Welcome to Ceragon Networks Ltd. second quarter 2008 results conference call. (Operator Instructions) Today’s call will be hosted by Ira Palti, President and CEO of Ceragon Networks, and Naftali Idan, CFO of Ceragon Networks. Today’s presentation will include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause Ceragon’s actual results to be materially different from those expressed or implied by such statements. For additional information regarding the risks associated with Ceragon’s business please refer to Ceragon’s annual report on Form 20F and Ceragon’s report filed with the SEC. Web users can visit Ceragon at www.ceragon.com to read the complete forward-looking statement language. I will now turn the call over to Ira Palti, President and CEO of Ceragon.

With me on the call is Tali Idan, CFO. In the second quarter we flew past the top end of our target range reaching an all time record of $55 million in revenue. Bookings remained very strong and our book-to-bill was great than one even with a big jump in Q2 revenue. We continue to benefit from the growing worldwide demand for high capacity protocol. In addition to growing demand for extension and upgrades with our high capacity solutions for Ceragon Networks I’m pleased to say that we are seeing a migration to all IP cellular beginning earlier than we originally expected. Geographically most of the strength is coming from the APAC region. In addition to the well known wireless boom in India we are seeing excellent growth from other parts of the region. For example, during Q2 we added an important new customer in Vietnam and we extended the scope of our relationship with Digital in the Philippines to include our IP solution for the first time. Digital is starting to use next generation cellular base stations which includes native IP interfaces in the parallel IP backhaul network using our IP map solution. Growth in Latin America in Q2 reflects total on business from a leading operator in Mexico which was a 10% customer for the quarter. As we expected North America continues to be the only weak spot, a continuation of the pattern which began in Q1. We believe that North America will remain weak through the balance of 2008 for both carrier business and private networks. In 2009 we expect improvements led by the growth in mobile data networks resulting from the high data usage caused by the new iPhone launch and similar devices. In addition once the merger of Sprint Zoom and Clearwire receives the required…

In Q2 revenues grew 48% to a new record of $55.2 million compared to $37.3 million in Q2 of 2007. GAAP income was $15.5 million or $0.40 per diluted share which included an $11.2 million income tax benefit related to the creation of deferred tax assets. I will explain the tax situation in detail in a moment. Excluding stock-based compensation and tax benefits, non-GAAP net income in Q2 grew 50% to $4.9 million compared to $3.3 million in Q2 of 2007. Non-GAAP EPS was $0.30 compared to $0.11 in Q2 last year on a much higher share count. Turning to the revenue breakdown the service provider category accounted for 89% of total revenues in Q2, the highest proportion of revenue we’ve seen so far. Private networks represented the remaining 11%. The private network category is comprised of enterprise and government customers where we have seen the continuation of the softness that began during Q1. IP revenues in Q2 were 24% of total revenues. As Ira noted, the Asia Pacific region continued to grow rapidly accounting for 57% of total revenues. EMEA accounted for 22% of revenues and Latin America increased to 15% of revenues while North America accounted for the remaining 6%. We had two 10% customers in the quarter, one was our long-standing customer in Mexico and the other one was Nokia-Siemens Networks. OEM accounted for almost 37% of total revenues in Q2. In light of the strong OEM business in the first half of the year we expect the OEM business to account for 30% to 35% of full-year 2008 revenues. Non-GAAP gross margin in Q2 was 34% mainly due to the relative higher contribution for OEM and the continued strength from Asia. Operating margin was 7.8% reflecting the lower gross margin. Assuming no change in mix as…

(Operator Instructions) Your first question comes from Tim Long - Bank of America.

Good revenue performance in the quarter and it sounded like OEM has really picked up. How would you characterize the deal sizes? Were there a lot of large deals contributing? So could you just talk to us about sustainability of some of the deals in the quarter and how that plays into your visibility? And then second, on the margin side you mentioned it might be challenging getting to that 10% bogey this year if the dollar does not improve. Could you just remind us on some of what the other puts and takes there are going to be and whether or not if it doesn’t happen in Q4 is that something we should expect in the first half of 09?

