Scott McGregor - President and CEO Henry Samueli - CTO and Co-founder Eric Brandt - CFO Peter Andrew - VP, Corporate Communications

Ross Seymore - Deutsche Bank Craig Ellis - Citi Investment Allen Mishan - CIBC World Markets Srini Pajjuri - Merrill Lynch Uche Orji - UBS Quinn Bolton - Needham& Company Sumit Dhanda - Banc of America Securities Seogju Lee - Goldman Sachs Shawn Webster - J.P. Morgan Tim Luke - Lehman Brothers Adam Benjamin -Jefferies & Company Shaw Wu - American Technology Daniel Berenbaum - Carris and Company John Dryden - Charter Equity David Wu - Global Crown Capital

Welcome to the Broadcom Third Quarter Fiscal Year 2007 EarningsCall. During the presentation, all participants will be on a listen-only mode.Afterwards, we will conduct a question-and-answer session. As a reminder, thisconference is being recorded Tuesday, October 23, 2007. Your speakers for today are Scott McGregor, Broadcom’sPresident and Chief Executive Officer; Henry Samueli, Broadcom’s ChiefTechnical Officer and Co Founder; Eric Brandt, Broadcom’s Chief FinancialOfficer; and Peter Andrew, Vice President of Corporate Communications. I would now like to turn the conference over to Mr. Andrew.Mr. Andrew, please go ahead.

Thank you, Jackie. During this call, we will be discussingsome factors that are likely to influence our business going forward. Theseforward-looking statements include guidance we will provide on future revenue,gross margin and operating expense targets for the fourth quarter of 2007, andany other future periods and statements about prospects for our variousbusinesses and the development status and planned availability of new products. It should be clearly understood, that our actual performanceand financial results may differ substantially from the forward-lookingstatements we make today. Specific factors that may affect our business andfuture results are discussed in the risk factors section of our Annual Reporton Form 10-K for 2006 and subsequent SEC filings. A partial list of these important risk factors is set forthat the end of today's earnings press release. As always, we undertake no obligation to revise or updatepublicly any forward-looking statement for any reason. Throughout this call, wewill be discussing certain non-GAAP financial measures. Today's earningsrelease and the current report on Form 8-K filed today, describe the differencesbetween our non-GAAP and GAAP reporting and present a reconciliation betweenthe two periods reported in this release. Please see the investor's section of our website forreconciliations going back to the beginning of 2005, as well as for additionalfinancial and statistical information, including the information disclosed inaccordance with SEC Regulation G. Before we proceed, I'd like to remind everyone about ourupcoming 2007 Analyst Day on November 8th in San Francisco. If anyone needs any information,please give me a call after our earnings call this evening. With that, let me turn the call over to Scott.

Thank you, Peter and good afternoon to everyone. I ampleased to announce that Broadcom has achieved record revenue, with anotherquarter of strong cash-flow from operations. Revenue in the third quarter camein a bit stronger than expected, driven mainly by sales of our Bluetooth andWireless LAN solutions, as this a seasonally strong time of the year for thoselines of business. Broadcom is a product cycle-driven company. We arebenefiting from new customers product ramp, platform expansion within ourexisting customer base, and new technologies such as 802.11n and a combinedBluetooth and FM chip. In the Enterprise Networking and broadband markets, Broadcomhas already proven its ability to integrate an increasing number of featuresand functions onto a single piece of silicon, so much so, that many switches,set-top boxes, broadband modems and more recently digital TVs are now coveredby converged single-chip solutions. In Wireless end-markets such as Bluetooth Wireless LAN andCellular, we're now entering a second phase of conversion, moving beyondintegrating more features and functions, towards integrating multiple forms ofcommunication onto a single chip. The convergence of communication, to be clearwhat we are talking about here, is not simply the ability to integrate puredigital radios with basebands and processors, as part of what we call the firstphase of conversions. The second phase of conversion is the ability to integrateother communication solutions, such as Bluetooth, Wireless LAN, FM receive andtransmit, GPS, etcetera, onto the same chip, with the primary baseband itsradio and associated processors. As we integrate more and more of these capabilities onto asingle piece of silicon, we believe that will enable our customers to createmarket-leading, cutting-edge products. We plan to invest aggressively throughout2008 to accelerate the second phase of conversion, while at the same time we'llcontinue our R&D investments to enter and gain share in the larger andgrowing cellular handset market. Last quarter, Broadcom and our customers made a number ofannouncements, highlighting the progress we have been making in both productsand design wins. I'll talk more about these in a few minutes, but first I'llturn the call over to Eric talk about the quarter from a financial prospectiveand provide our guidance for Q4.

Thanks Scott. We are pleased with our Q3 results. Tosummarize as follows, revenue of $950 million was up $52 million or roughly 6%from Q2 2007, and with $10 million above the range provided on our lastearnings call. Non-GAAP gross margin of 52.1% was down 30 basis points from lastquarter, consistent with our guidance. Total non-GAAP operating expenseincreased by $20 million over Q2. This was above the range provided by roughly$10 million, which I will detail in a moment. Non-GAAP earnings per share were$0.27, which was flat, with Q2 driven by the decrease in gross margin andgrowth in R&D and operating expenses, which offset the benefits ofincreased revenues. Cash flow from operations was a strong $212 million. Ourcash and marketable securities on hand remained roughly flat for the quarter at$2.43 billion, driven primarily by $171 million in share repurchases settled inthe quarter and the closing of our Global Locate acquisition which offset thestrong operating cash flow. Inventory for the quarterincreased by roughly $22 million to $213 million, which equated to 8.5 times ona non-GAAP basis. This continues to demonstrate the excellent work of ouroperations team and what they have done to change; to address changing supplyin an ever changing environment. The terms level of 8.5 times remains above ourlong-term goal of seven to eight turns. In our July call, we said that weexpected Q3 revenue would be approximately $915 million to $940 million. Wesaid we expected growth in our broadband and mobile and wireless groups withEnterprise Networking slightly down. We anticipated this to be driven by stronggrowth in Digital TV due to the ramp of our new 65 nanometer 10 ADP products,as well as Bluetooth and wireless LAN with their second half of the year ramps. In addition we expected modestgrowth in the Broadband modems controller and optical areas. What occurred wasgrowth across all three of our lines of business, which in total exceed ourrange by about $10 million. With respect to our Broadbandcommunication markets, as we projected, Digital TV roughly doubled with growthalso coming in the Broadband modem area. This was partially offset by a declinein the set-top box area, due a normal weaker back half of the year. In the mobile and wirelessbusinesses we benefited from strong growth driven by new product and customerramps in Bluetooth and strengthen all wireless LAN segments offset by a declinein mobile multimedia business due to our product transition. Finally, as you may have noticed,an increase in deferred revenue on the balance sheet which comes as a result ofour Global Locate acquisition. Global Locate's legacy contracts included aservice component with the chip sale related to its worldwide GPS referencenetwork. As a result, we need to recognize that revenue radically over theestimated life. We are currently working on splitting this service from thechip such that we may recognize the chip revenue in the period shift which asyou know is our ordinary practice. Contrary to what we expected, ourEnterprise Networking business did grow modestly, driven mainly by our timingissue in the controller segment caused by customer pull-ins due to deliverydelays that at a particular competitor for designs won in the last cycle. Thesequential decline in our switching business due to customer pull-ins in Q2,which we mentioned on our July call, was also not as great as we expected. Revenue distribution for Q3 wasas follows. Broadband communications accounted for approximately 38% in totalrevenue. Mobileand wireless were 32% and Enterprise Networking 30%. With respect to grossmargins as we forecasted in July, our gross margin declined slightly to 52.1%driven by product mix and the ramp of a number of new customers and products. Irecall that our product gross margins tend to be lower for new products whichhave not yet moved down the cost curve. Moving to operating expenses,non-GAAP operating expenses were up $20 million from our Q2 levels or aboutdouble the increase we projected in July. Roughly half of the additional $10million increase was due to dollar based R&D cost associated withopportunistic purchases of EDA tools and dedicated radicals prepared forproductions of 65 nanometer products. And the other half, just higher thananticipated litigation cost during the quarter. As a result, R&D as apercentage of sales on a non-GAAP basis, grew slightly to 27%. We continue tooperate above our long-term targeted R&D range of 20% to 22% as apercentage of sales, as we invest aggressively to deliver on recent design winsin our emerging businesses as well as to pursue additional opportunities. Thisincreased R&D percentage will continue until these design wins convert intorevenue, especially in the cellular market. Roughly half of our tape-outs in Q3were in 65 nanometer, where the number of additional tape-outs occurring justafter the quarter end. Looking to Q4, we expect thatapproximately 75% of our tape-outs will be in 65 nanometer or smaller processgeometries. Recent product and customer announcements reinforced our view that65 nanometer continues to give us a definite competitive advantage in thedesign win process in terms of offering lower power requirements and theability to integrate features and functionality into our designs that many ofour competitors either can’t integrate or will be much later in implementing.In addition, the expanded use of multi product wafers, and other efficiencieshave continued to allow us to accelerate prototyping to customers. We increased total company headcount from Q2 by 287 peopleto a worldwide total of 6,114 employees. This includes over 4,500 employees inengineering, where 74% of our total headcounts included nearly 500 Ph.Ds. Moving to the balance sheet. As I mentioned, total cash andmarketable securities were roughly flat at $2.43 billion, driven principally bythe share repurchase program approved in February of this year, as well as theclosing of the Global Locate acquisition. We generated strong positive cashflow from operations of $212 million. We also had some benefit from proceeds from employee stockoption exercise of approximately $65 million net. This was more than offsetprincipally by the repurchases of our common stock, capital expenditures whichmoderated somewhat in the quarter, and the acquisition of Global Locate in thequarter. Inventoriesincreased in Q3 by approximately $22 million to $213 million. Non-GAAPinventory turns remained strong at 8.5 times in Q3. The percentage of our salesmade through distributors remained low at 16%. In addition, we continue toprovide more products through hubbing arrangements with our customers. As areminder, we recognized revenue through distributors and hubs on a sales-outbasis. Our accounts receivable day sales outstanding decreased slightly from 39days to 38 days with good linearity. As I mentioned previously, we continued our share repurchaseprogram under which we can purchase up to $1 billion of our Class A commonstock over an 18 months period that commenced in February of 2007. During thequarter, the company repurchased $4.9 million shares at a cost of $163.9million. We currently have $182 million remaining in this program. The objectives of the program are to manage our net sharedilution, to return capital to shareholders. While our first priority willalways be to invest in our business, we believe that given our strong operatingcash flow, and the pace of our investments in future business and emergingareas, this is currently an excellent use of our cash. Moving to expectations. We currently expect continuedsequential growth in Q4 and that products revenue will be in the range of $960million to $990 million, which at this point does not include any revenueassociated with the patent license signed with Verizon in July. The reason itis not included, is because we have not yet received the counts of forms forwhich a $6 royalty would be payable during the quarter. In looking at what we expect to happen in Q4 in broadbandcommunications, we expect to see some growth across virtually all lines of ourbusiness. In Mobileand Wireless, we anticipate continued growth with all businesses likely to beup, and the strongest growth coming from Bluetooth. The Enterprise Networking Group will be down slightly ascompared to Q3, partially driven by a relatively flat quarter-on-quarterperformance across the portfolio, and a normalization of the current quartersupside in the controller products. For non-GAAP gross margin, excluding the margin impact fromthe Verizon license in Q4, we expect to see an additional decline in grossmargin, slightly greater than what was experienced in Q3, as we continue toramp a number of new products to new and existing customers in the quarter.Just to repeat, typically our new products have lower gross margins as we focusdesigns initially for quick time to market. For non-GAAP operating expenses in Q4, we expect to continueinvestments in products and the migration of 65 nanometer, including morededicated production-oriented math, both of which we believe are critical toour revenue growth and gross margin in 2008 and later years. As a result, weexpect the no-GAAP operating expenses on an absolute dollar basis to increaseslightly less than Q3 in the $15 million to $20 million range. Cash flow from operations for Q4 is expected to remainstrong. Also, we anticipate we will continue to repurchase shares in Q4. Asnoted early, we have approximately $182 million remaining on our currentbuyback program. And now I would like to turn the call back over to Scott totalk about the state of the business.

Thanks Eric. I'll now provide some more details on ourbusiness, starting with Enterprise Networking. Revenue from our EnterpriseNetworking business came in a bit better than we expected in Q3, driven mainlyby better than expected sales of gigabit Ethernet Controllers and a smallerdecline in switching revenue than we had originally expected. Our gigabit Ethernet Controller business was stronger thananticipated, due to an overall strength in the PC market. Also on our lastearnings call, we predicted some loss in market share and controllers, but thishas happened more slowly than we have forecasted. The service base where wecontinue to hold an excellent market position remained relatively strong in Q3. We do believe that we hit a peak in this business in Q3, andexpect our gigabit Ethernet Controller business to be down in Q4, as our marketshare shifts and as the market comes to terms with some double orderingreportedly occurring in the PCs space. Moving on to switching; our revenue generated from switchproducts was down in Q3 as we talked about the last quarter. But the declinewas a bit less than we expected, due to a relatively robust end-market in theservice provider, enterprise and SMP segment. Ethernet continues to reachdeeper into the metro or Carrier Ethernet market, and we are finding additionalopportunities to bundle more of our silicon together in our customer's productssuch as [Video Cell 2] which I'll touch upon later. During the quarter Linley Group published a report notingthat Broadcom's market share in the merchant silicon space for gigabit Ethernetreach the 70% level. To stride this leadership position with EnterpriseNetworking market, we began sampling our new highly-integrated line of 65nanometer StrataXGS gigabit Ethernet switches, which were used in Enterprise networksenabling more intelligence at a lower cost and power dissipation. Moving to our broadband business,broadband sales were up nicely in Q3, driven by growth in the digital TV,broadband modem and next generation high definition DVD player lines ofbusiness. As we expected, digital TV sales almost doubled from Q2 to Q3, drivenby growth in our new 65 nanometer highly integrated 10 ADP products. Nocompetitor has matched the levels of integration that we are bringing into thismarket, specifically our ability to integrate more of the front-end such asHDMI Channel B modulators today and in the future tuners, cable modems and ABCtechnology. As we look into 2008, we plan tobroaden our product line by developing products with additional pictureenhancement features and to expand our business with additional Tier 1customers. Broadband modems were strong inthe third quarter driven mainly by a rebound in our sales of voice enabledcable modems after a weak Q2 associated with customer inventory rebalancing. Wehad a very successful quarter with design wins for our VDSL2 solutions at bothEricsson and ZyXEL. While VDSL2 is still early in its deployment, we view thismarket evolution very positively as the increased bandwidth enabled by thesenetworks is essential to telecommunications operators to broadly deploy IPTVservices to compete with cable and direct broadcast satellite television. As we look into the fourthquarter we expect to continue to experience strong growth in our broadbandmodems business. Set-top boxes were a bit weaker due to the downturn wenormally experienced in the second half of the year as Eric mentioned. Withinthe set-top box space during the third quarter we announced our next generation65 nanometer SoC solution for cable satellite and IP set-top boxes. Thissolution built upon Broadcom's widely deployed family of ABC and BC1 highdefinition solutions, and supports the latest in interactive features in a widerange of compression standards and offers support for a variety of digitalrights management solutions. The chip incorporates features tospecifically address the needs of the IP set-top box market. A long history ofshipping products that address the cable and satellite set-top box markets,along with our ability to lead the second wave of communications convergencewith such functions as MoCA, wireless LAN, Bluetooth and other capabilitieswithin the set-top box, places Broadcom in a very strong position to addressthe IPTV market opportunity going forward. During the third quarter, we alsobegan sampling a complete digital TV set-top box solution, targeted at theNational Telecommunications and Information Administration, NTIA,digital-to-analog converter box program. This program is part of an FCCinitiative that will assist your household in making an affordable transitionfrom existing analog-to-digital terrestrial broadcasting, while preserving thelarge installed base of analog TVs. Next generation DVD playersexperienced good growth, driven mainly by demand for high definition DVDplayback for laptop PCs. In addition, both LG and Samsung are now shippinguniversal players, based on our solution that remove the confusion about whichtechnology HD-DVD or Blu-ray is better, as they support both disc formats. Aswe look into Q4, we anticipate that growth in the broadband segment will bemainly driven by broadband modems, and to a lesser extent set-top boxes. Moving to mobile and wireless. InQ3 our mobile and wireless revenue was up sharply as we benefited fromseasonality, along with new customer ramps; expansion within existing customerplatforms; and new product and technology ramps. The revenue growth in Q3 wasdriven primarily by our Bluetooth and wireless LAN lines of business. Before I touch on these areas, Iwant to talk about the recent developments in the cellular baseband area. Onthe cellular baseband front, our baseband revenue was still small, but grew inthe quarter. There were two important milestones for this business in the thirdquarter. First, there is now clear evidence of the customer traction Broadcomhas been experiencing within the EDGE G3 markets. While it will take some timebefore this design wins turn into material revenue, we can point to clearcustomer progress in the cellular baseband space we are two of the largestcellular handset makers. Nokia announced that it will beusing our 65 nanometer single-chip baseband processor along with our powermanagement unit in future EDGE phones. Our single-chip EDGE baseband integratesan RF transceiver or analog and digital baseband functions and multimedia. Thisis important, not only because Nokia is the world's largest provider of cellphones, but also because according to the market research firm iSupply, theEDGE segment of the mobile phone market is projected to grow from 245 millionunits this year to over 408 million units in 2009. Also Samsung announced it hasexpanded it's deployment of 3G cell phones, incorporating Broadcom's 3Gbaseband, power management, Bluetooth, 3G protocol stack software, and M-streamtechnology. This is important as it highlights how Broadcom has been able totake a 3G baseband only solution and expand it to include more Broadcomproducts, including our software and protocol stack, and partner successfullywith Samsung. Secondly, Q3 was an importantquarter because we announced a number of revolutionary new products withintegrated features and functions, that no one in the industry has announcedto-date, and that some simply aren’t able to do because they do not posses allof the necessary technologies to build such a product. We announced a true 3G phone on achip code named Zeus, which is the single-chip HSUPA mixed signal processorwith voltage CMOS RF, rich multimedia, Bluetooth, FM radio and transmit, andmore, all on one 165 nanometer dot. We are proud of our team for pulling off this amazingachievement. No one in the world has announced a product with this level ofintegration and this announcement highlights why we believe we have anopportunity to be a significant participant in the cellular handset market. Webelieve that handsets incorporating our Zeus chip will be available in the midto late 2009 timeframe. We also announced the new Multimedia Processor that enablesHD video camcorder and playback, 12 megapixel camera and 3D gaming, all in onechip. And at low power suitable for cell phones and other portable devices, webelieve this is a great product for the cellular handset and portable mediacustomers. It offers the following features: first of all it has fivehours of high-definition video playback or 3 hours of HD recording using astandard cell phone battery. It has support for a 12 megapixel camera withon-chip image signal processing capable of on-the-fly photography of up to 12pictures per second, and 3D gaming, capable of 32 million triangles per second,which is higher than PlayStation 2 class gaming performance. These are very important customer and product announcements,but due to the long design cycle of getting a chip in the multiple phone modelsand then getting the phones into mass production, we don't envision anysubstantial revenue contribution from our cellular baseband efforts in 2008. Wedo expect potentially to double the size of our cellular baseband revenue in2008, but that’s also a relatively small base, and most of the growth will bebackend loaded. Our goals in cellular baseband solution have not changed. Weare expecting 10% to 15% unit market share by the time we exit 2009. 2007 hasbeen the year of design wins, and you have seen some of those recently. 2008 isthe year to get the products of phones done, and 2009 is the year to grow shareand generate significant revenue. Moving onto our Mobile Multimedia line of business; revenuewas down sharply as sales of an older solution in the MP3 space ended, and thisfall-off more than offset growth in the sales of our new products for portablephones and MP3 players. In the GPS market, we closed the acquisition of GlobalLocate in July and then quickly rolled out our next generation Single-Chip GPSSolution for mobile application called Barracuda. GPS is a technology that we look to integrate with otherBroadcom technologies such as Bluetooth, wireless LAN, and our cellularprocessors to help drive the adoption of this technology faster in to personalnavigation device in cellular phone applications. Our GPS shipments grew nicely in Q3. Wireless LAN had a verystrong quarter, up over 20% sequentially as we experienced growth in allsegments: client, retail and embedded and in both protocols g and n. Thestrongest growth in the wireless business was on the client side, but we hadexcellent growth in both g and n client applications, especially in N, whereour revenue nearly doubled on a sequential basis. We clearly gained share inthe client segment. During the quarter, we pushed the integration envelop in the802.11n space as we introduced a 65 nanometer true single-chip solution to notonly lower the cost for existing client and gateway applications, but to alsoenable the solution to go into other consumer electronic products that havenever included wireless LAN functionality before, such as TVs, set-top boxes andcamcorders. Also during the quarter, we made excellent progress insecuring customers design wins for 2008 in the cellular and MP3 phases with ourtriple play products. This ultra low powered device combines 802.11a and g,Bluetooth and FM together on a single 65 nanometer die. We are seeing strong interest from our customer base inthese and other forth coming Converged Communication Solution. Finally theHomeRun line of business in the quarter was Bluetooth. Revenue was up stronglyin the quarter at all segments of this line of business. Mobile, PC, audio and embedded experiencedgrowth. The strongest growth was in the mobile and PC areas, wherenew rams were combined with additional expansion within our existing customerbase. Our Bluetooth plus FM single-chip solution for cell phones more thandoubled in the quarter, and our Bluetooth solutions for the PC market grew bynearly 50% as the penetration rate of Bluetooth and the PCs space grew and wegained market share within this segment. While early in it's evolution, we did begin shipping ourMono Bluetooth headset solutions to Tier 2 vendors, and we expect to ship tothe Tier 1 vendors in the first half of 2008. We look to garner significantmarket share in the Mono headset space in 2008. So, in total, it was a verystrong quarter for Bluetooth, and we expect continued strong growth in Q4 inall segments. On the litigation front we had another good quarter in termsof stopping QUALCOMM's pervasive infringement of our intellectual property. Onthe positive side, Number one, European Commission decided to continue it'sinvestigation regarding QUALCOMM's licensing and competitive practices. Number two, the Third Circuit Court of Appeals reversed thelower court's dismissal of the FederalAntitrust claims Broadcom brought against QUALCOMM. Our claims ofmonopolization and attempted monopolization are moving forward once again inthe district court. And number three, in early August, the San Diego Federalcourt ruled that QUALCOMM engaged in aggravated litigation misconduct and standardsabuse for two QUALCOMM patents that relate to digital video technology. With respect to standards abuse, the court discovered"Carefully orchestrated plan and the deadly determination of QUALCOMM toachieve its goal of holding hostage the entire industry." The court ruledthat QUALCOMM thereby waived its right to enforce all claims related to the twoBroadcom patents in question. The court also ordered QUALCOMM to pay Broadcom'sattorney's fees in the litigation. With respect to the aggravated litigation misconduct, QUALCOMMand its outside counsel are currently waiting a decision regarding sanctionsfor their misconduct. On the negative side, after the Bush administrationdecided to uphold the ITC Patent Remedy, a U.S. Court of Appeals granted a stayof the ITC's exclusion order, pending appeal by third parties to cellularphones containing QUALCOMM's infringing chips were subject to exclusion. The Appeals Court made no findings questioning the validity ofthe patent or it's infringement by QUALCOMM. Importantly, the appeals courtruling does not affect the ITCs Cease and Desist Order against QUALCOMM, or itsorder barring QUALCOMM from bringing infringing chips into the United States. Finally, as we've stated numerous times in the past, westand ready to negotiate with QUALCOMM or any other market participants thatseek a reasonable solution. We have made fair and reasonable settlement ofproposals to QUALCOMM, which we hope it will consider and embrace. In all this litigation, our goals remain simple. Number one,to gain proper recognition of the value of Broadcom’s significant intellectualproperty, specially in the wireless space. And number two, to achieve a levelfor competitive playing field in the cellular chip market. To date, QUALCOMM’s beenfound to infringe four of our patents in two different forms. We haveadditional patents, antitrust and unfair competition claims that have not yetbeen addressed to trial. By comparison, QUALCOMM has either lost or dropped allclaims against Broadcom. Unfortunately, however our settlement discussions withQUALCOMM have not yet borne fruit, as QUALCOMM appears to have bet its futureand its end customers upcoming product launches on the patents appeal process. Some near-term events to keep an eye on includes thefollowing. Number one, the Santa Anacase, where we have requested an injunction against QUALCOMM’s infringingproduct support, and new product development activities, among other things.And number two, a ruling on QUALCOMM’s misconduct in San Diego. We remain hopeful that these litigation matters will come toa positive resolution, and we see our agreement with Verizon Wireless,announced in the third quarter, as an important forward step in achieving thatgoal. So, in closing, Q3 was a good quarter, where new productcycles enabled Broadcom to once again reach record revenue levels, and generatestrong cash flow from operations. As Eric mentioned, we are looking forcontinued revenue growth in Q4. We are going to continue to invest aggressivelyin 2008, to keep this momentum going. We are now ready to take your questions. Jackie, may we havethe first question, please?

Sure, thank you. We will nowbegin the question-and-answer session. (Operator Instruction). Our firstquestion comes from Ross Seymore from company, Deutsche Bank. Please go ahead. Ross Seymore - Deutsche Bank: Thanks guys, that’s DeutscheBank. Eric, a question on the Verizon royalties. Give us a little idea when weshould expect those to come in?

We should hear from Verizon atthe end this month on the number of phones that earn the $6 royalty. And thenonce we have a picture of that, then hopefully we can provide you an update onAnalyst Day. Those royalties we will book once we know how much they are and wecollect the money. So that would occur in the middle of this quarter and wouldbe booked in this quarter. Ross Seymore - Deutsche Bank: If we think about it goingforward, is it more like a two quarter arrears that you have to wait or is itsomething that will little bit more timely as we go forward?

It's a one quarter arrears. Sobasically what it is, is that we signed the contract in the third quarter, sowe started collecting royalties about half way through the third quarter. Andthen they have 30 days provide us a tally sheet on the number of phones thathave earned the royalty. So that rolls into the following quarters, so it'sliterally as one quarter in arrears. Ross Seymore - Deutsche Bank: Okay. Then a bigger picturequestion for Scott. From your end customer perspective, are you seeing any ofthe gyrations you thought that you saw before from the customers being weakwhether that be their own issues or end market weakness? And on that secondpoint on end market weakness, any commentary you would like to give on eitherinventory of your parts in the channel or demand creating inventory of yourcustomer's final parts in the channel?

Well a few comments in thatregard when you talk about gyration from our customers I am not exactly surewhat you mean there. I mean we are seeing some macro economic challenges Ithink between housing and other things and it makes us all nervous for theoverall economy which obviously affects our business. On the other hand we are seeingvery-very strong design win traction right now, which I think is very positive,so I am feeling really good about that. I don't see any particular inventoryissues that I am concerned about I don't think they are always some placeswhere there is a little too much or not enough and there are always somecustomers who are expediting and some customers who maybe have a little morethan they need, but I say its fairly normal from our perspective from aninventory situation out there right now. Ross Seymore - Deutsche Bank: And then the final question, withthat macro environment happening are you getting the sense that your customersare incrementally bringing their orders on you down from where they were beforeor are they remaining unchanged arriving?

We are not seeing any significanttrend either direction there again we have some customers who order late and soare expediting and have seen pick ups in there their demand and then they areyou always get a mix and there is always some order and some push up, but Idon't see a trend there I think what you are trying to get at is do we see apush out trend and I don't see that right now. Ross Seymore - Deutsche Bank: Great thank you.

Our next question comes fromCraig Ellis from Citi Investment please go ahead. Craig Ellis - Citi Investment: Thanks guys. First clarificationon the operating expense guidance, I would have thought it wouldn't have beenup so much given the absence of what I would expect to be a one time impact onthe EDA tools in the third quarter can you just provide a little bit more coloron what's happening in the fourth quarter with OpEx Eric?

Yeah sure, it's principally theconversion from multi products wafers to dedicated wafers for productionpreparation which is driving the MOSFET costs up. Typically what happens is asyou know we have targets in terms of trying to get to the end of the year andwe have lot of people who would like to get their products taped-out betweennow and the end of the year, so that happen always, no, but I think its prudentof us to assume that that's the plan and that's what we are doing. That'sprincipally the driver of the increase as we move for multi-product wafers tomore dedicated radicals for production preparation. Craig Ellis - Citi Investment: Okay. So it's staffing relatedand more just related to product?

There is headcount in there aswell but there is a lot of MOSFET costs that's sort of driving that. Craig Ellis - Citi Investment: Okay. Fair enough. And thensecondly on the gross margins a little bit more of a step down sequentially as65 nanometer increases. How should we think about the trend that's developingthere. Is that going to somewhat stabilize after we get to the fourth quarteror is that something that could increase sequentially as we think about early2008?

Interesting if you look at thebusiness, as the business is grown faster, when you are seeing the greatestpressure on the gross margins. So, what typically happens is as we are growingfast we've new products and new customers as we price for time to market andthe gross margin inspite of in the space that's when we think the latestpressure in gross margin. So, my expectation would be that we are seeing somedrop as we continue to grow and sort of move to newer products which are littletighter and we price really for time to market or sort of design for time tomarket. And I think as we roll into 2008 which you will probably see somethinga little bit more in the middle band of our range and above our range for grossmargins. So, more in the middle band above 50 to 52 I suppose to above the 52. Craig Ellis - Citi Investment: Okay, that's helpful. And thenlastly for you Scott, it's always helpful to get perspective on expected growthdrivers I am wondering if you can take a longer term view and just talk aboutwhat you think the key growth drivers will be for '08?

We have a lot of growth driversacross our business and I think last year in the Analyst Conference we showed Ithink 15 different growth drivers and those are still in place. If I had tohandicap the various businesses I would guess the top three growth drivers interms of dollar content for 2008 would probably be Bluetooth, wireless LAN anddigital television. I would say those three are looking really strong. We'vebeen surprised in the past where others will come out of the blue and performreally strongly and that's the way it's possible. But based on our projectionsI'd say those three are very likely to be certainly our top growth driversgoing forward. Craig Ellis - Citi Investment: Okay and then just as a follow-upthere any thought on what a reasonable market share expectation is exceedingnext year on the baseband side.

It's going to still be fairlysmall single digit probably, well I won't speculate further than that. It willdepend how quickly some of our customers can deploy. There's a little bit ofuncertainty in terms of how fast they get the models to market, which modelsare popular ones in terms of the style and so forth and which operators. Sothat makes a little hard to predict there and we are taking a bit of aconservative view. But I think 2009 is where we are really focused on drivingthe market share. Craig Ellis - Citi Investment: Okay. Thanks.

I wanted to follow-up back alittle bit on the 65 nanometer in terms of cost. It's certainly a cost. It'slike almost $1 million when you do a 65 nanometer MOSFET. But that's generallya very positive event for us because it entails a new competitive productcoming to market and when we see some of the most competitive products we haveout there these 65 nanometer products we have where our competitors haven’t yetmoved into 65 nanometers those are looking really strong and we are seeing verystrong customer demand for that. So, yeah it's always bad whenever you spend $1million to do a MOSFET but I would view that as a leading indicator for ourfuture business because it generally means we are reaching a higher level ofcompetitiveness when we get those products out. Craig Ellis - Citi Investment: Okay. Thanks again.

Our next question comes fromAllen Mishan from CIBC World Markets. Please go ahead. Allen Mishan - CIBC World Markets: Hi. You mentioned in your talkabout the enterprise business that you had heard about, or had seen somepotential double ordering in the PC area. Do you worry about the wireless LANand Bluetooth businesses, that they perhaps, grew too fast and may see acorrection in the PC area in Q4?

You know that’s always possibleand when I hear an anecdotal evidence of some double ordering, I put back froma number of other industry players and also we’ve seen the sale of PC productsaccelerate fairly rapidly. I do believe there is probably some inventorybuildup going on in the PC channels based on those kinds of data. We, first ofall, watch that pretty closely, so we plan in our own forecast pretty carefullyfor the Bluetooth and wireless LAN spaces. So I think we understand thatbusiness pretty well and account for that. And also, certainly for Bluetooth,it’s not our largest business for Bluetooth by any means. So, it would not be amajor factor on the overall growth there, handsets continue to dominate the PCspace for Bluetooth by quite a large margin.

We also have some importantproduct cycles going on in the Bluetooth and the Wi-Fi space, so its Bluetoothprocessor and its 802.11n. So, we have additional drivers in those areas thatwe don’t have in the Gigabit Ethernet Controller space Allen Mishan - CIBC World Markets: Okay. Great. And then, did I hearyou say earlier that mobile multimedia would actually grow in Q4 versus Q3?

Yes. We do expect that area togrow in Q4. Allen Mishan - CIBC World Markets: Okay. So the product transitioneffect completely took place during Q2 to Q3?

Pretty much. Yes. Allen Mishan - CIBC World Markets: Okay. Thanks very much.

Our next question comes fromSrini Pajjuri from Merrill Lynch. Please go ahead Srini Pajjuri - Merrill Lynch: Thank you. Hi, Eric, as you lookpast the current quarter, how should we think about the R&D expense as welook into the next several quarters in 2008?

Well, Srini, you know that wedon’t provide guidance beyond one quarter. So we should have given you apicture of what we think will happen in Q4 in OpEx, and principally that’s anR&D expenditure. However, what we did say, Scott said and I said, I thinkis that the way to think about the R&D expenditure is that the discountrate has changed. So while we were investing very heavily in the baseband areaand in the mobile phone area trying to win customers, we had now won a numberof those customers and are winning others and in other parts of our business aswell. So, now we are sort of transitioning that investment from a pure R&Ddeveloper product and win a customer to now delivering on that product, puttingthe field test engineers in place and driving that forward. So, the way tothink about the risks is different and so there needs to be continuedinvestments to continue to do that and bring these products to markets anddrive the revenue forward, however, the risk profile is substantiallydifferent. I think we’ll continue to investto do that as Scott mentioned and drive these products to market and the realleverage will come as the revenue appears associated with that, principally inthe cellular space and then some of the other spaces as well. So that’s the waywe are thinking about the business. Actually, Scott said on the 65 nanometerproducts, we are thinking very positively that, we we’ve actually made this,we’ve turned the corner quite franklywith respect to the product performance and new products availability. And nowwe are sort of moving much more, I would say, perhaps into in a developmentstage or delivery stage of R&D. Srini Pajjuri - Merrill Lynch: Okay. And then, just oneclarification on the royalty payments. I am guessing it will pretty much flowthrough to the bottom line. Is that a fair statement or is there anything elseI am missing here?

Well our royalty payment has noby inherence, its inherent cost rather than the fact that we spend a fairamount on the legal side to generate that benefit. But at the end of the day,it does go to the bottom net of what we choose to invest back in the business. Srini Pajjuri - Merrill Lynch: Okay. And then Scott for you. Youjust reiterated the target to get to 10% to 15% by I guess end of 2009. Myquestion is, with the announced design wins, do you think you'll get there oryou think you need more designs wins to get to the kind of market share?

It's certainly possible to getthere with the designs wins we have, but we certainly like to have more designswins and I am working on them, and believe we will get additional design winsbeyond the ones announced so far. Srini Pajjuri - Merrill Lynch: Thank you.

Our next question comes from UcheOrji from UBS, New York,please go ahead. Uche Orji - UBS: Hi Scott. Just a question foryou, I appreciate you don't want to give guidance for much longer than nextquarter, but let me go back a bit to R&D. In your prepared comments youtalked about 65 nanometers and small [processor geometries]. But I assume youare doing some work on 45. Is there any point when should be reasonably expect45 nanometers to be in production from you, and what type of products will therebe for?

Yeah we are certainly working on45 nanometers, and we have done test checks so far on 45 nanometers. And Iwould expect based on the industry roadmaps that 45 nanometers probably doesn'tgo into production until 2009, sometime in that time frame. So that be probablythe best guess for when that would start to see our production ramps.

Our next question comes fromQuinn Bolton from Needham& Company please go ahead. Quinn Bolton - Needham& Company: This is just for Eric, but firsta quick clarification on them. To extent that you do recognize Verizonroyalties, you've talked in past about potentially reinvesting some of thatback in to the business. I am assuming that any reinvestment you have alreadyincluded in the OpEx guidance that you gave early on the call?

Yeah. For Q4 we've provide youour view of what the OpEx number would be. Quinn Bolton - Needham& Company: Okay. So, to extent that theroyalty that you give us and updated the Analyst Day whatever you gave wouldpretty much flow through to the bottom line.

Yeah that is mathematicallycorrect. Quinn Bolton - Needham& Company: Okay, great. And then second juston the DTV business. I know you guys sort of nearly doubled in the Septemberquarter right, I might have missed it but was just wondering if you would giveus an update what you see sequentially in to December quarter?

We don't breakout guidance forparticular businesses going forward. So I can't do that. But over the course ofthe next year we do expect that business to grow as we get additional top tierand second tier design wins in that space. We are bullish on the businessoverall for growth. Quinn Bolton - Needham& Company: Can you comment perhaps I meantypically in the business since September is a big quarter, would there be newproduct ramps either customers or models that might allow you to offset normalseasonality?

Yeah, I prefer not to comment onthat. We'd like announce those as we get them and the customers are comfortabletalking about that. Quinn Bolton - Needham& Company: Okay. And then lastly just canyou talk a little bit about IPTV, I know you've got some new products there,but just sort of any color you can give on IPTV, set-top box [direction]?

Well the IP set-top box marketdoes mean a lot of different things to different people, and we've beenshipping so far. We've been shipping product into the FiOS network and we'vebeen shipping Linux-based IP set-top boxes for a while. We've also recentlyannounced our 7405 product, which is specifically designed to address the needsof the IPTV set-top box market and I talked about that a little bit. And I think the key thing is,when you combine those kind of things with MoCA, wireless LAN, Bluetooth,Ethernet etcetera, we think we've got an excellent opportunity in all segmentsof IP set-top box market, including the Microsoft certified segments.

And our next question comes fromSumit Dhanda from Banc of America Securities. Please go ahead. Sumit Dhanda - Banc of AmericaSecurities: Yes. Hi Eric. I just wanted tofollow up again on your comment regarding maintaining a high level of R&Das a percentage of sales until the design converts to revenue. So is it fair toassume that this is generally going to hang around at this level, until thecellular revenues kick in which is mainly a '09 phenomenon based in what yousaid in the call today?

Yeah, what I would say is that,the way to think about it is that the leverage in the R&D line comesprincipally from revenue growth. And as the business continues to sort of drivegrowth forward and grow faster than it has over the last several quarters, youshould see some leverage beginning to appear in the R&D line. But the point we are trying tomake is, is that, we've now got these design wins in hand, we now have thesecustomers that we need to serve, and the single worse thing we could do rightnow is to not provide the support to deliver the products and get the productsinto the market. So what we are trying to do and we have made some choices interms of what we are doing in our business. What we are really trying to do isto drive that forward. So having said, the big revenueramp that we've been talking about is the cellular space, and as those productsand that significant investment in the cellular business and I will more aboutthis on analyst day and explain the economics a little better. But as thatinvestment begins to generate the kind of revenue we believe it will generate,that's when you will really see the R&D line begin to move back towards thetargeted range of 20% to 22%.

Okay. Our next question comesfrom Seogju Lee from Goldman Sachs. Please go ahead. Seogju Lee - Goldman Sachs: Right. Thanks. Eric, during thequarter at a competitor's conference, you characterized this sort of Verizonroyalties as expecting that. You would likely be booking, sort of the quarterlymaximums on a quarterly basis. I guess this quarter potentially, there is a bitof a stop because the contracts have closed during third quarter. But, in termsof your understanding of the Verizon phone shipments, has anything changed thatyou would think differently.

No. I think, I wouldn’t thinkanything is substantially different. You are right that this quarter is a stopperiod, so we don’t know. There is certainly a seasonal aspect to cell phones,as you have said of the holiday season. So there could be some little bit ofswing between, sort of heading in the front part of the year, versus the backpart of the year. But to be honest with you, we don’t sell cell phones. So Idon’t know for sure. But given what their total number of cell phones were, weexpected that we would probably hit to catch across the quarters in ’08.

Our next question comes fromShawn Webster from J.P. Morgan. Please go ahead. Shawn Webster - J.P. Morgan: Yeah. Good afternoon. Thank youfor taking my question. Can you, I hate to keep beating up on the OpEx thing,but can you define invest aggressively as we go forward, should we expect $10million to $20 million kinds of R&D growth or do you have any kind ofinitiative to maybe stop the inflow of headcount?

Yeah. I would say, we are on theprocess of sort of going through our budgeting process now, and reallybeginning to prioritize is what we are doing. I can’t give you specific numbersquarter-to-quarter, as we go forward. But suffice is to say that we are awarein cognizant of the burn associated with the operating expense. And are doingwhat we can to manage that while still delivering on the commitments we havegot for our customers. You know, in some respect, and Ithink Scott’s tried to sort convey this and I will reiterate the point that hemade, which is, we are winning a lot of design wins out there. And if anything,we are trying very hard to make sure that we have right resources to deliver onthose commitments, and are very excited about the up, the revenue side of thebusiness. So, that’s the message we are trying to convey to you. Having said that, I think we aremuch more dollar-focused, we are much more portfolio-focused, and trying veryhard to make sure that we maximize the opportunity dollar, and the opportunitybenefit for every dollar in R&D investments.

: Broadcom is often in a situation,where we win a design and then on the basis on that design win, we go createthe chip for that customer, which then sells a lot. And a lot of this is inthat latter category, which for me is a lower risk category, and as Eric wouldprobably say has lower hurdle rate, which you would assigned to that as aresult. And so when we have these situations and we are winning designs, wehave a choice, we say well, let’s tell the customer no, and not hire to peopleand get closer to our model R&D or let’s hire to people, go fulfill thedesign with the customer and then get the revenue down the road a year or so. And I think that’s the dilemma weface, and our belief is that we want to invest in the long-term value for theshareholders. And we think the right answer here is when you get these designs,you should go for it and you should go deliver on them. So that’s the basisthat’s what going on here. I apologize we can’t share all ofthe design wins and some of other things that we have won here that underscoreand underlie this investment, but we hope to do that. You have seen the Samsungand Nokia announcements so far. We believe there will be more over the coursehere, that hopefully will give you a little more confidence that we areinvesting in the right kinds of things. And we'll try and refine that a littlebit at Analyst Day and give you more of a feel for that.

Okay. (Operator Instructions).Our next question comes from Tim Luke from Lehman Brothers, please go ahead. Tim Luke - Lehman Brothers: Thanks so much. Eric youmentioned in the third quarter of the R&D was a little high higher than youexpected, partially reflecting some of the litigation cost. Is that where litigationexpenses largely reside, and is there any framework you gave us for how muchthat’s impacting that expense line? And may be separately just with respect toVerizon, is there as you move forward this outline date that you suggested withSanta Ana, isthere anything in that, that impacts the recognizing of revenue from Verizon asyou go through the next several quarters?

Well Tim let me start with thefirst one. I apologize if it wasn't clear. What I felt was that we were $10million above the range, half of that was driven by R&D and the other halfby legal. Legal is in the SG&A line actually it's in the [SG&A] line.And the right way to think about it is just look at the SG&A percentage. Imean between last quarter and this quarter it's down a percentage a tenth of apoint so marginally. But between last year and thisyear it's down from 9.7 and 9.2. So we continue to get leverage in that line.In fact the greatest investment in the company in the SG&A line has been inthe S part of that line, subject to sort of puts and takes and swings in thelegal cost, depending whether cases are on trial or not which when they are attheir highest cost. So one of the issues that we had, we actually we had anumber of court appearances over the past quarter in Q3 and that sort of drovesome of the costs in the SG&A line, so that's part of it. The second pieceof it is with respect to Santa Ana we have assigned contracts with Verizon,really what we are just waiting for is to find out what the number is fromthem. They certainly have their ability as we mentioned in the 8-K undercertain circumstance determinant contract but we have no reason to believe atthis point in time that that's in they are contemplating at.

Our next question comes from AdamBenjamin from Jefferies & Company.Please go ahead. Adam Benjamin - Jefferies& Company: Thanks. Just to continue this cellular theme. You guys have beeninvesting pretty significantly on the R&D side obviously to get the winsthat you've achieved now with Nokia and Samsung. Now that you have got thoseand obviously you are going to have more going forward can we expect there tobe a shift from the R&D investment to the SG&A as you add FAE engineersgoing forward and then in term to that if there is a shift can you quantify theinvestment in terms of what you've done so far and what you expect to continueinvest in '08 in '09 in terms of a percentage rate or whether that should startdeclining as the majority of the investment has been made or some percentagethere to give us some ideas to where you stand on that front?

Yeah, that's fair. I would say that the phase were in of course as youpoint out as first win the designs and then you actually have to deploy on themand what not. And that does increase the number of FAEs we have and also peoplewho do various kinds of adoption for the phones and customization and helpingthe customers get the things done. That is relatively easier from an R&Dpoint of view than the other aspects, still very-very important of course butit’s a little easier to find some of the people who do that. We want to keepour standard high but we'll continue to invest more in those areas, we thinkwe're in a very good shape on the technology point of view. As you cansee now we've pretty much announced every chip in the cell phone and everycapability in the cell phone except for perhaps standalone memory. And so, Ithink we are definitely at a critical math on the raw technology side and sothe R&D investments going forward are to help our customers to deploydifferent phones. FAEs are accounted as R&D for us and so that wouldn’tincrease the SG&A. So, the increase is again pretty much in there. We arerunning at about 27% now and I think that's probably the highest we would go ona percentage basis. I don’t expect much more than that and then as we get morerevenue then it would start to come down.

Our next question comes fromKrishna Shankar from JMP Securities. Please go ahead. Krishna Shankar - JMP Securities: Yes. I was wondering if you could-- I am trying to think about the royalty stream and how we should be sizingthat for 2008 and what happens to the royalty stream in case you reach anagreement with QUALCOMM?

Well I think it's premature tosort of discuss that. Let's see what happens with respect to QUALCOMM because Idon’t want to speculate one way or the other. When we have something to sayabout that we will. At this point we just have the relationship with Verizon.Can I just make a comment on what Scott mentioned on the R&D side? We willcontinue to invest to the extent there is some seasonal effect in the firsthalf of the year relative to some of the consumer oriented products. You couldsee some movement up on a percentage in first part of the year which will thencome back down as the year progress sort of on the consumer side pick up in theback half of the year.

Okay. Our next question comesfrom Shaw Wu from American Technology. Please go ahead. Shaw Wu - American Technology: Yes, just a little more color onyour digital TV business. You mentioned that the business doubled. I was justwondering if that was spread across your various OEMs? Or was it thatconcentrated towards one or two or any comment on ramping of new ones there.Thanks.

It’s spread across a number ofOEMs. It’s not concentrated in any one particular OEM, to answer your questionthere. We have announced and in the market today, we have LG, and Sharp andHaier and some of the other Chinese based customers. So, that’s what we haveannounced in the market today and we do expect new customers there over thecourse of the next year.

Our next question comes fromDaniel Berenbaum from Carris and Company. Please go ahead. Daniel Berenbaum - Carris and Company: Yeah. Hi, thanks for taking mycall. I need a follow-up on a couple of questions ago. We talked about R&Dmaybe going up as a percentage of revenue in the first half due to normalseasonality. Can you really help us to understand what normal seasonality isfor your businesses and what piece of your business, or what percentage of yourbusiness is affected by seasonality versus your new product cycle?

Most of it is new product cycle.I think that as we have seen strength, and growth and new products in consumeroriented products, which you go into the holiday season, you naturally get apickup in those businesses. I think as Peter has mentioned repeatedly, much ofthe capital equipments components of our business like what you would find inthe broadband business, or in the enterprise networking business, capitalequivalent tends to be a little bit stronger in the front half of the year. Ithink what we are seeing is, given the strength and the new product cycle, wehave seen in wireless LAN and Bluetooth, and things have sort of like PCs, cellphones and those sorts of things. I think we are just being prudently cautiousrelative to the strength of Q4 vis-à-vis sort of the front half of next year.

Our next question comes from JohnDryden from Charter Equity. Please go ahead. John Dryden - Charter Equity: Yeah. So a question for Eric.Could you just update us on the hubbing arrangements during the quarter, anddid that play out as you expected, with any quarter readjustments or anyincrease in overall inventory. And then, question for Scott, if you could justupdate us on the 43/25, any customer sampling feedback based on the quarter’ssuccess you had in Bluetooth plus FM?

I think on the hubbing side, weare proceeding as we projected, I think we are managing it well, I think ourops team does a tremendous job in terms of managing our inventory andprojecting those sorts of things. So, I think we have done quite well and infact some of the growth in the actual inventory dollars was in the face ofproduct ramp growth and the growth we saw in this quarter and potentially inthe next quarter as well as some tenders that we went after etcetera. Having said that, I think that itis possible that you could see some impact from hubbing. However, we’ve beenoperating well above our range on inventory at 8.5 times. So I think we feelcomfortable that the 7/8 times is quite achievable even in the face of thesehubbing arrangements.

In regard to your question on the43/25, we have seen very-very strong customer enthusiasm for the 43/25. Thereis nothing else like it in the market. And I think it's been a game changer inthat, in the past many of our customers were thinking about separately buyingBluetooth or wireless LAN. And they have now moved to think of combo as acategory and to look for that as a preferred way to get Bluetooth and wirelessLAN, if they want both of those in the same devise. We are seeing a lot ofinterest, especially in the cell phone handset makers as you would expect, butalso in the various MP3 customers as well. If sampling today a number ofcustomers are designing in it as we speak. I feel, you really going to startsee a revenue contribution for that starting in 2008.

We are actually seeing a pretty anormal supply situation there. There are always spot shortages and ease inother places. I don’t see any unusual situation in the market right now, overthe long-term we are able to get both the front-end and back-end resources thatwe need and don’t foresee any problems or issues with deliver on our revenue asa result of that.

There is time for one morequestion, the final question comes from David Wu from Global Crown Capital.Please go ahead. David Wu - Global Crown Capital: Sneaking underway, thanks fortaking may call. I just want some clarification on the gross margin issue andalso given that on a gross margin you were also talking about the going intocalendar '08 in the 50% to 52% pro forma gross margin range and I wonder wouldthat had us included those the royalty income from Verizon in that guidance.And on GIG-E do you see any growth in calendar '08 on the enterprise segmentand when should we expect any revenue contribution from 10 gig at least for theswitch side?

Just to answer your questionquickly the gross margin comment I made does not reflect Verizon we are focusedon product oriented gross margin which was what the basis of my comment was.

On your GIG-E question yes we dosee growth as we see the gig penetration in the enterprise space continued goalof 48% to 66% for some of the analyst forecast out there. In terms of 10 gigswitch was started if some of that coming out over the next few quarters andthat'll certainly increase starting from a fairly small base but eventuallythat'll become a significant part of business more likely in 2009.

Okay I'd like to conclude now,I'd like to thank everyone for joining us on the call this afternoon and thenjust one more reminder on November 8th we'll be hosting our 2007 Analyst Day inSan Francisco looking forward to seeing everyone there. Thank you very much forjoining us today and good afternoon.

Thank you ladies and gentlemen.This concludes today's conference call, thank you for participating, you mayall disconnect.