Cirrus Logic Inc (CRUS) 2003 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic's fourth quarter fiscal year 2003 financial results conference call. This conference is being recorded. Later we will open up the call to your questions and instructions for queueing up will be provided at that time. I will now turn the conference call over to Mr. Craig Ensley. You may begin.

Good afternoon. And thank you for joining our conference call for Cirrus Logic's financial results for the first quarter fiscal year which ended June 29, 2002. With us today are Dave French our president and CEO and Steve Overly, our Chief Financial Officer. Except for the historical information the matters to be discussed in today's conference call are dependent on certain risks and uncertainties listed in the company's form 10-K for the year ended March 30th of 2002 and other filings with the see him SEC: Information provided of today represents our outlook at of this date and Cirrus Logic takes no obligation to update or revise any forward-looking statements. We're ready to begin our call and as usual we will take your questions following this the formal remarks. Here to present those remarks is our president and CEO, David French.

Thank you, Craig. And thanks to all of you who are joining us here today. Today we'll be discussing the highlights of the quarter as well as recent developments. We'll also provide you with an update on our vision to be the semiconductor leader of the digital entertainment revolution, our products, and also our outlook for the company. To recap the quarter, our revenues were 76.0 million dollars and pro forma loss per share was 9 cents on 83 million shares outstanding. Gross margins 49 percent up on a pro forma basis on the prior quarter. As we previously announced we are reducing our work force by about 13 percent worldwide in the June and September quarters which along with our ongoing cost reduction and expense control efforts will allow us to save 15 to 20 million dollars annually. Our pro forma break-even revenue point will be reduced to approximately 90 million dollars per quarter down from the 105 million dollars in reach for the quarter we had previously estimated. Before I provide the business review by category, audio, video and connectivity and discuss our primary application areas I would like to turn the call over to Steve Overly our CEO, who will provide financial details for the quarter.

Thanks, Dave. Our first quarter financial results. Let me discuss those which ended June 29. Our total Q1 net revenues were 76 million dollars. Down 6.8 million from Q4 adjusted net reference of 82.8 million dollars. The reduction was due primarily to decreased demand for your DVD game console products. Partially offset by growth in our consumer audio products. During the June quarter the shareholders of E-micro Corporation, a Singapore joint venture in which we own a 75 percent interest voted to dissolve the corporation. Its operating results in our current and historical periods have been recorded as discontinued operations in accordance with GAAP. In order to facilitate a comparison of Cirrus's current operating results with those of prior periods we've excluded E-micro's results of disconnected operations from our current and historical pro forma results. Pro forma gross margins increased to 49 percent from 47 percent in the prior quarter. Improved wafer pricing and yields helped drive much costs much down resulting in improved margins. Additionally it benefited from other than improved product mix. GAAP increased to 51 percent. Our pro forma operating expense decreased to 46 million in Q1 from 50 million in Q4. Previously announced cost saving measures and continued expense management primarily drove this decrease. GAAP operating expenses decreased to 55 million in Q1 from 134 million in Q4. This is primarily attributable to the 73 million dollar reserve for disputed receivables related to our magnetic storage product line in the March quarter. Pro forma loss for the physical fiscal quarter was 8 million dollar compared about with a pro forma net loss of 9 million in the prior quarter. Pro forma loss per share of 9 cents compared with 11 cents in the prior quarter. GAAP loss for Q1 was 16 million compared with a net loss of 81 million in the prior quarter. GAAP net loss per per share was 19 cents compared with a net loss per share of 98 cents in the prior quarter. Our employee head count at the ends of June fiscal quarter was 1181. Virtually all of the recent reductions occurred after of the quarter closed. We ended the quarter with 145 million of cash and cash equivalents which is down from the prior quarter balance of 153 million. Our net day's sales outstanding decreased to 35 days from 46 days. Primarily due to more linear shipments during the quarter. Net inventory was 37 million at the close the first quarter up from 28 million at the ends the prior quarter. Approximately half of the increase was due to DVD game console devices and half planned inventory build of mixed signal devices for consumer Doe size the. Capital additions including purchase software and technology licenses totaled 5 million for the quarter. Depreciation and that amortization expenses totaled 11 million in Q1. Accounts-payable and accrued liabilities decreased by 8 million from the prior quarter. Stock holders equity ended the quarter at 345 million dollars down from them 58 million dollars in the prior quarter primarily due to our GAAP loss of 16 million dollars. Now let me turn the call back to Dave who will cover our business results and highlights in the quarter.

