Earnings Call: Q4 2012

Jan 31, 2013

We'll go ahead and get started here. My name is Tait Sorensen. I'm the Head of Investor Relations for STMicroelectronics. First of all, I'd like to thank everybody for joining us here today in Paris. I'd also like to thank those that will be participating on the webcast as well. We know it's a very busy day in terms of earnings, so thank you for your attention. Today, we will talk about our fourth quarter and 2012 full year results. We will have Carlo Bozotti, our President and Chief Executive Officer, lead us in that discussion and in the presentations. This presentation is being broadcast live over the web and can be accessed through ST's website. A replay will be available shortly after the conclusion of this event. Today, we will present forward-looking statements that involve risk factors that could cause ST's results to differ materially from management's expectations and plans. We encourage you to review the safe harbor statement presented here and contained in the press release that was issued with the results last night, and also in ST's most recent regulatory filings for a full description of these risk factors. Here's today's agenda, and also presenting today, we have Georges Penalver, the Executive Vice President and Chief Strategic Officer. We have Jean-Marc Chery, the Executive Vice President, Manufacturing, Technology, and R&D, and General Manager of the digital sector. At this point, I'd like to ask Carlo Bozotti, our President and CEO, to come up on stage and help us better understand the highlights of 2012. Thank you, Tate. Good morning, and thank you again for your attendance today. I just want to make a few points on last year. When we met one year ago, clearly we had different aspirations for the second half of 2012. The crisis hit hard. Our booking started to decline severely during the month of June, and the portion of our business that was mostly impacted in the second half of 2012 were areas that are traditionally strong, let's say, strongholds for ST: our automotive business, the industrial business, the distribution business, in general, the base of medium and small-sized customers. Clearly, Europe, our European region was hit. We had to react. I believe we have reacted fast. We have managed our capital investment program. We have reduced the overall capital expenditure, and we ended the year with $476 million of CapEx. We have been working on loading, and we have been working on working capital, and we managed to reduce inventory. Adjusting Q4, we have reduced inventory by $143 million. In addition, we have some encouraging signs on these families, on these more standard products. The booking trend is improving. The POS, the point of sales of our distributors did improve in Q4. The level of order entry that we see in January is encouraging. This is very much across the board from a product portfolio point of view, from an application point of view, and also from a geographical point of view. Of course, it is, I would say, important to understand whether this is sustainable, but the signs that we are seeing today are encouraging from the evolution of the bookings, the portfolio of orders, and the business in this area. This is the first point. Second point, when we met one year ago, we knew about the drop of our former major customer. The drop was important. Last year, our revenues with Nokia dropped by about $500 million. We believe that as far as ST is concerned, we are at the bottom. Now we have new opportunities to start growing again. At the beginning of last year, we have established a new sales and marketing organization to focus even more on the development of new major customers. It is, in fact, a package of 12 new major accounts. They are all industry leaders in their field. There are four American companies, four Japanese and Korean companies, and four Chinese and Taiwanese companies. With this package of customers, we grew last year 12%. If we look at Q4 last year, we grew quarter-over-quarter, year-over-year, Q4 2012 over Q4 2011 by 24%. Your comment is on our digital sector. As you have seen, results are not good. The digital business has been greatly impacted by the decline of sales in imaging, very much driven by Nokia and RIM. During the course of last year, in the imaging group, we have developed a base of new important customers. In fact, we have won five new major customers. Three of those will importantly contribute to the growth in 2013. It is not just mobile business, it is also gaming, it is also automotive, it is also digital still camera, is part of our diversification strategy. As you know, in October, we have announced a $150 million saving plan on the digital sector. This is combined by a new business model in technology development and also by restructuring and with unification of all application and processor activity in one single site. The third point is about our performance in certain areas. I am very happy to release the result on our MEMS. Overall, last year we have sold more than one billion MEMS products. We grew 22% year-over-year. We have introduced several new product families in this technology area, including MEMS microphone, including MEMS pressure sensors, and also the combination of MEMS sensors in one package, what we call fusion MEMS. Our iNEMO families, which is the combination, of course, of the micromachining technique with the brain. We did very well also microcontrollers, the 32-bit. We have introduced seven new product families. We grew on the 32-bit microcontrollers by about 30% year-over-year. Today, we are mastering in this area more than 350 different part numbers. Clearly, it is a priority for the company, both for general purpose and also for secure 32-bit microcontrollers. Finally, in this block of things related to products and technology, I would like to mention the results of our FD-SOI technology. Now it is proven. We have the products. Our application processor is running 30% faster with the same power dissipation, and it is running with 50% lower power consumption for the same processing power performance. This is a great opportunity for the company. We have a wave of new opportunities in a variety of areas, again, from gaming to portable equipment, but also more traditional ASICs, where clearly we will exploit the FD-SOI technology. This is not just one generation node, it is a roadmap that will cover from 28 nanometer down to 14 nanometer. Point number five, of course, in December, we have communicated our new strategic plan. The company will be much more focused. We want to focus on two major pillars in our business. One is the sense and power in the automotive on one side, and the second one is embedded processing. Still is a huge market that we serve. Last year was about a $140 billion market. We have also communicated that we will focus on five growth drivers, MEMS and sensors. Of course, our smart power products, the automotive products, all our microcontrollers and the application processors, including the digital consumer activity. We have announced in December that we will exit ST-Ericsson. The transition will be completed during the third quarter of this year. We have also announced a new financial model. Compared to the past, the major difference is that the company will be much leaner with a base of expenditure in the range between $600 million and $650 million. Finally, as a synthetic view to start this meeting, I would like to mention point number six. Last year, we managed to improve our net financial position. We started 2012 with a net financial position of $1.167 billion. We ended the year with $1.192 billion. There is an improvement of $25 million. This is, of course, after all the capital investment initiatives, the funding to ST-Ericsson, and also the distribution of dividends. So we are in the range of $355 million last year. This is very important for us. It was one of the priorities for last year, and we managed to achieve what we wanted to do. This will remain a priority, of course, during the course of 2013, but I will talk about 2013 later on. I just wanted to make a synthetic view of what we have done in 2012. I did mention these six elements that I believe are the most important elements in our business. After this, I think we will start with more formal presentation. I think the first presentation is Georges Penalver, he is our corporate strategy officer, and will cover our new strategic roadmap, but also all the financial results for 2012. Thank you very much. Thank you, Carlo, and good morning, everybody. I will now go over the financial highlights of the year. Just looking for the right slide. Okay. A quick snapshot of who we are at the end of 2012. We are 48,000 persons working in ST, including ST-Ericsson, and with about 11,000 of them working in R&D, showing our involvement in high technology. The semiconductor market, if we look into our market this year, as Carlo mentioned in introduction, market conditions were weak in 2012. While still showing a nice growth pattern over time, our TAM decreased in 2012 by an estimate of 3% at $290 billion after an already slow 2011. Our SAM also decreased in the same magnitude. Our SAM, including ST-Ericsson, was about 46% of the TAM, and it is estimated to have declined a bit more, 4.6%. Our SAM, excluding ST-Ericsson, is currently expected to grow in 2013 by about 4%. Here is a reminder of our reporting organization in 2012. Wireless product segment is obviously entirely related to ST-Ericsson, and the four other blocks compose what we have called the fully owned business. 2012 revenue by product segment. You see there the weight of these reporting blocks in our revenue. Analog, MEMS, and microcontrollers includes two of our most successful product lines in 2012, which are general purpose and secured microcontrollers and the MEMS. This block has the biggest share, now representing 38% of our revenue, followed by automotive, 18%. Digital gathers both the digital consumer part of our business, set-top box TV, as well as imaging, silicon photonics, and ASICs, and this represents about 16%. Power discrete, 12%, and wireless product segment is 16% and related to ST-Ericsson. We should mention that there are many other products sold to wireless customers, especially MEMS, image sensor, power management, for example, which are not in ST-Ericsson but are in the fully owned business of ST. ST total revenue. The revenue is $8.49 billion in 2012, down 12.8% this year. In full year revenue chart, ST fully owned business is in blue, and the wireless product segment sales is in pink. Market sentiment were weak, as discussed earlier, with a slowdown in second half compared to expectations we had at the beginning of the year. You can see that in quarterly sales evolution, full year 2010 had the traditional quarter-on-quarter seasonality. Full year 2011 showed decline from Q3, and full year 2012 was beginning with an expected rebound back to a normal seasonality in Q1 and Q2. Also, beyond market conditions, ST had a significant drop in sales at some of our traditional major customers. Q4 2012. Revenues Q4 2012 stabilized at low levels, flat versus Q3, slightly above midpoint of the guidance. Fully owned business was slightly up, and wireless product segment down 2.2%. In Q1 2013, we expect our fully owned business to deliver a better than seasonal performance with a sequential decrease of only about 3% at the midpoint. Including wireless, we expect a sequential revenue decrease of about 7% at the midpoint of our guidance, as ST-Ericsson anticipates a significant sequential decrease in sales. Here we go now to our sales and marketing approach. Here is a sense of our global reach with sales office around the world. If we talk about revenue by location of order shipment, Greater China and South Asia is our big region with 42% of sales. EMEA 25%, Japan and Korea 19%, and America is 15%. By customer origin, obviously the weight of the Western world is unsurprisingly more important. EMEA is rather in the range of 33%-34%. America is in the range of 30%, three zero. Greater China and South Asia is below 20%. Top customers. Here is the list of our top customers. I let them read them by alphabetic order. None of them represent now more than 10% of sales in 2012. This reflects the enlargement of our customer base. On the left, you can see the performance related to two key initiatives in sales and marketing: target new major accounts and penetration of mass market. Target new major accounts significantly outperform our average performance, as you see. The mass market showed growth in Q4, but has been heavily impacted by the market slowdown because this market is more volatile than the OEM market. Financial performance. Our performances this year are impacted by the low volume and the situation of losses in ST-Ericsson. You see this in the revenue, in the gross margin, and also in operating result, obviously. We had also restructuring and impairment charges of $588 million in Q4 2012 and $713 million in Q3, mainly reflecting impairment charges on wireless goodwill and other intangible assets. The reported earning per share resulted in a loss of $1.31 or $0.33 adjusted. However, our free cash flow significantly recovered, $145 million positive this quarter and still positive this year, thanks to careful asset management. The gross margin evolution. The gross margin was 32.3% in Q4 2012. For the full year 2012, it was 32.8%. You see the significant impact of unsaturation charges, tracked here in green box, reflected low volume recorded this year, especially in Q1 and in Q4. They were driven also by significant efforts to manage inventories during 2012. Inventories in Q4 2012 was 84 days compared to the year-ago period of 95 days. Q1 2013 guidance of the gross margin is at 31.4%, plus or minus two percentage points, reflects lower unsaturation charges, but no revenue from licensing compared to Q4 2012. The OpEx evolution. The combined SG&A and R&D cost increasing slightly sequentially this quarter, about 3%. This is mainly due to seasonal effects. We have significant programs to reduce OpEx over the coming quarters, including two restructuring programs announced in April 2012 for ST-Ericsson and in October 2012 in ST. As part of the new strategic plan, Carlo mentioned our goal is to reach $600 million to $650 million quarterly level by beginning of 2014. Fully-owned business performance. You see there the performances of each of our fully owned business product groups. Starting by automotive, Q4 2012 revenue decreased sequentially by 6%, mainly driven by difficult market conditions, with operating margin also down sequentially due to lower revenues. Analog, MEMS, and microcontrollers grew both revenue and margin second half 2012 on first half 2012, despite market conditions overall. Q4 2012 revenue increased 7.4% sequentially, driven by MEMS, secured microcontrollers, and analog applications. Margin sequential improvement in Q4 2012 was mainly due to higher volume of motion MEMS. Digital is still suffering of temporary situation at imaging and weak market conditions overall. Q4 2012 revenue decreased 1.7% sequentially. Mainly due to weak demand for digital consumer products. The decrease in operating margin this quarter is mainly due to manufacturing inefficiency related to a sharp decrease in loadings. Power Discrete had weak market demand and also customer specific situation compared to last year, and the revenue decreased 11% sequentially this quarter due to weak market demand, with obviously consequences on the margin. Wireless product segment performance. The wireless product segment showed a significant decrease in losses over the year, driven by the initiatives taken along 2012. Q4 2012 revenue decreased 2.2% sequentially and reflected ST-Ericsson continued ramp of NovaThor, as well as $43 million revenue in IP licensing, but more than offset, unfortunately, by the decrease in legacy product sales. The losses are still significant. The impairment charge in Q4 2012 for wireless goodwill and other intangible assets is bringing the investment value of ST-Ericsson in our book to a negligible amount. This is aligned with our decision to exit ST-Ericsson after a transition period, as announced in December. Our net financial position. Importantly, this year we have improved our financial position compared to 2011. This has been achieved despite challenging market conditions by managing carefully the CapEx investments. Also, it has been done while absorbing our portion of investment in ST-Ericsson and paying the dividends. During the quarter, ST and Ericsson waived their loan to ST-Ericsson. The Ericsson portion was recorded as a contribution from a non-controlling interest and then reduced the debt consolidated in ST. Q1 2013 outlook now. As discussed already, Q1 2013 revenue is expected to decrease sequentially in the range of about 7% at midpoint, with the own business down only 3% better than seasonal, despite weak market condition and ST-Ericsson anticipating a very significant sequential revenue decrease in sales. Q1 2013 gross margin expected to be about 31.4% at midpoint, reflecting lower unsaturation charge, but no revenue from licensing, as I said already. More broadly, semiconductor expected to improve in 2013, mostly driven by a more favorable economic environment. ST anticipates a good level of growth in these two segments, sense and power and automotive product and embedded processing solutions. In particular, we expect imaging, microcontrollers, analog and MEMS to be high contributors to our revenue performance next year. Next. Sorry. As you know, 2013 will see the implementation of our strategic plan, and here is the outline of what we announced in December. As a reminder, new vision and new strategy focus on five growth drivers where ST leads or will lead. Decision to exit ST-Ericsson after a transition period and the new financial model targeting 10% or more operating margin. ST-Ericsson. The decision to exit ST-Ericsson after a transition period expected to end during the third quarter of 2013. We are finalizing the decision regarding strategic options. We announced today that the current best estimate of further funding requirements for ST in the range of $300 million to $500 million during 2013, including ongoing operations. ST financial model. I repeat, our financial model is targeting 10% or more operating margin. This implies to significantly decrease the quarterly OpEx to the range of $600 million to $650 million. This new strategy, as announced, is based on two segments: sense and power and automotive products and embedded processing solutions. Starting in the first quarter 2013, ST will report revenue, operating income and CapEx of these two segments. Also, ST will report the revenue for the product groups. Finally, part of this new strategy is to intensify the focus on the five growth drivers MEMS and sensors, smart power, microcontrollers, application processor, and digital consumer. Now I will let Jean-Marc Chery to provide you with highlights about that for 2012 and achievements and also 2013 priorities. Thank you. Good morning, ladies and gentlemen. Let's move now on product technology and manufacturing field of operation. I am really proud to make this presentation on behalf of my great colleagues. As a drawback for you will not enjoy our star, Carmelo Papa, this time, but he will answer your question, I guess, during the event. This is our stronger and more focused product portfolio. Before to go more in detail, for sake of explanation, I would like first to recall that one of the important decisions we have made in 2012 is our new strategy. It includes a sharper focus within our two pillars, so sense and power and automotive products and embedded processing solution, and a relentless leverage of our manufacturing and technology R&D towards the achievement of our strategic objective to be a market leader within the financial model George Penalver has just described a few minutes ago. Let's go in more detail into the various product belongings to pillar. First, sense and power and automotive products. Automotive encompass car infotainment, smart power, and power microcontroller. Power discrete covers PowerMOS, IGBT, and modules, rectifiers, protection devices, what we call application-specific discrete, and what we call integrated passive and active device. Analog, MEMS, and sensor encompass MEMS, so motion MEMS, audio and environmental MEMS, and various sensors, advanced analog, power management, and standard ICs. Embedded processing solutions, so for microcontroller, it covers general purpose MCU, secure MCU, EEPROM embedded nonvolatile memory. Digital covers unified application processor platform, the digital consumer product, the imaging ICs, including the imaging signal processor and various modules, and the digital ASIC. Now, let's have a look on what we have achieved in 2012 and the top priorities for 2013 in these various areas. Let's start with sense and power and automotive, and automotive first. In the automotive market during 2012, major global players choose our 32 MCUs and our 32-bit microcontroller for their vehicle safety platform. Because it covers the full application from the low-end brake control to the most advanced dynamic vehicle control. We have collected with this device over $2.2 billion of design wins over the lifetime of the platform with major car makers and tiers one. In infotainment, we reached a milestone of having 200 million cars equipped with ST leading technologies. We also confirm our leadership in smart power, leveraging our 110 BCD9 shrink technology in the field of safety, powertrain, and body, addressing customer worldwide. The last but not the least, we are also establishing a strong partnership with the car maker, including Audi, and today we have announced a similar agreement with Hyundai. Thanks to the fact that ST today is a sole western company leveraging its two cluster of competence of high tech close to Milano for sense and power and Crolles close to Grenoble for digital, able to self-master the full innovation in technologies and products and the full supply chain for automotive needs. The top 2013 priorities for automotive will focus on market share gain again, continue the customer diversification outside Europe, and perfect execution in the product qualification and development in the new technology for smart power, so the BCD9 shrink technology, and also in the 40 nanometer embedded flash for microcontroller, which will reinforce our leadership and competitiveness. Smart power. In the field of smart power and power are not limited to automotive market. We introduce new low voltage MOSFET and IGBT families to complement our usual Carmelo strength in high voltage. For new 4G LTE device, we also introduced to several leading smartphone maker, high performing power saving tunable capacitor to optimize the antenna. I would like to say that one measure of the market recognition of our success in managing power activities is that more than 70% of ICs powering efficient AMOLED displays are supplied by STMicroelectronics. The top 2013 priorities focus on expansion of low voltage MOSFET and IGBT. Major turnaround, as Carlo said, in distribution and mass market following tough 2012 conditions, and we will introduce innovative solutions in power management for portable equipment as well. Let's move to the MEMS, analog and mixed. In analog, MEMS, and sensor, our foresight in anticipating the market needs and developing the right product led to a 22%. I restart. Analog, MEMS, and sensor. To make short, we work very well, so we have demonstrated, and Benedetto works very well, and manufacturing contributes as well. We have demonstrated a growth year-over-year of 22% in this field of activities. Overall, we ship over one billion MEMS units in 2012, and we have released this successful to start the production and this one billion shipments in pressure sensor, in microphone, and in our six-axis combo MEMS. We also start production of our capacitive touchscreen controller that are compatible with both on-cell and in-cell display technology. We have an important design win in analog chips to monitor the batteries of the smartphone. I would like to say that among one of the many success of this business unit, we ship more than 60 million MEMS microphone from zero, from standing start by end of 2012 across various customer and application. I would like to thank our both Agrate chips plant and Malta assembly and test plant to have achieved this tremendous sharp production ramp-up. Moreover, during the fourth quarter, we have leveraged our effort in the Windows 8 human interface device sensor to begin production to several tablet and smartphone design wins. This effort increased ST today to a position with a market share up to 48% in the field of mobile and IoT, and more than two times versus our closest competitor, which make us really a leading company in this field of application. Our 2013 top priorities will focus again on a stronger, of course, whatever our ultra-thin package for MEMS, touch screen controller, and high-performance microphone and op amp as well. Let's move now on our embedded processing solution, starting with microcontroller. 2012 has been an excellent year for microcontroller, because if you remember our work to move to ARM-based microcontroller in 32 bits continue to bear fruit. We have introduced seven new product line during this year, further expanded our family breadth in order to suit the mass market, and more important, to achieve a very strong 30% growth year-over-year in this kind of a family. In trust and data security, we have been confirmed by an important research firm to be a leading secure element vendor in the world. We have also introduced an innovative new dual EEPROM non-volatile memory, embedding a near-field communication compatible RF interface in addition to the standard serial interface. The top 13 priorities will focus on strengthening our leadership in 32 general purpose microcontroller, releasing seven new products, STM32, launch new generation of near-field communication products, including new secure elements in NFC controller. To generate dual-mode EEPROM product with significant revenue will be another major opportunity as well. Let's go more in digital now. Imaging. We continue to diversify our imaging business unit, delivering breakthrough processing technology in new applications. Proximity sensor, we are earning design win in industrial, in digital still camera, automotive, and mobile as well, thanks to our imaging sensor on new technology. Thanks to the complementarity we have with imaging signal processing, because STMicroelectronics is one of the sole company able to deliver to the customer the full solution between imaging sensor and imaging signal processor and module. This one helps us and provide to us the opportunity to expand our customer base in mobile imaging. Finally, in our application processor and digital consumer business, I recall you that in July, we have transferred from ST-Ericsson all the activities regarding the application processor. To offer, to build a unified application processor platform to address various markets. I have to say that today, this activity is really running and progressing very well. Last year, we have seen, and which is a major challenge because of the fragmentation of the market, our 40 nanometer set-top box deployment for cable and IPTV. We earn an important design win for the most advanced powerful home gateway product in both 32 nanometer and 28 nanometer, and we have introduced our DOCSIS 3.0 product for new high-speed cable products. Through several design wins in 32 and 28 nanometer ASIC, we really continue to expand our market share in this field of activity. In most advanced part of the activity of the digital, what we call our silicon photonics. This technology is progressing well in our Crolles R&D center, paving the way for customer partnership in the field of future optical modules. This is clear that for digital sector, the top priorities are definitively focusing on top line growth, leveraging our imaging ramp-up and new technology industrialization. Deploying the 40 nanometer set-top box family in emerging countries. Gain market share in U.S., thanks to our Orly platform and DOCSIS 3.0 product for high-speed cable. Additional growth will come from expanding our penetration in ASIC, leveraging our technology roadmap, and market share gain in monitor and displayport connectivity. Let's move to manufacturing. Well, I confirm ST is operating a competitive and flexible supply chain, leveraging both internal manufacturing infrastructure and external one, either through agreement or alliance consistently with our technology R&D. I would like to disclose that this year we have operated an average of 10% outsourced production volume wafer. In production value, it's equivalent 20% in foundries, which is really slightly lower than 2011, but strongly lower than 2010. Despite this repatriation effort from foundry to our internal manufacturing, as George said, we have suffered across the year $172 million U.S. dollar of cessation charge. But we do expect that the really ordered business achieving $2 billion, our manufacturing infrastructure will be preloaded towards zero unsaturation cost typically. Moving to CapEx. Effort we have achieved this year, I can disclose that the overall spending has been in the range of $476 million. Front-end manufacturing represents 32% and silicon R&D 17%. Main program we have support during this year is the 14 nanometer FDSOI capability setup. The 40 nanometer core capacity, mix capacity increase, and as I have said, the imaging 140 BSI ramp-up. We have enhanced our manufacturing and engineering system consistently with this new technology processing. Back-end manufacturing represents 19%, so we have increased capacity mix in our Asian plant, and obviously, we have achieved a strong effort in capacity increase in MEMS. Copper wire conversion has been a major program for obvious cost reduction. The rest, the 30% remaining CapEx, we have dedicated to test information technology, quality, and safety. All this effort totally consistent with our manufacturing and technology R&D model driven by the business demand. Well, I am proud to say that ST remains a technology provider for the business unit. So we master a large silicon technology portfolio from advanced CMOS derivative like embedded flash, embedded non-volatile memory for microcontroller, CMOS analog, PowerMOS, MEMS, and discrete. Our model, I repeat, our model is cooperative R&D. We are very satisfied with our participation with ISDA because today we enjoy, we are one of the sole company in the world enjoying a multi-source on 28 nanometer HPM metal gate duct. We have dedicated, thanks to this alliance, our internal team to faster deliver the 28 nanometer FDSOI. I will come back on this point. We are very satisfied as well with our cooperation in the field of imaging with Taiwanese foundry, UMC, as an example. Let me now go through our main success on the technology front. As I have said during the automotive product part, we are really proud to have been awarded from a leading automotive equipment manufacturer of our new generation of BCD93, which really a breakthrough compared to the competition. Consistently with our strategy of diversification and fastest growth in imaging sensor, we have started production of our imaging 140 BSI, and in 2013, we will accelerate the development and qualification in cooperation with UMC of Imaging 110. I would like to say that in the field of technology R&D, I am pleased to inform you that we have extended our participation to ISDA up to 2017, and we will cover the future most advanced STMicroelectronics technology, 10 nanometer and 7 nanometer, confirming our commitment to digital sector and manufacturing and technology R&D. Last but not the least, we have timely delivered our 28 nanometer FDSOI on time, full technology platform with the first application processor engineering sample, confirming, as our CEO said, superior performance and power consumption optimization. So now it's time to, let's say, to talk a little bit more in detail about STMicroelectronics FDSOI. This STMicroelectronics FDSOI technology is, as Carlo said, providing a unique value-enabling device, significantly more performing 30% at same power consumption, and with better power consumption at same performance, so 50% below. But equivalent important or more important is able to operate across the value set of operating voltage. As an example, this technology enable a device able to operate at 0.6 volt with a very low power consumption, but delivering for a dual Cortex-A9 device equivalent of 1 GHz, which means 5,000 DMIPS, basically, which cover all the application you need on the smartphone. So really, this technology will offer for smartphone or other digital application, either high performance or low power consumption, covering all the set of mission profile of this device. This manufacturing process is