Stephen Cumming

Yes, Steve. Yeah, so for Q4, our overall OpEx is $139 million but that did include a one-time charge for a bad debt provision of $11.7 million and a one-time legal settlement and cost of the $3.3 million. So, you back them out, we reduced our spending by about $4 million over Q3 and then going into Q1 we expect another step down as we have guided $114 million due largely to some of the actions that Steve mentioned earlier with regards to vacations, pension programs, and salary cuts, et cetera. Obviously we will see going into next year the full impact also our French restructuring and our US restructuring which already gives us the full impact at the beginning of the year.

Steve Eliscu - UBS

So, should we kind of think about that, having room to go down further, or are you suggesting there is something things taking it down and perhaps some other things that might bring it up later in the year.

Stephen Cumming

I think so, I think certainly for the additional measures that Steve mentioned we can see that prolonging into the rest of the first half and then there is other opportunity to pull it down, from additional operational activities into the second half.

Steve Laub

And thinking about it going a yard further there is additional steps the company could take along, similarly to what to we see other companies have done, clearly not the majority of other companies and we are very much paying attention to what's happening in the industry today. I think some companies that saw declines of 30%, for example, typically saw salary cuts for the entire workforce two weeks’ vacation or two weeks forced time off.

Those are the things, clearly, that we will be evaluating, and have evaluated, given that we have actually outperformed on a relative basis, the industry and we're generating quite possibly cash at this point, but we haven’t taken those steps which clearly are something that we are contemplating and could do based on what happens with general and street conditions.

Steve Eliscu - UBS

Some other questions? How are you seeing business so far in January? Or through since you have concluded January how have you seen it?

Steve Laub

Business so far, for the month of January; clearly an improvement from what we were experiencing in the latter half of November and through December; which is that we are back to environment. Now people are actually placing orders and taking product and actually expecting to take product in relatively short timeframes.

So, turns business has resumed and people placing orders has resumed. So that’s a very positive thing. We are not seeing the reschedules and push outs that we did experience in the latter half or the latter part of Q4 and so the overall tone of business has clearly improved, but it’s not I wouldn’t say it’s at the levels by any scratch what we’re experiencing in the first three quarters of the year, but clearly an improvement relatively to what we are experiencing in the latter half of Q4.

Steve Eliscu - UBS

One last question here on 32-bit AVR, what were your revenues in 2008 and what ballpark are you thinking about in 2009?

Steve Laub

So, we don’t breakout our 32-bit business between the ARM and AVR products from a competitive standpoint. We just feel it is better just not to do that. We can tell you that the AVR products grew from a percentage standpoint quite substantially. I’ll share that with you, they grew about 50% sequentially. So the business is going very rapidly in that respect, but it's smaller than ARM business is, it hasn’t been around as long really as the ARM business has. But overall they are both going very nicely for us.

Steve Eliscu - UBS

Thank you.

Operator

Our next question is from the line of Kevin Rottinghaus with Cleveland Research.

Kevin Rottinghaus - Cleveland Research

Can you hear me okay.

Steve Laub

Yeah. We can hear you, thanks, Kevin.

Kevin Rottinghaus - Cleveland Research

Okay. Great, thanks. Did you talk about where channel inventories are first half, I guess?

Steve Laub

So, from a channel inventory standpoint, what we experienced is in our OEM channel what we found is that a lot of OEM customers have taken their inventories down pretty substantially. And so in that regard one of the things that we firmly do believe and one thing that we confirmed in discussions with our sales people, who confirmed that with our customers. Is that they are actual taking your product certainly in Q4 relative to what their builds were, they were taking less than they are actually consuming, so they did bring down inventories generally across the OEM channel.

With respect to our distribution customers I know that in North America and Europe generally I believe the inventories came down a bit, the days of inventories actually probably went up but the actual absolute level of inventories came down. Asia; Stephen will just speak to that.

Stephen Cumming

Yes, Asia was roughly flat, again, days of inventory going up.

Kevin Rottinghaus - Cleveland Research

Okay. And then, the inventory in your books, could you talk about the mix of what it is at all, I mean, is it controllers, or, what products are you building at this point?

Steve Laub

I would say that, we don’t typically breakout too much of that detail, but from a standpoint of what we are building, I would say that the majority of our inventory build in Q4 was in controllers. That's based on the fact that from the standpoint of, you know, you think if you are building those things upon which you have the greatest growth potential as well as greatest growth expectations, which for us is the microcontroller business. And also, the microcontrollers, as they tend to have a very long shelf life, so that you can resell these products for a very extended period of time well after you have built them.

Kevin Rottinghaus - Cleveland Research

Okay, and what, could you tell us, what you have been, what you are, manufacturing in France currently, which product lines?

Steve Laub