Good day, everyone. Welcome to Ceragon Networks Ltd. Fourth Quarter and Full Year 2013 Results Conference Call. Today's call is being recorded and will be hosted by Mr. Ira Palti, President and CEO of Ceragon Networks; and Mr. Aviram Steinhart, CFO of Ceragon. Today's call will include statements concerning Ceragon's future prospects that are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks associated with doing business in Latin America, including currency export controls and recent economic concerns, the risks relating to the concentration of our business in developing nations, the risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities, risks associated with increased working capital needs and other risks and uncertainties detailed from time to time in Ceragon's annual report on Form 20-F and Ceragon's other filings with the Securities and Exchange Commission, and represent our views only as of the date they are made, and should not be relied upon as representing our views as any subsequent date. We do not assume any obligation to update any forward-looking statements. Ceragon's public filings are available from the Securities and Exchange Commission website at www.sec.gov or may be obtained on Ceragon's website at www.ceragon.com. I will now turn the call over to Mr. Ira Palti, President and CEO of Ceragon. Please go ahead, sir.

Thank you for joining us today. With me on the call is Aviram Steinhart, our CFO. Our Q4 results were in line with our guidance within a generally still challenging CapEx environment. Our business has remained pretty stable. The feedback on our new product portfolio is outstanding, and we are looking for gradual improvement beginning in the second half of this year. There were no meaningful geographic changes during Q4, just the normal quarter-to-quarter fluctuations. Latin America continued being very strong, and Africa showed the lumpiness we have come to expect. Our book-to-bill in Q4 was below 1, but not enough to cause us any major concern. Unseasonal softness is typical in Q1 and is almost always a bit lower than Q4. Therefore, as we expected, 2014 is likely to get off to a slow start, followed by a pickup in the second half of the year, something we have been talking about for quite a while. We want to emphasize that we have some very specific reasons for expecting improvement in the second half. In addition to our sense that deployment and expansion of LTE networks in North America, Europe, India and parts of Asia will lead to gradual overall growth in demand, we have made significant progress on a number of large opportunities since we first began looking through the second half of 2014 as the beginning of an uptrend. The closer we get, the more confidence we are developing, and it's becoming more apparent that the timing of our IP-20 platform is an advantage. We are moving through the various stages of evaluations and field trials with various operators, and the feedback is consistently very positive. Several of these opportunities are both large and appear sufficiently advanced that we can reasonably expect to receive orders in a…

Thank you, Ira. I will go through the Q4 results and provide some comments on the outlook for the current quarter. Our fourth quarter revenue was $89.5 million, within the range of our guidance, close to the average of the past several quarters. Our GAAP gross margin was 31%. Non-GAAP gross margin was 32.1%, a slight sequential improvement as expected. The non-GAAP figure excludes $300,000 for amortization of intangible assets, $200,000 of changes in pre-acquisition indirect tax position, $400,000 of restructuring related to expenses, and $40,000 in stock-based compensation. Fourth quarter GAAP operating expenses were $37.3 million. Non-GAAP operating expenses were $30.3 million compared to $31.6 million in Q3, reflecting a portion of impact of our restructuring measures taken in November. The non-GAAP operating expenses exclude $12.1 million of restructuring related expenses, a $1.3 million adjustment of pensions liability in Norway, $7.7 million, primarily related to the expiration of certain pre-acquisition indirect tax exposure, $300,000 in amortization of intangibles and $900,000 of stock-based compensation. On a GAAP basis, we reported an operating loss of $9.6 million. Our non-GAAP operating loss for the quarter was $1.6 million. Finance expenses in Q4 was $5.2 million. Non-GAAP finance expenses of $1.8 million exclude $3.3 million related to action we have taken in order to expatriate cash from Argentina. Tax expenses was about $700,000 for the quarter. On a GAAP basis, we reported a net loss of $15.4 million or $0.35 per share. On a non-GAAP basis, we reported a net loss in Q4 of $4.1 million or $0.09 per share. The geographic breakdown of revenue appears in the press release. Latin America continued to be particularly strong, partially offsetting lower revenue from Africa, which tends to be lumpy from quarter-to-quarter. We had 1 10% customer this quarter in Latin America. Our OEM sales…

I think you lost me because I was on mute. And Aviram turned to me, so I apologize. Aviram, thank you for the details. I'll repeat what I had to say, that we are encouraged by the way that several major new opportunities are developing. We believe that reaching a certain scale as the largest hauling specialist with the broadest global footprint is an important factor in our progress in addition to our technology leadership. We suspect that the gap between the competitors this year will widen, and that the pickup in demand will benefit us more. We are determined to build on our strengths and think we are in a very good position as we enter the new year. Now we will take questions.

