Good day ladies and gentlemen and welcome to the First Quarter 2015 JDSU Earnings Conference Call. My name is Jackie, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the presentation. (Operator Instructions) I would now like to turn the conference over to Mr. Bill Ong, Senior Director of Investor Relations. Please proceed, sir.

Thank you, Jackie. Welcome to JDSU’s fiscal first quarter 2015 earnings call. My name is Bill Ong, Senior Director of Investor Relations. Joining me on today’s call are Tom Waechter, CEO; Rex Jackson, CFO; Alan Lowe, President of our Communications & Commercial Optical Products Business Unit, SVP and CEO of SpinCo would also join us for Q&A. Please note, this call will include forward-looking statements about the company’s financial performance and plans to separate the business into two independent publicly traded companies. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with the SEC, particularly the risk factors in Part I, Item 1A of our annual report on Form 10-K filed with the SEC on August 26, 2014. The forward-looking statements including guidance we provide during this call are valid only as of today. JDSU undertakes no obligation to update these statements. Please note, also that, unless otherwise stated, all results are non-GAAP, which excludes, among other items, amortization of acquired technology and other intangibles, stock-based compensation and restructuring charges. We also expect to exclude certain costs we have incurred and will be incurring as we prepared for and execute separation. We include a detailed reconciliation of these non-GAAP results to our GAAP financials, as well as a discussion of their usefulness and limitation in today’s earnings press release. The release plus our supplementary slides and historical financial tables are available on our website. Finally, we are recording this call today and will make the recording available by 6 p.m. Pacific Time this evening on our website. I would now like to turn the call over to Tom.

Thank you, Bill. And welcome to those joining the call today. Given recently announced plans to separate into two public companies. We have shortened our prepared remarks today to allow more time for Q&A Focusing first on our quarterly results, our fiscal first quarter 2015 revenue at $433.6 million exceeded the high end of our guidance range. Book to bill exceeded one of both CCOP and our optical security and performance business segments, but it was below one for network enablement, service enablement, and JDSU as a whole. Gross margin was 49% with network enablement at 66.3% a fourth consecutive quarterly record. Service enablement at 69.1% and commercial lasers at 50.7% also records. Service Enablement was profitable and ahead of our schedule. Earnings per share also exceeded guidance significantly at $0.14 per share. Turning to our separation strategy with several years of heavy lifting behind us and our business segment operationally fit investing to win and targeting growth in a number of new areas, we’re confident that this is the idle time for the separation. As I highlighted in our mid-August earnings call in fiscal 2014, we completed several acquisitions to strengthen service enablement phase out lower margin products within OSP we established CCOP in Datacom, and gained further attraction in commercial lasers. As our result show what will be the new CCOP, which we refer to a SpinCo and the new Networking Enablement, Service Enablement and OSP, which we refer to as NewCo are starting out the fiscal year 2015 with the strong foundation and solid financial results, providing positive momentum as we move closure to completing the spin. The timing is right for both SpinCo and NewCo to sharpen their focus on growth opportunities as network scale to higher transmission speeds, 40G in data centers and enterprise, 100G…

Thank you, Tom. Consistent with prior earnings calls, we have a supplemental earnings slide deck posted on jdsu.com that provides current quarter earnings results and next quarter guidance outlook. JDSU’s fiscal first quarter 2015 revenue was $433.6 million and exceeded our revenue guidance range of $405 million to $425 million. Gross margin of 49%, grew 270 basis points from a year ago reflecting continued operational discipline, favorable product mix from SE, strength in commercial lasers, and OSPs last time by-product exit last year. First quarter revenue grew 1.1% from a year ago. However, excluding approximately $30 million of 3-D sensing and last time buy revenues in last year’s first quarter, our core network laser and any counter-fitting businesses combined revenue grew 8.7% year-on-year. Operating expenses at $173 million declined 6.5% sequentially from a $185.1 million on tighter expense controls and benefits from restructuring activities initiated in fiscal 2014. Operating margin at 9.1% exceeded guidance of 6% to 8% on higher than expected revenue and up from 8.3% last year, driving a better than expected EPS at $0.14, flat to last quarter and up from $0.13 a year ago. On the balance sheet, total cash at $880.9 million remains strong. Operating cash flow of $40.8 million continues our strength of eight straight years of positive cash flow. Since our CCOP spinoff announcement on September 10, we made great progress in separating assets and resources including personnel between the pending two new companies. We will set up SpinCo to be lean with sufficient capital and no long-term debt. We have received a lot of questions about our net operating loss carryforwards since our Analyst Day event in September. We have about $6 billion of U.S. Federal NOLs and about $3 billion of U.S. State level and International NOLs. We expect substantially all…