Thank you, Steve. First we'll look at the quarterly results from each of our three primary revenue categories. The audio product area, audio product revenue in the first quarter was 59 million dollars which was up 22 percent sequentially from Friday million dollars reported in March with gross margins at 54 percent compared with 50 percent achieved in March. Our revenue from video products was 14 million dollars down from 31 million dollars in March. Video gross margins were 19 percent in the first quarter compared with 46 percent in the fourth quarter. I would like to note that video revenues were adversely affected by lower demand for DVD controller chips for game consoles and also video margins were lower than March - than in March due to inventory reserves we have taken associated with our DVD game console business. Excluding the inventory. Connectivity revenue was up about 3 million dollars notice quarter with gross margins added 71 percent compared to 4 million dollars in the prior quarter with gross margins of 41 percent. Shipments to set-top ethernet lines continues to be slow this quarter as the industry or that industry continued to recover from excess inventory held by manufacturers in the set top box phase. As you know most of our products are sold into multiple applications unless digital entertainment field. Cirrus has emphasized several primary application arenas which I will talk about here. These are audio video receivers, DVD players, personal audio players, personal video recorders, DVD recorders, home media servers and set top boxes. I'll discuss a few of these and some of the highlights during the first fiscal quarter. To start with, audio video serves, this market remains our largest revenue generator of our target entertainment applications and our leadership position here remains strong. With multiple design wins in 9 out the top 10 audio serves manufacturers we believe our of market share is more than 60 percent worldwide. In September we expect to begin volume production of our newest 32 bit DVD. This has seen a strong design in over the ex-past two quarters: Design wins usual establish relationships for mult product generations over a period of 4 to 5 years. Secondly, in the DVD player space we believe that DVD market is the largest growth opportunity for Cirrus over the much next months. In 2002 the markets is expected to grow to consume approximately 45 million units, more than 50 percent increase from the 30 units sold in 2001. And some analysts are forecasting everyone higher, as many as 50 million units. Based on estimates of DVD player shipments by Chinese OEMs we believe our market share in Chinese already 10 percent of the market. We are also pleased to which innocence that our DVD processer has been chosen by Apex. This did he sign win is notably, we achieved two model with the #1 market share leader in the United States and the #2 world wide market share leader in Apex. In addition to the cost advantage enabled by the industry's smallest (inaudible) size, Cirrus video decoders have an additional strategic advantage. With power consumption that is approximately 25 percent of that offered by our competitors. Another - other signs of traction in this emerging signs for Cirrus, Shanghai video audio products, shipping in volume and TC holding company a major manufacturer in China. We acquired just two quarters ago we have seen significant kidding of our audio offering into the DVD market where we have not previously participated. We see close to 100 percent attach rates for our analog components into DVD wins. During the June quarter also Cirrus sampled our single board reference design fully integrating front ends and that back end to tier 1 entertainment manufacturers. Next I would like to talk about DVD serves which' class of application that represents a complete home theater in a box solution. Integrating the function also of a high end DVD player with a complete audio video receiver box. Bose Corporation pioneered this. This market is estimated to grow from its beginning last year to more than 600 million dollars in semiconductors content alone in 2005. In this area during June we achieved a first pass sucks for this all in one application. And we've already begun sampling a complete reference design combining silicon in which we expect to see significant sales during the coming year. Next in the area of personal audio players, the personal audio player market is another application in which Cirrus is a proven market leader with its innovative technology and low system cost implementation. We continue to be a leader with more than 50 percent market share but in addition IDC forecast a US shipment of CD based compressed music players will grow from only one million units last year to more than 18 million units by 2006 recommended ago compound annual growth rate of 77 percent. In the coming week, we plan to announce a low cost, CD based MP3 player single chip solution enabling system retail prices below $50. Our content opportunity in these type of players is 5 to 6 dollars per box. Two customers have designed our product ends and we expect to begin realizing revenue from some of these designs by the ends the year. However we expect to see the transition to CD style MP3 much players to become much more dramatic during calendar quarter. We sect expect of a rapid adoption cycle. Cirrus estimates that the worldwide market for personal CD players could be 60 million units annually. Next I would like to talk about personal video recorders, this is another exciting emerging growth. Area for Cirrus Logic. It has a potential for tremendous quote. IDC estimates this will grow to 16 million units by 2006. (Inaudible) personal video recorder which includes a DVD player and a personal video recorder in a single box is another growth area which we are well positioned to lead. For this application we have cost effective 2 chip solution that is already market ready. Sam sung a leader in consumer electronics worldwide has selected us with integrated DVD player and is planning on high volume production for this Christmas season. We expect to announce additional designs for this technology. Now I would like to go ahead and talk about our outlook and our guidance, although we are undoubtedly in a challenging period. We continue to make progress in establishing a very strong leadership position in it hymn growth did this tall consumer electronics market. With our reduced cost structure and lower break-even point we believe we are well position to resume significant growth as the economy and semiconductor market rebound. Our guidance for the seconds fiscal quarter which is our quarter ending in September 2002 is as follows. Our revenues are expected to be comparable to the first fiscal quarter just completed. Our pro forma loss per share is spending to be 6 to ten cents per share. Pro forma gross margins are expected to be 47 to 49 percent. Pro forma operating expenses are expected to be between 43 and 95 million dollars. Share counted is forecast to be at - between 83 and 8 fir million shares. We continue to be excited about the progressing we are making and the growth opportunities that face us. We would like to now open up the call to questions.

