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Re: NormalGuy200 post# 54
Post # of 104 
Andrew Pease actually "sounded" a little testy at times when replying to some of the questions.

Every eight or nine times out of 10, QUIK has disappointed the street. Expectations were never realized, always followed by excuses and more capital raises.

If you believe what action they are bidding on and what they could win, QUIK is going to $5 on the first (after Samsung) sizable (Tier 1) new customer announcement. IF they can announce 2 of them relatively quickly, they could jump over $7.50.

I could be tempted to buy it now. I will however miss out on their big burst if it comes because I am putting my penny money elsewhere.

I wish you luck.

QuickLogic's (QUIK) CEO Andrew Pease on Q3 2014 Results - Earnings Call Transcript

Oct. 31, 2014 2:02 AM ET | About: QuickLogic Corporation (QUIK)
QuickLogic Corporation (NASDAQ:QUIK)

Q3 2014 Earnings Conference Call

October 29, 2014 5:30 PM ET


Ralph Marimon – Chief Financial Officer and Vice President - Finance

Andrew Pease – President and Chief Executive Officer

Brian Faith – Vice President - Worldwide Sales and Marketing


Krishna Shankar – ROTH Capital Partners

Gary Mobley – The Benchmark Company

Rick Neaton – Rivershore Investment

Robert West – Oak Grove Associates


Ladies and gentlemen, good afternoon. At this time I like to welcome everyone to the QuickLogic Corporation’s Third Quarter 2014 Earnings Results Conference Call. During the presentation all participants will be in a listen-only mode. A question-and-answer session will follow the company’s formal remarks. (Operator Instructions)

Today’s conference call is being recorded. With us today from the company are Andy Pease, the President and Chief Executive Officer; Ralph Marimon, Chief Financial Officer; and Brian Faith, Vice President of Worldwide Sales and Marketing.

At this time, I would like to turn the call over to Ralph Marimon, Chief Financial Officer. Please go ahead sir.

Ralph Marimon
Thank you and good afternoon. Before we get started, let me take a moment to read our Safe Harbor statement.

During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to stated expectations relating to revenue from our new and mature products, statements pertaining to our design activity and our ability to convert new design opportunities into production shipments, market acceptance of our customer products, our expected results, our financial expectations for revenue, gross margin, operating expenses, profitability, and cash.

QuickLogic’s future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our annual report on Form 10-K, quarterly reports on Form 10-Q, and prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. This conference call is open to all and is being webcast live.

In the third quarter 2014, total revenue was $4.1 million which was just about the midpoint of our guidance range. New product revenue totaled approximately $2.2 million and was above our guidance due to higher demand from Samsung for our display product. Mature product revenue totaled approximately $1.9 million which was within our guidance range.

Samsung accounted for 27% of total revenue during the third quarter as compared to 40% of total revenue during the second quarter. Our non-GAAP gross profit margin for Q3 was 44% and was just below the midpoint of our guidance. Non-GAAP operating expenses for Q3 totaled $5.2 million, which was favorable to our guidance, primarily due to the timing of engineering related expenses. On a non-GAAP basis the total for other income, expense and taxes with a charge of $56,000, this resulted in a non-GAAP loss of $3.5 million or $0.06 per share.

We ended the quarter with approximately $31.2 million in cash. Our Q3 GAAP net loss was $3.9 million or $0.07 per share. Our GAAP results includes stock-based compensation charges of approximately $452,000. Please see today’s press release for a detailed reconciliation of our GAAP to non-GAAP results.

Now, I’ll turn it over to Andy, who will update you on the status of our strategic efforts.

Andrew Pease
Thanks, Ralph. We are pleased with the modest rebound from the tablet sector we enjoyed during Q3. Based on current orders, we believe this trend will continue and we will be forecasting a significant increase in Q4 new product revenue. We’re in the last stages of a new tablet design with our ArcticLink III display bridge at a tier 1 customer. If successful this opportunity will drive solid display bridge revenue well into 2015.

In previous conference calls we discussed the digital camera design with a tier 1 consumer electronics company. This product is scheduled to enter production this quarter and we expect to announce this customer shortly. In addition to this production win we initiated new design engagements during the quarter in the digital still camera sector.

