Operator: Good afternoon, ladies and gentlemen, and welcome to the Finisar Corporation Fourth Quarter and Fiscal Year End 2012 Financial Results Conference Call. Just a quick reminder, today's call is being recorded.

Now, at this time, I'll turn things over to our host for today, Mr. Jerry Rawls, Executive Chairman. Please go ahead, sir.

Jerry S. Rawls - Executive Chairman: Thank you, and good afternoon, everyone. We appreciate you are taking the time to listen to our conference call today. A replay of this call should appear on our website within eight hours. An audio replay will be available for two weeks by calling area code 888-203-1112 for domestic or area code 719-457-0820 for international. Then enter the ID number 4874146.

I need to remind all of you that any forward-looking statements in today's discussion are subject to risks and uncertainties, which are discussed at length in our Annual and quarterly SEC filings. Actual events and results can differ materially from any forward-looking statements. In addition, unless otherwise indicated, all financial results are discussed on a non-GAAP basis. A complete reconciliation of our GAAP to non-GAAP results may be found in our earnings press release and in the Investor Relations section of our website.

First, I would like to point out that we have prepared some slides for today's earnings call, which you can access by connecting to the Investor Relations page of our website at www.finisar.com. Click on Investors, then scroll down to Webcast Archives and click. Then you'll see a listing for today's fourth quarter 2012 earnings call.

In our just completed fiscal fourth quarter, our revenue were $239.9 million. Our sale of datacom products continue to be strong, however that was offset by lower sales of telecom products. This was primarily the result of sluggish carrier capital spending levels and the full three month impact of annual telecom price reductions.

I am pleased to report that our non-GAAP gross margin were 31.4%, which was a bit above our guidance of 31%. This resulted in non-GAAP earnings per diluted share of $0.21, which was at the higher end of our guidance range of $0.18 to $0.22.

Now with that, I'll let Kurt review the rest of the numbers. Kurt.

Kurt Adzema - EVP and CFO: Thanks, Jerry. For the fourth fiscal quarter our revenues were $239.9 million, a decrease of $3 million or 1.3% from $243 million in the preceding quarter. Revenue for data communication products was $146 million, an increase of $12.3 million or 9.2% over Q3. Revenue for telecommunication products was $93.9 million, a decrease of $15.4 million or 14.31% from Q3. In the fourth quarter we had two 10% or greater customers. Our top 10 customers represented 58.5% for total revenue compared to 59.9% in the preceding quarter.

Non-GAAP gross margin was 31.4% compared to 31.8% in the preceding quarter. Margins were impacted by the full-three months of the annual price reductions for telecom products that typical take effect on January 1. Non-GAAP operating expenses for the fourth quarter were $54.6 million compared to $53.3 million in the preceding quarter. This increase was due to harder employee benefit and payroll tax amounts associated with the beginning of the calendar year.

Fourth quarter non-GAAP operating income decreased $3.1 million to $20.9 million or 8.7% of revenues compared to $24 million or 9.9% revenues in the preceding quarter. Fourth quarter net interest expense was approximately $444,000 and other expenses were approximately $184,000. The adjustment for net income or loss of the non-controlling interest was a positive $673,000 and non-GAAP taxes were approximately $667,000. Non-GAAP income from continuing operations was $20.2 million or $0.21 per diluted share compared to $21.9 million or $0.23 per diluted share in the preceding quarter.

Average shares for the fourth quarter for non-GAAP purposes totaled $98.5 million. This diluted share count also includes the impact of converting the principal amount of our outstanding convertible notes to equity for the purposes of calculating EPS. Please note that you need to add back approximately $539,000 of interest expense and other costs associated with the aforementioned convertible notes to calculate diluted EPS for the fourth quarter.

The sum of net interest expense, other expenses, and the adjustment for net income or loss of non-controlling interest is expected to be a deduction of approximately $800,000 in Q1. Non-GAAP taxes are estimated at 4% of non-GAAP pre-tax income for 2013. In the first quarter, for fiscal 2013, weighted average fully diluted shares are expected to be approximately 99 million for non-GAAP purposes. Non-GAAP EBITDA decreased $1.1 million to $34.2 million or 14.2% of revenue compared to $35.2 million or 14.5% of revenues in the preceding quarter.