Thank you. At this time we are ready to begin the question and answer session. If you would like T ask a question, please press star 1. You will be announced to prior to asking your question. If you would like to withdraw your question, press star 2. Once again, to ask a question, please press star 1. Our first question today comes from Eric Gomberg (phonetic) of Thomas Weisel Partners.

Congratulations. Couple things. First could you talk a little bit about expectations in your guidance for a renewal of activity from the DVD base the game console program?

Right now we're taking a somewhat conserve approach in that we're forecasting only to ship what's already been confirmed as secure backlog and reconfirmed as secure backlog for the coming quarter. And we are not anticipating or forecasting any uptick in the coming quarter.

Based on that have you fully reserved any excess inventory you currently have?

As we noticed during the script, we've actually taken a reserve against the inventory for everything that's not anticipated to ship over the coming - over the near term here. And we think that's a good conservative way to approach it.

You noted in this quarter that shipments were fairly linear overall. What are your expectations regarding the second quarter?

In terms of linearity?

Yeah.

We don't usually give guidance on linearity questions. I don't anticipate it's going to be substantially different than the prior quarter.

I'll ask one more and let someone else go. Can you talk about your expect *takeses for ASP declines notice DVD market over the remainder of the year. What have you built into your internal models.

Yeah. It's a typical for a function to go down in price for 20 percent. For Cirrus we have a big focus in driving fragmentation into several segments. Our portable DVD focus and *ow merging emphasis on DVD recorder applications and also more traditional VCR replacement type using optical storage type device the. While we are driving great fragmentation and opening up higher points for yourself we think our SSP decline will be low as we continue to find these high value segments. We will attack the lower price points as well will probably leaf us with roughly flat ASP trends through the coming period.

Thanks very much.

Thank you for joining us.

Brian Alger of Pacific Growth Equities. You may ask your question.

Hi guys. Good afternoon. I didn't catch your comments regarding the connectivity group. I couldn't tell if it was up 3 million dollars or actually three million dollars in the quarter.

Yeah. It was actually 3 million down from 4 million in the prior quarter.

We saw a decline in that business and substantial increase in audio; is that correct?

Correct. Yes.

Within the video line, trying to understand how much exposure you have remaining to that DVD game console business. How much was trip attributable to that versus the DVD player market.

The decline in that space was basically a decline in the game console oriented business. I don't have a breakout of anything more specific than that but we think our exposure is pretty well contained at that many stage.

Okay. And I'm assuming that from the pro forma, the 1.2 million dollar reserve was for the optical controllers for that market.

The - I don't have a the - the that was a reserve, you're talking about the restructuring reserve?

No. The inventory reserve and the cost of good sold line or was that a reserve reversal? I'm sorry?

It was the latter. It was the reversal you're addressing.

How much of a reserve did you take in regards to the game console business.

We didn't actually break that out in dollar terms. We did note that the employees margins in the video business was 19 percent. Would you tell us the inventory charts they would have been about 40 percent. I think I can calculate it from that because basically one line adjustments.

Okay. Can you maybe give us some color on what you expect in terms of growth from your DVD player market in typically we see stronger sales in the second half of the year and more toward Q4, do you expect that too ramp up exitings year.