[Operator Instructions] We currently have a question from the line of Ittai Kidron with Oppenheimer. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: A couple of questions here. I wanted to talk about the new platform, the IP-20. Clearly, it's going well in the field, and you've talked about the growing interest from some Tier 1s in the platform. But maybe you can kind of lay it out for us, more in an historical perspective. In the past, when you went through such product transitions, how long did it take before they actually hit inflection points? And how long did it took before they were at peak cycle from the time of the initial product announcement?

I think we look at -- and I look at 2 cycles of this client, I've done - we have done here in [indiscernible]. One, in the beginning of 2008 with our IP-10 platform and then a second cycle or a much smaller one when we acquired Nera, when we had to replace Nera products with our own platform. Usually it takes around 1 year to reach 70%, 80% of the bookings on the new platform. That's also our expectations for this year, that by Q4 of 2014 we'll be in those ranges of the bookings coming in, which will probably have an effect on the revenues. The revenues are stretched a little bit longer because until you recognize some of the -- it's spread out probably over 1 or 2 more quarters. And from a cycle perspective and the market perspective, it's probably 1.5 years in total what you would call full blast moving ahead. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: So just skipping forward, then, from your perspective 2015 is a full-blast year, as you described it?

Yes. Assuming the market and the market demand is there, and we believe the market demand will be there. Full-blast year. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: Can you tell me how much of the interaction you have regarding this new platform is with new customers versus existing customers?

I would say almost 50-50, the reason being that we do have an inclination to walk in with a new platform into new customers. Because with existing customers, you have to walk very carefully on the plan with them to not totally cannibalize or stop our current sales with them. And less inclined when shifting to a new platform, they get very good service from the existing one. So we use it initially as a platform, and that's what has been last year and into gaining new customer places we are not in and really using the technological leverage and the time-to-market advantage in those situations, while more gradually migrating existing customers to the new platform. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: Got you. And then, Aviram, a couple for you. Just can you give us a little bit more color, just given you did the transaction in the market in the fourth quarter, how should we think about what is share count at current stock prices for the March quarter? And also you've done a lot on the restructuring side, what -- where should the OpEx kind of bottom out here, at what level and what quarter?

Okay. In terms of number of shares that [indiscernible] for the model it should be around -- between 50 million to 52 million, depending what would be the share price, and will go around 51 million. In terms of total, 51 million shares. In terms of the restructuring, overall, we are taking $25 million of expenses out of the P&L. $5 million is going out of the cost of goods sold in the annually and 24-month [ph], the OpEx. To reach [ph] $5 million a quarter in the OpEx, we were running $32 million, we should be around $27 million a quarter. Next quarter, it should be somewhere between the $27 million to $28 million, and the quarter after, we should be Q2, $27 million, around $27 million. In terms of the restructuring expenses, the vast majority of it was this quarter, and we have here several employees that will continue to work with us in [indiscernible] which we are releasing a -- still in a releasing mode, so there will be $3 million to $5 million in Q1 and less than $1 million or around $1 million in Q2. So there really a small fraction of the restructuring we've seen in Q2, we bring to completed this quarter. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: Right. But just to fine-tune that, when you talk about half of the benefits coming in the COGS line. So even though the IP-20 would make most if its impact starting late in the second half and into '15, already in the June quarter, we should see improvement in gross margin because of that, right? Because of the restructuring.

No. What I said in the discussion before is that we will see probably first half in around this range. The pickup before that, with mass production, will create a full effect in the margins in the second half because now the volumes, which also have effect on price, et cetera, is -- is a little bit more challenging. So I would model first half at this level, second half, start to pick up.

