Cirrus Logic Inc (CRUS) 2013 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic third quarter fiscal year 2013 financial results Q&A session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for queuing up will be provided at that time. As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference call over to Mr. Thurman Case, Chief Financial Officer. Mr. Case, you may begin.

Thank you and good afternoon. Joining me on today's call is Jason Rhode, Cirrus Logic's President and Chief Executive Officer; and Chelsea Heffernan from our Investor Relations team. Today, we announced our financial results for the third quarter fiscal year 2013 at approximately 4 PM Eastern time. The shareholder letter discussing our Q3 financial results and the earnings press release, including a reconciliation of non-GAAP financial information to the most directly comparable GAAP information, along with the webcast of this Q&A session are all available at the Company's Investor Relations website at www.investor.cirrus.com. This call will feature questions from the analysts covering our Company, as well as questions submitted to us via e-mail at investor.relations@cirrus.com.

Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the Company undertakes no obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Please refer to the press release issued today, which is available on the Cirrus Logic website, the latest form 10K and 10-Q, as well as other corporate filings made with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from current expectations.

Now I would like to turn the call over to Jason Rhode, our President and Chief Executive Officer.

Thank you, Thurman. Before we begin taking questions, I would like to highlight a few of the things we discussed in our shareholder letter. Q3 was another great quarter for Cirrus Logic, with revenue and earnings per share exceeding our expectations as we experienced stronger than anticipated product shipments through the end of the quarter. As a result, revenue was $25 million above the midpoint of our guidance. Given the higher revenue base in Q3, we now expect the sequential decline in Q4 to be more pronounced, although our expectations for total FY '13 revenue remain relatively unchanged. During the quarter, we saw a significant increase in operating margins, up 8 percentage points on both a GAAP and non-GAAP basis to 34% and 37% respectively. We believe our ability to deliver substantial revenue growth while maintaining operating margins well above our peers is a unique combination of execution and success that differentiates our performance.

While we continued volume shipments of multiple new custom portable audio products in Q3, our efforts to diversify our customer base began to pay off in our audio product line, where we are now shipping catalog devices to several mobile phone manufacturers. In LED lighting, we continued to gain momentum in the third quarter, expanding our products into additional SKUs, regions and customers. We remain engaged with all meaningful Tier One accounts and expect to be on the shelves with another customer in Q4. As we move into FY '14, we are enthusiastic about the markets for both audio and LED lighting and continue to see significant opportunities to grow our content with our existing customers and expand our business with new ones. Also, I would just like to note that while we understand there is an intense market interest related to our largest customer, in accordance with our policy, we do not discuss specifics about our business relationship. Operator, we are now ready to take questions.

Thank you, sir.

(Operator Instructions)

Tore Svanberg, Stifel Nicolaus.

Yes, thank you. Jason, I was hoping to start with the guidance. Could you talk a little bit about the sort of relative visibility you have towards that number? And maybe comparing that visibility versus where you were a quarter ago?

Well, I think overall, our visibility is about the same every quarter. All we can do is rely on the data that our customers give us. We judge that to whatever degree we see appropriate, given the overall environment. And frankly, the overall guidance that we gave last quarter, which included some hints about what we thought would be the case in the January quarter, overall, the total was about spot on or about as close as you can get in this environment. So we feel pretty good about that. We did see some shipments that we had expected to take place in the January quarter that moved into the December quarter, so that caused us to be significantly up in the December quarter and obviously caused the step-down in January to be more pronounced than we had previously expected. But overall, the total was right on -- about the right number. As far as visibility going forward, as far as we can tell, it is about the same as it usually is.

Very good. And also I don't know if you want to comment on this, Thurman, but just trying to understand your inventory. Obviously your inventory came down hard this quarter because of your revenue growth. How should we think about inventory in relation to the revenue decline in the March quarter?