We think we're continues to go gain share. We think the design base Brian we've got is doing going to drive revenues on an increasing basis. We don't have a good ability to predict consumer spending patterns through this Christmas, and we're taking a relatively cautious approach anticipating relatively week spending patterns for the balance of the year in North America. Again that's based on - difficult to pinpoint concern based on current equity situation, market wide and that things like that. So we're taking one might argue a somewhat cautious approach toward consumer spending patterns. We think we're still going to see some increases in our video product line if consumer spending patterns continue through the rest the year. We think that offers some upside opportunity for us.

Would you say that your view toward consumer spending in North America might be more conservative than your Japanese based customers.

I don't know what our Japanese are publicly forecasting. Because I haven't seen any conclusive or consistent trends from them on the consumer spending, particularly of late. So I don't know how to make that comparison.

Okay. And then just one final question with regard to the cost reductions you talked about, the 15 to 20 million reduction. Is that off an annualized basis of Q1 results.

Yeah. That's off an annualized basis which is lightly higher than the Q1 actual. Because we were also pushing out expenses wherever we could so it would be natural of spending pattern was slightly above the 46 million in the recently completed quarter.

Somewhere between Q4 last year and Q1.

Somewhere like 47 million, right.

Greater. Thanks guys.

Yeah. Thanks for joining us today.

Our next question comes from Chris (inaudible) of Sound View Technology.

Chris (inaudible) from (inaudible). Just following on, that with regard to your visibility for the second half, if you could provide some color on where your backlog sits right now and what level of turns you're affecting Q3 and color that with respect to this time last year and this time last quarter.

Yeah. We don't quantitative information on backlog coverage by the way we think it tends to leads to conclusions that aren't necessarily accurate. We think our backlog coverage this quarter he is comparable what it was last quarters. I'm not sure about a year ago period by I think the nature of our business is a bit different than it was a year ago because would he pled those three acquisitions during the December quarter and we broaden our product line and got out of the magnetic storage business and lots of other things. I don't think of a comparison of a year ago period would add much insight. But again, compared to where we were a quarter ago is probably about the same place.

Okay. Then if you could provide some information on what you see for inventories right now. I guess excluding stuff for the game console market. Where do you see inventories right now and what are your expectations is its going forward?

Yeah yeah. that's a question we continues to find a greater resolution on. It's very difficult to track retail inventories on a product byproduct basis. So we really only get anecdotal information on that front. And while we think inventories are at somewhat low level, particularly if you consider by the end of this quarter people will be preparing for the Christmas season in North America, it's difficult to quantitatively prove that. we feel pretty good. We think the lead times being represented by our customers orders on us, which shrunk somewhat over the cures of the past 90 days, with think their inventories must be either in line or on the low side. But again, we can't prove that quantitatively or scientifically.

One last one. Make some comments on Intel reference design that was announced this quarter and what your expectations are for that and near term, medium term.

Yeah. You're talking about the personal video recorder design that uses the (inaudible) technology. We think the Intel reference design based on that technology is another in an ongoing series of endorsements that that technology is in fact a leadership technology. We've got Samsung endorsing that technology in their combo drive. Intel. Other key signs in the mill. We think that that category of application offers some very substantial growth. We mentioned that personal video recorders are forecast by some of the market experience to grow as many as 16 million units per year. Within a few years. And we think that's a reasonable forecast. And our content for box starts at, declines over that time period but it's a good application. But it's difficult to tell how fast it's going to grow. We're forecasting very low revenue levels for that product family over the second half of this calendar year.

Okay. Thanks.

Thanks a lot for joining us today, Chris.

Our next question comes from (inaudible) from Salomon Smith Barney.

Good afternoon. I'm calling on behalf of John Joseph. In terms. Next quarter, would it be safe to assume that audio will be up and video potentially down next quarter or and also about the connectivity segment?

Thanks for joining us here today. We don't actually forecast segment by segment. There's just too many things going in and out. But with the audio growth this past quarter at above 20 percent in a quarter, the June quarter which is seasonally pretty slow as a rule, we feel pretty good about our position in the audio business and we talked about a bit about the game console business which is in our video business. With think that that downside is pretty well contained. But again, we don't forecast by sector. We did mention that we have a somewhat conservative view toward consumer spending in North America over the course of the next few months. If consumer spending remains strong, then we think that we've got a go upside potential but we take a conservative view at this table stage of the game.

