Earnings Call: Q1 2010

Apr 15, 2010

Good afternoon. My name is Saeed, and I will be the conference operator for today. At this time, I would like to welcome everyone to AMD's First Quarter 20 10 Earnings Conference Call. And Answer Session. As a reminder, this conference is being recorded today. I would now like to turn the conference over to Ms. Ruth Cotter, Director of Investor Relations and Treasury for AMD. Ma'am, please go ahead. Thank you, and welcome to AMD's Q1 earnings conference call. Our nineteen. Participants today are Dirk Meyer, our President and CEO and Thomas Seifert, our Chief Financial Officer. This nineteen. This is a live call and will be replayed via webcast on amd.com. There will also be a telephone replay. The number is 880 20662081. Outside of the United States, the number is 7 20 three-nine-two-five-two-five 3. The telephone replay will be available for the next 10 days starting later this evening. Before we start, I'd like to highlight nineteen. That AMD will attend UBS's Investment Conference on June 9 in New York and that our 2nd quarter quiet time $1,000,000 and ownership stake in GLOBALFOUNDRIES, which is reflected in the equity and net loss of investee line of our statement of operations. For your information, our 2018. Class A preferred share ownership decreased from 83% to 82% as a result of the capital call that took place on the 1st of 2018. Atik participated in the cash call and AMD did not. As a result, AMD's ownership on a fully diluted basis also decreased 20 10. Reconciliation of all non GAAP financial measures are included in our nineteen financial tables that accompany our earnings release available in the Investor Relations section of amd.com. Before we begin today's call, I would like to caution everyone that we will nineteen. We are making forward looking statements about management's expectations. Investors are cautioned that those statements are based on current beliefs, assumptions and 2019. The Expectations. The semiconductor industry is generally volatile and market conditions are particularly difficult to forecast, 2019's annual report on Form 10 ks for the year ended December 26, 2009. With that, let me now hand it over to Dirk. Thanks, Ruth, and thanks nineteen. Our priorities this year are to deliver compelling platforms, increase access to customer demand and transform our eighteen business model. In the Q1 of this year, we made good progress on each of these priorities. And in an improving global 2019. We delivered record 1st quarter revenue coupled with good operating performance. Our 2019. Our platform execution continued to be solid across the board with key new product transitions initiated in each of our main 2019 and the family into the mainstream and value segments. In addition, we unveiled the industry's first DX11 products for notebooks, where we Retail, showcase the benefits of an all AMD solution and increase upsell. Today, over 50% 2017 on customer needs for more cores and more memory for less money. OEM interest in our AMD Optron 4 1,000 series has been strong as well. The 4,000 series is on track for launch this quarter. AMD nineteen. The momentum in notebooks is growing as we expand our platform footprint and our list of top tier customers. We customer demand for a vivid digital experience coupled with strong battery life and real world application scenarios. To that end, customer interest in our Danube 18. Our operating performance is improving, the cash generation potential of the business is beginning to be realized, and we are improving our 2019 balance sheet. In summary, our Q1 was another in a series of solid quarters, a good balance of achieving strategic milestones and solid operating performance in an improving market. And with that, I'll turn it over to Thomas. Thank you, Dirk. We are pleased to report another quarter of good product and financial execution as we further demonstrated the strength of our business model by growing ASPs, margins and improving twenty nineteen. 1st quarter revenue was $1,570,000,000 down 4% compared to the Q4 of 'nine and up 34% compared to the same period a year ago. AMD reported non GAAP net income of $63,000,000 in the Q1 of 2010. To calculate the non GAAP net income, we excluded the $17,000,000 amortization 20.5% of the total interest expense and three items related to the deconsolidation of GlobalFoundries. First, a non cash one time gain of $325,000,000 based on the fair value assessment of our investment in GlobalFoundries. 