Vicor Corporation

Thank you, Tahisha, and welcome everyone to our conference call for Vicor Corporation’s first quarter ended March 31, 2012. I’m Jamie Simms, Chief Financial Officer, and with me here in Andover, as always, Patrizio Vinciarelli, our Chief Financial Officer; and Dick Nagel, our Chief Accounting Officer.

Today we issued a press release summarizing our financial results for the first quarter. This press release is available on the Investor page of our website, www.vicorpower.com.

We also have filed a Form 8-K with the SEC in association with issuing this press release. I remind all of you, today’s conference call is being recorded and is the copyrighted property of Vicor Corporation.

I also remind you various remarks we may make during this call may constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995.

Our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those explicitly set forth or implied in our statements. Such risks and uncertainties are discussed in our most recent Forms 10-K and 10-Q filed with the SEC.

Please note the information provided during this conference call is accurate only as of the date of the call. Vicor undertakes no obligation to update any of the statements made during the call and you should not rely upon them after the conclusion of the call.

A replay will be available beginning shortly upon conclusion through May 9, 2012. The replay dial-in number is (888) 286-8010 and the listener passcode is 32338294.

In addition, a webcast replay of the call will be available on our investor relations page of our website beginning shortly after its conclusion.

Patrizio and I each have prepared remarks, after which we will take your questions. Patrizio?

Hello, and welcome to our 2012 first quarter earnings call. As set forth in this afternoon’s press release Vicor reported first quarter earnings of $0.01 per share compared to $0.02 per share for the fourth quarter and $0.10 per share from first quarter 2011.

As Jamie and I addressed when discussing the fourth quarter, our recent results have been influenced by weakness in particular markets and slower than expected growth from new opportunities. Despite the poor performance, we’re staying a strategic course as we believe current conditions are temporary and the strategy remains valid.

The businesses within the big business unit experienced mixed results for the first quarter with flat aggregate bookings and aggregate revenue declining approximately 2.7% sequentially. Bookings for the BBU in aggregate were essentially unchanged quarter-to-quarter reflecting continued soft demand across the geographies and markets we serve.

Bookings increased less than 1% with increases from Asia Pacific, Japan and Europe offset by a decline in North American order activity.

The BBU’s Vicor Andover unit which manufactures both power conversion modules and DC/DC configurable systems, experienced a 12% increase in bookings and the Wescor unit which manufactures AC/DC configurable systems experienced a 16% increase. But these improvements were offset by a marked decline in new orders placed with Vicor Custom Power, the BBU’s custom system solutions business.

We previously have spoken to our concern that defense electronics has entered a period of sustained decline as Pentagon budgets decline. However, we’ve also spoken to our expectation that the diverse nature of our high-end solutions would be somewhat insulated from this sustained decline.

As is the case with our configurable systems businesses, longer-term promise for our custom systems solutions also will be driven by the use of V-I Chip components aligned for better performance at a lower cost. We continue to believe our custom systems solutions are aligned with Pentagon spending priorities, but the knowledge we may experience soft demand for at least the remainder of 2012.

Once again, BBU revenue declined 2.7% on a quarter-to-quarter basis with a mix of shipments similar to the bookings mix. I hope in the not-too-distant future to be able to speak to you about robust volume growth in revenue from our line of intermediate bus converters.

Unfortunately, despite the US Patent and Trademark Office finding all of the claims of each of the 4 patents being asserted by SynCor against us to be invalid, we have yet to receive meaningful orders from customers who, despite the compelling Vicor position and significant performance differentiation of IBCs, are unwilling to risk getting entangled in litigation which SynCor has brought to interfere with our business.

Nevertheless, we have used the IBC opportunity to introduce our advanced technologies and capabilities to win customers in networking, computing and other segments in which the intermediate bus architecture is utilized. We expect to make further progress with these customers both with IBCs as SynCor patents are finally invalidated, as well as V-I Chips and Vicor components.

Turning to BBU operations, the BBU continues to manage its supply chain and manufacturing plant quite well which is particularly notable in light of the changing mix as fewer high-margin custom solutions have been shipped in recent quarters. The BBU with its mass customization model has a good track record as a domestic manufacturer and its clear evidence sophisticated electronic products can be produced profitably in this country.

