Good morning, my name is Rebecca and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1, 2010 earnings conference call. All lines placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) I would now like to turn the call over to our host Andy Blanchard, Vice President of Investor Relations. Mr. Blanchard, now you may begin.

Good morning everyone and welcome to our discussion of Teradyne’s most recent financial results. I am joined this morning by our Chief Executive Officer, Mike Bradley; and our Chief Financial Officer, Greg Beecher. Following opening remarks, we will provide details of our performance for the first quarter of 2010 as well as our outlook for the second quarter. First, I’d like to address several 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 office at 978-370-2221. This call is being simultaneously webcast at www.teradyne.com. Note that during this call, we are providing slides on the website that may be helpful to you in following the discussion. To view them simply access the investor page of the site and click on live webcast. In addition, replays of this call will be available via the investor’s page of teradyne.com about 24 hours after the call ends. The replays will be available along with the slides through May the 14th. The matters that we discuss today will include forward-looking statements that involve risk factors that could cause Teradyne’s results to differ materially from management’s current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release as well as our most recent SEC filings for a complete description. Additionally, those forward-looking statements are made as of today and we take no obligation to update them as a result of developments occurring after this call. During today’s call, we will make reference to non-GAAP financial measures. We have posted additional information concerning these non-GAAP financial measures including reconciliation to the most directly comparable GAAP financial measure where available on our website. To view them, go to the investor page and click on GAAP to non-GAAP reconciliation link. Also, you may want to note that between now and our next conference call, Teradyne will be participating in the Credit Suisse Electronic Supply Chain Conference on May 12, in Boston, Cowen’s 38th Annual Technology Media & Telecom Conference, on June 2 and 3 in New York and UBS Global Technology and Services Conference on June 10 in New York, And Eric May Luncheon’s in New York and Boston on June 3 and 23 respectively. Now lets get on with the rest of the agenda. First our CEO, Mike Bradley will review the state of the company and the industry in the first quarter and will review our outlook for the second quarter. Then our CFO, Greg Beecher will review details on our quarterly financial performance along with our guidance for the second quarter. We will then answer your questions. For scheduling purposes you should note that we intend to end this call after one hour. Mike.

Thanks Andy. Good morning everyone, thank you for joining us on the call this morning. We are off to a strong start to 2010 with a very solid first quarter and increased revenue on profit guidance for the second quarter. It’s been an exceptional start for the year in three respects. First our SOC test product line up is seeing increase in demand across a wide array of customers in technology segments. Second, the business model we’ve shaped in the last two years is delivering markedly improved performance, and third this performance is being achieved without a strong rebound in the memory test markets so far, which means that we should have another contributor once that market gets moving. I’ll asked Greg to focus on the financial model comparisons in his comments, but I would like to expand on what’s behind our bookings and sales numbers for the first half of the year. As you saw on our press release, we logged $534 million in bookings in the first quarter, up over $230 million from the Q4 total of $303 million. Semi Test led the way up about $200 million sequentially and totaling $460 million in the quarter, the highest Semi Test total in ten years. System test group orders which include our defense automotive commercial board test and hard disk drive test units saw their own healthy order surge up above 85% from the fourth quarter, driven mostly by disk drive and commercial board test. Since many of these businesses and system tests have longer lead time profiles, you’ll see much of that revenue flow through starting in the third quarter, but back to semiconductor tests. There are a number of things contributing to our strong showing; first of all the utilization remains very high in our leading edge…