2nd, a eighteen. Gross margin benefit of $69,000,000 related to inventory and third, a non cash loss of $183,000,000 which nineteen. This includes our share of GLOBALFOUNDRIES operating results and other equity accounting related adjustments. We 2019. I will continue to reference non GAAP financial measures because we believe they are more indicative of our ongoing operating performance. Our non eighteen. GAAP diluted EPS of $0.09 in the Q1 is calculated using 730,000,000 shares, which excludes the impact 12 convertible debt dilution because the diluted EPS inflection point of 0.2 $9 for the quarter was not triggered. For modeling purposes, if this inflection point is triggered, you'll need to add back about 7,000,000 2019 in interest charges applicable to the debt and approximately 24,000,000 common shares, issuable upon conversion $20,000,000 excluding the gross margin benefit related to inventory and amortization of acquired intangible assets. Non eighteen. GAAP gross margin for the quarter was 43%, up 2 percentage points from last quarter, mainly due to improved product mix that that drove higher ASPs. Operating expenses in the quarter were $542,000,000 within the guided range. R and D was at 3 $23,000,000 and SG and A was at $219,000,000 for the period. 1st quarter adjusted EBITDA was 3 $302,000,000 up from $282,000,000 in the 4th quarter and adjusted free cash flow was 100 $77,000,000 Now switching to the business segments. 1st quarter revenue decreased 2019. We are pleased to report that we are seeing traction in both our Computing Solutions and Graphics segments. In the Computing Solutions segment, 1st quarter 2019 was $1,160,000,000 down 5% sequentially. For historical comparison, please note that starting in Q1 of this 2019. We are accounting for the Embedded Graphics business under the Computing Solutions segment. Previously, it eighteen. Sequential revenue decrease in computing solutions was primarily driven by a decrease in microprocessor unit shipments, partially offset by increased microprocessor ASPs, particularly in notebooks. Our server, notebook and 19.5% of our total revenue growth compared to this period last year. Server revenue and units demonstrated the 2019. We are 2019 by the ongoing success of our 6 core AMD Optum platform as well as the broad acceptance of the recently launched 8 and 12 core offerings. Combined, the 2 platforms drove higher server overall ASPs in the quarter and made $46,000,000 compared with $161,000,000 in Q4 'nine. In the Graphics segment, revenue for quarter was $409,000,000 down 3% sequentially in a constrained capacity environment. Record mobile GPU 2 shipments were more than offset by a combination of seasonally lower game console royalties and desktop discrete 20. Graphics processor ASPs increased sequentially on continued demand for ADI's 5 1,000 Sirius traffic cards. Graphics segment operating income was $47,000,000 compared 2019. I'm going to turn the call over to our financial results. The ending investment balance for the Q1 of 20 10 was $270,000,000 This balance will be adjusted on a quarterly basis, primarily based on our equity 2018 or loss under the equity method of accounting. Our cash and marketable securities balance at the end of the quarter was 1,900,000,000 2019. Long term debt as of the end of the Q1 of 2010 was $2,600,000,000 Now, let 2019. Let me turn to the outlook. The following statements concerning AMD are forward looking and actual results could differ materially 2019. For the Q2 of 2010, AMD expects revenue Q1 was a solid demonstration of the earnings potential of our business model. We are pleased with the market's response with greater access to customer demand. At this point, I would like to turn it back to Ruth for the Q and A. Thank you, Thomas. Saiid, please poll participants for their questions and we'll start the question and answer session. Thank you, Ms. First question comes from Tim Luke from Barclays. Thanks so much and congratulations on your 2nd numbers. Thomas, maybe you could frame some of the things that contributed to the improved gross margin in the quarter and how you With what you've described as seasonally lower revenue and how you perceive some of the backdrop for 2nd half of the year. And maybe also just on the operating expense side, you might be able to give some color about whether you're able to be able to hold 20. Yes. So for the Q1, ASP improvement was really driven by a better and improved product mix that drove higher ASPs. 2019. Overall, for the remainder of the year, we have no reason to deviate nineteen. Because of the product launches, we will perform, especially in the notebook segment, and we nineteen. Could you talk about how you perceive the node ramps and transitions and your confidence In the 32 nanometer ramp and also any early indications about timelines associated with Fusion going forward? Thank you. Sure, 2019. That is to say we plan to commence volume production in the back half of this year. We do now have internal samples of both of our initial fusion designs and are learning quite a lot and quite happy with 14th. And we've started sampling to select