with against the others?

So the last part of your question, clearly there are other companies that we believe are infringing and based on our strategy we may add other defendants to the current case. Or may add them in other types of actions. So yes, we believe there are other infringers beyond just Motorola. In terms of damages, the ITC case, ITC venue is really primarily focused on determining infringement. And if it’s determined there is infringement then they would typically grant an injunction and would prohibit the importation or sale of infringing products. The separate case that we filed in Delaware would typically be focused on damages, and having the damages as well as potentially punitive damages for the willful infringement of our IP. So that would be the vehicle to collect on our damages.

Thanks, Larry.

Thank you. And there are no further questions at this time. I would now like to turn the call back over to Mr. Viegas for closing remarks.

Okay. Well thank you, everybody for being on the call with us today. We look very much forward to updating you as our business progresses. And we’ll speak with you on our next quarterly call. Thank you.

Ladies and gentlemen, this concludes the Immersion Corporation Fourth Quarter Fiscal Year 2011 Earnings Conference Call. Thank you for your participation. You may now disconnect.