already simpler than the current high performance bulked STMicroelectronics with 2D transistor planar today, and for sure is much more simpler than the future 3D. Offering on top of faster manufacturing readiness, low cost of ownership, a strong legacy in design for better time to market. We are the first to offer a solution at 28 nanometer simply because we have consistently execute our technology roadmap across the past five years, relentlessly driven by a strategy of low power and low cost technology. Nevertheless, a major foundry and probably other one will be enabled at 28 nanometer, and we will selectively open this platform to the competition. And at 14, we will offer this platform more widely. So we are the first, but we will not remain alone definitively. So let me close this presentation by a very short video in order to share between us what really is FD-SOI. To build better digital devices and enhance the user experience, the size of the transistors must be reduced while increasing performance and reducing power consumption. Fully depleted silicon on insulator, or FD-SOI, is an approach that delivers these benefits while enabling a simplification of the manufacturing process. Unlike some other technologies, FD-SOI does not change the fundamental geometry of the transistor. In FD-SOI, the innovation lies in adding a thin layer of insulator, called the buried oxide, positioned just below the channel and eliminating the need to add dopants to the channel, thus making it fully depleted. Another key innovative step versus previous techniques is that the silicon on oxide layer is very thin. Together with the thin body channel layer, this technology is called ultra thin body and buried oxide. FD-SOI is an innovation that will allow the semiconductor industry to continue to deliver an ever better experience for consumers on next-generation digital devices. FD-SOI will enable these devices to operate faster and run cooler. FD-SOI is a simpler way to deliver these benefits compared to other alternatives, and is available for design and manufacturing today. To share with you and technologies always a step ahead. Now I am pleased to ask Carlo to conclude this various presentation. Thank you very much. Before I go to the Q&A section, I think it is important for me to outline what are the priorities for 2013. Of course, 2013 is a crucial year for us. It is a crucial year because we have a new strategy. I believe it is a successful strategy, but we now need to execute and implement the strategy. The first priority is the transition. The transition out from ST-Ericsson. As you know, we expect to complete the transition during the course of Q3, and today we are finalizing our decision in terms of selecting the strategic options. We have also looked at, of course, the financial implications on the company during 2013. Today we have an estimation. Today we are providing an estimation at the cost associated to support, first of all, the ongoing operation of ST-Ericsson, for instance, for the first quarter, and then to support the transition, and then to support the restructuring cost is in the range between $300 million and $500 million. We are not seeking any money. As I read this morning on certain press, we are just projecting what we believe is the cost for ST to support the ongoing operation of ST-Ericsson, to run the transition, and to complete the restructuring and to support the restructuring cost. This for us is in the range between $300 million and $500 million cash cost for 2013. This is priority number one. We are extremely focused on this, and of course, it is very crucial for us to make sure this transition is smooth and rapidly done. The second priority that we have, and we have a special initiative that is defined as Initiative 600, is to drive the company with the transition, the exiting, to a completely different phase of expenses. The company will run with expenses in the range between $600 million and $650 million of US GAAP net expenses per quarter. This is the range that we are targeting that we will reach at the beginning of 2014, but it is not just the objective for 2014, it is the objective during the period that is from 2014 and the end of 2017. We will stay within this range of expenses. I believe this is fair. I believe this is what we need to support our five growth drivers, product growth drivers, and we are very committed to execute this plan. We have a project team, we have a steering committee, we have bi-weekly meetings. This is a top priority for the year. The third priority is clearly growth. We want to grow our volume business. The most recent market research institutions are providing today figures projecting growth of our volume business without ST-Ericsson products. Still a lot of products for wireless, but without the ST-Ericsson products. Growth is projecting today a growth of 4.3%. Our ambition is to grow this year much faster than the 4.3%. I do not want to repeat now what will be the growth drivers. There is a detailed description of what are the priorities product by product. I mean, product family by product family during the course of 2013. I just want to underline again that we have a major opportunity of important turnaround in distribution. If I look at the distribution business globally in the world into Q4 2013 and Q4 2012, we are still running at about $120 million per quarter lower than what we had in the first half of 2011, before the crisis. This is a unique opportunity, and we are really striving this year with aggressive goal in all of our sales and marketing region to make a major turnaround in distribution. There are important drivers for our growth. I would like to mention three. We expect that these three families, this is our budget, in fact, we expect that these three families will contribute very importantly to the growth in 2013. The first is imaging, thanks to our diversification strategy. The second, again, is analog and MEMS, many new high-volume products. The third family is microcontrollers. Last year was a great year for general purpose microcontrollers, the 32-bit, with 30% growth. We believe that this year will be again a great year for microcontrollers. Also, thanks to important additions in the area of secure elements, where today we have opportunities. Secure elements is again 32-bit IP cores, is mostly for mobile applications. We are in a leading position, and we have visibility over a couple of hundred of millions of dollars of business in 2013 in this family. So there are important drivers. 4.3% is the market estimation today for the business that we serve. We want to grow much faster than this. I think Q4 will be definitely better. Most of our competitors decline in Q4. We did not, sequentially. In Q4, we started to grow again. It's a little growth. It's just 1.6%, but of course, it's a sign of turning. We have some positive indicators, like the POS business in distribution during last quarter. As I mentioned before, we are experiencing in March, in January, we have to see whether it's sustainable, a much stronger booking, particularly on standard products, on a very much global base. These three things are fundamental, so we are extremely determined, and we are committed to make sure that we make these three things on time. We are, as we described already in December, meeting many of you, we are absolutely committed to drive ST to become a much stronger company with a resized base of cost. This is necessary. Also, with a much sharper focus on product development and overall with a much stronger market position. I want to thank you again for your participation. I think we have plenty of time for question and answers. I think we would be three here, but all the group managers of the company are in the room, so we can go in details and respond to any of the questions that you may have. Thank you again. Thank you again for your participation today and for your interest in STMicroelectronics. Thanks a lot. Thank you, Carlo, and we'll have Carlo, George, and Jean-Marc up on stage. As Carlo mentioned, we've got plenty of ST executives here to help with the questions. With that, we have our first question. We've got some microphones, and for the benefit of those on the webcast, if you can wait until you get to the microphone. We've