customers one of those two designs. And actually, if I may, just on inventory, it looked like it was fairly flat. How do you perceive your inventory level on hand in the channel? And how would you eighteen. Keep inventory in our under our control as well as inventory in the channels is very healthy. We see ourselves building 18. Our next question comes from Uche Ojei from UBS. Thank you very much. Maybe I will just nineteen. A quick clarification, Thomas, did you say you are looking to pull in R and D in response to the earlier question? And if that's the case, how should we think about the trend for R and D for the rest of the year and possibly for OpEx in general. Yes, pulling in is a mighty word. So quarter. So Berlin is a very strong word. We are confident with the guidance we have given in terms of R 20 spend in relation to R and D for the remainder of the year. Okay. Can I ask you about Madnicor's? 16. What's the availability and what will be the impact on margins? So to be helpful. Sure. First, we did start production shipments actually of MagnaCore CPUs in March in support of our customers platform plans. You'll see platforms become available starting really early in Q2 and being over the course of Q2 from the 3 OEMs I outlined. The response to the product has been pretty enthusiastic. Our 2019. I have got some good design wins behind the product and as well 2018 win so far. So I think that's a good precursor to the competitive position of the product and how we'll do in the market. You asked The gross margin puts and takes and from my perspective to the extent we disproportionately grow our server 20. Okay. And just very quickly, I mean, Apple announced some refresh of their Graphics as part of the impact risk why they chose it and it has positive impact on the battery life. 20. How does this compare to what you have? And how do you plan to respond to this type of competitive pressure coming from NVIDIA. So if you can just talk about what Apple has done and the announcement they made and how that impacts your product, that would be helpful. Sure. I think that's a reference to what NVIDIA calls their Optimus. That's correct. Switchable graphics capability. At the high level, we've 6th quarter switchable graphics capability in the ATI graphics platform for a couple of years under the banner of Power Express. 2019. My understanding of OPTIMIS is it provides a little bit more of a software controlled experience and one that we have in our development pipeline as well. Eighteen. The final thing I'll say is the kind of the ultimate high performance graphics experience in a notebook is actually going to be made available on the Fusion context, which is one of the reasons We're so excited about having Fusion available in the market. Just one last question please. IT Spending, any comments you can make as to how you expect to see that progress for the rest of the year from an enterprise perspective? That's my last question. Thanks. Really started to pick up in Q3 last year and has remained pretty healthy. I mean, I think clearly, we've seen a minor seasonal downturn Q4 Q1, but we're still optimistic that the server opportunity is going to remain there for us and pretty strong as CIOs continue to look at the Hard to talk with any confidence about the pace or rate of a client surge in IT spend, so I'll stay quiet on that. Thank 20 Q. Our next question comes from Glenn Young from Citi. Thanks. My first question is about eighteen. Just to clarify that the improvement that you saw in Q1 was a function of mix predominantly, right, not absolute price increase. And And then related to that, can you talk about the impact of your recent successes in notebook on ASP and also your strategy in the two way server market and how that might impact the ASPs looking forward. Sure, Glenn. So first, correct, the ASP commentary nineteen. Could you repeat the question on notebooks? Just you've had some success on notebooks you did with Lenovo, for example, in the Q1 and I assume that progresses in Q2. How 2019. How does notebook help you or hurt you as you think about mix going forward and the same for the two way server market? Yes. So, good question. So, two eighteen. Two things on notebook. One is, as we've said before, we see the notebook market as a big opportunity for us, because we're relatively underrepresented there. As you know, our nineteen. There might have been such as battery life, perception gaps or other on the notebook platform. So, we feel 2019. Technologically, our platforms are awesome. Of course, the importance of graphics is becoming more clear to end users. And 2019. Finally, we feel really good about where we've got our triple and quad core positioned in the market in terms of the 2019. Power of those products and the sort of thin and light form factors that OEMs will be able to build around those products. And all of that in combination with the campaign. We think it's going to result in not only the opportunity for some share growth looking forward, but also a richer mix of AMD based platforms in the marketplace. Then your question on servers was in effect how 2019. Really gets us back in a great competitive position and by far the biggest volume part of the server market 2P, probably 80% 2019. As I said in response to the earlier question, to the extent we disproportionately grow our server business, it's good for our ASPs and good for our margins. 