Well, given the fact that we will be pushing inventory out, as we bleed off and sell off inventory that we already build, we will also be taking on -- begin the process of taking on inventory as we prep for our fiscal year '14 needs and customer needs from what we can see now. Right now, I think the best way to look at our inventory at the end of Q4 is probably flat with some additional build prepping for the year.

Okay. And Jason, you mentioned in the shareholders letter and also in your prepared remarks that you are now starting to sample some catalog products to -- I think in your letter, you even said some Tier One handset makers. Could you just elaborate a little bit on that? Is that something that could potentially be quite meaningful this year?

I think it is very meaningful. I cannot elaborate on it too much because we're shipping the product we have not announced into -- to a customer that has not announced their product. So we don't want to get the horse ahead of the cart, as it were. But obviously that is something we have worked on long and hard to develop a catalog of portfolio products that other mobile phone manufacturers can use. And obviously it is not going to completely diversify the Company overnight, but it is a good step in the right direction, and it highlights that manufacturers out there our valuing the technology that we bring to bear to improve the voice experience on the phone. There are not that many companies that are differentiating on audio performance. We have always done very well in that regard, and our recent foray into helping our customers differentiate on voice is a much more broadly applicable set of technologies. We think it is a meaningful first step in a great direction.

Great. Just one last question. In the past, you have sort of put some parameters and numbers on your progress in LED lighting. Would you care to comment on how big that business could potentially be here in calendar '13?

Certainly FY '13 was really more about getting our products into the market and getting design ins and design wins. We would expect to see FY '14 be more meaningful from a revenue base. This is the first time in a number of years where we have had a meaningful push into sort of a traditional analog inch-deep mile-wide kind of a market, and that type of thing takes a lot longer than some of the very explosive growth portable audio kinds of businesses that have driven our growth in the past few years. So we expect to see additional manufacturers and additional SKUs hit the shelves as early as this quarter, and a significant number of them over the course of FY '14. We expect FY '14 to be much more about revenue than FY '13 was. And more importantly, just continue to solidify our share of the market and our share of the top-tier accounts.

Sounds good. Great job guys. Thank you.

Blayne Curtis, Barclays.

Just a question on the gross margin. Thurman, you came in a little bit lower, but obviously the mix is well skewed to portable and your major customer. Can you talk about -- is this now the new level? I know you had to get some volume discounts on your new products. Can you talk about -- is this now a mix of new [reversals] kind of where is it going to be, and is this the new base that you guys can work off of going forward?

The guidance that we give is 50% to 52% for the next quarter. And you look at where we have come over a year, and we have basically doubled our revenue. So, a lot of this is mix, we have different levels of content. We have different numbers of products with some of our other customers.

So when you look at that, you have certainly different margin levels and margin numbers for the different products that you have. And with that kind of mix change towards that, I think we're looking at, at least for the next quarter for sure and we will talk about that more, to be at that 50% of 52% range. But we would also note that we are very focused on growing our operating profit. And although we are very cognizant of where we are at on our margin levels, we are also keeping an eye on driving revenue growth and driving operating profit up also. So we take a look at those factors also when we're looking at new product opportunities and new customer opportunities.

So just to elaborate on that a little bit, from my perspective as a non-financial person, our margins can move up and down a point or so on a quarter for a variety of reasons, business conditions and mix and everything else. And it is relatively meaningless from an overall company point of view despite how wrapped around the axle the financial community seems to get about it. So as Thurman said, we're much more focused on driving our operating profit over the long-term, and as you pointed out, we've sort of doubled our revenue in the last year in exchange for two points of margin, which is a trade-off we would take at least one more time.

Definitely. So the -- kind of following behind Tore about this a little bit, but definitely more commentary about diversification, new customers, leveraging similar parts. Definitely you are mentioning catalog parts. I was curious about just how much effort it requires on your side to get this revenue? Is it more back-half loaded? Or is it more next year kind of when you're thinking about you get some more material revenue? And then any progress on kind of more custom work with larger SKUs?

