Good day, ladies and gentlemen, and welcome to the QuickLogic Corporation’s Fourth Quarter and Fiscal Year 2010 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions on how to participate will be given at that time. (Operator Instructions). And as a reminder, today’s call is being recorded. I would now like to introduce your host for today’s conference, Mr. Andy Pease, President and CEO. Mr. Pease, you may begin. Andy Pease – President: Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us today for QuickLogic’s fourth quarter 2010 earnings conference call. Joining me here today is our Executive Chairman, Tom Hart, and our CFO, Ralph Marimon. Ralph will take you through our fourth quarter results then I will share my perspective on our business. Following this, Ralph will detail our guidance for the first quarter of 2011, and then we’ll take your questions. Ralph?

Thank you, Andy. First, let me take a moment to read our Safe Harbor statement. During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to stated expectations relating to revenue growth from our new products, the impact of inventory rebalancing in the channel, statements pertaining to our design activity and our ability to convert new design opportunities into customer activity, market acceptance of our customer’s products, our expected results and our financial expectations for revenue, gross margin, operating expenses, profitability and cash. QuickLogic’s future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. For your information, this conference call is open to all and is being webcast live. For the fourth quarter of 2010, total revenue is 7 million. Although total revenue was within our guidance range, this does represent a sequential decline of approximately 5%. New product revenue totaled 2.3 million which represented a 19% sequential decrease. New product revenue is impacted by much lower bookings than we anticipated due to the inventory rebalancing and the wireless broadband data card channel. The Tier product revenue on the quarter totaled 4.7 million which was at 3% sequential increase. Our non-GAAP gross profit margin for Q4 was 68% and was above our guidance due to the mix of product shipped. Non-GAAP operating expenses for Q4 totaled 4.2 million, which was within our guidance. As forecasted, non-GAAP operating expenses increased compared to Q3 primarily due to an increase in expenses for a new platform development. On a non-GAAP basis, other income and expenses and taxes for Q4 were net positive totalling approximately 10,000, primarily due to income tax benefits related to our overseas operations. This resulted in a non-GAAP net income of 496,000 or $0.01 per diluted share. Our net ending cash position of 22 million reflects an increase of approximately 4.8 million from the Q3 net ending cash balance. This increase was driven primarily by the exercise of warrants, the exercise on employee stock options, and cash generated by operations. Our Q4 GAAP net loss was 69,000 or $0.00 per diluted share. Our GAAP results include stock-based compensation charges of 565,000. Please see today’s press release for a detailed reconciliation of our GAAP to non-GAAP result as well as for detailed information on full-year 2010 results. I’ll rejoin you in a few minutes to discuss our guidance for the first quarter, but first Andy will update you on the status of our strategic efforts.

Thank you, Ralph. We are very pleased with the solid tangible progress we posted for 2010. Our total revenue increased 74% and our new product revenue increased 93% over 2009. As a result of this growth and the success of our improved operating model, we reported a non-GAAP profit for each of the last three quarters as well as for the full-year of 2010. This, along with the exercise of warrants and options, helped boost our balance sheet net cash from 16 million at the close of 2009 to 22 million at the close of 2010. While revenue describes the depths of our business, our balance sheet, the strength of our foundation, we believe it is also important to track and measure the breadth of our business which includes the number of active designs, customers and market segments. During 2010, we shipped 19 active production designs, more than three times the six active designs we had at the close of 2009. We also doubled our active customer base from 6 to 12. An important implication is we have increased the average number of designs for customer from one at the close of 2009, to 1.5 at the close of 2010. This indicates once a customer uses a CSSP in one design, there is a tendency to use our CSSP solutions in future designs. A major accomplishment is a fact that we initiated production shipments into the tablet segment into the fourth quarter of 2010. As a result, we exited the year shipping to four out of our five target market segments. During 2011, we expect to ship CSSP based on our Visual Enhancement Engine, or VEE, and Display Power Optimizer or DPO to our fifth market segment, Smartphones. On balance, 2010 was a successful year. While the numbers are still…