Fourth quarter net capital expenditures totaled approximately $23 million compared to $17.4 million in the preceding quarter primarily due to Finisar entering into a long-term lease of land in Wuxi, China in an anticipation of building a new manufacturing facility. Wuxi, China is located approximately 70 miles from our current manufacturing facility in Shanghai. Capital expenditures are expected to be on elevated level over the next 18 months as we build out this new facility, which is expected to be open in the second half of calendar 2013. Capital expenditures are expected to be approximately $23 million.

Cash and cash equivalents totaled $234.5 million at the end of the fourth quarter compared to $218 million at the end of the preceding quarter. Account receivable decreased $10.5 million over the preceding quarter. Inventory turns were 3.1 compared to 3.0 in the preceding quarter and overall our inventory decreased by $7.1 million from the preceding quarter. Accounts payable decreased $13.8 million from the preceding quarter.

During the quarter, Finisar repaid an equivalent of $1.1 million of Ignis debt, and an equivalent of approximately $3.2 million remains outstanding at the end of the quarter which is reflected in Finisar's consolidated balance sheet, and we expect to repay the remaining balance in Q1 FY '13.

At the end of the quarter, Finisar had approximately $40 million in principal amount of convertible notes outstanding with a conversion price of $10.675 per share. There are a number of non-cash or infrequently occurring charges which we exclude from our non-GAAP results. These totaled $7.1 million last quarter. If you include all these items as required under GAAP, we generated net income from continuing operations for the third quarter of $13.2 million or $0.14 per diluted share compared to $8.9 million or $0.09 per diluted share in the preceding quarter.

That concludes my comments, and I'll turn it over to Eitan.

Eitan Gertel - CEO: Thanks, Kurt. We continued our significant investments in research and development to further expand our product portfolio of innovative new products to enable our customers to enhance through new product. In datacom, we are investing in a variety of MSA and proprietary form factors for both short and long lease transceiver applications, which includes SFP+, XFP, QSFP, CXP and CFP. Demand for our 100G LR4 CFP transceivers continue to grow. We are also expecting to release our next generation lower power LR4 CFP in late summer with new internally designed directly modulated lasers. Our 16 Gig SX and LX SFP+ fiber channel transceivers continue to be very well received in the market and we continue to qualify this product with multiple new customers. We are the only supplier within this industry to have both products in full production.

We are continuing to invest in our QSFP portfolio and are developing a new short and long reach product, while expanding capacity for our existing QSFP product line. Many of our customers are migrating to QSFP due to the increased front panel density it offers over SFP+ and the versatility of the form factor in servicing many different applications and regions.

In our power product line we continue to see significant traction with several key OEM customers for our proprietary optical engine that will be used in next generation storage systems, switches, routers, servers, and the super computers. We expect this product line to grow very rapidly over the next few years as many of our customers move to using our optical engine for high density solutions with low power and very high bandwidth.

In telecom, we continue to invest in new product development for our WSS, optical channel monitoring, 10 Gig, 40 Gig and 100 Gig product lines. Our success in winning new customers for our low port count WSS platform for the 1x2 and 1x4 applications has continued. Our high port count WSS platform has also been very successful in winning new programs for our 1x9, 1x16 and 1x23 Flexgrid product. Finisar is the only company currently delivering full portfolio of flexible grid WSS modules.

In addition to new customer wins for our new WSS modules, we have also continued to win next-generation line cards with multiple customers based on our LCoS technology and Flexgrid capabilities. We believe we will continue to increase our market share as more of the industry incorporates Flexgrid technologies into ROADM systems.

For our tunable XFP transceiver business, we have completed numerous additional qualifications, and we are now focusing on design efforts towards the next-generation tunable XFP module development. Although, we have made great progress releasing numbers of new innovative products and winning new design opportunities, the current level of carrier capital expenditures coupled with macroeconomic situation has resulted in lower revenues than we have expected for this product. However, we believe that our strong portfolio of product and new design wins has set a strong foundation for revenue growth in the second half of 2012 and beyond.

