Question-and-Answer Session
Operator
We will now begin the question and answer session. (Operator Instructions) Our first question comes from Michael Coady of B. Riley, your line is open.
Michael Coady – B. Riley & Co.
Could you talk about where the [inaudible] productions will come from in terms of line items?
Faraj Aalaei
I’ll comment and then Linda wants to add something. Obviously, divesting the DSL business means that several of those resources will go to the acquirer and so people is one area the investment in tape outs and the NRE expenses associated with the R&D in the DSL business is another. And then, of course, G&A and support organizations that can be scaled down to respond to the divestiture of the DSL business.
Michael Coady – B. Riley & Co.
And the gross margin pick up in the December quarter, had DSL been weighing on the gross margin? Would you anticipate that your long term gross margin guidance changed as a results as the transaction?
Faraj Aalaei
The gross margin guidance long term for the remaining business is low 50s.
Michael Coady – B. Riley & Co.
The Fujitsu lawsuit that’s been ongoing, does this transaction affect that?
Faraj Aalaei
Well, I’m happy to report that we have prevailed in that lawsuit and that’s no longer an issue for us.
Michael Coady – B. Riley & Co.
Previously you had provided an expectation of reaching a breakeven by a certain point in time that was a while back before the DSL really deteriorated further. Now that you have better visibility potentially because you’re down to VOIP and optical. Will you be willing to have an estimate of reaching breakeven?
Faraj Aalaei
I am not at this point going to give guidance for specific time frame for profitability or breakeven point for the new business. I think what is safe to say is that in 2007 to 2006 we had growth primarily coming from frankly, voice-over IP business because the optical are still very small. Looking forward to 2008 we think that we will have significant growth with the combined voice-over IP and optical business relative to 2007. The primary reasons and driver for that is of course growth in the voice business itself, we see that business growing nicely, but we see that the optical business will have basically hyper growth in 2008 relative to 2007. So, the outlook in 2008 looks very good, very nice growth for these two businesses combined.
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