Thanks, Rex. For overall JDSU, we expect the fiscal second quarter revenue to be $445 million, plus or minus $12 million and non-GAAP operating margin to be 9.5%, plus or minus 1 percentage point. Our revenue midpoint of $445 million is down 0.6% from last year’s $447.6 million. We would point out that approximately $26 million in revenue from a year ago is attributed to the 3D sensing and OSP last time buys as largely being made up and in fiscal Q2 this year from revenue in our network markets. Thus, our year-over-year revenue growth of 5.6% in our core businesses reflects networking market share gains. We have also widened our revenue guidance range of $20 million to $24 million to reflect current macro uncertainty. Our non-GAAP EPS guidance of $0.15, plus or minus $0.03 has likewise been extended from a range of $0.04 to $0.06. In closing, network industries’ trends are moving rapidly. Disruptive technologies like SDN and NFV are emerging while 100G extents into the metro market and 40G is being installed in our Tier 1 data centers. Near-term U.S. carrier spending remains weak with initiatives such as Domain 2.0 expected to improve network investment efficiency while creating technological disruptions in the industry. We believe creating SpinCo and NewCo will put these new companies on a stronger position to capture additional opportunities as the markets evolve. I’d like to thank our employees, business partners and shareholders for your interest and continued support of JDSU. I’ll turn the call over to Bill to begin the Q&A session.

Thank you, Tom. I’d like to ask everyone to limit their discussion to one question and one follow-up. Jackie, let’s begin the question-and-answer session.

(Operator Instructions) And your first question comes from the line of Amitabh Passi with UBS. Please proceed. Your line is open. Can you please check your mute feature? Amitabh Passi – UBS: Hi. Can you hear me now?

Yes, we can Amit. Amitabh Passi – UBS: Hey, Tom, just a couple of questions from me. First, it’s on the SE side. If you could help clarify where the upsize of price came from? You obviously had breakeven much sooner than anticipated, but you’re then guiding against an operating loss in the next quarter. So I was real confused by some of the ebb and flow in SE in particular?

Okay. Yes, we had a strong quarter in SE. Part of it was network instruments, some larger projects around of assurance and then ran. Part of the fluctuation you’ll see and the profitability will be, how we allocate cost based on bookings. And as you know, SE will tend to be a bit lumpy on the bookings because of large size of some of these projects. So what happened is projected into next quarter is that we’re going to have significant amount of bookings, which will attract larger allocation of costs, so costing the lumpiness. We still believe that by our fiscal Q4 we’ll be able to get to consistent break-even or profitability but between now and then will be that be lumpy based on these allocations primarily. Amitabh Passi – UBS: Okay. And just a quick follow-up for you, Rex said, does you guidance for the December quarter incorporate any separation related expenses with an OpEx and. I’m just wondering is that included in the $0.15 plus or minus $0.03 or you going to perform that at all?

It does not include any expenses and we will be taking that out and making it very visible. Amitabh Passi – UBS: Okay. Let’s go back in the queue. Thanks.

Thanks.

And your next question comes from the line of Dmitry Netis with William Blair. Please proceed. Dmitry Netis – William Blair & Company: Thank you. I have two questions. One is, could you give us a lay of the land in terms of the North America carriers? I understand how you’re guiding for next quarter, but is there any hope for recovering 2015? Do you expect that to be in the first half, second half – I mean how do you view that CapEx environment in North America specifically and what’s your visibility is like on that front? And then also if you could comment on other parts of the world, for example what you’re seeing in EMEA and Asia? It sounds like those two markets came back – where actually – but we’re pretty strong this quarter. Do you expect that to continue in the forthcoming months or quarters? Thank you