Thanks, Andy. We now anticipate the impact of the inventory rebalancing for our Broadband wireless data card business will continue through the first quarter of 2011. Due to this inventory rebalancing, our backlog at the beginning of the quarter and the current level of bookings we have from our Broadband data card customers, we are forecasting that new product revenue will be down slightly to $2.2 million, plus or minus 10% in Q1. Based on our bookings and backlog, we are also estimating that our mature product revenue will decline by approximately $100,000 to $4.6 million. Total revenue is forecasted to be approximately $6.8 million, plus or minus 10%. As in prior quarters, our actual results may vary significantly due to schedule variations from our customers, which are beyond our control. Schedule changes, particularly those that may impact new product revenue, could push or pull shipments between Q1 and Q2 and impact our actual results significantly. On a non-GAAP basis, we expect gross margin to be approximately 64%, plus or minus 3%. The gross margin percentage is driven by the forecasted production rate and the anticipated mix of products shipped during the quarter. We are currently forecasting non-GAAP operating expenses to be flat with the fourth quarter of 2010 at approximately $4.2 million, plus or minus $300,000. R&D expenses will continue to be driven by development work on two new CSSP platform families and new hires that are forecast for our R&D department. Non-GAAP R&D expenses are forecasted to be approximately $2 million, while non-GAAP SG&A expenses are forecasted to be approximately $2.2 million during the first quarter. Our other income and expense will be a charge up to $60,000 during the first quarter. Our stock-based compensation expense during the first quarter is expected to be approximately $525,000. At the midpoint of our guidance, non-GAAP net income is expected to be approximately $100,000. Excluding the impact of additional warrant and stock option exercises, we expect the quarter to be cash neutral. Now I’d like to turn the call back to Andy for his closing comments.

Thank you Ralph. We faced a number of challenges late last year that limited our revenue growth in Q4. This led to an expected slower start in 2011 than we would have otherwise desired. However, 2010 was a very successful year by all measures. During the year, we nearly doubled new product revenue, more than tripled our active design base, and doubled our customer base. In addition to those accomplishments, we penetrated our fourth strategic market segment by initiating production shipments into our first VEE/DPO tablet design. We expect to open our fifth strategic market segment in mid-2011 when we begin shipping VEE/DPO technology to our first Smartphone customer. We have begun 2011 with a significantly stronger solutions, customer base, and design funnels. OEMs in our target market segments have concluded they need to radically shorten their design cycles and develop differentiated products. Like the Tier 1 Smartphone manufacturer I quoted earlier, numerous customers are telling us our CSSP platforms and the unique QuickLogic customer engagement model address these challenges. I believe the combination of these factors sets the stage for QuickLogic to deliver strong growth and innovation. Next week, we’ll be at Mobile World Congress in Barcelona. In mid-March, we will be presently at Roth Capital’s 23rd annual Orange Country Growth conference in Laguna, California. Our annual general meeting is scheduled for Thursday, April 28th at QuickLogic headquarters in Sunnyvale, California. Our first 2011 earnings conference call is scheduled for Tuesday, May 3rd, 2011. Now let’s open up the call for questions. Operator, please.

Thank you. (Operator Instructions). Our first question comes from Harsh Kumar from Morgan Keegan. Your line is open. Harsh Kumar – Morgan Keegan: Hey, guys. Good afternoon. Question for Andy. Andy, you talked about your first Smartphone when shipping very soon. I'm wondering if you can provide us with some – any color that you feel comfortable providing in terms of the significance of the platform. Is this a – i.e. is this a one-off rent in a single form within a platform? Does it run across the platform? Any color would be helpful.

Actually, Harsh, I wish I could, but unfortunately we are under very tight MDAs with all our customers and we absolutely cannot talk about the types of designs we’re in. Harsh Kumar – Morgan Keegan: Okay. That’s pretty fair. And data card inventory, I think you mention it will probably affect your guys through this current quarter. Do you feel that you’re getting to the end of that issue, or your customers specifically are getting closer to the end of that issue and this should be the last quarter? Any color would be helpful there as well.

Yeah, right now, Harsh, we are – we actually go through a very detailed regimen and we have tangible evidence that the run rate is increasing. So we feel comfortable by making that statement.

Thank you. Our next question comes from Edwin Mok. Your line is open. Conor Irvine – Needham & Co. : Hi guys, this is Conor Irvine calling in for Edwin. How are you?

Hi, Conor.

Hi, Conor. Conor Irvine – Needham & Co. : Can you guys talk a little bit more on the impact legacy sales have on your Q1 guidance. And you know, it looks like legacy sales totaled approximately 17 million in 2010. Should we expect a similar level through 2011, and you know, even with little or no investment in this area?

