Fourth Quarter 2008 Highlights:

The company announced earlier the sale of its display driver business for $3.5 million plus $0.5 million of the assumed liabilities;

The company has achieved thirteen new product design wins in the fourth quarter of 2008, including its first two Touch design wins and eleven new Power design wins;

The company has announced sample availability of the LDS8160, a new LED driver featuring company’s new in-situ LED-Sense Temperature Compensation engine;

The company generated first product shipments for the Touch products during fourth quarter of 2008; and

The company has also announced a new agreement with Immersion Corporation to allow rapid implementation of the high-quality haptic feedback in capacitive touch enabled devices.

Financial Results:

The fourth quarter revenue was $2.3 million, in line with company’s revised guidance of $2.0 to $2.5 million. The fourth quarter gross loss was $3.6 million, which included a $3.6 million excess and the obsolete inventory charge. Under the generally accepted accounting principles (GAAP), the fourth quarter net loss was $14.2 million, or $0.48 per basic share, as compared with $7.7 million, or $0.26 per basic share, net loss reported in previous quarter and the $11.0 million, or $0.38 per basic share, net loss reported in the fourth quarter of 2007. The loss in fourth quarter of 2008 included the excess and the obsolete inventory charge, and also a $1.1 million impairment charge on auction rate securities held by company.

The non-GAAP net loss for fourth quarter of 2008 was $11.6 million, or $0.40 per basic share, as compared to net loss of $6.9 million, or $0.23 per basic share, in the third quarter of 2008 and a net loss of $7.5 million, or $0.26 per basic share, in fourth quarter of 2007.

The company has reported cash, restricted cash and long-term investments of $32.8 million as of December 31, 2008 that was $10.3 million lower than its balance as of September 30, 2008. The decrease in cash was greater than previously anticipated, primarily due to less sell-through of the inventory during the fourth quarter, write downs in the auction rate securities, and also the unfavorable foreign exchange rate impact on cash held in Korean accounts.

The Business Summary:

Fourth quarter revenue, while within our revised December guidance, was down significantly from the prior quarter, said Tony Alvarez, president and chief executive officer. While we had previously initiated steps to bring our operating expenses more in line with our revenue, the deterioration in the macroeconomic environment further increased the urgency of our actions. The result is that we have taken a significant step in restructuring our business operations. This week we announced the sale of our display driver business. We have also exited from the Audio business and implemented additional staff reductions. The net effect is that we will have reduced our headcount and operating expenses by approximately 50% and we are targeting quarterly operating expenses of less than $4.0 million as we exit the first quarter. We have focused the company’s resources behind our Touch and Power products efforts, which allows us to preserve our cash resources, and we will continue to invest and develop these businesses while simultaneously exploring our options for realizing value from the promising technologies that we have developed.

First Quarter 2009 Outlook:

The current business environment remains challenging, said Alvarez. In the near term, the bulk of our revenue will continue to come from legacy display driver products that we retained after the recent sale of that business. We are encouraged by the customer traction that we are seeing with our Touch and Power products.

Based on the information currently available to the company, expectations for the first quarter of 2009 are:

Revenue is anticipated to be about $1.9 million in the first quarter of 2009;

The non-GAAP operating expenses will be about $5 million; and

The cash used in the operations is anticipated to be $6 million during the first quarter, including $2.4 million in retention bonus payments associated with the company’s prior acquisition of Mondowave Inc.