Now, I'll turn the call back to Jerry for some final comments.

Jerry S. Rawls - Executive Chairman: Thanks Eitan. Our long-term demand for bandwidth and our position as the industry's leader continues to remain strong. However, the current macroeconomic outlook remains uncertain driven by some of the latest development in Europe as well as the slowing of economic growth in China.

Generally telecom spending throughout the world has been soft. As a result, we believe revenues for our first quarter of fiscal 2013 ending July 29th will be in the range of $218 million to $233 million. Please note that this first quarter of fiscal 2013 will have two fewer shipping days than the fourth quarter of fiscal 2012 did.

This is expected to account for approximately half of our forecast and decline in revenues. We expect non-GAAP gross margins will be approximately 30.4%.

We expect that fiscal Q1 operating expenses will be relatively flat with last quarter at approximately $54.6 million. We also expect non-GAAP operating margin to be in the range of 5.5% from 7% and non-GAAP earnings per diluted share to be in the range of $0.11 to $0.15 per share.

We should remember that Finisar is a company that is driven primarily by growth in the demand for bandwidth from the pervasive distribution and use of video, photos and digital information. Contributing to this growth and demand are smartphones, tablet, computers, cloud computing, social networking sites, data center, consolidation, server virtualization, online gaming and video downloads. Many long-term growth drivers are working for us.

Unfortunately, the near-term macroeconomic situation in the world is not positive.

Ultimately the telecom service providers will have a spend more on optics and bandwidth expansion as the loading of the networks continues to grow. When this spending comes back, we believe that Finisar is uniquely positioned to reap the benefits. Our broad product line, extensive customer engagements, profitable vertically integrated business model and strong balance sheet will enable us to capitalize on the myriad optical product opportunities. We believe we will further strengthen our position as the market leader.

Now with that, I'm going to turn it back over to Cameron, and open it up for questions.

Operator: Troy Jensen, Piper Jaffray.

Troy Jensen - Piper Jaffray: Just a quick question, I guess Jerry or Kurt or Eitan a little bit. If you look at your guidance it implies about down 5% sequentially at the midpoint. Could you just give us a sense for how you feel datacom versus telco is going to do? We expect datacom to be flat-to-up again and telco down more or both expected to drive sequentially?

Jerry S. Rawls - Executive Chairman: We actually expect both of them to drop a little bit. We have the situation where we have too fewer days in the quarter, next quarter. In datacom as you remember, our customers just pulled from just-in-time inventory hubs at, I will say, random times during the quarter, but whatever they need product they pull them. So having too fewer days is going to affect – we think will affect datacom some, and we think telecom continues to be soft. So…

Troy Jensen - Piper Jaffray: All right. I got it. Then I have a quick for Kurt, and I got one last follow-up with that. Could you give us a dollar amount for revenues on 100 G short-reach and ROADMs please?

Kurt Adzema - EVP and CFO: Yeah. We don't break out revenue by product like that. We just break it out datacom versus telecom.

Troy Jensen - Piper Jaffray: Historically, you've given us some sense for just how it's grown or declined, or is there any other color you can give us?

Kurt Adzema - EVP and CFO: Well, what I would say is in general the tele – as you know, the overall telecom revenue was down last quarter primarily driven by the ASP reduction, so I'd say WSS and ROADM was in the same ballpark with overall telecom. In terms of a 100 Gig, a 100 Gig continues to grow, and that was one of the growth drivers for the datacom business, last quarter.

Troy Jensen - Piper Jaffray: Alright. Then I've one last for Eitan to get him involved, how about just confidence that the second half 2012 is going to be better than the first half, do you guys have any visibility to feel that we're going to have a better second half?

