JDS Uniphase Corp Executive Earnings Insights: CommTest, Budget Cycles
Patrick Newton – Stifel, Nicolaus & Co.: A question for both of you. I guess how far are we into the process of consolidating CommTest manufacturing footprint supply chain and was a meaningful portion of the streamlining of operations already present in the current quarter? And then dovetailing of the same CommTest theme, you had a statement in your slide deck stating that you have confidence in attaining the CommTest segment targeted model by the end of the calendar year or that your conference continues to grow, is it fair to interpret that to mean that you expect to eclipse $250 million in CommTest revenue in the December quarter?
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David Vellequette – CFO: Patrick, let me take the first part of then, and I’m going to let David Heard address the last part. Of course the activity that we announced, this is head count that will be reduced from our manufacturing support structure over the next three quarters as we reduce our CM footprint. So, I’ll let David handle the rest, I want to let you know the benefit it gets realized over the next three quarters. David?
David Heard – Test & Measurement Business Segment: Thanks, Dave. I think that question really ties to the confidence question, because I think you are asking how far are we along and what gives us the confidence, did I get that right?
Patrick Newton – Stifel, Nicolaus & Co.: Yeah, that’s right.
David Heard – Test & Measurement Business Segment: So as Dave mentioned, we committed in our February Analyst Day that CommTest would be reaching its intended goal at revenue of $215 million, gross margins of 64% to 66%, and operating margin of 20% to 23%. When we look at the current period today, we are at 61.6 points of gross margin on a $177.8 million of revenue and that is without the flow through of the reduction of the supply chain by 50% as we committed at the Analyst Day. What gives us confidence is, we have taken those actions in terms of the identification of personnel notification and the negotiation with our contract manufactures along that path. We are on our target and performing as promised along those categories. So, that is just one element of what we talked about at the Analyst Day, of our business model improvement plan with that supply chain consolidation. The other elements Tom covered nicely in the overall earnings discussion about new products. We also have margin mix products that we talked about in the Analyst Day, primarily driven around mobility and software. Tom mentioned PacketPortal. He mentioned another revolutionary product PacketInsight, that both are accretive to the overall CommTest model. So, against the milestones that we outlaid in that February session, we’ve made clear and definitive progress, along not only the supply chain, the overall operating efficiency and the new product level being at all-time high for us at 60% of new product revenues, but that’s even on a much lower today proof point base of revenue to gross margin. So, that gives us clear and definitive demonstratable confidence. Did that help answer your question?
Patrick Newton – Stifel, Nicolaus & Co.: Yeah, I guess. Just as a follow-up. So, you addressed – when you say increased confidence of the model, you addressed the gross margin aspect and you addressed the operating margin aspect, there is also the revenue component. So, the revenue is greater than $250 million is the bogey that you set out there in order to reach that model. If you have increased confidence are you also implicitly saying that with these products, with PacketPortal, with PacketInsight that you think that that $250 million is achievable by the December quarter?
David Vellequette – CFO: We’re providing guidance above the current quarter in term of the top line. I think the important part to walk away with is, with the late capital release that we saw primarily in North America, as we all know CapEx budgets and OpEx budgets have never been tighter, so I think our investments focus on mobility and video are at the high priority of where those dollars are spending. As we look at the CapEx flow for the remainder of the year, I think we feel pretty good and well-positioned being at 60% of our products being of those new products and those products being positioned in mobility and video. A, they’re high priority, B they’re growing at a much faster rate than the rest of the communications test market. So, I think that’s what we (indiscernible) about.
Patrick Newton – Stifel, Nicolaus & Co.: One last one still for you Dave on the PacketPortal side. I think in your prepared remarks, you talked about some purchase orders secured for PacketPortal. I think at your Analyst Day you said that you had some expectations of ramp in the first half of calendar ’13. So, based on the commentary and the press release, relative to your Analyst Day, is that representative of a pulling in demand for PacketPortal?
David Vellequette – CFO: I think, as we look at the outlook, no there is not a change in what we provided in Analyst Day. I think the good news is with the release of PacketPortal, we’ve seen a nice funnel of activity from the carriers. We’ve seen a large funnel of activity from application providers that can provide applications on our platform, both of which are very, very encouraging, but we’re also mindful that when we deploy this groundbreaking technology into networks it takes time, and that’s why we’ve kept with the same timeframe in terms of when it has an impact on revenues. Dave, anything add there?
David Heard – Test & Measurement Business Segment: No, I think that’s fine.
Nikos Theodosopoulos – UBS: Just a couple of quick ones. Back on CommTest you mentioned 50% of bookings occurred in the last month. Is that I guess you are implying that that’s higher than normal, what would you normally see in terms of the last month of booking in that business?
David Vellequette – CFO: It will be close to the low 40s.
Nikos Theodosopoulos – UBS: On the budget cycles, talking longer to release, would you say that was in all region or predominantly in the U.S. since that where you saw the most significant sequential decline and are you seeing that the release of the budgets continue into April?
David Vellequette – CFO: It was mostly in North America as you noted that – as we noted that north America is where the decline was for CommTest in the revenue and so it was mostly there what we’re seeing is we’re seeing the backend load of that in the booking this quarter, that’s what we put in our –contemplated in our guidance that we provided today. So, that contemplates exactly how we’re seeing the business coming in.
Nikos Theodosopoulos – UBS: Just one last one on OpEx, it was a little bit lower based on I guess additional employees from acquisitions and other things. Was there some kind of offset this quarter? I mean it’s good that it came in lower, but I am just curious what led to the slightly lower number?
David Vellequette – CFO: Are you talking about CommTest operating margin?
Nikos Theodosopoulos – UBS: Total operating expenses for the Company.
David Vellequette – CFO: The total operating expense for the company, it basically came in lower as we saw the – as the demand was coming in. Right, we therefore – two things happened. One, we had contemplated in our previous guidance that we would have variable compensation or bonus compensations being accrued in the quarter and because we didn’t meet our threshold we didn’t have that accrual. That’s why you see the OpEx for next quarter increasing because we hit certain thresholds that have us accruing for that. We obviously reduced other expenses as we saw that the orders were coming more backend loaded.