Earnings Call: Q1 2021

Mar 4, 2021

Welcome to Broadcom Inc. 1st Quarter Fiscal Year 2021 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Ji Yu, Director of Investor Relations of Broadcom Inc. Please go ahead, ma'am. Thank you, operator, and good afternoon, everyone. Joining me on today's call are Tom Tan, President and CEO, Kirsten Spears, Chief Financial Officer, Tom Krause, President Infrastructure Software Group and Charlie Kalas, Chief Operating Officer. Broadcom also distributed press release and financial tables after the market closed describing our financial performance for the Q1 of fiscal year 2021. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom's website atbroadcom.com. This conference call is being webcast live and a recording will be available via telephone playback for 1 week. It will also be archived in the Investors section of our website atbroadcom.com. During the prepared comments, Haakon and Kirsten will be providing details of our Q1 fiscal year 2021 results, guidance for our Q2 as well as commentary regarding the business environment. We'll take questions after the end of our prepared comments. Please refer to our press release today and our recent filings with In addition to U. S. GAAP reporting, Broadcom reports certain financial measures on a non GAAP basis. A reconciliation between GAAP and non GAAP measures is included in the tables attached to today's press release. Comments made during today's call will primarily refer to our non GAAP financial results. I'll now turn the call over to Hock. Thank you, Gee, and thank you, everyone, for joining us today. Well, we delivered net revenue of $6,700,000,000 up 14% year on year. Semiconductor Solutions revenue was $4,900,000,000 increasing 17% year on year. Infrastructure software revenue was $1,700,000,000 up 5% year on year. Let me turn first to Semiconductor Solutions. But before I get into the numbers, Perhaps it would be very constructive for me to give you my perspective on the situation today. And in fact, what has actually evolved over the past 9 months. You may recall in our earnings call Q2 fiscal 2020, around middle of last year, that we highlighted supply chain challenges. Since then, we have started extending lead times across our product portfolio. We stretched these lead times further over the past 9 months as we saw demand within end markets Continue to increase. So fast forward to today, we see customers Accelerating their bookings for early deliveries and attempting to build buffers And creating the demand supply imbalance you all hear out there. In anticipation of this phenomenon, we put in place in mid-twenty 20 A very rigorous disciplined process of carefully reviewing our backlog, identifying real end user demand and aligning our supply chain to more closely match End user consumption. Of course, not all end markets are behaving the same way, But we believe we have done a very good job of balancing demand and supply In our end markets and what I'm reporting today does reasonably reflect What's been consumed by our end users? With that, let me get into the numbers. In semiconductors, we grew 17% year on year organically. Starting with wireless, We hit a seasonal peak in Q1, where wireless was up 52% year on year and reached 40% of semiconductor revenue mix. This sharp increase was in large part Due to a higher content FR content was up And we ship in high volume Wi Fi 6 and WiFi 6e, the next generation of WiFi 6. As expected, Q2 wireless revenue will now show a typical seasonal decline sequentially, Even as anticipated revenues will be up 30% to 40% year on year. And as we look into the second half of the year, we are planning for typical revenue ramp In this space, and structuring our in house above fab capacity appropriately. This should result in sustaining the year on year growth trend we now see in Q2 through the second half of the year. Moving on, networking represented approximately 29% of our semiconductor solution revenue in the quarter and grew 15% year on year. Demand is strong, driven largely by data center spend in the cloud and global telcos We'll continue to upgrade their infrastructure and networks. Sustainability of this strength It's evidenced by bookings as they jump 80% year on year and 62% sequentially. Demand for switch and routing platforms, both of the current and as well as next generation It's robust. But as anticipated, our AI TPU business Was seasonally down this quarter. Moving on to Q2. We expect networking to be up sequentially And continue the trend have been up year on year, driven by continued strength we see in cloud and telcos, offset partially by continued weakness in enterprise. Turning to broadband, which represented approximately 15% of semiconductor solutions. Revenue was up 8% year on year, driven by The work from home environment. Multiple telcos in Europe and the U. S. Continue to roll out PON and Cable docks embedded in these wireline gateways Our next generation WiFi 6 access points. Softness in enterprise was more than offset By the strong demand from retail home routers even as telcos continue to spend. Looking at Q2, we are enabling the launch of new Wi Fi 6 enabled platforms We have higher value content for North American and European telcos. As a result, We do see demand accelerating, consumption increasing, and we expect to generate double digit year on year revenue growth in broadband. Server