Yes, so obviously we hope it is something that continues to grow. So we would expect it to get bigger over the course of the year and into the following fiscal year. Mobile phones are pretty complicated devices. There is lots of regulatory approvals and all that sort of thing. So once we start shipping into a customer, there's a pretty big delay before they actually start shipping their product in most cases. But it is a really good area where we can continue to build, now that there is this additional focus we have got on the voice experience that enables us to help our customers differentiate that as a platform that is a lot more scalable across multiple customers.

It remains the case that it is difficult to predict who's going to have the next big thing in the mobile space. And it is difficult to find companies that have the vision that go out far enough that are willing to partner on custom developments. But in most of those relationships in the past for us, the first step has been to get in with a catalog product or a minor variation of a catalog product, to really get the relationship off to a good start. And then once they see what we can do, hopefully we can expand on that relationship. So both from a diversification of revenue point of view, from a valuation of our technology point of view, as well as potential harbinger of things to come with additional custom products for other folks, I think it's a very good sign and a good step in the right direction.

Thanks, and just a final one for Thurman. You stepped up your OpEx quite a bit to get all these new products out, which you did very successfully. You have actually moderated the OpEx growth the last couple of quarters. When you look out into next year, do you need to continue to invest or do you see these smaller steps as more of the path?

We need to continue to invest. Again, that is one of our biggest challenges, though, is to be able to invest as much as we would like in the R&D. Sometimes we can't get there because we can't bring on enough people. But we still expect our operating expenses to continue to grow, and we will grow them as fast as we can. But most of that, anytime that we see an uptick in a quarter, it is going to be normally associated with product development expenses and R&D expenses where we're trying to get products out the door, get development done and get new people on to go after new projects and try to address more and more opportunities if we can. So you can expect that to grow. It is hard to tell you an exact rate, but it should be growing at a reasonable rate though the year next year.

Blayne, to put a different spin on it, we definitely would like to continue to add 20 to 30 some-odd people per quarter on an average basis. We are at this point a relatively small company with a relatively large amount of revenue. And we need the Company to grow into the revenue very quickly, because we obviously want to continue to grow the revenue off of the new, much higher base. It remains the case that for every development we kick off, we have many that we wish we could staff, which is a wonderful position to be in.

Actually this week, we have had our extended sales team, the bulk of them in for a sales conference. And across the board, every region, our sales people have opportunities that in every case we wish we could capitalize on, and the thing that is holding us back is not technology or opportunity or anything else. It's simply being able to staff those up to develop the products in addition to the things we are already committed to doing. So it is, in summary, a very fine problem to have.

Great, thanks.

Vernon Essi, Needham & Company

Thank you very much, and I would echo my sentiments on the gross margin. It's nice to see that growth and keep that at a relatively stable level. In terms of -- and I just wanted to follow-on too, I guess on Tore's and Blayne's questions around this other smart phone customer you mentioned or handset customer you mentioned in your prepared statement here. Jason, are you insinuating that this is basically a general part that could evolve into a custom part? Is there any sort of profile you can give us about this customer in terms of will this lead to other SKUs with them or how that is moving along in terms of behind-the-scenes?

Well I definitely don't want to tip the hat of who are talking about. But in general, a huge percentage of the value of our catalog product business is to establish ourselves with a new customer and put ourselves on a footing where we can develop that into a partnership, where we are able to develop new custom products. As we've talked about many times in the past, though, the economics of that can be difficult. It costs us $3 million to $5 million, or in the case of a highly integrated product, even more million dollars to develop a new part. And so, I have to ship quite a lot of units in order to warrant a custom development.

So catalog products can be a good opportunity for our customers to feel us out and see what our capabilities are and see what our support is like. Are we able to deal with changes in forecast or technical support or whatnot. But it is also an opportunity for us to feel out -- is this an account that knows what it means to partner for the long-term, which we believe delivers much better results for both parties, and are the volumes going to really shake out?