Turning to V-I Chip, the subsidiary recorded short-term improvements within the first quarter but its performance continues to be negatively influenced by the cancellation of the Blue Waters projects at the University of Illinois. We achieved so a 26% sequential increase in first quarter bookings from the depressed levels of the fourth quarter, and shipments increased 20% sequentially.

These increases reflect in part our efforts to broaden our customer base.

As earlier disclosed, Blue Waters was expected to generate approximately $17 million of incremental 2012 bookings for V-I Chip in addition to millions in bookings for the fourth quarter 2011, which failed to materialize. While V-I Chip’s 2012 performance will fall short of expectations discussed during prior conference calls as the [indiscernible] included substantial higher sales in 2IN [ph] servers, we are encouraged by the activity level and initial order flow from new customers.

Notably during the quarter and disclosed on our fourth quarter call in February, we achieved booked initial orders associated with an important design win in the enterprise service space utilizing Intel’s VR12 power specification. This and numerous other opportunities are expected to replace a portion of the 2012 volumes lost to the Blue Waters cancellation, but we now expect the achieved revenue to be essentially flat year-to-year and the revenue ramp 2015 may not be seen until the fourth quarter of this year.

We remain confident 2015 will be an improved year for V-I Chip based on our visibility into customer strengths for rollout of their products utilizing existing V-I Chips. An important growth variable for 2015 will be the rate at which customers designing new V-I Chips, most notably new DCMs and PFMs.

We expect commercial release during the second half of this year of our promising panel-molded V-I Chips and believe this new packaging technology will provide significant advantages for V-I Chip and V-I Chip customers.

The panel-molding approach to V-I Chip modules should materially reduce cents per watt, a key measure of the unit cost effectiveness of every [ph] technology and their manufacturing costs and production efficiency. Customers should find the unprecedented power density and cost effectiveness of these products to be very compelling.

V-I Chip continues to make progress on unit costs and overall manufacturing efficiency, recording a sequentially improved gross margin percentage for the first quarter.

Notably, certain material costs were lower and production yields trended up. Our now classic BCM, TRM and VTM modules utilizing the dedicated mole [ph] cavities will continue to be manufactured as they have been without the economies of scale of our new panel molding process.

Nevertheless, we expect our gross margins on these legacy products to improve once volumes recover.

As mentioned a moment ago, we’re nearing commercial release of new DCMs and PFMs manufacture using a new panel molding process. This process will enable us to reduce material costs and total manufacturing costs, particularly one measure in terms of cents per watt.

Many of the processes for panel-molded V-I Chips are the same as for dedicated cavity V-I Chips which should improve utilization for certain stages of production. However, some processes -- most notably molding and final packaging -- will require separate equipment and a branch in the workflow.

Given this branch and relatively lower volumes, V-I Chip’s consolidated gross margin percentage for the next several quarters may flag to the initial inefficiencies of this branch in the workflow. We do not anticipate large carryover expenditures this year to establish panel molded capacity.

As volumes increase for both types of products, we’ll strive to establish a separate line for panel molded devices but we anticipate the benefits of higher volumes to contribute to V-I Chip reaching its longer-term gross profit margin targets.

I’ll now turn to Picor, our fabulous city [ph] concentric subsidiary which is progressing on its merchant strategy. Picor experienced a 14% reduction in shipments and 39% lower bookings quarter-to-quarter reflecting many of the same circumstances as V-I Chip.

With the cancellation of Blue Waters, which would have offset a significant fraction of its anticipated 2012 order flow, Picor’s similarly is set to look to new customers to replace lost volume. Also as in the case of V-I Chip, Picor is expecting a significant rebound from new products sold to a broad range of new customers.

Over the next several quarters, beginning this quarter, Picor will be introducing new cool-powered devices. I’ve spoken of the importance of these devices for the execution of both Picor’s mentioned strategy and Vicor’s vision of delivering differentiated solutions all the way to the point of load.

The new line of [indiscernible] switching regulators are system-in-a-package devices that provide a mass performance of attractive price points in standard packages. These products have been designed to complement V-I Chip and VI BRICK Products aligned for the sale of comprehensive powertrain solutions thereby potentially accelerating our penetration of targeted markets.

Also an attractive value proposition in standard packaging should make these POL [ph] devices a source of robust revenue growth on their own. As standard products sold in high volumes, they should be especially attractive for distribution partners.

