And right now, we are not making any predictions with respect to long-term revenue growth for the year. Although, we have put in plans internally to bring that rest -- to bring the inventories down. So we have got our bills down consistent with that. We are bringing that down simply because of the needs of, it is everything to raise the money building product that you're not going sell for some time. And obviously, there is nothing really the advantageous from our cash standpoint, not from an inventory standpoint or from our gross margin standpoint, but we'll do that.

Doug Freedman - BPSG

Terrific! Can you talk a little bit about the sort of the way in which you think this cycle is going to play out? And how you believe that your revenues might recover to what you might believe your real demand is? If you can give us some idea how you are envisioning the next several quarters to unfold, any sort of color you can offer would be helpful?

Steve Laub

Well if I know that answer, I think I will become stock ticker. As I think no one anticipated the downturn quite likely to hit and everyone has their different estimate to what's going on. I will tell you our view here. But I don't want to get into specific numbers, because I think anybody is going to be looked, it's just too difficult at this point to anticipate that. Our expectation and not surprising I felt this was going to be true even back in sort of the November timeframe. Q1 would be a down quarter. It's seasonally a down quarter for us, as we anticipated it would be.

My sense for the industry obviously as its turning out, it's going to be down across the industry, which is also anticipated and a significant one as well. I also anticipate that it takes about three to six months for customers to adjust their inventories, consistent with their lower run-rates. And so I expect that for most customers, they will be pretty much adjusted to their own inventories by the end of this quarter. I do believe that the run-rates or consumption rates, excuse me, that the bill rates of our customers are exceeding their consumption rates, such that they are burning inventory right now. Even though we've been learning from our OEM customers that they actually have reduced inventory during Q4.

I think there is more reductions occurring right now and that will continue through this quarter. I do think we end Q1 with most of these cuts. We're therefore having reduced our inventories and adjust to simply build to their lower factory rates they will have to buy more in Q2, than they bought in Q1. So unless, of course this turns out to be a far most severe recession that anybody anticipated. So I expect Q2 to be a flat to up quarter for the industry and for Q3 and Q4 to be up more substantially than that. The magnitude of that recovery in Q3 and Q4 completely depends on what happens in the sort of worldwide economy situation. But I don't expect that the industry will be down in Q2. I said it'll be flat to slightly up.

Doug Freedman - BPSG

Terrific! And by the way, I feel to applaud you for being one of those few management teams willing to say what you are actually think might play out, whether it does or not.

Steve Laub

As always you don't hold it against me.

Doug Freedman - BPSG

Yeah. I definitely in this environment, we will not. Moving on to something that you can control, you moved in some of your distribution channel to a sellout model, but yet, you still have a fair amount of settling accounting in Asia. Any thoughts on moving to a global sellout, and when and if, and what are a sort of deciding factors there?

Steve Laub

With the preference to do that, but it will not happen in this year. We have to do that and number of our distributor's in Asia today don't have the type of systems in place that we can feel comfortable, Stephen and I that when they tell us that they have this POS number that we recognized revenue for. And we want to certify those financials, frankly. So, until that all those systems are in place we have that taking care of, we won't make any change. I don't think this is the year that it'll happen.

Doug Freedman - BPSG

And my last question and I’ll leave it there. Stock comp it's the last line on your income statement. Can you help us with trends going forward, it's been picking up lately and wanted to make sure that I'm calibrated to what's happening on that line?

Stephen Cumming

Yeah, that stock comp increase was largely due to the ground equity refreshment. That level is going to be pretty consistent going forward.

Doug Freedman - BPSG

Great! Thanks guys.

Steve Laub

Thank you.

Operator

Our next question is a follow-up from the line of Kevin Rottinghaus with Cleveland Research.

Kevin Rottinghaus - Cleveland Research

Thanks. I think you answered this already, but for controllers to be up in 2009, is that kind of consistent with the industry forecast you just gave as far as how the industry goes or is it not dependent upon 2Q kind of stabilizing and growing from there?

Stephen Cumming

So, I'm already being be held responsible for what I just said.

Kevin Rottinghaus - Cleveland Research

I don’t want…

Stephen Cumming

No, no. So our anticipation is a relatively, its going to be down year for the industry, is our expectation. So, I think the expectation must be pullout. However, even in that kind of environment depending unless the negative (inaudible) down, far below what people are anticipating today. We expect the micros to grow year-over-year.

So that's the best way I can put it. It does assume that at least it's stabilizing in future. But the micros we expect to outperform, as they have been and micros have been outperforming consistently for years and we expect that to continue.

Kevin Rottinghaus - Cleveland Research

Do you think that APAC will grow in 2009?

Steve Laub

We think it will, I mean all I will anticipate right now is I'm just telling the total microcontrollers are going to grow for us in 2009. Whether the industry, the segments is going to grow is too early to anticipate I would guess that.

Kevin Rottinghaus - Cleveland Research

Okay, are you in volumes with XMEGA now?

Steve Laub

We are shipping XMEGA now, but there is no significant volume for that. But there is a very substantial amount of design activity occurring on that, very, very substantial.

Kevin Rottinghaus - Cleveland Research

When should that start layer in, do you think?

Steve Laub