What we see is that built in our direct and through the OEM channel, deal sizes does increase. It has to do that we see a lot of deployment in the Asia Pacific region and specifically in India with operators are going to very large expansion projects. We do expect this to be sustainable and because the operators are not one-time buys, part of the plan with most of them for at least the next 18 to 24 months of ramping up and expanding their network, and we expect this to continue seeing those deal sizes on that level of activity.

For the second question Tim, you do know that we do have this challenge and target to reach 10% operating margin at the end of the year. Unfortunately the ratio between the Shekel and the dollar or the strengthening of the shekel against the dollar is really making it challenging. Let me say this. It still depends a lot about the ratio between the two which is uncertain. However this goal is very important to us and I have no doubt that as we budget for next year we will make sure to reach this target already in the first half of the year.

Your next question comes from Ittai Kidron - Oppenheimer (US).

First of all a quick question on the new products that you’ve started rolling out and it seems like the fact that they’re coming, that helps on gross margin. Can you tell us how quickly that transition to the new products and Tali can you clarify with regards to the return to the 35% to 36%, I believe you mentioned fourth quarter, so what should we assume for third quarter gross margins?

We are rolling out quite rapidly the new products and we do expect that by the first half of next year most of our products will be based on the new platform. And it’s a gradual very rapid rollout of the new platform to customers but it will take time until the second half of next year but it’s part of what will be driving back the gross margins.

As for the Q3 estimated gross margin, it’s about similar to the one in Q2. We think we will have the same mix still in Q3 with improvement in Q4 and beyond.

Just to clarify on net, the 10% you said you might be a challenge hitting the 10% operating margin if the fx remains an issue. Is that an annual comment meaning reaching 10% for the year or two any specific quarters in the second half?

We targeted reaching 10% in Q4 of this year. Now it seems difficult.

With respect to the tax rate, what should we assume then on tax rate for ‘09? Is that then we should already assume somewhere midpoint between 5% and 10% effective pro forma tax rate for ‘09?

Yes. I would say that probably for the remainder of 08 is more towards the 5% and going gradually swells ‘09 towards the 10%.

Your next question comes from Blaine Carroll - FTN Midwest.

Tali one of the things you mentioned about or Ira maybe it was in your prepared comments on the gross margin was the mix of OEM in Asia Pac. I was wondering if you could talk about the component costs within your cost of goods sold and what type of impact that might be having on gross margin as well?

The component cost in general has not changed significantly. They are coming by the way down for very aggressive cost reduction activities both on the current and next generation platform that we are using but if I’m looking on a one-to-one basis, they’re about the same. The only place where we see a little bit of an increase in component cost is around antennas. The antenna manufacturers have been increasing their prices slightly.

Does any of that have to do with shipping costs do you think?

It has to do with shipping costs and it has to do with aluminum costs.

And then on the DSOs they clearly jumped up during the quarter and you’re saying it was a lengthening payment cycle with some of your customers. Are any of those receivables at risk at this point Tali? Are any of them extending beyond the normal terms?

No, I don’t think that they are at risk. Most of our customers in Asia are strong companies. It’s really part of the tough negotiations that characterizes Asian customers and therefore we do see a certain increase in there. I should say that another component in this increase of DSO is coming from the fact that revenue really jumped from Q1 to Q2. If I calculated this though on an average basis when I average the AR balances at the beginning to end of quarter, I would get the result 81 days only, not as much as in 93. However as I said before, the main issue right now is longer payment terms in Asia.

And was the quarter more backend loaded? Did that contribute to it?

It was more than we experience in back load, yes.

Last question, when you’re talking about the target of the 10% in 09, when you’re doing your budgeting and that’ll factor into the budgeting, what areas would you focus on to eliminate costs in 09 in order to get to that 10%? Would you cut back on R&D? Would you cut back on marketing expense, things of that nature?