Eitan Gertel - CEO: We still want to think in the – that the network operators have to operate, because demand continues to grow. We hear from our customers. This comes from our customers, opinion that second half should be much better than the first half. Although, what we are doing is that we need to respond to what the demand actually shows up, so we decided to stay conservative until we see things start happening. That's the feedback from end customers – from our customers that they expect second half better than…

Operator: Patrick Newton, Stifel Nicolaus.

Christian Seiferth - Stifel Nicolaus: This is (Christian Seiferth) sitting in for Patrick Newton. I was wondering if you could comment a little bit on the timing of ROADM line card ramping? There has been a lot of chatter about tier 1 North American operator deploying flexible networks and is it likely that Finisar will be a beneficiary of these expected deployments?

Kurt Adzema - EVP and CFO: First of all, two things. First of all you asked about timings, we have said that our timings for line card development to production is about 12 to 16 or 18 months and we expect by midyear some time since July to start shipping initial quantity and ramp from that point on all the way to the beginning of next calendar year of 2013 and we are on scheduled to perform to what we said before. As far as Flexgrid, the number of operators that we are talking are actually doing more than talking on deploying Flexgrid and we expected it there. Currently we are the only one who has the full Flexgrid operation, full Flexgrid product line and we have had that for quite some time.

Christian Seiferth - Stifel Nicolaus: I was wondering if you could also comment on the direction magnitude of tunable XFP growth, sequentially?

Kurt Adzema - EVP and CFO: Without getting into the specifics, I will say that, our tunable XFP performance quarter-over-quarter was weaker than we expected and that was driven by our telecom customers we had for our designs. So quarter-over-quarter our tunable XFP have not grown, it slightly shrunk, but respectively we are directly tied to our – the customers, we have qualified with, and their revenue has been systematic quarter-on-quarter or their input. Although at the same time, I will say, we have been qualified at large number of additional customers, we expect that to grow actually faster than the recurring book of the telecom.

Christian Seiferth - Stifel Nicolaus: Lastly, I was wondering if you could provide some color on your development of a 100G Coherent modules. I guess talking about the market opportunity for these products, competition and also the timing of our revenue contribution?

Kurt Adzema - EVP and CFO: We have said a while ago, I think six to nine months ago that we are developing Coherent module, OIF module, and we have demonstrated our first module in the OFC Show, and right now, we have started sampling customers to the initial products. I don't expect that to have any impact on revenue before sometime in the second quarter, first or second quarter calendar 2013, but we're already in customer hands with fully operating modules, starting to do initial tests.

Operator: James Kisner, Jefferies & Company.

James Kisner - Jefferies & Company: I guess my first question is just on regarding the guidance. Just looking across this space, I think we've seen generally guidance in the component space for at least slightly up, you're guiding slightly down, I guess I'm kind of wondering is part of – how much of this is just driven by headline risk and how much is driven by deterioration in bookings, are you guys just looking at the similar lines as we are and you are incrementally more cautious this quarter, are you just – have you seen the change and say the last month, and you're business was hedging incrementally more cautious?

Kurt Adzema - EVP and CFO: I don't think we've seen a change in our business in the last month that's made us more cautious. Our telecom equipment customers have been weak for longer than a month. So, we don't know we haven't seen any recovery there and I think that we're forecasting that that continues. So, one thing I would remind you, when you compare our results with some of the others in our industry, is that many of them were operating off of much lower revenue levels because of the flood in Thailand, and so the recovery while that they may guide to higher result were coming off of both a lower base. So, we didn't get, we didn't get hurt by that flood. So, we're anyway, I have no other rationale to why other guys in the industry would be slightly up and we would be slightly down, but for us it's mostly a telecom (play).

James Kisner - Jefferies & Company: So, shifting gears then, thank you for that. On the enterprise, I mean you had a very strong quarter enterprise. I know, you're not breaking out product lines any more, but is that – is it fair to say that's driven by a lot of 10 Gig, can you help us understand why enterprise was suddenly strong this quarter?

