Question-and-Answer Session
Operator
(Operator instructions)
Our first question comes from Simon Leopold.
Simon Leopold – Morgan, Keegan & Company Inc.
I have got a couple of pretty straightforward ones. First of all, you mentioned Verizon was greater than 10% this quarter, could you be a bit more specific on where they came in?
Tom Steipp
I think they actually came in at about 13% this quarter.
Simon Leopold – Morgan, Keegan & Company Inc.
You talked about the Cesium arrangement, I am wondering if you could tell us a little bit more about how that deal was structured in terms of how you get paid. Are they the customers, is it a sort of a licensed deal, shall we think of it in terms of per box business?
Tom Steipp
Yes, Simon, I think we have not yet finalized the pricing structure of the agreement. What we were really focused on during the last quarter was just completing the trials. I will just give you a summary there; we are in 10 home trials with their own employees. Initially, we are in a hundred unit trial in customer homes at this point in time, and if those all work well, we will kind of go to a thousand-unit trial. But in terms of the specifics of the licensing agreement that has not been nailed down yet, but you need to think of it on a per box basis.
Simon Leopold – Morgan, Keegan & Company Inc.
Give us some sense of how many boxes they typically ship, aside the opportunity?
Tom Steipp
I do not know what Sagem setup boxes are in terms of their shipments at this point in time. The service provider that we are working with in Western Europe is well known. It is unclear to us at this point in time, exactly how much of their installed base they might try to cover with this. A lot of it will just depend on how this next trial of 100 units works.
Simon Leopold – Morgan, Keegan & Company Inc.
Typically, how are long are your trials lasting, I am assuming, since it is an update, they are about three months or less?
Tom Steipp
I think, in the next quarter we will probably have a better view of what they are going to do next.
Simon Leopold – Morgan, Keegan & Company Inc.
And now just shifting gears, I think the bigger issue is your commentary on visibility and spending from your big customers, particularly Verizon, AT&T. I think within the release you talked about the budget setting cycle and I think both carriers have talked about trying to improve the linearity of their spending and AT&T specifically has talked about shifting from calendar year budgets to these 15-month sliding budgets and your comment sounds like you are not seeing that. Maybe if you could talk about how you envision your CAPEX trends and your confidence or visibility into the second half of our fiscal year?
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