Thanks Mike and good morning everyone. In addition to providing a detailed review of first quarter results and second quarter guidance, I’d also like to expand on our earnings growth from the last cycle and our leverage on our business model going forward. Starting with the first quarter recap, we delivered a 21% non-GAAP operating profit on sales of $330 million. This resulted in non-GAAP EPS of $0.33, $0.07 over the top end of our first quarter guidance. Our first quarter non-GAAP EPS of $0.33 is already well above last cycles second quarter 2008 peak earnings per share of $0.16 without significant contributions from our new market entries in memory and hard disk drive test. Second quarter sales are predicted to be $390 to $420 million and non-GAAP earnings per share is expected to be $0.45 to $0.52 per share. For the second quarter, we expect a non-GAAP operating profit rate of 25% to 27%, which would be the highest operating profit rate in ten years. This non-GAAP EPS guidance is also about three times higher than the last cycle’s quarterly peak earnings, again with only modest contributions in the new market offerings. On the top line, we are clearly benefiting from our broad SOC test product coverage. The SOC unit recovery that has started in the third quarter of 2009 has spread out to almost all the right segments, with power management, micro-controller and wireless being the strongest. The breadth of the SOC market coverage, combined with our strong market share gains, is driving our second quarter revenue guidance up approximately 25% over our last cycle’s peak quarterly revenue. Our Semi Test business achieved a non-GAAP operating profit of approximately 26% in the first quarter on sales of $290 million despite only moderately increasing CapEx and memory tests. SOC…

Thanks Greg. Rebecca we’d now like to take some questions.

Your first question will come from the line Jim Covello. Jim Covello – Goldman Sachs: Good morning guys. Thanks so much for taking the question, and congratulations on the terrific results. I guess the first question would be and you alluded to it a little bit, but if you could go into it in a little more detail. Your sort of the timing between the very significant order number, obviously your orders are much, much higher in revenues. The timing for how we think about that turning into shipments and revenues, and again I know you alluded to it a little bit, but if you can get a little more granular there that would be great. Thank you.

Jim hi this is Greg. Thank you for the congratulations. You can see in our guidance of about $400 million thereabouts, there is some backlog that’s been build. Some of the backlog has to do with a new product that acceptance is required a significant amount, and we are assuming that acceptance occurs in the third quarter, we will start shipping that product in the second quarter, but some of it is just due to the timing of when you can recognize revenue with a new product. Jim Covello – Goldman Sachs: The traditional SAB101 sort of requirements?

Yes, yes. Jim Covello – Goldman Sachs: You think the Q3 revenue would be sort of, clean if you will relative to what the backlog would look like. In other words we should expect a pretty reasonable revenue quarter relative to the orders that we saw in this most recent quarter?

That’s what we are assuming at this point. I think that’s a fair assumption. Jim Covello – Goldman Sachs: And then, you have the slide up in the westbound which is very helpful relative to where we are in SOC, it has three months moving average bookings and we are obviously still well below the last cycle peak, but up off the bottom, but as you alluded to in memory test, we are still really nowhere. What do you think is going to be the kicker to get people moving in that segment? Do they have to add the capacity first on the front end which we are now starting to see, and then they will make the tester orders or is there another dynamic?

Well it’s all tied to unit volume Jim, and I think that the major thing that we’ve seen in this cycle has been the heavy reuse of the existing equipment. As you know the by rate by rate in memory has traditionally been about 50% higher than it has been in SOC. So in the downturn there has really been extra capacity there and that part of the industry is just focused more and more on trying to reuse the existing equipment as that gets loaded here, as growth in unit volumes go up that will trigger some buying, but as you can see from that chart I think its up off the bottom, but if you annualize those numbers its still well below any of the last five years. Jim Covello – Goldman Sachs: Sure. Maybe final question for me on that, obviously we are starting to finally thankfully see some capacity buying take place in the front end on the memory side. Do you think really that has to get installed before, we are going to the point where we are at a full utilization on the existing back end equipment, or do you think we could even see some buying in the memory sector before we get that incremental capacity up and running?

I think you’ll see some buying. I don’t think that this rate that the memory CapEx is reflecting now in that chart that we show there will stay flat, think it will go up. It’s very tough to call the slope though. Jim Covello – Goldman Sachs: Terrific, thanks so much. Congratulations again.

Thank you.

I’d let to add one think Jim, as the speeds go up in high speed memory we think that will likely trigger some greater buying, but that’s more of a second half of the year story. Jim Covello – Goldman Sachs: Thank you.

