Good morning. My name is Kimberley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradyne Quarter Four 2008 Earnings Call. (Operator Instructions). I will now turn the call over to Andy Blanchard, Vice President of Investor Relations. Please go ahead.

Thank you, Kimberley. Good morning, everyone and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our Chief Executive Officer, Mike Bradley and our Chief Financial Officer, Greg Beecher. Following our opening remarks, we'll provide you with details of our performance for the fourth quarter of 2008 as well as our outlook for the first quarter of 2009. First, however, I'd like to address some administrative issues. The press release containing our most recent financial results was sent out via the Business Wire last evening. Copies are available on our website or by calling Teradyne's Corporate Relations at 978-370-2221. This call is being simultaneously webcast over our website at teradyne.com. Note that during this call, we're providing some slides on our website that will summarize and reinforce some of the highlights. They may be helpful to you in following the discussion. To view them, simply access the Investor portion of our site and click on live webcast followed by click here for webcast. In addition, replays of this call will be available starting approximately 24 hours after the call ends. The phone replay number in the US and Canada is 800-642-1687. Outside the US and Canada, the number is 706-645-9291. The pass code for both numbers is 80439247. A web replay will also be available in the same timeframe. You'll find it by going to teradyne.com and clicking on Investors. The replays will be available along with the slides through the 12th of February. The matters that we discuss today may include forward-looking statements about events or the future financial performance of the company. Such statements involve risks and uncertainties. There can be no assurance that management's estimates of our future results or other forward-looking statements will be achieved. Actual results can differ materially…

Thanks, Andy. Good morning everybody. Since the daily news is dominated by speculation about the world economy including the depth and duration of the recession, and I can add my voice to that discussion today. What I do want to do though is to focus my comments on two things. First, is to describe what we are doing in the areas over which we have control, particularly on the cost front. And, second, to take a step back and outline how our strategic position has developed over the last year, and why I believe, we can exploit or recovery whenever it occurs. First, let me give a quick rundown on the results for this last quarter and a reiteration of our revenue guidance for the first quarter. As you know, revenue and earnings were just about the low end of our guidance. We actually had very little in the way of cancellations as customers who had orders in backlog took delivery on schedule throughout the quarter. But, the new order pipeline dropped sharply. Total orders dropped about 14% from Q3 levels, but new system orders were up significantly, especially, in semi-test, which declined more than 60%. So it's hard to find many bright spots in these numbers, but our Mil Aero and Automotive business unit did have good quarterly bookings in both systems and service. You can see that we are guiding revenues down by about 35% in the first quarter in response to this widespread cutback in the customer demand. We think this is pretty close to base level of revenues as it is built upon our ongoing service business on a more steady program base business in automotive and defense system's test and on a small new technology buying component in all the businesses. So, in a short-term,…

Thanks, Mike, and good morning everyone. I would like to address upfront two issues that are probably on all of your minds. Our breakeven plans as we head into 2009 and how well-positioned are we with cash. First, as we all know there has been no shortage of negative news over the last three months that global economic have semiconductor industry conditions have weakened considerably. And more importantly, there is no short-term recovery insight. Consequently, we're implementing additional cost reductions in 2009, which when combined with our earlier announced reductions for 2009 totaled approximately at $140 million on an annualized basis. These cost reductions were very significant, should not affect our most critical market expansion plans. The vast majority of these reductions are permanent in nature, such as savings from an additional 14% headcount reduction or about one-fifth are temporary reductions such as savings from broad-based pay cuts. As our cash breakeven plans are more important at this stage, I will translate these reductions first into our 2009 quarterly EBITDA breakeven target numbers. We expect that our quarterly EBITDA breakeven level will be about $190 million in the first quarter and about $165 million in the remaining quarters of 2009. You may recall that last quarter we described plans to lower our quarterly EBITDA breakeven level from about $235 million, which modeled in the Eagle Test acquisition to $215 million or less by the middle of 2009. These reductions amount to over 25% at the EBITDA breakeven line. From an ongoing operating model perspective, which factors in the permanent savings only, we would need about $200 million in quarterly revenues to achieve our 15% operating profit target. Prior to these actions, you may recall that we needed about $345 million in quarterly revenue to achieve our 15% model operating profit.…

Thanks, Greg. Kimberley, we would now like to take some questions.