Kurt Adzema - EVP and CFO: Well, let's see our enterprise business was up 4% last quarter, I mean the quarter before in Q3, was up 9% in Q4 and in both cases it is about the highest performance products that we have that we're driving growth. Its 10 Gig, 40 Gig, 100 Gig, and it's I think that – and that's exactly what we would expect. I mean we expected our – that the new products are the ones that are going to have the most rapid rate of growth.

James Kisner - Jefferies & Company: It's the last question, I'll pass it on. Given the gross margin being down, I guess I'm just kind of wondering how much of the – is that assuming you're at constant mix or is there any kind of mix assumption that impacts your gross margin guidance?

Kurt Adzema - EVP and CFO: It's primarily the volume being down. So, it's not a material change in mix that affecting things.

Operator: Natarajan 'Subu' Subrahmanyan, The Juda Group.

Natarajan 'Subu' Subrahmanyan - The Juda Group: Jerry, I wanted to follow-up on the comment that you made that, you mentioned that maybe half of your sequential revenue downtick is caused by two fewer shipping days and I wanted to clarify if that's entirely impacting datacom, so if not for that, datacom would have been flat and telecom would be down, is that how we should think about it?

Jerry S. Rawls - Executive Chairman: That's pretty close and naturally it comes out exactly like that, but if you think about our datacom business, because it is largely than the telecom business and because it is on a just-in-time basis we receive what is effectively many more orders. I mean orders come in every day from a large number of customers and so if you two shipping days you are losing two days of hub poles essentially.

Natarajan 'Subu' Subrahmanyan - The Juda Group: And all of the things being equal as we go into October, should the base we think of be a little bit higher because you lost two days this quarter that were the base for this flat base for October actually be a few million dollars higher?

Jerry S. Rawls - Executive Chairman: So Q2 will have one more shipping day than Q1, so I think it's fair to say it would have a positive impact from that one additional shipping day.

Natarajan 'Subu' Subrahmanyan - The Juda Group: You talked about customers talking about the second half of the year being stronger kind of commentary, have you started to see that in any way in the orders at all or at this point is it just kind of anecdotal commentary from the customers?

Jerry S. Rawls - Executive Chairman: We are waiting to see that optimism turned into real shippable orders. We have in the last year, we heard a lot about how the second half is going to be really strong, and second half didn't turn out to be really strong. I'm hoping that what we've heard this year about the second half is – will turn out to be true, but I will just tell you that our customers, who are the telecom equipment companies are not, are not having much success right now, forecasting the business that they receive from the service providers and I know that we tracked not long-ago the earnings release of the projections of our customers, the large telecom equipment providers, and I think for the July quarter, we – it's like almost, I think, 90% of them were guiding to down revenues, so I'm hopeful that maybe in the second half of the fiscal year, we'll see some of them that are guiding to up revenue, but we don't really have a firm indication of that yet. We have some talk and we have some verbal predictions but it's not solid.

Natarajan 'Subu' Subrahmanyan - The Juda Group: Final question on gross margins, Kurt, can you talk about some de-linear kind of improvements in costs you get through the course of the year, how much of an – say how much of the impact is lower volume, how much positive impact potentially from just cost reductions through the course of the year, you can – which affects the mix for gross margin next quarter.

Kurt Adzema - EVP and CFO: Well, obviously that it depends on various products, so it's a product by product basis, but like I said earlier I think you should think about the – we're predicting an expected about 1% decline in gross margin, and that's primarily just some volume driven thing. There are ASP reductions for datacom that happen every quarter, every six months, but at the same time, we're obviously trying to offset those with price reductions with our products. So, primarily I think of volume being the reason that gross margin is down?

Operator: Ehud Gelblum, Morgan Stanley.

Ehud Gelblum - Morgan Stanley: A couple of things. On the datacom side again, you started talking a little bit about storage, fiber channel versus Ethernet, but I was – could we glean anything from, was one of the two stronger than the other, was fiber channel better and Ethernet less, and can you kind of relate that to what Cisco told us at the beginning of May with respect to their business?

Eitan Gertel - CEO: I don't know that we have any particular comments there. We did talk earlier, I mean in response to one of the questions that we said that 10 Gig was strong, 100 Gig was strong and they are both Ethernet products, not storage products. So, I think, you can glean from that that Ethernet was – did pretty well during the quarter, but in general our storage business is where we have larger market share, and it's – and quarter-to-quarter we've done also well in that sector.

Ehud Gelblum - Morgan Stanley: I think, you had a comment about 16 Gig as well and that's a fiber channel product and so that's why I wasn't sure which way to go and – so are you seeing the same trends in both and does Cisco's recent bringing down of numbers, does that impact – is that part of what you are seeing flow through your numbers?

Eitan Gertel - CEO: Well, I don't – I think, Cisco because they are a large customer is anytime they are not as optimistic as could be, that must affect us, and in the end, we can only – we only shipped them as much product as they consume and as they can ship to their customers. So, we're cheering for their success, and for the success of all of our customers, but as well as I do that if their results are not strong than our results will follow that along.

Ehud Gelblum - Morgan Stanley: But 18 to 24 months they weren't doing so well, but you were – and you were doing well to them as well. So, there are times when you go out of sync with respect to their total numbers given that you supply and do a very specific part of their base.

Jerry S. Rawls - Executive Chairman: Well, I would say that in that period 18 to 24 months ago, one of the things that was happening was a real inflection in the 10-gigabit Ethernet market, and our view was that the optical content of each system that our customers shipped was greater than it had been in previous quarters, and or previous years, and so either though they might – results might not be strong, the optical content with each shipment would might be greater, and so therefore we could continue to -- our revenues could continue to grow. We're a couple of years into that, 10-gigabit inflection point. My guess is that maybe we're more linear with their product shipments now.

Ehud Gelblum - Morgan Stanley: 100 Gig CSP revenues I think last quarter, it was in the order of high single digits $8 million or $9 million, can you give us a sense as to how that grew this quarter?

Eitan Gertel - CEO: I think what we could say is that it was a big driver of the datacom growth, but we're not going to give a specific number.

Ehud Gelblum - Morgan Stanley: You expect that to fall next quarter or continue to drive – to go up and others just come down, because that's supposed to be growing for several quarters?

Eitan Gertel - CEO: We expect it continue to go up.

Ehud Gelblum - Morgan Stanley: Other thing I want to just ask one was share losses or share gains actually, more appropriately. So, do you think you either gain share on either the datacom or telecom side this quarter or partially lost it, whether it's Oclaro, Opnext getting back on their feet, Thai flood stuff no longer is much of an issue, and then finally in that same vein, your share gain, share loss, vis-a-vis any customers going perhaps more in-house than before?

Eitan Gertel - CEO: Well, I would say, we look at market share mostly on a customer-by-customer basis in terms of how are we doing with the customers that we have been successful with, and we feel pretty good there that we have not been losing market share and in fact in some cases I could point to places where we believe we have gains significant share of business. On the other hand, if I look at the market overall, one of the problems is that the only data that we have to look at, to examine those markets and the share that we have as industry analyst and their numbers tend to lag by about six months. So, we don't really have any current, in our total market share information about the last quarter other than our customers and as individual customers, we don't think we lost any share.

Operator: Simon Leopold, Raymond James.

Douglas Copolous - Raymond James: This is (Douglas Copolous) for Simon Leopold So, when you look at your, at how your visibility looks like now compared to last quarter, can you give us a sense as to how far out are others coming in compared to last quarter and do you see any pent-up demand for any particular products?

Jerry S. Rawls - Executive Chairman: I don't know that we can – I would say that there is a dramatic difference this quarter for last quarter as we were going into the quarter in terms of orders or any other metric that we might use. Our visibility into the quarter is usually some limited by the traditional definition of visibility and that, remember that our datacom business, which this quarter was about 60% of our revenue, in that sector it's all the just-in-time hub basis so we have low lead time. It is we receive an order and we ship the same day effectively. So the other 40% of our business in telecom is the only place we receive orders that where we have actually lead-times defined and I don't know that we could say that there was a meaningful difference between last quarter and this quarter in terms of telecom.

Douglas Copolous - Raymond James: So basically you didn't see any demand for any particular products to surprise you either on the upside of the downside?

Jerry S. Rawls - Executive Chairman: I wouldn't characterize anything in terms of our product revenues for the quarter as being surprises.

Douglas Copolous - Raymond James: Just provide some color on the weakness in the telecom segment, so basically the segment declined about 14% and you say that capital spending was the reason, was that weakness attributed to a specific customer or was it widespread across the board?

Kurt Adzema - EVP and CFO: One comment I want to make is, obviously the three months full three months of the annual price reduction impacted revenue for the quarter and that was one of the primary drivers for the quarter and then I'll let Jerry handle to the extent that there is any mix changes or anything.

Jerry S. Rawls - Executive Chairman: The problem with telecom is that we had – as I pointed out earlier, to one of the questions, something like 90% of all the telecom equipment companies that we ship to are the ones that gave guidance in a period of a month ago, guided to down quarters for the second quarter, second calendar quarter, and I mean that's I think that's just pretty much characteristics of the telecom business, across the board we have a lot of customers, a lot of telecom equipment companies, who will tell stories of increased traffic loading by the carriers, situations in the world, where service levels are in danger of – where the service level agreements will not be met, and where there clearly is the need to add capacity to networks, and the questions well when are they going to do it. I think, the answer is it's not as if they're going to do it, it is a when they're going to do it question. So, the carriers are going to have to add bandwidth and the issuers, most people were saying second quarter – second half we hope that they're correct.

Douglas Copolous - Raymond James: Okay. So, basically you're saying that a decline was not just down to the price reductions, whilst you'd expect about 14% is higher than expected, but also you had weakness I guess across the board, where you say that most of the equipment vendors reported weaker than expected sales, is that a fair statement?

Eitan Gertel - CEO: Yes.

Operator: Michael Genovese, MKM Partners.

Michael Genovese - MKM Partners LLC: Great. Thanks. I've just first two clarifications. In terms of price decline, I was expecting the full three months of price decline to have about 10% impact on the telecom business this quarter, just wanted to check that number, and then in terms of your enterprise strength this quarter, was the customer mix in line with previous quarters? I guess, another way of saying that is, was Cisco a normal percentage this quarter relative to other recent quarters?

Kurt Adzema - EVP and CFO: So on the ASP question, I think, in general as we had said in the prior call, ASP reductions were at that higher end of the normal 10% to 15% range, and so if you look at assuming two additional months of reduction, then I think that's the right way to look at it.

Michael Genovese - MKM Partners LLC: Then on the enterprise?

Eitan Gertel - CEO: On the enterprise strength that you referred to, we reported in the call that we had two 10% customers in the quarter, now it's pretty typical for us. We don't comment on any one – on any individual customer in terms of their strength or weakness, but I don't think we had any surprises in the enterprise or datacom market during the quarter in terms of customers, who were strong versus not.

Michael Genovese - MKM Partners LLC: Okay. Well, then from my question, if you look to the second half of the year whether it's the calendar fourth quarter, calendar third quarter whatever it is, North America and China in terms of when strong optical network build demand that you guys would see ROADMs, other high value products, where do you have better visibility or where do you just have a better feeling that demand might come back first for you, would it be China or would it be North America?

Eitan Gertel - CEO: China tends to be less predictable for us because the market turns on and off based on often based on government stimulus, and that can come quick over there as opposed to – our country, where it takes a while. On the other hand, I think that Verizon or AT&T are doing well, and they are the largest in terms of capital spending. I would guess in the world right now, and so I think they might have a greater impact on our business over the next six to 12 months than we might expect from China.

Operator: Paul McWilliams, Next Inning Technology Research.

Paul McWilliams - Next Inning Technology Research: The 10x10 that I believe is from the same package as a 100 Gig, are you starting to see some pretty good demand on that as well?

Jerry S. Rawls - Executive Chairman: No, right now, we're not. The 10x10 product is not one that we currently have in production, whereas the 4x25 and 4x28 are products that we currently have in production and those.