2019. Next question is, Thomas, maybe the equity loss, I think if I'm doing the math right, the losses at GlobalFoundation actually grew this quarter. 1, I guess, is that correct? And if it is, what happened there? No, the math is not correct because this line item, It also includes the dividend that we accrue on the Class B Preferred Shares. So there's more in there than just the operating loss. On the operating losses at GlobalFoundries moving Going forward, we will not comment. We will not give guidance on performance of GlobalFoundries as a legal entity. Last question is on going back to the inventory question, recognizing that it's low. I did notice that your deferred income to distribution was Marginally in the quarter, but it's actually high relative to the history of the business. Is there anything to read into that or is that really just because revenues are going up? Yes. So we moved more customers to a deferred revenue concept on our add our next question comes from John Hitzer from Credit Suisse. Yes, good afternoon guys. Thanks for letting me ask the question. Just on microprocessor, operating margins came in about 7 percent. I'm just kind of curious, saving share gain, what else can you guys do to help drive profitability in sort of the microprocessor business? Or is it really a 2019. Yes, I would say largely a top line story in capacity increase and we are not at full utilization yet. So as we go into the second half, this will have a margin impact. And then moving forward, of course, the transition to 32 nanometer nodes. And then Dirk, just 30 Infusion. Is that something that occurs late this year or is it a 2011 event? If you can help me understand that, I'd appreciate it. Yes. So we'll ramp production in the 2nd half and you'll see platforms in the market in the first early in the first half of next year. And then Dirk, my last question, you guys did not go after the netbook nineteen. We saw that grow quickly and then kind of plateau. I'm kind of curious, any strategy around the tablet market or thoughts there? Yes. We've 2019. In the analyst conference, the Ontario product is really focused on, I'll call it, value PCs and netbooks, but the Bobcat technology and other 2019. The 2nd largest quarter of the year, the 2nd largest quarter of the year. Nineteen. And you'll see Bobcat based products show up the following year appropriate to that market segment. Financials. Hey, thanks guys. Back to the server side, With the pricing differential between your chips and your competitor Intel's chips, Server Chips. Do you believe that they have created somewhat of a price umbrella where AMD can operate and gain share 2019. With a richer mix and drive gross margins or is there a I guess is there a closing gap there that Repeat the second half of your question again, Cody. I'm sorry, closing gap, I didn't understand. Yes, I guess it's just nineteen. Just the pricing differential between your server chips, you now have higher end server chips, the prices, seventeen. Obviously, with the higher performance move northward, and so does that 2019. Well, let me turn around and hope that I ask your question with the following eighteen. First, the MagnaCore product delivers leadership performance across a lot of workloads. So, we feel great about that. As I nineteen. Importantly, a lot of the buying criteria now include not just absolute maximum performance, but performance per watt per dollar. And nineteen. Final thing that we've done is in the Opteon 6000 series changed the pricing strategy and removed what had been nineteen. A pretty big step up in price when you go from a 2 socket capable processor to a 4 socket capable processor. And we 20.7% and some applications, really leadership performance per watt per dollar and a disruptive strategy round 4 sockets and we think we've got a good opportunity in the marketplace. So, Cody, I hope that did I answer your question there? Yes, you did. Thank you very much. 18. Just one follow-up. With a range of gross margin 40% to 40 5%, but yet 32 nanometer coming on, a bit of corporate recovery, prices, ASP is doing a bit better. 2019 beyond what we indicated on our Financial Analyst Day. But you have to keep in mind that 32 nanometer impact 18. End of the year, we are still confident with the guidance we have given. And I guess, looking at the corporate spending environment, how eighteen. I would say not much other than to the extent it affects one way or another our server business line. For both your processors and your graphics chips. Yes, Sean, we don't give out the specific eighteen numbers, but to be clear, we didn't actually increase prices rather what we saw is a favorable change in mix Q4 to Q1. Was it a slight increase or One man's flight is another man's big, so let's not go there. Okay. 2019. And then in terms of are you experiencing any tightness? I know that in recent quarters, you've experienced it on the 40 nanometer side on GPUs. Has that gotten better? Is it about the same? Or can you give us some clarity on how lead times are going in general for processors and graphics chips? Yes. First, 2019's improvements in forward looking committed supply. We're also seeing increases in demand and forecasted demand. The result being we 2019 throughout much of this year. Okay. And then, 6 or what was your mix of your processor business, the split between server desktop notebook in the last quarter? We don't give that eighteen. Our next question comes from Ross Seymore from Deutsche Bank. Hi, guys. Just another question on the GPU side of things. I realize it was late in the quarter, But any changing competitive dynamics at all with your competitor putting out their new generation GPU? None that affected Q1, of course, That product was from the competitor wasn't available in Q1 and in fact I don't think it's available until later this month. Got you. But going forward as far Anybody any of your customers using that as a competitive threat in their future ordering, etcetera, any kind of changes in the dynamics in that manner? Really no. And to amplify that, for quite some time, we were looking at the 20. For quite some time, we were looking at NVIDIA's next generation architecture as somewhat of a paper 2019. I grew, there was a lot of talk about it, but it wasn't available, not a lot of details available. And now that we've seen the details, now that the product has been in theory launched, we We feel better now than we did based on having little information at that time. So we feel like from a performance per watt 20.5% per square millimeter of silicon perspective. We've got the best GPU products on the planet and as well we've We've got the single highest GPU card on the planet in the form of our HD 5,970. So we feel very good about our product line looking throughout this So you'll rise because the cost will drop on the yield side or a little more price and market share competition might ensue, so therefore the profitability might not rise as that The history in this business is that the player with the best technology 2019. And I would expect that to be the case in a normal environment, Great. And then the last question for Thomas. I know you're only guiding for the Q1 out or 1 quarter out in the OpEx side of things. But historically, AMD's OpEx has 2019. But historically, AMD's OpEx has moved around seasonally for all the right reasons in the Q3 rising, etcetera. Are eighteen. Is there any reasons that that kind of seasonal fluctuation would not be something we should assume for the second half of the year? 10. We gave an OpEx and percentage of revenue guidance for all of 2010. And 2019. Thank you. Our next question comes from David Wong from Wells Fargo Securities. Thank you very much. Going back to The earlier point about the pricing of your 6,000 series, the MagnaCore. When you consider what you used to get for your 8,000 series, do eighteen. Do you now expect your revenues for 4 way server chips to drop going forward? Because I mean, the amount of market No longer have a 4 socket specific product line. That 6,000 series We'll support both 2 socket and 4 sockets. So in some ways, we're not going to be able to categorize the revenue in the form that The belief we have and the strategy is to be more effective, more competitive, deliver eighteen. Better performance per watt in the biggest segment of the market, which is 2P. Although, I do expect the 6 1,000 series to also hunt and hunt well in the 4 socket as well. Then could you give us then roughly what percentage did the 8,000 2,000 CREs account for in terms of total server revenue, say, in the past quarter or in prior quarters. Was it a half or a quarter 2019. Our next question comes from Stacy Rasgon from Sanford Bernstein. Hi, guys. Thanks for taking my questions. First, just around, I think, again, the pricing environment. So you saw better pricing this quarter from mix. Your competitors saw better pricing I think from ASPs coming up and more 2020. They were pointing to what they saw as a more benign pricing environment for the rest of the year. I was just wondering if you could give us a little bit of color on where you the overall pricing environment in your case for the rest of 2010? Yes. As you know, there's a couple of things that One is the pricing environment as a result of price competition between players in the market and the other is nineteen. Pricing influenced by what people choose to purchase in the way of systems and system 2019, which drives the system mix and hence component mix. On the former point, we really haven't seen much change for 2017. Several quarters now. That is the competitive element. I mean, it's generally speaking a competitive market. I think the wildcard is the mix. Clearly, The reasons I stated earlier to see a better mix within our client line and in particular our notebook line. Got 2019. One quick question about GPU unit seasonality. So I know you said the units were up this quarter. Can you tell us Looks It's like roughly it depends on whether you're talking notebook or desktop, but roughly flat across the whole product line. Great. And Thomas, a question for you. Can you give us a feeling for What you think your gross margins would have been had you been required to continue consolidating the foundry this quarter? No. I'm glad we did the deconsolidation. I'm very happy that we managed to report all the changes 2019 and how we would look like if we had to consolidate. So this is really a time period that we gladly leave behind us. Got it. And just one more quick question, I think around the foundry. Can you just give us a feeling for maybe what the foundry CapEx was this quarter as well the amount of the capital call of the contribution from ATEC. As we outlined in January and also 20 hour webcast. We cannot and we will not give guidance for GlobalFoundries. I'm not asking for guidance. I'm just asking what was Q1. I cannot even give you numbers on their performance. We will not engage in Doug Freeman from Broadpoint. Great. Thanks for taking my question, guys. Can you offer any more color on how much the royalty income in the GPU was down and whether you believe you won some share or not in the other GPU markets, the desktop and notebook segments. Yes, eighteen. We will not comment on the development of our royalty business in absolute size. And Doug, On the share front, I think it's too early to call, of course, NVIDIA is a quarter behind us relative to reporting. I think 2019. Lots of evidence that we gained share in notebooks, but overall it's tough to call. Okay. And then moving on, your plan for GPU migration onto GlobalFoundries. Is that still at 28 nanometer? And are they still on track to get you some 28 nanometer product by the end of the Yes. So, the first one that is the first intersection of our AMD GPUs and gold foundries with 28 nanometers. We haven't been public with nineteen. With respect to inventories either within our OEM customers or within the channel, either on the component side or 2020. Going forward, we're not going to provide anything other than the Q2 guidance that Thomas outlined. The only thing above that I will say is reflect back on what we said about our expectations for the market at our last analyst call, which is to say we expected PC unit consumption to grow between 10% 15% year on year. And based on where we sit today, I'd say Our next question comes from Jim Covello from Goldman Sachs. Great guys. Thanks so much. I mean, one question nineteen. I have is sort of something that's been kind of asked different ways. But the way I would say it is, if a lot of the share in the server market When you said a lot of the share, do you mean? Well, I mean if your share unit share could Could remain flat hypothetically, but we go from some of that being 4 and 8 way share to 1 and 2 way share. Do you think there's any way to offset That's an interesting question, but it has a hypothetical on the premise. Sure. Absolutely. Yes. I I don't want to ask answer a question that's got a hypothetical on the premise. What I'll say instead is to the extent we share our grow our server business Assuming the mix within servers were to deteriorate. Because I certainly understand what you're saying, it's totally plausible, but I mean, what's the balance? It sounds nineteen. You're asking me to give you the solution to a math equation on what our cost and ASPs are, which of course I can't do. Is there any framework that we could think about what the impact of the mix shift within servers, what you would need to do to impact the mix shift even 2019. Our next question comes from Craig Berger from FBR Capital Markets. Hey, guys. Thanks for taking my question. I guess one of my questions, is there any way to help us understand either qualitatively or quantitatively 2019. Kind of what gross margins might look like once you're done paying the underutilization charges in Dresden or Perhaps what the impact was in the quarter just ended? Well, in the quarter that just ended, we quarter. So, there was certainly no improvement. Moving forward, we have opportunity to improve. We said last quarter that our utilization was in the 75% range. So this is the indication of how much room And also as part of that, what's your capital intensity on a go forward basis? Nineteen. Coming from data laboratory infrastructure and of course from our back end in December manufacturing eighteen Facilities in Singapore, Penang and Shanghai. Moving forward in Suzhou and moving forward, 2019. Last question, when should we expect to see 30 2 nanometer product from you guys in case I missed it and what market segments are going to be second half of the year with the OEM system availability in the first half and that's both a notebook and desktop PC statement. Our next question comes from Hans Assistant from Raymond James. Yes, thanks. A couple of questions. Can you give us the mix of 40 nanometer shipments GPU Space. For the quarter? Yes, I don't want to be precise, but it Over 30%. And what were they in Q4, just as a reference? Much 2019. As I said, we've shipped about 6,000,000 units in total of DX11 40 nanometer CPUs through the end of Q1. Eighteen. And can you give us a timeline in terms of your move to take Fusion and or GPUs to global foundries? I wonder what can we To see products or GPUs based on that foundry and what process node would that be? Thanks. Yes, the process node will be 20 22. Our next question comes from Patrick Wang from Wedbush. Great. Thanks so much for taking the 2019. Just first off, Dirk, you gave us some color in terms of your expectations in the 2P server space and briefly touched on 4P. I guess seeing that you're pricing those chips at the same level as the 2P parts, do you have any evidence that the strategy is actually driving more customer interest? Any examples you can actually cite. Well, I mean, the only public example I can cite are the design wins that we big enterprise customers. But as you know, we can't cite enterprise deployments by name. Right, got you. Okay. But I mean, the pricing strategy is actually taking hold and you're starting to see some momentum on that on those parts? Yes, eighteen. I think there's a lot of resonance in the industry for the strategy that we've deployed. Yes, okay. Nineteen. I thought it was a clever strategy. All right. And then I guess also guys, can you give us a framework for what you think seasonality in the second quarter is? And the reason being that you're 2019 for a seasonal decline. And just a couple of days ago Intel was out guiding for kind of flattish type numbers. Just help us reconcile 12. Well, I think we would feel comfortable in the range of flat to minus 5%. Okay. And can you also maybe talk about the help us Our next question comes from Jake Kemeny from Morgan Stanley. Hi, thanks for taking the question. Can Can you just walk through which debt remains outstanding? And did you repurchase any debt during the quarter? Last question first. Only minor movement on the debt side. We repurchased about $10,000,000 of debt in the Q1. And your second question was? Can you just walk through how €85,000,000 And the 2015 convertible is at €1,600,000,000 1.7 $1,000,000,000 and then $500,000,000 on the 2017. Question comes from Srini Pajjari from CLSA. Thank you. Thomas, on the gross margin front, you said you still 2019. Could you give us some idea as to when those obligations expire and what kind of impact that will have 2019. As we said in the last quarter, utilization was 75% in the 1 module like global foundry where we have this obligation for the fixed cost of the capacity that we do not utilize. This gives you nineteen. It would go away with either us filling this capacity over the course of the year, the obligation to pick it up contractually ends at the end of the first quarter 2011. So when the obligation ends, do you expect any meaningful impact on the gross margin? 2019. I mean, I would expect you become fully fabless and obviously the gross margin will probably be more flattish than being A bit better in the second half. Well, the best case scenario is that we are able to fill the capacity until then previous question. Given your view about the demand and your product leadership in graphics and obviously you also have a new product in servers, I guess, the question is why not a bit more aggressive guidance for Q2? Is there anything you're seeing out there that make you more cautious? Nineteen. Thank you. With that, we'd like to thank everybody for 2018 in our call today, and we wish you all a good evening. Thank you. 18 and today's conference. This concludes our program for today. You may all disconnect and have a wonderful day.