Good afternoon and welcome to the Pixelworks Incorporated Fourth Quarter and Full-Year 2012 Financial Results Conference Call. At this time, all participants are in listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. (Operator Instructions) As a reminder, this conference call is being recorded today, Thursday, January 31, 2013. I would now like to turn the conference over to Mr. Steve Moore. Please proceed.

Good afternoon and thank you for joining us. This is Steve Moore, Chief Financial Officer of Pixelworks. With me today is Bruce Walicek, President and CEO. The purpose of today’s conference call is to supplement the information provided in our press release issued earlier today announcing the company’s financial results for the fourth quarter ended December 31, 2012. Before we begin, I would like to remind you that various remarks we make on this call, including those about our projected future financial results, economic and market trends and our competitive position constitute forward-looking statements. These forward-looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties that may cause actual results to differ materially. All forward-looking statements are based on the company's beliefs as of today, Thursday, January 31, 2013, and we undertake no obligation to update any such statements to reflect events or circumstances occurring after today. Please refer to today’s press release, our Annual Report on Form 10-K for the year ended December 31, 2011 and subsequent SEC filings for a description of factors that could cause forward-looking statements to differ materially from actual results. Additionally, the company's press release and management’s statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms, including gross margin, operating expenses, net income loss, net income loss per share. These non-GAAP measures exclude stock-based compensation expense, gain on sale of patents, gain on sale of marketable securities and additional amortization of prepaid royalty. We use these non-GAAP measures internally to assess our operating performance. The company believes these non-GAAP measures provide a meaningful perspective on our core operating results and underlying cash flow dynamics, but we caution investors to consider these measures in addition to, not as a substitute for, nor superior to, the company's consolidated financial results as presented in accordance with GAAP. Included in the Company's press release are definitions and reconciliations of GAAP to non-GAAP net income loss and GAAP net loss to adjusted EBITDA, which provide additional details. Bruce will begin today’s call with a strategic update on the business, after which I will review Q4 financial results and discuss our outlook for the first quarter of 2013.

Thanks Steve. Good afternoon everyone and thank you for taking the time to join us today. 2012 was a year of solid progress for Pixelworks despite the headwinds of a difficult macro environment and a contracting semiconductor industry. Overall revenues for 2012 came in at $60 million, down 8% versus 2011 driven by a difficult global consumer and education spending environment. Despite these headwinds, 2012 was a significant year for demonstrating the value of Pixelworks’ technology and capability as we closed 12 million of licensing and co-development deals. In first half of 2012, we closed a significant licensing and partnership for our advanced video display technology, which combined with our penetration of the top tier customer base, validates Pixelworks’ leading position in providing innovative solutions in video processing. Also in 2012, we achieved another key milestone as we engaged in a significant customer funded co-development project to develop a highly integrated next-generation chip that will result in significant revenue and market share gain in 2014 and beyond. In both of these engagements, Pixelworks was selected because of our industry leading video processing technology and product execution capability. In our PA series product line for large screen display applications, during 2012 we shipped volume production of our PA136 to Tier-1 customers and captured the first wave of 4Kx2K resolution Ultra High Definition design wins to Tier-1 customers. In the second half of the year, the first 84 inch 4Kx2K Ultra Definition display from industry leader LG Electronics was introduced to the market with Pixelworks’ leading video processing technology based on the PA138. In Q4 2012, we introduced the PA168 which is started for Ultra HD 4Kx2K applications such as TVs panels, monitors and projectors and this quarter we delivered mass production units of the PA168 and expect volume production to build…

Thank you, Bruce. Revenue for the fourth quarter 2012 came in at the low end of guidance as the lack of visibility noted in our Q3 2012 conference call continued into Q4. Total revenue for the quarter was $13.6 million compared to $16.3 million in the third quarter and $16.8 million in the year ago quarter. The sequential and year-over-year decline in revenue was primarily due to soft macroeconomic conditions across product lines, coupled with seasonal weakness. We splitted the fourth quarter revenue by market with 70% digital projection, 17% TV and Panel and 13% embedded video display. Licensing revenue was negligible during the quarter compared to approximately $600,000 in the third quarter. Revenue from digital projection was down 1.3 million sequentially to approximately 9.5 million in Q4 as customer suggested inventories due to softer demand. Revenue from TV and panel was down approximately 1 million sequentially to 2.3 million in Q4, primarily as a result of seasonality, amplified by the slow macroeconomic environment. Embedded video display revenue in Q4 was approximately 1.8 million. Non-GAAP gross profit margin was 49.9% in the fourth quarter compared to 49% in the previous quarter and 48% in the fourth quarter of 2011. The improvement in gross margin was largely the results of the favorable product mix. Non-GAAP operating expenses were at the low end of the guidance coming in at 9.2 million in the fourth quarter as we continue to focus on tight expense management. This compares to 7.7 million in Q3 and 9 million in Q4 2011. Operating expenses in the third quarter of 2012 were positively impacted by a reimbursement credit to research and development expense from our co-development agreement with the customer, due to the achievement of certain milestones. Fourth quarter 2012 research and development expense did not include a…

(Operator Instructions) And your question comes from the line of Krishna Shankar with Pixelworks. [ROTH Capital Partners] Please proceed.

In the trough what kind of data points do you have to suggest that Q1 could potentially be the trough, and how quickly with some of the new products such as the 4Kx2K TV chips and then the next generation projector chips and how quickly will the ramp up starting in Q2?

Yeah, thanks, Krishna. I think we have seen the seasonal pattern a couple of years running now and really based on what our customers are telling us in terms of working through the over into a situation experience in Q4 and sort of when they expect to have that work through, they are telling us roughly they are back on track going in the Q2. So it sort of seen the seasonal pattern couple of times it tends to be combined with sort of an inventory connection across and I think specifically we are seeing this centered around lot of Japanese customers as well. So specifically.

And would you see similar recovery in both the projector on the TV market or do you expect one to lead the other. And can you also talk about the prospects when new licensing in IP royalty streams going forward?

Yeah, I think we will see it from both categories what is, it what is going to be a driving especially the TV category would be the PA168. I think we will begin to see some volume in Q2, but we see the volume ramping in the second half of the year. The PA168 the dollar content of those systems in 4Kx2K is about five to six times the dollar content that we had in systems with the PA136. So we will have the dollar content increase in addition to new products ramping.

And can you elaborate on your comments for high resolution video processing on tablets, small screens and what your activities are there, whether you can talk a little more about your development chip or licensing efforts.

Sure. We are seeing as I mentioned in the commentary I think we are seeing a broad transition to higher resolution screens across just about all screens for the most part and I think we are just at the beginning of that trend. I guess we are not announcing products at this point right now. I think what we are discussing is how the relevant to video processing is pervading across not only large screens but the small screens as well and our technology and its importance in solving and creating great video quality. I think we are seeing that as a requirement across a lot of systems. We have a lot of interaction with the marketplace and need and requirements for video processing technology that we are encouraged by and I think as I mentioned on 2013, our intention is to focus our efforts on bringing our technology to solve those problems across all screens.

I would now like to turn the conference back over to management for closing remarks.

Thanks everyone for joining us and we’ll look forward to discussing our Q2 2013 results with you on our next call.