Jeff Palmer - IR Dr. Sehat Sutardja - Chairman, President and CEO Clyde R. Hosein - CFO

Allan Mishan - Oppenheimer & Company Craig Ellis - Citigroup Global Markets James Schneider - Goldman Sachs Uche Orji - UBS Investment Research Romit Shah - Lehman Brothers Sumit Dhanda - Banc of America Securities Craig Berger - FBR Arnab Chanda - Deutsche Bank North America Shawn Webster - JPMorgan

Good day, ladies and gentlemen, and welcome to the Q2 2009 Marvell Technology Group Limited Earnings Conference Call. My name is Anton and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions]. I would now like to turn the call over to Mr. Jeff Palmer, Director of Investor Relations, Please proceed, sir. Jeff Palmer - Investor Relations: Thank you Anton and good afternoon everyone. Welcome to the Marvel Semiconductor fiscal second quarter 2009 earnings call. I am Jeff Palmer, Marvel's Senior Director of Investor Relations and with me on the call today is Dr. Sehat Sutardja, Marvell's Chairman and CEO; and Clyde Hosein, Marvel's CFO. All of us will be available during the Q&A the portion of the call today. If you've not obtained a copy of our current press release, it can be found at our company website under the Investor Relations section at www.marvell.com. Additionally, this call is being recorded and will be available for replay from our corporate website. Before we begin, we would like to remind all participants that this call will include forward-looking statements that involve risks and uncertainties that could cause Marvell's results to differ materially from management's current expectations. These forward-looking statements may include forecasts, estimates, and other commentary regarding sales trend, revenue growth, gross margins, operating, non-operating expenses, timing of new product introductions, new product acceptance by customers, earnings per share, and certain items on our balance sheet. Such forward-looking statements are usually preceded by, but not limited to such words as: expect, forecast, anticipate, believe, should, may, will, or other variations. To fully understand the risks and uncertainties that may cause results to differ, please refer to Marvell's latest annual report on Form 10-K and subsequent SEC filings. Please be reminded that Marvell undertakes no obligations to revise or update publicly any forward-looking statements. During our call today, we will make reference to certain non-GAAP financial measures, which generally exclude the effect of stock based compensation, amortization of acquired intangible assets and other one time charges. Marvell management believes these non-GAAP metrics are useful to management and investors as they best reflect one of the metrics of how the business is internally managed. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. With respect to historic information, the most directly comparable GAAP information and a reconciliation between the non-GAAP and GAAP figures is provided in our second fiscal quarter 2009 earnings press release, which has been furnished to the SEC on Form 8-K and is available on Marvell's website in the investors section at www.marvell.com. I would now like to turn the call over to Dr. Sutardja. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Thanks, Jeff. Today we reported second quarter revenues of $843 million, up 28% from the same period a year ago and an increase of 5% sequentially. We exceeded the high end of our prior guidance, which at the midpoint projected the 4% sequential increase in revenues. The revenue in our second quarter was one of the highest quarterly levels attained by Marvell in our history. This success reflects our ability to deliver products that meets our customers' needs and enables them to be successful. This also accounts as a result of the excellent performance of our own internal team. I am really proud of what our teams have accomplished in achieving these results. Reviewing our end market performance, I am satisfied with our top-line growth in what is typically the seasonally weakest quarter for many of our customers. Demand for our datacomm products was robust across the product portfolio. We have a record quarter for sales of our wireless products driven by the launch of one of our customers handheld product lines as well as the continue demand from our existing customers. We experienced a better than anticipated demand for our Gigabit Ethernet controllers, but due impart to the increased demand for notebook PCs. Additionally, we continue to see positive fractions for our enterprise switches and system controllers due to the continued bill out of Metro Ethernet networks, primarily in...within the emerging markers. Our storage products experienced typical seasonal demand during the quarter. I am also pleased with the improving levels of profitability during the quarter. Gross margin on a non-GAAP basis improved sequentially by approximate 30 basis points as a result of operational efficiency in our businesses. I would now like to give you an update on several products initiatives. As I have mentioned in prior calls, we have great confidence in our opportunities in the cellular and mobile device market. And we are well aligned with the leaders in these markets. During the quarter, we began to ramp into high volume production of our second generation PXA-based 3G cellular communication processor. Additionally, we have experienced positive demand for our application processors used newly in announced high end smartphones from a major Asian customer. And we continue to see adoption by our other mobile device manufacturers. As you may remember from our last conference call, I discussed that we were in the process of migration to the third generation of our mobile processors. The goal of this newly family of products is to extend our broad based, best in class application processor franchise to new and emerging markets. These new products will benefit from the improved performance and speed characteristics while taking full advantage of the