Camera manufacturers are beginning to adopt MIPI displays and some of these new designs will require the use of a display bridge. We are actively engaged with tier 1 consumer electronics companies with our ArcticLink III display bridge solutions and we expect those engagements will generate production revenue during 2015.

During Q3, we shipped smart connectivity CSSPs to support four unique PHS handsets. Three of these are from Kyocera, each of which uses two of our CSSPs. The fourth is from JRC. We expect our success in the PHS handset market to continue.

In addition to the tactical accomplishments we made substantial progress with our strategic initiatives. With our smart connectivity and sensor hub solutions, that were introduced during the last year we have active engagements with eight of the top smartphone manufacturers. The status of these engagements ranges from evaluation to end product development. Six of these OEM engagements are based on our ultra-low power ArcticLink III in-system re-programmable sensor hub solutions.

And two of the engagements are based on our new PolarPro 3 smart connectivity solutions. We believe a number of these engagements will result in 2015 production revenue.

Last quarter, we discussed three programmable sensor hub engagements that we believed would enter production in the near term. Two of these are on schedule and one has been delayed for reasons outside of our control. We are scheduled to initiate production shipments of our ArcticLink III S2 programmable sensor hub solution during Q4 to support the launch of an innovative wearable device by our first customer, a new Japanese OEM.

We believe we will initiate production shipment of our ArcticLink III S2 next quarter to our second customer. The S2 will be used in a wearable device that will be introduced by a leading smartphone manufacturer that has strong brand name recognition. The third ArcticLink III S2 opportunity for our flagship smartphone has been delayed. In this case the OEM has decided to push the introduction of its first flagship smartphone incorporating always-on context aware capabilities out into 2015.

We remained the preferred sensor hub solution for this OEM and we are very optimistic that we will be the supplier when the smartphone moves into production. Last quarter, I discussed two new smart connectivity engagements. The most important of the two is moving forward, but the other was lost.

During our Q1 conference call I stated that we had been granted technical approval by a tier 1 smartphone company for our new PolarPro 3 smart connectivity CSSP. As I noted then our goal was to intercept a carrier-specific model from an ongoing flagship platform so that we could gain production approval. We are actively engaged in this opportunity and we believe this engagement will position us for the next flagship platform in 2015.

While this strategic intercept opportunity is going well the application in a high-end smartphone designed specifically for the Chinese market was lost. As a smartphone move from design to production, the customer made a last minute decision that included a unique technical requirement. We do not believe this requirement is representative of the mainstream requirements for programmable logic use to mobile devices and we remain very optimistic about our opportunities in smart connectivity.

I would now like to update you on the progress of our strategic initiatives for sensor hubs. It’s been almost a year since we’ve introduced our first in-system reprogrammable sensor hub CSSP, the ArcticLink III S1. Last quarter, we introduced the second member of our sensor hub family, the ArcticLink III S2. In mid-2015 we will release the third member of our senor hub portfolio the ArcticLink IV S3.

Our roadmap strategy was designed to enable the development and deployment of always-on context aware applications with our early adopters, while providing forward compatibility of their IP to future platforms. This roadmap strategy has resonated well with our target customer base. And the integral part of our roadmap strategy has been to closely couple silicon platforms and sensor software algorithms.

By creating an algorithm agnostic solution and partnering with algorithm companies, we were able to deliver a compelling differentiated solution that enabled us to accelerate our engagements with top tier mobile OEMs. Earlier this year, it became apparent the leading algorithm companies, including our partner Sensor Platforms Inc., would be acquired at very high valuations. Due to this, we accelerated the second phase of our strategy to develop in-house algorithm expertise.

I'm very proud to announce that we were ahead of what I thought was an aggressive internal algorithm development schedule. I'm even prouder of the fact that top tier smartphone OEM recently informed us that our predominant algorithm is delivering best-in-class accuracy that is height, gender, and stride agnostic. Accurate pedometer data is the foundation for fitness and health applications, as well as a growing number of applications that’s used with other sensor data. As such, pedometer accuracy is viewed as a critical factor by many of our perspective customers.

