Good afternoon. My name is Wesley and I’ll be your conference operator today. At this time I’d like to welcome everyone to Tessera’s fourth quarter 2008 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s prepared remarks, there will be a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to Moriah Shilton. Please go ahead ma’am.

Thank you, Wesley and good afternoon everyone. This is Moriah Shilton, Director of Investor Relations for Tessera Technologies speaking. Thank you for joining us for the Tessera Technology’s fourth quarter 2008 results conference call. This call is being broadcast live over the internet. A webcast replay will be available at www.tessera.com for 90 days after the call. In addition, a telephone replay of this call will be made available for 48 hours beginning approximately two hours after the completion of this call. To listen to the replay in the U.S., please dial 800-642-1687 and internationally dial 706-645-9291. The access code is 78822353. Before we begin I would like to remind everyone the today’s call including the Q-and-A session will include projections and other forward-looking statements, regarding expected revenue and earnings per share, as well as future plans, opportunities and expectations of the company. These projections, estimates and other forward-looking statements involve known and unknown risks and uncertainties, that may cause actual results to differ materially from those expects or implied on the call and are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which are made based on information known to the company as of today’s date. The company assumes no obligations to update the information contain in this call, which speaks only as of today’s date. A detailed discussion of the material factors that may cause results to differ from the statements made can be found for example, in the Risk Factors section of Tessera’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2007 and its quarterly report on Form 10-Q for the quarter ended December 30, 2008. On the call today from management are Hank Nothhaft, Tessera’s President and Chief Executive Officer; Mike Anthofer, Chief Financial Officer and Barney Cassidy, General Counsel. During this call today, management will discuss certain non-GAAP financial measures for comparison purposes only and they will be using non-GAAP numbers in their prepared remarks. The non-GAAP amounts of cost of revenues; research and development; selling, general and administrative expenses; net income and earnings per share do not include the following Stock-based compensation, acquired intangibles, amortization charges, charges for acquired in-process research and development and non-cash tax expense. Management believes the non-GAAP amounts provide a more meaningful comparison, a measure of quarter-over-quarter and year-over-year financial performance. Please refer to the company’s fourth quarter 2008 earnings press release and to the company’s website for reconciliation of non-GAAP measures to GAAP. After management’s opening remarks we will open the call to your questions. So, that management is able to respond to as many of you as possible, please restrict yourself to an opening and a follow-on question. Please re-enter the queue if you have additional questions. With that, I will now turn the call over to Hank.

Thank you, Moriah. Greetings to all of you and we appreciate your interest in Tessera. We’ve got to lot to cover this afternoon, so we’ll jump right into our presentation. Total revenue in 2008 was $248.3 million and royalties and license fees were $220.3 million up 27% and 37% respectively compared to 2007. Before I discuss the fourth quarter 2008 in more detail and our recent accomplishments, I want to comment on our recent IP protection efforts, including the decision last Friday by the International Trade Commission to review the initial determination by the Administrative Law Judge, ALJ, in our wireless ITC action. The commission’s final determination is scheduled to be issued by April 3 and may accept or reject the initial determination in part or as a whole. If the ITC determines that the expert’s methodology was appropriate, that will have a significant impact on the party’s expert discovery and trial presentation in our Subcon ITC Action, which is currently scheduled to begin April 27. Therefore today we filed a motion requesting that the ITC pause proceedings in this action. Given prior acceptance of the same basic methodology by the ITC and the Amkor tribunal, we believe it makes sense to allow the ITC to issue its decision regarding infringement methodology, before moving forward in the Subcon ITC Action, so that the parties and their experts may proceed in view of the ITC’s rulings. We are seeking an expedited ruling from the ALJ in this matter and may receive a ruling by February 9. If Tessera’s motion is granted, the Subcon ITC Action would resume after April 3, which are rescheduled for later this year. With regard to our Arbitration with Amkor, in January, the International Chamber of Commerce’s, International Court of Arbitration issued the final award. The panel…

Thank you, Hank. Now to review 2008; first a few comments on revenues. Fourth quarter 2008 total revenue is $69.1 million, up 30% year-over-year and 9% quarter-over-quarter. Royalty and license fees are $62.5 million up 37% year-over-year and 8% quarter-over-quarter. These results are driven by stronger than expected royalty revenue from certain existing customers and option fees from Motorola. Products and services are $6.5 million which is up 9% from the prior quarter, but down 14% year-over-year. The decrease year-over-year is due to our planned exit at year end from our government business. The revenue in this segment is slightly below our guidance due to the less than anticipated demand from our lithography customers due to the continued market softness. Total GAAP expenses are $57.1 million and are broken out as follows; cost of revenue is $3.9 million, research and development $16.7 million and SG&A $36.5 million, which included litigation expense of $17.7 million. Our litigation expense during the quarter was driven by discovery and trial preparation for the ITC Subcon case originally slated for April of ’09, completion of the ITC de-ramp case in October and it’s related post trial briefings and briefings related to the initial determination issued in the ITC wireless case. Stock based compensation expense is $7.3 million for the quarter, which is higher than guidance given due principally to additional stock options granted to employees in November. Amortization of acquired intangibles is $2.9 million. In the fourth quarter, we’ve recorded impairment charges of $2.5 million, one component of which is recorded in SG&A and the other components are recorded in our other income and expense. The amount recorded in SG&A is an impairment charge of approximately $1 million on the lease agreement from our previous corporate headquarters in San Jose. Recorded in other income and…

Thank you, Mike. Before I open the call to question, I want to discuss one of the America’s greatest renewable economic resources innovations. The protection and therefore the motivator behind America’s innovation engine is patent. IP protected by patents, enables new products that create jobs for Americans in the U.S., improve domestic living standards and in fact saves lives. As an intellectual propriety provider and innovator, we are adding onto this resource everyday. We spent $61 million in 2008 in R&D expenses and filled for 175 patents worldwide. We added to our patent portfolio with our acquisitions of FotoNation, a leading provider of embedded imaging solutions for digital still camera and mobile phone applications. We also acquired patents covering micro-cooling applications, PHP from Kronos, a developer of ionic based products and technologies. We have done extensive additional research and development based on these patents, resulting in additional patent filings, as well as productization of this technology. Our patent and application portfolio now totals over 1,500. We announced seven new imaging and optics products; signed seven new imaging and optics agreements, secured key design wins with existing and new customers and furthered our development work in emerging technologies that will help build long-term growth. It is an IP provider’s duty to also protect its patents, as innovation would not exist without strong patent protection. Innovation, without compensation is philanthropy. We were successful in 2008 in our IP protection efforts, reducing the illegal use of our technology, which in turn generated additional royalty revenue for Tessera and its takeovers. Admittedly looking at 2009, we too are facing the headwinds currently brewing in our served markets. We entered this turbulent time, encouraged by our 2008 accomplishments and supported by our solid balance sheet of almost $300 million in cash with no debt. We remain confident about our long-term growth potential and the opportunities that lie ahead. I would now like to open the call to questions. Operator, you want to open the lines?

(Operator Instructions) Your first question comes from Brett Hodess - Merrill Lynch.

Two questions; first, Hank on the emerging and optic side of the business, you laid out how you thought the revenues would ramp up overtime and I was curious if you could go into a little bit more detail on the timing, particularly for what you call this into sort of the designed in part, the software. Is that because the software is designed into these products before they are fully developed and so the end products have to be designed and produced and what not? If you could go into that a little bit more for us, it will be great.

So, the question as I understand is why the lead time is so long for software related or software derived IP in the emerging optics business? Okay, so the development cycle for wireless device is fairly lengthy. The OEM’s manage to bring out all these models that look like they’re rapidly producing these products by overlapping design cycles. The average development cycle for a cell phone is 18 to 24 months and so as part of that, we have to compete in the supply chain to win a contract, get design into a design cycle that takes up to two years to get the market and then of course they start selling the phones and then royalties are paid retrospectively after the product is actually shipped and they take audits on how many units are sold. So, it doesn’t take much imagination to string that after three years easily. That answers your question? Brett Hodess – Merrill Lynch : It does and the follow on to that is, so once your design to a phone, either with the software or with the hardware, with the SHELLCASE and with the optics. Do you have the same length of time for the next one; in other words we rollover to the next version of that model that come out? Do you find that out fairly early in the process?

Yes, it’s a very interesting and fairly complicated question, because on the SHELLCASE side and the hardware side of sort of an infrastructure IP and then what I was answering in the first question was software related non-infrastructure IP design in IP. So, let me address the design in IP first and then maybe I can comment on the infrastructure IP. So, the way it’s been working so far is that the various OEMs have designed programs for specific models or groups of models within a family or phone and they’ve been going off and bidding contracts on the design in IP side of the business for these families of phones, and generally we know by pricing and indication from the manufacturers, what the volume is going to be for that family devices. So, once we win one of these contracts and its starts rolling through when we start getting paid royalties, in parallel with that there could be several other programs where we have won, which may kick-in three months later, six months later, just because of the contracting cycle, not due to any inter mixing of technology. So, it’s just that, let’s say we went out successfully won five contracts over the course of the year and those occurred at different times during the year. All those programs would eventually be rolling into the market at different times, might have different lengths of lifecycles and certainly would have different volumes associated with them. I don’t know if that helps to answer your question. Brett? Brett Hodess – Merrill Lynch : The product launch services and you noted that the SG&A would be up this quarter. I think that actually cost of goods sold might be up this quarter as that starts to kick into with that?

I’m sorry, first of all I was not sure I answered the previous question and then your question was cut-off, so we only heard the end of the question. So, could you please restate your question? We can’t hear anything right now. Brett Hodess – Merrill Lynch : Can you hear me now?

Yes. Brett Hodess – Merrill Lynch : Okay, sorry. So the question was, on the product launch services, you did answer my question, Hank and I was asking Mike if on the product launch services if he could talk again about the cost impact as that starts to ramp-up now?

Yes Brett. Well, most of it’s in the form of depreciation based on the capital investment, so it’s fairly minimal probably 10%-15% maximum parse increased product sequentially quarter-to-quarter, most of it being depreciation?

And that’s mostly in COGS, not in the OpEx.

Your next question comes from Raj Seth - Cowen & Company. Raj Seth – Cowen & Company: Thanks very much. Hank on Amkor is it fair to assume a recurring contribution after the payment you received in February; and could you remind me if in fact it does when that license terminates and whether or not sort of $10 million to $12 million a year annually might be a fair way to think about that revenue stream?

Okay, so the question is relative to our relations with Amkor. So the current license that’s in effect expires in 2011 and based on our current understanding, assuming they make their payment in the current contract, remains in effect with no authorizations. We expect that it would be about $2 million to $3 million a quarter. Raj Seth – Cowen & Company: And if its $2 million to $3 million a quarter, also fair that the period of December which was not covered by the cash up that you’d received, I don’t know, $1 million in Q1 and are you assuming that or not assuming that in your guidance or are you stripping everything from your quarter out of that guidance?

Raj it’s not included in the guidance. Raj Seth – Cowen & Company: Okay and then can you just quickly tell us how to think about going forward pro forma taxes here? Where is tax right now?

This is Mike. So, Raj there is so many dependencies they are based on our structure. I mean long term we would certainly be under 40. For this year from a guidance standpoint I would say roughly in the mid 40’s probably a fair number to use at this point for 2009. Raj Seth – Cowen & Company: Mid 40’s for a cash tax?

No, I’m sorry both tax. Cash tax, probably around 5% to 6% of revenue would be a good guide for all of the analysts. Raj Seth – Cowen & Company: Okay, that for the full year and last question for me. Hank, do you guys have any statistics now that might be useful. I know it various by situation on reviews on the ITC. I think last quarter you talked about, you threw out a 25% reversal percentage and I don’t remember if that was inclusive of the decision to either accept or not accept a review and then a reversal. Do you have any statistics that might help eliminated how unusual or common it is for the ITC to do what they’ve just did, that might also suggest probabilities and general for our reversal?

Thank you for the question. I’m going to let Barney answer it.

Hi Raj, this is Barney to answer it. I’m the new General Counsel. We are not going to give any probabilistic suggestions about the outcomes of any of our litigation going forward. We’re part of the team on the field as it where and we’re going to leave the handicapping to the people in Las Vegas. So, the experience of the ITC is that when they see a significant issue, they will reach out and reserve an administrative law judge that is what’s happened here. They are reviewing it to determine whether they agree or not and since we’re deeply involved in this effort, it’s somewhat indecorous for us to comment on our chances of success. You wouldn’t ask players in the super bowl, what their chances of success are who are very busy at trying to win the game.

Your next question comes from Olga Levinson - Barclays.

Just first question just for our comparison purposes; can you provide us with the December quarter in micro electronics and imaging & optics revenues?

I do understand. No, we’re not providing that at this point. So when you do the historical restatement in the queue that will be available. We’re not providing that today.

Okay and then can you talk about within the Imaging & Optics portion, why that products and services proportion of that was so high? Is that a result of the Litho segment or is that actually an indication we’ve been designed into handset OEMs and now we’ve eventually turned into royalties?

The reason for that is that historically when we purchase these companies they were either mature product oriented companies like digital optics or they were very nascent sort of start up companies that hadn’t started producing licensable technology yet; and so what will happen overtime is the percentage of revenue in the Imaging & Optics business that is product derived will decline and the royalties and licenses segment will grow overtime. So, I would imagine without giving guidance or forecasts for several years out that number or flip-flop and it will be more or like 60% to 70% royalty and licenses and products then will be under 30% to 35% category end of two years; that’s certainly our plan.

Okay, and then one final question, does your guidance or margin includes any sort of option fee related to Motorola’s expansion?

Yes.

Yes, it does.

Okay, and anyway to quantify it? Is that lower than your December level or roughly equal?

No, cannot comment on that; it’s confidential Olga.

(Operator Instructions) Your next question comes from Mehdi Hosseini - FBR.

A couple of things; first Hank, I’m sort of a little bit confused. It will be great if you could help us understand who exactly in the imaging and optics is paying you? Is it just one single party or multiple parties and whether they sit in the food-chain?

It’s clearly multiple parties dependent on product lines and so there is a lot that takes to look at quite a matured company; they had 2 million lines of product businesses that had a group of customers that they’ve been servicing for a number of years. Of the newer companies that we bought, SHELLCASE was pretty nascent, and in the case of Eyesquad, as usual, they had actually not booked any contracts at all when we had acquired them. In the case of the SHELLCASE technology, we announced on a regular basis as we did in this script today, new license fees for that technology. So we have five or more companies that have licensed showcase technology and some are paying us significant royalties and that we’ve spoken on a number of occasions. We have 40% plus market share in cavity center encapsulation in the market. Then FotoNation was a company that had a significant penetration of digital still camera market and certainly had 15 to 20 customers and the reason we had acquired them was to take that technology and migrate it into wireless handsets as the camera quality generally improved and increased and so we’ve been able to sustain if not strengthen our position with the digital still camera market and certainly we’ve made great strides in starting to move their technology into our wireless handsets. Then Eyesquad, which I didn’t mentioned has won a number of contracts. That’s designed in IP. Certainly I would expect that technology to be in tens or millions if not more firms within the next 24 months, but today it has not produced one penny in royalties.

So, would it be fair to say that the SHELLCASE right now accounts for well over 50% of imaging and optics, but at what point would the impact of SHELLCASE be less or the percentage go down significantly?

Well, you’re wrong; it doesn’t even approach 50% and we have developed a SOHO Technology which has quite a bit of interest in the market. We’ve been able to license some new licensees in the process of outfitting their factory, so we would see royalties coming from that source. Then in this vision we had to create the wafer-level camera. The SHELLCASE technology is a key part of that and so you may recall we closed our Jerusalem operation which was SHELLCASE. We are in the process of moving the engineering team to North Carolina, so they can be in the same location as our team in North Carolina from visual optics. So, we’re taking the wafer-level optics expertise and capabilities from that team in North Carolina. We’ve now brought the people over from Israel to work with them and that’s where our wafer-level camera’s activity and development is taking place. So that will have a long lifecycle as part of the wafer-level camera. So, we have four major components in imaging and optics; it’s the wafer-level optics, smart imaging, smart optics and our wafer-level packaging and in that, there is really a broad distribution of revenue. There is not a dominance by any category and we’re forecasting in our own internal plans growth in all those areas.

I’m glad that I was wrong on that mix of revenue, because at the end of the day, it seems like with incremental revenue from non-semi area, your overall royalty revenue would be more stable and to that extent for the purpose of modeling, should we assume that imaging and optics would be more than 20% of the mix or less or can you just help me with that?

For the whole company, I don’t think we’re providing that guidance today, but I can tell you that we’re very optimistic about the imaging and optics business. I won’t read too much into the first quarter guidance and we have had a lot of wins during the 2008 which will start kicking in as revenue as we move through 2009 and then even in a greater extent into 2010. So for a emerging sort of market with a lot of new products and a lot of new customers, I’d say disproportion in the amount of this years plan booked already, as we look ahead in a very weak economy and a terrible market. We actually have the makings of a real success story in that area.

One more follow-up question, how should I think about pricing in this area? Is that fixed over the length of the contract or does it changes?

Well, it depends on the product actually. Typically though there are some form of an up front license fees, some cases NRE and then an ongoing royalty based on unit shipments.

Your next question comes form [Daniel Giltouch – Rowing Brook Capital] Daniel Giltouch – Rowing Brook Capital: I just wanted to get a little color on the trend of legal expenses over the course of the year, I’m not sure you’ve covered that yet?

We haven’t, but this is Hank. I’ll refer to Barney Cassidy our new General Counsel or Mike Anthofer.

This is Mike. I just want to make one comment. I did say specifically for the first quarter that our litigation expense would be slightly below last quarter and beyond that we’re not prepared to give any specific guidance to litigation, but I’ll let Barney comment further if he chooses.

I completely agree with Mike. Daniel Giltouch – Rowing Brook Capital: The qualitative type of guidance put together just to get an idea, what’s remaining in terms of, or what’s your timeline in terms of a cases etc.

Right well, the main takeaway is that we are going to continue to protect our intellectual property. We’re deeply involved in the three ITC matters that are ongoing. We did receive a favorable ruling on Friday and the lead case, the 605 case and the ITC were ruled on or before April 3, on key issues in that case, which were actually key issues in the other cases and hence we asked for a stay by filing a motion today, so that when we go forward in the Subcon case, the 649 case, we’ll know what the rules of the game are. We don’t know exactly what they are because the ITC has reached out and expressed an interest in reviewing the initial determination made on December 1, by the Administrative Law Judge. So, the Administrative Law Judge isn’t sure what the rules are going to be; neither are we, neither are the respondents. So we’ve asked for a stay until this eight week period passes during which the ITC will give us their views of the matter, at which time we expect we’ll go back into the full scale effort. So, in terms of guidance for the year, we don’t obviously provide guidance for the year, but the company is committed to the protection of its IP. We had a various statutory effects from our enforcement efforts last year and we’re going to continue them in 2009. Daniel Giltouch – Rowing Brook Capital: You feel that there is a pretty decent chance that we should see a reduction at least in the second half of this year or is this level certainly possible over the course of the year?

Well, it certainly depends in part on our licensees and our other players who should be licensing our technology. So, again we are not going to give guidance for the year. We have given some guidance for Q1, which is the best we can do and we are prepared to go forward in continuing to enforce our IP protection efforts. I don’t know what else I can tell you frankly. Daniel Giltouch – Rowing Brook Capital: As far as the micro electronics business itself, obviously we’ve heard some pretty significant statements from research; last week about DRAM market being down significantly this year. Do you have any guess or you have any type of guide for us where we should be looking for volumes, on the DRAM side or maybe on the wireless side.

Yes, this is Hank. So, we are not a good forward indicator because we get paid in arrears. So, we don’t have any particular inside information on what’s happening. Looking forward, we do have a lot of information looking in arrears. Having said that, we do subscribe to a lot of external market research and try to follow the market as carefully as possible and keep in mind my comments and my statements that when you talk about the DRAM industry being down, you have to take into account, what part of it is DDR1, DDR2, DDR3. When you’re talking about revenue, are you talking about overall bips? Are you taking about unit shift etc? So having said that, we get paid on units, in some cases pins and we also have some volume pricing incentive contracts in place that affect our revenue as well, but our current view base in all the market research that we’ve subscribed to and discussed shows that the forecast have been coming down very rapidly, like a weekly basis, but currently we’re looking at about a 2% to 3% unit growth for the overall market at this moment in time, but that view has been changing and has gone down. Now this is not an unprecedented situation in the DRAM market and it is not the biggest price drop or crash of the market that ever occurred. Actually if you go back and take a look at the various cycles of the DRAM market, it was actually the post dot com bubble part of the market, in a much deeper price declines in a worse situation then we find ourselves in now. So, it looks like the DRAM manufacturers have restrained their supply, their utilization rates have dropped, they’re taking capacity out of the system and prices have responded here in January and they are up. So, it’s in their best interest frankly to try to keep utilization low. It’s sort of like the airlines and how many seats are they going to fly at any given point in time. So, the industry certainly has the ability to self destruct if they want to go and raise all the utilization rates backup to some significant level, they could get themselves in an over supply situation very quickly, but that is not the case right now. Daniel Giltouch – Rowing Brook Capital: Just as far as the mix between DRAM and wireless or the other logic out there is it mostly DRAM at this point?

We don’t give that guidance, I’m sorry.

(Operator Instructions) Your next question comes from Kevin Vassily - Pacific Crest.

My question is specific to DDR2 and DDR3. There seems to be some activity picking up in terms of DRAM companies moving from I think what you would call risk production to maybe some early volumes there. You get any different royalty rates for DDR III versus DDR II on average, relative to the kind of speed requirements of getting data on off-chip for DDR III.

No, we’re strictly unit based and in some cases IO based.

There’s know real different pin count then for DDR III versus DDR II?

Slightly

Slightly; okay, is it slightly negative or slightly positive for you guys?

Slightly positive

So, they are no further question at this time.

Okay, thank you very much in your interest. We look forward to talking to you next quarter. We are going to be at an investment banking conference next week in Florida, Deutsche Bank. Thank you very much.

And that concludes Tessera’s fourth quarter 2008 earnings call. You may now disconnect.