(Operator Instructions). Your first question comes from the line of Gary Hsueh of Oppenheimer. Gary Hsueh – Oppenheimer: Hi, guys. Thanks for taking my question. Question here on HDD. Are you seeing a benefit in terms of HDD already in terms of bookings and the flow through is yet to come in terms of revenue? Can you kind of breakout in Q4, your system test and your semi test bookings?

$we don't, Gary it's Mike. We don't have anything on the books in HDD. We can breakout the other bookings for you. Gary Hsueh – Oppenheimer: Okay, so you're not actually booking HDD yet on the books, but do you expect to sometime in '09 revenue flow through should happen as well sometime in '09?

That's the objective, correct. Gary Hsueh – Oppenheimer: Okay. My second question is just on inventory. Your inventory numbers, I'm not sure if you walked through that, but it kind of popped up sort of significantly in the December quarter, what's kind of driving that? Maybe that might have been the HDD test business, but can you explain why inventory levels left in Q4 to 168?

Hi, Gary. This is Greg the inventory jumped in the fourth quarter, because of Eagle Test, Eagle Test carried a large amount of inventory than we do relative to sales. Then there is also a purchase accounting adjustment under GAAP that added about $16 million to fair value their inventory, so the increase was basically all Eagle Test. Gary Hsueh – Oppenheimer: Okay and my final question is just about taxes. I see that you guided to a $1 million tax provision, and you kind of wrote down a lot of the short-term and long-term differed tax assets. What should we be modeling for your tax rate in terms of 2009 for the full year? And just if you could answer that question first, that would be helpful.

If the year is a difficult year, which you expected to be might, you might just model $1 million or $2 a quarter and expense and not use a rate I just put a $1 or $2 as expense. Gary Hsueh – Oppenheimer: Okay and then in Q4 of 2004, I think you wrote down roughly $300 million in deferred tax assets that are now kind of off balance sheet NOLs. Is that about right, and do we just kind of add to that off balance sheet NOL kind of asset value roughly another $20 million is that the right way to think about it?

Well, in terms of off balance sheet. Let me give that number first. We have about $210 million of NOLs that are off balance sheet that will shield us against taxes principally in the US. We also have credits in the US which dollar-for-dollar $15. So any taxes we have generally speaking are going overseas and sales locations such as Japan. We might have a $1 million or $2 million tax through the year depending on how the income falls in various countries. Gary Hsueh – Oppenheimer: Okay, great. Thank you.

Your next question comes from the line of Jenny Jones (ph) of Morgan Stanley. [Jenny Jones] – JPMorgan: Hi. It’s Jennie Jones from JPMorgan. Just a couple of quick questions. First, what was the linearity of your orders during the quarter and you have they trended in January?

Jenny, we don't comment on current quarter orders. I actually don't know exactly, but I think I’m going to be accurate to tell you that the orders were, I'd say because of so much service content it maybe a confusing quarter for you. Actually we had the traditional hockey stick that you would see in a normal environment quarter, but if you said how were the system bookings projected that would be reversed. The system bookings tailed-off and got softer towards the end of the quarter. [Jenny Jones] – JPMorgan: I see, so service went up at the end of the quarter?

Yeah, what happens in the service contracts is we have a rolling of renewal of service contracts by, it’s just a cumulative function that many of our service contracts mature in the fourth quarter and are reset then. And this quarter, companies were in tremendous lockdown kinds of operations, and were trying to make determinations of how much equipment that we are going to put on service and so on. So there was a different kind of delay factor in that this quarter. [Jenny Jones] – JPMorgan: I see. Okay, and then do you think markets are all for a bottom or there are things on the horizon that can make the situation worse?

