Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Rajvindra Gill – Needham & Company.
Rajvindra Gill – Needham & Company
A question on the reduced guidance for September, when you preannounced positively back in May you were very confident of the $35 million guidance. I know Sylvia touched upon why the guidance is coming down but, if you could kind of elaborate what’s happening on the discreet FRC side? Why did the customers decide to use an internal solution as opposed to an external solution and what changed from mid May when you preannounced positively to now? If we could talk just a little also about how you see the discreet FRC business going forward over the next several quarters.
Sylvia D. Summers
You are asking several questions in one so I’m going to take some of them and Pete will take the rest. Regarding what happened in Korea, for the last two years in fact Micronas has been fighting against the equivalent solution which is internal. This time we basically taped out until we acquired the company, and it was the first time we could actually see the product, they were very confident that liked the two previous years they would be able to win. When we taped out we went to propose the solution to Samsung and it turned out that the solution from Micronas we just acquired was not a lot better than the Samsung one. So, that’s what happened.
There’s another phenomena going on which is until recently we really had inside this company three different branches of products: a low end; a mid range; and a high end. For the mid range and the high end they were using external FRC types of solutions. This is changing because only in the high end are they going to be using these so the whole mid range volume is actually moving towards integrated solutions that we are currently competing against which is the news de jour really. So, that’s what happened on this business.
You combine this with the fact also that on the current version of FRC that we’re shipping to these Korean customers, there has been a reduction of volume. This is what happened and we found this out actually recently.
Pete J. Mangan
I’d just add to it that the current product in place will be sold in the September and December quarter and we’ll begin to transition next calendar year.
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