Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 Pixelworks Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Mr. Steve Moore. Please proceed sir.

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 second quarter ended June 30, 2013. Before I begin, I would like to remind you that various remarks that 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, Tuesday, August 6, 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, 2012, and subsequent SEC filings for descriptions of factors that could cause forward-looking statements to differ materially from actual results. Additionally, the company’s press release and the management’s statements during this conference call will include discussion of certain measures and financial information in GAAP and non-GAAP terms including gross margin, operating expenses, net loss and net loss per share. These non-GAAP measures exclude stock-based compensation expense and additional amortization of the pre-paid royalty. We use these non-GAAP measures internally to assess our operating performance. The company believes these non-GAAP, 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 loss and GAAP net loss to adjusted EBITDA, which provide additional details. Bruce will begin today’s call with a strategic update of the business. Afterwards, I will review our 2Q financial results and discuss our outlook for the third quarter of 2013.

Thanks, Steve. Good afternoon, everyone, and thank you for taking the time to join us today. Q2 2013 revenues of $9.6 million were up 16% over Q1, slightly below the range of guidance provided on our Q1 2013 conference call, as the slow environment experienced in Q1 extended into Q2, as customers finished working through their inventory overhang. While the quarter started on a sluggish note, overall, book-to-bill is greater than one, reflecting a steadily improving environment and customers beginning to ramp the PA168, our next generation video processor into volume production. All other non-GAAP metrics came in within the range of guidance and we made significant progress on our previously noted co-development project that will result in market share gains in 2014. Based on an improving environment, ramp of the 168, and success with our licensing initiatives, we expect Q3 revenues to be up more than 50% and see non-GAAP profitability for the balance of 2013. As mentioned last quarter, we continued to experience strong demand for our technology as we exited Q2 with a robust licensing pipeline, which points to the growing importance of our portfolio of advanced video processing technologies. To that point, in the current quarter, we captured a significant license for our advanced video technology as noted in our 8-K release today, which is a major validation of our technology and expertise and reinforces our thesis regarding the growing importance and need for video processing to improve the visual experience across all screens. In our PA Series product line, for large screen display applications, in Q2, we began mass production shipments of the PA168 Video Display Processor, which is targeted for Ultra HD applications and expect volume production to build during the balance of 2013. The PA168 is designed to meet the performance requirements of…

Thank you, Bruce. Revenue for the second quarter 2013 was $9.6 million, compared with $8.3 million in the first quarter of 2013, and $15.5 million in the year ago quarter. As Bruce mentioned, the sequential increase in revenue was due to increased sales of chips for both projectors and TVs. Revenue declined compared to the prior year quarter primarily as the result of lower licensing revenue during the second quarter. The split of our second quarter revenue by marketwise; 70% digital projection, 17% TV and panel, 13% embedded video display. Licensing revenue was negligible for the quarter. Revenue from digital projection was up over $1.2 million sequentially to approximately $6.7 million in Q2 as our customers’ demand began to improve in spite of continued macroeconomic challenges and as customers continued to balance their inventories. Revenue from TV and panel was up nearly $300,000 sequentially to $1.6 million in Q2, primarily due to the beginning of the production ramp of our PA168 for Ultra High Definition televisions. Embedded video display revenue in Q2 was approximately $1.2 million. Non-GAAP profit margin was 49.7% in the second quarter, essentially flat compared to 49.7% in the previous quarter and 50.6% in the second quarter of 2012. Non-GAAP operating expenses were $8.7 million in the second quarter of 2013, compared to $8.8 million in the prior quarter and $8.1 million in Q2 of 2012. Second quarter 2013 research and development expenses included costs for writing down reimbursement credits for the previously disclosed co-development agreement, which resulted in higher operating expenses year-over-year. We expect that we will complete milestones related to this co-development agreement and realize $2.5 million of reimbursement at credits during the remainder of 2013, which should reduce operating expenses in the second half of the year, which was created as a part of…

(Operator Instructions) Your first question comes from the line of Krishna Shankar from ROTH Capital. Please proceed. Krishna Shankar – ROTH Capital Partners, LLC: Yes. Bruce and Steve, congratulations on the good outlook, with your guidance for the September quarter, does that imply a sequential growth in the projector, TV, licensing and embedded business. Can you talk about the constituents for growth in the September quarter?

Yes, Krishna. The expectation for Q3 would include growth in projector, television and license. Krishna Shankar – ROTH Capital Partners LLC: Okay. and then can you give us a little more details on the 8-K that you filed with respect to the licensing arrangement. how much can you talk about that?

Krishna, as you know, we have a policy of not discussing our customers and partners in turn. So the information we provided on the 8-K is the granularity we’ll be providing about this license deal. Krishna Shankar – ROTH Capital Partners LLC: Okay. and then with respect to the previous co-development agreement, you’re still targeting revenues from that co-development agreement is that in first half 2014 or second half 2014?

We would see the mass production commencing in the first of 2014, Q2 and then ramping very heavily through the balance of the year. Krishna Shankar – ROTH Capital Partners LLC: Okay. and with respect to your comments, Bruce, on the application of your technology to the mobile market, do you envision sort of a variety of potential deals in terms of revenues, be it licensing, joint development product, I mean can you talk about the revenue opportunities in the mobile market going forward?

Well, on the call, I noted that we will be bringing solutions to market in 2014. and just to put it in context, our Computex announcement, which was a significant demonstration of our technology as we develop products. we wouldn’t see releasing products in the first part of 2014 that would go into production in 2014, so that’s sort of the time horizon now. I’ve talked about our general strategy across all markets, licensing, we lead with Silicon, but licensing is a component of our go-to-market strategy. and as it makes the opportunity makes sense and if it’s our strategic framework for engagement with our major customers. Krishna Shankar – ROTH Capital Partners LLC: Okay. and then in projectors, you had a relatively good June quarter, despite the macro, do you see the macro improving and the up tick of your new projector platforms leading to good growth there for the foreseeable future?

We do see the conditions improving in the market. Projectors are largely driven by education spending, and the growth areas in that market had been in the emerging markets. So the emerging markets slowed down at the latter part of 2012, especially China, sort of slowed the projector market down, but we do see it’s improving and we’re seeing an improving trend going into Q3. Krishna Shankar – ROTH Capital Partners LLC: Great. And my final question on the PA168, will that be kind of the main platform for all the Ultra High Def TVs or it appears that there is going to be a fair number of lower price kind of mass market Ultra High Def TVs, so do you anticipate variations of your product for different price segments of the Ultra High Def market?

Yes. we can approach the 60 hertz 4Kx2K market, which is the low-end market that you’re referring to and it largely is seeing a lot of traction and up tick in China, and we’re approaching that market with the PA168. so in the case of the 120 hertz implementation today, you would use two PA168s, we have single chip for the 60 hertz low-end market. Krishna Shankar – ROTH Capital Partners LLC: Great, thank you and congratulation for the outlook.

Thank you, Krishna.

There are no further questions in queue. I would now like to turn the call back over to management for closing remarks.

Thank you for joining us today, and we’ll look forward to updating you on our Q3 2013 conference call. Thank you.