Good afternoon, everyone, and welcome to AXT's Fourth Quarter 2012 Financial Conference Call. Today's call is being recorded. Leading the call today is Dr. Morris Young, Chief Executive Officer; and Raymond Low, Chief Financial Officer. My name is Deanna, and I will be your coordinator today. I would now like to turn the call over to Leslie Green, Investor Relations for AXT. Please go ahead.

Thank you, Deanna, and good afternoon, everyone. Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company and our ability to control costs and improve efficiency, increase orders in succeeding quarters, improve our competitive position as the market improves, as well as other market conditions and trends. We wish to caution you that such statements deal with future events and are based on management's current expectations and are subject to risks and uncertainties that could cause actual events or results to differ materially. These uncertainties and risks include, but are not limited to, overall conditions in the markets in which the company competes, the global financial conditions and uncertainties, market acceptance and demand for the company's products and the impact of delays by our customers on the timing of sales of products. In addition to the factors that may be discussed in this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission and available online by link from our website for additional information on risk factors that could cause actual results to differ materially from our current expectations. This conference call will be available on our website at axt.com through February 25, 2014. Also before we begin, I want to note that shortly following the close of market today, we issued a press release reporting financial results for the fourth quarter and fiscal 2012. This press release could be accessed from the Investor Relations section of AXT's website at axt.com. I would now like to turn the call over to Raymond Low for a review of the fourth quarter and fiscal 2012 results. Raymond?

Thank you, Leslie. Revenue for the fourth quarter of 2012 was $18.9 million compared with $20.8 million in the third quarter of 2012. Total gallium arsenide substrate revenue was $11.4 million for the fourth quarter of 2012 compared with $12.9 million in the third quarter of 2012. Indium phosphide substrate revenue was $1.6 million for the fourth quarter of 2012 compared with $1.6 million in the third quarter of 2012. Germanium substrate revenue was $1.7 million for the fourth quarter of 2012 compared with $2 million in the third quarter of 2012. Raw material sales was $4.3 million for the fourth quarter of 2012, flat from $4.3 million in the third quarter of 2012. In the fourth quarter of 2012, revenue from North America was 14.4%, Asia Pacific was 66.3% and Europe was 19.3% of total revenue. One customer generated more than 10% of our revenue during the fourth quarter, while the top 5 customers generated 39.7% of our fourth quarter revenue. Gross margin in the fourth quarter was 19.5% compared to 26.3% of revenue for the third quarter of 2012. The drop in gross margin in the fourth quarter of 2012 was attributable in nearly equal measures from lower selling price of raw gallium, sales mix and lower capacity utilization. Selling, general and administrative expenses were $3.7 million for the fourth quarter of 2012 compared to $4 million in the third quarter of 2012. Research and development costs were $875,000 for the fourth quarter of 2012 compared with $844,000 for the third quarter of 2012. Total stock compensation expense was $342,000 for the fourth quarter of 2012, of which $22,000 was including cost of revenues, $279,000 in SG&A and $41,000 in R&D. Loss from operations for the fourth quarter of 2012 was $0.9 million compared with income from operations…

Thank you, Raymond. 2012 was a year of many moving pieces in our industry. Consolidation within the base of customers for our product is likely to have slowed certain qualifications for AXT but also has the potential of opening new doors for us in 2013 and beyond. This past year, we also saw SOI technology enjoy increased adoption for certain types of RF devices that have historically been gallium arsenide based. We're mindful that SOI will coexist with gallium arsenide within our market going forward. But we believe that the rapid proliferation of cellphones and tablets, coupled with superior linearity and speed of gallium arsenide for HBTs and other devices will continue to provide AXT with healthy growth opportunities. During 2012, we also saw a drop in the price of raw gallium to historic lows as capacity in our industry increased beyond what the market demand required. Industry growth rectified this issue, and the turnaround in pricing can happen quickly. As we move into 2013, we believe that the dust is settling on a turbulent year and our industry is adjusting to the many changes that have been taking place. With our positive customer relationships, low-cost manufacturing and highly efficient cost structure, AXT has weathered a tough year and is well positioned to leverage new opportunities as they emerge. In semi-insulating gallium arsenide, while our sales were up sequentially in Q4, the demand environment remains soft. And yet, as it has been for many quarters throughout the year, we saw significant changes within our customers' competitive landscape. Market share shift and consolidation likely caused customers to be more cautious in their purchasing decisions and also slowed our progress with new qualification. Further, the more widespread usage of SOI technology, largely in antenna switch devices, impacted the overall industry. Despite these…

