Ladies and gentlemen, thank you for standing by, and welcome to the SST Third Quarter Earnings Results Conference Call. At this time, all lines are in a listen-only mode. Later we’ll conduct a question-and-answer session and the instructions will be given at that time. [Operator Instructions]. As a reminder, today's conference is being recorded. I'd now like to turn the conference over to Chief Executive Officer, Mr. Bing Yeh. Please go ahead.

Thank you all for joining us today for SST’s third quarter 2009 conference call. I am Bing Yeh, Chief Executive Officer. With me today is Jim Boyd, Chief Financial Officer. Jim will begin the call today with a financial discussion. Following that, I will discuss the status of the company and current market conditions. Then we'll open up the call for questions and answers. Jim?

Thank you, Bing, and good afternoon, everyone. During the course of this conference call, we may make projections or other forward-looking statements regarding the flash memory and non-memory market conditions, the general economic climate, the company's future financial performance, the performance of our new products, the market's acceptance of those new products, the company's ability to bring new products to market, the company's ability to develop new technologies, the company's ability to secure manufacturing capacity, inventory lay-offs, ASPs, margins, cash flow and cash balances, our tax provision and expected tax rate and other items as may be appropriate. Please keep in mind that these statements are predictions, and that the actual events or results may differ materially. Please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2008, and other filings made with the SEC for additional information and risk factors, which could cause actual results to differ materially from our expectations. Now our third quarter 2009 financial results are as follows. Net revenues for the third quarter were $71.3 million, compared with $58.1 million in the second quarter of 2009, and compared with $92.4 million in the third quarter of 2008. Product revenues for the third quarter of 2009 were $61.8 million, compared with $51.8 million in the second quarter of 2008, and with $79.8 million in the third quarter of 2008. Licensing revenues for the third quarter were $9.5 million, compared with $6.3 million in the second quarter of 2009 and with $12.6 million in the third quarter of 2008. Revenues for the quarter included 350,000 in upfront fees, which compared with zero in the second of 2009, and with zero in the third quarter of 2008. Excluding the upfront fees, royalties were up approximately $2.8 million in the third quarter over…

Thank you, Jim. This has been an encouraging and productive quarter for SST. When we reviewed our results for you in July, we told you that we were taking a fresh look at our business and were focusing our resources on areas that would yield to the most impact overtime. These efforts include the targeted approach to product development that emphasizes non-commodity products with differentiated featured. New programs to enhance our licensing business and they continue to focus on cost control and the conservative management of our assets. We are pleased to report that strong execution of these objectives, coupled with an improved demand environment, resulted in the solid financial performance in the third quarter, and several key achievements in our product development and licensing efforts that will help to drive our growth in quarters to come. To begin, the end market demand recovery that we began to see in the second quarter continued through the third quarter, resulting in more than 30% sequential increase in unit shipments and healthy growth across all four of our applications segments. Equally encouraging, we begin to see a stabilizing pricing environment, and the rate of price declined for likely product has slowed dramatically from earlier in the year. Further, the competitive environment is more rational, than we have seen it in several quarters. Although, our blended ASP decreased by 7% in the third quarter, it was more a function of changes in our product mix, particularly the increase in sales of serial flash and RF power amplifier products that carry a lower ASP. Sequential ASP decline for the serial memory products was less than 4%, compared with 11% to 6% declined in each of the prior three quarters. We expect that the stability in the pricing environment will continue through the fourth quarter,…

[Operator Instructions]. Our first question will come from the line of William Myers with Miller Asset Management. Please go ahead.

In terms of growth, your networking segment has done better than your wireless communications segment. I'd just be curious as to if you could explain that a little bit, and as also if that trend you would be thinking, it would continue into 2010.

The segments growth is mainly because the growth - actually, we have a strong growth in the Bluetooth and GPS. But that was offset by the decrease of shipment to the cell phone market. So as a result of that, it shows a small increase. Moving forward we believe that it would recover some from mobile phones shipments. So, as a result we will gain more increase in the coming quarters.

The other question I would have the specifics would be is; you said you were going to expect to increase inventories. Do you have any - even approximate number you would put on what you might think would be necessary?

We are going to ramp a little bit, not a lot, in terms of wafer side. In order to meet in case there is a surge in demand. So, in case that demand doesn't exist and then essentially our inventories are now going to grow more than 10%. So, it's under our control.

[Operator Instructions]. And gentlemen allowing a few moments for anyone to queue up, we have no questions in queue.

Thank you for participating in this conference call. We will be presenting at the Needham Growth Stock Conference in January and look forward to seeing many of you there. As always, feel free to call Leslie Green in investor relations, Jim Boyd or me directly if you would like to arrange a call or meeting. We thank you for your continued interest in SST.

Again, ladies and gentlemen, that does conclude our conference for today. As you heard earlier it was recorded and it will be available for replay starting at 3:30 pm Pacific today through November 3, 2009. You may dial in to the replay system at 1800-475-6701 and enter the access code 119429. International participants may dial area code 320-365-3844 and enter the same access code number. Those numbers again 1800-475-6701, International is 320-365-3844 with the access code 119429. I'd like to thank you for using AT&T executive teleconference. You may now disconnect.