We have had many opportunities over the past couple of years to develop custom products for various tablets, and I'm proud to say that we passed on most of them because most of those products have not shipped enough units that would warrant the development effort. So it is definitely the potential first step. Obviously, the best case scenario is that we develop just as meaningful a business with catalog products that we can sell to many customers. That is certainly a lovely turn of events when it happens. But the mobile phone space is such that we really think that if you find a customer that is capable of thinking several years in advance and partnering with us, that we can jointly achieve a much better effect through developing a custom product together.

Okay. And then just sort of in the same realm here. The other audio, and I always ask this question, it was down about 10% year-over-year. What is sort of happening to that bucket of parts? Are you pruning some back? Are you becoming more focused in these areas such as the one you were just talking about to sort of concentrate more effort in that area? I'm just trying to figure out what sort of happened to that product line over time.

Actually other audio was year-over-year about flattish. It declined on a sequential basis, which is typical for the December quarter. It is definitely the case that we are not investing as heavily in areas like home audio, for example. That is certainly not for lack of products that I believe should be in the market. But our customers for the most part as yet haven't dreamed up anything super amazing for the home that we believe would drive meaningful growth in the market.

Automotive remains a key area of interest for us. We are investing there as we see opportunities that we are able to staff and justify the expense. We think that automotive, as high-end entertainment permeates down the product line from the top end down into even the most basic models of cars, we see a significant amount of growth in the kind of electronics that we provide to the automotive market. So it is still a slow-moving market. It makes it very important to pick your customers and opportunities carefully, especially given our resource constraints that we've got. But that is an area that we continue to emphasize.

And then of course, more of everything in mobile -- in particular, things that are driven by voice. We are seeing a lot of opportunities in voice interaction initially with mobile devices, but over the long-term, I think that a lot of those technologies are going to permeate other areas whether it is automotive or home or you name it. We are entering the phase where the field of being able to interact with your things via your voice is just going to be explosive, I think. I think it presents a tremendous amount of opportunities, which could be as simple as A to D conversion, more channels of microphone input, for example. Or it could be a much more sophisticated signal processing solution -- noise cancellation, noise suppression, echo cancellation and things like that. It positions us uniquely to really be able to serve those opportunities well because it's exactly in our wheelhouse.

And my last question here, just to go back here, and I will try to go about this as delicately as possible. Your largest customer, I sort of do some simple math on an average basis, and your content's roughly up some 140% year-over-year on a smooth sort of average basis. And regardless of that number, it is obviously huge. What I am wondering is, if we go out another year or two, presuming there are no socket losses, should we anticipate further incremental gains? Obviously not to that same magnitude. Or are there scenarios where that might actually reverse even though your revenue could grow, your dollar content may be going down?

That's really good question. Over the next handful of years, we see as much opportunity to grow our content as ever. We are engaged in a ton of new developments in portable audio. As I said, this opportunity to interact via your voice with stuff -- it's starting in mobile -- is tremendous. So we see a ton of opportunity to continue to grow our content and our importance.

Now, on an individual part-by-part basis, sometimes we are able to increase our ASPs as we integrate passive components or integrate new features, eliminate other passive components on the board for our customers, so that we can help their bill of materials go down and in the best case, achieve an increase in our ASP. Sometimes that is an opportunity, other times it is not, and we need to do a good job of making our product more cost-effective, et cetera. But that is just the name of the game. It's kind of the -- what was that book a long time ago, that sacred cows make the best burgers? You want to replace your own products before somebody else does. So that is all just a healthy part of our business, and overall, we see just a tremendous opportunity to continue to increase our audio revenues.

Okay. That's helpful. Thanks a lot, Jason.

Bobby Burleson, Canaccord.

