Ladies and gentlemen welcome to Sequans’ Fourth Quarter and Full Year 2012 Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded. Before I turn the conference over to our host, Mr. George Karam, I would like to remind you of the following important information on behalf of Sequans. This call may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions discussed in this call, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for our future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given the risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. More information on factors that could affect our business and financial results are included in our public filings made within the Securities and Exchange Commission. Please go ahead sir.

Good morning ladies and gentlemen. This is George speaking. I’m with Deborah Choate, our CFO and we are pleased to welcome you to our fourth quarter 2012 results conference call. Let me start by highlighting the fact that we achieved the sequential increase in LTE revenue during Q4, although the holiday interfered with our ability to finalize one agreement, causing us to revise our guidance. Still during the quarter we made significant progress that’s not apparent from the financial results. We will start by recapping our publicly announced milestone. As you know we had the Verizon Certification, we also announced a successful testing with SoftBank of our interference rejection technology, and another milestone, very important one, we win a major share in the First China Mobile bid for the expanded field trials and last but not least we introduced a new value family of products optimized for connected devices. In addition, we added new customers during Q4 and expanded the number of projects with existing customers. As a result our confidence in our LTE position is growing with each of these milestones and recent developments increased our conviction that our LTE revenue will ramp in the second half of the year. We want to share some of the specific reason for our optimism with you. So I will do this as usual in the context of an update of each of our four market segments driving our go-to-market strategy. I'll start with the first segment which is we name it emerging market broadband wireless access or also you can find Greenfield Carrier there. We are quite advanced in the emerging market and BWA segment. As you know, India here is one of our main focus. In India we've been participating in testing and trials for several quarters, working with a…

Hello everyone. I'd like to add some details about our fourth quarter financial results and the outlook. Revenues in the fourth quarter were $3.1 million for the quarter. This was a sequential decrease of 61% quarter-on-quarter and a 73% decrease compared to the fourth quarter of 2011. We shipped nearly 300,000 units compared to about 700,000 units in the third quarter. Our two largest customers continue to be HTC and Huawei. Revenues from HTC represented 18% for the quarter and 30% for the year, compared to a 78% last year. Revenues from Huawei represented 16% for the quarter and 17% for the year, compared with 9% last year and we had two other customers above 10% in the quarter, both were around 15% but will be less than 10% for the year. We realized an overall IFRS gross margin of 9.4%. This is below the 48% we reported in Q3, as well as the 52% gross margin in Q4 of 2011. This is primarily due to a provision for excess WiMAX inventory of $854,000, as well as the impact of fixed costs on a lower revenue base. Excluding the inventory provision, gross margin would have been at 36.6%. Gross margin was 1.8% in the fourth quarter, compared to 44.9% in the third quarter and 50.4% in the fourth quarter of last year. The decrease in gross margin reflected continued low absorption fixed cost and in the fourth quarter of 2012 the inventory provision. This inventory provision was primarily related to an excess of the number of units of memory over the number of equivalent dies for our WiMAX SQN 1210 and 1220 products. We are still confident that we will sell the remaining stock of equivalent finished goods. Lastly I would note that we have not seen any significant pressure…

Let me just conclude with a few words here and stress again that there is the disconnect between short term revenue and degree of future opportunities somehow normal. Keep in mind that the company is in a transition phase and ramping revenue in a new market; and this in general is a long process. As you know you have to design the chip, you need to win customers, you need to have your customers designing product with your chip, get those product in trial and testing with carriers, and have those carrier launching and expanding their networks, then you start seeing orders to sell chips and generate revenue. Obviously it looks a little bit scary when I go over this list but you need to keep in mind that we are not anymore in the beginning of the process and we are very close to the end. In the past we have achieved much higher revenue with a fewer customers and a smaller market. I am referring to the WiMAX. I know very well how this happened. Now we have much more customers and a much bigger market. Positioning the company to win in LTE has been our goal for several years since 2009, and we made enormous progress during 2012, even though it is not yet apparent in the financials. What is important to keep in mind are two points. Our addressable market with single mode LTE is a real opportunity and has a big potential and the second point that the effort made by our team developing products, wining customers and engaging with carrier has positioned the company to win. As such, this will translate sooner or later in my opinion to revenue and this will have much bigger growth potential than what we have seen in the past with our WiMAX business. Many thanks for listening. We’ll turn the call now to operator for questions.