To conclude the early portion of my prepared remarks, I want to emphasize, as Vicor’s largest shareholder and the company’s CEO, I am particularly disappointed by our recent performance. Clearly if among other things our defense business had stayed robust and if the Blue Waters Project had not been cancelled, our bookings and revenue trends would be more encouraging.

Recent performance has been negatively influenced by shifts in markets that were previously identified and which were the basis for our shift in strategy to our global OEMs. In a small [ph] ironic way, our recent performance confirms the validity of our shift in strategy and I will articulate this point further.

As I’ve long stated, customers are coming to terms with the realities of a world becoming more and more dependent on electronic products that must be small, light and efficient. High conversion power density and high conversion efficiency, the defining characteristics of Vicor products, have become customer priorities for a broad range of applications and customers, not just for the high-end applications we have traditionally served.

Our value proposition is well suited for today’s increasingly power-conscious market, and over the past few years we changed our strategy and direction [ph] to address these market opportunities.

Whether these early adopters embracing Factorized Power in supercomputing, the recent design win for PRMs and BTMs in the enterprise service space or the remarkable customer response to the differentiated capabilities of IBCs, these examples and other evidence represent strong confirmation of our value proposition and the nature of the shifting customer priorities away from commoditized power conversion solutions.

A brief review of our evolution may prove useful. Around 2000 because of the collapse of the telecom infrastructure market on which we had based our initial strategy, we focused on serving lower-volume opportunities with high mix mass customization.

Our [indiscernible] strategy focused on high-power applications and emphasized design flexibility. We relied on manufacturing reps and internationally known stock industry leaders to access customers who were supported by strong field applications engineering.

This well-executed strategy afforded us stability in cash flow but did not provide long-term growth. It was also inconsistent with our view of the expected shifts in customer priorities and competitive capabilities.

Based on our belief traditional BRICK modules would ultimately be unable to meet the high complex and demanding performance of an ever more power-conscious marketplace, we then began what is now a $200 million investment in next generation power components, V-I Chips. The market shift we anticipated is now underway but the engineering [ph] sequence presenting challenges contributing to our core performance.

As I mentioned, we believe our assumptions regarding changing customer requirements have been confirmed as has our strategic response; however, outside circumstances we did not expect are influencing our short-term performance. First, the market transition we did expect is taking place during a prolonged period of global economic uncertainty; second, BBU performance has been impacted by a pronounced decline in defense spending that has exceeded what we anticipated; third, when we launched our major power initiative in IBCs we did not anticipate our success would be inhibited and delayed by baseless legal challenges.

Let me address each of these circumstances. We expect that our transition in customer requirements would be steady over several years as it has largely proven to be; but we did not anticipate the consequences of poor economic conditions on already challenging sell cycles.

During strong economic conditions sell cycles can still require upwards of 12 months of intense customer interaction before purchase orders are forthcoming. Many potential customers become more risk averse during periods of economic uncertainty, and while designers may be pressing ahead with next generation products presenting an opportunity for Vicor, the urgency for new product development can be lower, lengthening the sales cycles by quarters.

Also during economic downturns, OEM procurement personnel become more focused on price reductions which they’re often able to extract from incumbent vendors; themselves seeking to protect their own volumes.

Our value proposition is therefore to be very well defined if it is to be successful with price conscious customers. I am pleased to point out that this was the case with a recent design win in enterprise service as the achieved solution was selected on both technical merit and long-term price per watt performance, satisfying both designers and procurement personnel.

Unfortunately, other customer engagements have been reflecting the delays and risk aversion associated with economic uncertainty. Our power-molded packaging approach for V-I Chips should contribute to an acceleration of our ability to meet cents per watt cost requirements irrespective of underlying economic conditions.

With regard to the problematic defense electronics market, sufficiency [ph] in Pentagon spending have reduced volumes for both our custom systems solutions business and our modules business. As we have discussed, we’re not optimistic volume will return to peak levels we experienced in 2010.

As US involvement in Iraq and Afghanistan has declined, fewer field systems may be needed going forward. Also as a result of overall budget constraints, funding of transactions for long-term programs that represent a meaningful portion of our revenue have been postponed or otherwise delayed.

We had hoped the declining volume had ended in late 2011 but this quarter’s results are indicative of continued weakness.