Your next question is from the line of Raj Seth. Raj Seth - Cowen & Company: Thank you. A couple quick ones, is your expectation of better HDD in the second half still driven by that one customer? Can you update us on where you are with other customers there? Mike, you talked about gaining share on SOC, perhaps you can talk a little bit about where it is within SOC, you think you are gaining share and sort of what the rate of share increase feels like to you at this point.

Raj, first on the HDD side, that’s a second half story from a revenue standpoint for us. As we talked about last quarter have an effort underway to expand to more than one customer, we are in the evaluation process to try to do that. I would think about that as also, obviously a second half story if we are successful on that. So that’s our objective and we hope to be able to deliver on something on that in the second half of this year. On the share side, let me put it in perspective over the last few years. In SOC if we go back three or four years we were mid-30s in share and moved that up in ‘08 to just over 40% and held our share position in 2009 around 41% share in SOC. Now, we think that, and it’s on a much smaller, obvious on a much smaller test market of about $1.3 million. We are pretty optimistic that we are going to gain some ground this year, how much I’m not sure, but the hold at 41% last year was done without much real contribution from the microcontroller segment, from the image sensor segment, from the digital wafer probe segment. So holding last year was actually in retrospect to pretty good accomplishment. So, we are hopeful we can get a couple of points share this year, but we won’t know that until we have a few quarters under our belt. Raj Seth - Cowen & Company: And the share that you talk about this year, would it come from those areas that you just mentioned, micro controllers, image sensors, etc. Is that primarily where you think the share gains are, or is that elsewhere do you see a meaningful movement?

We don’t think about share gains from a market segment shift standpoint. In other words if image sensor comes back, that’s just a recovery of a segment, if you think about it from a designing standpoint we are very pleased with the momentum we had this first quarter and we think that’s what builds the real long term market share story. If you look at where that came; that was led in power management, in terms of socket wins, some microcontroller wins, automotive base stand. It really covers a lot of different segments, but the one’s mentioned... Raj Seth - Cowen & Company: And just a quick follow-up, in RF what’s the trend like? In RF you’ve got a competitor that implied they’ve been gaining share from you. What’s your view there?

From the outside world, we are still north of 60% in share through 2009. Obviously the quarterly battles and the socket battles go on, but we think our momentum is quite good. The UltraWave product is out between a 150 and 200 units, I think close to 200 units from a booking standpoint. So we feel like we are on pretty good ground on that front and from a socket standpoint we do well. Raj Seth - Cowen & Company: Thank you, nice quarter.

Thank you.

Your next question is from the line of Krish Sankar. Krish Sankar - Bank of America/Merrill Lynch: Thanks for taking my question. First question is on a gross margin guidance seems to be flat in such a strong revenue improvement. Is it fair to assume that one of the business that seems to be slowing as the analog business?

No, I wouldn’t assume that. What happened in the first quarter is we had favorable mix, so we are little bit higher than we would normally expect and in the second quarter we are assuming a more normal mix. The other thing that is happening, it’s just the simple math as the sales get higher, the incremental drop through moves the percentages less as the numbers get bigger. So it’s those two things that are happening and to be at 53%, this level of sales is consistent with our model. Krish Sankar – Bank of America–Merrill Lynch: Okay, and just to touch on the market shares for SOC. If I just take your 1Q and 2Q run rate for the SOC business for a $2 billion year. If you try to extrapolate it we might end up at a 50% market share, unless there is some slow down in the second half. Is that a fare enough way to look at it, assuming you go from a 41% to 45%. Still those are going to be some kind of a slowdown, because this run rate is probably a little too aggressive.