(Operator Instructions). And we’ll go to Tristan Gerra with Baird, please go ahead.

This is Daniel Marquardt on Tristan’s behalf. We are entering 2013 and you went through your four markets. I was hoping that you might be able to give us an idea of how you guys are thinking about the size of these markets in the second half or 2013 in total and kind of potentially the share range that you guys either hope or expect to win in those markets.

Okay. So I believe, going on the two questions you are raising here regarding the size, I mean the challenge, first of all what I want really to stress and this is not obvious, I understand, when you talk, when you position to company Sequans and obviously we are playing in single mode LTE and while the people in the beginning of the LTE deployment, majority of the carrier, they didn’t re-shift the loss coverage at least for the big carrier well established in the market and the other guys who are more in a Greenfield and emerging who are deploying and coming with a new network, still they are in the early phase of their deployment. And from this position, we face difficulties somehow not to participate in the big chunk of the market at the beginning because the first piece of the market will be requesting 2G, 3G, 4G because of the coverage is not there and obviously the guys will be asking multi-mode to get the full coverage. So, I what I want to express here that if you take into account those new potential, whether the emerging market as well the people like Verizon who are getting the full coverage of LTE, for single mode LTE opportunity, we strongly believe that this should be maybe 25% to 30% of the total addressable market of LTE. So this a really, we’re talking about more than 300 million unit over three - four years down the road. So the potential is big and no doubt that if Sequans is able to play there even with the descent market share in this not really huge one, Sequans can go to big number in terms of revenue over the coming years. The challenge they have from question is that how…

All right, that's great, and as far as the China and India markets this year, do you have any reason to believe that you could have potentially greater than 10% market share in those markets or is this going to be, something that's going to be a little lower than 10%.

If I take India, I have no reason to think why I will not have much more than 10%, because I don’t see. I have currently, many I believe, I don't know if we give the number but we have more than six vendors there with our products and I can tell you we have the best product in testing. We are beating everybody; people like to ship a lot, the devices and delivered by our customers. So in India I have no reason to believe that we have anything special as a challenge. You can argue obviously about China, because China is much more competitive, much larger a market and you'll have many people attacking there but so far if I look for the first bid we've been there, Sequans came almost with the same level as the two major guy, one Chinese guy and one non-Chinese guy that you know from the big competitor and Sequans has come almost equivalent in market share, for two reasons, simply, I will say engagement and a product maturity but there's also another reason, which is finding the right partner in China to play with, where themselves they can win as well market share with China Mobile, they are very close to China Mobile and so on. So, it could be challenging over time. In the short time I believe we should be able to do more than 10%, maybe down over the coming two-three years, maybe we'll do less but the market will be much bigger. So even 10% in China will be a huge market for Sequans.

Next question is from Quinn Bolton with Needham and Company. Please go ahead.

Just wanted to follow up on the last question. Obviously I guess we're all trying to sort of figure out, not only what the rate of the ramp is for revenue in the second half of 2013 and in into 2014 there also sort of - what the cash burn implied is. Obviously any delays in the ramp probably increased cash burn in the near term. So I guess if there is anything you can do to help us frame how you are looking at the revenue ramp in the second half of the year, I guess just to put some real rough numbers around it, so if you’re doing 0.5 million units at $20, that gets you to $10 million. Is that the kind of ballpark you are thinking about in the second half of ’13? Could it be better? Is that too optimistic and how do you see, are we sort of at the peak level of cash burn. I assume we are given the revenue level, but how do you see the cash burn over the next couple of quarters?

