Question-and-Answer Session
Operator
Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Lauren Ye with JP Morgan. Please go ahead.
Lauren Ye - JP Morgan
Hi guys. I just wanted to kind of go through PCTEL and it’s integration that’s happened so far. Can you just walk me through what you have done in I guess the last couple of months with PCTEL and what also needs to be done going forward and I guess given your margin guidance, in the second half of the year, is your margin really growing from maybe some synergies or anything out of PCTEL integration or is it more a revenue lift?
William Smith
Okay. Let me start the answer and Andy can chime in, but where we are right now, what was formerly known as the PCTEL MSG Group is now part of Smith Micro’s connectivity and security group. I am very pleased that [inaudible] who ran the unit for PCTEL, is now Vice President and General Manager of the connectivity and security group. The connectivity and security group had a great year, it doubled its sales. So in recognition of that, Tom Mathews who ran the unit last year is now Senior Vice President of Corporate Strategy and Development and many of you on the street will see him from time to time at conferences etcetera.
Well, we are moving ahead nicely. PC’s job is not an easy one. We have staffed this part of the connectivity group in Aliso Viejo now in Chicago and also in Herndon outside the Washington DC area as well as over in Serbia, pulling together the team into our cohesive unit that’s highly motivated, they are incredibly successful, it’s a lot of work, we are working to eliminate duplications of efforts and redeploy the people that better serve our customers. We need all the people that we have, we probably need more right now. We have a lot of business. We have business that you know about and business we haven’t even announced yet. So this is a very active group, a very strong growth, look for continued growth in 2008.
Andy Schmidt
And just kind of following up with Will’s comments, as we said, the guidance that we are giving here is based on information we know at this time and so we are just assuming existing customers in the case of the PCTEL MSG Group; existing customers and products and expected growth in that area -- Will had pointed out many times as one of the key elements of that acquisition is the opportunity to cross-sell products into these new customers and also to leverage your technology to bring out new products. I get our guidance is taking a look at what we know today, so when we look at the back end, the lift in margins and specifically out margins in the back end of the year is primarily driven by release of products that we right now are doing the development work for, so right now we have got a tax of development expense without the revenues. Revenues come on the stream in the second half and those are contracts that are already awarded. So, once again it does not necessarily assume any new wins or the PCTEL or any of the opportunities that we do derive from the acquisition.
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