Well, we don’t give guidance out on that further than the quarter. I mean, we’ve seen a pretty steady rate out of the legacy product over the last few quarters. That’s what we’re anticipating in the first quarter and beyond that, we don’t see it dropping off significantly, but we lack visibility also into that space. Conor Irvine – Needham & Co. : Okay, fair enough. And regarding the inventory rebalancing that took place in Q4, you know, should we go back, you know, after Q1, do you think we should go back to using sort of a 2Q-3Q at the revenue baseline? And on top that, do you think do you think there’s any risk that these customers are sort of changing their design requirements, or maybe they’re dining out of the [inaudible] part.

As I think I mentioned in the call, we do not see that we are designed out or the shipments are falling off. We do see that in – that they are now starting to take product through the channel and we expect that to continue. Conor Irvine – Needham & Co. : Great. And Andy, it looks – looking into 2011, do you view the end market and product mix for new product sales, or I should say, how do you view the market for those two? And the majority of new product sales have been selling into the data card market, but can you give some more color on which end market will account for the majority of product revenue, the new product revenue in 2011 and which of these, you know, you’ll start to see the most growth first?

Well, again, we’re not giving guidance beyond Q1, but for the first part of the year, data cards will continue to be the mainstay as the security applications increase and VEE and DPO sales increase. Conor Irvine – Needham & Co. : Okay. And lastly, any changes to your target gross margin or OpEx levels going forward?

No. We’re not – I mean, what we forecast is based on the products mix for gross margin. So we’ve always maintained as new products command a majority, or grow to a majority of the product mix, then that gross margin will come down. But we still maintain that, you know, we’ll be above 50 points of margin even when new products dominate the revenue stream. Conor Irvine – Needham & Co. : Great. Thanks very much.

Thank you.

Thank you.

Thank you. Our next question comes from Brian Coleman. Your line is now open. Brian Coleman – Hawk Hill Asset Management: Great, thank you. My first question is on the data card business. Can you give us some update on your relationship with Icera and going forward and past this – the first generation of Icera products that you’re in? Do you have a – and as they come out with new processors, do you maintain a role in those designs or has Icera kind of incorporated some of your features now into their chip?

Well, first Brian, we are in our second generation of Icera products. The next generation that comes out, they are incorporating the single functionality that we have in the product that we are currently in production with now, that would be just a connection to their flash memory. We are in discussion with them on the CX product, however. And so we view that the CX will be a product that will ship into the data card market as I implied before. Brian Coleman – Hawk Hill Asset Management: Okay, terrific. Question for you on the, the reference design that you’ve talked about in the past that had the 4,000-unit order. When you kind of first announced that, I asked conceptually if you assumed that there would be a high CSSP attach rate in designs that were ultimately based on that reference design. Meaning, would an OEM or an ODM opt not to use the CSSP if they were using the processor in that reference design. I think Tom indicated that conceptually it would be possible for somebody to decide not to use the CSSP, but it wouldn’t make much sense from a business case standpoint. Now I’m wondering, now that we’re a couple quarters in and – I’m wondering if you’ve got any experience that might backup the, you know, a view on what the CSSP attach rate might be in these reference designs?

Brian, I think it’s still early to talk about attach rates. The realm – we talked about two reference designs in the last earnings calls, if you recall. The first one was going to application developers, but the latter one, which by far is the more interesting one is going to OEMs. And that did ship in Q4. I can say that we’ve already been contacting customers that have that reference design and time will tell what the attach rate will be. And I think Tom’s comments from the last year still stand. Brian Coleman – Hawk Hill Asset Management: All right.

It seem to just make good business sense. Brian Coleman – Hawk Hill Asset Management: Okay. Can you provide us with any kind of updates on the other reference designs that you’ve mentioned in the past? There were a handful of other ones; we’ve kind of gotten some updates on this first one with the two 4,000-unit orders. Can you give us some updates on where we are with the other reference designs?

Well, the ones that we talked a lot about in the last couple of quarters were the two that you just mentioned. We did mentioned reference designs earlier in the year, but actually those were Smartbook reference designs and they ran the same fate of the Smartbook industry in general. We still are working on other reference designs but nothing that we can report concretely right now. Brian Coleman – Hawk Hill Asset Management: Okay. And then a question on – at the – I think it was the Qualcomm Upling Conference you announced an RGB split, PSD and indicated that there was a specific project that had come up from one of your customers that had required that. I’m just curious, is there – is that project, is there any update on that project that you can provide for us?