Would you care to venture a guess as the break-even time schedule.

Give you the same answer. Can't forecast where the consumer is headed, we don't know where the market is going in total.

Okay. All right. Thanks very much.

Thank you for joining us today.

Once again, to ask a question, please press star 1. Alan Adler of Alan Adler Enterprises. You may ask your question.

Thank you. David, how are you?

Thanks, Alan. Very good.

The revenue was less that you know thought it would be going into the quarter. How much of it is the X box and how much of it is other products and which products?

We mentioned in the press release that we - I can't remember the exact -

Due primarily.

Primarily due to the game console devices.

Primarily, has business -

A vast majority. The audio business growing at 22 percent quarter on quarter was ahead of anything that we had anticipated.

What's the status of the - on the X box business now after Microsoft cut its prices? There was some concern or some expectation as to whether their volumes would pick up and whether your customers would continue ordering. Have they order the or are they on hold?

We think it's probably best to look to our customers for the forecast on their business specifically and that for us to make any additional forecast on our customers' outlook, #1, is probably not the best. We're not the best source. And secondarily, it's probably inappropriate for to us to do that. I have to defer on that Alan, sorry.

Brian Alger of Pacific Growth Equities. You may ask your question.

Coming back to the same question.

Yeah, Brian.

Trying to add up the numbers here for the video line. Looking at the numbers from last quarter, I believe you said there were 31 million working from that. Trying to work towards what revenues may have been for the (inaudible) portion and somewhat stream machine may have been. Clearly a vast majority of those revenues must have been assigned to the X box last quarter; is that correct.

The majority of the 30.5 million in the fourth fiscal quarter was game controllers, yes.

Clearly that's the source of the decline. But I'm wondering, did we see (inaudible) and stream machine related reference go up in the June quarter.

We didn't actually break it out.

I guess here's my question. We put out a press release on April 15th, you shipped over 1.2 million DVD chips since purchasing Luxnor (phonetic). By my math according to the market costs that should have generated somewhere in the neighborhoods of 8 million dollars in revenue. Where is it?

What do you mean where is it?

Since we picked up Luxnor (phonetic), have we, I'm not looking for exact numbers but have we seen somewhere in that neighborhood a revenue from Luxnor (phonetic) business by my math, we're still a couple million shy in terms of revenue from that group. Or are we selling it at a lower than market ASP.

Definitely not the latter. The 1.two million units was over all two quarter period, #1. And #2, the revenue in the first fiscal quarter for total video was 13.5 million. Which includes Luxnor (phonetic) as a good percentage of that. And so that's where that - you would finds that revenue level.

Was Luxnor (phonetic) something like half of that.

We didn't break it out, without getting in the habit of breaking it out on an ongoing basis. You have to leave it at that.

Are we going be to be able to track the growth in your DVD revenues since that seems to be the major growth driver for you in the video line going forward? Are we going to be able to track that or is the going to be clouded by the PBR end and recordable functionality in that line item?

Well, we are combining the DVD decoders with the end coding devices from that perspective I guess you could say it's clouded. Our view is not with an intention to do that. On the other hand, many of these applications are getting interests grade. In fact of the personal video recorder products are going into DVD player device he is that have those same boxes that include end coding technology. And we're driving, and as well as with the controller chips from that perspective I think that's an appropriate combination, Brian. I think the other - well, question, or criticism that you levy is here is we have the game console business there as well. As we go forward I think you'll see game cone soles being a lower and lower percentage and that will make it easier to understand what we think is a good easy to understand, though not infinite level of resolution on the ongoing business of the company.

Do you see the game console business going to zero?

Not in the next couple of quarters anyways but we do see it going down a little bit.

Thanks for answering the questions Dave, itch appreciate.

Yeah. Thanks, Brian, for joining us today's.

Once again, to ask a question, press star 1. Our next question comes from Brenden McMillan of (inaudible).

Hi, you all. Could you clarify when your backlog coverage was similar to last quarter, similar to the expectations of going into him last quarters or similar to the realized revenue of the quarter?

Similar to the realize the revenues going - as a result.

Okay. Great. And also could you just spend a little time just going over the compensation charge and the treatment of that?

Compensation, which - which aspect.

Just well, the I guess one philosophy and then the time period over which you're taking the charge and why it's being treated that way.

I guess I still don't understand the question.