storage connectivity represented approximately 12% of Q1 semiconductor revenue. This segment is largely driven by enterprise demand, as we know. And not surprisingly, Server storage revenue was down 22% year on year, reflecting continued softness in end user demand as well as OEMs, original equipment manufacturers, depleting their inventory in this space. While bookings have improved, these are largely for demand in the second half. And accordingly, we expect revenue in Q2 to continue to be down year over year by double digit percentage. However, we do expect some recovering based on our bookings received in the second half. And finally, industrial represented approximately 4% of Q1 Semiconductor Solution revenue. Resales grew 13% year over year in Q1, driven by a recovery of Multiple Economic Sectors in China. Turning to Q2, we expect resales to grow at roughly the same level as we see recovering now occurring as well in Japan and Europe. Inventory in the channel for us continues to deplete and we may have to increase shipments and revenues to replenish channel inventory this quarter. So in summary, semiconductor solution revenue Segment revenue was up 17% year on year in Q1. Q2, we expect this year over year percentage revenue to continue at a similar around a similar amount in spite of a seasonal decline in wireless. The way it looks now, This relatively strong trend appears to be sustaining through most of 2021. However, in our view, this very high and unusual secular growth rate Merely highlight an accelerated adoption of our connectivity platforms during this pandemic. Turning to our other segment, software. Q1 2021 was our first quarter that on a year on year basis Provides an organic comparison following the Symantec acquisition. In Q1, Infrastructure software revenue growth was 5% year on year. In dollar terms, Bookings averaged 122 percent over expiring contracts, while core accounts averaged 137%. Now over 90% of these bookings represented recurring subscription and maintenance. Our strategy of focusing on core accounts continues to perform well as we cross sell our portfolio of software In other words, our software portfolio continues to perform as we had planned and continues to be on track With our long term financial model for organic software revenue growth of around mid single digit percentage year over year, And that's something we expect to continue to see in Q2. So in summary, our Q1 consolidated net revenue grew 14% year on year. We Thanks. A similar growth trajectory in Q2, which could bring revenue to $6,500,000,000 or 13% year on year growth. So with that, I'll now turn the call over to Kirsten. Thank you, Hock. Let me now provide additional detail on our financial performance. Net revenue was a record $6,700,000,000 for the quarter, up 14% from a year ago. Gross margins were 73 percent of revenue in the quarter and up approximately 30 basis points year on year. Operating expenses were $1,100,000,000 down 8% year on year, reflective of the full benefit of the completed Symantec integration. Operating income from continuing operations for the quarter was $3,800,000,000 and is up 23% from a year ago. Operating margin was 57 percent of revenue, up 4 20 basis points year on year. Adjusted EBITDA was $3,900,000,000 or 59 percent of revenue. This figure excludes $138,000,000 of depreciation. Now a review of the P and L for our 2 segments. Revenue for Semiconductor Solutions was $4,900,000,000 and represented 74% of total revenue in the quarter. This was up 17% year on year. Gross margins for Semiconductor Solutions were approximately 67% in the quarter, up to 20 basis points year on year, notwithstanding the higher mix of lower margin wireless revenue. Operating expenses were $750,000,000 in Q1, down 3% year on year as we invested in R and D and streamlined SG and A. Because of this, operating margins increased to 52% in Q1, up 3.50 basis points year on year. So while semiconductor revenue was up 17%, operating profit grew 25%, all organic. Moving to the P and L for our Infrastructure Software segment. Revenue for Infrastructure Software was 1 point $7,000,000,000 and represented 26 percent of revenue. This was up 5% year on year. Gross margins expenses were $346,000,000 in the quarter, down 18% year on year as we've completed the integration of Symantec. Operating profit was up 17% year on year on top line growth of 5%. Operating margin was 70% Q1, up 7.40 basis points year over year. Moving to cash flow. Free cash flow in the Q1 was approximately $3,000,000,000 representing 45% of revenue. This is up 35% year over year as we carefully manage working capital. Day sales outstanding were 35 days in the first quarter compared to 57 days a year ago. We ended the quarter with inventory of $952,000,000 a decrease of $51,000,000 or 5 percent from the end of the prior quarter. We should also note in Q1, we spent $114,000,000 on capital expenditures. On the financing front, we extended our weighted average debt maturity to approximately 9 years from 6 by issuing new notes that we use to refinance and redeem existing debt. Our weighted average coupon increased about 23 basis points to 3.8%. We ended the quarter with $9,600,000,000 of cash and $41,900,000,000 of debt, of which $843,000,000 is short term. Turning to capital allocation. In the quarter, we paid our common stockholders $1,500,000,000 of cash dividends. We also paid $225,000,000 