got Stefan over here. Yes, hello. Good morning. Stefan Reid, Magic Systems here. You can't hear me? You can? Okay. Can we have more sound up here? Yeah. Okay. I just wanted to clarify one point about the $300 million to $500 million that you are counting on for ST-Ericsson. Correct me if I am wrong, but it does include, if I understand well, the cash burn of ST-Ericsson in its normal functioning. So if you take into account the fact that, let us assume that ST-Ericsson will burn 150 per quarter, staying flat at that level, and that you take 50%, goes to above $200 million already only for you because you share with Ericsson. Does it mean that you are expecting very low restructuring measures with ST-Ericsson? That is my first question. Yeah. Can you hear me? Okay. I think, of course, the visibility that we have today with Q1 we can give. We believe that our cash need for Q1 for STMicro is about $100 million. This is the ST portion. And we have estimated that in addition to this, to run the transition and to run the restructuring cost, we have the need for an additional $200 million to $400 million to complete everything. Of course, this is the best visibility we have today. We are committed to go fast with the transition. As I said before, we are finalizing our decision in this respect. But indeed, the visibility that we have is an overall cash cost for the company in the range of between $300 million and $500 million, including the ongoing operation, the transition, and the restructuring cost. I cannot comment further on the options. You understand this may be counterproductive. I said that we are working to finalize the decision, and of course, we will come back to you as soon as we have the final decision. But we wanted to give this indication of the cash drain, because I think it is an important indication. Of course, it is a large number. I believe it is a number that we can manage. We have been able last year to protect our, well, in fact, last year we slightly improved our net financial position. We want to make sure we protect this as much as possible. I would not exclude there will be some form of degradation, but limited degradation of the net financial position in the course of the year. It is important for us to move on, to move to the new phase, focusing on our five growth drivers and become a leaner company, but stronger. Thank you. You have been talking about the first signs of recovery in order. Could you give us some more color on that, if it is coming from end demand or it is more inventory replenishment? Do you have the visibility on that? Well, of course, it's not that easy so rapidly because these, let's say, encouraging signs are pretty recent. What I can say is that it's not only distribution. It's a combination of distribution and OEM customers. I can say it's multi-products. For instance, we are tracking in the company systematically in great details, seven families that are the non-automotive, the non-MEMS, the products that are more standard with a higher elasticity in the marketplace. Like for instance, microcontrollers, like power, discrete, non-MEMS analog, these kind of products. This better bookings is across the board. Also geographically, it's not only one region. I would say it's across the board. Now, your question, is this replenishment or not? The inventory at our distributors at the end of Q4 was pretty stable. I think from my point of view, it's pretty clean. I believe they have a fair level of inventory. I think it's what they need. They have not decreased inventory at the end of Q4. They have not increased inventory at the end of Q4. We see. I mentioned two things. I mentioned that the POS in Q4 was good in several regions. I also mentioned the fact that the booking is good in January. It was better already in Q4, but the improvement vis-à-vis Q3 was limited, and the booking in Q4 was still well below the level of bookings that we had in the first half of, for instance, 2011. Fine. This is positive. MEMS will drop in Q1. If MEMS would not have dropped in Q1, we would have grown in Q1. Of course, this is mostly wireless, but including, and you have, of course, a lot of information on the evolution of the market in wireless. If we look at the minus 3 is composed by a few families growing, other families flat, and this time, MEMS dropping a little bit. But after a very strong rate in the second half of last year. Okay. We'll move on to our next question, please. Jerome? I'm Jerome Mohamed from Exane BNP Paribas. How should we model the OpEx entering Q1 this year? Do you have any idea when you could get back to the 10% or more EBIT margin? That's the first question. Well, who is talking about OpEx? I can do, I do. I think there will be some limited decline of the OpEx in absolute value. This is the model, right? As far as the 10% objective, of course, our objective is during the course of 2014. This year, as you know, we want to grow more than 4.3%. We want to fill our fab. Jean-Marc said before that in our model, at $2 billion per quarter, we fill our fab, which means either no or very limited unsaturation cost. Today, the visibility that we have is to improve loading during the course of the year. Clearly, the sales from ST-Ericsson will go down. Overall, I believe that during the course of 2014, we are in the condition to achieve the level of profitability that we set with a significant generation of cash. Maybe just a follow-up, maybe for Jean-Marc. If the fully depleted SOI becomes successful within the industry, could we imagine that STMicro as a whole would get licensing revenues from fully depleted SOI? Can we imagine that STMicro will receive licensing revenues from FD-SOI going forward? We can imagine everything, but we cannot disclose. Today, we have developed this technology in cooperation with and the support of the LETI in the field of our current bilateral agreement we have with them. Then, as we said, we will transfer this technology to a major foundry player. Obviously, our objective is not to transfer only as a second source for only our needs, and we would like to open this technology. This is clear that this technology is successful with the competition. ST should be normally rewarded, okay, for that, and the partner who have developed technology with us as well. Thank you. Our objective is to use up this technology, and we are starting now really to use these technologies for ASIC solutions. We have a lot of interest from customers, and particularly after the demo at the CES, where we have really shown the product, the technology working. We are experiencing a lot of interest because what we said has happened in terms of performance, and this technology will be used for various things. Of course, portable equipment, but also for gaming applications, I think, in general, for ASICs. I believe is a good opportunity for us to focus on. Okay. Next question. I have three short questions. First one, I wanted to find out, you have two cost-cutting program initiatives. If you could just remind us exactly how much you want to achieve in absolute and what you have achieved to date and what we might to be flowing through the P&L going into 2013 in terms of the cost-cutting programs. That is the first question. The second question, I am actually a bit surprised to see your wireless not showing up as a discontinued operation, and you are still showing it as a core segment. Maybe if you could comment on that. It is not very clear why. The third thing is on in-sourcing of volumes. I think you said 20% of your volumes are outsourced to foundry partners. Where do you want to take that number in terms of making up for the lost ST-Ericsson volume potentially? Thank you. I missed the second one. The second question. Why was this not a discontinued operation at ST-Ericsson? What do you mean discontinued operation? In the balance sheet. Oh, in the balance sheet, you mean. In the segment reporting. In the segment reporting. I understand. I think that, let's start. I leave the second question to my controller team and finance team because, of course, they will respond on that. As far as the first question is concerned, I think we have announced the $150 million plan in October. In Q1, we plan to achieve between $12 million and $15 million out of