I can’t provide any updates on that specific project, but there is interest in our customers in this RGB split, yes. Brian Coleman – Hawk Hill Asset Management: Okay. All right. On the BenQ tablet, I assume your fourth quarter had some preproduction. I don’t believe that tablet has actually been released by BenQ yet for production, so it would sound like your revenues there are supporting their preproduction and I’m wondering if you’re seeing any orders yet from them for their official launch, or is it the kind of thing that we have to wait for some end-market sell to that tablet before we get the pull-through orders for you guys?

Well, when they placed the order, the initial order for us in December, they said this is the unit that they’re going to production with. And they are taking it to operators right now and we should have more word on that as we move forward. Brian Coleman – Hawk Hill Asset Management: So does your guidance for 1Q, does that include anything additional for BenQ?

Yes. We do have in our guidance some BenQ product. Brian Coleman – Hawk Hill Asset Management: Okay.

It is a product level. Brian Coleman – Hawk Hill Asset Management: Okay. And then my last question, you put out a press release, I think it was today on the Mobile World Conference in – the conference in Barcelona that you’d be showcasing tablets with VEE/DPO and – are you going to be having a public booth at that conference or is it the – are you doing a private – the same way you did at CES, a private – private booth?

Yeah, Mobile World Conference, we actually have a public booth that anybody can walk up to. This is not in a private meeting room. Brian Coleman – Hawk Hill Asset Management: So will you be in a position then to announce to these – who these tablets are at some point in the next week or so?

Well, we’ll obviously be showing any tablets – we’ll be talking about – any tablets we show will be public information. By the way, we are in – what is that, Stand 2.1 in Easy 1 in the Enterprise Zone, Hall 2.1, lower level. Brian Coleman – Hawk Hill Asset Management: Okay. So you said whatever you’re showing will be public information?

Absolutely. Brian Coleman – Hawk Hill Asset Management: And so you’ll have tablets there with OEM/ODM brands on them?

We will have – we will have similar tablets that we showed at CES. Brian Coleman – Hawk Hill Asset Management: Okay.

And I think you were in CES, in our suite at CES, right? Brian Coleman – Hawk Hill Asset Management: Yeah, exactly, yes. Okay, that’s all I’ve got. Thanks.

Thank you, Brian.

Thank you. Our next question comes from Hamed Khorsand from BWS Financial. Your line is open. Hamed Khorsand – BWS Financial : Hi, guys. Just a couple of questions. One is, what kind of activity are you seeing from the Tier 1 customers as far as reference designs go?

Well, so maybe we have a definition of term issue. When we talk about reference designs, reference designs are things that we do with other semiconductor companies, principally processor companies. So we are engaged with Tier 1 customers and it’s basically engaged with their engineering and architecture groups. Hamed Khorsand – BWS Financial : Okay. Do you have any kind of senses of timeframe as to getting decisions on design wins?

I wish I could tell you. Unfortunately, I can’t talk about any of our engagements with our Tier 1s. Sorry, MDAs are very tight with them. Hamed Khorsand – BWS Financial : Okay. And then what kind of revenue increase could you see before you run into another packaging capacity issue?

Well, in terms of the packaging capacity, we don’t see any more issues. They actually increased their capacity by almost 4X. In addition, they’re opening up another facility in the center of China. So we don’t anticipate any more issues with this. Hamed Khorsand – BWS Financial : Okay. And just one lastly on this Smartphone comment you made. Are you just expecting one production shipment this year from Smartphone [inaudible]?

We’re prepared to commit to one in mid-year, year. Hamed Khorsand – BWS Financial : Okay. All right. That’s all my questions.

There’s certainly more in the pipeline, but I’m not prepared to commit them to 2011 revenue, principally because we just don’t how long the operators take to qualify these things once they’re designed in. Hamed Khorsand – BWS Financial : Understood. Thank you.

You’re welcome. By the way, I’d like to add something. On the terms of our packaging, we actually took steps and we have an alternate source also that’s doing the same process that was causing capacity issues. So we are dead certain that that won’t plague us in the future.

Thank you. (Operator Instructions). Our next question comes from Bob West from NI Technical Research. Your line is open. William West – NI Technical Research: Hi, Andy, Tom, Ralph.

