2007-04-25 Rambus 1st Quarter Revenue Conference Call Operator: Good day, everyone, and welcome to this Rambus first quarter 2007 revenue conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Satish Rishi. Please go ahead, Sir. Satish Rishi: Thank you operator, and welcome to Rambus first quarter 2007 conference call. I'm Satish Rishi, Chief Financial Officer, and with me today are Harold Hughes, our President and CEO, and Tom Lavelle, Senior Vice President and General Counsel. We also have Sharon Holt, Senior VP of Sales, Licensing, and Marketing, with us for Q&A. The press release for the results that will be discussed here today have been filed with the SEC on form 8-K If you want a copy of the release, please visit our web site at www.Rambus.com on the investor relations page under financial releases. A replay of this conference call will be available for the next week at 888-203-1112. You can hear the replay by dialing the toll-free number and then entering ID number 6011140 when you hear the prompt. In addition, we are simultaneously webcasting this call, and a replay can be accessed on our web site beginning today at 5pm Pacific Time. Before we begin, I need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending litigation, and demand for our products, among other things. These statements are subject to risks and uncertainties which are more fully described in the documents that we file with the SEC including our 8-Ks, 10-Qs and 10-Ks, and these forward-looking statements may differ materially from our actual results. In addition, the revenue numbers we present today through our press release and this discussion are not yet audited and be finalized when we file our financial statement. Now, I'll turn the call -- I'll turn the call over to Harold. Harold Hughes: Thanks, Satish, and good afternoon, everyone. In Q1, we turned in another strong revenue result of $50.1 million. Satish will go further into the numbers, but I wanted to comment briefly on our ongoing restatement. We are all anxious to get through the restatement and back to reporting our full financials. I share the frustration of our shareholders, and Satish will provide an update on the restatement and investigation later in the call. The restatement, while an extremely important activity and a tremendously difficult one, as well as the FTC's si -- situation that Tom will address are issues that focus on the past. What I want to focus on today is the future. Specifically, I want to talk about the future of computing and its very positive implications for Rambus. We've seen a great deal of industry discussion around the topic: multicore processors. In fact, with the semiconductor industry's ability to continue to drive transistor scaling down to 45 nm, 32 nm, and even smaller, we can pack an incredible number of devices on a single chip. In order to continue to scale performance and take advantage of all these transistors, the processor architects have moved to multicore. This is -- This is an exciting area for Rambus as the common need across these multicore platforms is a veritable thirst for greater memory bandwidth. There are plenty of examples of multicore processors where the manufacturers have just ganged up pup -- ganged up additional cores which do the same set of tasks. What is more interesting, and what we believe presages the future of computing, are the multicore processors which handle both general compute and graphic tasks with a single chip, processors that need both capacity and high bandwidth, and there's only one high-volume memory solution that meets both these requirements, and that's Rambus's XDR memory architecture. XDR DRAM is shipping today in millions of units per month. High-volume production XDR devices -- again, available today -- can provide bandwidth of up to 8 GB per second, and the XDR family has a roadmap of device bandwidth of over 25 GB per second. The XDR architecture provides 4 GB of capacity, and with an easily supported buffered architecture, can scale to the kinds of capacities needed even by high-end servers. No other memory architecture comes even close to serving both these needs simultaneously. Not only is XDR an obvious performance choi[ce], it can be the lowest cost solution as well in high-end HDTVs which can require as much as 6 GB [per second] of bandwidth. A single XDR DRAM device can do the job of four DDR2 devices. From both the standpoint of bill of materials and reducing system complexity, XDR is the economical choice. This is a message that's resonating with our customers. In every one of our sales geographies, be it the US, Europe, Asia, or Japan, we have customer engagement activities for XDR in compute and consumer electronics, such as HDTV and set-top box applications. Some of these are at very early stages, but some are well advanced. Our flagship application is the PlayStation 3 and has already shipped in the millions; and every PlayStation 3 ships with four XDR DRAM devices. We'll make you aware of other XDR enabled product across computer and consumer electronics as they are released into the market. Regardless of the specific application, all of our customers are in high-volume markets, and all demand assurance of supply. This is why our Qimonda XDR DRAM agreement is so important. When Qimonda has its XDR DRAM products in production, we will have the current number 1, number 3, and number 5 DRAM suppliers shipping XDR. Support for XDR DRAM from these top tier DRAM suppliers provides the assurance of supply our customers require, and as we've said before, that we -- what we've achieved with Qimonda is our goal for all unlicensed DRAM suppliers: namely, to put in place a broad patent license agreement and engage to a technology agreement on products such as XDR DRAM that add value to our customer's products and to our customer's customer's products. The XDR memory architecture is ready for micro -- core -- micro -- multicore processing today. We foresaw the need for high bandwidth, high-capacity memory solutions long ago. Our business model requires that we anticipate and invent solutions years ahead of the market need. That's why we hire and must retain the industry's best and the brightest. In five years time, leading edge graphic and gaming applications, applications that will be powered by multicore processors, will require up to a Terabyte per second of bandwidth, and we're working on technol -- working on the technologies that will deliver that -- make that possible today. Along with the need for ever-increasing memory bandwidth, customers are increasingly concerned about our power use -- and about the power usage for their products. We recently showcased our low-power initiative: targeted multi-gigabit per second platforms. Our engineering teams achieved a 3X power reduction when compared to traditional implementations while still delivering high-bandwidth performance. At a recent IEEE conference, we demonstrated a test receiver that transferred more than 3600 Terabits of data utilizing the power of only two standard AA batteries. Let me put that in context. 3600 Terabits of data is equivalent to transferring the content of nearly 100,000 DVDs, accomplished with just the energy requi -- that's provided by two small batteries. That's an accomplishment and one that is recognized not only by IEEE society through the presentation of our findings at their conference, but by the academic -- academic community as well. We continue to bring value to the industry through our innovation. This innovation -- this innovative spirit -- is in our DNA, and our teams continue to push the boundaries of what is possible. One measure of this is our continued progress on building our patent portfolio -- folio, and in the first quarter, we reached an important milestone with the issuance of our 600th patent. We now have 620 issued patents worldwide and another 477 pending. Consider that with less than a year ago that we announced we had reached the 500 patent milestone. The 600 patents equate to 1.5 patents per Rambus employee, a metric that places Rambus in the top tier of innovative driven -- innovation driven companies. This continued high output of patents represent our continued commitment to fundamental core technology research and development. During 2006, we committed to a 4X increase in the resources focused on core technology, and we delivered on that commitment. The continued growth of our patent portfolio signals that our commitment of resources is bearing fruit. So, to wrap up, performance matters in computing and consumer electronics, and XDR memory architecture is the best memory solution available, period. XDR provides both the bandwidth and capacity required by an increasingly powerful generation: multicore processors. But the race never ends, and the bandwidth requirements of tomorrow will continue their steady march forward. Our engineers and scientists push the boundaries of what's possible, even demonstrating industry-leading, low-power technology. What the market will need in 5 to 10 years, we are working on today. With that, I'll turn the call over to Tom to give perspective on what happened regarding the FTC in addition to other legal developments during the quarter. Tom. Tom Lavelle: Thanks, Harold, and good afternoon. As we've said before, the issues surrounding the FTC arise from matters that deal with the past. However, some of the clarifying points made by the FTC do affect our business moving forward, and we want to provide some perspective on that for you today. First, as a review, on February 2nd of this year, the FTC issued its remedy decision, setting maximum royalty rates we can charge for JEDEC-compliant SDRAM and DDR SDRAM devices and controllers. The commission's remedy did not extend to DDR2 SDRAM devices or controllers or any subsequent generation. Subsequent to that, on March 19th, the FTC granted a partial stay of its remedy order. This stay pertains to Rambus's ability to collect royalties in excess of the FTC-imposed rates. The FTC has ordered that Rambus is permitted to collect royalty payments for use of our patented technologies during the period of the stay in excess of the FTC-imposed maximum allowable royalty rates on SDRAM and DDR SDRAM products so long as the funds above these FTC-imposed rates be placed into an escrow account. The funds in the escrow account will be distributed in accordance with the decision of the Court of Appeals when that decision finally comes down. Any funds which go into escrow will not be included in our revenue unless we eventually win the appeal. More on the appeal in a moment. As part of its order on the stay, the FTC also clarified that its remedy is intended to be forward-looking, and, therefore, Rambus is not restricted from collecting royalties for the use of its technologies in the past, nor are we required to refund royalties that have already been paid. Now, back to the appeal. On April 4th of this year, we filed a petition with the Court of Appeals for the District of Columbia Circuit, seeking both review of the liability findings and of the remedy findings in the FTC matter. As we've said before, we believe the FTC, in both the liability findings and remedy, got it fundamentally wrong. The commission chose to ignore its own Chief Administrative Law Judge, the key factfinder in the case, and contradicts the Federal Circuit's findings on the same issue. We remain disappointed with the FTC matter and will provide further updates on the appeal as that case proceeds forward. The remaining portions of the FTC remedy order that were not stayed went into effect on April 12th of this year, and Rambus is in compliance with the remaining FTC order, of course. Turning now to our other litigation. On April 4th of 2007, Judge Whyte in San Jose held a Case Management Conference with all the parties involved in the Rambus-related cases in his court. This included Hynix, Samsung, Micron, and Nanya. As a result of that conference, the judge has combined portions of the cases into one, since these cases deal with essentially the same issues. The combined cases will address the defendants' allegations of improper conduct by Rambus. Our allegations of patent infringement by the remaining defendants will be tried some time after the conduct allegation. You will recall that Hynix has already been found infringing. Judge Whyte has tentatively set a trial date for the conduct issues in January 2008. There will no doubt be pretrial motions that will be filed and subsequent rulings, and we will continue to post information on our web site to keep interested parties updated. We also expect a claims construction hearing on the remaining patent claims in early 2008. Turning now to the joint boycott case in San Francisco. This is the complaint we filed in 2004 alleging the parties engaged in a joint boycott to eliminate RDRAM from the marketplace. A Case Management Conference was held on this matter on April 12th, 2007. The judge in that case, Judge Richard Kramer, determined that a discovery referee was needed in order to better manage large number of discovery issues that are likely to arise in the case. The parties were ordered to meet and confer on the appropriate referee. Also, Judge Kramer determined that it is too early to set a formal trial date but mentioned March 2008 as an aggressive target. He also ordered that depositions and discovery can proceed while we work with the discovery referee to mediate issues as they arise. These depositions may include certain witnesses who are incarcerated for their roles in the DRAM price fixing prosecutions by the US Department of Justice. With that, I will turn the call back to Satish to review the revenue for the quarter and provide an update on the independent investigation. Satish? Satish Rishi: Thanks, Tom. As Harold mentioned, total revenue of $50.1 million were up 6% over the first quarter of last year, driven primarily by patent licensing deals that we signed in 2006, Sony PS3 [PlayStation 3] royalties and recent technology deals, including Qimonda. It is worth noting that revenue of the first quarter of last year included 10 million dollar royalties from the Intel license agreement. Given that we in the process of restating our financials, we do not have the complete income statement details to share with you. However, I can say it was another good quarter reflected by revenue results. In addition, overall cash, defined as cash, cash equivalents, and marketable securities, increased $54 million from the first quarter 2006, ending the quarter at $445 million. Let me provide you with a quick update on the status of financial restatement. I know that many of you are anxious to get this behind us, and so are we. When this began, we did not expect this process to take as long as it has taken. We have found that the process is tedious and time-consuming. As we mentioned in the last call, the indepen -- the independent investigation into the stock option granting process had been largely completed. Subsequent to that, we have had to internally determine the correct measurement dates, verify the correct accounting that existed at that point in time and then calculate how the charge would be allocated to future periods. We also verified other equity related activities, such as vesting of options during leaves of absences, vesting of options -- forced terminations, and the correct accounting for employees who became consultants and vice versa. None of the accounting impacts from any of these related activities had been recorded in the past, so we first had to determine what the facts were, which is the most time-consuming part, and then record the correct accounting entry. In addition, as a part of the restatement process, we have opted to go through additional procedures to ensure that other areas that are entirely unrelated to stock options have also been accounted for correctly. We have not found any significant issues from any of these nonequity related areas, but, nevertheless, we have had to go through the process of ensuring that we have reviewed all possible areas where they could have been an issue. Again, this is a time-consuming activity, and we are working through it as best as we can. In October of last year, we mentioned that we expected the non-cash, pretax, stock-based, compensation charge in connection with the misstated stock options to be in excess of $200 million. As of now, having had quite a bit of work on this, we estimate that the charge for all option related issues including miss -- misstated options accounting for vesting after terminations, etc., will be approximately $190 million. Of this, approximately $170 million will be booked as a non-cash, pretax charge for the periods from 1997 to 2005 and approx -- approximately $20 million will be recognized during 2006 and beyond as the older mispriced options vest. On February 7th, we had also reported that we received a letter from the NASDAQ listing and hearings review council informing us that the council had called for review and also stayed the NASDAQ listing qualifications panel's January 19th, 2007 decision. The council gave us the opportunity to submit additional information for its consideration by the end of March 2007. In March, we provided the council with a status update on the restatement process, and we requested that they grant us an additional extension to complete our restatement. The matter is currently under review by the listing council, and we expect that they will issue the decision sometime soon. Under the NASDAQ mark -- marketplace rules, the council can pr -- the council can provide us with an additional extension that is a lesser of 60 days from the date of the decision or 180 days from the date of the decision made by the NASDAQ listing panel which was January 19th, 2007. While there can be no assurance that -- that the council will grant our request, we are hopeful that they will g -- grant us a further extension which will allow us to remain listed on NASDAQ while we complete this restatement process. We will provide additional updates on this process v -- via 8-K and press releases as appropriate. As Tom mentioned, the FTC's order is in effect for royalties -- for patent royalties in SDRAM and DDR memory devices and controllers that are shipped after April 12th, 2007. We have also mentioned that we have filed an appeal of the FTC's liability and remedy decision. As Tom outlined, the FTC has ordered that any royalties in excess of MARR, or the Maximum Allowable Royalty Rate, for these products be put in escrow until a final -- final decision is reached through the appeal process. We are in the process of talking to our customers over the mechanics of this and also working through the overall impact of this decision on our revenue in the second half of the year. At this time, based on our estimates, we expect that this may put up to $15 million -- one five -- $15 million of our revenue in the second half at risk. However, as Harold mentioned, we are working diligentl -- diligently to grow our business and are seeking momentum and are seeing momentum in our XDR memory architecture engagement. Let me turn our fore -- Let me turn to our forecast for the next quarter. As mentioned before, we do not -- we do not expect the FTC ruling to impact our revenue until the third quarter. Based on our current expectations, we estimate that Q2 revenue will be between $45 and $50 million. We have also received a few questions regarding our shareholders meeting. I just want to remind everybody that we cannot have a shareholders meeting 'til we are current on our financials. Once we get current, we will -- we will provide more detail about the annual shareholders meeting. That concludes our prepared remarks. Operator, would you please open the call for questions? Operator: Thank you, Mr. Rishi. Today's question and answer session will be conducted electronically. If you would like to ask a question at this time, please press the * key followed by the digit one on your touchtone telephone. If you are using a speaker phone, please make sure the mute function is turned off so your signal may reach our equipment. Once again, if you would like to ask a question at this time, please press *1. We will pause for just a moment to give everyone an opportunity to signal. We will take our first question from Dunham Winoto with W. R. Hambrecht. Please go ahead. Dunham Winoto: Good afternoon. I'm calling in for Daniel as well. If I can just ask you a couple of questions. First of all, can you talk a little bit about the potential opportunity for PS3 this year? Sharon Holt: Hi, Dunham. This is Sharon Holt. We cannot give you figures as to the potential business impact or revenue impact for us from the PS3, but, certainly, I think we have been very public about the Rambus technologies that are incorporated in the PS3, and I think if you take a look at what Sony has released publicly about the volumes they have already shipped and what they expect to ship for the rest of the year at least gives you some idea of the positive impact for Rambus. Dunham Winoto: OK. In that case, then let me just change gears a little bit then in the second question. I think Satish and maybe Harold talked little bit about the potential of getting delisted, so what are the key dates that we have to watch out for here? Satish Rishi: Well, Dunham, like I mentioned, we -- we have sent in our information and -- to the -- to the NASDAQ review council, and, typically, they meet once a month, and we are not privy to when they meet, but once they make the decision, they have within the -- within -- within their right, they can give us up to 60 days of -- from the date of the decision or up to a 180 days from January 19. Those are the two dates that -- that -- that they can provide us for the -- for the extension at this point in time. Dunham Winoto: OK. 150 or 180? Satish Rishi: 180. Dunham Winoto: 180. OK. Thank you very much. Operator: As a reminder, if you would like to ask a question at this time, please press *1. We'll take our next question from Michael Cohen with Pacific American Securities. Please go ahead. Michael Cohen: Thank you. Hi, Harold. You touched on -- Harold Hughes: Hello. How are you? Michael Cohen: I'm doing pretty good. You touched on the need for XDR memory in platforms that have both CPU [central processing unit] and GPU [graphics processing unit] cores. What I was wondering is -- is wondering -- with the previous licensing agreement with AMD, now that AMD and ATI are combined, would ATI need a separate licensing agreement or are they covered under the original AMD deal? Sharon Holt: Hi, Michael. This is Sharon. I'll take that question. The -- the current AMD, which is the merged company, is -- is licensed on a forward-going basis, so the business that was formerly ATI on a forward-going basis is now covered under the existing agreement with AMD. Michael Cohen: OK, and if you could refresh my memory, was there a variable component to that deal, or was it a -- a one-time paid-up fee of I think 200 million? Sharon Holt: We didn't announce the specifics of the deal. We did announce that the total value of the deal was $75,000,000 over a five-year period. Michael Cohen: OK, and, similarly, would Intel need any additional agreements if they chose to combine CPUs and GPUs on a single die, or would their past license agreement that's now paid up ... um ... Harold Hughes: Well, to the extent that the -- to the extent that the inventions were covered by their paid-up license, obviously, no, but as I said, we continue to invent every day, and they are developing the product as it goes forward. Presumably, they will focus on the highest performance. So, I can't answer categorically one way or the other. I could simply say that over time, we will develop a patent portfolio that will -- will require licensing. Michael Cohen: OK, and my next question is: You previously announced a systems level licensing strategy some time back, and I previously asked if you had sent out letters of infringement to systems manufacturers, and at that time, the answer was no, and I was wondering have letters been sent out now? Sharon Holt: Michael, this is Sharon. I -- I doubt that we said yes or no or anything definitive in response to that question. We do not talk about the status of ongoing discussions with potential licensees. Michael Cohen: OK. Can you comment on whether that's still a viable strategy or one that you plan to go forward as previously announced or is that now off the table? Sharon Holt: We continue to talk to a variety of potential licensees at -- at all levels of the value chain. Michael Cohen: OK, and my next question would be for Satish. I was wondering if you could give us a number on the amount of outstanding convertible debt and also the number of shares outstanding? Satish Rishi: The -- the amount for the convertible debt is $160 million. Michael Cohen: Can you repeat that number? Satish Rishi: 160. 1-6-0. Michael Cohen: OK. Satish Rishi: And that hasn't changed from last public number. In terms of shares outstanding, you know, we have not done that calculation, because as we -- we can only do that after we complete our restatement in terms of the options and the shares and so and so forth, so that number we'll let you know when we -- when we restate our financials, but, again, the number shouldn't have changed very much from what you had initially. Harold Hughes: I would -- I would use a 100 million. Michael Cohen: Roughly a 100 million. Harold Hughes: Yeah -- yeah. It certainly makes the math easier, doesn't it? Satish Rishi: Yeah. Michael Cohen: Yeah. Can you [garbled] number. Is there anything that could change the number of shares outstanding with regard to the investigation? Satish Rishi: There -- there are some things that could change, but I probably won't speculate at this point in time at what they might be. Michael Cohen: OK, and my last question is: I was wondering -- I'm a believer that you're eventually going to ha -- file a DDR3 suit, and I was wondering in terms of the timing of when it's -- it's already a standard. Would it have to be on the market? Could you comment on an timing of when such a suit would come if it were to come? Tom Lavelle: Hi, this is Tom. No. I think we're not really gonna to comment on what is very speculative as to what we might or might not do in the litigation arena looking forward. I think I just leave it at that. Operator: We will take our next question from Jeff Schreiner with American Technology Research. Please go ahead. Jeff Schreiner: Good day, everyone. Harold Hughes: Hello, Jeff. Jeff Schreiner: Got lost there -- lost in translations, possibly. Want to ask you a question, Tom. Could -- and -- and I apologize if this is just asked by Michael, but I was kicked off, but wondering if you could provide a little bit of the reasoning or -- or what Rambus believes the DC venue offers as a basis for its choice of the FTC appeal. Tom Lavelle: What it offers in terms of -- of a choice? Jeff Schreiner: Well, why -- I mean everything done legally is -- is based on your perception of -- of -- of the positioning that you'll receive -- Tom Lavelle: Well -- Jeff Schreiner: -- and, so, what's Rambus's perception of why you chose the DC circuit when you -- you know -- you had several options within the circuit court to choose. Do you feel that there's an expertise there at -- at the level of the judge relating to this t -- type of technology? Tom Lavelle: I think there's expertise in a lot of the circuits. I think the principal reason really focuses on the fact that a number of the JEDEC meetings took place in and around the Washington, DC area during the time 11 years ago, almost 12 years ago, that Rambus participated. We thought that's a pretty important fact involved in our decision where to file, so I would say that's probably the most significant factor. Jeff Schreiner: OK. Switching gears, Satish, I was just wondering if you could comment -- appreciate the -- the initial guidance about the potential risk of revenue on the second half from the FTC ruling. Would you be able to just -- you know -- not specifically comment on which licensees, but you -- could you comment on maybe the number of licensees this may in fact affect? Satish Rishi: No. I -- I wouldn't at this point in time, because it -- it is complicated, and we are still in the process of talking to many of our customers at this point in time. Jeff Schreiner: OK. Does that -- Satish Rishi: So -- Jeff Schreiner: In talking with the customers trying to determine what the actual rate may be if they're paying fixed payments at this point? Satish Rishi: What the actual rate might be, what the actual products might be. There's a lot of -- a lot of different complicated factors in there, so I think what we felt is that we should be -- you know -- fee -- feel there is some risk to the revenue, that there's some downside. We wanted to be up front and let -- let everyone know that there is some potential risk to the revenue but -- you know -- we'll do our best to make it up in other ways, obviously. Jeff Schreiner: OK. Just one final question. I appreciate your time today. Um. Satish Rishi: Sh -- Sharon -- Sharon wanted to add one more comment. Jeff Schreiner: Oh, OK. I'm sorry. Sharon Holt: Yeah, Jeff. I just thought that I'd add each of our licenses is somewhat different in terms of how it's structured, so working through the ramifications of the FTC remedy order with each one of our licensees is -- is a very much of an individual process. There isn't kind of a blanket answer for each one. Jeff Schreiner: OK, and just a final question I wanted to ask. Maybe, Sharon, it's for you or maybe Satish. Has the -- could -- could investors look to the fact that the option restatement hasn't been completed -- also, we haven't seen during that period really the announcement of any new licensees -- so could investors assume that when management is able to finally work its way through this process that there could be the potential that that opens up the ability for the company to possibly start to craft negotiations that may be in -- in process, let's say, or in the works right now? Satish Rishi: Well, Jeff, I think the -- the -- the two facts are -- the two tasks are unrelated. I think the -- I'm -- I'm focused quite a bit on the -- on the stock option investigation and the restatement, and Sharon and her team are focused out -- outwardly with the customer licensees, so, yes, I would like to be spending more of my time on the business side of things, but it doesn't mean that Sharon and her team and the rest of the company are not doing that. So, I think the two -- the two tasks are fairly unrelated. Sharon Holt: I think also if you're wondering are we -- are we holding back on any announcements or sitting on any announcements during this time? The answer is no. No, we continue to try to move new opportunities forward as we always do, and as we close new deals, we will announce those as appropriate at -- at the time. Jeff Schreiner: OK. Thank you very much for your time. Satish Rishi: Thanks, Jeff. Someone: Jeff. Operator: We will take our next question from Hamed Khorsand with BWS Financial. Please go ahead. Hamed Khorsand: Good afternoon. Harold Hughes: Good afternoon. Hamed Khorsand: My question was related to if there is a set timeline where we can see XDR in a broader line of -- of electronics. Harold Hughes: No, I -- certainly not a set timeline. I -- I -- I went into it in great detail because I -- I believe it's probably more accurate to say that we increase significantly the likelihood that it will happen based upon the architectural structure of these multicore processors. I obviously couldn't commit to a particular timeline. I'll ask Sharon to commit to a particular timeline, but I -- I could never commit to a particular timeline. Sharon Holt: I think, just to add on to that, certainly as we -- as we mentioned earlier in the call, the addition of Qimonda as the third supplier of XDR in the market really does help fuel momentum for XDR in more application, and we are obviously trying to leverage that as we go out and talk to many more customers this year about XDR in a broader variety of markets and applications, and, in particular -- you know -- we are very excited about -- in the visual consumer area -- the -- the HDTV and set-top box market which really is a perfect application space for XDR, and, as Harold mentioned, we believe, longer term, with the advent of multicore architectures in computing, that we will -- we will see XDR penetration into the computing market as well, and we are pushing with everything we've got on that this year. Hamed Khorsand: OK. Now on the terms of getting into the -- the flash market with Spansion, is there a set product that Rambus is looking to attract with -- with the Spansion deal or even expand on -- on that arrangement? Sharon Holt: So, we're continuing to have a dialogue with Spansion about new technologies and potential areas for collaboration, but nothing that we're prepared to talk about today. Hamed Khorsand: OK. All right. Thank you. Satish Rishi: Thank you. Operator: And this will conclude today's question and answer session. Mr. Rishi, I will turn the conference back over to you. Satish Rishi: Thank you, Operator. That concludes our conference call for the first quarter. Thank you all for your continued interest in Rambus. Thank you. Operator: Ladies and gentlemen, this will conclude today's presentation. We do thank you for your participation, and you may disconnect at this time.