Paul McWilliams - Next Inning Technology Research: I'm sorry I have the 10x10.

Jerry S. Rawls - Executive Chairman: Our demand is particularly strong. What is known as the CFP form factor and it's also – Eitan referred to it in the call earlier as an LR4. So, it's got – there are four wavelengths in there that, each carry 25 or 28 gigabits depending on the version of the product.

Paul McWilliams - Next Inning Technology Research: Could you elaborate a little bit more on the optical engine that you touched on as being a major long-term growth driver?

Jerry S. Rawls - Executive Chairman: Optical engine is a concept for melding optics on a circuit board, whether it be a motherboard or a backplane to put the optics very close to the I/O of the chips that ultimately you are driving them. So, whether it is the switch chip or it is some other function chip, be a big processor, the putting the optics close to the chip means that the system provider doesn't have to dissipate power by driving a very high speed signal, so we think about being 10 Gig, 25 Gig etcetera, driving it through a copper wiring across n number of inches of circuit board. So, putting the optics right on the board next to the big IC saves power. And when it gets the face plate it' will often safe density as well. So, we have a number of customers who are looking at next generation design where they can put very large bandwidth in these board mounted parallel optical engines. It's – we think it's going to be a very big market over the next few years.

Paul McWilliams - Next Inning Technology Research: And you've got a proprietary positioning in that?

Jerry S. Rawls - Executive Chairman: We have a proprietary design, does that mean that there won't be other, no I think they'll likely be other alternatives, but we think our is very efficient. It is – we put a lot into the design, we are vertically integrated in the lasers that go onto these things in the photo-detector and we think it's a – we have a very strong positing.

Paul McWilliams - Next Inning Technology Research: Capacity utilization wise, where were you last quarter?

Eitan Gertel - CEO: Well, I think it really comes down to looking at things on a product by product basis, so obviously with the telecom products being challenged over the last couple of quarters. We have excess capacity for telecom products especially for some of the WSS ROADM products that have been much higher in historical quarters. At the same time, obviously some of these newer datacom products like the 100 Gig products, Jerry was just talking about we're more and more strained to get those products out. So I'd say in general telecom, we got plenty of capacity, datacom depending on what the product is we're adding capacity mainly on the final test of some of the 100 Gig products.

Paul McWilliams - Next Inning Technology Research: Got you. Now the new plant, is that going to replace capacity or be in addition of capacity?

Eitan Gertel - CEO: No, it's additional capacity. We are – our Shanghai facility is now full, and so for us we've had to make provisions for expansion. It's a very positive statement I think by us of what we view the future of this industry.

Paul McWilliams - Next Inning Technology Research: What will be the plant size relative to Shanghai?

Eitan Gertel - CEO: The first phase of the construction is 400,000 square feet. We currently have 150,000 square feet in Shanghai.

Paul McWilliams - Next Inning Technology Research: That speaks a lot of optimism. In telecom, my contacts have given me very, very similar inputs as to what you are providing. The only upsize that I have been – I had reported to me, potential upsize is it looks like there's some traction building in India and the Middle East. Have you heard anything that would confirm that?

Jerry S. Rawls - Executive Chairman: Our customers are – we don't know where the end customer really is. We ship to the European customers, we shipped all the products outside of Europe. We ship to customers in China, we ship to Europe, so we don't know exactly where the product ends.

Paul McWilliams - Next Inning Technology Research: I understand.

Eitan Gertel - CEO: But I would expect like South America will be stronger, and things like that. I don't know exactly.

Paul McWilliams - Next Inning Technology Research: I understand. I appreciate the input. I was just looking for more datapoints on that. Thank you very much for your time.

Operator: At this time, we have no further questions in queue. I'll turn things back over to Jerry Rawls for any further remarks.

Jerry S. Rawls - Executive Chairman: Well, thank you, Cameron. We thank everyone for tuning into our fourth quarter conference call today, and we hope you'll be able to join us again three months from now. Everyone have a good day. Thank you.

Operator: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation.