Quickly on Q4, you will see a couple of things that went on in this quarter. We divested the image sensor business. It’s ON Semiconductor and I will give you an impact on how that’s going to get on the guidance. And then, we also settled the civil litigation related to the SRAM litigation that was out there.So, you see an adjustment for $6.5 million in revenue. So, the focus for you should be on the non-GAAP, which is the $226.6 million, and that was in line with the guidance that I gave you. It declined 2% sequentially and increased 17% year-on-year. We had really strong sequential growth in handsets, really due to touchscreens, and we saw declines in most of the other end markets that Chris can touch on. Pretty much what we expected and very consistent with what you have seen other companies reporting on, and I think from our perspective, the vast majority of it continues to be the lead times in inventory rebalancing going on. If you look at it by division, MID decreased 8% from Q3, predominantly in the SRAM area and again most of it related to the lead time inventory adjustment. DCD was down 12%, same thing with lower com inventory, and lower end of life sales that you obviously always see in that area. And we had slightly better-than-expected sales in West Bridge, which was good to see. CCD was the monster for the quarter. They grew 10% sequentially, and again, don’t forget, they normally go down in Q4. So, that was a really great deal to see, and that was predominantly driven through touchscreen, which offset the normal seasonality in quads and USB. Just as a side note, CCD has now become the largest reporting division. It was about 45% of our revenue, expect to see that continue all through 2011. They could be about half of the revenue for the company, and that’s up from 39% of the company in 2010 [ph]. So, very big increase there.
PSoC and TrueTouch hit all-time records, and I am sure you will have a lot of questions for Norm on that. So, I will let him tackle that. And again, TrueTouch could become one of our largest product families in Q1. And I think sometimes during 2011, a lot should be bigger than the synching of SRAM business. Designs are very strong all across the board, and we expect to have a better PSoC and TrueTouch greater than seasonal revenues in Q1.Handsets, you figured us talk about handsets, our revenues there, which again are mostly smartphone-based, which is good, because that’s where the market really is growing, increased 27% sequentially. And I think that handset revenues could be about 25% plus of the company in 2011, and again be one of our largest end markets, which is a big deal because prior to early ’08 with the introduction of West Bridge, we really did not plan handsets. If you look on the net income basis, we had a GAAP net income of about $0.05 a share. We had a couple of things that impacted that. You can see all that in the recon. The good thing is even our GAAP earnings were up pretty heavily year-on-year. Our non-GAAP net income was $50.6 million, that gave us earnings per diluted share of $0.25, slightly better than the midpoint of my guidance, even though I had a higher share count, and we did enjoy a little bit of tax benefits like you are seeing everybody else from the extension of the R&D tax credit. The EPS growth for the non-GAAP earnings was 56% year-on-year, and that’s 3x faster than the rate of sales for the same period. So, we are dropping a lot to the bottom line, and I expect that to continue going on. If you look at gross margins, our non-GAAP gross margin was 59%, down slightly from Q3 as we expected and guided, and really just due to product mix and less end of life sales in DCD, the gross margins are in line with guidance, the utilization of our fab decreased we balanced the recon like we talked about, and our core semiconductor gross margins, which if you take out emerging tech out of it, were 60%. So, we are actually pretty proud of where we are driving gross margins and we think we will be fairly stable going forward.
Utilization in our Minnesota fab based on wafer start was about 82%. It was down from around 91% in Q3, and we would expect the utilization to be flat to slightly down. Our Flex Fab strategy is paying off pretty good. We had a record 48% of our wafers coming from our foundries, and that mix will probably continue to increase into 2011 as PSoC is predominantly sourced through our foundries as well as our own fab,ASPs remain flat at around $1.50, and MID and CCD ASPs actually grew a little bit sequentially. So, that was great to see. For the year, we had $884 million, that increased 32% from ’09. Our non-GAAP earnings were $0.94 and that was an 840% increase from ’09, and obviously the stock did very well. We had a 76% stock return in 2010 and we pretty much smoked every index that was going out there. OpEx was basically flat the last quarter, it was around $83.2 million, so again that included about $1.3 million of the non-cash deferred comp. So, if you subtract that out, it was basically $82 million smack in the middle of what my guidance, and we are very, very focused on OpEx. I know there are lots of concerns of other companies cranking OpEx. So, we are still very focused, we are investing obviously very heavily in PSoC, Touch and our Emerging Tech, but you would have our commitment, we are going to manage the OpEx very tight all throughout next year. The OIE was pretty standard. We have the other side, the deferred comp in there, we had about 700 [ph], say in interest income, and the tax rate, the effective tax rate was about 5.3% versus our 9% to 10%, and again it was the refundable tax credits on the R&D that you saw from everyone else. Cash was very strong. We had $434 million. That increased very nicely as we had good cash flow from ops. We still have $24 million of auction rates out there, and we also had one of our YEPs outstanding over the end of the quarter for about 44 million. That matured in cash instead of stock. We had another $3 million gain on that, which was a 68% annualized return, and that added another $47 million DAC in cash. So, as we sit right now today, we have just over $500 million in cash.
Our cash from ops was $76 million, which was basically 34% of our sales, which is very strong, and for the year, we cranked out $270 million in cash from ops, and that was over 200 [ph] increase from ’09. So, on the buyback, I think as you all know, we had a $600 million buyback approved. We said we would deploy it opportunistically over kind of a year to year-and-a-half. We took out just under 2 million shares at an average cost of about $17.40. That costs us $33 million. We have another million shares that went out of the door since the end of the quarter. But basically, we have 548 million still remaining under the buyback.We also had two of our YEPs outstanding over the same period that we are hoping would have returned another 7.5 million shares in stock, but fortunately or unfortunately, depending on how you look at it, the stock rallied very hard, and we didn’t get the stock. We got north of $7 million in cash, which gave us a very nice bump in our yield, but obviously we didn’t get any more shares out. Inventory increased about 15% from Q3. The vast majority of that is actually in die bank for PSoC and TrueTouch. As you saw, we had a pretty big book to bill and that stuff is on fire. Our whip in our finished goods inventory actually decreased in Q4, which was actually good. And I think as you know, there is about 6 million in stock-based comp as part of that number, and that we had always had another 6 million in last time inventory built. So, if you strip that out, and what I look at as operating inventory, about 90 million or about 88 days. And I think our inventories would be pretty much flattish going into Q1. Read the rest of this transcript for free on seekingalpha.com