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Q2 2009 Adaptec, Inc. Earnings Conference Call - Final.

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OPERATOR: Good day everyone and welcome to the Adaptec second quarter fiscal 2009 earnings conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Ms. Nicole Noutsios. Please go ahead.

NICOLE NOUTSIOS, IR, ADAPTEC, INC.: During today's call we will first hear from Sundi Sundaresh, our President and CEO, followed by Mary Dotz, Adaptec's Chief Financial Officer. After Mary's remarks we will host a brief question and answer session.

Some of the comments today will include forward-looking statements regarding future events and/or projections about the financial performance of the Company, based on our current expectations, including a projection of operating results for the third quarter of fiscal 2009.

These statements are subject to significant risks and uncertainties that can cause our actual results to differ materially from those expressed in these forward-looking statements.

We refer you to the Risk Factors section of the documents Adaptec has filed with the SEC, specifically in our most recent Form 10-Q, which contains important risk factors that could cause actual results to differ materially from expectations.

In addition, some of the financial measures that are included in this presentation are non-GAAP. For a reconciliation of GAAP to non-GAAP measures, please visit our website at www.Adaptec.com under the Investor Relations section.

With that, I would like to introduce Adaptec's President and CEO, Sundi.

SUNDI SUNDARESH, PRESIDENT, CEO, ADAPTEC, INC.: Good afternoon and thank you for joining us for our Q2 fiscal 2009 earnings call. During this call we will briefly provide a business overview, details on the newly acquired Aristos Logic, and update from our OEM and channel initiatives. Then I will turn the call over to Mary to outline the progress we had made to improve our fundamentals, and provide further information on Aristos Logic.

We continue to make progress on our revenue growth strategy, as well as maintaining a conservative expense structure. Our second quarter revenues were $31.7 million, which is above our guidance range.

Our gross margins dropped a bit from last quarter to 44% on a non-GAAP basis, but it is still a large improvement from 36% we reported in the prior year's second quarter.

As we take proactive measures to streamline our business, the expense reductions continue to flow to Adaptec's bottom line. I'm pleased that we are able to report positive net income once again this quarter.

Further, the Company continues to make progress on its growth initiatives. In the quarter we introduced Intelligent Power Management, and successfully completed Aristos Logic acquisition to further round out our product portfolio and provide a foundation for additional OEM opportunities.

To maintain our competitive advantage Adaptec must continue to innovate and create leading-edge products. In the past few quarters we have been very focused on delivering to a strong product roadmap. Last month we successfully launched Intelligent Power Management, the industry's first and only RAID controller-based power management solution for SATA and SAS storage.

Integrated into all of our Series 5 and Series 2 Unified Serial RAID controllers, it allows system OEM integrators and IT managers to easily configure storage systems to reduce power consumption by up to 70% without sacrificing performance.

In the quarter we also completed the acquisition of privately held Aristos Logic, a provider of industry-leading RAID solutions. Mary will discuss the financial implications of this...

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