Well, I think, we are awfully close to an order bottom. What drives orders are three things. There is a capacity buy component, there is a technology buy for new devices, new silicon. And then there is what I call kind of inefficiency component and that is there would be pockets of buying where there might be over capacity in the entire world population, but under capacity in a pocket. And right now, there is virtually no capacity buying. And there is a little bit of the other two. There is technology buying and there is a little inefficiency in the market. And so I think, we're at or pretty close to the bottom levels here on bookings. I'm saying this about semi test. Our other businesses have got different buyer rhythms to them that have a bit more long program based tool and so, automotive diagnostics, Mil Aero business, those are tended to be steadier through this storm. [Jenny Jones] – JPMorgan: Excellent and and thanks for the granularity. And then just one last question, can you provide more detail on the utilization rates maybe by customer or by platform types that you were saying earlier?

Whenever I give that to you in, I got it here. Hang on, in the Semi Test business, we track that between our IDM population and our subcons and if you give one second, I'll dig it out here. Here it comes. If you go from the September quarter to the December quarter, the overall utilization, I said there was a range, but if you took it all together, it's in the 60's and it went down more severely in our subcon and in the OSATs. Then, it's a kind of 2 to 1 percentage decline, so round numbers, 8% or 9% in the IDM sector. So they are in the 70 to 80 range and down about twice that in the subcon so the OSATs are in the high 50s range. And if you look by platform it obviously is all over the map. Some products are chugging away and others that are very ideal. [Jenny Jones] – JPMorgan: Okay, great thank you.

Your next question comes from the line of Timothy Arcuri of Citi. Timothy Arcuri – Citi: Hi, guys, a couple of things. You had mentioned last call. Obviously, this has changed but I just wanted to get your update that you thought that $150 million to $200 million would be your goal for '09 in terms of sheer new product bookings, and of that I think you had a $100 million, which was coming from HDD, can you give us an update on those numbers now?

Actually HDD was not in that set of numbers. We were talking about a set of semi test products. That whole discussion last year was around semi test products, mostly around FLEX and our J750 product. So it didn't actually include our memory, our Nextest products it didn't include any of our systems test product, so in that respect it's a better story than you were outlining there. But anyway, you are right. We had a target of $150 million to $200 million, we are in very good shape halfway through the year. We ended up just under the low end of that. I think it was a round number about a $135 million might have been $138, I can’t remember exactly, but it was 90% of the low end of the market. And quite frankly it was all caused by the fourth quarter. We were on a pretty good trajectory. The pluses there were our wireless fifth generation instrumentation. We have a high-density digital option for the UltraFLEX and we had some new models of the 750. So, we didn't make the target, but we had a very momentum on them and there are some of standup instrumentation products in that portfolio. Timothy Arcuri – Citi: Well, let me ask you this way. So of the $1.1 billion for '08 revenue, how much of that was acquisition-related? So, I’m basically trying to look at '09 and I’m trying to say, if I think that your core business is down X% than I can kind of layer on top of that new products and I can kind of add incrementally what you'll do in these new products, so what is the base number in 2008 that strips out the acquisitions and it strips out the new products?

Okay. This is Greg. For 2008, Nextest was $79 million, Eagle Test was $2.5 million, so about $18 million of non-organic bookings. Timothy Arcuri – Citi: Okay, so then layered on top of that, I’m going to make my own assumptions in terms of what I think your core business will do in '09. But layered on top of that number, what should I expect in terms of incremental new products? So, I’m talking about DDR3, talking about HDD products, what's the incremental revenue numbers I can lay on top of that this year?

We're not projecting, Tim, the revenue on those at this point it is consistent with we always said in the past. We're going to start to register in when we hit revenue with those product and we're not trying to be evasive about it. It's just that it's the timing of that revenue that moves a little bit on us. We got clear objective milestones on the design end, but the volume or the total revenue on them is very hard for us to get a feel for right now because of what's going on in the customer base.

And Tim, it is also second half of 2009, as you get closer, we maybe will be able to give you a better picture of what it's likely, but right now it's too difficult to a fence around the numbers. Timothy Arcuri – Citi: Understood. But you had previously given a number for the HDD business of about $100 million. So, I'm wondering, even if I just look at HDD, you should be able to do, or if I look at that number, you should be able to do with all the new products I would think you should be able to an incremental $100 million when you add all those new product together.

Yes. Well, let me just respond to HDD. HDD, we would not expect to be $100 million. And there is some confusion, Tim, because we're looking around saying, we don't know who said a $100 million on HDD. That's been uncertain. It's a very high growth segment of the hard disk drive market. But it really depends on how much we are able to penetrate. Our objective is to get in with lead customers, two lead customers. And if we do that, we think the upside is very strong. Overtime we would see the possibility building $100 million business. But, honestly, it's hard to draw the slope of that at this point. Timothy Arcuri – Citi: Okay. Last one for me then, can you give me what the memory, out of the $146 million that you did in Semi Test in Q4? How much of that was in memory, and specific to that, typically you have some insights on timing around DDR3, and that's continued to kind of push out. But what's your current thinking based upon what you hear from your customers as to when DDR3 really kicks in?

All right, I'll get onto it. Yes. But the flash in the fourth quarter was $15.5 million revenue.

Tim, on the timing, there has been actually a push by our lead customer around pulling in rather than pushing out on the next-generation high performance memory side. So I think the question is when that product gets accepted, and when the customer starts to ramp in volume. All we can say right now is, we are driving to get that product accepted so we could get the first revenue point hopefully in the second half of '09, hopefully in the front end of that second half. That’s our objective, what that ramps to, is very tough to call. We actually don't have an estimate of what that volume would be. But those tend to be pretty sizeable systems because they are attacking very high parallel applications, so the system unit-by-unit is pretty hefty.

Okay, thanks.

Your next question comes from the line of Jim Covello of Goldman Sachs. Jim Covello – Goldman Sachs: Good morning, guys. Thanks so much for taking the question, two from me. First, can you talk to us a little bit about the dynamic particularly on the memory tester? How much R&D you are spending now that you won't have to spend as the product ramps, so you should see a little bit of double-leverage effect to get some revenue as it ramps and you shouldn't need to spend as much R&D as you have over the last period. How much of that R&D is kind of coming down already versus how much is still yet to come down?

Jim, this is Greg. First of all 2008 we over 20% of our R&D is either went to memory or hard disk drive, the bulk of it's certainly memory. And both of those fall off in 2009 as the products come to maturity, so that’s a big help and then, when the revenue comes in that could be delayed given the market environment, but the revenue would be late 2009 if the customers keep their schedule. Jim Covello – Goldman Sachs: Great, and then relative to cost savings you talked about the $140 million and you gave us some thoughts around what EBITDA breakeven would be. Am I to infer to that you will achieve all of that cost savings by Q2 of 09?

That’s true. The only thing I should add Jim is that I’ve included the temporary savings, broad-based paycuts and the EBITDA break-even number as those reductions are likely to be in effect for the entire year. Jim Covello – Goldman Sachs: Okay, so, the sort of expense model, we can model as – if you’re going to model flattish revenue, we would model flatter expenses after Q2.

Correct. Jim Covello – Goldman Sachs: Okay great. Thank you very much. I appreciate it.

Your next question comes from the line of Satya Kumar of Credit Suisse. [Davis] – Credit Suisse: For the quarter--

Satya, we can't hear you. Try again. [Davis] – Credit Suisse: Hello, can you hear me?

Now that’s perfect. [Davis] – Credit Suisse: Okay yeah this is Davis for Satya. Okay yeah actually couple of questions. The first one is could you provide what the split between IDM specifiers for and OSAT for the quarter?

I didn’t but I can. Yes I think 8515 is close – yeah that’s – that’s what it was last quarter. It was 8317, yeah, you’re right, specifiers were 83 last quarter that’s Q3, 17% was the OSAT, now it’s 8515 so the OSAT still declined at a rate faster than the IDM. And than back in Q2 as you remember 4555 so it’s split. [Davis] – Credit Suisse: Right. So, that means we expect in so much so that there must be some technology investment and IDM segment given this downturn and can you provide any granularity on which kind of end markets you're seeing kind of relative strength with regards to your design wins from your power or microcontrollers or other segments?