Congratulations on a great quarter. This is for Jason, I guess. You showed a remarkable ability to forecast in terms of how you described what might happen overall for fiscal '13 in the second half. I think you are spot on to the number. I am wondering, it seems like you have decent six-month visibility. Any sense of the amount of volatility we might expect on the revenue line beyond March? I mean obviously, it is coming down pretty hard. I am wondering whether or not there's any early indications that there could be more of a V-shaped recovery or more volatility to come perhaps on the positive side beyond March?

Well, I think that is certainly possible. Like I said earlier, all we can really do is take the forecast that our customers give us, which do go out a good long ways. We try to apply some conservative judgment to that so that we don't set ourselves up for being a big disappointment. But we -- as far as what the market uptake of our customers' products are going to be, we really don't have a good crystal ball for that that goes out more than a quarter or so. I will echo the comments of somebody with a lot more information at their disposal than I do, that I think by and large, you see so many rumors and comments all over the web and all over the talking heads on TV, et cetera that have all got one little snippet of data out of what is a very, very complicated situation. And then make it out like the sky is falling or if everything is going to go gang busters. I would just like to echo the comment that if you're making investment decisions based on rumors and what not that have been reported in the media or on the web anywhere, that you are, in my opinion, much more likely to be wrong than right

Okay, great. Yes, and I guess the other one would just be on the tax rate. At some point here, it resets to a much higher rate, at least on the income statement. I am wondering whether or not -- what opportunities there are to address that, what your options are if any, any kind of update on how we should think about taxes at that reset kind of the 35% period?

Well as we said previously, we are in the process of evaluating options we could have around maximizing the effect of the tax rate. But I think from a realistic standpoint, and where we will be when whatever time that we begin to become a taxpayer, that from a modeling standpoint, which is I think one of the reasons you are probably asking about that, is it probably should be looked at as a 35% tax rate at that point in time. We will continue to look for incremental improvements to that, and we will know better as we go through the process, which we're pretty deep into now in terms of evaluating what we can and cannot do. And we will try to be forthcoming with that if we have different information from that. But at this point in time, that is really the best that we can say.

Thanks. In terms of forecasting ability, as you guys are more successful and your customers are and you are diversifying let's say not into additional customers, but just into more SKUs, all of which have differing prospects for success, are you finding it more difficult to forecast? Or do you think there will be a smoothing effect there? What are your thoughts about how you address the challenge of having so many different products out there in the market?

Well one, we try not to get too hung up on it. We are a fairly conservative bunch. And the reality is, we win whatever we win a year in advance. And the next quarter or so is entirely out of our hands. So it is an exercise of forecasting, there's nothing we can really do to drive it. But we take the data our customers give us, you are right to some extent that the law of large numbers is the more products you get out there, there should be some level of smoothing effect.

But again, that is not the metric that we use to judge whether or not we are being successful in our endeavors because it is largely out of our control. So we try to be conservative at it and then really try to look at a lot of other metrics to really gauge whether our business is headed in the right direction or not. Are we winning all the sockets that we know about? Or are we passing on the right ones and capitalizing on the right ones, et cetera? That's really where the value of the Company lies.

Okay thanks. Congratulations again for the great quarter.

Andrew Huang, Sterne Agee.

Thanks. I was wondering if you could give us a little more color on the new program win that you are talking about with the Tier One handset maker? I think you mentioned that right now it's a catalog part hoping to become a custom part. But I was just curious, one, about the functionality, what the product actually does -- your product? And then two, in general, what kind of an ASP a chip like that would have?

I would rather not comment on the ASP front because again, we are a ways out from the thing actually shipping. And products, especially catalog products, tend to have a pretty wide range of ASP for an individual device depending on who is buying it. So if I give you a number too high, then that is going to screw you guys up, and if I give you a number that's more accurate, it might cannibalize some of our other opportunities out there with the same device. Basically, it is a very low power A to D converter for multi-microphone applications. So this is again target an improved voice experience in the phone.

Got it. And then your comment on the tax rate remaining below 4% through fiscal '14. Does that mean, are you kind of indirectly giving full-year pretax income guidance by giving that number?

I don't think we said that.