Well, one which is obviously giving you the number where we see a bit and so on and obviously we are very cautious in our prediction, because as I said, any shift in any deployment, we know for example Reliance was a little bit disappointing in terms of timing. Originally there were, but today for example that’s very official. The launch is happening in July two major cities and so on, and so we see them really moving in Q3. So depending on those network in the emerging market, I don’t believe they have any reason now to delay anymore but this should happen, and obviously all this will add up and take us to, we are not predicting really to reach breakeven points in Q3. I believe we are - our target if you want is to as close as possible to this at the end of the year, which is, if you do the math, the number you are talking about, maybe this is on the low end, I will say what will be there. And obviously if you make all this and you say okay there is cash burn and this is an important remark and it does that we ignore it on our side. But I would like to stress two things there. What’s first of all important to for us to know that our spending, we made some optimization of our OpEx last year and we maintained descent level of spending, not really to support existing product that you are selling. It’s much more to come with a new product, new devices. We announced a new product, a new family which is the Streamlight and if look at all the competition and from what I’m hearing many people are very, very impressed with this move…

Okay I appreciate the additional color there, George. Just wanted to come back to the breakeven. It looks like the, at least on a non-IFRS basis. OpEx is around that $10 million per quarter level. Is that a good level to think about as recommended in 2013 and I guess, if that’s the right level and assuming an approximate gross margin of 50%; it seems like your revenue breakeven would be right around $20 million. Is that the right level to be thinking about to go for revenue breakeven for the company?

Yes, I believe, this is what I will call the stronger numbers are coming here, Quinn. Obviously in the early phase we could do a little bit better in gross margin. We could have some services and something with this number; but from spending, you are right, we around the $10 million. So you saw a little bit in the recent quarter. This is where we will be fluctuating over to 2013. And this is for a fully loaded, I will say program in 2013. In other words, we are not making, we will be coming with a new product to be announced this year and this is supported in this spending. And obviously when you make the math with the gross margin, you will come to numbers at breakeven.

And you did, I hate to keep harping on potential negatives, but if the revenue ramp slips because carriers continue to see delays in the launch of their networks, and you look at some of the spending on the longer term product development that you might be able to postpone, is there any range of spending, is that $1 million or $2 million per quarter that you might be able to postpone, to the extent that the ramp does, for reasons outside of your control get delayed again by the carriers?

Yes, absolutely. I mean this is an order of magnitude which will be not major restructuring, I tend to say.

Okay, and then just for, I guess, Deborah, any sense can you give us on the split between WiMAX and LTE in the December quarter. It sounds like it might have been fairly close to 50/50 but I wasn’t sure, if you could provide more color.

Yes, WiMAX was still a little bit more than half. We have expected LTE to be more than half and if we had signed the last deal and we had been working on it, it would have been more than half.

And the revenue for Q1, it sounds like again something around a 50/50 split, is probably the right ballpark since, you said that WiMAX is probably likely to continue at a rough range of $1 million to $2 million a quarter?

Yes.

Next question is from Jay Srivatsa with Chardan Capital Markets. Please go ahead.

I just wanted to know about entering these new markets and your competition that you have, how strong is that competition and do you think that you would be offering your competitive edge with your new services?

In terms of competition, I mean this is your question on entering. First of all we are not entering in new markets. We have worked on those markets as I said, whether China, emerging market, we are there in the CDMA carrier since the beginning. We have some big move happening on the CDMA carrier to say with the Verizon and some even good move with the China, where we have the bid. So the competition again in terms of, I mean people I believe I am hearing that may be all those big guys playing on the multi-mode chip, that would be coming this year, somehow end of this year some of them the following year. So we are still didn’t see major change since the last quarter in terms of competitive landscape. Obviously we still have the big San Diego company leading in the multi-mode devices and Sequans, again our play there is not really to compete with those big guys because those guys are all addressing what I will call it the multi-mode 2G, 3G, 4G high-end smartphone, which is absolutely big market and it makes sense to make a big fight for it. But Sequans, our choice was from the beginning to say okay we are going to lead with 4G because we have a super 4G architecture, much better optimized than the big guys and it will be always much better optimized we don’t have the legacy to deal with and this enabled us to give us very low cost which will be very sensitive for emerging market, for China so on. This give us as well very high performance and the same time and the small footprint to address the single mode opportunity in a market like Verizon where you need to connect consumer devices and so on and in this case only is the space, power consumption, and performance as well cost are important and if you have the 4G only you can do it. So this is what I can comment on it.

