If you're asking a question during the Q&A session of today's call, we'd request that you limit yourself to one question, and if you'd like to ask a second question, please re-queue with the operator. Thank you.And I'll now turn the call over to Mike. Mike Zellner Thanks, Dave. I'll review our fourth quarter 2010 results and financial position and then turn it over to Greg to discuss our business activity in detail. As expected, revenue in Q4 was slightly lower on a sequential basis at $159.3 million, a decrease of $3 million or 2% compared with Q3 revenue of $162.3 million. The Q4 revenue included approximately $6 million of revenue from our acquisition of Wintegra which closed on November 18, 2010. In Q4 we had one customer that represented greater than 10% of our revenues calculated on a rolling 12-month basis, namely HP. On a non-GAAP, gross margin in the fourth quarter was 68.2% compared with 67% in Q3. This increase of 120 basis points was driven by product mix with a greater proportion of sales of higher margin WAN infrastructure products this quarter and lower sales in the area of microprocessors and Fiber to the Home as expected. On a non-GAAP basis, operating expenses increased by $7.4 million from $65 million in Q3 to $72.4 million in Q4. Approximately half of the increase relates to the operating cost of Wintegra since the completion of the acquisition in mid-November. And the balance related to continued investment in R&D projects as planned as well as incremental tape-out cost. In Q4 our non-GAAP operating margin was 23% compared with 27% in Q3, mainly due to Q4's lower revenue profile. Non-GAAP tax provision was higher as expected in the fourth quarter at $2.5 million compared to $1.6 million in Q3. Non-GAAP net income for Q4 was 34.6 million or $0.15 per share on a diluted basis, representing an $8.3 million decrease from the $42.9 million or $0.18 per share generated in Q3. Q4 GAAP diluted net income per share was $0.05 versus $0.06 in Q3.
Please note that for each historical non-GAAP financial measure mentioned on this call, that a full reconciliation to the most comparable GAAP financial measure is included in our press release issued today. In addition, our GAAP to non-GAAP reconciliation of financial measures that will be provided in our outlook will be posted on our website under the Financial Reporting section of the Investor Relations tab.The primary reconciling items for Q4 are as follows -- $7.4 million in amortization of purchased intangible assets, $5.6 million in stock-based compensation expense, $800,000 of non-cash interest expense, $6.7 million of acquisition-related costs, $4.5 million gain recorded on our previous investments in Wintegra, $3.8 million recovery of our investment in the reserve fund, and $10.8 million of income tax related adjustments as described in our press release. Turning to the balance sheet, we entered the quarter with over $583 million of cash and cash equivalents, short-term investments and investment securities. Our cash position at year-end net of the $68.3 million face value of our convertible notes in the $181 million short-term bridge loan relating to the Wintegra acquisition was $334 million, a decrease of $153 million from Q3. This decrease primarily relates to approximately $204 million cash paid on the acquisition of Wintegra net of their cash acquired, $5.9 million of IP in capital expenditures, offset by $49.3 million of positive cash flow generated from operations adjusted for non-cash items and an additional $3.5 million of cash for employees related to stock issuances. In addition, please note that the short-term bridge loan related to the acquisition of Wintegra that was outstanding at our year-end was repaid in its entirety early this month. Accounts receivable decreased $7.5 million to $69.3 million. Excluding Wintegra, we had 36 days of sales outstanding based on our quarterly sales volume, which remains a very healthy collections profile. Read the rest of this transcript for free on seekingalpha.com