This strategy has made us self-sufficient and placed us in control of our own destiny. We also believe, it enables us to greatly enhance our value proposition and more durably differentiate our market position.

So with that, let me base line where we are at in the market and how we are leveraging our positions. Today, we have what is by far the lowest power in system reprogrammable sensor hub solution. While there are number of smartphones in the market using discrete processor-based sensor hubs, the power consumption of those hubs is too high to deliver meaningful always on context-aware applications.

We believe the capability to deliver always on context-aware applications without compromising battery life will open new markets for smartphones and wearable OEMs, as well as for the wireless carriers. In addition to our silicon platforms and roadmaps, we have developed a comprehensive engagement package that provides our targeted customers with the tools and flexibility they need to bring always on context-aware applications to the market. This package includes software drivers for Android and real-time operating systems along with the qualified sensors from all the leading suppliers and most recently best-in-class algorithms.

In addition to these tools, we are actively supporting customer with our smartphone reference design that was released during Q2, and we will release multiple wearable reference designs next month. One of these designs leverages our partnership with Nordic Semiconductor, a leader in Bluetooth low energy, which is also known as Bluetooth Smart. This strategy has led to engagements with six major smartphone OEMs. We believe, these engagements will lead to significant sensor hub revenue in 2015. A majority of Android flagships smartphone shipping today include an in-system re-programmable mobile FPGA.

The most common application supported by these mobile FPGAs are infrared remote control, Mobeam compliant barcode transmission, and LED drive. We have Proven System Blocks or PSBs for all of these applications. In addition, we are very excited about our recent press release with PO, where we announced we will embed their proprietary smart IR technology into our sensor hub solutions. With over 100 million users, PO is the world leader in smartphone remote control applications.
We have found two ways to address these smart connectivity markets. With our PolarPro III platform, we can compete ahead with current mobile FPGA solutions that are commonly used by smartphone companies. While PolarPro III directly competes with mobile FPGAs, we also have the ability to integrate smart connectivity functions into the programmable fabric section of our ArcticLink III S2 sensor hub.

As a result, customers can integrate technologies like PO smart IR in the QuickLogic sensor hub CSSP versus the two chip solutions that are currently used. This gives our single chip solution a meaningful cost and form factor advantage. We have multiple active engagements in the smart connectivity markets with both of these solutions and expect production revenue in 2015.

With that, I’ll turn the call back over to Ralph for our Q4 guidance and rejoin you in a few minutes with my closing comments.

Ralph Marimon
For the fourth quarter of 2014, we are forecasting total revenue of approximately $5.4 million, plus or minus 10%. The $5.4 million in total revenue is expected to be comprised of approximately $3.4 million of new product revenue, and $2 million of mature product revenue.

The increase in new product revenue reflects higher shipments of our display solutions into the Tablet segment and initial production shipments of our new ArcticLink III S2 sensor hub. As in prior quarters, our actual results may vary significantly due to schedule variations from our customers, which are beyond our control. Schedule changes for existing opportunities, and projected production start dates for new opportunities, could push or pull shipments between Q4 and Q1 and impact our actual results significantly.

On a non-GAAP basis, we expect gross margin to be approximately 45%, plus or minus 3%. Gross margin is driven primarily due to the mix of customers and products shipped. We are currently forecasting non-GAAP operating expenses to be $6 million, plus or minus $300,000. Non-GAAP R&D expenses are forecasted to be approximately $3.6 million. The increase in engineering expenses is due to outside service costs related to new chip development and new hires within the engineering organization.

Our non-GAAP SG&A expenses are forecasted to be approximately $2.4 million. Our other income, expense, and taxes will be a charge of up to $60,000. At the midpoint of our guidance, our non-GAAP loss is expected to be approximately $0.06 per share.

Our stock-based compensation expense during the fourth quarter is expected to be approximately $600,000. We expect to use approximately $2.5 million to $3 million in cash. The forecasted cash usage is primarily due to the increase in operating expenses related to new chip development, which includes higher head count and outside service expenses, as well as capital expenditures.

Before we move to the question-and-answer section of today’s call, let me turn the call back over to Andy for his closing remarks.