And can elaborate on the implementation of your new segment?

I believe your referring to the segment which we’re addressing with Streamlight, right?

Yes.

I mean, this Streamlight again the point is what, if you look the vision, we have, the company and I believe that the world is moving, it’s not moving from 3G to 4G. The world moving from circuit switched network to an IP wireless network. It’s a completely different story. It’s not only about throughput. People only think 3G, 4G is more speed and everybody is happy about this, which is normal and its absolutely more speed, but more important we’re going to an IP network where even the carrier will have much lower cost to provide the same service and they will have the ability to provide integrated services on the LTE, not only to give data but as well to provide multi with rich communication suite with as well video service such as eMBMS that runs on LTE. So from this angle the carrier will have more and more to offer single mode LTE. On top of this the device will be cheaper and easier to build. So this is the vision there and obviously when you go there you can expect that all the device, if you’re able to bring the cost down of the LTE only solution to something very close to the cost of the WiFi, why will you have a tablet with only WiFi inside, why not having WiFi and LTE? You may have, obviously you can see the high and smartphone will have all these 2G and 3G because they need to have phones, they need to have roaming and so on, but today the biggest chunk of the tablet in the world, they have WiFi and the game devices they have even nothing, the camera, they have nothing. So if you’re able to bring down the cost equation to have an LTE solution that fits with the cost equation to address this market and if the carrier, they have the coverage for LTE then it’s absolutely a way to go on, and this is where the world will be moving. And this is not something a vision that we have on our side. We share this with, it’s like a joint vision, I will say with many aggressive carriers. We are discussing with them in terms of deployment. And they see this is the way how the world is moving. So definitely it’s a challenge somehow for Sequans’ in the short term because we don’t have 2G, 3G, 4G, and that people this is what they are buying today, because the market of single mode LTE is not there. But if Sequans is moving with the 4G technology to get the best 4G technology, we will be ready for this market and we will lead there with the architecture we have.

Okay, just a follow-up. In terms of customer retention, do you think you would be able to retain your current geographic footprint while expanding with these new services?

Obviously we could ask much more, if you look to the market in LTE, it’s is huge. That’s why, by the way we are really selecting. In geography, in a sense, Sequans is a globally company and all our life we played everywhere in Asia, U.S., Europe. So we are always present. This is not really challenge. This is I believe, it’s more a style of, a culture somehow as a global company. But more important, which is, you are right is how many customers, how many big customer we are able to address. And the size of Sequans today, we cannot address the same way that big company can do. That’s why by the way we are selecting our battles in terms of market segment, in terms of even carrier by carrier. We are, for example, focusing in the U.S. on Verizon. This is where we are putting our focus because we believe there is a matching there and we can win there, and obviously selecting few other carriers upon and from there we can expand obviously, if we are successful and also we elaborate a lot, the partnership when this make sense. For example, the presence in China, we had a strong presence in China. But this is not enough. That’s why we have the partnership with Nationz and Primemobi, where those guys help us complementing our resources to provide all what’s needed to get the testing, the bid acceptance, and all this with China Mobile while Sequans is limiting the effort somehow to avoid burning much more energy on this account.

Thank you, we have no further questions.

Thanks very much for all of your questions and for the listening and hope to see you soon, face-to-face. Thank you guys.

Thank you ladies and gentlemen, this conference is available for replay after 9 a.m. today through midnight of March 7, 2013. You may access the replay system anytime by dialing 1-800-475-6701 and entering the access code 276747. International participants dial 320-365-3844. Those numbers again are 1-800-475-6701 and 320-365-3844 and enter the access code 276747. That does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.