existing ecosystem and software infrastructure of the legacy XScale architecture. This family of next generation mobile processors has more than doubled the performance over the prior generation of PXA products. These processors now have the equivalent integral [ph] computing performance of mainstream laptop PC, yet the power consumption that you would normally find on a smartphone. This new family of mobile processors is based on our... on instruction set compatible CIVA, CPU core. This core designed by our internal CPU architecture group is truly world class. These are early testing, we believe it deliveries best in class power consumption and significant computing performance advantages. We believe this new family of processor will give us a strong competitive advantage in the smartphone MID and advanced home entertainment markets. Our raw [ph] for mobile processors over the next two years will follow the kind of trajectory that you have seen in the other parts of the microprocessor industry. So we expect to move to a multi-core processors that will of course, further greatly increased performance while continued maintaining low power consumption. Now, turning to our storage business, I would like to update you on our solid state storage or SSD efforts [ph]. Since announcing our entry into this market at Computex last quarter, the impress and response from potential customers has been very positive. And we believe the SSD market is a clear term expansion opportunity for Marvel. Clearly, our ten plus years of system level experience and know-how in the hard disk drive SoCs will enable us to build a new product franchise. I would like to take a movement to explain to you our perspective on the SSD market opportunity, because we believe it is a huge opportunity for Marvell. We see the SSD market expanding, but we believe the fear of it replacing the HDD market is vastly exaggerated. Rather we believe it will create new market opportunities. There are two main reasons; first: SSD performance will always come at a price premium. So customers will want both; HDD for high capacity and SSD for high performance. Secondly, what today there is an over supply of flash memory chips. This is primarily due to the end market applications, which are driving today's flash demand such as MP3 players and digital still cameras. However, it will look out several years from now to when SSDs are more widely adopted in PCs, even thinking for a moment only as a secondary storage medium, let alone as a primary storage medium, there is clearly not enough flash manufacturing capacity online today or in the near term to support these expected adoption. So, while we are positive on the longer term growth of the SoC market, we believe this will require a significant investment in flash manufacturing capacity, which will take years not months to bring online assuming that the flash manufacturers take the risk of the significant upfront investment effect of the market development. At the same time, we see HDD technology continuing to rapidly improve and even our own product roadmap shown that our customers will be able to build a terabyte mobile drive within the next couple of years. The balance between the economic investments needed to support a significant SoC market and the continual advancement in HDD technology will result in co-existence of SoC and HDD for many years to come. Setting aside from the manufacturing supply issues there for a moment, what will accelerate the demand for SSD in the market place are total system costs and the overall throughput performance of the SSD. We want to stress the investors that performance and reliability are what we believe are our distinct advantages. We are focused on delivering the highest performance controller which will simultaneously maximize both the performance and the reliability of flash memory SSDs. We see three distinct vertical market opportunities for SSD devices. First, enterprise class storage and service; second, full featured notebook PCs in which the solid state drive is a secondary storage medium; and thirdly, small foam factor MIDs where solid state memory will be the primary storage medium. The products we're assembling today address both the full featured notebook and the MID segments and we have product engagement in place to address the enterprise data storage market. We anticipate beginning to see early revenues from SSD efforts by later this year, but due to dynamics we discussed earlier it is natural that the volume runs will follow much later. So in summary, during the last quarter, I believe Marvell continue to expand its presence and share in many target markets. Our technology investments continue to gain traction in the market and encourage us that we have made good investment decisions. Now I'd like to pass the call to Clyde to provide the financial update and guidance before turning to your questions. Clyde R. Hosein - Chief Financial Officer: Thank you, Sehat and good afternoon everyone. I will start by reviewing the non-GAAP results for Q2. Revenues came in at $843 million, representing a 28% growth year-over-year, 5% sequentially and slightly above our Q2 guidance range of $830 million to $840 million. As Sehat mentioned earlier, we are pleased with the progress we have made towards improving our profitability and free cash flow. Our non-GAAP gross margin for the second quarter was 52.3%, an improvement of approximately 30 basis points sequentially, an increase of over 287 basis points from the same period a year ago and better than our prior guidance of 51% to 52%. Our overall operating expenses on a non-GAAP basis were $279 million, which is slightly better than our prior guidance of $280 million to $285 million. Expenses in our last reported quarter included a benefit of about $15 million from various settlements. Adjusted for this, our overall expenses were up about 3%, reflecting the increases in product specific development costs. R&D expenses for the quarter were $217 million, up approximately $8 million sequentially due to increased product expenses and head count additions in strategic development areas. SG&A expenses for the quarter were $62 million, up approximately $15 million sequentially. However, when adjusted for the one-time benefits received last quarter, SG&A expenses were essentially flat. Interest expense and other income was approximately $2.7 million, and tax expenses were approximately $5.1 million, with a effective non-GAAP tax rate at 3.2% for Q2 as compared to our non-GAAP tax rate of 5.4% in Q1. Our non-GAAP net income for the second quarter was $154 million or $0.24 per diluted share compared to non-GAAP net income of $150 million or $0.24 per diluted share during our first quarter. As a comparison, on a recurring basis, non-GAAP net income in Q1 without the benefit of the credits was $136 million or $0.22 per share. The shares used to compare non-GAAP net income during the quarter was 640 million, up from 624 million shares in the prior quarter due to higher average share price and using the treasury method of computing diluted share counts. Let me now summarize our results on a GAAP basis. We are pleased to report GAAP net income of approximately $71 million or $0.11 per share in the July quarter. This is essentially flat with the last quarter, but up significantly from the $0.10 loss recorded in the second quarter of the prior year. The difference between our GAAP and non-GAAP results during the second quarter was due to stock option compensation expense of approximately $48 million or $0.07 per diluted share on amortization of intangibles representing $35 million or $0.06 per diluted share. These non-GAAP adjustments are essentially flat sequentially and an improvement of about 2 pennies per share on a year-over-year basis. Now I would like to offer some additional insights on our revenue results during the quarter. Our performance was better than anticipated considering the seasonality of the quarter. From an end market perspective, the quarter played out modestly stronger than our original expectation, with sales of datacomm products better than plan, and sales of storage products in line with seasonal expectations. Sales linearity during the second quarter was back-end loaded but improved on a year-over-year basis. Sales of our embedded wireless products were better than we had anticipated due to the launch of a key consumer product by one of our customers and that continued strength from existing customers. The sales of wireless products were up sequentially and upgraded on 75% year-over-year, highlighting the strength and marketing expectance of our low power embedded wireless offerings. Sales of our Ethernet products increased both sequentially and on a year-over-year basis better than we had anticipated but due to the continued build out of metro Ethernet networks within the emerging markets as well as the continued demand for network PCs. The sales of enterprise products, that is switches, system controllers and processors was up over 16% on a year-on-year basis. The sale of client-based Ethernet controllers was robust with greater than 30% year-on-year growth. Sales of our cellular products were in line with our expectations and declined modestly both sequentially and on a year-over-year basis. Demand for our application processors accelerated during the quarter and both the unit and revenue basis as a new series of smartphones from the major agent customer gained market traction. As Sehat mentioned we are very impressed by the opportunities within the cellular and mobile space. Sales of our communication processors were slightly lower than our expectation during the quarter, as we believe some inventory balancing is occurring ahead of new product launches at one of our major handset customers. Revenue from our storage product declined sequentially as anticipated and was in line with normal industry seasonality. Notwithstanding the modest sequential decline, revenues from our storage products grew over 30% on a year-over-year basis. During the quarter, unit shipments of mobile hard drives SoCs increased sequentially in the high single-digit. These positive trends were partially offset by seasonal declines in desktop SoC and enterprise re-channel products. We continue to see our major hard drive customers benefit from our strong product portfolios which are allowing them to gain share, particularly in mobile drives. During the quarter, Western Digital was the only customer exceeding 10% of our revenues. Lastly, sales of our printer products were better than anticipated, especially for ink-based printer systems. Revenues for printer products were up both sequentially and on a year-over-year basis. Now turning to the balance sheet. Cash equivalents and short-term investments were $889 million, up approximately $115 million sequentially. We generated $183 million in cash from operations, spent $16 million in CapEx, resulting in $167 million in free cash flow or 20% of revenues. We generated approximately $51 million from employees' stock programs and paid down $100 million of our outstanding debt. Accounts receivable was $471 million, up about $100 million sequentially, primarily due to linearity and timing of customer payments. DSOs were 51 days, an increase of 9 days from the first quarter. Net inventories at the end of the quarter were $327 million, down $43 million sequentially as we focused on improving our operational efficiency. Days of inventory was 78 days, down sequentially from the 92 days reported in the previous quarter. Accounts payable were $237 million, up $69 million sequentially due to the improvement in timing of payments made to suppliers. Now I would like to provide guidance for anticipated performance in the third quarter of 2009. We currently anticipate third quarter revenues in the range of $860 million to $880 million, which represents a growth rate of 13% to 16% year-over-year and 2% to 4% sequentially. We anticipate non-GAAP gross margins in a range of 52.5% plus or minus 50 basis