Well, two things I do, is that in the short term, even though it was a -- there was a pretty spare quarter here in Q4. The segments that drove it to the extent that we did have volume, there were power management, image sensor and then, processor based gaming system, ESIX. So, those were the three segments that were the drivers in the fourth quarter. Overall, though, if I open the aperture up and go back through '08, we were able to gain some share in the business. And that was driven by Bluetooth wireless, the ESIX business I've talked about, automotive, power management, server controllers, those were the pockets and inside those segments there were some specific design end platforms, design ends that will play out with greater volume over time. But that would be the least of the top drivers. [Davis] – Credit Suisse: Okay. Thank you.

Your next question comes from the line Mehdi Hosseini of FBR. Mehdi, your line is open. Mehdi's question has now withdrawn and the next question comes from the line of Patrick Ho of Stifel Nicolaus. Patrick Ho – Stifel Nicolaus: As your, the 215 is that the target on the operating breakeven line?

Hey Patrick would you mind repeating it, you got cut off in the beginning. Patrick Ho – Stifel Nicolaus: Sorry about that, just one quick clarification. When you said operating breakeven reductions, you said 250 to 215 right to 250?

Correct. Patrick Ho – Stifel Nicolaus: Okay. In terms of the Eagle Test integration, how are you working with your customers in terms of both support and integration as well as your product roll back going back?

Patrick the fund end integration is done meaning that we've consolidated all of the field operations, both account management, application and service support. So the single to those customers. That created some synergies for us because we are able to consolidate some of the leadership positions on the account side. As far as the product road maps go. We've reiterated with our customers that the portfolio of products that we got the Eagle acquisition are the ones we are backing for the long term. They have a very strong low cost high productivity platform, on power management analog-dominant SOC. And while there is a little overlap as you look at devices becoming more analog and digital integrated the space that they reside in, is essentially. They've got the dominant position in that space. So we've reinforced with customers that A. The portfolio of products is complimentary to what we've got in ours. And B. despite the tremendous contraction in the market, there is no change in the product road maps going forward with those products. Patrick Ho – Stifel Nicolaus: Okay great. And I guess this is final question from me. Given the acquisitions you've made in the past year as well as some of the new products that you’re introducing to the marketplace both high speed memory and hard disk drive. How are you, I guess rationalize in the cost cutting efforts and streamlining manufacturing operations given that you've got at least from the acquisition front several different types of manufacturing structures or operations. How are you trying to line back to the overall Teradyne cost cutting goals that you’ve set?

Yeah I’ll let Greg, talk a little bit about this. The thing I would say about well Nextest is in the fold now and that integration is running very smoothly and their business actually has been -- they’ve had a good position and have been able to hold up here because of their new Magnum II product has been successful in penetrating the MCP side of the market. The Eagle Test integration is, their participation, their business is down like ours is, so, they are participating heavily in this contraction here especially in the variable part of their business on the manufacturing side. Greg, why don't want you say anything else you think.

Sure quickly on Nextest, we immediately found savings in their raw materials by using our leverage with suppliers, we were able to little attract, basically get them better prices now that's looks quite significant. So that happened immediately and there was no real cost to do that disruption we’ve looked at moving Nextest manufacturing and the savings are immaterial so we’re unlikely to do that. Things can change but that’s best where we are on that one and Eagle Test we’re going through an analysis as to what makes sense. So far we’ve seen that they get good prices. We can't help them with our purchase power and we'll look at whether it makes sense to keep it manufacturing where it is or move it but at the moment certainly for the full year, we stay where it is. Patrick Ho – Stifel Nicolaus: Great. Thanks a lot.

Your next question comes from the line of Brett Hodess of Bank of America. Brett Hodess – Bank of America: Good morning, guys. Two questions. First, I just wanted to be clear on the cash side. I think, you said you drew down your revolver of -- I think it was $22 million. So, roughly, so your net cash as after the first quarter is probably closer to just under $200 million. Is that right?

No, it would be a 250. Brett Hodess – Bank of America: 250?

Yes, 274 with cash and marketable securities at the end of the quarter. Brett Hodess – Bank of America: At the end of the quarter just ended?

Yes. Brett Hodess – Bank of America: And so at the end of the next quarter, where your net, well you said your total cash and securities would be down a little over 300?

We end the first quarter with cash and marketable securities just above 300 and the reason it's going to so much in the first quarter is related to some severance being paid in the first quarter, as well as some annual employee settlements that get paid in the first quarter. And our full cost actions are in place. So the cash use, obviously is much less in subsequent quarters. Brett Hodess – Bank of America: The second question I had was, you mentioned in the backlog, about 65% of it I think you are shipping in the next six months. And you also mentioned that in the revenue mix or in the first quarter, you got about $60 million being service so it looks like a lot of the backlog is more targeted to ship, beyond 1Q and the 2Q and 3Q. Do you feel at this time, that you still won't see push outs and cancellations against that, as the backlog is pretty firm or how do you look at that? Because it seems like a lot but it is not really for the short term here?

This is Greg. The chunk of the backlog is service. And those are annual contracts. Many of them just renegotiated. So I think those are in good shape as our customers generally need these folks yield supporting them. So I think the service is in good shape. By the way service we are likely going to be down. In Q1 our service revenue is down about $10 million from the prior quarter. So its going to be about $58 million versus $68 million a quarter ago. So we think its going to operate at about that level and be a healthy business. The product business it's still quick turns. Customers want it fast. And lead times are short, so we generally find that there is not soft backlog related to products in our backlog.

Brett, the net reduction I think our cancellations were something like $3 million in the fourth quarter. So in places like Automotive and in Mil Aero those backlog stayed very steady. The question marks around solidity backlog would come in the in circuit test and in the and in the semi test areas and those are been pretty solid despite of very tough environment. Brett Hodess – Bank of America: Great thank you.

Your next question comes from the line of CJ Muse of Barclays Capital. CJ Muse – Barclays Capital: Hey good morning. Thank you for taking my question. I guess first question just to clarify. Do you say breakeven in 2Q you anticipate between $205 million, $210 million?

Yes. CJ Muse – Barclays Capital: Okay, great. And at that range what should we be thinking about in terms of gross margin and OpEx for Q2?

I haven't fully modeled that in, but we're working our OpEx towards about mid 90s. So we are heading in that direction, whether deploy there in Q2. We probably will be so about $95 million for OpEx. CJ Muse – Barclays Capital: Okay and then I guess once things do recover and you remove some of the temporary cuts so what should that level look like?

The temporary cuts are across the company, which even in gross margins are about $6.5 million a quarter. But I do believe those cuts will be in for the full year. CJ Muse – Barclays Capital: Okay and then just to look back on the December quarter, could you share with us what the semi-test product revenues were in service revenues for just semi-test?

The semi-test product revenues in the fourth quarter were at $95 million. And the next question was? CJ Muse – Barclays Capital: The semi test service.

Okay. The semi-test service was $51 million. CJ Muse – Barclays Capital: Okay great and then you also I think said $15.5 million of flash revenues in the fourth quarter, is that, just prior, does that include service as well?

They will include service. CJ Muse – Barclays Capital: Alright and then I guess, thinking about the systems test business very nice book-to-bill how should we think about that going into March and June and what's the sort of poor run rate that you would expect for that business considering the I guess less volatility there as well as the service component?

I think the flow is about $40 million a quarter, keep in mind that about half of the businesses is Mil Aero and that has a whole different buying cycle and we think that business will stay strong and healthy and is operating up the teams profit rate, such a varied business. The diagnostic solutions business is largely service business and we have many of the contracts lined up with customers and there is some small product but we’ve lowered the cost quite a bit there. So, I think that business will hold up and that should be a profitable business as well. The in-circuit business probably has little more question to it because that can fall a little bit back, but they have a good service element. That’s probably looked a more volatile and that has dropped. So, keep an eye on that one. But that should remain profitable. Then the wildcard is HDD, how does that unfold late in the year? CJ Muse – Barclays Capital: Okay. So, you will be reporting HDD in this line item?

We'll probably break it up, but it is managed within that group. It is within certain task groups. So, yes, we will break it out in STG. But we will give you the information, so you can see its impact. CJ Muse – Barclays Capital: Great. And that strong book-to-bill, was that mostly turns in December or does that mean we should see another strong March quarter before you fall off to possibly lower to that $40 million range?

Its hard to say what's going to happen apart from that book, but my judgment we will be stay on 40. I don’t think its going to fall off. CJ Muse – Barclays Capital: And then, last question from me, longer term on the DDR3 side, can you talk about the work you've done beyond the first announced customer and when you think you might have a second customer in the fold?

We can't get into any detail on that front. I think the thing we only want to disclose at this point, which we haven’t said prior to this is that there is we do have product that customer announce. So the joint work that has been going on for over year now is based around and clustered around the product at the customers. So, with tire kicking and evaluation and checkout is very, very active at this point. Beyond that first customer, we're not going to elaborate. CJ Muse – Barclays Capital: Okay. Sounds good. Thank you.

Your next question comes from the line of Gus Richard of Piper Jaffray. Gus Richard – Piper Jaffray: Yes thanks for taking my question. On in terms of new requirements, clearly the DDR3 is going to be a new requirement, that’s well understood. Could you talk a little bit about other test markets. And what do you think might be drivers over the next 12 months?

Well lets see, there is such a broad set of markets for us. The drivers, the strongest drivers in semi test have been on the wireless side. And with the Gen-5 product there the UltraWave product we think we are now on a very good shape to capture a good chunk in business there. We don’t see that this performance on that axis beyond with the fifth generation UltraWave product offerings.

We continue to drive obviously for increased density and parallelism. And that gets implemented in a variety of instruments, that’s why we have this high density digital instrument in the SOC space. But beyond that there is, the continuation of a drive for greater accuracy throughput and performance. And that was cut across all of the different markets. The CMOS image sensor market is one that we'll see some growth in. There is a it’s a small piece of what Eagle is getting into. They have a product that’s now entering the discrete market that may be a $100 million market worldwide very-very disbursed and bit hard to get at. But our distribution systems is going to be attacking that. So I think this, the vector of performance cuts across all of the instrument types. I don’t think any one would be called out. I think the most noticeable one here is obviously in the – is in DDR3 and the graphics DDR chips. Gus Richard – Piper Jaffray: Okay so just a – say it’s slightly differently in the wireless you’ve got, different arena phases, higher frequency, see more image sensors higher bid for accounts that sort of thing, in the streets make are currently higher voltages or a combination thereof and then in the logic you mentioned higher levels of density but that will be something along the lines of bigger FPGA's or I’m just trying to think of what markets are moving test requirements forward?

Yeah I think in the density side it tends to be more driven by multi-side testing. Gus Richard – Piper Jaffray: Okay.

So, to say, existing devices, existing technology, doubling up on the density. Gus Richard – Piper Jaffray: Right and in that primarily is cost – trapping down cost.

Yeah and obviously what I mentioned before in the flash for the multi-chip packages in the DRAM and Flash space that’s an obvious driver. It is pushing on the Nextest product. Gus Richard – Piper Jaffray: Got it and then just if you talk a little bit about the Aero and Mil market I would imagine that you had a good book-to-bill in the system test business. I would imagine that automotive is going to cut off but no alternative thing in there. How do those businesses look going forward?

Automotive is a bit paradoxical because we had the same men on the street sense that automotive would get as an overall market would be hammered, actually we’ve got our systems in automotive are built-in to these models year transitions that exists so there is actually automotive tends to look more like our Mil Aero market then it looks our semi-test market. So, it was some reasonably steady demand, as Greg said, that is -- it's an instrument business in both the production line and the service but its also an applications business for new technology in each model year. So, I think that will be steady. The thing that is happening inside in Mil Aero for us that keeps that a very good performer as long program investment cycles, and our strategy has been to continue to chip away and try to add more instrumentation to the total test solution. So, if you looked at two years ago versus now on the solutions in Mil Aero, you will find a lot more of the Teradyne trademark inside the instrumentation clusters in those systems. Gus Richard – Piper Jaffray: Got it. All right. Thanks so much.

Your next question comes from the line of Steven Pelayo of HSBC. Steven Pelayo – HSBC: All right, yes, just a couple of ones. I'm curious that pricing, I know, in the downturn its got more aggressive, or on the other hand the consolidation in the industry is really starting to more rational behavior or may be help in the longer term structural profitability of overall industry?

