Good afternoon, my name is Courtney and I will be your conference operator today. At this time I would like to welcome everyone to the Q3 FY10 Sematech Corporation earnings release conference call. (Operator Instructions) Thank you Mr. Chris Rogers, you may begin your conference.

Thank you Courtney and welcome to our fiscal year 2010 third quarter conference call. We have just issued our press releases announcing our unaudited results for our third quarter ending October 25, 2009, and the acquisition of Sierra Monolithics Inc. A copy of our press release is available on our website, www.semtech.com as well as national news and financial market wires. A replay of this call will also be available on the investor relations section of our website through December 18. During this call, Mohan Maheswaran, Semtech’s President and Chief Executive Officer and Emeka Chukwu, our Chief Financial Officer will be discussing our news and answering your questions. Our call today will include forward-looking statements that include risks and uncertainties that could cause actual results to differ materially from those made during this call. We encourage you to review the Safe Harbor statements included in today’s press releases as well as other risk factors noted in Semtech’s most recent periodic reporting documents on Forms 10-Q and 10-K filed with the SEC for more detailed discussions. Also during this call we may refer to pro forma or other financial measures that are not prepared according to generally accepted accounting principles. In conjunction, we have provided supplemental information in our third quarter results press release to help readers understand the company’s comparable financial performance between periods. Thanks for your attention to this important preliminary information. I will now turn the call over to Emeka Chukwu, Semtech’s CFO.

Thank you Chris and good afternoon everyone. In my prepared remarks I would discuss our Q3 financial performance, our Q4 outlook and we conclude with more details on this Sierra Monolithics or SMI acquisition that was announced this afternoon. Revenues for the third quarter of fiscal 2010 were $75.1 million, a 13% sequential increase and down 6% from the same quarter last year. In the third quarter, 61% of our revenues were derived from customers in Asia, 23% from North America and 16% from Europe. Direct service represented approximately 51% of total revenues while distribution led up to 49% of total revenues. Our GAAP net loss for the quarter was $20.9 million or $0.34 per share down from net income of $11.5 million or $0.19 per share for the same quarter last year and net income of $7.4 million or $0.12 per share for the second quarter of 2010. It is important to note that our GAAP net loss for the quarter incorporates a one time tax expense of approximately $33 million related to the decision to repurchase foreign based for funding the SMI transaction. Although the SMI transaction is being announced now in our Q4, the transaction does result in a one time tax expense that we retroactively incurred in Q3. Excluding this one time tax expense, our GAAP net income would have been $11.9 million or $0.19 per share. Bookings were up sequentially in Q3 driving a positive book to bill for the quarter. We saw increases in all end markets. Net trans orders accounted for 41% of shipments during the quarter. In the third quarter, especially related to equity based compensation were $4.1 million or 5% of revenue. This is a decrease of approximately $900,000 from the second quarter of fiscal 2010. This sequential decrease was due…

Thank you, Emeka. Good afternoon everyone. I will discuss our Q3 fiscal 2010 performance by end market and by product group and then discuss our acquisition of Sierra Monolithics which we announce today shortly before our Q3 earnings results. Q3 of fiscal year 2010 is another really strong quarter for Semtech. We achieved net revenues of $75.1 million this is above the high end of our revenue guidance and represents a 13% sequential increase versus Q2 of fiscal year 2010. We also increased our GAAP gross margins to 55.1%. In Q3, revenues from communications increased and represented approximately 21% of revenues. High end consumer revenues increased and represented 43% of revenues industrial revenues were down and represented approximately 20% of revenues while computing revenues increased and represented approximately 16% of revenues. As we anticipated, we saw seasonal increases in our consumer and computing businesses and there was relative strength from the communications segment. The industrial segment was softer in Q3 due mostly to softness from the military and aerospace segments within our power discreet business in North America. Now, let me discuss the performance of each of our product groups in Q3. In Q3 our power management revenues increased sequentially by 20%. Strength in our power management business was driven by all end markets with computing and high end consumer segments exhibiting the strongest growth. We continue to make very good progress in reinventing our power management business to become a more diverse business with the revenue contributions from all major market segments and with higher overall gross margins. We are very encouraged by the quality of some of our new product platforms and attraction of these new platforms and customers in all geographies. For example, we recently announced a new tiny LED backlighting driver platform for handheld backlighting systems…

(Operator Instructions) Your first question comes from Harsh Kumar - Morgan Keegan.

I have got two questions here; first of all, Mohan, from what I understand about your company, I think your OpEx structure is geared for I will call it $95 million to $110 million in revenues, what does this deal do for you from a leverage standpoint outside of the margin structure that Sierra Monolithic brings?

It adds up about $50 million of top line revenue Harsh and I think the main thing that it does for us is it gives us access to our whole new set of spaces that we haven’t participated before. So it’s really a SAN expansion strategy and then obviously with the leadership position they have in 40 gig and 100 gig which are both very fast growing markets enables us really to drive further top line growth. With that said I think there are opportunities to continue to expand gross margins. I think there is a fit both companies is very good as I mentioned on the call and I think with the balance of common industrial increasing I think that will help us from a portfolio standpoint as well. So, all of those should give us a little bit more opportunity to grow our earnings.

Just one more follow-up; your guidance Mohan at the mid point of up 2%, you’ve got an extra week which roughly is about call it 7% to 7.5% something like that. If I back out the extra week you are somewhat cautious or worse than seasonal this time around down about 5% to 6% call it. Is it just, when I look at your call, I mean business seems to be very good, what’s the reason for some sort of hold back calling on guidance.

Well, let’s say Q4 is seasonally down for us Harsh, I mean consumer and computing are seasonally down. We do have the extra week but from a standpoint of seasonality I think the fact that we are guiding up tells you that actually our businesses are holding up quite well. We expect consumer probably to be flat or slightly up, computing to be probably slightly down, communications to be up and industrial to be up. So depending on how those play out I think our guidance is still very positive.

Your next question comes from Rick Schafer – Oppenheimer.

Just a quick follow-up on the SMI deal; just can you give an idea of expected timing when the deal ought to close and maybe back to our question a little bit, how accretive can you give us any kind of order of magnitude or just an idea I guess of how accretive the deal ought to be and how much of it depends on sort of cost reductions and efficiencies.

The deal should close by the end of the year, certainly before the end of the calendar year is our expectation.

And Rick, so with regards to the accretion I think what we have stated is that on a non-GAAP basis excluding stock based compensation and cost of our intangibles that we expect the deal to be immediately accretive. We don’t have an exact number yet but it should be really accretive with regards to any sort of cost synergies at this point we have not really bagged in any synergies. SMI is an organization that runs pretty lean. Any cost synergies that we would expect to see from an integration probably would be offset by spending to pursue additional revenue opportunities. So at this point we are expected to be accretive immediately on the non-GAAP basis without a lot of cost synergies.

Then second question just on sort of the military, defense side of the business. It seems to be again weighing on the industrial segment. I guess you gave some colors that orders had started to pickup there. Can you give any more color exactly what’s happened there, maybe describe sort of what you see in the channel there. I know that Channel seems also lean everywhere except maybe in the defense piece.

I think that is most of it, Rick, channel is still pretty heavy with the military. I think with the change of administration there is a little bit, its not clear which programs are getting funded and which ones are not and some of the maybe the legacy programs are not being funded the same way as they were. So a little bit of uncertainty there, but I think the good news is that we still see opportunity to expand our SAM, so, regardless of what goes in the market place I think that once we start to get the Janus space products out and start to get some of the new products out we should start to get back on a growth curve independent of the market.

Your next question comes from Li-Wen Zhang - Pacific Crest.

My question is how about the lead times, currency lead time compared to historical, do you get any changes there?

The orderly times are similar nothing really unusual there, supply lead times I would say are pretty consistent as well Li-Wen, I don’t think there is anything very different.

And also, are there any changes in foundry outsourcing strategies?

No, that strategy is still the same. We continue to use multiple foundry partners we don’t have our own manufacturing fab outside our power discrete business as you know and that continues to be the strategy. So we work very closely with our foundry partners and then develop leadership process technologies and continue to rely on them to support us through the ups and downs of the semiconductor industry.

Your next question comes from Steve Smigie - Raymond James.

Mohan when you put up on several nice quarters in the power management business how sustainable is that kind of growth, can you talk a little bit about a new platform that you might be having coming out in that area?

Yes, power management business is doing quite well. The strategy has been come out with what’s more new product platforms, try to balance the business from being historically more computing centric to little bit more diverse, and we are seeing good traction there. So I am pleased with the progress in the handheld space, I am pleased with the progress in the computer peripheral space I think consumer is doing quite well. So we have more and more platforms coming out and I think we will continue to see that as you watch the releases come out and we’ll see more and more products that are really differentiated power products for us I think we will continue to do quite well.

Great and then also in terms of overall communications and how you go to market, obviously, you had top sync product and some other comps products. How does that fit in with the selling of the new comps products, how does the sales force work together, can you talk a little bit about how that?

