Now with that, I'd like to turn the call over to Sehat.

Sehat Sutardja

Thanks, Sukhi, and good afternoon, everyone. Today we reported second quarter revenues of approximately $860 million, reflecting an increase of over 2% sequentially. While this was below our initial expectations, we continue to deliver good profitability with second quarter non-GAAP gross margin of 53.6%, operating margin of 17% and earnings per share of $0.24. We also continue to return value to our shareholders, as we repurchased about 20 million shares and paid the company's first quarterly dividend of $0.06 per share.

Our business was impacted by the slowing macroeconomic environment, starting in the middle of the quarter. We also faced continued challenges with lower volumes at our leading North American cellular customer, while demand slowed down at our Chinese smartphone customers.

In addition, our increasing presence in price-sensitive consumer markets is modestly impacting our gross margin.

Now let me provide more color on our performance and expectations across our end markets. First in our storage end markets, Q2 revenues increased by 7% sequentially. Storage now represents about 47% of revenues. The recent macro slowdown resulted in lower PC sales in Q2, and our drive customers are now forecasting flat market demand in calendar Q3. If true, this will be the first time in history that HDD demand is flat in Q3. We believe this conservative view in today's environment is healthy for the industry as it reduces the risk of inventory buildup. However, the drive industry may have to deal with the potential for improved demand, for example, as a result of the upcoming Windows 8 launch.

Beyond the near-term end demand issues, there are a number of positive things happening in our storage business that I want to highlight. First in Q2, we continue to see strong growth for our 500-gigabyte per platter mobile drives, which grew over 30% in Q2 and represented over 1/3 of our unit shipments. As you know, we are the only provider of this 500-gigabyte mobile technology. We increased our shipments of 500-gigabyte per platter products to a major customer for their mobile drives, where we are a new supplier. We are now at about 10% of their core mobile platforms and expect our share of their mobile drives to increase over the next few quarters.

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