There's a comment in the press release about how it's going to be taken over several quarters.

I'm trying to find the words that you're addressing here. Are you talking about where we're taking the reduction in head count is a happening between June and September quarters or -

Previously stated the company expects GAAP charges to (inaudible) and compensation charges to total approximately 6 to 7 million dollars each quarters for the remainder of fiscal 2003. How much of that is what but just so you can clarify that.

This is on the difference between GAAP and pro forma results and operating expense line. I understand what you're saying now. And what we have is amortization on the GAAP operating expenses of the amounts stayed in the press release as an estimate will continue to be a difference between the anticipated pro forma results and the anticipated GAAP results. And Steve, you're looking for a breakout, is it Brenden, between compensation and other intangibles?

Yes.

We're not guiding forward.

We're not breaking it out between segments.

Right. We haven't broken that out between compensation and other intangibles.

There could be a number of different factors that could come to play. At this point we're not guiding as to where we think those charges are going to be quarter-over-quarter.

I'm sorry, you're not guiding. I mean, the compensation charges represent - may have been if you could just clarify what is in compensation charges? What types of compensation are in there and why you're not clear as to how much that's going to be. That wouldn't seem to be a revenue dependent number. I'm just curious.

Those compensation charges are related to the acquisition that is we made predominantly in the second half of last calendar year and the December quarter. And they would be hold back and other deferred stock option type payments for the acquisition.

They relate on only to the acquisitions and -

Anything that was done here. Correct. That's true.

Okay. That helps.

Our next question comes from Adam Brenner of Intrepid Capital.

Hi. I was wondering if you could tell us who your 10 percent customers are and how business is going with Thompson who was a 10 percent customer last quarter.

Thompson is the only 10 percent that customer that will show up in the queue for the just completed quarters. I believe it will show up at roughly 14 percent of revenue with Thompson. That was split between a wide variety of applications including percent game controller type chips which represent a good percent of that but I count wouldn't say the vast majority of those. In businesses other than the game controller business we think our business is growing quite nicely. In the game controller, we've talked about that and we don't have any other color to add to that forecast.

All right. Thank you.

Thanks for joining us.

Our next question comes from Alan Adler of Alan Adler Enterprises.

Dave, could you give us some detail on the 73 million dollar disputed receivables what the status of that is and what's your assessments of collection or not and over what time period.

Yeah. Alan, that was a disputed receivable which we fully reserved in two quarters ago. In the March closing quarter. I'm going to let Steve overly respond to that question.

We continue to remain confident that we're going to prevail in that litigation, both litigations and to collect the full amount of the 73 million. On the other hand, to be conservative we of course have reserved those amounts on our books. Both these lawsuits are proceeding in court in California.

As far as the anticipated timing, we really can't anticipate when those things will come to a conclusion.

It is very difficult, if not impossible to predict the outcome of litigation, the timing of it.

Our next question comes from (inaudible) of Merrill Lynch.

Yes. Just a couple of quick questions on connectivity side. What percent of that is set top box related.

What percent of what is set top box.

What percent of your connectivity business is set top box related.

We don't break it out but it is one of the more important applications in that arena.

And who are your largest customers?

Overall -

No I'm just talking with the connectivity business.

All the main players worldwide are. We participate with scientific Atlanta, with Motorola general instruments, with PACE, we have some relationship with virtually all the set top box manufacturers worldwide.

You said there was an inventory buildup that you're seeing. Are you seeing this inventory buildup at the OEMs or more see MSOs themselves.

Perhaps I wasn't very clear. We saw a an inventory buildup a couple of years ago which with think is still hanging out there both in terms of component inventories and possibly end system inventories although we don't have a lot of resolution with our customers inventory as we mentioned earlier.

Okay. Thank you.

Yes. Thank you.

At this time we have no further questions.

Thank you very much. We look - we appreciate your joining us on the call today. We look forward to talking to you when we report our September quarter financial results on October 23rd. In the meantime we hope to see you at many of the upcoming conferences we'll be attending in the next two months. These include the summer seminar on August 6, the US Bankcorp Piper Jaffray Technology Conference in Boston August 8th. The Sound View bus tour in Santa Clara August 27 through 29. Salomon Smith Barney tech 2002 Conference in New York. And Fall Technology Conference in Boston on September 5. If you would like any information on arranging one-on-one meetings in any of these events please contact 650-470-0200. Thank you very much and goodbye.