Besides operating expenses I think that if you look backward you’ll see that we are decreasing both expenses gradually over time, both the R&D has been decreasing and the sales and marketing has been decreasing. This is really our policy, to decrease these expenses gradually as revenue grows. And we will concentrate on continuing in doing this as well as improving gross margin.

And you mean decrease as a percentage of sales?

Decrease as a percentage of sales, yes.

Your next question comes from Amir Rozwadowski - Lehman Brothers.

In terms of the revenue growth I was wondering if we could talk about your visibility there. It seems as though certainly you’ve benefitted from ongoing strength in Asia Pacific. Is that more capacity expansion or just keeping up with the rapid subscriber growth? And I just want to get a sense as to if this is something that we should expect ongoing or where are we at in the build-out stage there?

The build-out stage there is I think I said a little while ago we think this is a process which will continue for the next 18 to 24 months as some of those networks continue to ramp up their expansions into mainly new geographies and adding capacities in existing geographies to meet the subscriber demand. And we have reasonable visibility into the way they proceed forward.

I was wondering if we could talk a little bit about North America. It seems some of the weakness that you experienced in Q1 is ongoing. I was wondering if you could talk about it in terms of the magnitude. Are we experiencing a worsening of the situation or are you looking at it more as an in-line trajectory with weakness beginning in Q1?

It’s more like in-line trajectory that began in Q1. We saw mainly in Q1 a slight decrease in the private network which stayed at the same levels and a more significant decrease in the career business in the US where some of our customers are still thinking their steps forward in the current economy and where they need to put their resources. So it’s more in-line with Q1. I haven’t seen a change or worsening during this quarter.

Should we think of that, if you’ve seen some of the carrier customers take steps in the current economic environment given where traffic growth is, is there an opportunity somewhere down the line where they’re going to need to come back to you folks in terms of additional capacity expansion?

There’s a clear opportunity there. I think I said in my comments I do expect by the beginning of 09 the pressure on some of those networks to become such that it will come back and rebuild the network because of the data pressure. And we do expect those; it’s very hard to time because you have to time on the one hand the macroeconomics with the data demands and things that you see within the network, but it’s clear that those networks will have to expand on their capacities. And, just to fill in on that, we are in discussions with some of the US carriers about that. It will depend on what time they will take the action.

That actually was my last question, in terms of the upgrade and progress of IP within the carrier network, I just wanted to get a sense of where we are there?

There it’s interesting to note the trends are a little bit changing. For a while Europe was leading that trend. I think Europe is still on the same time scale that was originally there which meant this year its design wins, this year its network designs, it’s really starting to deploy in beginning of 09, middle of 09. What we are starting to see are some operators in APAC, like the [inaudible] customer jump starting that cycle moving a little bit faster and doing some of that type of immigration towards the second half of this year or end of this year. US, I think all operators are discussing it but it will be a little bit slower on the pickup of all IP network for backhaul.

Your next question comes from Irit Elrad-Jakoby - Susquehanna.

I notice that you mentioned that Europe remains strong and that you’re not seeing any slowdown in this market but it seems that EMEA revenues this quarter were lower quarter-over-quarter and also year-over-year.

EMEA revenues were lower this quarter and you are noticing correctly but as I stated we don’t see a decline in the demand. It mainly has to do with timing issues which have to do with some of the EMEA revenues are large projects we are doing in Africa and other regions which has timing differences between demand and revenue recognition due to revenue recognition policies.

Again if you can give more color on IP deployments. You mentioned that you see that across the board geographically but is it mostly cellular driven or do you also see some uptake on WiMAX networks?

We see uptake on the WiMAX networks where I think I mentioned on the call ELRO and Denmark as people deploy WiMAX. I don’t feel that is a very large uptake at this point because the WiMAX networks in most deployments are still small. On the cellular, as I said, I see a little bit of an uptake. It’s not there yet. It’s mainly what I would call a planning activity. It’s designed, it’s testing, it’s lab testing, it’s RFPs, FRI, it’s not yet at the level which is generating large and significant revenue.