in withholding taxes due on vesting of employee equity, resulting in the elimination 521,000 ABGO shares. We ended the quarter with 408,000,000 outstanding common shares and 450,000,000 diluted shares. Note that we expect the diluted share count to be 450,000,000 in Q2. Based on Current business trends and conditions, our guidance for the Q2 of fiscal 2021 is for consolidated net revenues $6,500,000,000 and adjusted EBITDA of approximately 59% of projected revenue. That concludes my prepared remarks. Operator, please open up the call for questions. Thank Please standby while we compile the Q and A roster. Our first question will come from Ross Seymore with Deutsche Bank. Please go ahead. Hi, guys. Thanks for letting me ask a question. Hock, you gave some good color on the supply side of the equation and a little bit about your lead times extending. I wanted to dive a little bit into that. Last quarter you talked about a backlog. I think the number was $14,000,000,000 Can you talk a little bit about the composition Of your backlog today, how it is on an absolute level and the sustainability of it as investors are wondering if Demand is just too good to be sustainable and what does it mean to excess bookings, double ordering that Well, that's a very interesting question, a very, very appropriate question At this time, and as I said, we have had as I indicated, we started this process Almost 9 months ago because we are seeing demand that are Quite strong and we started the process of thinking how we best Ensure very, very good use of our supply chain capacity. And basically, as I said, we went through this process rigorously scrubbing our backlog. And by the way, Our entire backlog virtually entire backlog follow a set of terms a Key set of terms we mentioned before, which is non cancelable for any of the customers who booked us And they still apply more so than ever. So double bookings from our point of view is not it's never been an issue. And as we stretch out lead times, we are seeing customers obviously booked for delivery dates or customer requests That's all for the help. So that makes sense too. And that's why it makes the process of create of being able to Match customer consumption close as close as we could do it Against what we supply to be something that makes sense and redundant. And I think we are fairly We could always do better, but we feel pretty good that we have a reasonable process in place That represent ensures that our customers get their products and maybe just in time, but they do get their products when they need it. And we believe we have managed this process of supply demand and imbalance Very, very well as I indicated. And in fact, as I made to repeat the point I highlighted, our revenue Year on year in Q1 was up 17%, but as I also indicated, our bookings What's up? 63%. That by itself proves there is a lot of demand and people are booking out Very far. We are virtually 90% booked for 2021. And if you laid out what you need and we believe this is real Because they can't cancel it. And obviously, in order to reach that point, to one of your points, Has our backlog as we begin Q2 increased from when we began Q1? Yes, it has. We have and quite significantly as we start to see lead times even stretch out more. And the strength We believe of our products, not only products that are incumbent and used today, What is coming down the pipe as next generation products, which have already released, but Wait launching is proven by the fact that we have Customers, many of them and reflecting our backlog, were willing to book out for delivery of those products It's through the rest of 2021. Thank you. Our next question will come from Harlan Sur with JPMorgan. Please go ahead. Good afternoon. Thanks for taking my question. Hock, the biggest concern by investors Right now, is your ability to drive growth in the seasonally stronger second half of your fiscal year, your July October quarters, When you start to ramp into your flagship smartphone customers, if I just apply normal seasonal trends in wireless combined with, let's say, Same networking strength and as you mentioned recovery and storage that would get me revenues in the second half in that sort of 6.7 $7,000,000,000 range. And now I'm not asking you to endorse those numbers, but I guess the question is from a supply chain perspective, Has the team secured enough capacity to drive higher revenues in July October quarter if your backlog supported that profile? You are really asking me to guide you, Danjil, and I'm not guiding you. But I do understand your question and you have seen in my prepared remarks just earlier Where we see ourselves planning the other trend to go, we have I've also specifically mentioned Where we are manufacturing like EVA in house, which is a big part of what Is the up cycle in the seasonal up cycle in the back half on wireless side that we have put in place, The capacity to handle it, the simple answer to your question is, yes, We have done a decent job, as I said, over the last 6 months, and we continue to do a decent job I've been able to meet our the critical needs of all our customers. Thank you. Our next question will come from Vivek Arya with Bank of America Securities. Go ahead please. Thanks for taking my question. Hock, you mentioned you expected this 30%, 40% kind of year on year growth rates in wireless to sustain in the back half. I was hoping