I think if you make the denominator that small, the only way you can translate it is into very high share gain for us. So we are not leading with that story. We think there is share gain that will be embedded in our performance in 2010. The way we think about it is that obviously the first quarter has been very strong. The first half of the year for us will be strong, and our short-term expectation here from a customer-by-customer standpoint is that there is still an appetite to continue to add. If you took it at the other end of the spectrum and said “Well, how large could the market be?” If you put a $3 billion market and through SOC and you might be gulping as I say that, because that sounds high historically, but if you put a $3 billion market in, you still have a three year cycle here that is lower than the prior two three years. So the productivity and the buy rates continue to go down, and if you don’t mind me giving the numbers, the buy rate in the first three years and the last nine would be 2.1%, and the middle three years 1.8%, and then even if I embed a $3 billion market, which is not in my view out of the realm of possibility for this year, because of the correction and because of all of the leading technology that’s being developed by our customers, you still move that buy rate down to 1.4%. So it really hasn’t rocked the boat so much to have that kind of year, that kind of market performance. If we do that, our market share moves up less than you describe, but its still a good move on market shares. Krish Sankar – Bank of America–Merrill Lynch: That was very helpful, and just a final question. Did you give the split of the post side in IDM?

I don’t think we did, but we can. The split is -- you are asking for bookings or sales.

Both.

I will give you on the bookings side; the OSAT’s are 36%, last quarter 32. We will insert that answer on the fly here as Greg digs it out. Go ahead. Next question and Krish, I’ll come back to you.

Your next question is from the line of Satya Kumar.

Thanks for taking my question. I was wondering if you could give some color on the order patterns in Q1. What was the linearity of the order intake? Was it uniform or was there a rush towards the end of the quarter. I am just trying to get a sense of what’s the risk of those double ordering going on.

Satya, we’ll come right back to that. The trajectory of orders was -- the thing that’s set out in the first quarter was that the trajectory of orders continued up in terms of a funnel forecast through the quarter, but it did not have anything exceptional with back end rush. If anything, it was stead all the way through, but all consistent up through the quarter. The between the lines question or the thing you asked is double ordering. Maybe I can answer it this way. Of the top 20 flex customers, just as an anecdote, the top 20 flex customers, 80% of those customers bought in the first quarter, and we see them coming back in about the same rate in the second quarter. So if there were double ordering, I don’t think we’d see that breadth of continued demand.

Are you saying that they are coming back at the same rate for orders or in terms of deliveries?

No, I was just talking about the breadth of participation. I can’t make a call here as to whether they’ll order more or less; obviously they ordered a lot in the first quarter, but the sign of a return for incremental ordering from a broad set of customers I think is one indication that there is not likely any double ordering. And we are very careful as we work with customers, as we are trying to populate a slot plan here that we don’t have double ordering, that you might see in all sense.

You mentioned your lead times are 10 weeks on average for SOC. Can you remind us what is normal and when do you expect to get back to normal.

This is Greg. Normal for us would probably be six to eight weeks and it can obviously vary quiet a bit depending upon how many systems in the configuration, but six to eight I would say is normal, and last quarter you it was about 10. I think something during this quarter end we’ll probably work our way back to 10 or under 10 by the end of the quarter.

Okay, and can you help me understand specifically on J750. How long are the lead times. There are some market participants I think as high as five or six months. How big is J750 sensitive to the part of the mix for you guys, and is there an opportunity for competitors as they share in that segments participated by J750 because of the lead-time?

Satya, I think it’s very common when there is a big drive on a product for competitors to say there is a window of opportunity that they can get in. Honestly, we haven’t seen a lot of that. We are expanding the capacity very dramatically to keep our lead times in check. The 750 lead times are amongst the highest that we have got, but they are now coming down, and as we get through this quarter, we will see lead times in the third quarter that will be lower than they are in Q2, independent of volume; because we are going to be in triple digits of shipments of that product.

Is there any sense of how much the 750 is as part of the semi business?

What percentage it is of our business?

Yes.

We don’t have that. From a unit standpoint it’s obviously bigger than dollars, but if we can dig that out as we talk here, we will insert that.