Finally, on OEM, have you seen expansion of OEM involvement in other geographies beyond APAC? Do you see any potential for OEM in North America or maybe more OEM business in Europe than you’ve had in the past?

Yes, we see the potential for it. At this point I think because of the huge expansion in the APAC region it’s in a way overshadowing those things. But we do see revenues coming from other regions as well with the OEMs.

Your next question comes from Steve Ferranti - Stephens, Inc.

I wonder if you could just give us a little more color in terms of the carriers’ efforts to transition to IP networks. What point of the process are you most often seeing these days? Is it RFI? Is it RFP? Are we actually at the point of trialing? Where are those people in terms of actual efforts in making that migration?

The whole spectrum, I can’t pinpoint a single, there are a lot of carriers. Some of them are not doing anything at this point all the way to some of them are deploying. I would mostly, if I need to weight it, I’ll weight it more towards not doing anything in some ways because it’s just starting the cycle at this point. And what we see is from the leading carriers, most of them are in the phase off issuing RFIs, issuing RFPs, some of them are with lab testing. It’s a new concept for them. They have to change the concept of how and the way they build the backhaul networks. It does take the time and we’re involved with a lot of them in doing that process.

I thought your comment was interesting in terms of what North America at least over the next couple of quarters thought it would remain soft. I would actually think the iPhone would spur carriers’ thinking in terms of transitioning to IP backhaul. Are you seeing any signs there in particular?

I see the signs. I see the discussions. But I think that turning this into revenue will take time. And we had discussions with a lot of the US carriers around those types of positions.

If you could provide us a little more color in terms of the private network segment. What’s driving the sluggishness there and how long do you think it lasts and is it related to any particular geography?

It’s related mainly to the US geography. Most of the private networks business comes from the US because of regulatory environment. In most countries around the world the private segment in itself does not exist for backhauling or for microwave. You cannot do it directly. So it’s mainly US, Germany and Australia. And it’s a large portion US. At this point we see a little bit on the slow side and from here, you’ll have to ask the macroeconomics about the impact.

Your next question comes from James Faucette – Pacific Crest. James Faucette – Pacific Crest: First, this is a question on the competitive landscape. With the perceived acceleration towards all IP, can you just characterize for us any changes you’ve seen in the competitive landscape either new products from existing competitors or if IP products from upstarts have started to gain more traction recently?

I think that we’ll start it this way. Most of the transition for cellular networks, and I’ll separate WiMAX in a second because it’s a separate story, have to do with the capability of both TBM and IP at the same time. If I’m looking at the competitive landscape there, it hasn’t changed significantly over the last two or three quarters. I think we are one of the main players. I think Harris Stratex is one of the main players. I see Alcatel-Lucent coming up with some products. And I think both NEC and Ericson are major players in the wireless backhaul and probably Nokia-Siemens sometime down the road will come up with their own product. James Faucette – Pacific Crest: I just wanted to ask a little bit about your growth forecast for the rest of this year and how we should think about the seasonality of the third and fourth quarters. Typically you would see the fourth quarter be the strongest and I’m just wondering if after the strong September quarter that you’re looking for that you would expect a sequential increase in the December quarter? The reason I’m asking is that if you were to hit the high end of the range that you gave for the September quarter, even a flat September quarter would put you well above that 35% revenue growth target, and I’m just trying to calibrate the fourth quarter outlook correctly, if we should expect to see normal seasonal growth or if that could be closer to flat?

For us I don’t think we really have seasonality trends. In recent years we have been growing quarter after quarter and this is usually our plan. It characterizes our booking; it characterizes mostly our production capacity. So I really think that revenues will continue to grow quarter after quarter. This is our projection.

My last question is tied in a little bit to growth. Obviously you’ve had a pretty substantial use of cash over the last few quarters to support the very strong growth. Is this a phenomenon that we should expect to continue for the foreseeable future or do you feel like you’re now getting to a period and a point where the use of cash to support the growth should start to stabilize?

I believe it starts to stabilize but from time to time the growth surprises me as well. We’ll wait and see. But I certainly hope and believe that we should start stabilizing cash and start generating cash.

Your next question comes from Daniel Meron - RBC Capital Markets.

Can you give us a little bit more color on the situation with Sprint-Clearwire? Obviously you discussed it to a short extent but if you could just give us a little bit more color on your thinking about the timing in 2009.

As I discussed on the call, I think the main issue is Sprint Zoom and Clearwire are merging. The good news is there’s money there and the project will happen. Timing from experience does take time. You merge a small organization with a huge organization, although Zoom is not all Sprint but it comes with the culture and the DNA of a very large organization. Until regulatory points, nothing will happen. There will be a lot of plans. After regulatory points, you have to merge a lot of people, build in offices, and do things. I think that this is a first half of 09 story until they’ll start really ramping up and building outside.

I know that you’ve throughout the year reduced your outlook from Sprint-Clearwire so by now it’s probably going to zero pretty much?

It’s probably going towards zero at this point.

And you still made up those numbers from elsewhere as far as growth, so that’s pretty impressive. And then Tali if you can just give us a sense on the DSO level that you expect and how we should think about it over the course of the next few quarters? And also on the tax levels, should we expect a linear growth starting from the third quarter starting from 5% and then growing over time?

As far as the DSO we have a target of 70 to 90 and speaking to this target, even though as you can imagine it’s becoming challenging, but this is definitely our target and we want to stay there. As far as the tax rate, it’s really not a science so I gave a range and I think that it will gradually grow from the 5% towards the 10% but I cannot say anything more accurate than that, mainly because there are two streams. There’s going to be a stream of regular expense and there’s going to be another stream of probably continuing to build deferred tax assets, so it’s difficult to project.

Should we expect the same tax levels persistent to 2009 as well? I assume that you want to exhaust the NOLs beforehand.

My estimate that this trend is going to stay for ‘08 and ‘09 until we exhaust the NOL and then from that point on we will show income tax expense at the then-current corporate tax rate.

You’re growing this year north of 35% which is impressive. Going back to your prior commentary that you expect long-term growth in this business of 25%, should we expect the same growth of 25% over the revised growth figures for 2008 as we head into 2009?

Yes, that’s my expectation.

Your next question comes from Matt Robison - Pacific Growth Equities.

Your OEM mix, was there a second or third OEM? In the past you’ve given some proportion on that. Maybe you could give us some flavor on that? And I’m curious with regard to the DSO, is it fair to assume that you haven’t had to change your terms with the OEMs and that you had some of these overseas customers that wanted extended terms and your OEM business was maybe a bit backloaded?

First, DSOs mainly come from customers which are not OEM customers. And as far as the revenue mix, yes we did have some of the other two OEMs. None of them reached the 10% level but they were participants, active participants in revenues this quarter.

If they were both very close to 10%, then Nokia could have been 17% or 18% of sales. My feeling is that it was probably a lot more than that. Is that correct?

I prefer to stay with the numbers that I’ve given and not start giving hints regarding each one of them.

Did the business in India reflect some degree of pent up demand? I recall that there have been some regulatory impediments towards some of your customers shipping/taking a lot of product in the last couple quarters prior to this one?

One of part of the pent up demand and the boom that we see in India is a change in the regulatory environment. It’s not the environment. It’s the change in India. What happened in India was that everyone was waiting for expansion of their licenses. By the middle or towards the end of the first quarter, the government had started to allocate additional licenses to all operators in India where the seven major ones now own licenses for all 23 circles in India. This started all of them and not all of them are customers of ours but started all of them in really both planning and rapid expansion to cover the areas where they got the licenses. And that’s what I’m saying. I’m expecting this process to continue for the next at least two years.

What are your lead times now?

Lead times are relatively somewhere between 30 and 60 days depending on the equipment.

And Tali, based on this portfolio business that you see that will get you between $56 million and $60 million in sales this quarter, based on what you know of that, should we expect DSO to come down and deferred revenue to come up this quarter or no real change?

I think Q3 is quite a similar mix to Q2 so I’m not expecting major changes in these two items.

On your non-cellular provider business, how did that perform relative to the last couple of quarters?

The other operators I suppose, right?

Yes.

There was a certain decline in the mix between cellular operators and other operators, and cellular operators had a bigger portion when I compare it to the previous quarter.

Do you see that as a focus of the other operators on select markets and trying to extract cash flow to their business or is there any trend that you would point to?

I think it’s from looking from a trend perspective mainly because the proportion is because the cellular grew and the others were a decline and within the other operators most of those are WiMAX deployments and because the numbers there are still relatively small, it’s sometimes lumpy. Sometimes I have an operator which, for example, I think in Q4 of last year was a larger jump in the IP because it was a large WiMAX operator there with a deployment.

Your next question comes from Kevin Dede - Morgan Joseph.

Tali, with the OCS debt out, what happens to other income in the third quarter?

The interest income?

Right.

The financial income?

Correct.

I think the financial income in Q3 and Q4 should be higher than previous guidance that they gave and I believe the previous guidance was around $400,000 to $500,000 per quarter and I’m raising this guidance towards the $700,000 per quarter financial income.

How about op ex now? What do you see that falling out on given that you’re adding another $600,000 on account of the exchange rate?

It means that op ex will grow by at least $600,000 of course assuming that the rate stays the same. It will be this amount plus an additional natural growth.

And Ira, you mentioned Nokia-Siemens network working on an IP TDM radio but that’s for the flexihopper line, right? There’s no change in your relationship?

At this point there’s no change in the relationship and we’ll keep on pushing through them both IP, mostly SDH but IP as well in some of the deals.

Targeting the high capacity, right? Their radio development’s in the lower capacity line?

Depending, they’re planning on doing everything and they’ve been planning to do that for the last two years so it’s a wait and see.

Can you speak to the carrier-carrier business you have in the US? Obviously you’ve chatted a lot about what you expect to happen with Sprint and Clearwire, but can you talk about some of your other business there?

As we said, in the US most of the operators are re-evaluating their strategies at this point.

And that includes your carrier-carrier business?

And that’s including the carrier-carrier business, yes.

Your next question comes from Lawrence Harris - CL King & Associates. Lawrence Harris - CL King & Associates: I was wondering if you could speak to what you’re seeing in terms of pricing trends or competition related to that in the market place. And if you could remind us what the gross margin say on IP versus SDH radios are?

Pricing trends have not changed. We have been seeing a decline of 10% to 15% in prices year-over-year. By the way that’s true on what I call same-mix basis. If you take the same type of a deal in the same geography on the same product for the same channel, that’s what we see year-over-year as a trend. I think what’s affecting a little bit more from our side is the mix changes. There are differences in the pricing worldwide, which is part of the effect that you saw on the gross margins this quarter because of the mix change. So it did affect the selling price but not because of a price decline as much as more APAC versus other places where APAC is a little bit lower priced. I think that’s in general. If I’m looking at IP versus SDH, I don’t think there’s a major price difference if you look at similar capacity although we do expect the IP to be a little bit lower than the SDH. Lawrence Harris - CL King & Associates: Offsetting that would be the product redesign?

Offsetting that will be the product redesign, yes.

Your next question comes from William Choi - Jefferies & Company. William Choi - Jefferies & Company: First a clarification on the gross margin guidance for Q3, you have a couple products out this quarter. Obviously more of the IP based FibeAir IP10 would be next year but why wouldn’t you get a more immediate benefit from the shift to the 1500P and why wouldn’t that improve if you have the same mix and somewhat of a slight gross margin improvement going into Q3 versus Q2?

If we look at going into Q3 versus Q2 we will be shipping more of the 1500R which is the new generation, but I think that as an overall it will not have a significant impact still on the gross margin because most of it, both revenue recognition and other issues will show up in Q4. William Choi - Jefferies & Company: The reason you feel pretty confident about 35% to 36% next year is more of the combined benefit of the new IP product as well?

Yes. William Choi - Jefferies & Company: Tali, on tax here, you’ve been fairly clear but I just wanted to clarify. You’ve been paying 27% tax on the interest income. Are you including that in your total calculation of 5% for the company?

Let’s say yes. For simplicity, let’s say yes I was including it in that. William Choi - Jefferies & Company: The other fast growth market, China, maybe you could talk about your opportunities there, because I don’t know quite about this year where [inaudible] issues but in 09 clearly there are a lot of major build-outs, possibly even 3G deployments. So can you talk about your positioning there and how you look at perhaps getting a bigger share of that market in 09?

The question I think I’ll take it backward is the market in China. Up to now there’s not been a market in China for microwave point-to-point links at all and that had to do with in the way government directive and the way China operates where it’s almost fiber to every base station. And that’s the thinking the way they do the business. Very little microwave in China both from us and from all the competitors at this point. I’m not sure if the market will change with the 3G rollouts next year. We are monitoring it very closely hoping that if it will open to take a share of it but I’m not sure it will open. My guess is it will not. There will be very little microwave in China.

Your next question comes from Jeff Kvall - Lehman Brothers.

My question is about the trajectory of the US and those likely to remain its current pace for the new near term. Ira, do you see a sense of when that might turn around for one thing? And then maybe the second component of that, does the US business or the trajectory have some impact on your gross margin structure?

On the first part, I’ll say we are hoping and my guess is that beginning 09 we’ll see the pressures around data in some of the networks and things like Sprint Zoom and new Clearwire coming online into activity affecting that and starting to see some pressures in the US. By the way, pending all of the macroeconomics which is I think you’re better equipped than I am in reading those. Yes to the second question. I think part of what we’re seeing on the pressure on the gross margins has to do with the mix and part of it is pushing down the gross margin. As I said, it’s first and foremost geography, deal size and channel. And all of those right now are on the one hand work very nicely in our favor and pushing up the top line because we are positioned very well both geographically and for handling large deals with delivery volumes and through channels and OEM channels to capture the markets where they grow. It does have an effect on the gross margin because this mix leads to a little bit of a lower gross margin than if we had very strong US. And what you would expect is the US would come back stronger even at normal levels and it will also push the gross margins up.

Is there a different dynamic going on for you in the carrier market in the US versus the enterprise market?

The dynamics are that the enterprise market declined but not as strong as the carrier markets. Let’s remember that for quite a while our market in the US has been mainly carrier-carriers. We did have some of the other carriers in the market but most of the carriers did not deploy their own microwave link and they were depending on the carrier-carriers and because of the dynamics right now in the market a lot of those are re-evaluating their strategies.

Your next question comes from Rich Valera - Needham & Company. Rich Valera - Needham & Company: I was just wondering if you could comment a little bit more on how you feel your competitive position is at Spring-Clearwire. Obviously there’s one competitor that has a strong position with both Clearwire and Zoom. How do you feel you’ll stack up in 09 when they open up to potentially other microwave vendors?

I usually don’t refer to those questions. We are in Sprint and we are a selected vendor in some of those activities. We are in the lab. I think it will be a totally open game when the new Clearwire will start again and we are walking. I’m always cautious on this and my guidance is we need to resell, totally resell in this situation. Rich Valera - Needham & Company: On WiMAX in general, how do you see based on your pipeline, the trajectory of your WiMAX related business for the balance of 2008 into 2009?

At least what we see from our WiMAX trajectory right now, it’s on the same level. It may be increasing a little but at the same level. I’d like to thank everyone for being on the call with us and spending the time and I would like to also say we’ll see you in person probably over the next quarter each and every one of you so we can follow up on the questions then and have a more detailed discussion. I’d like to thank everyone and have a good day.