Andrew Pease
We believe we have the most complete sensor hub solution in the market. We have the lowest power and the most flexible hardware solution available. We have best-in-class sensor algorithms. We have comprehensive silicon and algorithm roadmaps. We have an engagement model and tools that enable OEMs to integrate any combination of QuickLogic OEM or third-party algorithms in our sensor hub platform. We have all the necessary software drivers to be processor and sensor agnostic. We have a complete valuation environment for smartphones.

We have multiple reference designs and a valuation kit for the wearable market. We have a sensor qualified vendor list that expands all major sensor types and suppliers. And we have embedded programmable logic that enables OEMs to integrate functionality from discrete components into a single chip solution. In closing, I'm extremely pleased with the progress we've made towards realizing our strategic objectives, and I firmly believe that, they will lead to significant new product revenue growth in 2015.

Operator, we would now like to open up the call for questions.

Question-and-Answer Session


Thank you. (Operator Instructions) Our first question comes from Krishna Shankar with ROTH Capital. Your line is open.

Krishna Shankar - ROTH Capital Partners
Yes, congratulations on the new product momentum and some of your new reference designs. Andy, as you look out to 2015, can you sort of give us a sense for – it sounds like the display bridging opportunity in tablets is going to extend somewhat into 2015. Also, can you sort of rank order for this the revenue opportunity from sensor hubs, programmable smart connectivity, and display bridges for 2015?

Andrew Pease
Yeah, Krishna, we never comment, broken up the new product revenue as we go forward, obviously a lot of that is geared by one customer, and so that will become obvious. But we're not going to rank order those opportunities.

Krishna Shankar - ROTH Capital Partners
Okay. And then I guess, you mentioned, is it eight smartphone engagements that you have now?

Andrew Pease
Yes, I think, what we said is and it’s hard to find out what the top 10 is, that seems to be a moving target. But we are engaged with eight of the top smartphone guys [ph] suppliers in either solutions and/or smart connectivity solutions.

Krishna Shankar - ROTH Capital Partners
Okay. And are these Android, China Android companies going, can you give us some flavor for the types of customers you are engaged with?

Andrew Pease
Yes. Well, these – first of all these are all top tier guys. You would recognize the names of every one of them, they are all Android-based. I think earlier this year, we're pretty specific that while we can't be operating the system agnostic in terms of smartphone operating systems, we are solely focused on the Android market.

Krishna Shankar - ROTH Capital Partners
Okay. I think that does it for me. So give a – just quality – I know you just gave one quarters guidance at a time, but given the breadth of design wins and engagements you have, do you have an unseasonably strong Q1 as happened last year, can you give us some sense for the pipeline and unit products in production?

Andrew Pease
Krishna, frankly, this market has so much volatility to it, you know, what happened to us at the end of Q1 going into Q2. We can't really say definitively and we would rather not.

Krishna Shankar - ROTH Capital Partners
Okay. Thank you.

Andrew Pease
I think it’s going to be up.


Thank you. Our next question comes from Gary Mobley with Benchmark. Your line is now open.

Gary Mobley - The Benchmark Company
Hi, guys. Thanks for taking my question. Your guidance for the fourth quarter for new product revenue is about $3.4 million, can you confirm whether or not the bulk of that will be driven by Samsung-related tablets and as well, can you kind of give us a sense of the type of revenue, the initial revenue for the ArcticLink III S2 is expected in your new product revenue for the fourth quarter?

Andrew Pease
Yes, I think for Q4 this is initial production shipments for the S2. Like we said all year, we believe that we would see something in production in S2, and frankly, I think that’s a great accomplishment and we are going after a brand new market for us. But clearly, most of the revenue will be display bridge revenue and the bulk of that is obviously by the big dominant Samsung.

Gary Mobley - The Benchmark Company
Okay. The traction or the initial revenue you are expecting for ArcticLink III S2, can you give us a sense of whether you have tied to one customer SKU, a couple or maybe multiple customers, multiple SKUs?