if you could give us some color on what kind of content growth you are expecting this year? And then looking forward, how much does Broadcom benefit From all these C band spectrum auctions that were conducted recently, I assume that's more of an outer year benefit. On the latter part, yes, it's an outer year. These things don't get implemented so fast. And on the formal part of your question, I can't answer that. I'm sorry for obvious reasons. It's too early. We'll tell you about it when the time is appropriate. Thank you. Thank you. Our next question will come from John Pitzer with Credit Suisse. Please go ahead. Yes. Thanks for letting me ask the question. Hock, I just want to get back to the supplydemand You did a very good job kind of explaining how you guys are trying to call your backlog. I'm kind of curious as you look out over the next couple of quarters, when do you think Why will catch up to demand enough such as your customers don't feel obligated to have to build that cushion? Another way of answering that question, John, I think is, when do you see lead time to reduce Maybe to reduce and perhaps normalize. That's probably the other way of looking at that equation. And right now, I don't know the answer to that. What we do know is We have extended lead time today in place, and we've been extending the lead time over the past several months, as I indicated. And we have a fairly extended lead time today, and We are getting the bookings from the customer. And when the bookings disappear is probably when you know You're headed to a situation of demand starting to disappear. We have not reached that point yet, Far from it at this point. Thank you. Our next question will come from Stacy Rasgon with Bernstein Research, please go ahead. Hi, guys. Thanks for taking my question. So Hock, you're saying that you're stretching out lead times. I get it, but I think before you told us the lead times were 6 months. So if you're stretching them out, where are they actually sitting today? And how does that maybe vary By end market. And I guess to that end, you said you're kind of convinced that what you're shipping now sort of represents end user consumption. How do you actually have any visibility into that? And do you think the users I mean, are the products actually going into end products? How do you know the users are stockpiling them and ordering them while they can? How do you have any visibility into what they're doing with them? That's a hell of a good question, by the way. And it cuts To the core of the work we've been doing, we've never been working harder simply because number 1 is, Don't forget, we supply we do supply I mean, we supply a range of products and we do supply to a bunch of customers. But keep in mind, if I could remind you of the business model we have built up, the structure we have built up. We We provide technology leadership products in multiple verticals, mostly connectivity Into the IT space and where we are, we're the leaders. Where we play, we tend to be leader And we play with leading customers worldwide. We know who those guys are. We know the level of consumption. And in many areas where we go and we're talking End user demand. We're not talking about middle people middlemen like distributors for sure. We indicated that we don't For our leading customers, we don't go to distributors. And for OEMs, we track them Because who they sell that and demand that those our products to is where it counts at the end of the day. And In many cases of in one segment in particular, server storage, but it also applies To some extent and part of our networking business and to a much lesser extent in our broadband business for sure, We actually see the difference in terms of whether it's just inventory depletion At original equipment manufacturers or even buffer inventory sitting in end users versus Actually using the products in the same quarter, we ship them the products. We track that. And that's really and for us, it's not that complex when you think about our revenues. In semiconductors, 75% of our revenues really goes to just over 100 customers worldwide. We can track that. Thank you. Our next question will come from Craig Hettenbach with Morgan Stanley. Please go ahead. Yes. I appreciate the color on the software bookings relative to revenue. Now that you have Symantec for a year and CA for a couple of years, can you just talk about the confidence of the growth rates on a longer term basis that you're talking about? I know you touched on the 90% recurring, but just really how the global large accounts are kind of how that transition is playing out? Yes. As I indicated in my prepared remarks on some of the key metrics that we go by, we feel very, very good about those 2. We feel very good that Things are moving along, tracking along where we both the business and financial model where we expect them to go, which is about focusing on core customers and truly uplifting capacity, entitlements, products To those core customers across our portfolio. And you've seen the metrics we indicated, they increase. And on non core, you've also What we don't say what I said previously is we do seize a level of attrition Manageable, but it won't. And as they treat, but it's offset by improvement in core, we expect to be able to Reached a stabilization, as I said, around mid single digits on a very consistent basis. And we have seen that 2 years now that we have gone through over 2 years now, and we've seen that happen. We have seen going 8 quarters, 9 quarters to be exact of that level of performance and it's a great line of sight. The other thing I might add that is also interesting and I know stating the obvious to some extent is most of all our customers, if not all of them Enterprise, even in this environment, you heard what I talked about enterprise in semiconductors and The approach the different approach, the different characteristics and behavior enterprises have in terms of demand requirements In this environment of pandemic work from home to compare to telcos, broadband and public cloud. We don't see that in software, in the infrastructure software we have simply because These are mission critical products, tools embedded in the business process Of these largest enterprises in the world who, if anything else, during this environment, consume More of those products rather than less. Thank you. Our next question will come from Timothy Arcuri with UBS. Please go ahead. Hi, thanks a lot. I guess I also had a question on the supply demand. Hock, orders obviously were up quite a bit in fiscal Q1, Q on Q, Given that revenue was up and backlog, I think you said was up significantly. So as you look into fiscal Q2, wireless orders are obviously going to come down a lot. So I'm wondering if orders in the other parts of the business are going to be strong enough such that total orders will be up in fiscal Q2 again? Thanks. Tim, if we are talking about when you say orders and I hear you say orders, Let me say, the orders as we ramp up to This current generation of phones for large North American customer as we ramp it up For this current generation, booking started ramping up as early as Q3, Really shot up in Q4 and started declining late Q4 and Q1. So bookings was already declining. And when I indicated Q1 bookings year on year improvement of 80%. And what I'm also saying is that is netting out a decline In bookings of our wireless in a fairly substantial manner as it would have you would expect seasonally. So the answer is yes. What we are seeing what I'm reflecting out to you guys, the extent I show those bookings are revenue is The bookings that we're showing in Q1, which is fairly strong, reflects Declining bookings in wireless as we all fully expect seasonally in at that during that time frame. Thank you. Our next question will come from Toshiya Hari with Goldman Sachs. Please go ahead. Thanks so much for taking the question. Hock, I wanted to ask about capital allocation. The dividend component is But outside of the dividend, how are you thinking about paying down debt, buying back stock and M and A and software? The markets are clearly very volatile right now, but how are you thinking about those 3 buckets on a relative basis? Thank you. That's a very interesting question. I was wondering when one of you guys will get to that and sure enough. You're right. We are accumulating cash and you heard Kirsten mention it. We are generating cash. In Q1, we generated $3,000,000,000 of cash and that was Q1 also is the time We pay out bonuses to all our employees. So if I fact that normalize that, that's about It's we're generating at $3,500,000,000 a quarter. It's a free cash flow. So it's half of it goes to dividends or almost half of it, As you correctly say, so that's predetermined. And the other half for now, we are putting into an increasing cash portfolio. And you're right. We look we under our business model and strategy, as you know, long term is to Acquire and add on to our portfolio, add on to our earnings stream For our shareholders, and we take that very seriously and we continue to look at it very seriously. And so and this takes time and we continue to look at it and we will also take an approach Look, my point that we would be somewhat flexible to that as we accumulate cash and by end of this Calendar our fiscal year, we haven't done an acquisition. So obviously, Take a hard look at our 2 other choices. 1 is pay down debt, and that may even happen before then, But interest rates are very low and money is very available and we're still very investment grade. And the other alternative is buyback shares, and all these are open. Thank you. Our next question will come from Blayne Curtis with Barclays. Please go ahead. Hey, good afternoon. Thanks for taking my question. Hakush, just curious a little bit more on wireless. We don't have the right compares year over year. So maybe if you could just give us a little bit color as to What you're expecting? I just don't know what that 30% to 40% year over year really kind of compares to. So maybe just some just color as to what you're seeing in that wireless channel versus normal seasonal patterns that would help us kind of dial in as to what you're really saying for April? Well, as I Indicated in my prepared remarks when it comes to wireless, this is for 2021. Don't forget there is some timing adjustment by quarter to, Blaine, in the sense that What used to be a peak quarter in our wireless seasonality of fiscal Q4, In this recent generation, the peak quarter, as I indicated, became Q1 of 2021. So obviously, things roll down perhaps somewhat slower. And because we're also assuming as it rolls down slower in The course of fiscal 2021 that we can we have to assume for lack of knowing no better That we might be back to a normal seasonal cadence of a wireless seasonality of wireless Launch of new phones and assume that you will be back to that normal cadence. So 'twenty one might look kind of compressed, anything. So in terms of revenue, in terms of Availability of a market for us to address. And then couple that With a content increase between 202021, you therefore could understand why I indicated that for the rest of 2021, begin to look like a fairly significant 30% to 40% Thank you. Our next question will come from C. J. Muse with Evercore. Please go ahead. Yes, good afternoon. Thank you for taking the question. I guess wanted to dig a little into your EBITDA margin guide. It would suggest that either gross margins are flat, which would not seem likely given the fall off in wireless or OpEx Is moving higher. Can you kind of walk through the moving parts there? And as part of that, can you help us understand how to model gross margins and OpEx through the remainder of the fiscal year? Thank you. So in Q1, we said that from year over year, gross margins were up 30 basis points And that's largely because of wireless. So when you look at Q2, we'll have less wireless revenues in the margin mix. And so therefore, look back at Q4, How I could model Q2? And then as you look at margins for the rest of the year, it would be similar To Q2. Look back at Q4 and then consider the fact that we'll have probably more normal seasonality on wireless towards the second half. Thank you. Our next question will come from Harsh Kumar with Piper Sandler. Please go ahead. Yes. Hey, thank you. Hey, guys. Congratulations on solid numbers. Hock, I had a question for you. I'm trying to wrap my head around some stunning numbers you threw out for networking, 80% increase in bookings, some 62% sequential increase. I appreciate the process of identifying real demand. So with that, Is there something going on in bookings that is specific to your end markets or your product set that is driving it? Could you just highlight what is going on there? Great question. And I've been dancing around and saying it in nice words, let me call it directly. People need our products, each of our products and particularly whether it's broadband or networking, our Customers, our end user customers truly need the product. I mean, they're in the business. They're in the business of Launching more broadband, improving their networks, and all the cloud guys have to scale out data centers because There's more demand for hosting a demand from public cloud in this work from home environment On social media and also online retail and everything else. So we need to buy Those products of ours, whether it's the current generation, which we have that works or soon to be the next generation. So if we stretch our lead time To an extended basis, the thinking in their mind is these are non cancellable orders. Do I still need it 6 months, 9 months from now. They made it they placed an order. Otherwise, they have a gap in being able to Scale out capacity or scale out launches, they'll do that. It's a real test Of how strong our product franchises and how mission critical it is to our end user. And so as we stretch our lead time, whether it goes from 3 months To 6 months to 8 months, they just book what they need 8 months out or 1st 3 months out, 1st and 6 months out, then 8 months out. And you only do that if you truly believe you need that product to enable your business. And what I'm trying to say is, if nothing more fundamental if there's nothing more fundamental than Why we are seeing as we stretch out lead time because we match it against our ability to get those products out It's a great way to indicate whether our products are needed. And They don't need it now as much as the book as people might seem to indicate. They may need it 3, But they are willing to lock in and say they need it so that we can manage our supply chain To get them those products, which is why I'm also saying the management of our supply chain to match demand It's not that extreme and in simple as maybe made out there that you hear around. It's all about being able to tell your customers and get your To behave in a rational manner and for us to manage it in a rational manner. I mean, if I ship out my half my entire backlog today, assuming I can even do that, of course, they will take it Because they are all in the pending mode. But if on the other side, they know they can get it when they need it 6 months from now, they're happy to wait until then. Meanwhile, they book it ahead of time because that's what I need to reserve my capacity. And that's the perspective I want to give to you guys. It is what it is. This is not a panic mode. This is a very structured And reasonable process, which we believe at the end of it all still shows And the real underlying demand and the way we want to report it. Ladies and gentlemen, thank you for participating in today's question and answer session. I would now like to turn the call back over to Ms. Yu for closing remarks. Thank you, operator. In closing, please note that Broadcom and Morgan Stanley will be hosting a presentation on our broadband business on Monday, April 12, after market close. Hock will be joined by Rich Nelson and Greg Fischer, General Managers of our broadband businesses. That will conclude our earnings call today. Thank you all for joining. Operator, you may end the call. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.