As discussed, we believe the nature of our products and the diversity of the programs into which they are designed should largely insulate Vicor from further significant volume declines. However, even the most promising opportunities for which we are providing a highly differentiated solution have been affected.

As an example, we have a sizable design win for a next generation or greater platform utilizing innovative V-I Chips. This important opportunity, unfortunately, has already been descheduled twice due to funding constraints and we now do not expect revenue until 2013.

Turning to the circumstances surrounding our IBC initiative, the baseless claims of a third party have inhibited and delayed the market adoption of our highly differentiated line of intermediate bus converters. As discussed in prior calls, our IBCs are a slide converter of a unique design for networking, computing and other market segments.

Our IBCs offer twice the power density and conversion efficiency of industry standard bus converters for which they represent incompatible replacements. Our IBCs utilize the same proprietary Sine Amplitude Converter engine found in V-I Chip BCM and BTM converters.

Intel IBC implementation of Sine Amplitude Converters deliver 98% peak efficiency in every performance-based competitive amperages for OEMs.

When we launched our IBC line in early 2011, we saw substantial market opportunity that we thought we would have substantially penetrated by this point in time. While original expectations for IBCs have not been met, we have been aggressively pursuing customers and have design wins reflecting there was further acknowledgement of the superiority of our solutions.

We have won every one of several battles in our initiative to have the US Patent and Trademark Office declare all of the SynCor patents invalid. As these patents get finally validated and the threat of litigation blows over us, customers should be ordering escalating volumes and we may recover some original expectations for this promising product line.

As you’ve now heard, several [indiscernible] circumstances have contributed to our recently poor performance. Our revenue has been lower than we anticipated, and given our build-out of marketing, sales and field applications engineering, our expenses have been higher leading to weaker profitability.

Despite our disappointing recent performance, we are looking beyond current business conditions and remain focused on our strategic vision. We must assume macroeconomic trends will reverse at some point and we suspect the Pentagon’s budget to find this bottom when it comes to products in which we’re designed in.

We also are quite confident we will prevail in having all the asserted SynCor patents declared invalid to the delight of customers and the industry at large. At the same time, we’re certain global trends in OTC [ph] availability, cost and consumption will continue and likely accelerate, strongly favoring our well-defined value proposition.

We invested heavily for many years in new technologies and manufacturing processes and, most recently, the front end of our business. Our transition as a company continues as we engage with global OEMs seeking the highest performance solutions to their power conversion needs.

Vicor now has a product map and the organizational capabilities uniquely suited to meet the complex demands of these sophisticated customers.

We discussed the high level of design activity underway and the considerable promise of our activities with OEMs. We also discussed the progress we continue to make operationally.

As such, Vicor remains well positioned for the future. While I’m very disappointed with recent financial results, I remain enthusiastic about the future.

I now turn the call over to Jamie, who will discuss our financial statements.

Thank you, Patrizio. I’ll now review our quarterly financial performance providing some background and business unit specifics.

Total one-year backlog at year end stood at $45.8 million, a decline of approximately 16% from the prior quarter’s ending backlog of $54.2 million. Consolidated bookings for the first quarter totaled $51.2 million, an increase of 2.3% from the prior quarter.

Backlog scheduled for shipment in Q2 at the end of Q1 totaled $33.4 million or 73% of total backlog, down from $40.4 million of backlog scheduled for shipment in Q1 at the end of Q4 which represented 74% of total backlog.

BBU bookings were stable quarter-to-quarter with an overall increase in Vicor Andover, Westcor and Vicor Japan bookings offset by a decline in Vicor Custom Power bookings. As Patrizio mentioned, V-I Chip bookings for the first quarter rebounded from the low level of the fourth quarter but, at just over $7 million, remained well below levels expected before the cancellation of the Blue Waters Project.

Turning to revenue, as disclosed in today’s press release, Vicor reported consolidated revenue of $59.7 million for the first quarter, an increase of 1.9% over the fourth quarter of 2011. Notable shifts in mix leading to the slight sequential increase were a 22.5% increase in V-I Chip revenue but a 21.9% decline in Vicor Custom revenue.

We did experience a modest increase in recognized sell-through revenue associated with shipments by Future Electronics, notably from Future’s European activities, but we have not yet booked meaningful sell-through revenue associated with Digi-Key with which we announced a distribution relationship during the fourth quarter. Sell-through revenue totaled $281,000 for the first quarter.