Thank you, Morris. In the first quarter, we're expecting to see total revenues of between $20 million and $21 million. We're expecting net loss in the first quarter between $0.08 and $0.07 per share based on approximately 33.1 million common shares outstanding. This loss per share takes into account an expected amortization of inventory reserves that will be incurred during Q1 and Q3 of 2013, also expected additional R&D costs and the annual tax withholding in China on dividends declared by our joint ventures. This concludes our prepared comments, and I'm happy to answer your questions.

[Operator Instructions] We'll take our first question from Avinash Kant with D.A. Davidson & Co. Avinash Kant - D.A. Davidson & Co., Research Division: A few questions actually, Raymond. You just issued the guidance for the Q1, and could you break down the impact of the inventory reserve and some of the other things that you talked about? How much is the impact of higher R&D and inventory reserve in the quarter?

The higher R&D, turning [ph] to that question, is approximately $0.01 extra additional expense in Q1 2013. And then the amortization of inventory, that would be approximately 3.5% of the Q1 revenue, which approximately, it's about 3.5% of gross margin. Avinash Kant - D.A. Davidson & Co., Research Division: 3.5% of Q1 revenue, that's pre-tax?

Yes. Avinash Kant - D.A. Davidson & Co., Research Division: So that's the impact on the quarter, not the year, right?

Correct, the quarter. It's going to decrease between Q1 and Q3. Avinash Kant - D.A. Davidson & Co., Research Division: It's not going to come in Q2, though, right?

There will be some in Q2. Avinash Kant - D.A. Davidson & Co., Research Division: Could you give us some idea how to think of it for modeling purposes in Q1, Q2 and Q3?

Just to give you -- obviously, the percentage-wise would differ as revenue base increases or decreases. But just to give you an idea of the dollar volume, it's approximately $750,000 in Q1, about $525,000 in Q2, and the decrease is down to $250,000 in Q3. Avinash Kant - D.A. Davidson & Co., Research Division: All pre-tax numbers, right?

Correct. Avinash Kant - D.A. Davidson & Co., Research Division: Okay. And Morris was talking a little bit about the landscape changing and the opportunity of the customers. Could you expand a little bit on that? Of course, IQE seems to be becoming quite big. Does it mean given the business you have had there, you have a higher opportunity there now?

Well, as we said in our conference call, I mean, this year, the consolidation is really very, very intense. And you can see that everybody's fully aware; IQE has bought out Kopin. And so there are good things and bad things. And obviously, they -- we now understand part of the reason perhaps we didn't get into those qualification was probably because of unsettling businesses. And of course, it's difficult to tell going into the future, but we do have a reasonable good relationship with IQE. We certainly will try to knock on doors and offer our good quality products with competitive pricing to our customers again.

We'll take our next question from Edwin Mok with Needham & Company. Edwin Mok - Needham & Company, LLC, Research Division: So first question, Raymond, just to be very clear. Beyond the inventory reserves, as well as the higher R&D that you talked about, right, you also talked about annual tax in China, did I get that correct? And how much would that be?