the, let's say, almost $40 million per quarter, because $150 million is annualized. We then plan to progressively grow from this $12 million to $13 million to the $40 million per quarter saving by the end of the year. This is where we are. I also want to men- This is on the bottom line. This is on the bottom line. I also want to mention here that for some quarters, we will have a very limited other income and expenses. We are working, of course, on the future phase, and we expect that what will happen in 2013 is similar to what happened in 2008, where there was a catch up of the other income and expenses in terms of grants later on or at the beginning of next year. The third question was? In foundry. Yeah, for the foundry, as you said, in volume was 10%, in value, in worldwide standard value production, it was 20%. I think the priorities, frankly, is filling our fab. We have some more opportunities to repatriate in certain technologies, clearly. This will help. We have very transparently described our model with revenues in the range of $1.95 billion-$2 billion per quarter. The infrastructure that we have is saturated. Of course, the priority is to go out for the rest, if we need. But today, what we want to do is to maintain the flexibility, particularly in a moment where we expect the transition of ST-Ericsson. We want to maintain the flexibility to repatriate, if needed. As far as accounting is concerned, I believe that the trigger will be in terms of not report the wireless account in the normal, let's say, pocket of the company. I believe the trigger will be the finalization of the decision of the option. I believe is like this. We took the impairment because we took the decision to exit, but as soon as the formalization of the decision, what option we select, this will happen. Of course, I expect that it may be we will have a certain asset for sales, for instance, that will be, as happened to us in the past, out from the running cost. The reason is this. Okay. We've got a question right here, and then we'll go back to Dan. Actually, hold on. Juergen, why don't you go, and then Dan, we'll get you next. Okay. Yeah. Thank you. A question on the digital division. In imaging, you mentioned that you expect this to be a significant growth driver this year. In terms of dollar value, how much of revenues do you need to add this year, next year to make imaging from a profitability point of view? I would have a follow-up on digital. Yeah. Yeah. I mentioned two initiatives. One initiative is the addition of dollar value, as you say. The other initiative, of course, is the $150 million saving plan, is the combination of the two, clearly. In imaging, it's very simple. The first thing that we want to do is to go back where we were. If you take, for instance, in Q4 last year, we grew 1.6% year-over-year, right? This, despite imaging decline from $160 million to $100 million. In 12 months, due to the fact that the business was concentrated on two customers that are, I think we have already disclosed, these are Nokia and RIM. Our revenues in 12 months dropped from $160 million in Q4 2011 to only $100 million in Q4 2012. What we want to do this year is to go back from $100 million in Q4 2011 to $160 million in Q4 2013. This is the addition. It is an addition, but it is also recovery. It is what we have lost, and we believe that this recovery is mostly thanks to the diversification program that is adding new customers, and not only in the area of mobile. I would like to mention gaming, for instance, that is important, and others like automotive. This is on imaging and is the top-line evolution. Then, of course, in addition, we have the restructuring and the saving plan in the digital sector that we expect will need almost $40 million saving by the end of 2013. $40 million per quarter. Looking at, you mentioned also the losses in digital TV, and what does it take to bring that back into profits post-restructuring? This is part of the saving plan that we have announced in October, is the concentration in one unit of all the application processors, including TV. Today, what we are doing in TV is, we have very advanced discussions with leaders in this area to develop dedicated products for them. By the way, using the SOI technology. I think it's already part of the digital saving plan, the $150 million, and the concentration of all the application processor activity in one unit. This is what we have announced in October. That is two things. One is the saving plan, and then it is also the business model. We will not promote any longer standard TV solutions. We will work more and more with customers to align and develop for them very high volume dedicated solutions. Thank you, Juergen. We'll move to Dan. Hi. Dan Garden, HRT. You mentioned in the statement some comments around pricing. I just wondered if you could give some more detail there about what's changed, and specifically what products are affected, and how long you think those pricing effects will take to work. Dan, it was a little hard to hear you. Can you hear me? I can hear you, but I didn't hear well. Okay. Is this better? Yeah. Okay. The question was on pricing. You made a comment in the statement that pricing conditions had impacted gross margins. I wondered what changed over the course of the last three months, and how long you think that effect will take place, and what segments/products are impacted? Is that okay? Did you hear that? Yeah. It is very clear. No, the price pressure remains strong. The price pressure remains strong. I think, of course, this is very much driven by the market. We also have, as every year, new contracts that will trigger the 1st of January, that is embedded in the numbers. I think it is premature that we talk about improvement in terms of price pressure. I think what we need to see now is a continuation of the trends of the bookings, and then we will see. I think the price pressure was strong in Q4 and is remaining strong in Q1. We have, of course, for many OEM customers, the new contracts that are triggered in starting from the 1st of January. But let us wait a little bit longer, the trend of the market. Today, the price pressure is strong. Okay. Is that in any specific products or segments, or is that across the board? No, I would say it is very much across the board. I think it is across the board, both from the point of view of the products and also from the point of view of the regional activities. So it is across the board. It is a generic pressure that you have in a moment where the market is weak, and during the last few quarters, the market was pretty weak. Okay. If I could have one further question, just to confirm something, one of the answers you gave earlier. Do you think you can get to that 10% operating margin target at $2 billion of revenue per quarter? That implies that your core business has to grow by low teens percentage point from the current run rate. Is that correct? No, I didn't say that. I think what we said, particularly during all the discussions that we had during the month of December, that to reach above the 10% operating income, we need to go back to the level of sales that we had in the first part of 2011 on the core business of ST, on our business. This is what we said, and I clearly can reconfirm today. What we said today, and also in December, is that with revenues of $1.95 billion-$2 billion per quarter, we have our manufacturing facilities well utilized from a loading point of view. But to achieve the 10% mark, we need two things. We need to, of course, execute on our $600 million initiative on one side, and reduce the cost base. That is mostly ST Micro but not exclusively, because we also have the $150 million restructuring plan in-house. On the other end, we need to go back to the level of sales that we already had as a core business of ST in the first half of 2011. Thank you, Dan. Next question. We've answered all the questions. All right. We got another. Another hand started going there. I was going to take one. Just on a lot of the application processor business, Samsung is developing the application processor business fairly rapidly. What is your view on kind of the addressable market for the application processor, not just in mobile? It seems the number of players getting in is still Yeah fairly high. What do you use as Yeah. -differentiation? Yes. Well, I think first of all, our top priority remains in the area of application processor, the home gateway. This must be very clear. Our unique opportunity here is the U.S. market. In this market, our business model was centered on customer development for one specific customer that had a very strong position in U.S. This business model has changed, and today we are aggressively promoting our Orly, and we are aggressively promoting, for instance, we mentioned this morning, the DOCSIS 3.0 for high-speed applications for this market in the United States. This is a very important priority for us. I believe we have good products. I believe that there are a lot of traction with customers and also with service providers in the United States. If we move on, there are important areas where we believe we can exploit our knowledge in application processors, our capability to design products at very low power consumption, and also we can exploit our FDSOI. One that I would like to mention, for instance, is gaming. This is an area, gaming, where we see a lot of traction. Then frankly, also more traditional portable equipment. I have to say that what we will not do is to promote a general purpose application processor platform for smartphones and tablets. This we will not do. What we will do is to promote home gateway solutions on a very broad base with a strong focus in the U.S. We will focus on specific products for gaming and specific products for tablets and similar portable equipment, but in close cooperation with major customers. Okay. Well, Stefan over there. Yes. I just wanted to know if you can give us a range for the CapEx budget for 2013. Yeah, we can. I think we will be in the range today, the visibility, and as I said, the visibility is also the visibility to grow. To grow with Q2 better than Q1, Q3 better than Q2, and Q4 better than Q3, to grow on our core business. So the visibility that we have today is in the range between $550 million and $600 million, based on an assumption of growing our business. Of course, we will be very vigilant, and I think the plan is to spend about 300. I am sorry. Now I am reporting the goods that we receive, because what we public outside is the payment of the CapEx. So maybe there is a little bit of gap. But just to give you an order of magnitude. We want to go for about 300 million in the first half, and then of course we have the second half, and hopefully, we can go to 580, because this means that we will grow in the second half. Thank you, Stefan. We got a question in the back. Hi. Two questions, actually. One is on market share. Is it too loud? Yeah. On market share, you said you were quite focused on gaining market share. Can you tell us where are the maybe two or three areas where you think today you are gaining the most market share? The second question will be on the automotive on if you can comment more on the Audi and Hyundai partnerships. Well, I think that we had a big run rate, whatever market share gain for several quarters through starting maybe at the end of Q4 2009, through probably the third quarter of 2011. Many quarters of gaining market share continuously. Then we had a halt. The halt was a consequence of a few things. One is the decision to leave the digital core of these drives that we did, and our sales are now zero. While, for instance, in the first half of 2011, they were not, they were material. The second reason is the drop with our former major customers, that has been very material for us. In Q3, in Q4, I believe we have gained market share again. I am looking at the guidance of our competitors and what we have done, and we are tracking systematically 10 competitors. We are also using this for our stock award plan, is one of the three criterias, and is the evolution of the sales compared with these 10 key competitors. Texas Instruments is there, Renesas is there, et cetera. The biggest, they are all reporting the results. I believe that in Q4 2011, our market share, if you look at these 10 competitors, was 10.9%. We do not have yet all the results of these 10 competitors. If I look at Q4 2012, our expectation is that our market share is 11.4%. Okay. I believe that in Q4 last year, we have gained market share, and hopefully now we are at the bottom with Nokia. Hopefully now we are at the bottom with RIM, and we can start on our business, of course, without wireless growing again. In terms of growth drivers for this year, there are three. One is imaging, because the swing was very brutal last year, and we want to go back to the $160 million in Q4 or more. The second one is microcontrollers. I did mention that we have important areas this year related to the secure microcontrollers business, where we have plenty of design wins and now production that is ramping up, and this is a 32-bit microcontrollers, but for secure applications. The third one is analog and MEMS. In the area of analog, there are a few very important families, like our touch sensing. This is good for also innovative display solutions and is with hovering functions, is allowing to drive the display even at distance without touching the display. This is a big driver for us this year. Then very high volume microphone activity and very high volume, I say iNEMO, the MEMS fusion. Okay. On top, we have been really hit by the crisis in the mid and small size industrial customers. This was a real hit for ST. Europe did play for us an important role, unfortunately, in this respect. This is a great opportunity because here the turnaround can be very fast. I mentioned before that if I look at the distribution business that we had in Q4 2012, if I compare this with what we had before the debt crisis, our decline is still $120 million. I believe this is an important turnaround opportunity on many standard products, including power products. We are now encouraged by the booking trends that we see in all these products since few weeks. These are the major drivers. In Q4, we gain market share compared to our top 10 competitors. Almost for sure, we will know the result very soon when everybody will report. If I look at the guidance in Q4 2011, our market share vis-à-vis our 10 top competitors was 10.9%, and in Q4 2012 should be about 11.4%. But is this margin total or kind of everywhere? No, I think we have done this despite a major drop in imaging. Because as I said before, moving from Q4 2011 and Q4 2012, our imaging business dropped $60 million, which is a massive drop. It is almost, for us, three percentage points. Just as a follow-up on market share, we understand that Nokia and RIM hit you badly. I understand Nokia and RIM hit you badly. But on specific products, for example, in power discrete, you feel you are gaining market share. MEMS is very clear, but We think so. We have gained globally. Clearly, I believe that we do not have yet all the detailed numbers by product, but I believe that. We know the number for discrete in Q3. The market share of discrete in Q3 was up. Okay? This is for sure. Clearly, we gain share in microcontrollers. There is no doubt. I think we will see. We do not know automotive yet. We will see. We have done -6% last year. My second question was on automotive. If you can make additional comments on the partnership you announced with Audi last year and apparently Hyundai this morning. What is the nature of these partnerships, and how does it work? We believe it is a very important partnership. They selected ST as the real partner for several technologies and for several applications in the cars. I think there will be a press release soon, right, Marco? We will describe the content of the agreement. This is great for us because, of course, it is a company that is growing a lot and is wide in terms of technologies, and they have very kindly allowed us to mention them during this meeting. Okay. At this point, I think we would like to show you just a very short video clip, and then as we- You can go. I will be there in a minute. Absolutely, because there is lunch waiting for you. That is more important. With that, if you want to run the video, and thank you for your participation, and top management will be around to answer your further questions. Thank you very much. Bye-bye.