Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Brian Modoff - Deutsche Bank
Brian Modoff - Deutsche Bank
Looking at your operating number in terms of your operating income, your Q1 results and your Q2 guidance, are essentially in line with our numbers and your handset forecast for the year are slightly above our numbers, yet your back half operating income numbers are below our numbers and we’re at a $1.87 for EPS, what are you seeing in the back half that causes you to be more conservative, are you perhaps expecting not the snap back after the inventory work down, is it ASP trends, is it this deal you’re negotiating, what is it that gives you more caution on the back half of the year?
William Keitel
A couple of data points I would give I think would help you model into our estimates, our current guidance midpoint on the market of 565 million units, inherent in that projection right now we’ve got an ending inventory estimate of approximately 14 weeks at the end of the calendar year. If you recall back in November we had disclosed our estimate back then was 17 weeks so we are projecting at this time a slower ramp in channel inventory after we hit a low point later this year.
I would add that 38% replacement rate is within that guidance. We think we ended 2008 at about a 41% replacement rate. So we have brought down our replacement rate forecast for 2009 modestly in these new estimates to about 38%. I would add also, yes, in the second half of the year to your point, we have provided in our estimates an assumption of a new license extension, and then as well we always have a mix shift in chipsets between regions, between customers, at this point with the ramp we see forthcoming in China, our optimism for the developed world we are expecting a lighter mix of chipsets in the second half of the year as compared to the first half of the year.
I think those are the primary factors.
Operator
Your next question comes from the line of Glen Young – Citi
Glen Young – Citi
So basically if I were to think about MSM units, it sounds like you’re basically suggesting flattish progression from the 60 to 65 range, basically for the rest of the fiscal year?
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