Okay let me – I’ll talk about the NIM carriers, which is mostly the NSE business. So we do continue to see weakness in North America. We do see one of the four major tier 1 carriers that we support in North America as that a reasonable run rate, the other three are well below what we normally see. So that continues to be weak. Again, we believe most of it is because of the disruptive nature of what’s going on with the architectural shifts in SDN and NFV, as well as some M&A activity that’s out there. So we don’t – as I mentioned on the last earnings calls, I didn’t expect any type of recovery until we get into our second half of our fiscal year. And I think that’s still pretty accurate. We don’t have great visibility, but we do know that in most cases of those North American carriers, they are getting behind on their investment. So there is some indication and that will pick up, but still limited visibility. I think I’ll touch on NSE for rest of world and then have Alan speak to from a CCOP standpoint. We did see Europe picking up somewhat EMEA including the extended areas. So that is not fully rebounded, but what we do see some pickup there. We saw reasonable strengths than parts of Asia, but from an NSE standpoint not as much as we’ve expected in China, Latin America is reasonable, Brazil somewhat, Argentina, so we’re seeing some reasonable activity and probably a little bit better than what we’ve planned coming out of Latin America for the NSE business. Alan, do want to comment on CCOP?

Yeah, I think for CCOP we’re seeing strength as we have expected on 100G throughout the world with particular strength in China. As Rex had indicated, we saw 30% growth in 140G modulator shipments and I think that was pretty broad based. I think what we’re seeing – North America, Greenfields networks are very slow, but a lot of activity around next generation of rhodium, deployments, and colorless, directionless. So we saw for instance our book to bill on next generation rhodium is a very strong, as a leading indicator that we’re making good progress there, but I would say that the timing of those major deployments are still up in the air and in 2015, I think the carriers in North America will have to deploy those new next-generation networks. EMEA, we saw strengthen in EMEA, but, again, those were the NIMs that we’re seeing particularly and where those end up going it’s hard for us to track. Just kind of a follow-up on the NSE side, I felt and mentioned, we do see some pickup in activity in India that’s come out healthier for the NSE business. Dmitry Netis – William Blair & Company: Okay, Tom, and thank you. Much appreciated for that color. My second question is on flow and actually on the optical communications side. If I look at your gross margins, were a bit light this quarter. Do you expect that to rebound or how should think about the gross margin going forward in optical communications.

Yes, I think our expectations are that pricing is less aggressive in the current Q2, but as we’re in the middle of the annual price negotiations and those haven’t been settled out, it’s still premature to know where the second half or the beginning of the second half gross margins will be in optical comms. I think as we roll out new products and 100G on the client side and the next generation ROADMs, our emphasize is really to rejigger the gross margin with new product introductions and I think that we’re well on our path forward on that side of the business. So I hope that answers your question. Dmitry Netis – William Blair & Company: Okay. Thanks.

And your next question comes from the line of Mark Sue with RBC Capital Markets. Please proceed. Mark Sue – RBC Capital Markets: Thank you, gentlemen. Maybe, Alan, on optical. If we look at the 100 gig, how can you think about your share being near-term and how long that might persist considering competitors’ capacity? So maybe you sustain that they would be of 100 gig. And then, Tom, as you progressed towards splitting the business, does it perquisite with any M&A on product of thoughtful (indiscernible) actually happened. Then perhaps you can also read in your comment as it relates to the changing landscape within there?

Mark, on your 100G question, I think we’re still in the early stages of deployment and primarily in core of the network. I think as we go forward we’ll start seeing 100 gig in the metro side in calendar 2015. And I think that will continue to drive volumes of 100G. We did start volume production out of a contract manufacturer in Asia over the past few months and that’s really unlocking substantial capacity for us and we’re still playing on doing that up and adding capacity overtime. So we are very bullish on the outlook for 100G, in the short-term, as well as long-term. On your second question Mark, on M&A kind of pre-split, there’s nothing that precludes us from acquiring businesses and we continue to look across our three business segments or business units, add opportunities, so there is nothing precluding us from doing that and that makes sense for us strategically, there is opportunities there we obviously move on that. I think as far as potential divestitures as I said, at our Analyst Day, we clearly have a path that we’re going down that, we worked with the Board on and did a lot of due diligence on that we think brings the best value for the shareholders. But if we do see interest out there in one of our businesses and we determine that, that will bring greater value to the shareholders who will obviously pursue that, path. I think as far as the NetScout Danaher merger, I think, it’s very good for the industry. I think consolidation is good, both on the NSE side and the optical component side. I would say that it wasn’t very well received by the NetScout shareholders, with their stock being down 20% to 25%. But I think from an industry standpoint, it will be helpful. Mark Sue – RBC Capital Markets: That’s helpful. Now on Tom, and perhaps there’s any progress in the process, there is a lot of hard-lifting that needs to be done. Does it feel that the timeframe is not looking readily achievable does it seems like the third calendar of next year, things might actually happen quicker than that?

We believe that milestone is achievable we’ve done a lot of work and making lot of progress on our milestone here. It’s conceivable, that could happen sooner, but we’re sure we’d make that commitment at this point if we could pull at the end, make sense we would definitely do that. So as we look at milestones in approaching those, we are obviously looking at that eye of can we pull them in. But I think we feel very comfortable with the Q3 of next calendar year, we’ll continue to keep everybody updated if we can do it sooner, we would definitely, follow down that path. Mark Sue – RBC Capital Markets: Understood, okay thank you gentleman, good luck.

Yes, thanks Mark.

And your next question comes from the line of Patrick Newton with Stifel, please proceed. Patrick Michael Newton – Stifel, Nicolaus & Co.: Yes, thank you for taking my questions. I guess first on the optical side, in your prepared remarks, or I guess in your presentation, it talks about record 100G transmission revenue that was up 77% year-over-year, you also talked about 30% growth in 40G and 100G modulators. Given that I was kind of surprised to see your pricing was down 3.8% in the quarter, and I was wondering if you could discuss which products have been hardest hit by pricing and where pricing is holding up.

Yes, on the question about the 140 gig, one was year-on-year one live sequential. So, was that your question? Patrick Michael Newton – Stifel, Nicolaus & Co.: No that was just a statement given the growth and there’s what I would assume are higher margin products and less price consider products what’s driving that 3.8% decline and pricing in the quarter.

Yeah. I mean I think it’s typical competitive landscape of our business and I think we try to response what our customers’ needs or and we have competitors in the space that’s do things to fill up their factory and I think some of the consolidation that’s happening over the last few quarters is going to be very helpful. I’m not going to get into the particulars of which product lines are seen a higher ASP reduction. We’re really more focused on generating new product introduction to offset that ASP reduction. Patrick Michael Newton – Stifel, Nicolaus & Co.: :

I think we definitely think that SE is going to grow much faster than the any business and it’s I think part of this nature what’s happening with this move to more software enabled architectures out there in the market. So I think there will be less seasonality in SE and then there is an any because I think the need for SE is emerging and it will continue to grow and again its coming up fairly little base. So those percentages I think are achievable, I don’t believe that’s going to drop off in the second half of the fiscal year but like other things we just still have great visibility so we’re always cautious until we are moving into that period of time Patrick Michael Newton – Stifel, Nicolaus & Co.: Okay. Thank you for taking my questions.

You’re welcome

And your next question comes from the line of Rod Hall with JP Morgan. Please proceed. Rod Hall – JP Morgan: Yeah. Hi guys, thanks for taking my question. You hear me okay by the way?

Yes we can Rod Hall – JP Morgan: Okay. Just a couple of things I guess I wanted to ask I know that when you guys announced the (indiscernible) working through some of the gap issues and I wonder if you made any progress on that and whether you could give us any update on what relevant tax rates might be in the two entities and any other tax affect that you think would be worth us knowing. And then secondly, I don’t know – if I didn’t hear the first part of the call, if you addressed this I apologize, I just wondered if you could talk about – you’ve made some management changes in – and just wonder if could talk a little bit about the changes and what drove that and kind of how you see the management of that business going forward? Thanks.

Rex, do want to address that.

Yes, I’ll be dealing. On the tax front, in my commentary, we tried to cover this as comprehensively as we could. We’ve made a lot of progress in terms of structuring that the new CCOP entities going forward. So we’ve got a pretty good line of sight on what that structure is going to look like. It is one that allows us to take advantage of the fact that we do have a significant tax asset. I don’t have an actual effective tax rate to give you in terms of an actual number right now. We’d hope to be in a position to do that by the next call if not sooner. But one thing I can definitely say and have said it’s going to be substantially below full taxpayer rate. And so, I think people can take comfort on that. The other things we’ve also set on the NOLs, they will stay with NewCo, the NE, SE, and OSP businesses, so that they can be future utilize for other purposes to maximize value, but they’re proving to be very useful in setting up CCOP.