Okay.

All we have said on that front is that we have given you the amount of the deferred tax asset that is remaining, and then you can run that against your model and figure out when you think it runs out. So no, we're very deliberately not giving you guidance inadvertently through that.

Okay, got it. And then I guess one last question on the share repurchase. It looks like you guys did buy back some stock during the quarter, I guess during the December quarter. Are there any restrictions, or what are the restrictions in terms of when you cannot continue to do that program?

Well, our general view is that we should be pretty conservative from an implementation of a buyback point of view. We are opportunistic about it. When we believe that the fundamentals are really disconnected from the sentiment that is out there in the market, we see that as a good opportunity, which is why we announced and then executed part of the buyback. In terms of when during the quarter, there are certain things that are legal restrictions and then other things that are just kind of what we view as optical restrictions that we don't -- for example, if we as a company, we don't think it's appropriate to be buying right through our earnings call, for example. So we try to stay away from the end of the quarter and all that. But we are not in any fundamental great hurry about it either. But we get a lot of questions about use of cash in dividends and investments and acquisitions, et cetera, et cetera.

It remains the case that we would love to find an acquisition that made a lot of sense for us and furthered our strategy and accelerated us more quickly than we might otherwise do. But that is, as we have discussed in the past, is often a very perilous path. You have to be very mindful of cultural fit, geographic fit, technology fit and anything else. Once you get through all that and then cull the list further to just a list of quality companies, it is pretty rare to find anything that works. At this time, we don't feel like we are great fit for a dividend. That one way to use our cash that is in the interest of our shareholders has been to opportunistically implement a buyback the way that we have done in the past to a pretty great affect. So that gets at the bulk of your question.

Okay. And then if you don't mind, I just had one last question on LED lighting. I think in the past, you have talked about a two string driver. I think the idea there is that you can do color mixing with two different color LEDs. Do you expect to ramp that product in this calendar year, calendar 2013?

Yes, there actually should be a product on the shelves sort of any day now that is using that. And then over the course of the calendar year, we expect to see several more SKUs hit the shelves.

Okay, great. Thanks very much.

Christopher Longiaru, Sidoti & Company

I will echo my congratulations, guys. So I guess with all these changes, and you talked about your need to hire as aggressively as you possibly can. Can you just revisit what your long-term model is for those expenses and if it has changed in your view at all? Or if you have a plan to change it in the near future?

Well, we have said historically that we expect that our model is something like 20% R&D and 15% SG&A. I think certainly the economies of scale as we get bigger should lower that SG&A number somewhat. We have not refined a real precise model for what exactly what it should be. Obviously we are significantly under that for the R&D number as well. In fact, so significantly that we have not bothered to figure out exactly what the right percentage is because we are such a long ways away from it.

Okay, that's helpful. And then just in terms of that seasonality here, because I think somebody else asked before, about your other audio business being down sequentially and kind a flattish year-over-year. With your movement more into consumer, is there kind of a more normal seasonal pattern that you're going to follow? Especially the way this played out in the March quarter with a much bigger December and then a much lighter March, do you think this is kind of the new normal?

I think to some degree we're a seasonal story, but probably to a greater degree, it is more that there is a large product cycle obviously that is laid on top of that, and those two are tied together somehow. But it also depends if somebody got something new to launch in a particular quarter or another. So I feel your pain, it does make it from your perspective probably difficult to model through the course of the fiscal year. And we don't always have great visibility into what you might expect for next year's fiscal Q4 or next year's fiscal Q3. We -- at this phase of the game, we just make sure that we're keeping track of the design wins that are ultimately going to drive whatever the numbers might be.

Okay. So it has epically been 10% to 15% down in the March quarter. Is that fair? Not that you have an idea of what you're going to ship next March, but you don't see any major reason to change that expectation at this point?

I mean, yes, if you're trying to model next year's Q4, that's probably as good a model as any.

Okay.