The mix of North American and export revenue was consistent quarter-to-quarter with international revenue representing 53% of consolidated total revenue, down slightly from the 53.7% share in the fourth quarter. Consolidated gross profit margin as a percentage of revenue for the fourth quarter was 41.0%, down slightly from 41.8% for the fourth quarter.

As indicated, the BBU maintained robust gross margins with a slight percentage decline quarter-to-quarter, and V-I Chip experienced a meaningful recovery in gross profit margin as a percentage of revenue over the poor margin of the fourth quarter. As a result, the consolidated figure showed a slight decline reflecting the increased volume of lower, albeit improved margin V-I Chip products.

Consolidated operating margin as a percentage of revenue for the first quarter fell to 0.8%, essentially breakeven, down from the fourth quarter operating margin of 2.1%. SG&A expenses were up 2.9% sequentially, largely as a result of increased compensation due to additional headcount, sales and marketing activities and the annual change in certain employee benefit costs along with fees incurred during our annual audit.

Legal fees largely associated with our patent litigation were lower sequentially and should remain at current levels through 2012. R&D expenses, predominantly compensation, increased 3.4% sequentially largely associated with the same annual change in certain employee benefit costs.

Quarterly pre-tax income including interest income and the net effect of accounting for certain changes in the value of our investment portfolio totaled $517,000 representing 0.9% of revenue down from $1.2 million representing 2.1% of revenue for the fourth quarter. Our effective tax rate for the fourth quarter was 34.0%.

Cash flow from operations totaled $7.5 million for the first quarter, up from $4.7 million for the fourth quarter, reflecting a sizable net reduction in inventories for the period. Our net capital expenditures remained at the maintenance level of $1.3 million for the quarter, up slightly from $1.2 million for the fourth.

As Patrizio mentioned in the context of our panel molding initiative, we do not anticipate substantial CAPEX in the near future.

Turning to the consolidated balance sheet, our receivables portfolio remains in excellent shape with days sales at 44 days. Consolidated inventories quarter-to-quarter declined $4.3 million, reflecting aggressive management of raw materials in light of reduced bookings; and our annualized inventory turns stood at 4.2 in line with 4.1 for the fourth quarter.

As of March 31, we had $78.3 million in cash and equivalents as well as long-term investment securities carried at a book value of $9.7 million. Included in this long-term total are auction rate securities with a par value of $9.1 million carried at a book value of $7.7 million representing 84.5% of par value.

Since the failure of these auctions by which these securities were priced in February, 2008, we have received over $29 million in redemption at par and are confident the remaining balance will, in time, also be redeemed at par value. We continue to be debt free and own our manufacturing facilities and principal offices.

on March 16, the US Court of Appeal vacated a 2009 judgment in our favor associated with our lawsuit against certain of our insurance carriers with respect to the Erickson settlement. We had been awarded approximately $16.5 million in the ruling which the insurers appealed.

The Appeals Court has remanded the case for a new trial and we are reviewing the ruling.

This concludes management’s prepared remarks and we’ll now take questions from listeners. Tahisha, are you there?

Hi, Patrizio. Last conference call, we heard that the legal issues with SynCor were basically behind you, so I’m wondering what changed.

Well, I’m not sure where you got that from. I think we’ve been clear about the fact that it’s likely to be litigation that will remain with us for quite some time.

Maybe you picked up on early reports of success in the patent office with respect to each of several different examiners, or the examination finding the SynCor patents, their claims to be invalid, but that’s the process that it’s not come to its end yet because SynCor will have the right to appeal it to the Appellate Board and potentially to the federal circuit Court of Appeals. We expect that this is going to happen but are confident that this process will come to the right conclusion, which is that these patents are destined to the scrap heap.

It’s just a matter of time, but while that is going on, the litigation goes on.

Okay, so it sounds like you’re not expecting any kind of production orders from your bigger customers with the IBC line in the near future?

Well, we haven’t received major orders. We have a level of business which has been increasing and we are aware of significant design wins that have not come to production volumes yet but should in time so some of these are new programs that are going to take some time to go into volume production.

I think when it comes to major customers and major programs where there was an opportunity to replace with superior products solutions that have been precluded by SynCor’s early win in Texas against a different set of defendants, that opportunity has been largely negated by SynCor’s stubborn approach and, I would suggest, arrogant approach with customers, threatening customers with litigation against them or disruption of supply as a means to keeping customers from deciding to substitute better products.

Okay. Maybe what I heard on the last conference call is more to the effect that some of your major customers were siding with you and they didn’t think that their claims were valid, so I kind of got the impression that you thought you would be seeing some production orders as a result of that, but it sounds like some [indiscernible].

Well, I think when it comes to the largest customer in this space, unfortunately, that’s not come to fruition yet, even though we had led to believe that it would, we think because SynCor is continuing to exert the -- actually a lot of pressure on that customer.

Okay, you mentioned the Intel opportunity and what I think I heard, maybe you could give us a little more color on this or clarify it a little bit, but you’ve actually done some initial shipments to them? Can you tell us a little bit more about when this might come to fruition and when you expect to see quantities from that?

We are currently expecting production volumes to hit in the second half, and more likely, the fourth quarter of this year.

So you might see some bookings in the third quarter for those?

I see some bookings in the third quarter for shipments in the fourth.

And the units that you’ve shipped so far, are those just like engineering units or that they’re building up or prototypes or are there any …

On this, just say we’re shipping the engineering units earlier and we’ve now been through a first round of larger quantities to, in effect, demonstrate capabilities on a larger scale.

Okay, good. Good.

Now, you mentioned that you won that for both technical reasons and price reasons and this is an Intel opportunity, so I’m wondering what’s preventing you from going to every other server company now and presenting that same type of sales pitch or whatever to the VPs of Engineering or the decision-makers. And do you expect to start seeing some significant activity with other server companies now that you’ve got both price and technical issues covered?

Okay, so what makes this application unique and, at this point in time, leading the pack is the fact that it will rely on a 48 volt distribution path as distinct from the traditional 12 volt that is used in [indiscernible]. So that makes a value proposition considerably more compelling, and to be clear, when it comes to value, part of the opportunity in terms of delivering a level of sense for what is very attractive to the customer is to do with the availability of a next generation solution, which is coming to fruition.

So it’s a case where we’re going to be going into production with existing V-I Chips, and then that production is going to, over time, migrate to a next generation solution that combines V-I Chips with the Picor SiPs [ph] to deliver a level of cost-effectiveness that is considerably more attractive, attractive enough to make a lot of sense in terms of cents per watt. Now, going to the heart of your question, we’re certainly looking to make this a good precedent for other applications of a similar kind.

The logic that brought this one company to the change they are undertaking is a logic that, in terms of efficiency and overall system cost, it’s a logic that makes sense for other companies and we expect that over time, these architectural changes will favor the kind of solutions we have to offer.

Are there other server companies that use 48 volts? Are they almost all universally 12 volts?

The beginning of a trend in that direction and the one we are involved with is going to be a very visible one, we believe.

I wanted to ask about the SynCor as well and with this being tied up, I know you’d like to see it resolved, but can you give me an idea of when this goes before the courts and when you [indiscernible].

So it’s currently scheduled to go to trial in Texas in the second half of 2014.

Okay, and so we’re talking at least 2 years before it’s even reviewed?

Well, we’re talking that current schedule for the case to go to trial. We expect that the SynCor patents will be in the trashcan before then.

What’s your best expectation as to when you might start seeing any kind of volume orders on that IBC?

Well, again, with certain customers, the threat of litigation has not been a deterrent. With the largest customer, it has been a deterrent.

That could change because of the compelling measure of our products. So fundamentally, the dilemma has to do with, on the one hand, the engineering community wanting our solution because it is enabling the level of performance that they’re asked to deliver to their management, while other parts of the company that, in effect, may not be as keen on the technology facet but are more focused on business considerations and the lingering legal threats being in effect deterred and wanting to take extra time to make decisions because of the threats.

This is something that I think, again, as we continue to make progress in the patent office with the SynCor patents being declared one by one invalid by a number of different examiners, I think it’s clear at this point the writing is on the wall that the patent office has come to see these patents for what they are, which is trash. And if that happens, the market at large, we think, and as some of the players in the industry benefit from our solutions to deliver high performance products, we expect the market at large will come around to the solutions even though there may still be litigation going.

Is there the risk, Patrizio, that during this process, the potential customers get so frustrated that they design around the IBC altogether so that you wind up being out in the cold as well as SynCor?

Well, there certainly -- that’s really scary. I think that that’s been a reality in some cases.

I’ve seen that happen with some customers who, to your point, said, “The hell with it. I am just not going to have my business be dependent on this kind of potential issues.”

On the other hand, as suggested a moment ago, with most customers, the engineering community, as I say, and the engineering community is saying we need the performance IBCs, and in particular, we need the much higher performance of Vicor’s IBCs in order to get their job done. So at the end of the day, I would think that the ability to get products out and the ability to get high performance product out should trump the legal concern because at the end of the day, the CR [ph] company should care about revenues and profitability and to the extent that it’s dependent on having leading edge products and those leading edge products depend on having a power system can keep up with the needs of the product, that should drive the decision, but up to a point, these inhibiting factors have been playing a role and, certainly, we’ve gotten severely damaged by that.

Okay. Jamie, could I ask you?

I kind of missed one of the early statements that you had, but I was trying to get some kind of a dating on that backlog, if you could compartmentalize that a bit. Can you age it for me by quarter?

When you went into this quarter, the 54, did you say [indiscernible].

What we do is we talk about the specifics for the forward one quarter and then we give you the 4-quarter total.

Yes, so what was the forward quarter in December?

Backlog -- well, let me just read the sentence again. Backlog scheduled for shipment in Q2 at the end of Q1 totaled 33.4 and the corresponding figure for the prior quarter was 40.4.

Okay. Alright, now I also see on your homepage you’re talking the, was it 4 to 12 days you can have a new system in your hands.

Are you getting a lot of response to that?

Well, it depends specifically on what’s being requested but, yes, customers obviously want to receive what they can as quickly as they can. We typically -- as you know, we don’t maintain meaningful amount of finished goods inventory.

We build to order. So it is our objective to shorten lead times as much as we can, but I think the fact that we’re looking at the levels of bookings as we’ve discussed and the implied turn figure shows that we’re still pretty much in the 4 to 6 weeks threshold for BBU.

Given what you’ve told us, does it now look like it’s not really a pickup in the second half, this is more a 2013 event?

Which event are you referring to? [Indiscernible] a significant revenue rise.

In terms of an acceleration in revenue.

Well, certainly the softness within the last quarter has dampened our expectations with respect to a significant pickup in the second half, so maybe we are now more cautious because of recent history, and given what’s in the pipeline and the good deal of activity on a variety of fronts, these expectations could change. I’ve been around long enough to have seen these kinds of things happen, but looking at it with the rearview mirror, what has happened over the last couple of quarters certainly makes me more cautious with respect to the year than with it being or was [ph] 6 months ago.

And could you also give us an update on the PFM?

So as I mentioned earlier, we have developed a new device using power molded technology. We are looking for this platform to manifest itself into 2 variants with different outputs and different flexibilities for different application environments, and in particular, there will be one that will dovetail to Picor offerings that are forthcoming with their system and their package solution.

That’s been carried along in parallel with the 48 volt solution, which to your implied point, made its first in connection through the double chip PFM, which we’ve been selling for some time, but without a good deal of emphasis, partly because a companion device and a package to, in effect, deliver a complete solution involving the PFM installed [ph] FEM, it’s not yet been released. Now, we expect that, that package to be released imminently, but perhaps more importantly, I’m looking forward to the release of the palm [ph] of the counterparts of these devices because they will raise the bar with respect to power capability, efficiency, and most significantly, cost-effectiveness.

And when should that happen?

That’s planned to happen in the second half of this year and we’ll follow on with respect to that. We’re on track to get that to happen as early as the early part of the third quarter.

Okay. In looking at 2013, if you had to rank the programs with the most incremental revenue opportunity that would contribute to 2013, I mean, you’ve got the VR12, the IBC.

You’ve got the radar that you had mentioned, the impact of future in Digi-Key and distribution and anything out of Picor. How would you rank those?

Well, so that’s quite a combination and some of the things you listed have tens of millions of dollars per year worth of revenue attached to them. Some are still in the very developing stages, so to be realistic our global distribution strategy will take time to come to fruition, but the numbers this year will be in the millions of dollars, but really few as a stepping stone to a considerably larger number next year, so that is not by itself going to make a significant difference to the top line for Vicor this year, even though it’s beginning to plant seeds that are going to bear fruit in 2013.

The Picor product line is extremely exciting, but that, too, I would urge caution with respect to seeking immediate gratification. Unfortunately, that’s not going to happen for some time.

With products, significant [ph] package regulators beginning to get its reviews this quarter and following through with additional products of this kind in the third and fourth quarter, we’re looking at the usual designing cycle that is measured in a year or 18 months as opposed to what we like to have, which would be a lot shorter, but wouldn’t be realistic. But I expect that, that will become a tens of millions of dollars per year opportunity in its own right, and as suggested in the earlier remarks, a great opportunity for Vicor at large because it is -- it can be a [indiscernible] play that plays well with the PFMs you asked about, particularly palmer [ph] the devices that are forthcoming in that it will provide an end-to-end solution.

It will provide the solution for customers seeking a power system that can operate from a universal AC input to supply a large multiplicity of outputs where the PFM will carry the system from the wall plug to a bus voltage from which Picor SiPs [ph] will take it all the way to the point of load. These are very unique solutions that are highly differentiated.

They are way ahead of any competitive products from the likes of Neotech, National TI [ph] and others, and I think are going to set us into a very unique position. But unfortunately, they aren’t going turn into instant revenue because of the nature of the beast.

Right, so that’s like 2014 or something.

No, I think we’re going to see something meaningful in 2013 and it will be more significant in 2014, and again, some of it is going to be VR [ph] contribution, and this I expect will be high margin products from the word go. High contribution in terms of bottom line and profitability of Picor, and again, very significant opportunity in terms of the bundled sales capabilities that we have in terms of projecting a tall solution capability.

Okay, and the impact of the VR12?

Well, so we are very excited about that. This is a very recognizable name and, as suggested earlier, one that should lead to others, also potentially very significant.

And, by the way, these play in service that are more in effect down to earth to being Intel based is not a disclusion [ph] of the play that we’ve had for years now in the IM market where we continue to see big opportunities with our major cast. I mean, that market for next generation systems, they are still going to be leveraging.

In fact, [indiscernible] are taking it to the next level of performance as well as with the Japanese companies also looking to deploy factorized power system solutions in their end server. So the server market, whether it’s high-end, it has been where we’ve played in the early going with V-I Chip solutions, or for Intel service, which, obviously, there’s a lot more leveraging in the short term.

Again, a V-I Chip solution as a stepping stone to a V-I Chip Picor solution, these are all very exciting opportunities that are going to begin to make a significant contribution late this year and should lead to greater contributions in years to come.

I wanted to ask you when you talk about some of these as being temporary setbacks, if your 3 by 5 plan is still on target as you see it.

We are very confident with respect to the plan and its execution. I think that we -- this may sound a little over the top, but I remember a comment that was made by an analyst that was writing about us and wanted to write something disparaging about Vicor, and this was a time frame in which Apple was not doing all that well and they were not the success story they are today, and the comment was along the line of, “Vicor is the Apple of the power system business,” in the sense that we were unusual, we were odd, we were different, and at the time, were not doing all that well.

Well, I would not be surprised if that fellow turns out to be right even though he didn’t mean it that way. We have tremendous opportunity and we think we are embarked on the right strategy.

Okay, and if you’re going down the road, do you ever try to evaluate whether -- because obviously you want this technology to get developed, to be deployed. If you see it from the standpoint of saying, “Gee whiz, we’re just not a big enough outfit to really get this thing out there and deployed the way we would want to,” would you look at partnering or selling on out the business?

Or are you going to maintain your independence all the way?

Well, I learned a long time ago never say never, right? We’re old enough to understand that, that would be a foolish proposition, but I can say unequivocally that, first of all, we are not seeing our size as being a limitation with respect to customers’ engagements, small and, more significantly, large, 2 or 3 by 5 initially is [ph].

We’ve been engaging with major corporations worldwide who see a value proposition with respect to our products, our technology and our capabilities and want to partner with us as suppliers and in some cases in other ways, but I see the greater return for shareholders coming out of playing out this opportunity for what it is worth, which is a lot more than the current market cap.

Thank you and talk to you in the next quarter.