I think as far as the management changes, what we recently announced was a change where David Heard is the President of the NSE business will be transitioning out of the company in the April timeframe will help us through the next quarter and then major part of the transition period. David has done a tremendous job for the company has really taken us through unbelievable transition or positive transition with that business. I think the thought process here is that we are going to delayer and remove cost as a result of this initiative and we didn’t feel like, we needed both the CEO and the President of the NSE business. I think as far as the NSE management team, leadership team is pretty well impact, they don’t envision any major changes in that area. Rod Hall – JP Morgan: Okay. And then maybe just one follow-up for you, if it’s mixed indications on the optical market, one of the big systems companies indicating weaker margin although it feels like – and maybe that’s related to a single customer, another company talking about very solid demand and stable pricing environment. You guys don’t seem to be apart from the pricing coming down a little bit on components factor than usual, demand environment seems like it’s pretty good, I just wondered if you could comment on, how the visibility looks out there in the – at least in the component market and how you feel about the end markets?

Yeah. Thanks Rod. I think, as I said before, we’re seeing strength in 100 gig and very-very strong demand in the cloud and web 2.0 datacenter build outs. I think, I can’t really comment on our two customers, and what’s going on there. But I will say that, I think we’re going to continue to see strength in both Datacom and on the 100G and then question is, when did the new Greenfield’s start getting deployed and I’m a believer that it happens in 2015 calendar, just not sure, when those full scale deployments really start rolling out. Rod Hall – JP Morgan: Okay. Great, thanks guys.

Thank you.

And your next question comes from the line of Alex Henderson with Needham. Please proceed. Alex Henderson – Needham and Company: Thanks. I was wondering hoping you can give us a couple of a just raw data points on growth rates. You made a comment about packet portal of contribution, if you can give us a little bit of sizing on that. And what the rate of growth was on the Datacom product lines and optical, as well as the ROADM piece.

Okay. I’ll pick Packet Portal first and then hand it over to Alan on the optical component side. Continue to make good progress on Packet Portal, it did grow year-on-year but it’s still not a significant part of our revenue. But we do have three Tier 1 revenue customers both representing wireline and wireless domains today. We did during the quarter close our first partnership agreement, that was really important for us as a next step and we are seeing expansion of orders from those Tier 1’s and things like VoIP, video and LTE. So there’s emerging I think three high demand applications for Packet Portal Ethernet performance and segmentation, career manage enterprise and mobile assurance. And we also believe it’s directly aligning with the needs in the architectural shifts into SDN and NFV. So, does not represent a large amount of a revenue today high percentage by continues I think to be a disruptive technology that’s now being well received out there in the marketplace. Alex Henderson – Needham and Company: Go ahead at the Datacom, please.

Yeah Datacom, was up 14.8% sequentially and ROADMs was substantially flat, but with a very strong book-to-bill and where our two flex ROADMs grew substantially in the quarter. So, again, I think greenfields really are needed to have ROADM deployments and ROADM growth and the question is when does that happen, but I think the bookings is a good indicator for us that it’s going to happen. Alex Henderson – Needham and Company: Could you just give us the year-over-year growth rates on Datacom?

Datacom was 2.4% up. Alex Henderson – Needham and Company: Year-over-year?

Yes. Alex Henderson – Needham and Company: Thank you. And then last question I have for you is the RESO pulling exercise. Where are we on getting the full recognition of the revenues and matching revenues to cause in all sort of good stuff on that accounting issue, which has been slowly winding through the company?

Yes, so the outlook on getting VSOE at the moment is we’re probably a number of quarters out before that happens. Having said that, we are able to take most of the revenues that the bookings would generate ratably. So I think we would expect to see steady improvement there as opposed to something that’s lumpy and transformative. Alex Henderson – Needham and Company: And so, it will be fully completed in the process and you’ll one-to-one in two or three quarters there?

Probably longer than that. I would expect some time probably in FY 2016 at this point. Alex Henderson – Needham and Company: Okay. Thank you very much.

Thanks.

And your next question comes from the line of Troy Jensen with Piper Jaffray. Please proceed. Troy Jensen – Piper Jaffray: Hey, congrats on a nice quarter gentlemen.

Thank you.

Thank you. Troy Jensen – Piper Jaffray: And so a couple of questions here. I was hoping you could touch on (indiscernible) pretty strong in the quarter and with the gross margins as that relate to most products?

Yes, we don’t pick out the gross margins by product. I think we’re still focused on ramping that product and as volumes come up we’ll get economies of scale and continue to improve that. I think just – indicator is 50.7% gross margin for our overall lasers business. Those are the numbers that we’ll be public with, but we’re not going to break out the different products on gross margins. Troy Jensen – Piper Jaffray: That’s fair. So Alan, I got you to then fill. So CCOP was up at the upper end of your range, your guidance. For revenues gross margins were at the lower end. So I’m assuming that mix and actually was asking the Gen 2 question of our margins to see if that was kind of the reason?

No, I mean, I think we had a record gross margin in our lasers business and record revenues. So I think it was more of a mix in the optical business and the less absorption that we got by the substantially lower 3D sensing revenue from a year ago period. Troy Jensen – Piper Jaffray: Okay, very clear. But I want you Tom you may or may not be able to answer, but I’ll just drove out there. Spinning the business off versus selling it, I guess my thought is if you spin it, shareholders get fractional position in a company that may or may not want. I mean if you sell the business you can put a big chunk of cash on your balance sheet and do some acquisitions and strategic moves and stuffs like that. So can you just help me what’s kind of the decision to spin versus sell CCOP?

Yes, we looked at what we think the value of CCOP as we spin it out and the progress we think it will make over the next two to three years. And as we look at that value, we think that’s very significant to the shareholders with a sale, it’s immediate and then there really isn’t a chance to increase that value. So as I said, we have a very clear strategy and plan a record. And if we find another option or alternative that comes off that brings better or greater value to the shareholders would definitely pursue that. Troy Jensen – Piper Jaffray: All right, well, good luck gentlemen.

Thank you.

And your next question comes from the line of James Kisner with Jefferies. Please proceed. James M. Kisner – Jefferies & Co. Inc.: I just have a related question on the CCOP business and the spin. If I’m just wondering if you were to sell this business, the CCOP business prior to the spin, is there some tax viability that’s treated would recognize that capital gain that’s taxable and maybe perhaps you could quantify that?

So James, if we were to sell CCOP at a value that we could certainly estimate, our NOLs would allow us to shelter substantially all of the game that would be a tremendous game of course, but we would be able to shelter almost all of it. James M. Kisner – Jefferies & Co. Inc.: Okay and that would come out of capital loss; I guess carryforward would come out of your NOLs, right?

No the NOLs are fine for both operating profits and capital gains. James M. Kisner – Jefferies & Co. Inc.: Okay, that’s interesting.

Gains on sales – excuse me, capital gain is not the right term. James M. Kisner – Jefferies & Co. Inc.: Okay, so in some ways you’ll be getting some value to Uncle Sam in that situation. Okay, it’s separately…

James, the other round we would – it will be almost a tax free rate transaction if we were to sell CCOP or any of other business units for that matter. James M. Kisner – Jefferies & Co. Inc.: Okay, but you’d be consuming some of those NOLs at this point.

Thant’s great. James M. Kisner – Jefferies & Co. Inc.: So just a quick one just in recognition and I will pass. On PCs – I am just curious, if you want to tell us if – one of the products (indiscernible) has recently been announced publicly?

Honestly, to answer to that, I don’t know. I think for sure you’ll see it before the end of the year, but hasn’t already happen. James M. Kisner – Jefferies & Co. Inc.: Thanks guys.

These products are products that people have to put on the shelf before – or put them in a warehouse to unveil them. So I think we’re still early in that process and frankly I’m not aware if they have announced it or not. James M. Kisner – Jefferies & Co. Inc.: Okay. Thank you.

Thanks.

And your next question is from the line of Michael Genovese with MKM Partners. Please proceed. Michael Genovese – MKM Partners LLC: Great. Thanks. Thanks for taking the question. Two of them. First, to reconcile the NSE business, in the 1Q you came in higher than your forecasts, despite weakness in U.S. Tier 1 and you’re guiding, I think 2Q – the weakest 2Q sequential growth that I’ve seen in a lot of years. So does that suggest somehow that there’s strength outside of the Tier 1? The [side] (ph) in 1Q goes away or just reconcile why there’s no seasonality benefit at all and what’s going on here in NE and SE?

Again, if I look at what’s happening with the NIM operators and what’s happening in our space with others that have announced in around the space, we’re cautious. So we don’t think there’s going to be any type of budget flush like there has been in past years and we’re cautious with what’s happening with the NIM operators. We think it’s going to be at least fiscal Q2 before they start placing any substantial orders. So, it’s really based primarily on NIM. I don’t see any retraction of any magnitude in our businesses in the other geographic regions, some of which are lumpy, but I don’t particularly see that retracting. Michael Genovese – MKM Partners LLC: Okay, got it. And then, on the other thing I feel like just – with the last question before me answered the question about tax implication at CCLP were to be involved in a M&A transaction before this spin. So what I want to ask you about now is tax implications if CCLP does the transaction after this there’s been and specifically if IRS moved about tax rate spin offs and engaging in M&A with partners you’ve been in previous discussions with and I’m not sure if it’s a year or two year period. So could you just talk about those implications as far as you know about them? Are the tax implications doing it after the spin and would you might have to use the NOLs to show that this was M&A up post-spin? Thanks.

This seems almost above my pay grade, but I’ll give it a run. So, they are definitely implications post spin. If you try to do a, what you’ve done a tax redistribution and then you engage in acquisition discussions, particularly with people you may have talked to before the spin. If you get side – it is a two-year period, it’s my understanding and if you get sideways from the tax perspective in that scenario, because the intervals would remain with new panel they would be at no use to Spenco and addressing that issue. Having said all of that, I actually see that as a pretty low risk. When we think that anyone out there that’s wealth enough to buy CCOP will understand that and do before this spend versus after to avoid that problem. Michael Genovese – MKM Partners LLC: Thank you.

And your next question comes from the line of Joseph Wolf with Barclays. Please proceed. Joseph Wolf – Barclays Capital: Thank you. Couple of questions, one is there was a deal on the tunable laser sector. I was hoping you could address the opportunity in Tunables and modules and standalone and how you are seeing that as we move to 100G. If the sale actually helps the sector, it tells you anything about what the seller thought about gross margins on the addressable market.

Yes. I don’t know what’s in the sellers mind at the time. But I’ll tell you that on the narrow line with 100G tunable lasers, we were behind in that market. And but I’m happy to say that last quarter, we had our first volume quarter and we expect to grow that business for CCOP substantially in the second quarter. And so we broadening out our available revenue per 100 gig port that shipped when we added the tunable lasers to the modulators that we shift today. I think any kind of consolidation is it good thing. And given the fact that the acquirer already had that technology really just eliminates a competitor in the space that’s a healthy thing for us and for the industry as a whole. Joseph Wolf – Barclays Capital: Great. And then, I think you’ve touched on this a little bit with the SE discussion and the lumpiness of the margins. But if you could you talk about any mix, because its seems like as the higher level of revenue there is a wider loss and what that means is there that much of variability in mix or it just the size of the orders. Is that a multi-core or kind of happen how at the end of the year or at the end of the fiscal year to that kind of even out.

Yes. I think again, at the – it is lumpy from a booking standpoint, because of the size of some of these orders. It just much larger than what we would normally see in any business and as I mentioned earlier in our fiscal Q2, what we are projecting as far as bookings as a percentage of the overall bookings for NSE increases and therefore that draws more expenses based on how we are allocating some of the sales and other expenses to bookings. So I think that’s what creates the major lumpiness. Joseph Wolf – Barclays Capital: Those bookings have a longer shelf life meaning of those three quarter bookings versus shorter term booking for the traditional business?

Yeah so to turn those bookings into revenue definitely takes longer than it does for any with the instruments. So yes it could be two to three X kind of timeframe. Joseph Wolf – Barclays Capital: Okay.

