Good day everyone, and welcome to the SanDisk Fourth Quarter 2006 Earnings Release Conference. Today's call is being recorded. At this time I'd like to turn the call over to Ms. Lori Barker Padon, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to the financial teleconference for SanDisk Corporation for the fourth quarter of 2006. I am Lori Barker Padon, SanDisk's Director of Investor Relations. Joining me is Sanjay Mehrotra, President and Chief Operating Officer of SanDisk and Judy Bruner, Executive Vice President of Administration and CFO. The agenda for today's teleconference is as follows: Sanjay will start his remarks about SanDisk and trends in our markets. Judy will follow-up with our fourth quarter financial results and future guidance. We will then conclude the teleconference with your questions. Any non-GAAP financial measures discussed during this call as defined by the SEC in Regulation G will be reconciled to the most directly comparable GAAP financial measure. That reconciliation is now available along with supplementary schedules on our website at SanDisk.com. After the completion of this call, an audio replay of this conference, a copy of today's prepared comments, and quarterly metrics will be made available on SanDisk's Investor Relations website at SanDisk.com. During our call today we will be making forward-looking statements. Any statements that refers to expectations, projections or other characterizations of future events or circumstances is a forward-looking statements including those related to revenue, pricing and expenses gross margin, tax rate, inventory, production capacity and technology transmission and future products. Actual results may differ materially from those expressed in these forward-looking statements. Factors that may cause actual results to differ are detailed under the caption risk factors and elsewhere in documents we file from time-to-time with the SEC including our quarterly report of Form 10-Q for the third quarter ended of October 1st, 2006. We undertake no obligation to update these forward looking statements which speak only as of the date hereof. We do not intend to update information contained in this teleconference. Now, I…

Thank you, Sanjay, and good afternoon everyone. We had a very strong Q4 and 2006, and to provide you with better clarity on our results, I will organize my comments in three major buckets. First, I will discuss our SanDisk's standalone non-GAAP results for the quarter and the year. Second, I will describe the non-GAAP results for the former msystems business from our acquisition day of November 19th through the end of 2006. And finally, I will describe the GAAP adjustments for stock compensation and acquisition accounting. In order to make it easier for you to follow my comments, we have posted to our SanDisk's website at SanDisk.com in the IR section two charts that show you these components of our GAAP results. The first chart is for Q4 and the second chart is for the full year 2006. So let's start with SanDisk's standalone results. SanDisk's standalone fourth quarter product revenue of $964 million was up 43% sequentially and 41% year-over-year. Our SanDisk's standalone megabyte sold increased sequentially 73% compared to our previous forecast of 50% to 60%. And our ASP per megabyte fell 17% within our forecasted range of 15% to 20%. Our strongest sequential growth in both units and megabytes was in our Sansa MP3 products, which comprise 14% of our product revenue in the fourth quarter. Looking at our revenue growth on a year-over-year basis for Q4, our strongest growth in revenue dollars was from the mobile market followed by the MP3 market. For the full year of 2006, our SanDisk's standalone product revenue grew 36% over 2005, an accelerated growth rate from the 29% we enjoyed in 2005. This demonstrates the power of elasticity in our markets resulting from a 58% price decline in ASP per megabyte for average 2006, compared to 2005. Our standalone…

Thank you. Could you limit your questions please to one or two questions.

(Operator Instructions). We go first to Jim Covello with Goldman Sachs.

Good evening. Thanks so much. First question is on the self-correcting aspect of the capacity situation or excess capacity situation that you talked about. We all know about Samsung may be doing something and Hynix may be doing a little something in terms of NAND to DRAM. How about yourselves? Are you going to be part of that self-correcting mechanism?

So in terms of our own capacity RAM, we believe we are able to sell all of the capacity that we can manufacture. And in fact, we are targeting to sell our output, as I said in my script, in global regions as well and we see strong growth drivers coming on. The growth drivers I talked about, increased average capacity in mobile phones, video, portable video players, etcetera. That we believe will allow us to continue to use our output and basically sell it. In fact in the second half of the year, we see ourselves purchasing some non-captive supply itself. So I don't think for our business it makes sense reduce our capacity production. Of course, we always have the flexibility of non-captive supply, just like over last couple of quarters we turned down the non-captive supply to significantly less than 10%. We have that option going forward as well and we plan to dial it back up in the second half of the year.

So, if I could ask a follow-up on that, in my view, it's not really a question of if you can sell it. I think we all agree that you could sell it. It's a question at what price you could sell it? And if you as the industry leader isn't going to cut back on the capacity ramp then what makes you feel comfortable that everybody else is going to. This is a game of chicken in some senses where if my competitor isn't going to back down then neither am I. So, how can you be supremely confident that your competitors are going to be as aggressive as they need to be on the capacity roll back if you're not going to be?

Jim, this is Judy. Let me add that our bit growth in 2007 will naturally be quiet a bit less than it was in 2006, given the aggressive ramp we had in our Fab 3 in 2006. Fab 3 in 2007 will be reaching full capacity by the end of the year and the ramp is not nearly as steep in 2007 as it was in 2006. And of course Fab 4 will not really result in salable output until 2008. So, we have no plans to slowdown our fab capacity ramp for Fab 3 or for Fab 4, but by its very nature, the growth in that bit output will be quiet a bit less in 2007 then in 2006. And that's why Sanjay said in fact to meet the demand that we would expect in 2007. We anticipate e that we would be dialing up non-captive in the second half of the year.

And also we have to look at this thing in the long-term picture. And in the long-term, we see the demand for flash continuing to grow. Industry projections as shown here are moving from 650 petabytes last year to something like 13,000 petabytes in 2010, and with that kind of a scenario we have to with our leadership with us being in the driver seat, we have to continue to grow the demand, create the markets, and fulfill that with the supply. So, we really cannot just have one quarter or two quarter excess that may be going on till December timeframe determine our decisions regarding capacity cutbacks. We really are looking at the long-term demand pictures and positioning ourselves to be in the driver seat in that market.

Final question from me, Fab 5 there has been some speculation that may be Fab 5 -- even though that was only in the planning stages that that could be the Fab that -- maybe you take a little bit more of a cautious view around or your joint venture partner takes cautious view around given the pricing environment, is that consistent with your thoughts on Fab 5?

So, as you know, that in NAND Flash Toshiba and SanDisk invested jointly. But I must tell you that there have not been any discussions of Fab 5. These are just somehow market rumors and both Toshiba and SanDisk do not have plans for Fab 5.

So there is no plan for a Fab 5 in the first place is what you are saying?

There is on plan for Fab 5 at this time, yes, in the first place.

Thank you.

We'll go next to Craig Ellis with Citigroup.

Thanks Judy. With the royalty commentary, I know you are not providing specific for your guidance there, but can you tell us if there is any meaningful prospect that you would have an additional source of royalty revenue this year?

Craig, we really can't comment on the potential outcome of litigation or other discussions. So, I really cannot provide a full year royalty revenue estimate at this point. Not so much because of whether or not we would get new licensees, but more that the pricing environment is uncertain for the remainder of the year.

Okay. And then switching gears, you mentioned a couple of times that new products that were announced at CES, how should we think about the gross margin percentage of those new products relative to the current portfolio, and how can we think about the growth parameters or the volume parameters of those products this year relative to the existing portfolio?

So, the new products that we announced, for example, USB flash drives, Vista ReadyBoost flash drives, the gross margins for those products will be similar to our USB line of products. The other products that announced USB TV and the Sansa products, on the low-end, of Sansa Express and the Sansa Connect products those will continue to carry in margins that are similar to our audio/video line of products. As you know, that we are very much focused on scaling our business in the audio video space and as we scale up that business, basically we expect improved gross margins going forward with our focus on intense cost reductions for that product line as well.

So to clarify, you expect improved gross margins on those products, but those products are noticeably below the corporate average, aren't they Sanjay?

The audio/video products tend to be below the corporate average, yes.

Okay.

And again, because they do not yet have the benefit of the scale, and as you see that in Q4 we were driving that and we will continue to drive those products in global regions. That continues to drive the unit demand as well as broaden the product portfolio and that we believe will give us cost benefits, cost synergies and possibilities of improvements in gross margin.

And you think you get there in 2007 or is there really something you are going to do in 2008? Or you meaningfully improve the gross margin structure in those businesses?

Yes, we will continue to work on in it in 2007. We are excited about the opportunities ahead of us in this audio/video space. If you look at just Europe, we made very good progress in Q4 in penetrating Europe and in 2007 for audio/video, we want to basically go global and I would absolutely expect [then] our focus to continue to gain share and improve solidly our business in audio/video in 2007.

Thanks Judy. Thanks Sanjay.

We go next to Satya Chillara with Pacific Growth Equities.

Yeah hi guys. Starting with you, Sanjay, on cell phone, in terms of cell phone demand with iPhone getting into 4 and 8 gigabyte embedded. From your point of view, your customers or carriers, are they asking for 4 and 8 gigabyte microSD, and if so basically what do you see for the cell phone business in 2007?

Actually we are seeing the demand definitely in high capacity microSD, but in embedded solutions as well, and as you know, through msystems, we have further strengthened our product portfolio on the embedded side. So we are seeing demand for 4 gigabyte, 8 gigabyte capacities for embedded, as well as cards. And for sure, later this year, we'll have 4 gigabyte microSD product, and we have complete lineup of embedded solutions as well. So basically we're expecting that with the iPhone announcement, with what the handset manufacturers and the carriers are indicating to us in terms of their interest in pushing the phones to the video capabilities to the high quality music, as well as to high-end camera applications. We actually expect in the mobile space for the average capacity to perhaps move even faster than what it has done in the past, with all these applications coming in.

Okay. So can you clarify what average capacities it would reach by the end of '07 for the mobile phone segment?

I would expect -- I can't nail it down, but I would expect the average capacity is really over next four to six quarters to start approaching 4 gigabyte plus on an average basis.

Okay. Moving on -- one question for Judy. Judy can you -- given the guidance of $700 million to $800 million. I just wanted some clarification here in terms of the discontinuation of msystems, private label, USB drives. How much of that basically is falling off on an apples-to-apples basis. And the second question I just wanted make sure for the year, in terms of gross margins with all this NAND, non-NAND related, whether it's Wi-Fi based or a flash video iPod products. Where can we expect gross margins for the year to go below 30% margins, compared to historical 33% to 35%? Can you shed some light please?

Okay. So, let me comment on your two questions. First of all on the private label business, the private label business within msystems has generally been about half of their product revenue and as I said for the six-weeks that it was included in our consolidated Q4 results, it was also about half of the revenue. So we are not going to break it out in terms of the $700 million to $800 million, but you can get an idea of the size of it in the past, and it is coming down significantly based on our decision to focus on the more profitable SanDisk branded business. In terms of gross margins, and you are asking non-NAND components and perhaps that putting pressure on margins -- let me address that and also comment back on Craig Ellis' question in this area, and that is that while going forward, some of these audio/video related products will typically have a gross margin, that is somewhat below the corporate average. The embedded products that we have just acquired from the msystems acquisition, both in the mobile space as well as other embedded applications, tend to have a higher than corporate average gross margin. So there is a mix of new product lines coming in to our gross margin and we really can not predict at this point in time, how that will sort out. But I think -- there is both lower and higher than average. In terms of gross margin for the year, we are not going to put a stake in the ground at this point in terms of a gross margin for 2007 for all of the reasons that I described. We have given the range for Q1. And beyond Q1, I have given some color on the pricing parameters, but at this point, we are uncertain as to pricing beyond Q1.

Okay. Thank you, Judy.

We'll go next to Paul Coster with J.P. Morgan.

Thank you. Hi, can you hear me?

Yes.

I have three quick questions. First of all, Judy, you mentioned that the licensing revenues came in slightly short of expectations and you attributed it to pricing. What did you mean by that?

What I mean by that is our royalty revenue is based on a rate that is applied against the licensees' licensable revenue. So, if they have steep price declines in a given period, then that is going to depress the licensable revenue.

And that's, therefore is factored in thinking about licensing through the remainder of the year?

Correct.

Okay. Second question, I know it's less meaningful and it used to be, but the total bit shipments including msystems and the total ASP per megabyte decline for the fourth quarter, are you in a position to share those numbers?

In the ASP, really it's not a sensible number because it is only included for the six-week period, and it's not necessarily comparable to what we will see in Q1. If you think about it in Q4, the msystems business was heavier towards the USB private label business in Q1, and in Q1, we would expect it to be heavier towards the embedded business.

Okay. And then, my last question, Sanjay, as you think about your cost curve and therefore probably the industry's price curve to some extent, how does it change? Does the price -- the cost decline accelerate round about the time of the 55-nanometer, 300-millimeter activation or is there some other event that we should be thinking about in the sort of '07-'08 timeframe that will take the cost curve down in the sort of step function fashion?

So, in terms of cost, we have said that in general, on an average, year-in-year-out, cost come down by about 40% to 50% per year basis. So, this year in 2007, the decline in the cost will primarily be determined by our ramp of 56-nanometer technology. As we said, 56-nanometer we are just starting that in Q1 timeframe. But in terms of the effect of this -- the full effect of the 56-nanometer, we have said before, we will really start experiencing the benefit of that in the Q3 timeframe, mainly because of, again, its application to the retail products and the amount of time it takes for retail products to sell through the channel. So, the 56-nanometer, as it ramps up into production, we will basically linearly essentially drive the cost reductions and our ability to transition the wafers to 56-nanometer during the course of the year as well as continue to improve use of 56-nanometer is what will determine the ongoing cost improvement that we will realize on a per megabyte basis during the course of the year. So, in terms of step transitions with 56-nanometer, it's not a step transition because it is determined by wafer ramp and yield improvement. The step transitions really come about when you go to a new technology such as potentially the volume production of x4 or 3 bit-per-cell etcetera.

And when will we see x4?

x4 we're actually making some good progress in terms of the engineering development and applying that technology to system level, applying our systems level expertise to their technology. But really, we'll not have any meaningful shipments of that product in 2007. It's more -- you'll see some impact of it in 2008 timeframe.

Okay, got it. Thank you.

We'll go next to Mark Edelstone with Morgan Stanley.

Thanks a lot guys. Few questions, the first one for you Sanjay. When will we see the crossover in 56-nanometer here this year on a wafer start basis?

Do you mean crossover in terms of bit cost of 56-nanometer and 70-nanometer?

Yeah, I was just thinking not cost but just total wafers 56-nanometer starts crossing over 70?

We plan to ramp it up aggressively. At this point, we're really not disclosing the plan ramp for 56-nanometer. It is just at the very beginning at this point, Mark.

Okay. So it sounds like best case is really somewhere in the second-half of the year anyways?

Okay.

Question was on msystems then for you Judy, when you look at their absolute revenues for Q1, given the fact that you had ownership for just six weeks in the fourth quarter. Do you expect those revenues to be flat or actually decline in absolute dollars quarter-to-quarter?

So again I am not going to break out this specific amount of msystems revenue in Q1. But I think -- you can get approximately there based on the comment that we had six-weeks in Q4 and about half of that business was USB private label, which we are significantly deemphasizing, alright. So, one can sort of assume that if you go from six-weeks to 13 weeks, and then takeaway what was about half of -- most what was about half the revenue you can get there.

Okay. That's what I was trying to clear figure out. It's flattish --

Yeah.

Still declines in total dollars. And then if I heard you correctly, I think you said that the product gross margins for the company on a non-GAAP basis will be 24 to 28% in the quarter, if you did not have the msystems business, what would the non-GAAP product gross margins for SanDisk be in the first quarter?

I would tell you that we do not expect the msystems business to materially depress our gross margin, because of two reasons, one is that most of the business that will remain is the higher margin embedded business, and second we are moving pretty aggressively to utilization of captive supply for the msystems business.

Okay. Fair enough, thanks for that and then just two very brief ones. One, you gave the year-over-year growth rate in MP3 for Q4, what was it sequentially in both revenues and units, if you can share that?

The MP3 unit and revenue growth from Q3 to Q4 was approximately 150%.

Okay, great. Congratulations on that. Then just lastly, where are inventories in the channel now in terms of days or weeks?

So when we talk about channel inventory, we always give it on a backward looking basis to be consistent, and on a backward looking basis, channel inventory ended at about six-weeks at the end of Q4, and that compares to about seven-weeks at the end of Q4 of last year.

Thanks for the questions. I appreciate it.

We will go next to Gurinder Kalra with Bear Stearns.

Yeah, hi. I guess you can't provide the ASP guidance for the combined company, but can you provide, I guess on an apples-to-apples comparison, if you were to look at just ASPs for SanDisk on a standalone basis in Q1?

No, we are not going to break that out. But as I said, we expect the ASP per megabyte for most of our products, will fall more in Q1 than it did in Q4.

Right. Is that a bottom-end to that range?

We are not going to project the range at this point.

I guess my second question is, can you update us on the progress on 3 bits-per-cell sell in terms of when we might be able to see something on that end?

I think with respect to 3 bit-per-cell, probably in terms of any production, early part of next year.

And if you have production on 3 bits-per-cell in the early part of next year and how do you think that could affect your negotiating stance on people you want to get royalty from or renegotiate royalty agreements from?

We do believe that those that manufacture NAND Flash as well as (inaudible) that are involved in system level products, do need license to our IP. But the impact of 3D or MLC or some of our other system level or device level patents. I mean this is really all, part of overall IP licensing policy, I would not really provide any comment or detail on the specific impact of one particular innovation or one particular IP aspect on the overall impact -- overall IP license.

Okay. Thanks very much.

We will go next to Eric Gomberg with Thomas Weisel Partners

Hi thanks very much. I was wondering, if you could expand on mobile. I think in the opening remarks, you said that you expect dividends to be up strongly in Q1 or continue to be up in Q1, could you talk about the type of ASP pressure you may be seeing in mobile and also you gave a lot of color on revenue and mobile year-over-year in '06, could you talk that may be the unit volumes '07 versus '06 from the design activity that you already have booked?

So, Eric, you're asking -- I did say that we expect unit growth to occur from Q4 to Q1 in the mobile business. And as I said, we really expect to see price decline in Q1 in all of our product lines including mobile, but we're not giving a specific range. The pricing environment is challenging really for all product lines today, retail and OEM, although retail is probably a bit more challenging. Your second question was with regard to 2007 growth?

Yeah, just trying to get a sense of your -- when you look at say bundling activity, from where you see today what the unit volumes may grow year-over-year? It would seem that grew well over 100% last year?

We would definitely see a strong growth in bundling as well in 2007. If you look at last year, about 250 million card slotted phones shipped. And 2007 projection is -- there are multiple numbers out there, but anywhere 400 million plus for 2007. So clearly, the increase in units we believe will still continue to result in increase in bundling. There are a more and more phones that are getting designed in with card slots. Actually the last count is about 700 phones that have -- 700 different models that have card slots and more than half of them are microSD card slots. And so, we fully expect that bundling trend in 2007 will continue in the mobile space.

Could you talk about 3D memory and where you stand in terms of bringing that up to leading edge geometries and chip capacities, and your thoughts right now -- or your thoughts on opportunity in preloaded content?

So, the 3D business in terms of the preloaded content is basically going well, going per our expectations. And we have said before, that we will have the 3D products convert from under 30-nanometer to 80-nanometer technology in the second half of this year and that is still proceeding per plan.

Okay. And I guess just one last question, I've realized you don't have great pricing visibility beyond Q1 or even necessarily in Q1, wondering other than seeing some NAND capacity go back DRAM, are there any catalyst other than typical Mothers Day, Father Day, graduations in Q2 that you see coming in Q2 that should kind of suit the industry pain and stop the price declines?

You are right. Usually Q2 is strong. We call it like second Christmas, as the second strongest quarter of the year and it tends to drive lot of demand for our products. So, therefore, it will definitely be happening for our sales. We have several new products that we will be starting to ship in Q2. The Sansa -- I mean actually we will start shipping in late Q1 ready for volume production, volume shipments in Q2. These are the Sansa Connect as well as the Sansa Express. And in addition, the new handset models that keep coming out and the mobile growth will continue to drive I believe strong demand in second quarter as well.

Okay. Thanks.

We'll go next to Daniel Gelbtuch with CIBC.

Hey guys. Few questions, first of all, just a follow-up on Eric's question with metrics. I know that Eli has talked about in the past about making a breakthrough with regard to 3D read-write, any new visibility on that front?

We are working on that, but really too soon to say anything, and no breakthrough to report yet. Generally, we tend to make announcements once we really ready with the technology, and I think Eli have said that this is something that will take considerable amount of R&D, considerable amount of investments, and we are continuing to do that. It will take two to three years, before this technology really becomes a viable production worthy possibility.

Along the floating gate breakthrough lines, Intel and IBM recently made announcement about using hafnium alloys, which helps their ability to extend Moore's Law, does that have any application to you guys?

That is done for military transistors. Of course, that has been in the literatures and at various conferences, high-k dielectric has been explored for application to flash memory as well, and there are actually at this point multiple technology approaches that are being looked at to work on scaling of flash. So, I really cannot comment anymore beyond that on this at this point.

And as far as you stand right now, where do you guys or where does Toshiba believe that they can scale beyond 56-nanometer, [I assume] 45 and 32 are in the mix at this point still?

Yes, we are definitely working on those generations of technologies and we believe the 4X -- we call it 4X, means, 40 something technology node would be the one that will get introduced in 2008 timeframe.

And finally just on the supply side, I have spoken to lot of a suppliers, who've indicated that supply growth this year on a bit basis will be in the 140% range. Is that something that you find to be consistent and I imagine that's well below the typical average over the last few years? Do you think if that is so, we could see some sort of back half firming of the supply-demand balance?

Yes, the industry estimates are about 140%to 150% in terms of the base growth. We believe that there are enough applications that could be driving the demand to higher requirements than that. We have already said, that for our own needs, we probably will be using non-captive supply in the second half.

Thank you very much. Good luck.

We will go next to Krishna Shankar with JMP Securities.

Yes can you comment on the premium that you addressed for SanDisk branded cards and drives in the retail and OEM channel embedded. Can you (inaudible) versus some of your generic competitors?

I am not sure I completely heard the question, but if the question was about the premium that we see between our branded products and other non-branded products in the marketplace. Yes, we continue to be able to sustain a premium for our cards and USB products in that marketplace. And in fact that's part of the reason why it makes sense for us in this environment to focus on our branded products.

And that has held up despite the challenging environment towards the end of Q4, has that brand premium held up or is it narrowing?

Brand premium has certainly held up and it's not like there is a fix formula for brand premium, it is different in different regions based on our strategies for our growth in those regions.

And my second question is given the challenging environment in Q1, can you talk a little bit about your inventory reserves and how you account for any actions that you've to take in terms of either protecting your margin or what's your choice in terms of reserves for the channels?

Sure, good question. Clearly, we took a careful look at our inventory reserves as we always do. And we did factor into our analysis, the pricing that we anticipate, will occur over the next several months as we sell the inventory that we had on hand at the end of the year. And we did in fact take some increased inventory reserves that are reflected in our fourth quarter results, in order to be prudent about the pricing environment.

Great. And Sanjay, can you -- it sounds like you folks, longer-term want to become a more consumer systems company, as well as accelerating those efforts and it seems like you want to become a more branded consumer company versus drifting it out from the flash card and private label market. Can you comment strategically on where you are heading longer-term?

Definitely longer-term, we want to become global consumer powerhouse, and we want to achieve that by bringing new products, new ideas that leverage our technology manufacturing and the vertical integration business model including our worldwide retail sales footprint. So you are absolutely right, that we should not be looked at as a component supplier, because we are really end-to-end solutions provider and continually trying to bring products that are just more than simple storage, basically products that also give user experience. Things such as your Sansa Connect or USBTV etcetera. So yes we are definitely moving in that direction.

Would that mean that you would perhaps lower your capital spending plans going forward and depend more on foundry outsourcing for greater portion of your needs -- beyond this year?

No, because -- the very factor that gives us the ability to succeed this vertical integration model, is our very cost effective supply. That's what gives us a real differentiator in terms of cost and really ability to penetrate the various value added products into the marketplace. So no, we will absolutely continue to invest and build our asset base in terms of the flash capacity going forward, because that is a very fundamental part of our business model and that's what makes us unique, that we have that flash capacity supply together we have the ability to innovate products and create new markets and really become a consumer powerhouse.

Great. Thank you.

Thanks. We have time for one more caller.

We'll take our final call from Pranay Laharia with Deutsche Bank.

Hi guys. How big were Sony Ericsson and Samsung in the quarter?

Well, we don't normally break them out right on a quarterly basis. We had mentioned, I believe, it was in the third quarter that Sony Ericsson was at 10% customer for the quarter. This quarter, as you can imagine, retail was particularly strong in the fourth quarter. So I would say that we did not have a 10% OEM customer during the quarter, even though OEM was very strong and we had several OEM customers in the top ten customers. But in the fourth quarter, the sequential growth was more in the retail space.

Okay, fair enough. And just last question, can you give an update on the legal front, important base etcetera, to keep in mind particularly against ST Micro [that you lost] in the second half?

In terms of ST Micro, we completed the ITC trial in December and the initial determination will be made in June. The judge had some health problems recently, therefore it has been pushed out, and the final determination would be, I believe the date is for October timeframe. But anyway the initial judgment is in June timeframe, and with respect to the other cases related to ST Micro, they are basically proceeding on their own schedule and nothing specific to report there.

Okay, great. Thank you, guys.

Okay. Thank you very much. Again I must congratulate the team on a year of excellent revenue growth, innovation and expansion into new markets. On behalf of Eli and our Executive team, I look forward to speaking to you on our upcoming Analyst Day on February 26. Thank you very much.

Ladies and gentlemen, this concludes today's conference. You may disconnect your lines.