Andrew Pease
The only thing that we feel comfortable addressing right now for Q4 is one Japanese customer that I mentioned that is a wearable product. I think, you will hear a lot more about the production wins, which is what we would rather be talking about in design wins. So I think you’ve been in this business long enough to know that design wins can come and go, but it’s really production wins that matter and go to the bottom line in your P&L.

Gary Mobley - The Benchmark Company
Sure. The purpose of this next question is try to get a sense of the continued revenue for the video bridge product, specifically with Samsung. So I'm just curious how long you would expect the revenue tail for Tab 3 related sales to last, and what the – there will be multiple layers added on top of that that drives video bridge solution to 2015?

Andrew Pease
Right. So what we said is that the tablet market has had somewhat of a rebound, that’s why the Q4 guidance is up. In addition to some of the other things going on, we are seeing some camera opportunities. We actually talked about this last quarter that we do not see our display bridge revenue going away long-term as your other opportunities. I like that maybe Brian chime in and give some additional color on this.

Brian Faith
Yes. So clearly, the volume is driven from the tablet sector, would you see as, Andy mentioned camera is playing into that in 2015. And we are engaged in some adjacent segments that tend to use mobile technology now as their mainstream technology. And so we see opportunities there coming forward to the display bridge also. But clearly as Andy said, the volume driver is the table still.

Gary Mobley - The Benchmark Company
Okay. It’s no secret that Samsungs then go into some turmoil and it’s my understanding as well that there has been some management changes throughout Samsung mobile division. So I'm just curious how those changes that turmoil has impacted your design win traction with Samsung for design win potential other than video bridges?

Andrew Pease
Yes, I don’t think I could comment on those type of issues that are going on in our customer. I think that like we said in the past, our relationship with Samsung is very good, and it continues to be very good as we get into other opportunities. So we are very pleased with our progress here and the team we have in place in Korea.

Gary Mobley - The Benchmark Company
Okay, all right. And relating to the gross margin for the third quarter, it was down sequentially, I think I was down about 110 basis points sequentially, despite a lower mix of new product revenue and specifically a lower mix with Samsung-related revenue. Why didn’t we see more of a uptick in the gross margin due to what seem to be a more favorable product mix?

Andrew Pease
Well, product mix is one key component, but the other component is, we are not as efficient as we should be from the manufacturing side. So when the volumes are lot lower, it hurts our efficiency, which impacts gross margin. So that’s why you didn’t see the mix, the direct margin for simply the product was better, but overall, it’s a little bit worse because of the efficiency issue.

Gary Mobley - The Benchmark Company
Okay. All right. thanks, guys.

Andrew Pease
Yes, sure.


(Operator Instructions) Our next question comes from Rick Neaton with Rivershore Investment. Your line is open.

Rick Neaton - Rivershore Investment
Hi, Andy. Hi, Ralph, and Brian. I wanted to drill down into the algorithm that you have in developing in house. About three weeks ago you had – when you presented at the EuroAsia Conference, you hadn’t showed seven algorithms that are already available and you had seven more that are under development. I'm wondering if that – if those numbers have changed and, is there any more of these algorithms will be available by year end?

Andrew Pease
Yes. So first for all our listeners, when we talk about algorithms, that’s really a pretty broad category. And if you are talking about algorithm, specifically for sensors, they fall in four big categories. The first category is something called motion fusion, primarily used for gaming, and that’s the checkbox, right? The certain classification of the algorithms is for change detection, and that’s what we originally had in our ArcticLink III S1, in other words being able to monitor the sensor’s raw data, and say, hey, I think a change has been detected by all these inputs, what is that change, and that leads us into the third category, which is called context classification. Context classification is one of the things that you’re referring to Rick, where you say, are you sitting, standing, walking in a car or whatever.

And the last category of algorithms is called gestures. And gestures is really a nonverbal communication that really requires your phone or mobile device to have an immediate response.

So with that, I will have Brian talk a little bit more about some examples of those in detail and where we are.

Brian Faith
Hi, Rick, this is Brian.

Rick Neaton - Rivershore Investment
Hi, Brian.

Brian Faith
So let’s talk a little bit more about the sensor software algorithms that we are doing. And fundamentally, we’re taking all of these sensor inputs, and we’re training that into meaningful information for the OEM, which translates to a better user experience for the consumer. And this market is fast moving. OEMs are actually seeing this as an area of possible differentiation for their product.

So one of the great things about having our own internal team now is that, we can work with customers identify where they see an opportunity to differentiate. Then we can go and do that algorithm for that customer, optimized it power in our hub due to proper partitioning from a system point of view, and deliver that out to the market, out there to that customer then broadly make it available in our roadmap.

So I want to set that expectation that in the EuroAsia Press, you see some size that talk about where we have today, where we are going to have this quarter. As Andy said, everything is on track for that. But just remember that, we have this capability now to adopt that, so you’ll see that roadmap changing undoubtedly in the future, as we bring more of these things into play.

Rick Neaton - Rivershore Investment
Okay. Using that Slide 12 as a basis, where you have some sensor algorithms under development for cycling, on stairs, Tap-to-Wake, optical gestures, device in pocket, device not on person and in an elevator and in a vehicle, are any of those now available?

Brian Faith
I think we’re basically consistent with our release together with what we posted in our presentation.

Rick Neaton - Rivershore Investment

Brian Faith
As we do release, more will make the public aware that, we do have customers obviously that we are working with on these to understand how they are going to be measuring accuracies and latencies of all these and making sure that we are meeting those before broadly make them available to the public.

Rick Neaton - Rivershore Investment
Okay. Thanks a lot, guys.

Brian Faith
You're welcome.


Thank you. Our next question comes from Krishna Shankar with ROTH Capital. Your line is open.

Krishna Shankar - ROTH Capital
Yes, Andy. I had a follow-on question, you mentioned intercepting an existing smartphone platform with your programmable connectivity information with the LED, barcode scanning, and other features. Will that contribute to revenues you think in the first-half of 2015, or is that still something that you have engineering qualification with no production orders yet?

Andrew Pease
Well, Krishna, I think that you’re combining two thoughts. The first thought was what we called the intercept. We’ve been talking about this opportunity really since our Q1 conference call of this year.

Krishna Shankar - ROTH Capital

Andrew Pease
And that’s where we’re trying to basic – be an alternate source to what is commonly used in smartphones today. The second thing is, those smart connectivity marketplaces there could be our barcode transmit or TV remote control or LED, that really applies to several different OEMs we’re interested in those functions. And in the case of both, I think, it could generate revenue in the first-half of 2015, yes, but don’t combine the two.

Krishna Shankar - ROTH Capital
Okay. And then going forward, do you think that the S2 sensor hub with programmable features, will that be kind of the mainstream revenue workhorse or will you see more standalone sensor hubs and standalone programmable? I’m trying to get a sense for how many customers like your unique feature of programmability and sensor hub in one chip?

Brian FaithKrishna, this is Brian, I’ll take that question. So I think we have talked about before where we have customers that we tend to drive more catalog solutions to. Those are the guys that we could see would use the standalone sensor hub from us as a combined solution of the device and the software algorithms.
There are other opportunities with larger OEMs, where we see this possible integration play with the smart connectivity box you mentioned, as part of the sensor hub. And we see that combination being good for these sort of higher volume guys that we would be a justification of the work involved and actually doing that customization.

Krishna Shankar - ROTH Capital
Great. That’s very helpful. Thank you.

Brian Faith
You’re welcome.


Our next question comes from Robert West with Oak Grove Associates. Your line is open.

Robert West - Oak Grove Associates
Hi, Andy. How are you?

Andrew Pease
Great, Bob. How are you?

Robert West - Oak Grove Associates
Good. Thanks for taking my call. And I want to begin by – I'm asking you the comment on something you mentioned last quarter on your closing remarks and now was that you believe you – that QuickLogic was executing on or ahead of plan on all of your engineering tasks. Is that continuing, can you give some color on that?

Andrew Pease
Yes, I thought I basically gave some and maybe indirect color on that, that when I said that, we’re ahead of what was a very aggressive algorithm development schedule. We’re still running ahead of that. And we’re continued to be pleased the number of reference platforms or tangible things we’re able to put in the hands of customers is ahead of our schedule, and so we’re very pleased with that?