So just one other color point on that so I’ve made one comment that I have made in the script I think that the best way to look at in the NSE is to look at them from a revenue perspective and a margin perspective, and then when you get to the bottom line for those two units, I’ve put them back together and look at NSE as a whole, and the reason for that is, there is a shared sales force between the two segments and obviously we’ve created the segments to try to get more revenue and margin visibility, but there is a shared sales forces, at their sales expenses are allocated best based on the relative bookings between the NSE in a given quarter. So as you can imagine that’s going to swing all over the place but there was not another methodology we would like to use. So I would again start the top when you get to the operating income put them back together. Joseph Wolf – Barclays Capital: That’s helpful. Thank you.

And your next question comes from the line Richard Shannon with Craig Hallum. Please proceed. Richard Shannon – Craig Hallum: Good afternoon guys. A couple of questions from me first on your Datacom business within CCOP I think you talked about that business being flattish year-on-year for the September quarter. What’s your view going forward here? What kind of growth can you see and can you discuss that extent your breath of customer basis rather broader that fairly narrow that could drive some lumpiness going forward?

Yeah. The year-on-year was only up 2.4 and I think that’s lower than the market growth for sure, I think if you look back a year-ago we had substantial one major, major customer deploy in cloud datacenters in a meaningful way that had took, taken a little bit of a pause and now it’s starting backup again it’s a – we are expecting Q2 Datacom to continue to grow, and as we introduce new products like – where I believe will be first to market I think will substantially gain market share over time. So the breath of customer base it’s – there is a handful of guys that make a meaningful impact, so it’s not 20, and so as one customer may deploy large amounts of datacenters we will see that go up and down. Richard Shannon – Craig Hallum: Okay, thanks Alan. And my second is on 3D sensing here, last quarter you talked about the major PC customer starting to take some pre-production units. I think your prepared comments were some shipments coming here. Can you give us a sense of how broad the interest is here and the PC says for a 3D sensing and how long could it be before that business gets back to levels that you saw with your gaming customers’ year ago?

Yes, it’s really hard to say. I think the breadth of adoption will depend upon the applications that drive it. And as we saw with gaming, if there is a hot game that the units will sell or they’ll be incorporated into a different PC model. So I think it’s still early to determine where and when and how big that is. But as we said earlier, we are now starting to ship production units and expect to see that grow over the next year to, I think the big question is, when will those wild applications hit the market that make people want – it’s been a little bit extra for personal computer. Richard Shannon – Craig Hallum: Okay. It’s great. Thanks a lot guys.

Thank you.

And your last question comes from the line of Alex Henderson with Needham. Please proceed. Alex Henderson – Needham & Company, LLC: Yes, I’ve been doing these calls for a long time and I can’t remember ever asking a question on OSP, but I got to ask one. What’s causing the big spike in that business quarter-to-quarter and is it sustainable, because I mean that’s the biggest percentage variants in our model?

As you know, we primed out some of the low margin business ending in the June quarter. And we said that we would backfill that primarily with anti-counterfeiting banknote products and that’s starting to pickup both – some inflection points around OVMP on some fairly significant currencies and then we’ve got the threads coming on board also. So we get more real estate per banknote with a combination of OVMP and the thread. So that’s the major driver there. We have some other new products that are coming on outside of the banknote anti-counterfeiting and that’s starting to pickup, but that really won’t make a difference in this second fiscal quarter. It’s really around anti-counterfeiting for the banknote. So if you look at that what we said was we primed out these little margin products, the gross margins and operating margins would popup 200 to 250 basis points. We’ve already seen that without the revenue getting back to the previous levels. Now the revenue will get back to the $50 million kind of level as we had fiscal Q2. And then we would expect we should be able to maintain pretty close to that. And then there will be some inflection points above that, but it will be hard to predict and get lumpy. Alex Henderson – Needham & Company, LLC: So there’s no specific big build program that’s kicking it out – just kind of roll off or anything that’s where – this is sustainable level at this – going forward?

Yeah, we believe so, because some of these new designs in the bank notes – they go through different denomination, so we think that will last for a while – so it’s not like one spike where, that’s going to happen and go away and it should last for a period of time. Alex Henderson – Needham & Company, LLC: Super. Thank you.

You are welcome.

Ladies and gentlemen, that concludes our Q&A session. And now I’d like to turn the call back to Mr. Bill Ong for closing remarks.

Thank you, Jackie, and this concludes earnings call today. So thank you everyone.