Oh, it's just a withholding tax that we have to pay on dividends declared by our consolidated joint ventures. And in Q4, we did not have this dividend, but we actually received a dividend expense in Q1. That approximately equates to $0.01 extra withholding tax, $0.01 EPS effect. Edwin Mok - Needham & Company, LLC, Research Division: Great, that's very helpful, just want to clarify that. And then second thing is just based on the guidance you guys have provided -- based on all of the numbers you just provided, if I crunch the number quickly, you kind of implied if I exclude this onetime stuff from your gross margin, it's roughly around flattish this quarter, right, excluding the inventory reserves? Can I ask you if that number -- and if that is correct, Ray? And number 2, is that based on kind of pricing while there's recovery on -- gallium is pretty weak? Is that why the gross margin is flattish even though you're guiding for revenue to rebound?

No, actually, Edwin, the gross margin is going to decrease from Q4. Edwin Mok - Needham & Company, LLC, Research Division: And then can I ask why it decreased?

We have a 19.5% -- that's why I just told Avinash we've got this inventory reserve that we have to amortize which is going to be charged to Q1, which -- $750,000 charged in Q1. If I just assume $21 million revenue, that's approximately 3.5%. So that is the worsening effect from 19.5%. So you could take it down by at least 3.5%. Edwin Mok - Needham & Company, LLC, Research Division: Yes, I know, I know. My point is if you exclude that charge, okay, you just mentioned, right, that the, call it, gross margin on an apples-to-apples basis actually would have been around flattish?

Yes, roughly, correct.

Right.

It would seem like 1%, so yes. Edwin Mok - Needham & Company, LLC, Research Division: And can I ask you why it's flattish given that you guys are assuming revenue will recover?

The revenue is more in the raw material sector.

Well, I mean, Edwin, I think the revenue do increase slightly. We do see, as we see it now in this quarter, things are starting to pick up a bit, so we are cautiously optimistic, and because Q1 usually is a slow quarter for our industry. But we do see some pickup, some very good signs. But -- also because of the industry was so kind of unpredictable, so we take a fairly cautious stand. But I think as Raymond said, we're carrying what we had to pay for the inventory write-down and the absorption of the lower capacity utilization for last year. Edwin Mok - Needham & Company, LLC, Research Division: I see. Okay, that's fair. Just in terms of groups, I think, Morris, you mentioned on the call that actually some inflation -- some improved sequentially in the December quarter, right? And you also mentioned that the germanium business, you're starting to see sign of improvement. If I look into the first quarter and maybe look beyond that, are we expecting those 2 markets to be driving the rebound in the March quarter? And then beyond that, how do you think about the semiconducting given that has dropped quite a bit over the last 2 quarters?

Okay. Well, germanium, I'm quite confident because the order size seems to say that the satellite launch is going to begin again, as well as some CPV activity in China. Actually, we see fairly strong -- at least the initial stage of asking for quotes there are fairly strong. And we do see that Europe is fairly strong in terms of demand in germanium. Indium phosphide, being a much smaller segment of the market, is going fairly strong for us as well. Semi-insulating, I'm, again, guardedly optimistic. I think if you're -- it's probably going to grow, but because of some uncertainties, as well as the announcement of Qualcomm, so they put a -- damper on my enthusiasm a bit. But for semiconducting, I think that market can always come back like a lion. I don't know if you remember, in Q2 of 2012, I mean, we had a huge quarter in semiconducting business. So I think that business, when all the inventory got digested and the way it to start to turn -- it can turn very quickly. But we definitely didn't model a fairly strong growth for semiconducting at this moment. But we do see raw material is probably going to be growing slightly, clearly strong growth with germanium, clearly strong growth with indium phosphide. And we do expect wireless to grow. But the uncertainty is probably in semiconducting. Edwin Mok - Needham & Company, LLC, Research Division: Great, that's helpful. And then just quickly on -- recently, the yen has been falling; I think your large competitor in gallium arsenide is in Japan, right? As well as some of your customers as well. How does the changing yen affect you all? Does that affect you at all? Do you see stock -- do you see your competitor get a little bit aggressive in pricing? Or do you see anything yet?

That's a good question. Edwin, I do remember the same question when yen was coming -- getting strong from 120 to 76. And that didn't affect it much. But if I were to look just economically what would be the effect, when you make gallium arsenide or indium phosphide or even germanium, most of the raw materials, which get into the how to make the substrate, they're all quoted in dollar, okay? Gallium, arsenic, pBN ports [ph], everything is quoted in dollars. So it doesn't help anybody or make anybody disadvantageous. The only part, I think, that's going to make some difference is probably the labor. But again, there, I think it's controversial, because AXT's labor is in China. I mean, no matter how strongly -- I mean, you know China, the labor rate has gone up tremendously in the last 4 or 5 years. But still compared to Japan or United States or Germany, I mean, that is still much lower no matter how you cut it. I mean, it's not a 10%, 20% difference kind of a difference. But of course, we're also fully realizing our competitors are a division of very large companies. So I'm not for sure they base their pricing solely on the exchange rate alone. Edwin Mok - Needham & Company, LLC, Research Division: I see. That's very helpful. And then lastly, I think previously, you guys talked about some design activities, particularly working with, I guess, one of the -- working with a epiwafer maker as well as kind of end customer there especially on the gallium arsenide, right? I'm just curious, any update on that end? And now that IQE has covered all of this huge capacity, does that change the qualification, dynamics there? And have you seen any kind of movements since they have made those announcements?

Well, let me put it this way. We're working on it. But we haven't got anything breakthrough, so we cannot say [ph].

We'll take our next question from Richard Shannon with Craig-Hallum Capital Group.

Maybe I'll just follow up the last question regarding opportunities for some share gains with new customers. Do you have any expectations of the timeframe by which those decisions might be made?

Richard, I mean, the qualification, I'm sure, is a big disappointment to me and probably to our investors. I mean, we've worked on it for a whole year last year. I think the good news, we always say, is still it's going, but the bad news is we never went through. I think definitely it's a disappointment. I think with the new consolidation in the industry, as I've said, we will definitely offer our good service and product and most competitive pricing to our new customer again and hopefully they will listen to us. As to timing, it's really difficult to call. I would say some of the products, I believe, we already qualified. I mean, it's a business decision that takes more than one party to agree and stop purchasing. And when they stop purchasing, it is probably going to be a small volume to begin with and hopefully ramp up.

Okay, fair enough. Question on your guidance, specifically on the sale side. I heard some of your responses to the last few questions. I just want to get -- maybe dial in and get a better sense of the moving parts in your sales guidance. If I were to guess, it sounds like the raw materials will be the biggest driver of your sequential increase. Give us your thoughts on directionally either up, down or however else you'd like to discuss the wireless and LED and germanium businesses as well.

I think germanium is going up, especially, I think, towards second quarter and onward. In phosphide, it's probably going to be a fairly strong growth opportunity, but the base is small. That's why Raymond is counting more on the growth of raw material. And wireless, it's interesting. I think we definitely have new opportunities there, but I think Q1 is probably going to be flattish, and we have some opportunities going forward.

Okay. And then in LED?

LED is the big unknown. We're trying very hard. As I've said before, I still remember the good quarter we had on Q2 of 2012. And it was a huge quarter. So they can be turned down very fast. But this market is extremely competitive in certain area, such as China. We've got some great opportunities somewhere in Taiwan and Japan. And if we get into that, then that market can grow fairly fast as well.

Okay. Just a follow-up on your raw material sales outlook here. If I'm to guess, that the rough revenue levels you're looking at for the first quarter will be about closer to the levels you had in the first half of last year as opposed to the second half. Do you think this is a sustainable level? I mean, do you see the same amount of tonnage demand out there? Or is this some kind of onetime? Or how do you view this?

Richard, actually, the tonnage went up. It's just the sales -- price erosion in gallium that actually made the revenue. So in fact, we actually did increase revenue from Q4 to Q3, and that was a combination of revenue but also -- sorry, volume, but decreasing pricing. So looking forward to Q1, I mean, since the end of December, the price up to now in February has actually gone down. So now with February guidance looking forward, we're not sure when the price is going to increase. But again, volumes are picking up, so maybe it's just a timing effect.

But one correction, Raymond. I think what you're quoting is the Metal-Pages.

Yes, just the guidance.

Yes. But the Metal-Pages really has nothing to do with the large volume quote anyway. But I think the tone is such that there are several things. I mean, Richard, normally when you see very precipitated decrease in price, you'll say the volume must be decreasing as well, holding flat. But I think in this cycle at least, we're selling more. There is actually more demand out there. But it's just not big enough to absorb all the extra capacity. I mean, that's what. And the pricing, I think again, you can always find the Metal-Pages, but that's not -- it's a good guideline, but it usually is a history, okay? And the third point I do want to point out, I think, is that we are probably one of the lowest-cost manufacturer anywhere in the world. I cannot say the lowest, but we are one of the lowest. So our business, our joint venture partner business, is a fairly tough business -- I mean, a tough competitor, let's put it this way. And so we can survive. But to ask me when the prices will start to turn, that's a tough question. And normally, I'd say it takes at least 2 to 3 quarters after the substrate business improves, and they probably will then start to turn. I mean, of course, there are other things into it, too. The most -- the rest of the economy activities such as gallium is used for making magnets, making gallium nitride, LED, lightbulbs, as well as some of the solar cells. So gallium definitely has a very diversified utilization, application.

Okay. And to be clear, Morris, I was asking the question because -- around the point of I thought your implied guidance suggested a lot more volume, not less. So I just want to make that clear. To follow up that same track of thinking, Morris, are you seeing any evidence of some of your competitors, especially like these aluminum mines, actually taking capacity offline?

Well, that's already happened. I mean, they are, because of the decreasing price. And I know at least 2 or 3 of them. They just shut their factory down because the selling price is below their cost. But they will take a little bit more if you start to consolidate and then somewhat shut it down. But of course, the reverse process is also true. When the price goes up and when it goes over a certain threshold and somebody decides, hey, that's over -- above my cost and they will start production again.

Okay. Morris, one last one for me. This is actually a big picture question here. You announced a share buyback. I'm wondering if you could consider any other options for releasing more value on the stock. Clearly a very cheap stock, trading well below book value. I don't know if there's any other way you've thought about doing that and any other ways that you can increase margins of your business, notwithstanding the pricing of gallium. I think a few of those would be taken positively by the stock price. Any thoughts on any of those topics?

Sure. We are working on it. As we always say, it's a great amount of value, right, joint ventures. And it carries our book at a fairly low book value, but you even attempted to write up to say what they're really worth. But until you monetize it, nobody can say what it is. And that's one category I think we can help ourselves with. We obviously are very consciously looking for large -- more volume to fill out the factory. We definitely feel the pain of less utilization and thus the fixed overhead increase. Overhead increase, general, is hurting our profitability. So we're looking for ways to fill up our factory, but unfortunately, some of these headwinds are not in our favor such as germanium raw material pricing is high and we're trying to negotiate with our customers. So we're doing all of the above, and for one, try to unlock some other value for our joint ventures, better utilize our factories and we're having programs to improve yield and efficiency, and we're doing all of those.

We'll take our next question from Tom Sepenzis with Northland.

I guess just kind of big picture. Qualcomm obviously had an announcement about a full CMOS front end, and I'm just curious, if they're successful there and others follow suit on the low end to mid-end, how do you see gallium arsenide maintaining share or the kind of volume that you would need to continue on in that business? And how would you deal with that?

Yes. I think, Tom, I actually saw your report. I thought you said nothing to worry about. But obviously, this is something that we are very much aware of, the announcement, and we will continue to watch its development. But I think the gallium arsenide industry is a fairly developed industry. I mean, it's, what, $6 billion industry. And gallium arsenide is used for better linearity, better power efficiency and also has the benefit of you can do a very quick turnaround instead of a very fixed product, which like memory chips, that you can use it forever. In cellphone, they turn it into different generations, very, very fast pace. So those are some of the advantages for gallium arsenide. I think, again, it took 20 years to build the big pyramid as it is today. Obviously, we're feeling the pressure or the competition from SOI. But also, I remember 10 years ago, we just speed up -- beat back the silicon competition for silicon and germanium when they first emerged to be a competitor for gallium arsenide. So I think overall, I think gallium arsenide is going to stay, whether -- how the battle is going to shape out and -- it's hard for me to tell. I think all we can say is we all have to watch. But I think it's going to evolve into many years. I think also I want to point out the other thing is that although smartphone, people are saying it's maturing, the new -- but nevertheless, it's going to be nearly 2 billion cellphones going to be sold year-over-year. So we are just making the material. So still a fairly healthy business. And also, wireless is going to be the theme of the future of human communication. So all those are, I think, working in our favor. When you have a very growing demand of a very good business, you cannot just turn back all competition.

Great. I mean, presupposing that people use best-in-class materials, so gallium arsenide for power amps and silicon -- or SOI for switches. Is there an opportunity for you with silicon germanium to expand into more wireless markets using that technology?

No, Tom. We're not in silicon germanium. I mean, if silicon germanium is successful, we only supply germanium material. No, we're not in silicon germanium. But I think obviously, I mean, the application just expands just beyond all of those, yes.

We'll take our next question from Dave Kang with B. Riley & Co. Dave Kang - B. Riley & Co., LLC, Research Division: First question is, Raymond, how much was stock compensation? I think I missed that one number.

It was $342,000 for the fourth quarter.

Okay. And then, Morris, regarding gallium prices, it's been flat for the last month or so. I mean, do you think it has bottomed? What is your take on that?

Well, I certainly hope so, Dave.

What's the chatter? I mean, what's the chatter among the industry people? I mean...

I really cannot tell. And I think -- I really think, Dave, that you should take it as -- the really good sign is the demand is strong. The bottom has not fallen out. Definitely, the demand is strong.

So shouldn't you be concerned? I mean, if demand is strong and yet price is not picking up, shouldn't that be a concern? Or...

Well, there's nothing I can do about it because the capacity increase is such that there are people who are willing to do it. But as I've said before, again, everybody's cost of making that gallium is different. If you make that gallium in Germany, I mean, then your cost is higher. It's probably $450 a kilogram. If you migrate to a lower-cost place. So it can be anywhere from $450, $500, down to $390, $350, $300 and so on and so forth. And what I think AXT's strength is that our cost is one of the lowest, perhaps. I cannot be sure it's the lowest. And then we just have to wait until the market takes care of itself. I mean, the lower it goes, the more of the guidance is exiting the market.

Assuming the LED market does recover in the second half, I mean, would that be enough to move the needle for [indiscernible]?

Oh, yes, absolutely. I mean, that's easy. We know we have customers who buy our gallium to make trimethylgallium to make LEDs. And so it's a resource, not to mention gallium arsenide for wireless devices.

Right, right.

And I think the other thing is all the customers, like us, we now are so confident. There are more capacity, so we don't carry any inventory. So everybody -- if everybody start to feel the pressure a little bit and start to buy inventory, then all of a sudden, demand is going to even increase more. So I'm only telling all of these possibilities, but I still say I wouldn't know. I mean, right now, I hope it would stabilize, stabilize, maybe wait for another quarter or 2. And then if there's a possibility, it will come back up if demand continues to increase.

Got it. And then you talked about R&D going up, and that is going be about $0.01 per share. Is that just a, I mean, first quarter event? Or can you just walk us through how R&D will kind of act for the rest of the year?

We're planning to increase R&D for the next few -- several quarters.

Several quarters?

Yes, in the tune of about $0.01 per share.

Got it, got it. Any particular areas that you're focused on or...

Yes. We're working on some projects on substrates.

Substrates. Got it. And then last question is IQE, now that it has become an 800-pound gorilla. So I'm wondering if you could just quantify maybe kind of incremental pricing pressure that IQE has gotten so much bigger than before. Or is it hard to quantify at this point?

It's hard to quantify. I mean, negotiation was -- I mean, without them consolidating is difficult enough. But we go through every year, and not to say that to negotiate with any other large customer is easy. So I don't think just because they're doubling size will make them even more difficult. I think overall substrate business, I would describe the pricing environment to be sort of normal. I mean, they're not increasing for sure, but they do so to follow the normal decrease in every year.

We'll take a follow-up question from Avinash Kant with D.A. Davidson & Co. Avinash Kant - D.A. Davidson & Co., Research Division: A few more questions. So maybe Raymond can take this one. If I look at the third quarter and the fourth quarter, it looks like looking at the revenue mix, revenues in the materials segment were exactly the same. So would you attribute all the margin decline to just volume?

No. It's actually a little bit more complex than that. I actually did an analysis between Q3 and Q4. And as we said, the 3 factors was almost shared exactly the same, the raw material sector, pricing and then also sales mix and then lower capacity utilization. It was almost an even share between the decrease between Q3 margin and Q4 margin. Avinash Kant - D.A. Davidson & Co., Research Division: So maybe could you give us the average gallium pricing during the September quarter and the December quarter?

Sure. Just using Metal-Pages as a guideline because we obviously cannot give out our selling prices from our own joint venture, the Q3 average per Metal-Pages, Q3 2012, was $319. Q4 average was $307. And as of today, January and February, the average is $291. So as I said, even in the first 2 months, so far, the price of gallium, per Metal-Pages, has fallen 5.1%. Avinash Kant - D.A. Davidson & Co., Research Division: Okay. And the share count guidance that you are giving, is that based on -- the share count is going up, actually, right? Yes, between Q4 and Q1? And you just announced the share buyback plan. So what's that -- what's that attributable to then [ph]?

It didn't actually go up by much. It's only about $200,000, I think. But that does not take into account any of the share buyback plan yet because that will basically only kick in, in the open period in May 2013. Avinash Kant - D.A. Davidson & Co., Research Division: So you talked about the Q1 share count being how much?

Hold on, I will get it for your right now. It's about $33.1 million. Avinash Kant - D.A. Davidson & Co., Research Division: Yes. And what was the share count in Q4?

Something like $32.9 million. Avinash Kant - D.A. Davidson & Co., Research Division: Okay, okay. So you've not attributed the share buyback in this one?

No, not yet. Avinash Kant - D.A. Davidson & Co., Research Division: Is there any time line in the share buyback plan, up -- it is -- it will last for so long, what's the time?

It's only going to open in the next open window period in May 2013. In fact, the 2nd of May. Avinash Kant - D.A. Davidson & Co., Research Division: And then it's going to be open? There's no end to this plan?

It's going to be a 1-year plan. We're only going to be buying per Rule 10b-18. And first thing during the open window period. Avinash Kant - D.A. Davidson & Co., Research Division: Okay. But there's a 1-year limit on this one. And did you break down your semiconducting and semi-insulating revenues for the quarter?

No. But I can give it to you. It was a mix of 44% to 56%. Avinash Kant - D.A. Davidson & Co., Research Division: How much?

44% semiconducting to 56%. Avinash, that was an entire flip from Q3, which was 54% semiconducting and only 46% semi-insulating. So we definitely had a sales mix during Q4. Avinash Kant - D.A. Davidson & Co., Research Division: So semiconducting seems to have seen -- semiconducting was 44%, you said, right?

Correct. Avinash Kant - D.A. Davidson & Co., Research Division: So that declined quite a bit, actually.

Yes. It's a 29% decline from Q3. While semi-insulating actually went up 8%. Avinash Kant - D.A. Davidson & Co., Research Division: Okay, okay. And one other question I have was -- yes. So in the guidance that you have given for Q1, what do you think you have modeled as material sales?

That's why most of the increase is actually going to come from raw materials. And as you see, the pricing actually went down, as I just gave you Metal-Pages pricing, but the volume is going to increase. Avinash Kant - D.A. Davidson & Co., Research Division: Okay. So would the mix and all these issues that you have, the high R&D and the Q1 and Q3 kind of impact on -- from China, where do you think your breakeven a point -- at this point is?

That's a very tough question, Avinash. It definitely changes, but you could see the low points, right? Sometimes, it could be at $18 million, $19 million revenue. Avinash Kant - D.A. Davidson & Co., Research Division: At $18 million to $19 million, you'll break even?

That's not a hard and fast number because things do change. Avinash Kant - D.A. Davidson & Co., Research Division: Okay. But your guidance is -- the low end of the guidance is a loss of $0.08 and $20 million.

Correct. That's why because there are some other things that came into play that -- well, that are going to come into play for Q1, which was not there really in Q4. Avinash Kant - D.A. Davidson & Co., Research Division: So I'm trying to figure out how to think of the impact of these going forward into Q2 and Q3.

Oh, okay. I think you were the guy -- so as I said before, if I use $750,000 in Q1, which is going to be part of this amortization of sins of the past for the lower consumption, that's low utilization. So I just used $750,000 net on a revenue base of $21 million equates to about 3.5%. Now obviously, I don't know what Q2 revenue base is going to be, but you can model $525,000. And in Q3, you can model $250,000. So whatever that percentage works out to, whenever Q3 comes around, is going to change, but that's the absolute dollar amount I'm modeling on right now.

We'll take a follow-up question from Edwin Mok with Needham & Company. Edwin Mok - Needham & Company, LLC, Research Division: I have a question regarding your raw material joint venture business. So I think historically, when gallium prices were really high, it was margin contributing -- I actually hope, drove better gross margin for your business, right? Is it fair to say that now as margin is below your covered average margin?

Yes. Edwin, if you just even do the rough calculation, slightly below the corporate average. Edwin Mok - Needham & Company, LLC, Research Division: Okay, that's helpful. And then I guess kind of just a longer-term question. You guys announced a buyback, which will consume around $6 million of cash, right? And you're guiding for a loss in the coming quarter, right? Do you think cash balance is an issue, especially given that you have some of your cash that's tied up in these long-term securities?

No. The long-term security is not that much tied up. But out of the $50 million that we have, pretty much only $9 million is actually tied up in longer term. It's up to 2 years. But those obviously longer-term investments give you higher interest return. Edwin Mok - Needham & Company, LLC, Research Division: But you do have the financial capability to sell those if you want to?

Oh, yes, yes, we could liquidate that. Edwin Mok - Needham & Company, LLC, Research Division: I see. I see. So it means that if you would find more interesting joint venture or you want to increase your buyback or stuff like that, you can access that cash if you need to?

Yes, sure. Edwin Mok - Needham & Company, LLC, Research Division: Okay, I wasn't quite sure about that. Okay, that was very, very helpful. One last question, I guess, for you, Morris. Beyond kind of the near term and -- is there any other areas that you guys feel that you could maybe either enter, either related to raw material or related to substrate business that might be a longer term? Is there some areas that you might be interested in entering? Is that the reason why you are increasing R&D spending?

This particular R&D budget increase was for substrate, but we are working on, of course, other opportunities to enhance our business scope and capacity, as you said. But yes, we're working on it. But by nature, we obviously cannot talk about it before the chicken hatched.

At this time, I'd like to turn the call back over to Dr. Young for closing remarks.

Thank you for participating in our conference call. This quarter, we will be presenting at the ROTH Conference in Dana Point, and we look forward to see many of you there. As always, feel free to contact me, Raymond or Leslie Green directly if you would like to meet with us. We look forward to speaking with you in the near future.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.