Okay, and lastly on memory. I agree that the buy rate probably needs to go up, and there is some equipment reuse happening in used equipment as well. I guess that’s sort of getting used up. I was wondering though, if you look at it from a little bit more of a longer term perspective, is there a structural change that is happening in the way chip companies are testing memory; whether its more wafer level testing or using certain ECC or other features in NAN flash for example, to lower the amount of testing they do; the best part, they don’t really need more testing. Can you help me understand the way the productivity is working out for the chip companies?

All of those techniques are being applied, because the memory customers are looking at the CapEx rate and memory relative to SOC and they are seeing that even with greater variety SOC, the SOC market has had a more productive test asset. So they are driving a variety of techniques. Many of the ones that you described are in place, and then there is a group force thing on making sure the utilization is just pushed and pushed. I think the way that I would approach this is to say, what if the market in memory has been north of $1 billion in the number of years in the last five or six years, so the way we model it is we say, if it gets back -- and right now I think its running at about annualized, running at about a $300 million rate, up from $200 million last year. So if it’s a $500 million market and we are trying to get a 20% share, that’s $100 million for us. If it works its way incrementally back up to $1 billion, our hope is that we could have 20% plus in that environment. So rather than call exactly how big the market is, which we have sized an investment and we have got two product lines that are attacking that, that we hope to be able to deliver between $100 million and $200 million business, depending upon how that market does shape up.

Well thank you so much, and congratulations on a terrific quarter.

Thank you.

To follow-up on your earlier question, the J750 in the first quarter was 13% of semi-test sales, or 11% of total company sales in the first quarter.

Excellent, thanks once again.

Next question is from the line of Gary Hsueh. Gary Hsueh – Oppenheimer & Co.: Hi, thanks for taking my question. I was just wondering if you could guys talk a little bit about the end market, bookings heading north of $500 million. Not to be too simplistic about this, but the last time that happened was in 2004 and there is an inventory correction in the second half. Now granted we are talking about buy rates that are considerably lower, but could you just give us anecdotally how this year looks and feels, and maybe how that looks and feels differently from 2004, and what the buy rate is I guess, just to kind of reset what my expectation is in Q1 in SOC.

We have got the quarterly buy rates here. I will talk for a minute and then Andy if you can dig that number out. Gary, its a lit bit of a review of the numbers I was pumping out just a minute ago. I think you are asking comparatively how does buy rates stack up, and is it overheated; that’s the essence of where you are heading right? Gary Hsueh – Oppenheimer & Co.: Actually, I don’t think its over heated. I agree, buy rates are still pretty low, but in terms of absolute dollar value, we are getting to that $500 million kind of order, kind of level. I was just wondering how does this year in terms of the first half look and feel differently from the first half of 2004, more of a qualitative kind of stand.

Yes, well lets see. I’m having a little trouble remembering the beginning of 2000. Ask me a 1984 question, I’d probably know. One of the things that are happening now, there is clearly a very broad and strong demand, heavy optimism in our customers about their projections for unit growth and new product introduction. I think one of the big things that’s different between 2004 and now is that the OSAT’s don’t buy the way they did in 2004 now, that was a built newer environment. It is far more thoughtful now and tied much more to commitments from their customers. So you don’t have the built-in bubble from the OSAT side of the equation, but when you are in an up market everybody does feel good, so we are very careful about whether there’s any double ordering as we were asked a few minutes ago, or whether there was some exuberance in the market. We are certainly seeing strength, but we are not seeing the signs of double ordering. The other thing I comment on is, there has really been quite a significant decommissioning in this cycle of older generation equipment, and even though customers do want to squeeze out as much as they can out of fully depreciated assets, they really decommissioned a number systems; as much as if I take a combination of complete decommissioning and low utilization, that could have eaten as much as 30% or 40% into the cumulative installed base of legacy equipment. So a bit of this buying here is offensive buying to get on with the new generation of product, and it’s filling in a little bit of that hole that exists because of the heavy decommissioning in the cycle. I think that’s different from 2004 as well. Gary Hsueh – Oppenheimer & Co.: Okay. The other thing I’ll just point is probably on a OSAT percentage of the booking side of the house. I mean the 36% or 32% last quarter, its still a pretty tame percentage and your product profile is broader and stronger than it’s been ever before certainly compared to 2004, I would guess.

Q2 2008, it was 54%, so you don’t have to go back to 2004 to find out that percentage.

I think Gary your point of product profile I think is spot on, because we have eagle test now and eagle test is performing very strong. We also have Nextest, which has a good SOC test system as well. So some of the acquisitions have made a significant impact in terms of our bookings and sales. Gary Hsueh – Oppenheimer & Co.: Okay, great. A kind of follow-up question for you Greg. You talked about how high speed memory test and hard disk drive test represent basically upside to the mid cycle model. In terms of profitability, I just wanted to kind of get reset in terms of what our expectation level should be in the second half or hard disk drive test, since the margins I guess over the last year have improved considerably. I mean is this still a case where it’s maybe dilutive on a gross margin basis, but net neutral or maybe even slightly accretive on the operating margin line, the 20% operating margin level.

That would be correct. Our gross margins have come down, but the operating expenses are already in the P&L, so while gross margins come down we have higher revenue and it drops to the bottom line. We have shown on our website some time ago that if the mix is heavy, hard disk drive, HSM, say 80% mix of that business in a sales growth perspective, and 20% SOC to drop through playing around 35% versus 52 % in that neighborhood, but obviously its upside to EPS, upside to income, but its going to throw off some of the percentages. Gary Hsueh – Oppenheimer & Co.: Okay, but that hasn’t changed over the last three to six months, that’s been the same case.

It’s the same case and we are much closer to having the HDD achieving its target margin profile. We were behind as the new product came out. We think we are in much better shape to get that on its model, which is different in semi-test model, but it has its own model. We think we can get it to that model in 2010. Gary Hsueh – Oppenheimer & Co.: Okay, great; and congratulations on the Q1 result, thanks.

Thank you.

The next question is from the line of Daniel Galzuke. Daniel Galzuke – Unidentified Company: Just a follow-up on Gary’s question. With regard to I guess the Eagle Test and the Nextest, is there any way to size what the contribution in terms of revenue is from those businesses or even just a rough cut; something we can have a comparison relative to mid cycle revenues for the base business.

We weren’t planning on breaking that up, but I can just tell you that it is very significant, the contribution. In the first quarter, we certainly would be below last Q2 2008 P5 significant amount if those businesses weren’t with us, so it’s a very significant impact, but if we prefer not to break that out. I would prefer to keep it at the SOC and memory level. Daniel Galzuke – Unidentified Company: Alright, I appreciate it. Thank you and congratulations on a great quarter.

Thank you.

The next question is from the line of C.J. Muse.

Hi, this is Olga Vincent calling in for CJ, thank you for taking my question. In terms of your HDD outlook and given the significant portion of that in your current backlog; assuming you don’t get a second customer, can you talk about the magnitude of revenues there on some range for the second half of the year.

This is Michael. We mentioned in our last call and I will reiterate that the range of buying from a sizeable HDD customer in a 12-month period could range anywhere from $40 million to $60 million a year; that depends really on the timing of their tooling and so on, but if you thought about a CapEx rate, that would be a good shorthand to use. So our hope would be, that if we can bring another one into the fold, that we would have the ability to get about that same amount from a second customer.

Okay and if you do get the second customer would that impact in any way the gross margin profile for that business, or pretty common platform there would mean similar margins.

It would be similar margins, it would help us cover the fixed cost, so it would improve the bottom line, but the gross margin percent would look the same.

Got it, and then for the new product that’s currently included in your backlog, which you will begin to ship in the second quarter and really revenue in the third quarter. Is there a magnitude that you can talk about that’s currently in your backlog.

No, sorry we can’t.

Okay, thank you.

Your next question is from the line of Patrick Ho.