Hi, Bob. Good to hear from you. William West – NI Technical Research: I wanted to start with a question maybe for Ralph. On your inventory, I notice that it’s up about 700,000 in the end of Q4 compared to Q3. Is this in anticipation of future volume going forward, or just any color you can give on that would be appreciated.

Yeah, it’s both, but you know, it’s primarily [inaudible] inventory related to the data card business. So the revenue drop off is a little bit more significant than we thought and so we already had inventory in the supply change coming in. So we’re not worried about our use of that inventory, we’ll be able to use it. So that’s not an issue. It’s just higher than we wanted it at the end of the year. William West – NI Technical Research: Okay. I understand, those things happen. Second question is on, Tom, during your prepared remarks, if I recall, you made reference to a second 10-inch tablet customer in preproduction, if I caught that correctly. A question on that. Can you give us some color on that? Preproduction suggests that it’s getting pretty close to – it could be ready to launch. Is there more than one tablet that could go into product in Q1, or is this Q2? Whatever color you can give on it.

This is beyond Q1. We are certainly working on more than one tablet. I can assure you that, Bob. But the reason I pointed out this particular tablet, and I’m actually happy you asked that question, is this particular tablet actually uses an iPad-like display that has much better viewing angles than the BenQ R100. What comes with that, by the way, is a much higher power consumption. So it turns out when there’s higher power consumption, the value of our DPO technology goes up and that’s why the power savings these guys are seeing is almost double what BenQ is seeing at 36%. William West – NI Technical Research: Very nice. So this is a – should be a really nice screen, you’re telling me?

Yeah, they call it, there’s a word for it. It’s called an IPS display, which has very wide viewing angles. But in order to accomplish that, it obviously takes more power consumption. William West – NI Technical Research: Okay. Very good. I wanted to ask a question on another subject. In late January QuickLogic announced the availability of new software, Mobile Display Optimizing MDDO software for use on CSSP-enabled devices running on Android operating system. Can you give us some color on customer reception to that product?

The customer reception is very good because this actually plays well into our unique engagement process where we provide the customer with much more than just silicon. So now we’re offering customers that kernel that they have to provide anyway if they’re going to adapt this technology in their mobile device. A real side benefit of this technology, frankly however, is it enables us to on any tablet or anything that’s running Android, is to actually demonstrate what VEE and DPO will actually do for their system in a simulated way. And that has been extremely effective for us because one of the things that all these customers want to see is they want to see, well, how does V actually look on the display I’m using. Because I’m sure as everyone here knows, every display is somewhat different and they want to see how it looks on their own display and this new Android app gives us the opportunity to do that very simply. As a matter of fact, we’ve even had customers download this off the web and look at it themselves. William West – NI Technical Research: Okay. Continuing kind of in this area, the press release suggested that the software could be implemented as a replacement for the standard Android auto-brightness menu software on Android.

That’s correct. William West – NI Technical Research: Can you give us a little more color on that? Is this software intended as a revenue producer or is it strictly to generate customer development?

It’s strictly to first be a great demonstration vehicle and secondly, to accelerate customer development and it is included in what we normally charge for our CSSPs. William West – NI Technical Research: Okay.

It’s a winner for us. William West – NI Technical Research: Okay, very good. Next question I had was on your CX platform. Specifically on Smartphones and tablets, you’ve got several youth cases on your website for those two bucket areas. Can you give us some color on maybe the reception from your customers and the tablet and Smartphone market to this offload engine?

Actually, we’ve had very good reception considering that we have not put out samples in the marketplace yet. But there’s many customers that really like the idea of off-load engines and certainly if they’re tackling the security market, this plays right into the CX offering. But keep in mind, CX does not have to have security attached to it. So it does play into the more general Smartbook or tablet, or Smartphone market. William West – NI Technical Research: Okay. Now, looking ahead to 2012, can you envision a time that you might have a multiple upload engines or coprocessors on an individual tablet, one CX and one VX?

Actually, we have had customers in the same design expressing interest in both devices. William West – NI Technical Research: Okay.

So that’s more than a wish. William West – NI Technical Research: Okay. Well, great. Well, thank you for the clarity and best wishes on the quarter.

Thank you.

Thank you. And I’m showing no additional questions in queue. I would like to return the program to our presenters for any concluding remarks.

Okay, well thank you very much for joining us for this conference call and we’ll look forward to seeing you either at Barcelona, Laguna or at our annual meeting in Sunnyvale. Thank you very much.

Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude the program and you may now disconnect.