I think if you look back over a number of years, it's a very fair amount, what may or may not have gotten launched in the January quarter.

Thank you guys. I appreciate it.

Rick Schafer, Oppenheimer.

Hey guys, this is Shawn Simmons calling in for Rick. Congrats on a good quarter here. Most of my questions have been answered, but I just wanted to touch on a couple of topics that no one has really touched on. So the power meter business, it looks like that was weak again this quarter. It's -- what are you guys expecting for next quarter? And then maybe broader, just over the next 12 to 18 months there, do you see any opportunity to expand your customer base or penetrate further within your largest customer there?

Yes, we do. I think there has been to some degree some level of a hangover from the whole smart grid thing that was so red hot a few years ago. We have made good progress with broadening out our business with our largest power meter customer to be a little more focused on worldwide success rather than just North America. Power meters is not the fastest moving market in the history of the world just because the products have to be designed and then certified and then field-tested, and there's a lot of steps in that, and it takes our customers a long time to expand their business as well.

So it has been in a little bit of a lull over the past few quarters or so. We don't see that going away immediately. But in the long-term, we are actively engaged and successfully winning the sockets that we expect to both expand our business with our largest customer in the metering space, and also diversify that to other customers as well. Long-term, we think it continues to be a good market for us to be in.

Okay, great. And then obviously with the move to your headquarters for the motor control team, can you give us any update there? Are there any kind of particular applications that you guys are having success in? And when should we expect meaningful revenues from that group?

We will let you know when we see it. It is still pretty far out, that is more of a technology investment at this point, and that is part of the team's challenges to go figure out where exactly to deploy this technology that we think is pretty compelling. But what we have developed is some technology around a sensorless, brushless DC motor that has some pretty unique properties and solves some neat problems. The challenging thing there is that it is a pretty fragmented market, and it is not necessarily the case that just because we have some amazing technology that there is a big market opportunity or good business to be built around that.

But, that is what the team is engaged on and it certainly seems like there is enough demand and enough real value that is represented by the technology we have developed, that there should be a business in there. So that is what the team is working on. The neat thing is that the folks who moved over from Tucson -- the reason we moved them here is they're amazing people. They're very talented and fit right in with the mission that we have for Cirrus overall. So there's very good opportunities for them regardless.

Okay, great. Thanks guys.

Thank you Sir.

(Operator Instructions)

Andrew Huang, Sterne Agee.

I apologize if this question has already been asked. But for the last two quarters, you have kind of given us very nice guidance for the current quarter and then a little bit of color for the out quarter. Do you have any commentary at this point for the June quarter revenue?

Yes, we really don't have any commentary we want to share at this point. The past couple of quarters, we had things that we felt like if we didn't at least give you a little bit of a clue that people might have gotten severely off in the wrong directions. We don't see anything really remarkable going on at this point. The business is kind of steadily moving along, so we think you guys will probably get it in the hump without our help on that. Typically, historically, our policy has always been to guide the current quarter only. It was just due to the kind of real remarkable events of the past couple of quarters that we got a little ahead of ourselves to try to help clue people in.

Okay. Thanks very much.

(Operator Instructions)

Presenters, there appear to be no further questions on the phone line. I would like to turn the program back over to Chelsea for any additional remarks.

Thank you, operator. We have had a few questions submitted via e-mail. These were addressed in the questions we received from our analysts, so at this time, there are no more questions.

Great. Let me close by saying that Q3 was a great quarter for our Company. We're very pleased with our results. FY '13 is shaping up to be a year of many milestones for Cirrus Logic as we should nearly double revenue and significantly improve our operating profits. Longer-term, we are excited about our opportunities with both new and existing customers in audio and energy, where our technology and engineering expertise uniquely position us to be an industry leader. If you have any questions that were not addressed, you can submit them to us via our investor website. I'd like to thank everyone for participating today. Goodbye.

Thank you, presenters. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation, and have a wonderful day. Attendees, you may log off at this time.