point. We anticipate non-GAAP operating expenses to be approximately flat plus or minus $5 million. R&D and SG&A should be essentially flattish on a sequential basis. Interest expense and other income should be in the range of negative $1 million to $2 million, and the effective non-GAAP tax rate should range between 6% to 8%, with diluted share count of approximately 645 million. We project non-GAAP EPS to be in the range of $0.24 to $0.26 per share. On the balance sheet, we currently expect to generate $160 million to $170 million in free cash flow during the quarter, which would result in an ending cash balance of just over $1 billion. This projected cash balance excludes the effects of any debt repayments or employee stock activities. We currently expect GAAP EPS to be lower than our non-GAAP EPS by about $0.13 per share plus or minus a penny. About $0.06 of this is related to amortization of intangibles and about $0.07 in stock option expenses. Before we take your questions I would like to turn the call back over to Sehat for a couple of strategic announcements. Sehat? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Thank you Clyde. Today, I am pleased to announce two agreements in our storage business. First, the evolution of our longstanding supplier relationship with Seagate. As many of you know, Marvell has had a long history in supplying advanced enterprise class read channel products to Seagate. see you. More recently we started supplying enterprise class SoC products to Seagate. Seagate and Marvell has now agreed expand that relationship. I'm pleased with the expanded long-term commitment to technologies from Marvell. Second, I would like to share you with an update on our relationship with Fujitsu. We are pleased to announce Fujitsu has awarded Marvell the SoC design for its next generation SAS enterprise drive. This design will begin to ramp into production in our fourth quarter. These two new agreements demonstrate that Marvell has been successful in the hard drive market because we have consistently delivered SoC products with the industry best signal to noise ratio, thus enabling our customers to build the highest density drives and with superior manufacturing yields. These features have directly enabled our customers to enter the market sooner with high density products leading to better profitability. Additionally, we have a very long history of introducing the lowest power read channel technology versus our competition. This continues to be a distinct advantage especially with the continued transition over mobile platforms. Our low power consumption is also a clear advantage for the data center drive applications due to the rising energy cost. In closing, we are very pleased that Seagate [ph] and Fujitsu adopting our technology more probably. Now we would like to turn the call back to the operator to begin the Q&A portion of our call. Question And Answer

[Operator Instructions]. Your first question comes from the line of Allan Mishan with Oppenheimer. Please proceed with your question. Allan Mishan - Oppenheimer & Company: Guys, can you talk about the content that you would get in a SSD controller or would that be higher or lower than what you get today, in a hard disc drive? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: I would say, depends on the target markets for very, very low capacities probably either similar or slightly lower in the long run. But, initially will be higher. It all... again all depends on the volume. But in the very high end I will say quite a bit higher than the traditional hard drives associated. Allan Mishan - Oppenheimer & Company: Okay, great. And then on Fujitsu win, is that for a hard disc controller or is than of reduction in SoC? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: It's an SoC, specifically SAS so [indescribable] also a very high enterprise class application. Allan Mishan - Oppenheimer & Company: Okay. And does Marvell supply SAS hard disc controller to producer today or is that all being supplied by another supplier? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: It supplied by another supplier at this point. Allan Mishan - Oppenheimer & Company: Okay thanks very much and congratulations on the win. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Thank you.

Your next question comes from the line of Craig Ellis with Citi. Please proceed with your question. Craig Ellis - Citigroup Global Markets: Thanks guys. Quite you can help us understand that as you come abode and you look at operating expenses, what opportunity is there to control operating expenses to an even greater level than what we've seen in the last few quarters? Clyde R. Hosein - Chief Financial Officer: I think it's still early for me to describe what those areas are, I think that I found in press release the revenue growth opportunities and I think you will see that in the next few quarters from mobile, even within that other than some quarter-to-quarter fluctuations, our intensions or current intensions to keep OpEx flat and leverage that with the revenue growth. Craig Ellis - Citigroup Global Markets: Okay. And then switching to the top line in the outlook, as we think about the sequential guidance that you provided, how should we think about what the relative strengths and weakness are on our product line basis climb? Clyde R. Hosein - Chief Financial Officer: Typically, we'd see improvements in communications and storage, we still currently seeing that. Our embedded wireless is still growing. So, pretty much all of our segments are growing albeit I think more subdued in the light of broad economic concerns. I think our customers are, we have seen that in some of our customer, in most of our customer. So, I really don't think any specific area is growing much better than the other ones but we are seeing embedded in our forecast tempted down for economic federals. Craig Ellis - Citigroup Global Markets: Okay, fair enough, thanks. Clyde R. Hosein - Chief Financial Officer: Thank you, Craig.