Steve, there are so few transactions that it is a little bit hard to say what's the trend in pricing. Most of the buys that we're seeing because of what I said before, technology buys. So, they are -- I think in general, you say, there are less -- in customer's eyes is less on the capital price economics and the negotiation are really more driven by wanting a solution for the new silicon. I will say that as customers look at their fleet utilization and the dramatic changes that are underway, there has been a lot more effort put in by customers to make they would doing the right thing on how many systems recovered. So working out the calculus on that with customers has been challenging. As they try to figure out what price they can pay and should pay for partial utilization of their install base. So that's were we saw some of the price churn going on.

If I could add to that Steve this is Greg. I think an area of opportunity over time I think for all of us who play in this space is the application engineering talent that many accounts are provided at sometimes at no charge to help win sockets, I think over time, each of us will be forced to reduce those free resources. And that inform us away of helping pricing by not giving something away for free. So I think that trend is going to occur over some number of quarters just given the environment that we are in. Steven Pelayo – HSBC: And could you point anything that consolidation in the industry has, we've seen a tremendous amount in last year or so. As we were talking about this, the previous 10 years, saying this industry needed it and we would see some benefits from it. Or do you think we're really realizing those or are we just continuing to have to right size our business to much smaller and smaller opportunities out there.

Well I think its hard to see the benefits in a recessionary downturn. But if you look under the covers you could see that, in the for example the Eagle Test acquisition, we were calling on some of the same accounts giving away a lot of application engineering. And we can dramatically change what we are doing there. Steven Pelayo – HSBC: Okay.

Kimberly, we have time for one more question.

So our final question comes from the line of Mehdi Hosseini of FBR. Mehdi Hosseini – Friedman, Billings, Ramsey & Company: Yes, can you guys hear me now?

Yes, we can Mehdi. Mehdi Hosseini – Friedman, Billings, Ramsey & Co.: Just a one side question going back to earlier on in the call and talking about the opportunities in the DRAM business. I’m a little bit confused or maybe you can remind me, what is the product differentiation here, is that you’re going in against large incumbency and I’m just trying to better understand what’s going to give you ability to have these design wins at this particular customer. Is that primarily AHD or just a high speed nature? Is technology -- what is it that your competitors cannot duplicate?

If you’ll bear with me just for a second and accept the fact. I don’t want to go into what we’ve got out there and what the special sauce is that the access of competition in this space is there is a high performance, high speed technology component and there is a density component or a parallelism component and our efforts are around providing something unique on those axis. So, I don’t want to further describe but that’s the axis. Mehdi Hosseini – Friedman, Billings, Ramsey & Company: Sure that’s fair is there any difference in what Advanced Probe Cards offer when it comes parallelism?

Well the Probe Cards have to be capable of doing what the tests are doing so I don’t think there is -- we’re not going to outstrip the capability of the interface technology? Mehdi Hosseini – Friedman, Billings, Ramsey & Company: Sure but in another words it’s more complementary, is it correct?

Right Mehdi Hosseini – Friedman, Billings, Ramsey & Company: Okay so to that extent prohibits a significant pricing pressure to get the design win?

Correct Mehdi Hosseini – Friedman, Billings, Ramsey & Company: Okay thanks two quick comments on the – I think I would just like to make and I hope first of all the organic investments we've made and the acquisition investments we've made, obviously in this kid of storm its always tough to be combining with other companies and then having to go through difficult times. I want to say that the combination of Nextest certainly and Eagle Test more recently have really anti- for us. We think those acquisitions are long term very, very powerful additions. In one way, I think about it is that in the last couple of years, I'll give credit here on the comparative side, the four companies in the Semi Test base that have been gaining market share, those four companies, Teradyne, Veragy, Nextest, and Eagle, and combining with Nextest and Eagle is really strengthening the overall portfolio. The last thing I would say I hope you get from this discussion that our focus on one thing and that is we're going to take, we have taken and we're going to continue to take the necessary steps to insure the future of the enterprise. These are very tough times and where these are significant cuts we're making it affects many of our employees. And we're just going to keep our eye on that ball and keep doing that as we work through very difficult times. Thanks everyone for your attention today. I'll see you next quarter.

Ladies and gentlemen, this concludes the today's conference. You may now disconnect.