Now we have a question from the line of Alex Henderson with Needham. Alexander B. Henderson - Needham & Company, LLC, Research Division: I just wanted to date [ph] a couple of qualitative issues. One, can you talk about whether you've seen any change in what you've been thinking about the field conditions as a result of what's going on in Latin America subsequent to you being out on the road for your offering?

What we see globally, we see 2 things. Since we've been out on the road, we have been very encouraged by seeing in India, mainly Europe and somewhat in Africa encouragement around pushing around LTE, mainly in Europe. And big projects coming up, and I would say competitive environment between the operating half earnings [ph]. We do see a lot more cautious in Latin America, at this point, having to do with currency fluctuations and many devaluation and difficulties there. And we are a little bit more cautious with some geographies because of that in the way we do the business. Alexander B. Henderson - Needham & Company, LLC, Research Division: Do you have any exposure to the troubles that are going on in Argentina, for instance, where they're really talking about closing down that market in a hard way as a particular venue?

We are seeing challenges in 2 countries, Argentina and Venezuela. And our plan, both from Argentina and Venezuela -- initially when we talked about the numbers, it was much lower than were in 2013, looking to 2014. Having said that, what you're saying could be even more challenging and could be create additional effect, because those 2 economies and the currencies around the importation processes there and are putting more harbors [ph] on the operator to bring in equipment. So for now, we already planned significant more lower revenue coming in Venezuela and Argentina, lower, and again we are monitoring it very closely and it definitely can affect us. Alexander B. Henderson - Needham & Company, LLC, Research Division: So as the India pickup more substantive than the slowdown in Latin America?

Over time, yes. Timing-wise, I'm not sure, especially because of revenue recognitions. Just to highlight a point there, just please note that even this quarter, we took a hit of $3.3 million on a non-GAAP basis on the financial expenses because we took measures to take all sorts of cash we had in Argentina out, and we took -- there were issues around it and we took a big hit there. Alexander B. Henderson - Needham & Company, LLC, Research Division: All right. And then looking at the commentary about some larger "significantly larger" transactions. Can you give us a little bit of sense, I mean, are some of these transactions scale-wise quite different from what you've been seeing in the past as a result of big programs that haven't been evident over the last couple of years? And then similarly, does the rollout of LTE cause some acceleration in some of those contracts? And how do you see that playing out with the small-cell stuff?

So I'll take this one by one. Yes, those are probably larger scale than we have seen in the last few years, mainly because we are talking to Tier 1 operators we haven't been talking with before across a few of the markets. And those do tend to be much larger-scale type of operators who we have not been dealing with in the past, and the new platform generates that demand. Those operators are really talking about rolling out LTE. By the way, mainly at this point, macro and micro cell sites, not as much as small cells. Small cells or outdoor small cells are still around the corner, are not there yet. And their plans are, I would say, are accelerating, but they will not appear as a very big boom because of a very big project. And that's why we're saying, we'll see only initial expense in the second half because I think those will also be -- will roll out or start rolling out in the second half for those operators. Alexander B. Henderson - Needham & Company, LLC, Research Division: And do you have small cell slow down the process or is that now...

I think small cell is still a discussion within the operators. I think they need to deploy LTE first at the macro and micro level. Small cell is something, which will see significant, especially on the outdoor side, only at the end of '15 and '16. It's not something around the corner. You will see coverage, mainly indoor, where we are a little bit less involved earlier where we'll need to catch up LTE coverage on an indoor environment. Alexander B. Henderson - Needham & Company, LLC, Research Division: And then just going back to the share count question, what was the exact ending share count at the end of the year for our models?

As I said, it should be around 51 million. Alexander B. Henderson - Needham & Company, LLC, Research Division: That was the ending share count?

End of the year. The average.

The average. Alexander B. Henderson - Needham & Company, LLC, Research Division: No, not the average. The actual ending.

Yes, the actual that you use in the model, as I said, it should be around 51 million [indiscernible]... Alexander B. Henderson - Needham & Company, LLC, Research Division: No, what was the actual ending share count is what the question is. The year-end ending share count.

The total number, just to make sure I understand it, total number of shares out there, out in the... Alexander B. Henderson - Needham & Company, LLC, Research Division: At the very end of the quarter, not the average for the quarter, but the end of the quarter.

52 million. Alexander B. Henderson - Needham & Company, LLC, Research Division: It's 52 million.

Yes. Alexander B. Henderson - Needham & Company, LLC, Research Division: So why would it be lower in 1Q then?

Because it's depending on some of the calculation and the accounting depending on the share price and treasury stock made [ph] that we need to -- to look into. We should have some lower amount in the total number of shares.

We have a question from the line of Peter Misek with Jefferies.

Just a question on the industry in terms of competitive pricing dynamics. It seems based on the work that we've done that there's been a lot of price aggression by some of your competitors to try and stay in the market. Maybe you can address that. And at what extent -- at what point in time do we see one of the competitors drop out? Or how should we think of industry consolidation? How do we solve this pricing dynamic? That's the next question. And then the final question, for gross margins, I guess if we look at the operating model longer term, we would expect that gross margins would've been a little bit better. Maybe you can help us understand the puts and takes as it relates to the medium to long term on gross margins.

I'll take the first half. I'll let Aviram handle the gross margin piece. Typically pricing dynamics have always been competitive and I think you alluded to the fact there are quite a few competitors in the market. By the way, we do not see all competitors in all markets. We see different competitors in different markets depending on the different geographies. In each one of those we do see sometimes the competitor who is willing to be the rabbit on the pricing. By the way, sometimes we are the rabbit on the pricing in some of the deals. I do not think that the market dynamics of that type have changed over the last 2 to 3 years. It's always been aggressive, and usually when there are change of technologies, the people who lag sometimes like to use the pricing as the way to stay in the game for a while. This plays into mainly deals, which do not require the new functionalities. And there I think, even without our current products, we can respond on the pricing pressure, which is balanced somewhat by getting better margins from the new product both because of cost and then because of sometimes a little bit of a premium pricing because we advantaged on the functionality of the product. You did ask the question on when will some of our competitors be out of the business? What should I say on my competitors? From my perspective, the sooner the better. But that's -- I think that most of them have their way of running the business, and it's sometimes sort of a valuation from the other side. I do not expect that to happen soon or around the corner. We need to plan as we will continue to compete in this environment for a while. Aviram, do you want to take the gross margin piece of that?

Yes. Can you please repeat the question on the gross margin?

Yes, just on gross margins, I would've expected gross margins to have been a little bit higher in the last quarter. Maybe we can address gross margin pluses and minuses for the medium to long term.

As we said, that maybe we couldn't guide in exactly what you're looking. As we said, we expect in the first half, gross margin to stay relatively flat, around 32%, that we have over the last several quarters. We're talking in the first 2 quarters. The plus and minuses, the minuses or the pluses improving the gross margin is basically the fact that we took measures which is roughly when -- with the full effect of that [ph] is roughly a 1% gross margin, influencing the gross margin up as a result of fixed expenses going down. On the other hand, we are just starting a -- producing the new products and here, there is a mass production and prices [ph] of mass production, and here there is [ph] of beginning productions of IP-20G, IP-20N in mass production, IP-20C in mass production. There is a process when you start to put them on the lines, and they'll start to have the full -- in full -- without others in their lines there is a process that will take 1 quarter or 2 quarters. This has been our experience. This is why we full -- expect the full effect of it when it’s becoming more into the revenue and more into a higher mass production in the second half of the year.

We have a question from the line of Sid Sinha with Canaccord Genuity.

Just a quick one on the IP-20 mix as a percentage of the total revenue. Ira, I think today you said that it was about 15% of the bookings. And on the last call, you talked about expecting it to be about 50% [ph] of the bookings exiting the 2014. So, I mean, but you think that within a year it should reach about 70%, 80% of bookings. Should we think about this as actual rating [ph]? I mean, IP-20 as a percentage of mix throughout the year, was it your prior expectations?

Yes. I think it will meet -- probably grow almost linearly between now and exiting the 2014 in the mix of the products. That's on the booking side. We need to probably add 1 to 1.5 quarters into the revenue side, which is typical to everything that we do, is that between bookings and averaging out the effects of revenue it's 1 to 1.5 quarters.

Okay, great. And just one last one for me. Just stepping back a bit and as we step into the first quarter of 2014, with some of the larger operators laying out their CapEx plans for the year, were there generally any surprises for you in terms of your prior expectations from these operators, any pluses and negatives for any region or any operator in particular?

I think that if you look at the budgeting cycles, I don't see any major surprises. But I think as we expected we'll probably see a CapEx cycle going into and accelerating in India on some of the competitors there, but that was our expectation. We'll probably see a little bit of a slowdown in Latin America. Somewhat also in Brazil for this year because they have the World Cup and probably as they prepare towards it they'll wait for the World Cup and then probably will pick up next year towards the Olympics in 2016, which is typical cycles within different operators.

We now have a question from the line of Bob Sales [ph] with IMK Capital [ph].

A couple of questions. First of all, you mentioned the Indian opportunity. Has that opportunity -- I think when you first talked about it a few months ago, on the deal roadshow, it -- you expected you would be splitting the business if you were able to win it. Is there -- are you now seeing a bigger share of that rollout in 2015?

First, let's not [ph] talk about India, and I think it's not a single opportunity because once the India market starts to move, it's more than a single opportunity out there. You're referring to one of the opportunities, which we think we are in. We'll probably split that opportunity, but I'm not sure that splitting will be half and half. Like any deal that we do worldwide, there's never a single competitor within the operator. And I think we always walk in, I wouldn't say 2 steps, but it's always a continual process. We enter, we take a certain market share, and then we work very hard to increase that market share within the operator. True for all opportunities, including India.

Okay. And then with respect to Latin America, are you seeing currency pressure across all the countries that you do business with? Or are there certain countries that like Brazil that appear to be more stable and business is being conducted as usual? I haven't really looked at the real to see what the valuation has done.

We need to look on 2 elements. One is the fluctuation of the currency, and the second is the regulation that the government impose on importation and taking money out. Then there is [ph] differentiation -- major differentiation between Argentina, Venezuela and Brazil. In terms of the regulation, the ability to import into the country and take money out, Venezuela, Argentina, they are far more complex, on top of the currency, the valuation issues that those countries are facing and the control of the government on the currency. On Brazil, it's of course open, and you can import, and the regulation around the currency is less -- much less stricter than the -- and the fluctuation of the real has affected us. It went -- you see it was -- over the last year, I think it's around 15% or 16% devaluated, which, of course, affected us, at least portion of it, because a lot of it is local services and also local equipment that we are buying locally. But the radios that we are shipping from here was affected. So we see also in Brazil some [indiscernible] around the currency.

So when you do business in Brazil specifically, are your equipment sales in U.S. dollars or are they in reais?

No, the local -- to the customer, we are selling to in reais [indiscernible]...

Okay. And then -- so the installation services -- in installation services, you're buying in reais, whatever you sub out, and then the equipment is -- your production basis is shekel or U.S. dollars, correct?

U.S. dollars, correct.

[Operator Instructions] We have a question from the line of Gunther Karger from Discovery Group.

Two questions. The recent announcement, in fact, yesterday's announcement regarding your North American business distribution, what if any impact do you see of that over the next year? Is that significant or insignificant? And the second question has to do with vertical markets. Would you care to make any comments on such markets, say, the Homeland Security, the utility markets, markets of this type?

Okay. We did announce yesterday a deal we have signed and an agreement we have signed with TESSCO for their solution and their products. It is important for us because in some of the region and mainly in the North American region, part of the business that we do to serve to some of the vertical markets like Homeland Security and many of the smaller deals is growing through a distribution network, and this strengthen us significantly in the North American market. In the overall numbers, it's not I would say a huge number, but it is within the North American market, will give us another foothold to increasing the business mainly within the U.S. market to nonoperators in verticals. In the vertical space, and you mentioned Homeland Security, and public safety of applications, we do have different channels, and we are competing for those in the U.S. and in other places around the world both in reaching for those direct, some of it through very for local and global large partners. And some of it through the distribution like TESSCO that we announced.

There are no further questions at this time.

I would like to thank you, all, for joining us today on this call. We would love to hear from you on a one-to-one basis and have further amplifications if you need to. Thanks again, and talk to you soon both on the phone and on the road.

That does conclude our conference for today. Thank you for your participation for using AT&T TeleConference service. You may now disconnect.