Your next question comes from the line of James Schneider with Goldman Sachs. Please proceed with your question. James Schneider - Goldman Sachs: Good afternoon and thanks for taking my question. Shat, in the past you've talked about the fact that proxy developed 2 to 3 years ago contribute to today's earnings. So, as you look out into the calendar '09 what are the products you introduced in the past couple of years you expect to drive your most... most of your revenue growth next year? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: If you look the... we talk quite a bit on application processors, mobile processors. So that is a significant investment over the last couple years. There are lot of new applications that can take advantage of the performance of the XScale types of devices and taking advantage of the software infrastructures. And I would say from that area it could be a very significant drive growth in the next year or two. That we... obviously, we continue to invest heavily on heavy, heavy investment on advanced read channels for this drive. So, we are positive with our... that our customers will gain more traction in the marketplace and that will drive also higher unit volumes for us in the next couple of years. A few other activities that we'd be talking about that we invested in optical, we didn't spend much time about it. But this is a... it's a significant investment, of course in the scale as the HDD investment. But nonetheless still significant is we have a good tractions right now on the Blu-ray side. So... but they will probably toward sometimes second half also of next year when you see the more revenue on that side. And a few other little things in there the; we talk about power management and it's... we don't have time to talk more about it. But there will be more traction also there. James Schneider - Goldman Sachs: Fair enough, thanks. And then may be one for Clyde. I think on the last call, there is an allusion to an update this quarter on the target operating model. Can you share with us a little bit of your thinking specifically with respect to gross margins and how we should view those going forward and any other comments you want to make around OpEx as well? Clyde R. Hosein - Chief Financial Officer: I think it's still early; after eight weeks, it's still early for me to put out the model that would be embedded into the fabric of Marvell. But if you look at the track records at least have had is to continue to drive the business to improve gross margins. Most recent quarter, we announced we show 30 basis points of growth and you will see similar amount in the next quarter. So, I think you could continue to see us to drive in the sequential improvement in gross margins. I do expect that to continue. As I discussed earlier, on the expense side, I think our... most of our focus right now is to keep expense flattish. We will see how economic conditions play out with the current economic environment I'd say we keep it flattish, but drives significant amount of line growth. So the improve in your expense ratio is that way. And I think that continues to be the strategy. And then finally, I think again in my track record is to focus a lot in cash flows and I think so happen intent to continue to drive that. So, we will see improvements in that I know that's not given you guys a lot of specifics right now. I think the best time to look at that is at the end of the fiscal year when we report results as a good time to talk about long-term models. Hopefully I think we'll have... all of us will have better clarity on the economic environment at that point in time. So, I think that's a good point for us to lay that out for you. James Schneider - Goldman Sachs: Fair enough, thanks.

Your next question will come from the line of Uche Orji with UBS New York. Please proceed with your question. Uche Orji - UBS Investment Research: Thank you very much. Clyde, just to make sure I understand; you talked like expenses flattish; is that up of the base of this current quarter and safe for how long to 12 month? Is there any way to kind of make that come and delivery most specific? Clyde R. Hosein - Chief Financial Officer: Yes, from this quarter, I think you will see, I think about $280 millionish. Uche, you will see some quarter-over-quarter fluctuations that are primarily products specific, tape outs and so forth. But we aren't intend to add to the structure unless short of an acquisitions or something. But I think structurally our intension is to keep it essentially where it is right now. I guess we re-visit that we have to dependent on economic conditions, but our current use to keep the structure as it is right now, and we will of course keep investing in product specific areas. Uche Orji - UBS Investment Research: Sure, all right. Just on the HDD setting [ph] congratulations on the winds I did to and... but can you just give me any insight on what your feel on the current channel investor for how this drives and because as we comment on concerns out there about if the tribute and including your customer base. Is there any insights that will happen? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: So again, if I understood the questions, if it's related to our design wins or our market shares, I can say upfront that we are very, very happy with the progress with the engagement that we have with all other customers. So if the economy is not as it will stay in the good health. I think we'll tremendously benefit from that side. Uche Orji - UBS Investment Research: Okay. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: If you're talking about the economy, it's hard for me to tell you what's the effect of downturn economy, potential downturn economy to that market. Obviously there will be some impact if it happens. Uche Orji - UBS Investment Research: I'm asking are there any customers that you think have excess inventory now and is that resulting any type of shares or consolidation from those customers? That's what I am asking. Are there any comments around the level of inventory now, especially related to number technologies we have slightly higher level of channel inventory from what you can do with your customers? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Not that I know, I think I mentioned many times in the past that many times when we ship products to our customer, we ship on the almost like on the short term notice basis. So, I think we have... of course we have forecast, but a lot of times our customers are not in the habit of building things beyond that what they can sell. Uche Orji - UBS Investment Research: Sure. Okay, that's helpful. Just one last question; in terms of the recent licensing agreement with Trimble for GPS, where does that place your capabilities for delivering complete GPS solutions. And given the level of competition of this market, how... what gives you confidence of getting at this point and how successfully do you plan to be in terms of where this will run in terms of gross margins or so if there is any insight as to this arrangement, which Trimble and your strategy for GPS? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Sure. So the short answer to that question is yes. We're looking to how to incorporate GPS technology functionality into our products across the board from and hand held devices to non-hand held devices. And we study the drawing concepts of doing different things, different implementations. And we came to conclusion that to pick some direction and the agreement with Trimble is a hint of what we are planning to do to incorporate GPS into our products. They will allow us to build those GPS functionality at the lowest possible costs to allow more products to incorporate GPS down the road. Uche Orji - UBS Investment Research: Okay, all right. Great, thank you very much.