Yes, that’s one of the beauties of this deal really is that, it really strengthens our portfolio to the type of customers that we have been seeing quite good traction on with that timing synchronization platform. Also even the power and protection when we go into some of the major OEMs and we are protecting 10 gigabit Ethernet ports and providing the power solutions for some of these OEMs to be able to also provide 40 gig and 100 gig studies devices I think is a real win for us and then the other opportunity as we see it, as we start to talk with these OEM direct customers in terms of their strategies and where are the biggest integration opportunities I think the wireless plate for us, the very high end microwave wireless integration becomes a real key strategy for us.

Your next question comes from Douglas Freedman - Broadpoint Amtech.

Can you talk a little bit more about the customers that they are attracting now and also the potential customers they could gain once they become part of Semtech and perhaps more like a tier one supplier.

Well, SMI has actually done a very good job in the communications infrastructure space, they really have very good penetration of a lot of the leading players there and also the module providers into that space. I think that actually they are going to benefit Semtech from that standpoint, the penetration of those customers. I think where Semtech are going to bring more value to Sierra Monolithics is really on the broader wireless plate and also in the defense area. So, specifically the wireless area, we have a pretty good traction there with our tops and timing synchronization product for example and the ability to parlay some of the CRO technology into those customers I think is a good opportunity. Obviously I can’t mention any customers at this point.

Great and moving on to gross margin expansion opportunities I see that SMI is fabulous in using the SiGe process so should I assume there is like fairly limited manufacturing leverage there but these are going to remains of the tracks.

Well, they have similar operations to us and they are a fabulous company. I think the opportunity is to bring some of the know-how and knowledge of building complex analog high volume products to Sierra Monolithics and to try to minimize costs. From that standpoint there is opportunity I think but their gross margins are actually better than ours. So I think at this point in time, I would say that the margin profile is probably the right profile for us going forward.

Your next question comes from James Snyder - Goldman Sachs.

Mohan, maybe you could talk a little bit about what you are seeing in the industrial end market ex-military and aerospace section of that. Are you seeing that being strong again in Q4 and would you expect your distributors to again deplete inventory in the quarter?

So Jim the industrial is strengthening outside the military space is definitely getting stronger and we do expect it to increase in Q4 also. And then the other part of the question was?

Whether you expect to see to deplete inventory again in the quarter.

Yes, I think POS was strong in Q3, I think POS is going to continue to be quite strong in Q4. So, but the days are kind of in line it was 72 days I think days of inventory is about right. If POS continues to increase then obviously they will probably have to start replenishing.

Then maybe just a follow-up; just a detail on the OpEx for SMI. The $6 million of OpEx, would you expect that to - how does that split between SG&A and R&D and would you expect any efficiencies there?

Jim, this is Emeka, I think I’m not quite sure of the split between SG&A and R&D. But like I said before we do expect that obviously as we do the integration that there will be some efficiencies. However, SMI really offers us a lot of revenue opportunities and we would be looking to have some discretionary spending in areas that will allow us to pursue higher revenue. So, what we are looking at, at this point is that we are not really expecting that much cost synergies from this transaction.

Your next question comes from Craig Ellis - Caris & Company.

Mohan can you just provide some context how long have you guys known SMI or you are looking at other potential candidates in addition to SMI, fill out the picture a little bit for us.

Yes. For some time I think I have been talking about how Semtech has gradually being improving its execution organically and I was comfortable that as an organic engine we have been doing very well. Focused now on the scale side, how do we grow the business and try to expand SAM, and that was really kind of the beginning of the process probably about 12-18 months ago. We have set a very rigid very tough framework and you know has to be company that has unique competences and fast growing markets, extremely difficult products to develop, differentiate on process and analog design and packaging has to be a cultural fit, customer oriented, fast moving, value of the people assets, has to be able to fit our gross margin model and our operating margin model, has to be accretive on a non-GAAP basis fairly quickly, and on a GAAP basis within a reasonable timeframe 6 to 12 months, has to be able to strengthen our portfolio, location was important, and then really just end market balance bringing us a little bit more industrial consumer, sorry industrial and communication. So I have been talking to SMI all over a year. We knew that they had been looking at potentially going IPO but I think they got very comfortable with us as a partnership, obviously they had to look at other alternatives. But when we started to really talk about the opportunities I think they felt and we felt that it was a very good fit for both companies.

It seems like there is quite a few tail wind sequentially with gross margin at least a number on the mix side. So are there any headwinds given that the low end of the gross margin guidance is flat what could cause gross margins to be flat sequentially since mix should get better.

So, the conserve would have is although we expect mix to get better but you just never will know. You could see continued strength in the consumer business and maybe you even in the computing business. So, taking all of that into account obviously the gist of your question is that if the mix gets better as we would expect, our expectation is that we should come out at the higher end of the gross margin guidance.

Okay that’s clear and then one last detail. On the cash balance, how much of that now is in the US versus outside the US?

Towards the end of our Q3 probably 25% to 30% was in the US and the balance is obviously what we’ve reported is that after transaction we expect to have about $130 million left and my estimation will be at that 40% of that will probably in the US.

Your next question comes from David Wu - GC Research.

Can you tell us who the top competitors are in the market, and also I am little curious about once the accounting thing is over in terms of, when do you think we could get accretive contribution from SMI? And the last thing I have was I am little bit confused, because Mohan you talked about the mix of the end markets after the SMI would come in, I assume SMI is all in communications and the 27, 27, 13, 33 show that SMI is only in comp, in some other businesses maybe you could me on that?

Let me start with that David. So, SMI is both industrial and communications. So they have both communications products but also products that go into the military, we categorize those as industrial products. So the end market balance will be communications will be approximately 27%, industrial will be approximately 27% high-end consumable will be approximately 33% and computing will be approximately 13%. So, then on from a competition standpoint on the optical side, its mostly internal basics, Mostly, the OEMs who choose to have their own internal developments is really the competition. Some module manufacturers also have their own chipsets. So that’s mostly the competition in the 40 gig and 100 gig space. In the wireless RS space its Maxim and Hittite and in the microwave space I would says its Hittite.

And so David with your questions to when we expect to get our accretive, I think I can lay it out this way. On a non-GAAP basis we expect the deal to be accretive upon closing. If you exclude the cost of intangibles our expectation is that the deal should be accretive within three to six months. Now on a full GAAP basis the expectation is that it should be accretive within 6 to 12 months.

Full GAAP.

Full GAAP within 6 to 12 months

Okay, I was wondering whether there is other than not going public were there other competing bidders for SMI. It looks like the numbers ought to be pretty attractive from a financial standpoint and they seem to be serving hot growing markets. So I was curious whether there were other competing bids in this spot?

Yes, I’m sure they had `to weigh up the transaction with other versus Semtech. We know we want involved in a broad formal option, they did tell us that, but I have been in dialogue with SMI for quite some time and from the outset we kind of built a good understanding of where the opportunities were with each other and I think that was really important. But to answer your question I’m pretty sure they had to weigh up some opportunities without the company as part of the process that they would use, but we want part of a formal broader auction.

Okay, now I was curious because they are down in Orange County and around there, there is one big company with billions of dollars and they make a lot of acquisitions. I was curious how they - how did $180 million came about?

Essentially you know it’s we have bankers and they have bankers and bankers token, that’s how we came up with the value.

(Operator Instructions) Your next question comes from Harsh Kumar - Morgan Keegan.

Guys, can you just give us some idea about the tax rate for the out year particularly with the two companies combining.

During my prepared remarks I did indicate that on a non-GAAP basis we do expect the tax rate to be somewhere between 22% and 25% and on a GAAP basis we expect it to be somewhere between 18% and 21%.

Your next question comes from David Wu - GC Research

On the GAAP basis do you assume the R&D tax credit in the US continues or do you assume that it expires.

We assume that it continues and there is no reason to assume otherwise at this point. Obviously that is an issue that is taken up every year, but at this point we assume that it continues.

Okay and SMI would not change the tax rate for the company right?

I don’t think SMI would change that significantly. One of the benefits that SMI business is going to have from the integration with us too is that they will be able to enjoy the benefits of our tax planning and structure. So, it’s more just the mix of the Arabian yield might be a little bit more on the domestic side, but we don’t expect the Arabian is to really impact our tax rate that much.

You have no further questions at this time.

Let me summarize by saying that Q3 of FY10 was a very good quarter for Semtech. Revenues increased sequentially by 13% we were able to generate approximately 26% of revenues in free cash flow and increase that cash balance by $25 million to $316 million. Our end market balance and traction from our new product platforms in all end markets are enabling us to continue to outperform that peer group and maintain the very resilient profit and cash generation model we have. We are very excited with this Sierra Monolithics acquisition and strongly believe that the additional product breadth and technology capability that this acquisition brings will enable us to continue on our growth journey to $500 million and beyond. With that I would like to thank everyone for participating in our third quarter conference call and look forward to updating you all next quarter, thank you.

This concludes today’s conference call you may now disconnect.