Thanks a lot and congratulations as well. A couple of questions; first in terms of the customer mix on the SOC side of things, you did mention that you are still seeing the same type of buy rates from your existing customers. Do you see in the second quarter any broadening of the customer base, or is it going to be pretty much the same type of customers just buying at the same rates or even possibly higher in the June quarter.

Patrick, its Mike. I was careful not to say that they are buying at the same rate, because we don’t know exactly what they are going to be buying in quantities this quarter. I was trying to comment that the breadth of participation of the top 20 customers, 16, 17 of those customers bought in the first quarter, and I gave you a segment which was only flex us and I wasn’t trying to disguise it’s. It’s just that we do that careful analysis on the flex line. So you are going to have the 80% of them buying here in the second quarter.

Okay then I apologize for that. Secondly, in terms of disk drive test market. I think you mentioned last quarter as you gave an outlook for 2010 given the strong buy rates in 2009 that there was a possibility that it would be a decline in 2010 because of that. Has anything changed given that you saw some buys this quarter, and potential changes in the second half of the year given where the disk drive market is heading.

Yes Patrick, the recap on what we talked about last quarter was because of the acceptance process, the SAD101 process, and in fact we had a totally brand new first generation product. We described our ‘09 revenue was having more than ‘09s worth of buying in it. It was one and a half to two years worth of buying as you saw in our 10-K. So if you do just numerical comparison with one customer buying; if one year has two years worth buying, then the next year would obviously be smaller and that was the signal we are trying to give last quarter. I would say with the strength in the markets with the tooling that’s going on, each customer could buy in that range I described and hopefully could be at the high end of that range given the expansion in the HDD market itself.

Right and a final question from me, and this is going back to the SOC side at things. I know your lead time are still a little bit extended, so you are getting a little more visibility than you have gotten in the past. Is there concerns of any capacity digestion period at this point in the game. Just because orders have ramped up, your now as we look into the June quarter for three consecutive quarters. What’s your take about a potential capacity digestion kind of pause that could occur in the second half of the year?

Well, there is always that concern, and I think that’s why on the fixed cost side we are not ramping the fixed cost structure up. Its not because we are anticipating this digestion and dramatic fall off, it’s because our business model doesn’t require it. I do think we will have some digestion, but if you look at the utilization rates, Q3 and Q4 has been pretty strong ramp, Q1 on top of it has been pretty strong, and even with that amount of new capacity going in, the customers are putting them online immediately and are getting very, very high utilization. So, its really a function of will the unit volumes continuing to grow, and will their forecast continue to strengthen that we’ll have the impact as the whether there is any pause in the digestion. But again, as I come back to this, I think there is a scenario here; the probability of a sharp fall-off starting in the third quarter. It doesn’t look to us that way based upon metrics like moving average of the buy rate, as well as the appetite of a series of customers to bring additional capacity on in the third quarter.

Right, that’s very helpful. Thank you.

Your next question is from the line of Gus Richard.

Thanks for taking my question. Could you talk a little bit about supply constraints, and are you able to get what you need to build your products; are those bottlenecks brining relief for you?

Hi guys, this is Greg. Yes, they are. The fact that we were at 10 weeks in the first quarter despite the incredible ramp we had on average I think is very positive in terms of how our supply line guys were able to get the necessary parts. There was extraordinary wall room effort to pull that off. I think lead times are likely to move out a little now, but we expect to pull them right back in; some what like we did last quarter. When we started the quarter, we thought lead times could be a little beyond 10, but we ended up at 10, and our normal is six to eight, so we are not that far out the range right now. So we are going to do everything we humanly can and our suppliers are making good progress. So we see that we are making progress everyday. Occasionally we will set back, but we tend to recover very fast. So we are feeling very good about where we are on the supply line and have more work to do, but we are confident that we will meet our customers’ expectations.

Okay, and the constraints, are they electronics, loose logic, just any color there?

It’s been all over the map, there is no one thing. What I will say is that typically in an upturn you would expect it to be the custom parts more than the commodity parts. It has been both in this case. The model we got is that our manufacturing partner Flextronics handles the vast majority of the commodity parts. We still have a supply line organization both in the US and based in their plant. That really goes after the custom parts, and we were very much in a partnership to make sure that the supply line is responding, but if not anyone thing, its been a mixture of tough components.

Then, I know this is hard to say but what would you consider in an upturn normal seasonality or is there such a thing?

In the last few years, the seasonality has been stronger Q2 and Q3 buying, and if you go back far enough, then it used to be more of a Q4 buying, but I think the pattern of the last couple of cycles with everything else being equal, no fouls in the world economies and so on, you would see highest demand in the second and third quarter. I think this is exceptional in the first quarter because of the convergence of so many things of the low low super low buy rates that preceded this, the decommissioning of products, and a return of some very strong optimism across the customer front.

The last one from me, this is a tough one to answer. You have been talking to your customers, you are sort of engaged with them, you have got a pretty good idea of what their ramp plans look like. Would you be willing to hazard a guess as to what you thought the sequential unit growth in the IC business is going to be, both outside Q2, Q3?

IC unit growth?

Yes just from talking to your customers, kind of we are looking at 5% to 10% sequential. Do you have any thoughts there, just sort of how that aggregates?

We do it with a subset of customers. It’s certainly greater than five and less than 15. So I think in the mid to high single digits it is what I’d say. That’s very off the cuff. You said it was a hard question and you are getting a lousy answer.

Okay and that is for Q2 and Q3 at this juncture?

They really are not very good at being able to say beyond one quarter, so I wouldn’t put a lot on.

Got it. That was very helpful, I appreciate it, and thank you. By the way, congratulations from going from near death to sprinting up heart break hill in the Boston marathon.

Thank you Gus.

This is going to be our last question Rebecca.

Your final question is from the line of Atif Malik.

Thanks for taking my question. Can you comment on the book-to-bill in the current quarter. Do you expect it to be flat up or down?

Atif, we don’t pay much attention to book-to-bill and that sounds like a good answer to you, but we are looking at our capacity plan and as Greg said, trying to make sure we get our lead times back in a little bit, and maybe that’s just the way of asking us what we think our bookings are going to be in the second quarter, and we don’t forecast the bookings, but I would say that from a tonal standpoint, the customer still remain more optimistic than they are showing signs of caution.

Okay, that’s helpful and one more question and not to beat a dead horse on double ordering and digestion kind of lines of thinking, but some of the testing houses like Ardentech have publicly commented about slow deliveries by test companies that could be hurting their revenue profile this year. If I go back to 2004, the phenomena that we saw there was, that the OSAT’s ordered multiple testers for the same customer. Any kind of thoughts you can give that can kind of lessen our concerns that something similar could be happening this time around and multiple OSAT’s are placing orders for the same customer?

I will keep alive the tradition that when you have longer lead times you should blame your suppliers. I think that’s what customers do and we have already said we had some supply constraints, but I don’t think that the OSAT double ordering that you saw in the ‘04 cycle, you did not see in the ‘08 cycle, and we don’t feel like we are seeing it now. There is a very tightly connected royalty or specifiers who are going to drive business at the OSAT’s, talk to us about their capacity plans, and we talk to the OSAT’s. So there is a triangulation process that tends to identify things if they are on top of extra super buying, on top of what the real demand is. We could get fooled, but I think that we have a reasonably good handle on that.

That was very helpful. Thank you.

I think the last point Mike made is, different from the past when an OSAT is putting an order in, we go back to the specifier to find out “Are you the guy driving that demand? Are you putting that demand anywhere else too?” So we get confidence that it is only going to that one OSAT, and the specifier isn’t also planning on getting off another OSAT, and the OSAT’s tend to buy it after they know they have the business. They don’t buy it in advance or book it in advance. So we check with the specifier to make sure it’s a real firm commitment coming our way.

Okay thanks.

Great. Thank you every one, and we look forward to talking to you in the weeks ahead.

Thank you.

This completes today’s conference call. You may now disconnect.