Robert West - Oak Grove Associates
All right. What about your base line product development like the ArcticLink IV S3. Is that progressing maybe ahead of schedule also?

Andrew Pease
Our ArcticLink IV S3 is right on schedule now and still for sampling in mid-2015. So we’re on track with that.

Unidentified Analyst
All right. And has the ArcticLink III S2 gone to a production status yet?

Andrew Pease
It is in production status as we speak. And for us, of course, that means it is gone through all our QA checks, and we will be shipping it for revenue this quarter.

Unidentified Analyst
Great. That’s good news, because at the time of your EuroAsia presentation it was shown as sampling, so that’s good news.

Andrew PeaseRight. Yes, we’ll change that slide in our investor presentation that will be on our web.Unidentified AnalystOkay. Last quarter you also mentioned that customer schedules were changing and somewhat influx and made it difficult to really nail down completely where you start, how is that - has that changed and are you seeing a little more stability overall in your customer schedules?Brian Faith
Bob, this is Brain, I’ll take that. I think, in this market, this is just how it works. These customers don’t have the visibility six months out, the other markets that historically we sold into is an FPGA company. And so we’re always trying to deal with those situations as they come up.

Unidentified Analyst
All right. Brian, can you offer some thoughts on the CES 2015 coming up? It appears that you quite well have products on a number of smartphones and wearables, so can you elaborate?

Brian Faith
I can elaborate on what customers may have there with QuickLogic. But I can tell you that I'm thrilled about our presence to see us. We’re going to have our own meeting room that we always have with a lot of demos the people have never seen before. And we’re also going to be participating in the MEMS, the MEMS area in the Sam's Hotel & Casino. So we’re going to have a lot of presence there and invite anybody on the call to stop by and see what we have new for the CES show.

Unidentified Analyst
All right. Well, thank you. Wanted to ask Ralph a question. On your non-GAAP R&D expenses for the last quarter, you had guided for $3.6 million that came in nicely lower than that. Was that because some of your outside services pushed out into Q4 and maybe Q1 also?

Ralph Marimon
Yes, I think we were just a little too conservative in forecasting that, because the outside services are pushing out there in Q3, but that will be in Q4 and Q1 as well. And in the last quarter’s forecast, we would assume more, it would show up in the Q3 timeframe. So it’s not haven’t delayed any programs, haven’t delayed any hiring, it’s simply timing of the expenses.

Unidentified Analyst
Perfect. Are those outside services as a big category generally the back-end layout?

Ralph Marimon
Yes. That’s pretty much exactly what they are as well as consulting and potentially IT purchases as well or IT that goes in our devices.

Unidentified Analyst
Right. And by the way, congratulations on continuing to push the intercept forward with. Would you repeat again, Andy, what you said about there your expectations for that – for this – for 2015?

Andrew Pease
Yes. So what I said was under this intercept model, if you recall in Q1, we said we gained technical approval. In Q2, we said, we actually identified a specific carrier-based model, and we’re working with the customer to go into production. On that particular model, we gained full production qualification that puts us in a good position to complete for the next flagship, and all of that is still tracking.

Unidentified Analyst
Right, okay. One – 0I think one last question. A year-ago or last quarter, you mentioned in those prepared remarks, I think, you gave some indication of how things looked for Q1 of 2014. Is there any chance of getting some color on Q1 of 2015?

Andrew Pease
Yes. I think if you recall in this call last year, because we were getting down and because we had kind of a mid – timing of deliveries we wanted to give people a good idea that we are going to continue to grow, and so that's why we did that. I think, our guidance is good now and that we’re growing, and we feel like, we’ll continue to grow.

Unidentified Analyst
Okay. Thank you. So, again, thanks for taking the questions, and congratulation on your progress and look forward to – more in the future.

Andrew Pease
Thank you. Great. Thanks, Bob.


I'm showing no further questions at this time. I would like to hand the call back to Andy Pease, for closing remarks.

Andrew Pease
We thank you for your continued support and I look forward to reporting our strategic progress in our next earnings call, which is scheduled for Wednesday, February 4, 2015 and go Giants.

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