Ladies and gentlemen, thank you for standing by, and welcome to the Aviat Networks conference call. (Operator Instructions) I would now like to hand the conference call over to Cynthia Johnson. Cynthia, you may begin.

Thank you, operator. Good afternoon, everybody, and welcome to our Fiscal 2011 Earnings Call. This is Cynthia Johnson, and I am joined by Chuck Kissner, Chairman and Chief Executive Officer; and Tom Cronan, Senior Vice President and Chief Financial Officer. During this conference call, we may make forward-looking statements regarding our business, including statements relating to projections of earnings and revenues, business drivers such as the transition to IP infrastructure, the timing and capabilities of new products, network expansion by mobile and private network operators and variations of economic recovery in different region. These and other forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and the filings made by the company with the SEC. These can be found on the Investor Relations section of our company website, which is www.aviatnetworks.com. Now, I’d like to turn the call over to Chuck Kissner, Chairman and Chief Executive Officer of Aviat Networks. Chuck?

Thanks, Cindy, and thanks to all of you for joining us today. During the conference today, I’m going to provide a general overview, and then Tom will provide a detailed financial review of our first quarter 2011 as well as the status of the restructuring that announced last quarter. Then I’ll provide an update on our business status, the market conditions and more information about the going forward strategy. So, first the overview. Our revenue at $109 million came in about the middle of our guidance of $100 or $120 million. The man did begin to improve during the quarter, but we were constrained by operational disruption that we previously had indicated should be expected and I’ll speak to those later. Order input was quite strong during the quarter; it contributed to a positive book to bill, which actually wouldn’t have been recorded revenue at the top of the range. Cash usages was significantly above our original projection and that was due to a level of operational disruption at affected inventory and to a greater extent our receivables. As our shipping performance improves that increase non-cash working capital should convert back to cash again. But clearly that wasn’t our plan for the quarter. The refocusing of our product development as began to year results already with a release of some new eclipse features for the market and momentum on some additional enhancements that are underway. In addition to that our efforts to reduce cost in the product line are on track. While our wireless transmission business which includes the mobile backhoe business is encouraging, we do face challenges with our WiMax product line as we work hard to satisfy both existing and new commitments. And just as an example WiMax negatively impacted gross margins by about 250 basis points during this quarter. In general, we’re on track with our restructuring plan with a number of operational issues that are really connected to the speed at which we’re moving have been pretty high. That being said, we are making progress and we’re convinced that moving at this fast rate is the right thing to do for the business. So, with that, I’ll turn it over to Tom.

Thank you, Chuck. We have now completed the first full quarter of our fiscal 2011 restructuring plan. In Q1, we made good progress towards our goal of reducing our year-over-year total spending by $30 to 35 million. Operating expense was down $4.1 million sequentially. Spending and our manufacturing and operations group was down $400,000 sequentially. In part, our spending reductions were accomplished by reducing headcount by 130 people or 9% of the worldwide headcount to the level we had planned for Q1. Part of this reduction was moving in house manufacturing to a contact manufacture in Texas. In the long term, this transition will reduce our cost and improve our margins. However, in the short term, this transition has proved very disruptive. Although revenue for the quarter was in line with our guidance, we experienced significant manufacturing and delivery delays as a result of accelerating the completion of both the manufacturing transition and the systems conversion. We have finally completed the transition of our legacy enterprise resource planning or ERP system in North America for an Oracle based system. As happens in this kind of changes, there are significant order processing issues which impacted order fulfillment in North America. This North American disruption as well continuing worldwide component shortages significantly affected the timing, geographic distribution and the mix of overall revenue. Most importantly, our inability to make complete shipments significantly affected our collections in the quarter. We are making incremental improvements in our North American manufacturing process and ERP systems in Q2. But we expect that will take us to at least Q3 and so our manufacturing ability is sufficient to match customer demand. Our second major restructuring element is the closure of our Research Triangle Park or RTP facility and the relocation of our finance function to California. The closure will allow us to consolidate our produce development functions into lower cost facilities in Slovenia and New Zealand and to consolidate our U.S. finance organization into one location to increase efficiency and streamline decision making. We announced this closure in August and put retention program in place for key personnel in RTP and have begun hiring the finance team in Santa Clara. To date, we are on track in finance having hired half of the finance position in our Santa Clara headquarters location. As we previously indicated, we expect that there will be short term incremental cost in Q2 and then the first half of Q3 as we add stuff in both engineering and finance, ahead of the RTP closure. In addition, there is of course some risk in the near-term of both disruptions to the development schedules and to our financial processes as we relocate our finance function [inaudible] our engineering group. By fourth quarter notwithstanding the short term incremental expense in Q2 and Q3, we will have reduced the quarterly OpEx run rate by $68 million and expect to substantially complete all of our cost-cutting actions by the end of Q3. The third element of our restructuring in Q1 was the sales of our NetBoss asset to a newly created privately finance company. The new company was founded by our former net boss development partner and the private equity fund. The NetBoss product line was struggling for the last 12 months from revenue and operating margin basis and we believe that is in the best long-term interest of our customers and our shareholders to sell these assets to a company that will exclusively focus on developing and delivering these products to our customers. We retained the license to use the NetBoss product within our networks operation center. We will continue to offer this service to our customer. The sale was in material and we did not disclose the selling price. Now, let me review the GAAP financial performance for the quarter ended October 1st, 2010. First, the revenue was $109.1 million and we reported a net loss of $21.3 million or minus $0.36 per share. GAAP results included $11.5 million of pre-tax charges composed of the following: $5.6 million of restructuring charges, $3.9 million for the loss on the sale of NetBoss asset, $1.1 million for share-based compensation expense and re-branding cost, $900,000 for the amortization of purchased intangibles. Now, I’d like to present the details of the quarter based on a non-GAAP result. We believe the supplemental non-GAAP financial results reflect the basic operating results of the company and will facilitate comparisons of our results across supporting periods. Please refer to our website for the complete GAAP to non-GAAP reconciliation table at www.aviatnetworks.com, we delivered revenues of $109.1 million. This is down 9% year-over-year and down 6% sequentially. By business segment, North America contributed $35.6 million of revenue in the first quarter, down 26% from the year ago period and down 6% sequentially. The international segment contributed $73.5 million, 2% higher than the year ago period. By geographic segment, Africa contributed $23 million in revenue, 23% lower than Q1 fiscal year ‘10 and 39% lower sequentially. EMER, which comprises Europe, the Middle East and Russia contributed $28.7 million in revenue, 545 higher than the year ago period and up 69% sequentially. Revenue for the Rest of the World was $21.8 million, 7% less than Q1 fiscal year ‘10 and down 65 sequentially. In the quarter, there was no customer who contributed more than 10% to our revenue. Gross margin was 22.5% in the quarter, versus 33.3% in the year-ago period and 31.1% in Q4. As we discussed on our last earnings calls, margins in the quarter were negatively impacted by a non-cash charge of $6 million related to the removal of material overhead from the standard cost of our product. We made this change because we’re no longer manufacturing in house. Now, we are taking all of the cost associated with our internal operations organization which supports our contract manufacturers each quarter. In the past, we’ve put most of this cost into the product cost and inventory. Margins in the quarter were also negatively impacted by the low margins in our WiMax contracts by geographic and product mix issues. As many of these factors that affect margins were specific to the first quarter, we expect our margins to recover substantially in Q2. Total operating expense were $39.3 million or 36% of revenue. This amount compares to $43.2 million in the prior quarter. The decrease in OpEx resulted primarily from the reduction in G&A and sales and marketing expense within the quarter. Operating loss was $14.8 million for the quarter, compared with operating loss of $300,000 in the year-ago period. Our pro forma tax rate was zero as it was in the year ago period. Our cash tax rate is expected to be about 2%. Net loss for the quarter was $15.3 million, compared with net loss of $800,000 in the year-ago period. Our growth cash was $107.8 million and net cash was $101.8 million at the quarter end. That balance compares to $141.7 million growth cash and $136.7 net cash at the end of the last quarter. Operating cash flow for the quarter was a negative $36.8 million, compared with a positive $6.5 million in Q4. Our collections in the quarter were very disappointing. We anticipated that we would have a more difficult collection quarter in Q1 because we had such a strong quarter in Q4 compared to revenue. This in combination with the fact that we’re still generating a loss and spending more cash than we are collecting led us to guide that we would use $10 to 15 million in cash. This guidance did however assume that with key [inaudible] accounts receivables and accounts payable relatively flat as we have in past quarters. We also assume that we would use inventory in the quarter benefiting cash. Unfortunately, due to more back ended shipments in the quarter and partial shipments to customers that prove not to be collectible in the quarter, our collections were more than $30 million lower than last quarter. This is reflected in the increase in receivables of $15 million on a sequential basis. We also had a reductions and accounts payable of $5 million and essentially flat inventories after taking into account the net write-down of $6 million in inventory due to the change in the application of our material overhead that we already discuss. We would expect that the increase in receivables and the reduction of accounts payable should be a benefit to cash and future quarters. So, on a balance sheet basis, we saw some overall erosion, but generally we had a large shift in assets from cash to receivables and a reduction in our accounts payable liabilities. This was not what we forecasted and we expect to rebalance our assets back to cash over the next few quarters. During the quarter, we entered into a new line of credit for $40 million with Silicon Valley Bank. This line of credit should give us more flexibility under our covenants than the previous line of credit. As indicated earlier, accounts receivable increased to $120.5 million compared with a $104.8 million and DSO has increased to 94 days in Q1 from 80 days in Q4. The company has taken several steps to focus on cash collection this quarter and to assure that customers are receiving complete shipments as early as possible to facilitate cash collection within the quarter. Depreciation and amortization of property, plant and equipment and capitalized software was $.3.6 million in the quarter. CapEx for the quarter, including capitalized software, was $2.3 million. Employee headcount was 1,254 in Q1, compared with 1,384 employees in Q4. As I stated earlier, the headcount reductions last quarter are consistent with our restructuring plan and we remain on track to reduce the quarterly OpEx run rate, the $35 and 37 million per quarter by Q4, fiscal 2011. In doing this, we intend to establish a quarterly run rate that will be profitable at the current revenue level and will allow us substantial leverage as we increase our revenue levels overtime. We remain confident that we will complete substantially all of our planned cost-cutting actions by the end of Q3. Let me conclude with our revenue, margin and cash guidance. Our forward-looking visibility has improved compared to last quarter, since our book to bill was substantially greater than one. However, as we continue to expect internal disruptions during the restructuring we will continue to provide range in our guidance. Therefore, for Q2 FY ‘11, our current outlook is for revenue in the range of $105 million to $120 million. While we generally expect top line revenue growth, there continues to be lumpiness in the orders and concerns about our ability to ship all of our orders at the end of the quarter, given current manufacturing and supply issues. We feel that it’s appropriate to provide a wide range for revenue and caution our guidance. We still expect gross margins to substantially improve in Q2 and that margins will approach our interim target levels by Q4 fiscal year ‘11 of 32 to 33%. Our longer-term gross margin targets remain in the mid-30s, but will be dependent on the introduction of the next generation of products that are now in development. Regarding our operating margins, our target remains to achieve low single-digit operating margins by Q4 of this year as we achieve our OpEx reductions and our margins return to the interim target level. Our long-range target remains in the high single digits at modestly higher revenue levels. We expect that a substantial higher revenue levels, we will be able to achieve higher leverage to corresponding higher operating margin. We are anticipating substantially better collections this quarter than in Q1. However, we believe that there will still be manufacturing and supply issues that will interfere with collections in Q2. That said we expect that we will need to use $10 to 20 million in cash this quarter. Bottom line, we’re encouraged by progress in our restructuring, transitions from legacy systems and improvement and demand from our products, but we have ample reason to keep a conservative stance this early in the process. Now, I would like to turn the call back to Chuck to provide you with a market and business update.

Thanks, Tom. First of we talked a little bit about the market. Overall, long-term, we’re pretty optimistic. Industry conditions seem to be stabilizing, end user demand for bandwidth continues to increase, mobile data usage is continuing to grow strongly with 3G spreading. For example, ABI Research says from now to 2015 data usage is expected to increase at a CAGR of 42% in Europe and 55% in North America. Beyond that, we see opportunity as mobile operator’s transition eventually to new technologies like LTE and that will push bandwidth demands higher and also increase number of cell sites. We expect the LTE rollout continue to gain momentum at the drive and need for the capacity in backhoe and as end user demand for bandwidth continues to increase, our networks expand we’re optimistic about some new opportunities for new products and services. On our last earnings call, we indicated that the demand was starting to firm up again in Africa and in Europe, Middle East and Russia region, and that was true and as a result total orders for the company were very strong in Q1 and that was driven by business out of Africa, Russia and the North American stimulus program. Eclipse orders were up over 40% sequentially and this is a positive sign for gross margins over the next quarters. In North America, our Microwave bookings were sequentially flat, but we continue to migrate the tier 1 customers for Legacy TRuepoint products into Eclipse. And as we preview the last quarter, we were awarded a significant stimulus under project and at first quarter and we’ve started the engineering work and finalizing the customer’s network design, we expect the installation of that to commence the third quarter. In Africa, the CapEx restrictions that we talked about before that has delayed many of the tier 1 operators network expansion eased last quarter as we indicated we thought they would and we actually nearly doubled booking sequentially specifically of Nigeria, Kenya, Ghana, Benin, Perchino Foso [ph], South Africa and Tanzania. In the Europe, Middle Eastern, Russia region, there was significant growth prior quarter out of the strength from orders from Russia, Poland and the Middle East and that was a 30% sequential growth in orders. Some specifics on the EMER region included the BT project that was awarded in 2009 is now showing improved visibility with approval for more significant qualities with Eclipse product for deliveries starting in the current quarter of Q2 and beyond. This came about after many months spent on integrating our product and our network management system flat for under BT’s network tools. So, we currently book the first nature order which was a little over $2 million. We also saw returns of orders in Russia and there’s Pakistan with our main customer in Russia, who’s aggressively deploying 3G now, and overall, we’re pleased with a strong start on our orders in the EMER region. But we need to get our delivery issues sort out obviously in order to continue to this momentum. But I’ll touch on the delivery aspects a little bit. In Asia, we continue to see a steady demand for the Microwave products and maintain the same solid little of business that we have in the prior quarter. On top of that we received significant follow-on orders from one of our WiMax partners in Indonesia. So, in Asia that resulted in a close to 50% increase in orders compared to the prior quarter. Backhoe and other wireless transmission product in Asia for Q2 have solid as tier 1 operators are spending the balance of their 2010 budget. So, let me touch on the operation issues that Tom and I both mentioned already. Operationally, we obviously had major challenges as done in the quarter. we did make a decision as I think we told you before the finalized, the acceleration of the system integration that had started way back in 2007 when we merged the companies and the ongoing delays in completing this process have greatly contributed to many of the issues that we’ve seen especially over the past year. And due to this ongoing issues as well as the reductions and force that have happened in our coming and that we’re committed to achieve and we decided we have to complete this integration quickly despite any risk. That’s why we said last quarter there was a likelihood disruption to occur. The challenge was that we believe there were order processing issues with the old legacy system that couldn’t be adequately resolve unless we actually made the conversion. Now, on top of this, there had been some industry wide discreet component shortages and as a result during the first quarter, we suffered extended and increase shipments for customers that prevented the inventory reductions that Tom mentioned had been increases in receivables. We have been rapidly working through this system issues and we’re starting to see improvements now. But I expect we’re going to continue to have residual issues through most of the current quarters as well. But we are confident we’re going to get these long anticipated systems issues finally behind us. The restructuring process is on track as Tom indicated. We began reducing headcount per our plan and we started a major move with the finance function to California. In addition, the merging and relocation of other functions is on track, so we do expect that we meet our Q4 spending that we provided last quarter. Bottom line, we do expect by Q4 Aviat Networks will be what we said it would be on the last call, a leaner, more focused and an innovative company. In Q2, we do hope to see top line growth return for the first time in four quarters. We also expect to return the cash generation later in the year as we work through the current operational issues. We completed putting together our internal strategic plan and we roll that out throughout the company now. Let me talk about the three aspects of it. The first is products, second is our solutions and the third is financial performance. In terms of products, we are accelerating innovation in our wireless transmission and refocusing our investments on Microwave backhoe. As sure as many of you know, we were one of the first companies to supply the capability to migrate to an all IP backhoe network and reinvigorated our developments in this area. We began explaining our new long-term road maps to our key customers last quarter and this has been met with a very positive response. Our focus on being the best in all forms of wireless transmission and especially in IP backhoe seems to be resonating very well. We did recently announce you may have seen the release of the next generation Ethernet switch card for the Eclipse node of wireless transmission platform. This new product is a plug-in Eclipse card. It provides enhanced performance in the areas of port capacity, quality of service controls, traffic management and Ethernet services and contains switching. The new card also introduces packet network synchronization features and it enables fully protected gigabit line interfaces. We’ve now successfully demonstrated this new product at the industry’s largest annual carrier Ethernet [inaudible] test event. It’s conducted by the European Advance Networking Test Center. This was a big test that included participation in the multi-vendor synchronous Ethernet test combined Microwave, wireless line network. It also was working with several other vendors of non-Microwave networking equipment. The product is beginning to ship this month. We are planning to announce early by next calendar year of further major addition to the Eclipse platform and the other new products announcement behind that and those will be significant. Secondly, in terms of solutions, we are expanding our solutions orientation with network operations management, network design and installation and this is to further enhance our value proposition with our customers. As Tom noted during the quarter, we sold our NetBoss Network Management solution. We determine that we needed to direct our investments in network management to our core platform, which is called ProVision as well as to other areas of the business. Third, the financial performance obviously of critical importance. Our goal here is improving our performance by rapidly finishing the integration process, fixing the systems and other process that in generating new hire margin offerings. We are committed to drive across the business down, improving operational cycle signs as we work through this transmission. And obviously there are challenges in moving as quickly as we’re moving, but we are going to get to a more effective business a lot sooner. I just want to wrap up before we go to the Q&A and just say that the returned innovation and the operation excellence in the company are cornerstones of the strategy going forward. There is a lot of excitement in the company right now and a new sense of energy, now that we’re focusing on these traditional strengths and we’re applying them to market areas that show good growth and opportunity for us to clearly provide value to our customers. In just in summary, we are more optimistic about our future now and we’ll continue to focus our efforts on executing strategy against what we believe is a pretty good market opportunity [inaudible]. So, with that, I’ll hand it over to the operator for questions. Operator, can you now open it up.

Thank you, sir. (Operator Instructions) And our first question comes from the line of Blaine Carroll with Hudson Securities. Please, go ahead.

Yes. Hi, Chuck. Hi, Tom.

Hi.

Hi, Blaine.

A couple of questions if I can. First of all, Chuck could you talk about the order linearity during the quarter. Tom mentioned that shipments were backend loaded, but what was the order linearity like. Secondly, is there any risk of losing some of the orders that you received or some frustration on behalf of your customers that the product isn’t being delivered on time. And then, Tom for you, if you could talk or maybe just define what you mean by gross margins will increase on substantially on the second quarter. Thank you.

Okay. In terms of linearity, if you look at the raw numbers per orders, I think it’s probably been, if not the most linear, one of the most linear quarters the company’s has had ever had [inaudible]. That being said – so that was a big plus. I think you probably know we’re pushing linearity in a number of fronts here right now, so that has a very positive impact. That being said, when you look under the covers, some of the linearity was due to large orders at the front end of the quarter that aren’t deliverable – that weren’t deliverable in Q1. So, if you look at what was deliverable in Q1, it wasn’t quite a strong as you might think. But of course that creates a nice backlog going into Q2 and to Q3 and that’s one of the reasons why we’re relatively bullish about growth going forward. As far as customer satisfaction and how that reflects, I think we’re doing a pretty good job managing the networks, customer networks. Obviously, there’s some dissatisfaction. But we’ve been juggling things, I think, relatively well. I think the issue here is if this goes on for too long, then it’s really hard to get new orders because we haven’t delivered what has already do [ph] that customers unlikely to book those new orders. So, I don’t think this can drag on for too much longer. I think the plan that we got in place, what we’ve actually been able to accomplish so far this quarter, I think we’re feeling good, relatively comfortable at this moment.

Yes. And the other question was what does that mean when I said substantial improvement in gross margin. I think we obviously talked about the one-time issue that’s substantially affected margins, so that won’t be there. So, we’ll see that improvement. And then we – our current outlook, the geographic and product mix is better in the quarter, so we would expect that the margins would be 30% or greater as we look at next quarter.

Okay. And then one last one before I pass it on. Chuck as you’re looking at the market, can you size what you think you’re addressable market is right now and maybe the way you segment the market whether its Ethernet or voice backhoe versus core, something along that lines.

Yes, I’d say the backhoe part of that market is in the 4.8 the size billion range and then we – what we do usually internally is we cut that in half and we say that this roughly in half say, about half of that is truly an addressable market for us because there are significant parts of the market that are locked up and integrated system sales and of course we could try to battle it out, not really a good use of our resources. So that’s the backhoe part. There’s probably another billion on top of that, but I recall the non-backhoe wireless transmission market. So that would be mingling [ph] private networks and the enterprise business and things like that. I say generally that is accessible to us. In terms of segmenting, what that would say is that about 80% of the market we would say is mobile backhoe right now and the other 20% is everything else. Does that answer your question?

Yes, it does. Thanks and good luck.

Yes.

Thank you.

Thank you. Our next question comes from the line of with Barry McCarver with Stephens. Please, go ahead.

Hi, good evening, gentlemen. Thanks for taking my questions.

Sure.

Thanks, Barry.

It looks like Africa was, just regionally looks like Africa was pretty lumpy in one key versus the previous quarter. in terms of the pickup on revenue you see for 2Q and potentially the rest of the year, can you give us an idea of where do you think that’s coming from based on your bookings?

Yes. I’d say right now the – so, Africa is strong; EMER, a lot of it driven out of Russia is strong going forward. Those would be the two big ones, but [ph].

Okay, and then other question is when you talked about net margins improving a little bit later in the year I think you said, up to low single-digits getting that coming out of research and development or would you expect given what you’re doing with the products there that that could continue to be at a higher level?

Right, so I think when we talk about the operating margins, there is two elements. One is the small improvement in the gross margins and that’s driven by cost reductions on the operating side as well as an increase in revenues in our forecast. And then the biggest pickup in the operating margins is from the OpEx reductions. So it’s all independent of new production introductions. And when we talk about our long-term model, getting to high single-digits in higher gross margins that would be dependent on the engineering efforts and coming out with new products.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Rich Valera with Needham & Company. Please go ahead.

Thank you, I was wondering if you’d be willing to put any color around substantially when you talk about a substantially positive book-to-bill, are we talking kind of 1.2, 1.5, just any kind of range around that would be very helpful.

Yes, I think we tried to do that by saying if we’re coming at the top end of the guidance which was 120, it still would have been positive book-to-bill.

Okay, that’s.

It wouldn’t have been marginal but it would have – and it would have been still substantially greater than one.

Great, that’s.

Because we don’t actually get our order this numbers. Anything more than that would be same as giving out orders.

All right, that’s helpful. And Chuck, last quarter in response to a question you said you thought you could grow the top line this fiscal year versus last year. And given what you’re forecasting for the first half it looks like you would need to grow the second half by about 15% relative to the first half and I guess that’s in the face of what I think it will be a pretty significant roll off of revenue contribution from your big mid-east project. So I guess first question is, do you still think you can grow overall revenue this year and if so, sort of what are the drivers in that second half that help offset the mid-east project rolling off?

Okay, just to be – clear on this because I believe if you look back to the transcript, but I think the question was is it possible that we would have growth year-over-year and I said yes, it’s possible. So I wouldn’t want to – given where our sales went to over the past year, I think there would be – it would be a tall order to grow the whole year but it’s possible because we’re seeing a lot of strength and demand. I think right now we’re just focused on getting cost and getting our top line growing throughout the year. So we end – so we have a pretty good growth. So I don’t know what that rate is going to be right now, so that’s how I would characterize.

How about just a conviction that you can grow second half over first half, you’ll be – obviously you’ll have these operational issues hopefully behind you by then maybe a better bookings trajectory. But again you will have the mid-east project rolling off. I was just wondering if you’d be willing, to say if you think you can grow the second half revenue versus over the first half?

Yes, I think so the best I could say right now is looking at the deals in process and our assessment of probability of closing. I’d say right now our confidence I’d say right now our confidence is reasonably high that we’ll have growth second half over first half.

Great.

And part of that is driven by some other products because we are introducing some new products some of which we’re obviously talking about customers right now. So, because they’re seeing a roadmap again about where we’re going in the backhaul area hence that tends to increase our effectiveness as (inaudible) management.

Okay, that’s helpful. And Tom, I think we’ve been looking for an actual cash burn associated with this restructuring in the very low double-digit range I think $10 million to $12 million or $15 million all in. And it looks like through the first two quarters of it will, be about $50 million of cash burned. Now I gathered from your comments you expect to recover much of that through working capital recovery. But do we, I guess the question is do you still have that same estimate of actual cash burn, and if so what’s the timeframe for recovering the working capital that’s going to get sucked up these next couple of quarters?

Right, so I think when I was talking about my estimate of restructuring cash burning with specifically the cash reduced payments of employees for severance and other cash payments that were associated with closing buildings, liquidating assets, not the – while we were still on Q1 which was really a lowering of collections because the disruptions of the restructuring. So as it relates to the severance and cash restructuring cost, the answer is yes, still in the low double-digits. And this cash loss is more related to both the operating loss in the quarter and the fact that when we usually generate fairly positive working capital, we weren’t able to do that this quarter because of all the disruption and we saw some negative working capital on the quarter. So that’s why I think which is recoverable and we’ll see better performance as we go forward.

Okay, and one final one from me just on the broadband stimulus, I know you mentioned you had one particular order you’re working on there, but would you be willing to give any estimate of how significant a factor that could be in terms of either bookings or revenue in this fiscal year?

So I think bookings we had talked about in the past were in the $15 million to $20 million range of what we said. On revenue that will be very dependent on when we start the project and what the rate of acceptance is and deployment in third and fourth quarter.

I guess I would say right now that was what we said in the past that’s probably right fixed time earlier up. We’re probably on a high side and beyond in terms of what we’ve – what we have in terms of difficulty right now. I think it’s going to be higher than those numbers.

Okay, and I’m sorry one final one if I could, just with the WiMax you mentioned a 250 basis point hit to gross margin in this quarter. What was that, is that – is this temporary? What should we think about the WiMax impact going forward?

Because of the way the contract we have in India is structured, we have to be conservative as we take our revenue and or margins and a portion of the head where we had is because we have to preserve more margin against the deals and revenue. And so that produced a negative margin this quarter and on an ongoing basis going forward it will be probably zero until we release at the contingencies on the contract. So it will as we ship under that contract there will be some impact to the overall margins in the quarter because it won’t contribute any margins until we get to a point where we can release that contingencies which now looks like several quarters up.

Okay, thanks for that.

Thank you. Our next question comes from the line of Joanna Makris with Mizuho Securities. Please go ahead.

Hi. Good afternoon. It seems like coming out of last quarter, you were a bit more optimistic about trends in North America. You saw some sequential increase in bookings and I’m wondering why kind of the flattish revenue, was a lot of that attributable to the manufacturing issues, if you could comment a little bit on the demand outlook in North America?

Yes, I think that’s very perceptive. Certainly a lot of the issues that – we have two kinds of issues one was around the global component supplier and that affected radio shipments so that was, that’s affected North America and the rest of the world. The other side of it is, a lot of the systems convergence around legacy deliveries and legacy systems. Obviously because most of legacy stuff is North America oriented and has affected North America more than other. So a lot of this is non-radio products what we thought OEM products, parts that are necessary to complete installation. We’re likely to do that for North America. So that constrained revenue in growth margin other places going forward.

Okay, thank you.

Thank you. Our next question comes from the line of Ilya Grozovsky with Morgan Joseph. Please go ahead.

Hi. It’s Ilya Grozovsky. I had a question about the cash. So what with the cash at about what $108 million, a little bit over $100 million at the end of the quarter. And your guidance of using about $10 million to $20 million in this quarter so dip obviously, below $100 million, what level of cash do you feel comfortable with or more importantly, what level of cash do your customers feel comfortable with your level of cash do they feel comfortable with? Thanks.

Yes, so I think we’ve said traditionally we’d like to keep our cash balance around a $100 million when we’ve been asked in the past to whether we would use our cash to buy back shares or other types of uses of our cash. So I think consistently we do feel like $100 million is about the right number so getting below a $100 million may us to take actions to try and increase that cash balances, which is what we’re doing. So you’ll see us aggressively try and recover back to $100 million, because that’s where we feel we need to be in that range. We don’t need that to operate, that is sort of a comfort willow for both suppliers and customers and we can operate very substantially below that number. But it is more of a comfort level.

Okay, thanks.

Thank you. Our next question comes from the line of Matt Thornton with Avian Securities. Please go ahead.

Hey, good afternoon, guys. A couple of questions Tom, just to clarify, so it looks like gross margin you’re looking to snap back to 30% plus in 2Q and we should still get back to that 32% to 33% intermediate target by 4Q. Is that correct?

That is correct.

Okay, and then OpEx. How should we expect that to stair step? I know you’re still targeting that, call it $36 million in 4Q, should that come down evenly over the next couple of quarters, or any sense as to how to think about the step down?

Yes, so because of the increase in personnel we can do the further reduction, we’re expecting offset by some other reductions in other functional areas that it’s going to be relative flat or actually even just slightly up next quarter. And then Q3 should come down a little bit and then the big reduction will be between Q3 and Q4 as we release the employees in RTP and finish the other cost cutting reductions in Q3. And you’ll see the benefits in Q4.

Okay, got you. And when you look to, you talked about a long-term target of 35% and I think you mentioned you can get there at modestly higher revenues. What’s the bridge from 33% to 35%, is it just the new products ramping, how much more revenue do you need, I guess where do we get from 33% at 35% if, again, we’re exiting the year with some of the new products up and running, any thoughts there?

We’ve gone a little behind on the cost for – on these products. So basically the new products that we’ve got under development right now. We’re pretty comfortable without getting much higher margins as a result of that.

So I guess.

For a straight forward development, this takes time.

Got you, and there is two more if I could, I guess coming back to the prior question on North America it sounds like your large tier one customer has pulled forward some of the demand there and I think, sounds like they’re moving forward pretty nicely there, I guess, have some of the interruptions here prevented, you from capturing some of that upside, and is there any risk to lost opportunity there I guess, can you talk us through that a little bit?

I think so far we have been fine. As I said if this goes on for too much longer clearly some loss of opportunity. I think right now the issue is we do have longer lead times than we’d like and – some of the business we get is opportunistic. I think some of that opportunistic business, that would not be a generally tier one. That’s been tough to go after, but I think based on the schedule of recovery we have right now in terms of the tier one stuff I think we’re okay.

Got you and just one last one if I could Chuck, when you look at top line growth, obviously we’ve got new products coming next year and that should be a driver. Is that enough or is there anything else that needs to be done in terms of channel strategy, in terms of sales force, I guess is there anything else on your mind to help return to the positive trajectory in the top line?

I think we’re much more dependent on liquidity in the global markets and the market demand is more than anything else right now. So I think our execution plan is pretty clear right now, I think we’re in good shape. We have rationalized our channels for sales force. I think in long-term we have another strategic issue, because we’re developing some new products that we hope will find applications beyond what we’re doing right now. When we get to that, I think then we have to think about some different channels, but that’s not an immediate issue.

Okay, great. Good luck, thanks guys.

Thanks.

Thank you. At this time I would like to turn the conference back to management for closing remarks.

Thanks everybody for your participation. Just a quick update, our 2010 Annual Meeting of shareholders will be held on Tuesday, November 9, 2010 at 2:30 PM local time at our headquarters location located at 5200 Great America Parkway, Santa Clara, California. In addition we will be attending the upcoming Stephens Fall Investment Conference on November 16 in New York City and we will be on the road on Seattle on Portland on November 18 and in Dallas and Houston on November 30. Thank you.

Ladies and gentlemen, that does conclude the Aviat Networks Q1 fiscal 2011 financial results conference call. If you would like to listen to a replay of today’s conference please dial 1800-406-7325 or 303-590-3030 and enter the access code of 4381161 followed by the pound sign. Thank you for your participation. You may now disconnect.