You r next question comes from the line of Romit Shah with Lehman Brothers. Please proceed with your question. Romit Shah - Lehman Brothers: Yes, thanks for taking my questions. Just wanted a follow up on Uche's question about storage. If you look at one of your larger... your largest hard drive customer, they... I believe they guided units to grow over 10% in Q3 so if you could just give a little help on how we reconcile that versus your expectations for growth in the storage business this quarter, thank you. Clyde R. Hosein - Chief Financial Officer: We don't comment as a company policy on specific customers, and I think you're going to stick to that. What I'll tell you is if you look at this quarter and you look at year-to-date, our trends in storage is consistent with the overall industry trend so there is nothing in there that concerns us of design thickness is a consistent through out and Sehat mentioned some improvements, which you will see in the next several quarters. But... so I think it's on a year-to-date or in the quarter basis from an industry level we've seen consistent stuff and I really want to avoid commenting on specific customers. Romit Shah - Lehman Brothers: Sure. Clyde R. Hosein - Chief Financial Officer: I do think as we said earlier, I do think the economy does have some of the effect on the overall customer demand. But there is no disconnect between the trends that people are seeing on a cumulative basis. Romit Shah - Lehman Brothers: Okay. And then Clyde, just on stock option expenses, it's a fairly large percentage of your pro forma earnings. Can you talk a little bit about that and is that a number of that you expect to come down over time? Clyde R. Hosein - Chief Financial Officer: We value stock options as one of the key retention programs for our employees and plan to continue that. It's about $0.07 a share and if I recollect, that's probably mid single-digitish which is consistent with our peer group, but you haven't updated to look at Marvel's peer group. So, I think we intend to continue it, but it's obviously something we look at. Romit Shah - Lehman Brothers: Thank you.

Your next question comes from the line of Sumit Dhanda from Banc of America Securities. Please proceed with your question. Sumit Dhanda - Banc of America Securities: Yes. Hi, Sehat, first question on Seagate you talked about and expanded relationships, could you shed more light on what exactly it is you are talking about. Is it on the client side, is it SSD? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: So, at this point, I can only say that I am very pleased with the expanded relationship. I mean, I'm really, really pleased. This is a long-term commitment to technology from Marvell. In terms of specific details, I think I will defer that to some other times when it is appropriate to do so. Sumit Dhanda - Banc of America Securities: Okay. Second question again sort of relates back to Seagate. Your storage business was down seasonally; you noted high single-digit growth in your mobile segment and of course desktop and server was down. So, I guess my question is when we'd expect to see the benefit of the enterprises versus CRAM with Seagate really start to show up in your numbers because given the decline last quarter and then clearly an outlook for some what tepid growth as opposed Q3, in the October quarter. I am having a top line reconciling your outlook despite your concerns on the macro? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: So, I will take that. In the July quarter, you are right. In... to clarify, storage was down, mobile was up consistent with what you see in the mobile PCs. So, that's consistent with typical seasonality and trends there. The second part of the question is to when you will see the benefit of this? These are architectural designs that will take probably a year to 18 months before you'll start seeing showing up. But then the good news of it is it's sticky and it will last several years after that. So, you won't see at least see a question on the Seagate side in near term from today's announcement. You might see little bit earlier on the Fujitsu side, probably couple of quarters from now. Sumit Dhanda - Banc of America Securities: Just to clarify, when I am talking about enterprise SoC which I follow was supposed to ramp this year, I am not talking about your expanded relations which you announced today? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Yes. The products are shipping and I mean, we will continue to ramp typically in the enterprise business. The ramp is not as fast as the let's say, the desktop or the mobile. But it is... it's a sure ramp. So maybe that's the reason why probably you one of the many reasons why maybe you have questions about why the ramp is not... I mean why we are not seeing faster increasing revenue. The other part is look, an enterprise revenue is also a small portion of Marvell's revenue today. We have a much bigger revenue number, total number so as a percentage also the impact is also smaller. And more importantly, as a company we also are now more concerned with the potential outlook of the economy and every time people ask questions about why we are not worrying about the economy, so I know we are, I mean we are making the outlook with some are thinking about worrying about the economy especially when every investors in asking us why we are not worrying about the economy. Sumit Dhanda - Banc of America Securities: Okay, I am sorry to belabor at this point, but let me just ask you this differently. If you look into what your competitor LSI has to say on the cloud, they make it pretty obvious that they're expecting to lose a quarterly run rate of business close to $30 million, $35 million a quarter, which I would assume should show up the revenues sooner or rather than later and I guess my question is if that's indeed the case, then effectively what you are suggesting is that in what's a seasonally strong market for PCs in Q3 the rest of your drive business is going to be flatter, am I really missing something in this equation in terms of the real trajectory of the ramp of the enterprise SoC with Seagate? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Yes. So, without going to specifics, okay, if you think that any single questions that you ask we don't know... I don't know what exactly what LSI charging for what the revenue that outside losing in terms of the Seagate enterprise. But it could be at some of the older products I'm speculating. So, it could be some of the very older products they are charging much higher price compared to the market price today that they are losing. So, it could be part of the explanation. But in terms of the storage pieces we are... you need to understand we have a huge market share in the storage business. So, we are not looking at individual specific customers as a metric on what will be the outlook of the storage business. So, we are looking at the storage business outlook more in terms of the market outlook, okay. So that's what we need to judge our business at this point. When we were much smaller company, when we're stepping only does one-fourth or one-fifth of the revenues that we are doing today, we do not have to worry about the market outlook, but to be... we need to be more sensitive to be at the market outlook at this point especially in the next quarter to until the economy turns back to normal. Sumit Dhanda - Banc of America Securities: Okay, one last question and I will go. Back to your expanded agreement with Seagate, may be I asked the question differently, can you cover us whether the revenues are going to come from existing markets or new markets? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: I can only... I am not at liberty to be... to go to into any more specifics than what I have said already. Sumit Dhanda - Banc of America Securities: Okay, thank you very much Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Right, thank you.

[Operator Instructions]. Your next question comes from the line of Craig Berger with FBR. Please proceed with your question. Craig Berger - FBR: Thanks for taking my question. Just getting back to the guidance, I am having trouble understanding it. Intel's guiding for 9% sequential growth, LSI says PC market is good. HP says the PC market is good. You've got a large Wi-Fi ramp into a smarter phone. You've got a large compressors ramp into the smartphone in Q3. So, why isn't the storage growth better? Clyde R. Hosein - Chief Financial Officer: I think we've got the next month in October there and as Sehat and I had pointed out, our concern goes into the fourth quarter one of our months in royalty, that's one of our bigger months. So that's where I think the concern is. It's not... our as I said, this is not... as you pointed out there's no design changes during the quarter. I think our forecast reflects more conservatism than some of the other ones that ends in September. Craig Berger - FBR: You're being too conservative right now? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Well, if we are, I think there is potentially upside. We've got to make adjustments while as we sit here. And our forecast for the next few months. So, if we are one, we'll deliver much better results. Craig Berger - FBR: Moving on to the cellular business, you said that business is down year-on-year, which... can you A) walk us through the inventory issues going on right now. And B) as you look out into 2009, you should have pretty good idea just given the length of time, it takes to ramp products into the cell phone. You should have a pretty good idea for what your growth trajectory looks like and base band and ask processors. Can you help us understand how 2009 is unfolding? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Yes, so, the... I think I'm very... actually, I feel positive about the outlook in 2009 as it unfolds. Our new product are doing well. products are shipping from TSMC instead of the Intel fab, okay. Our application that's on the competition processors as the integration or basement then publication processor. On the standalone application processors, so we have very good traction. Our customers continue to see the advantages of our low power high performance application processor. As I mentioned on the... we've been looking for the last year or so or moving over the third generations of the application processor, and we have completed the design of that application processors and we are seeing significant. I mentioned doubling the performance compared to the existing ones. And a newer and even more advanced process geometry. So, and it's fully compatible software, fully software compatible. So, any applications, DDO or whatever it is that runs on the existing application processor will run on this processor. So I feel that there will be continue to get more design wins in the site of 2009, especially in 2010, if you will, be even better. Craig Berger - FBR: Can you walk us through the inventory issues and also tell us whether you think you will be to get a second comp processor customer next year?

On the inventory I think without getting into customers specific, I can say that there are some supply chain changes, not related to us more today supply chain. That should work itself out probably in a month or so... certainly this quarter. And that's probably the best with our given customers specifics on that issue. As far as... can you repeat your question on the... Craig Berger - FBR: Do you guys expect to be able to get a second or more base band possess possessor, comp processor customer, you guys have one comp processor customer right now. That raises a lot of concentration risks among the investment community. And we want to know what it's going to take for you guys to get a second customer there. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: I think it's too early for us to mention anything about it that once you have answered. The second asset is, I can tell you in terms of the risks, I'm very, very comfortable. I am really, really feel comfortable with that risk that everybody perceive to be a risk. It's... this is not a risk that I am... to worry about or lose sleep on in fact as I said I feel very comfortable. Craig Berger - FBR: Thank you.

Your next question comes from the line Arnab Chanda with Deutsche Bank. Please proceed with your question. Arnab Chanda - Deutsche Bank North America: Thank you. First question for Sehat. Sehat, could you clarify little bit of what the Seagate relationship that you are announcing. Are you going to be selling into desktop and laptops and are you going to be single or dual first? Could you explain that little bit with some idea about the time frame? Thank you. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: I mentioned earlier... unfortunately I am not at the liberty to expand beyond what I've said. I think in due time, we will talk more about it. The only thing rephrase is I am very happy about it. Arnab Chanda - Deutsche Bank North America: Okay. I have a question for Clyde then. You are talking about... if you look at all the different drivers in your business, I think this line was kind of explored few earlier to, but I'm just going to try it again. It seems like you do have a couple of pretty significant product around few of the Seagate Enterprise sharing and as well as the 3G ramp from your top customer. Yes, you are just talking about growth that's significantly below seasonality. Could you describe this to... could you sort of tell us how much of this is economic concern that you have versus what you've seen in the order book or is it, you have talked about some kind of supply chain and efficiency. Is that an inventory issue or are there some other factors such as some other business that are not doing so well; and that will be great. Thank you. Clyde R. Hosein - Chief Financial Officer: Yes. Some of the ramps, especially enterprise we talked about; this necessarily come into play this quarter; part of it would be body the bonding [ph] have to move the needle. A lot of these things we talked about for future quarters beyond Q3. And in term of a core business or growth business, I'm very excited about that. But I think in the near term, I have been concerned about it their economy to slow. Before I came to Marvel, it continued to be that way. Things have chased my views. So I think this is more than near term things. We are very excited about our business in our growth prospects. We just placed 28% year-over-year in the July quarter. And 145, 16% in the next quarter. That is much better than the industry. So let's not... let's put that in complete perspective here. Even with our tempered view, this is an excellent growth story. And I assure you it will only get better. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: I just want to add little against [ph] with our outlook. So our outlook if influenced by the outlook of the economy, so every time I look at the outside the window of the office, when I see the fuel cost driving on the road that concern me a little bit. So we just have... we are trying to be... we are just trying to figure out to reflect the reality in the market, what we... we thought we could be wrong. I mean there is a potential that we are wrong that the market is just fine. And all our design wins, all our engagements will pull in more revenue. That's always a possibility. Arnab Chanda - Deutsche Bank North America: Just one last question, Sehat; obviously we are all trying to figure out what the gas prices mean, our cars mean for. The economy... if you look at what you can control what's in... what you are working on, could you list for us in 2009 what the major growth drivers would be? Thank you. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Yes, I mentioned it earlier. So, we spent lot of time on mobile application processors, anything related to that if it is a good gross in 2009. I mentioned about that we... our advanced storage technology will continue to contribute into share gains into our customer base. So, I mentioned the other things that we are looking on that over the next one year, we will look at market tractions and starting to generate revenues. Arnab Chanda - Deutsche Bank North America: Thank you very much. Jeff Palmer - Investor Relations: Anton, I think we have time for just one more question.

Your final question comes from the line of Shawn Webster with JPMorgan. please receive with your question. Shawn Webster - JPMorgan: Yes, thank you for taking question. Hey, Clyde, can you... in the last couple of quarters, you guys were taking about your backlog as a percentage of your guidance; can you give us an update in anyway you like to look at it in terms of churns required or what your backlog coverage is for Q3? Clyde R. Hosein - Chief Financial Officer: Yes, I can do that for you, Shawn. Going into this quarter, our backlog was about five points higher than it was in the last quarter. So to hit the midpoint of our... the range we guided obviously would require lesser terns at the beginning of the quarter. So, like I said, it's order backlog is in pretty decent shape. Shawn Webster - JPMorgan: Okay. And in terms of the, I guess that I don't remember you guys talking so much about economic weakness and macro weakness in your last conference call. Was there any thing specifically that changed as far as what you are seeing or is it a simple matter of what your backlogs is doing. Clyde R. Hosein - Chief Financial Officer: I've got a new CFO. Shawn Webster - JPMorgan: Okay. Clyde R. Hosein - Chief Financial Officer: Sure, I think Shawn, if you had known it's been a concern; that's what. I don't think there is anything specific. There is no customer specific issues. I think we're just being cautious. And I think you'll see Sehat and I being cautious as we go through this. The things we control in our business, Sehat just answered is the ability to influence customer technologies and that is optimistic as certainly as I have ever see. We just announced a couple today and we'll announce a lot more in the future. So the things we control are technology design, design wins and the other team is doing supportive job with that. All of your near terms I cautious and we admit this cautious. Shawn Webster - JPMorgan: Okay. And your gross margin percent seemed like it came in quite a bit better than your initial guidance. Can you reconcile what went better versus your expectations in Q2 and what is driving the incremental gross margin growth in Q3? Clyde R. Hosein - Chief Financial Officer: That's a very good question, Shawn, because that's something we could control unlike some other things. Wafer costs for example were incrementally better, and we expect that to be incrementally better again in Q3. And the yields and some of our products were also better. So, we are executing a very well in those areas, and that's the principle difference between the two. There is a minor things like where price is being less, but those are minor things. The broader issue is wafer pricing and/or wafer yields are much better than we... Shawn Webster - JPMorgan: Okay, and what was your headcount in the quarter? Clyde R. Hosein - Chief Financial Officer: I think it was up about a 100 people sequentially, so just... Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: It'sabout 5,300, Shawn; I can give you exact number a little later on. Shawn Webster - JPMorgan: Okay. And can you characterize the pricing environment right now for storage? Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: Stable. Shawn Webster - JPMorgan: All right. Thank you, very much. Jeff Palmer - Investor Relations: Thank you, Shawn. Ladies and gentlemen, thanks for joining us today. We appreciate your interest in Marvel, and we look forward to seeing you at our investor conferences coming up in the next several weeks, and speaking with you at our next earnings call. Thank you, very much. Dr. Sehat Sutardja - Chairman, President and Chief Executive Officer: All right, thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect.