Lumentum Holdings Inc. (LITE) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Lumentum Q1 2017 earnings conference call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

各位女士、先生，大家好，歡迎參加 Lumentum 2017 會計年度第一季（Q1 2017）財報電話會議。目前所有與會者皆處於僅收聽模式。稍後我們將進行問答環節，屆時會提供相關指示。

(Operator instructions)

（接線員指示）

As a reminder, this conference is being recorded. I would like to introduce your host for today's conference Mr. Chris Coldren, Vice President of Strategy and Corporate Development. Sir, you may begin.

提醒各位，本次會議將被錄音。我想介紹今天會議的主持人：策略與企業發展副總裁 Chris Coldren 先生。先生，您可以開始了。

Thank you, welcome to Lumentum's first quarter FY17 earnings call. This is Chris Coldren, Vice President of Strategy and Corporate Development. Joining me on today's call are Alan Lowe, President and Chief Executive Officer; and Aaron Tachibana, Chief Financial Officer.

謝謝，歡迎參加 Lumentum 2017 會計年度第一季財報電話會議。我是策略與企業發展副總裁 Chris Coldren。今天與我一同出席的有：總裁暨執行長 Alan Lowe，以及財務長 Aaron Tachibana。

This call will include forward-looking statements, including statements regarding Lumentum's expected financial performance, expenses, trends and positions in our market as well as expectations related to our customers and our products. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review most recent filings with the SEC, particularly the risk factors described in our 10K filing for fiscal year ended July 2, 2016.

本次電話會議將包含前瞻性陳述，包括關於 Lumentum 預期財務表現、費用、趨勢與市場地位，以及與客戶與產品相關之預期等陳述。這些陳述受到風險與不確定性影響，可能導致實際結果與我們目前預期出現重大差異。我們建議您查閱我們最近向美國證券交易委員會（SEC）提交的文件，特別是截至 2016 年 7 月 2 日止會計年度 10-K 申報文件中所述的風險因素。

The forward-looking statements we provide during this call, include projections for future performance are based on our reasonable beliefs and expectations as of today. Lumentum undertakes no obligations to update these statements except as required by applicable law.

我們在本次電話會議中所提供的前瞻性陳述（包括對未來表現的預測）係基於截至今日我們合理的信念與預期。除非適用法律要求，Lumentum 不承擔更新這些陳述之義務。

Please also note, unless otherwise stated all results and projections are non-GAAP. Non-GAAP financial measures should not be considered as a substitute for or superior to financials prepared in accordance with GAAP. Our press release with our first quarter FY17 results is available on our website www.lumentum.com under the investors section, and includes additional details about our non-GAAP financial measures and our reconciliation between GAAP and non-GAAP results.

另請注意，除非另有說明，所有結果與預測皆為非 GAAP。非 GAAP 財務衡量指標不應被視為 GAAP 編製財務資訊之替代或更優者。我們已在新聞稿中公布 2017 會計年度第一季業績，並可於我們網站 www.lumentum.com 的投資人專區取得，其中包含關於非 GAAP 財務衡量指標的更多細節，以及 GAAP 與非 GAAP 結果之調節表。

The website also has our latest SEC filings, which we encourage you to review and supplementary slides related to today's earnings release. Finally, a recording of today's call will be available by 7.30 PM Pacific time this evening on our website. Now I'd like to turn the call over to Alan for his comments and first quarter business highlights.

該網站亦提供我們最新的 SEC 申報文件（我們建議您查閱），以及與今日財報發布相關的補充簡報。最後，今日電話會議的錄音將於今晚太平洋時間 7:30 前後在我們網站提供。現在我想把電話交給 Alan，請他發表評論並分享第一季業務重點。

Thank you, Chris. Demand continues to be relentless. I am pleased to have achieved both record revenues and operating margins for the first quarter. Strength and demand for ROADMs, 100G components, fiber lasers, and submarine products combined with capacity additions drove our first quarter revenues up 7% sequentially and 21% relative to a year ago. Telecom growth was strong, increasing 14% sequentially and 25% year on year. Despite the increased output, our customers wanted more.

謝謝你，Chris。需求持續強勁。我很高興第一季同時創下營收與營業利益率的新高。ROADM、100G 元件、光纖雷射與海底產品的強勁需求，加上產能擴增，帶動第一季營收較前一季成長 7%，較去年同期成長 21%。電信業務成長強勁，較前一季增加 14%，較去年同期增加 25%。儘管我們已提高產出，客戶仍希望我們供應更多。

At Lumentum, we're focused on using our Photonics technology to accelerate the speed and scale of cloud, networking, advanced manufacturing, and next-generation 3-D sensing applications. Each of these applications are currently going through or planning transitions which creates strong demand for our products. The rapid growth in cloud computing, streaming video, mobile, and other high-bandwidth applications is placing enormous demand on networks in terms of capacity, connectivity, and efficiency. These demands can only be met with advanced optical communication technologies including 100G and higher data transmission and advanced ROADM architectures.

在 Lumentum，我們專注於運用光子（Photonics）技術，加速雲端、網路、先進製造，以及下一代 3D 感測應用的速度與規模。上述各項應用目前正處於或規劃進行轉型，因而帶動對我們產品的強勁需求。雲端運算、串流影音、行動通訊及其他高頻寬應用的快速成長，對網路在容量、連接性與效率方面造成龐大需求。這些需求唯有透過先進光通訊技術才能滿足，包括 100G 及更高速的資料傳輸，以及先進的 ROADM 架構。

Advanced manufacturing techniques including the cutting and welding of metals, precision machining of semiconnector wafers, printed circuit boards, and glass and plastic displays are driving further reliance on lasers. Leaders in next-generation consumer electronics, virtual and augmented reality as well as the automotive industry are looking to laser-based 3-D sensing to enhance capabilities and enable new applications.

先進製造技術（包括金屬切割與焊接、半導體晶圓的精密加工、印刷電路板，以及玻璃與塑膠顯示器的加工）正推動對雷射的進一步依賴。下一代消費性電子、虛擬與擴增實境，以及汽車產業的領導者，正尋求以雷射為基礎的 3D 感測來提升能力並開啟新應用。

We continue to invest in these new emerging applications to position us well with these various customers. Lumentum is a leader in Photonics technology that are critical enablers of these applications. And our investments in new products position us well for all of these future trends.

我們持續投資於這些新興應用，以便在各類客戶中建立良好布局。Lumentum 是光子技術領導者，而光子技術是上述應用的關鍵使能技術。我們在新產品上的投資，也讓我們能在這些未來趨勢中保持有利位置。

Demand from China continues to be strong and new network tenders are being awarded for additional network buildouts throughout calendar 2017. North America Metro network deployments have transitioned from trials to large city buildouts. Hyperscale data center operators continue to plan major 100G upgrades and we believe that we are well-positioned as the transition from 40G to 100G accelerates. Increasingly, network and data center operators around the world are critically dependent upon our products.

來自中國的需求持續強勁，且在 2017 年曆年期間，新的網路標案正陸續授標，用於進一步的網路建設。北美都會網路部署已從試驗階段轉向大型城市建置。超大規模資料中心營運商持續規劃大規模 100G 升級，我們相信隨著 40G 向 100G 的轉換加速，我們具備良好競爭位置。全球各地的網路與資料中心營運商，正日益高度依賴我們的產品。

While we have added significant manufacturing capacity over the past year, we continue to be capacity limited across many of our product lines. We continue to experience challenges with some of our suppliers meeting our demand, which is also affecting our ability to meet our customers demand.

雖然過去一年我們已大幅增加製造產能，但在多條產品線上仍持續受限於產能。我們也持續面臨部分供應商無法滿足我們需求的挑戰，這同樣影響我們滿足客戶需求的能力。

Telecom strength was driven by strong growth in a ROADM products and transmission components including tunable lasers and modulators for 100G systems. Additionally, we saw a return to strength in our submarine business, as we had predicted.

電信業務的強勁表現，主要來自 ROADM 產品以及傳輸元件（包括用於 100G 系統的可調式雷射與調變器）的強勁成長。此外，正如我們先前預期，我們的海底業務也恢復強勢。

ROADM revenue grew 17% quarter on quarter, and 97% year over year driven by strong demand for blade level TrueFlex products. ROADMs are not only critical to North America metro builds that are underway and most network operators around the world are shifting to more advanced architectures that rely on the functionality of our TrueFlex ROADM products. Based on engagements with customers and network operators in China, we continue to expect that China will begin significant ROADM deployments in the next calendar year.

ROADM 營收較前一季成長 17%，較去年同期成長 97%，主要由刀鋒層級（blade level）TrueFlex 產品的強勁需求所帶動。ROADM 不僅對正在進行的北美都會網路建置至關重要，全球多數網路營運商也正轉向更先進、仰賴我們 TrueFlex ROADM 產品功能的架構。基於我們與中國客戶及網路營運商的互動，我們仍預期中國將在下一個曆年開始大規模部署 ROADM。

Datacom revenue, while up 24% year on year, declined 6% sequentially driven by decline in our 100G transceiver revenue. Demand for our Datacom products was and continues to be extremely strong, but during Q1, we encountered a quality problem with an electronic component that we sourced externally.

數據通訊（Datacom）營收雖較去年同期成長 24%，但因 100G 收發器營收下滑而較前一季下降 6%。我們 Datacom 產品的需求一直且仍然非常強勁，但在第一季，我們遇到一項外部採購的電子元件品質問題。

The supplier quality issue negatively impacted our ability to meet our customers' demand and impacted our first-quarter revenue by approximately $10 million. The supplier has implemented corrective actions to rectify the issue. We've recently resumed shipments of our 100G products that were affected by this supplier problem and we are again ramping to meet our strong customer demand.

該供應商品質問題不利於我們滿足客戶需求，並使第一季營收約減少 1,000 萬美元。供應商已採取矯正措施以解決該問題。近期我們已恢復出貨受此供應商問題影響的 100G 產品，並再次提升產能以滿足強勁的客戶需求。

For lower speed Datacom products, we actually saw an increase in 40G revenue, however we continue to see strong pricing pressure, with prices aggressors in the market focused on maintaining market share. Commercial lasers revenue was up 12% year over year, but declined 2% sequentially. Kilowatt fiber laser revenue was up 15% sequentially to new record levels, but offsetting this were declines in other laser products.

在較低速的 Datacom 產品方面，我們實際上看到 40G 營收增加；然而，我們仍持續面臨強烈的價格壓力，市場中的積極降價者專注於維持市占率。商用雷射營收較去年同期成長 12%，但較前一季下降 2%。千瓦級光纖雷射營收較前一季成長 15%，創下新高，但其他雷射產品的下滑抵銷了部分增幅。

This is a very exciting time for us. Demand continues to grow for bandwidth and speed across the world's data centers and the communication networks that connect them. Manufacturers around the world are increasingly using advanced laser-based techniques. Global consumer electronic leaders look to laser-based 3-D sensing capabilities for next-generation applications. We believe we are well positioned with our new products, customer relationships, design wins and our ability to execute. I will now hand it over to Aaron for more details on our financial results and our guidance for the second quarter FY17.

對我們而言，這是一個非常令人振奮的時刻。全球資料中心以及連結它們的通訊網路，對頻寬與速度的需求持續成長。全球製造商也日益採用先進的雷射技術。全球消費性電子領導廠商則仰賴以雷射為基礎的 3D 感測能力，以實現下一代應用。我們相信，憑藉新產品、客戶關係、設計導入（design wins）以及執行能力，我們具備良好布局。接下來我將把電話交給 Aaron，請他更詳細說明我們的財務結果，以及 2017 會計年度第二季的展望。

Thank you, Alan. Net revenue for the first quarter was at $258.1 million and exceeded the high-end of guidance. First-quarter revenue increased 7% sequentially and 21% compared with the same period last year. GAAP gross margin was 31.7% and decreased 120 basis points quarter-on-quarter. GAAP operating margin was 6.5% and GAAP diluted net loss per share was $0.06.

謝謝你，Alan。第一季淨營收為 2.581 億美元，超出指引上緣。第一季營收較前一季成長 7%，較去年同期成長 21%。GAAP 毛利率為 31.7%，較前一季下降 120 個基點。GAAP 營業利益率為 6.5%，GAAP 稀釋後每股淨損為 0.06 美元。

GAAP diluted net loss per share includes a $22.7 million non-cash expense related to the derivative liabilities associated with the conversion feature of our Series A preferred stock. The liability amount adjusts upward with increases in our stock price, the corresponding offset is to other expense within the GAAP income statement. Our first-quarter non-GAAP gross margin was 34.2% and increased 10 basis points relative to the prior quarter. The sequential increase was driven by a 20 basis point improvement in optical communication gross margin.

GAAP 稀釋後每股淨損包含 2,270 萬美元的非現金費用，該費用與我們 A 系列優先股轉換條款所相關的衍生負債有關。該負債金額會隨著股價上升而向上調整，相對應的抵銷項列於 GAAP 損益表中的其他費用。我們第一季非 GAAP 毛利率為 34.2%，較前一季增加 10 個基點。此一序列增幅主要由光通訊毛利率改善 20 個基點所帶動。

As Alan highlighted, the supplier quality issue in the first quarter for our 100G Datacom business negatively impacted revenue and gross margin. Also negatively impacting gross margin were inventory reserves associated with lower speed 10G Datacom products, which will reach end-of-life soon.

如 Alan 所強調，第一季我們 100G Datacom 業務的供應商品質問題，對營收與毛利率造成負面影響。此外，與較低速的 10G Datacom 產品相關的存貨備抵（該產品即將進入生命週期終止）也對毛利率造成負面影響。

Non-GAAP operating margin for the first quarter was 12.7% and exceeded the upper end of our guidance range. Our operating margin expanded 110 basis points sequentially as gross profit dollars grew faster than operating expenses. Non-GAAP earnings-per-share was $0.49 based on the fully diluted share count to $62.4 million and also exceeded the upper end of our guidance. These earnings include $200,000 of other income and $2.2 million of tax expense.

第一季的非 GAAP 營業利益率為 12.7%，並且高於我們財測區間的上緣。由於毛利金額成長快於營業費用，我們的營業利益率較前一季擴大 110 個基點。非 GAAP 每股盈餘為 0.49 美元，係以完全稀釋後股數計算、對應約 6,240 萬股，亦高於我們財測上緣。這些獲利包含 20 萬美元的其他收益以及 220 萬美元的所得稅費用。

Now, for some additional detail. Optical communications revenue was $218.3 million, an increase of 9% over the prior quarter driven by a $20.5 million or 14% increase in telecom revenue, which was offset by a $2.8 million or 6% decrease in Datacom revenue and a $600,000 or 7% decrease in industrial and consumer revenues. Optical communications gross margin at 32.5% increased 20 basis points sequentially from higher volume and the mix of products.

接著補充一些細節。光通訊營收為 2.183 億美元，較前一季成長 9%，主要由電信營收增加 2,050 萬美元（或 14%）所帶動；但部分被 Datacom（資料通訊）營收減少 280 萬美元（或 6%）以及工業與消費性營收減少 60 萬美元（或 7%）所抵銷。光通訊毛利率為 32.5%，較前一季提高 20 個基點，主要來自出貨量提升及產品組合的影響。

Commercial lasers revenue at $39.8 million, a decrease of $700,000 quarter on quarter. In the first quarter, fiber laser revenues increased 15% to a record $17.2 million. Commercial lasers gross margin at 43.2% was flat with the prior quarter. We had three customers that each contributed 10% or more of our first-quarter revenue which was consistent with last quarter.

商用雷射營收為 3,980 萬美元，較前一季減少 70 萬美元。第一季光纖雷射營收成長 15%，達到創新高的 1,720 萬美元。商用雷射毛利率為 43.2%，與前一季持平。我們有三位客戶各自貢獻第一季營收的 10% 或以上，與上一季一致。

Operating expenses totaled $55.5 million or 21.5% of revenue compared with last quarter at $54.4 million or 22.5% of revenue. R&D expense was $33.8 million and SG&A expense, $21.7 million. Income tax expense was $2.2 million for the quarter and equated to an effective non-GAAP tax rate of 7%.

營業費用合計 5,550 萬美元，占營收 21.5%；相較之下，上一季為 5,440 萬美元，占營收 22.5%。研發費用為 3,380 萬美元，銷售、一般及行政（SG&A）費用為 2,170 萬美元。本季所得稅費用為 220 萬美元，折合有效非 GAAP 稅率為 7%。

As we go forward, we expect the non-GAAP tax rate to be in the range of 7% to 10%. Capital equipment additions were approximately $24 million in the first quarter. In addition to expanding capacity for telecom and Datacom products, we're also adding equipment to prepare for emerging 3-D sensing applications. Our cash balance was $166.8 million at the end of the first quarter, an increase of $9.7 million over the fourth quarter of FY16.

展望未來，我們預期非 GAAP 稅率將落在 7% 至 10% 的區間。第一季資本設備新增約 2,400 萬美元。除了擴充電信與 Datacom 產品的產能外，我們也在添購設備，以因應新興的 3D 感測應用。我們在第一季末的現金餘額為 1.668 億美元，較 FY16 第四季增加 970 萬美元。

Now on to our guidance for the second quarter of FY17, noting that all projections are on the non-GAAP basis. We project net revenue for the second quarter to be in the range of $258 million to $270 million with operating margin in the range of 12.4% to 13.7% and earnings per share to be in the range of $0.47 to $0.55. From a segment perspective, we expect commercial laser revenue to be down in the second quarter due to seasonal weakness from micro materials processing laser demand and also timing of customer projects and project transitions. We expect our optimal communications revenue to more than offset the decline for commercial lasers. Also, as we continue to invest in new products, our OpEx could trend up a bit to meet the timing and needs of our customers. Now, I will turn the call back over to Chris to begin the Q&A session.

接著說明 FY17 第二季的財測，並提醒所有預估皆以非 GAAP 基礎呈現。我們預估第二季淨營收將介於 2.58 億至 2.70 億美元，營業利益率介於 12.4% 至 13.7%，每股盈餘介於 0.47 至 0.55 美元。以事業別來看，我們預期第二季商用雷射營收將下滑，原因包括微材料加工雷射需求的季節性疲弱，以及客戶專案時程與專案轉換的影響。我們預期光通訊營收將足以抵銷商用雷射的下滑。此外，隨著我們持續投資新產品，為配合客戶時程與需求，我們的營業費用可能會略為上升。接下來我把電話交回 Chris，開始問答環節。

Thank you, Aaron. I would like to ask everyone to limit discussion to one question and one follow-up. Vince, let's begin the question-and-answer session.

謝謝你，Aaron。我想請大家將討論限制在一個問題與一個追問。Vince，我們開始問答環節。

Thank you, sir.

謝謝您。

(Operator Instructions)

（接線員指示）

Alex Henderson, Needham & Company.

Alex Henderson，Needham & Company。

Thanks, guys. Let me just start off with a couple of clarifications, because you left some stuff out on a limb there a little bit. The charge -- or the cost of revenues of $10 million in the quarter, was that resolved before the end of the quarter or was that resolved after the end of the quarter and if it was after the end of the quarter, is there a similar divot or some portion of divot in the current quarter as a result of the resolution timing?

謝謝，各位。我先做幾點釐清，因為你們有些內容講得有點懸而未決。本季 1,000 萬美元的費用——或說銷貨成本的 1,000 萬美元——是在季末之前就解決了，還是在季末之後才解決？如果是在季末之後才解決，那麼因為解決時點的關係，本季是否也會有類似的缺口，或缺口的一部分？

Yes Alex, it didn't get resolved during the quarter. I think we've determined root cause with the supplier and corrective action was implemented, but wasn't proven out until a couple of weeks ago. So, there is, to use your terminology a divot in Q2. But nowhere near the size of what our impact was in Q1. So we are back to full production and ramping up today so, it was probably the first two plus weeks of impact where we had much lower volume output than our capacity would have been able to do.

是的，Alex，這件事在當季並沒有解決。我們認為已與供應商找出根本原因並採取了矯正措施，但直到幾週前才驗證完成。所以，用你的說法，第二季確實會有一個「凹洞」。但規模遠小於第一季對我們造成的影響。我們現在已恢復滿載生產並正在爬坡；大概是前兩週多的期間受到影響，當時的產出量遠低於我們的產能所能達到的水準。

So $2 million or $3 million kind of hit in the quarter, this quarter?

所以本季大概是 200 萬或 300 萬美元左右的影響？

It probably was more than that.

可能比那還多。

Okay. The second question --

好的。第二個問題——

But just keep in mind, we have been adding capacity. So you know, maybe $5 million of impact of lost revenue this quarter, but on a higher capacity base.

不過請記得，我們一直在增加產能。所以你知道，這一季可能有大約 500 萬美元的營收損失影響，但那是在更高的產能基礎之上。

Right, I understand. The second one was -- just to get some clarification, there was a charge of inventory for writing down the 10 gig stuff, can you give us a scaling of that?

對，我了解。第二個是——想再釐清一下，針對 10G 相關產品有一筆存貨跌價的費用，你們能否提供一下規模？

It was roughly 50 to 80 basis points in terms of impact of gross margin.

以對毛利率的影響來看，大約是 50 到 80 個基點。

Okay. So that's nonrecurring, it's not going to occur again this quarter?

好的。所以那是一次性的，本季不會再發生？

That's correct.

沒錯。

So, that's all in, in the prior quarter?

所以都已經反映在上一季了？

All in the prior quarter.

全部都在上一季。

Okay, so now that I've got that out of the way, if I could just ask a question on the business. The ROADM business obviously grew quite strong, TrueFlex up 11% sequentially. I assume that's tracking to capacity additions, could you give us some sense of what the trajectory on capacity additions will be over the next couple of quarters there and have you seen any evidence of the qualification of the WSS card over at (inaudible) yet in the field?

好，那我把這些先釐清之後，如果可以我想問一個關於業務的問題。ROADM 業務顯然成長很強，TrueFlex 較前一季成長 11%。我猜這是在追隨產能擴增的節奏；你們能否談談未來幾季產能擴增的走勢？另外，你們是否已在現場看到（聽不清）那邊的 WSS 卡完成認證的任何跡象？

Well, let me answer the first question, we are adding capacity, we added capacity last quarter. Our revenue is just below the peak level that we had in 2011. So as we predicted, you know, we're getting back to that point of where we were in 2011.

我先回答第一個問題：我們正在增加產能，上季也增加了產能。我們的營收目前略低於 2011 年的高峰水準。因此如同我們先前預期的，我們正回到 2011 年時的那個水準。

And as we really look at what's happening in China with the ROADM deployments, we will be adding more capacity. But at this time, we're pretty happy with where we are and with a slight amount of additional capacity coming online this quarter, I think it will really be up to what I learn on my trip to China in a few weeks as to when those deployments happen. So, we will make further decisions at that point to add capacity. As for your second question about our competitor being qualified, I really -- our customers don't tell us. But from what I can tell from the polls and the demand, I'd say that we still have the vast majority, if not all of the demand.

而當我們觀察中國 ROADM 部署的進展時，我們會再增加更多產能。但就目前而言，我們對現況相當滿意；本季會有少量新增產能上線。我認為接下來要看我幾週後去中國出差時所了解的情況，部署何時發生，屆時我們會再做進一步擴產的決策。至於你第二個問題，關於競爭對手是否已通過認證，我真的——客戶不會告訴我們。但從我能看到的訂單與需求來看，我會說我們仍掌握絕大多數、甚至可能是全部的需求。

Okay. I'll seed the floor, thank you.

好的，我把時間留給其他人，謝謝。

Thanks, Alex.

謝謝你，Alex。

Michael Genovese, MKM Partners.

Michael Genovese，MKM Partners。

Great, thanks a lot. Could you just repeat what you said about the commercial lasers? I think it was a little bit weaker than I expected in quarter, but also did you say would be sequentially down again in the second quarter?

很好，謝謝。你能否重複一下你剛才對商用雷射的說法？我覺得本季表現比我預期稍弱；另外你是不是也說第二季還會再較前一季下滑？

Yes, hi Mike. This is Aaron. We did say would be down a little bit during the second quarter, seasonably not a great time for the materials processing demand.

是的，Mike 你好。我是 Aaron。我們確實說過第二季會小幅下滑，因為就季節性而言，材料加工需求在這段時間通常不是很強。

I mean, besides just down, any other help quantifying how much?

我是說，除了「下滑」之外，能否再幫忙量化一下大概會是多少？

Probably going to be down 15% or so sequentially.

大概會較前一季下滑 15% 左右。

Got it. So then, if we sort of take that into account as well as the Datacom, if I could ask more in the Datacom 100G issue, was that in CFP2 where you were having some success last quarter? Was that the product that had the issue?

了解。那麼，如果把這點以及 Datacom 一起納入考量，我想再問 Datacom 的 100G 問題：那是發生在你們上季在 CFP2 上取得一些進展的那個產品嗎？是那個產品出了問題嗎？

Unfortunately, it impacted many of our 100G including CFP2 [core], and one of our QSFP28 products. So it was quite impactful across the board, we were able to spring it forward in many cases, but at the end of the day, we were not able to continue in production with the part that we had, it needed to be fixed. So it was a broad issue of a common component that was common to many of our 100 gig Datacom products.

不幸的是，它影響了我們多個 100G 產品，包括 CFP2（核心）以及我們的一款 QSFP28 產品。因此影響相當廣泛；在許多情況下我們能把進度往前趕，但最終我們無法繼續使用當時的那個零件進行生產，它需要被修正。這是某個共用元件的廣泛性問題，而該元件被多個 100G Datacom 產品共同使用。

Right. So it seems like if anything, it's surprising here to investors. It's probably that -- I mean the quarter looks pretty good but that you -- as revenue guide maybe not quite as big as people thought it would. But when we account for the impact, the ongoing impact in Datacom and the commercial lasers decline, I guess it makes the [opticalcom] guidance look better. And I guess my question to you is just on these major end markets of China, Datacom and the US Metro. Have you seen anything that weaker in the last month or two? Anything that you are seeing worrying you in any of those markets or do you feel just as good or better than before?

對。所以看起來如果說有什麼讓投資人意外的地方，可能是——我的意思是這一季看起來相當不錯，但你們——在營收指引上也許沒有大家原先想的那麼大。不過當我們把 Datacom 的影響、以及商用雷射的持續下滑影響納入考量後，我想這反而讓 [opticalcom] 的指引看起來更好。我想我對你們的問題是，針對中國、Datacom，以及美國都會網（US Metro）這些主要終端市場，你們在過去一兩個月有看到任何更疲弱的跡象嗎？在這些市場中，有沒有任何讓你們擔心的現象，還是你們覺得跟之前一樣好、甚至更好？

I feel really good about all the markets. I think mainly due to our position in the market. And so if you look at China, our modulators and tunable lasers, both hit record high for 100 gig components, so we're doing quite well there. ROADMs, we have a very good share of the spend in North America and then, I'd say on Datacom, it was just super unfortunate that we ran into this issue. But our mindset with our customer was we'd rather fix the problem and ship quality parts then ship something that would be at risk to be a field issue. So we together made the decision to not ship that product and get it fixed, and now it's fixed and I'd say that we'll be back up to our normal full capacity run rate by the early part of November.

我對所有市場都感覺非常好。我認為主要是因為我們在市場中的定位。所以如果你看中國，我們的調變器與可調式雷射，在 100G 元件上都創下歷史新高，所以我們在那邊表現相當不錯。ROADM 方面，我們在北美的支出中占有非常好的份額；至於 Datacom，這次只是非常不幸地遇到這個問題。但我們和客戶的心態是：我們寧可把問題修好、出貨高品質的零件，也不要出貨可能在現場（field）造成問題的產品。所以我們一起做了決定，先不要出貨那個產品，先把它修好；現在已經修好了，我想我們在 11 月初就會回到正常的滿載產能運行水準。

Okay. Excellent. And last quick one for me. On ROADMs, are you back up to your all-time cycle high that you had seen before and does that mean you be ahead of your expectations that you had previously set in the December quarter?

好的。非常好。我最後一個快問：在 ROADM 方面，你們是否已經回到之前看到的歷史週期高點？如果是，是否代表你們在 12 月那一季會超出先前設定的預期？

We are just below it, but a hair below it. Less than 10% below it, and certainly expect that over the next several quarters we'll bust through that. Especially as China comes online with ROADM deployment. I'm gaining confidence in that happening.

我們目前略低於那個水準，但只差一點點。低於不到 10%，而且我們確實預期在接下來幾個季度會突破那個水準。尤其是當中國開始上線部署 ROADM 時。我對這件事會發生的信心正在提升。

Great. Thanks a lot.

太好了。非常感謝。

Thanks, Mike.

謝謝你，Mike。

James Kisner, Jefferies.

James Kisner，Jefferies。

Yes, thank you very much. My first question -- I'd like to drill down a little bit on 3-Ds (inaudible) comments you made, I joined the call a little bit late so I apologize if you gave some of this detail. Your former sister company was saying that pretty much all the major phone OEMs would likely be looking at 3-D sensing, probably the second half of next year that would be ramping for many OEMs. I'm wondering if you have the same view and could you verify the dollar content per phone opportunity that you think is coming from that for you?

是的，非常感謝。我第一個問題——我想針對你剛才提到的 3-Ds（聽不清）評論再深入一點。我稍晚才加入電話會議，所以如果你已經講過其中一些細節，我先致歉。你們之前的姊妹公司表示，幾乎所有主要手機 OEM 很可能都會導入 3-D 感測，可能在明年下半年會對許多 OEM 開始放量。我想知道你們是否也有同樣看法？以及你能否確認你們認為每支手機的美元含量（dollar content）機會大概會是多少？

I don't know that we have a sister company. But --

我不知道我們有什麼姊妹公司。不過——

(inaudible) I'm talking about, to be clear.

（聽不清）我指的是哪一家，先說清楚。

I'm [totally] joking. I would say that the customers that we're working with are super secretive and for us to talk about the dollar content per phone or other kind of device or augmented reality or automobile would be premature at this time and I would say there's a lot of activity going on. We are increasing our R&D spend, we're spending capital in anticipation of being successful. So I would say hold tight and in the January earnings call we will give you a better update at that time.

我是在 [完全] 開玩笑。我會說，我們正在合作的客戶都非常保密，因此現在談每支手機或其他裝置、擴增實境或汽車的美元含量，時機還太早。我會說目前有很多活動正在進行。我們正在提高研發支出，也在投入資本支出以因應我們預期的成功。所以我會說請先耐心等一下，在 1 月的財報電話會議上，我們會在那時給你更好的更新。

Okay. So, thank you for that. And just, we've been hearing some rumblings that there's been some issues with the Tomahawk Switch still looking for 100 gig, just wondering if you are seeing any evidence of that, does that create any risk from your perspective that the 100 gig QSFP28 ramp could be delayed, paused, or slowed?

好的，謝謝你的回覆。另外，我們聽到一些傳聞，說 Tomahawk Switch 仍在尋找 100G 的方案上遇到一些問題。我想問你們是否看到任何相關跡象？從你們的角度看，這是否會帶來風險，使 100G QSFP28 的放量可能延後、暫停或放緩？

I think it has been delayed and I think it has been paused, which is from my perspective, very good for us given that we had this challenge in the September/ October time frame with this component. So I don't think that we've lost any the ground with our hyperscale customers with respect to that, but it's a good thing. And don't think it's really even happening this quarter in a meaningful way. So much of our Datacom 100 gig products are really the client side of telecom networks and the CFP2 and CFP4 format, although QSFP28 is picking up, it's not getting to that hyperscale kind of volume this quarter that I would've expected three or four months ago. I would say, that there is lots of talk and we're adding capacity in anticipation that it happens early in the March and June quarter and so from my perspective, is not a bad thing that it got delayed.

我認為它確實已經延後了，而且我認為它也確實暫停了；從我的角度來看，這對我們非常好，因為我們在 9 月／10 月期間在這個元件上遇到挑戰。所以我不認為我們在這方面對超大規模（hyperscale）客戶有失去任何進展，反而是好事。而且我不認為這一季在實質上會有很明顯的進展。我們很多 Datacom 100G 產品其實是電信網路的客戶端（client side），採用 CFP2 與 CFP4 規格；雖然 QSFP28 正在起量，但這一季它還沒有達到我三、四個月前預期的那種 hyperscale 量級。我會說，市場上有很多討論，我們也在增加產能，預期它會在 3 月季與 6 月季的早期發生；所以從我的角度來看，它延後並不是壞事。

From your perspective, it's essentially resolved, like it's not continuing to cause a bottleneck for 100 gig QSFP28 demand?

從你的角度看，這基本上已經解決了嗎？也就是說，它不會再持續造成 100G QSFP28 需求的瓶頸？

It is today, I think. I think there's anticipation that will get resolved and be up and running in the first half of next year. I would say, as we said in the script, our 48 Datacom business was up last quarter which was somewhat of a surprise, but I would say there is no indication that I have that the first half of next year won't be a transition to 100 gig in a major way.

我認為今天它仍然是（瓶頸）。我想市場預期它會被解決，並在明年上半年恢復運作。我會說，正如我們在講稿中提到的，我們的 48 Datacom 業務上季是成長的，這多少有點出乎意料；但我會說，我沒有看到任何跡象顯示明年上半年不會以重大方式轉向 100G。

And lastly on the capacity constraints you are seeing with some of your suppliers. Are you getting the sense that there's a lot of activity that these are going to be alleviated, is your supply chain getting more aggressive and getting some of these [selective strain] to loosen up here in the next couple quarters or is demand just so strong you're not likely to catch up anytime soon?

最後一個問題，關於你們在部分供應商那邊看到的產能限制。你們是否感覺到有很多動作正在進行、這些限制將會緩解？你們的供應鏈是否變得更積極，讓一些（聽不清，[selective strain]）在接下來幾個季度鬆動？還是需求太強，你們短期內不太可能追上？

I think we are working with these key suppliers, I think the surprises that get us, but we are working with everyone that's critical to the ramp that we're expecting, to put buffer inventory in front of our factories and be able to have the flexibility when our customer mix changes. Which you know, in tight situations when the mix changes it's hard to up flex. But we are working to try to get those suppliers to increase their capacity and put the VMI inventory in front of our factories. So I would say that we will have that taken care of as we get into the big ramp and the hyperscale 100 gig stuff.

我認為我們正在與這些關鍵供應商合作。我想讓我們意外的事情仍會發生，但我們正與所有對我們預期放量至關重要的夥伴合作，在工廠前端建立緩衝庫存，並在客戶組合變動時保有彈性。你知道，在供應吃緊的情況下，一旦組合改變就很難向上彈性調整。但我們正在努力讓這些供應商提升產能，並在我們工廠前端建立 VMI 庫存。所以我會說，當我們進入大幅放量、以及 hyperscale 的 100G 產品時，這些問題會被處理好。

Thank you very much.

非常感謝。

Thanks James.

謝謝你，James。

Troy Jensen, Piper Jaffrey.

Troy Jensen，Piper Jaffrey。

Thank you, and nice quarter, gentlemen.

謝謝你們，各位先生，這一季表現不錯。

Thanks.

謝謝。

Just back on 3-D sensing, it seems like everybody's uptick here. If we're going to assume this is a second-half opportunity should we think there's going to be preproduction volume hitting in the June quarter timeframe?

回到 3-D 感測，看起來大家都在上修。如果我們假設這是下半年的機會，我們是否應該認為在 6 月那一季的時間點會有前量產（preproduction）的出貨量出現？

Troy, I really would hesitate to give you guidance on that for multiple reasons. One is, customers don't want us to do that, and then number two, it could flip or it could pull in. And I think what we're doing is fully investing, building dedicated teams, buying capacity and capital and anticipation of it happening and if and when it does happen we will be ready. So, I wouldn't -- it'd be premature for me to tell you that there's major 3-D sensing in the June quarter.

Troy，我真的會很猶豫在這件事上給你指引，原因有幾個。第一，客戶不希望我們這麼做；第二，它可能往後延，也可能提前。我想我們正在做的是全力投資，建立專責團隊，購置產能與資本，預期它會發生；而一旦真的發生，我們就會準備好。所以，我不會——我現在告訴你 6 月那一季會有大量 3-D 感測，對我來說還太早。

Understood, that's fine. Can you also just give us an update on your ACO? I think previously we thought kind of shipping, or maybe shipping samples at the end of the year.

了解，沒問題。你也能否更新一下你們的 ACO？我記得之前我們認為可能在年底出貨，或至少在年底出樣品。

Yes. I'd say first of all, I think we're making tremendous progress with the single-chip solution at the wafer level and device level so we're very pleased with that. We are getting units, we're making units on our production line in our [SAVs] and in the CMs, so I think from that perspective we're really happy with that. I think we still will be giving data samples this quarter and early next year we'll be in production. And I think from my perspective the decision that we made to do the single-chip solution to provide a cost advantage is still the right decision and so I'm pretty happy with where we are. I think that said, just another data point around the components of 100 gig, is our 100 gig modulators and tunable lasers last quarter grew approximately 20% and we expect that to grow again this quarter. So both have markets to address and I think we're going to continue to see discrete components grow until the ACO market and ACO product costs come down to the point where I think our single-chip solution can get it.

可以。我先說，我認為我們在晶圓層級與元件層級的單晶片解決方案上取得了非常大的進展，我們對此非常滿意。我們正在取得（做出）產品，我們在自家產線、在我們的 [SAVs] 以及在代工廠（CMs）都在生產單位產品，所以從這個角度看我們非常開心。我認為我們這一季仍會提供資料樣品，而明年初我們會進入量產。從我的角度看，我們當初決定採用單晶片解決方案以提供成本優勢，仍然是正確的決定，所以我對目前進度相當滿意。話雖如此，再補充一個關於 100G 元件的數據：我們的 100G 調變器與可調式雷射在上季約成長 20%，而我們預期這一季還會再成長。所以兩者都有市場可以切入；我認為在 ACO 市場成熟、以及 ACO 產品成本下降到我們的單晶片解決方案能切入之前，我們仍會持續看到分立元件（discrete components）成長。

Okay. Last question for me and I'll seed the floor. Could you just give us some early thoughts on pricing, assuming you've probably started some dialogue with customers on what the ASP [rate] is going to look like for next year?

好的。這是我最後一個問題，之後我就把時間交回給大家。能否請你們先分享一些對定價的初步看法？假設你們可能已經開始和客戶對話，討論明年 ASP（平均售價）[幅度] 會是什麼樣子？

Don't think that we gave the data point for last quarter, but our average selling price last quarter was down about 2% and typically that quarter it's about 3.5% if you look back over the last few years. So we are starting to see the impact of better pricing reductions, if you will. And we are having discussions and settling agreements now because the customers want to make sure that they have the capacity allocated to them. So, I would say it's a better pricing environment and we're still going to have to get some pricing, but I think it's going to be better than it has been over the last several years.

我不認為我們有提供上一季的那個數據點，但我們上一季的平均售價大約下滑了 2%，而通常那一季如果回看過去幾年，大約是 3.5%。所以我們開始看到更好的降價幅度所帶來的影響（如果你要這麼說的話）。而且我們現在正在討論並敲定協議，因為客戶希望確保有產能分配給他們。所以我會說，定價環境正在改善，我們仍然得做一些價格調整，但我認為會比過去幾年好。

Thanks, gentlemen, keep up the good work.

謝謝各位先生，請繼續保持出色的表現。

Thanks, Troy.

謝謝你，Troy。

Simon Leopold, Raymond James.

接下來是 Raymond James 的 Simon Leopold。

Great, thank you very much. Couple of things I wanted to get into. One, Alan you did mention you are visiting China and you'll probably gather a little bit more intelligence and hopefully update us when you can. But in regards to the China ROADM opportunity, one of the things that we've heard is that the operators there are likely to deploy more traditional ROADMs rather than a CDC or TrueFlex form factor. Wanted to hear your perspective on that possibility and also to understand what would be the implications of the operators opting for more traditional rather than a next-gen ROADM form factor?

很好，非常感謝。我有幾點想深入了解。第一，Alan，你確實提到你會去中國拜訪，應該會蒐集到更多情報，也希望你方便時能更新給我們。針對中國的 ROADM 機會，我們聽到的一個說法是，那邊的營運商可能會部署較傳統的 ROADM，而不是 CDC 或 TrueFlex 的外形規格（form factor）。想聽聽你對這種可能性的看法，也想了解若營運商選擇較傳統而非新一代 ROADM 外形規格，會有哪些影響？

Yes, so there have been trials of both the traditional 1 x 9, and they are calling them Flex [Lite]. So they don't have the full TrueFlex capability, but certainly our TrueFlex ROADM meets the needs of that TrueFlex Lite. But there are also networks that are being deployed with our 21 x 20 technology and whether that's CDC or CD architecture is yet to be determined, I think. So I think we're positioned well for both. I think certainly on the twin 1 x 20, there's a whole lot less competition than a 1 x 9.

是的，目前兩種都有在做測試：傳統的 1 x 9，以及他們稱為 Flex [Lite] 的方案。它們沒有完整的 TrueFlex 能力，但我們的 TrueFlex ROADM 當然能滿足 TrueFlex Lite 的需求。另外也有一些網路正在採用我們的 21 x 20 技術來部署，至於那會是 CDC 或 CD 架構，我想目前還有待確定。所以我認為我們在兩邊的布局都不錯。我想特別是在雙 1 x 20 上，競爭比 1 x 9 少很多。

But we're cost effective at the kind of volumes we have to compete effectively with everybody on the 1 x 9 product and we have next-generation 1 x 9 low-cost edge ROADMs that should address the cost points that the rest of the world is looking for, including China. So I'm very happy with our position as the ROADMs start getting deployed in China.

不過以我們目前的量體來看，我們在 1 x 9 產品上也具備成本效益，能夠有效地和所有競爭者競爭；而且我們也有下一代 1 x 9 的低成本邊緣（edge）ROADM，應該能滿足全球（包含中國）所追求的成本點。所以當 ROADM 開始在中國部署時，我對我們的定位非常有信心。

And do you have an expectation or thought about which way they are leaning at this juncture?

那你們目前對他們此刻比較傾向哪一種，有沒有什麼預期或想法？

I think there's going to be both being deployed and I would think that over time -- one of the things about the China carriers is that they look at the North American networks and they say, we don't want to just be good enough, we want to be as good or best of class in the networks and so they are trying everything to shift as fast as they can to the CDC kind of network. And the question my mind is how fast can they make that transition and will the 1 x 9s suit some of the networks in some of the Metro areas versus the more TrueFlex type of architectures. And so I think there's room for both and I think we're positioned well for both.

我認為兩種都會部署。我也認為隨著時間推進——中國電信業者的一個特點是，他們會看北美的網路，然後說：我們不想只是「夠用」，我們要做到同級最佳甚至最好，所以他們正嘗試用盡可能快的速度轉向 CDC 類型的網路。我的問題是他們能多快完成這個轉換，以及 1 x 9 是否會適用於某些都會區的部分網路，相對於更 TrueFlex 類型的架構。因此我認為兩者都有空間，而我們在兩者上都具備良好定位。

Great. And then, in terms of the develop market trends, we get the sense that long-haul is probably slowing and may be slowing at a somewhat faster pace than we thought six months ago, and Metro is really just beginning. Could you help us understand the implications for your business. Is there a risk of a pause in the telco related transmission spending, so non-ROADM related spending as you shift from long-haul oriented to metro oriented spending. How you see that playing out over the next couple of quarters? Thanks.

很好。接著就已開發市場的趨勢而言，我們感覺長途（long-haul）可能正在放緩，而且放緩速度可能比我們六個月前想的更快，而都會（Metro）才剛開始。你能否協助我們理解這對你們業務的影響？當支出從偏長途轉向偏都會時，電信相關的傳輸支出（也就是非 ROADM 相關支出）是否有暫停的風險？你們怎麼看未來幾季的發展？謝謝。

Yes, well I think our perspective, we don't really care if it's a Metro deployment, by a transmission standpoint or a long haul. You know, we sell -- we have different varieties of modulators and tunable lasers that go both into the long haul as well as the Metro markets. And so, from our perspective, as long-haul goes down, Metro picks up, that's okay with us. We ship similar types of products, so we address both marketplaces. I would say that you're right, that it does looks like with spending from many of the carriers are moving from the long-haul core network out to the Metro and there's where the ROADM count is high, the transmission ports are high, and 10 gig [tunables] are high. So that's a product that today we're on allocation on, that we're trying to address. So, either way for us is fine. I do think you're right though as far as where the carriers are spending today. It's really more shifted to the Metro and I would say that the Metro is in the very, very early stages. There's been a few cities, less than a handful of cities that have been deployed and so, I think we're really in the early stages there.

是的，我想從我們的角度來看，從傳輸的角度我們其實不太在意是都會部署還是長途。你知道，我們銷售——我們有不同種類的調變器與可調式雷射（tunable lasers），同時用於長途與都會市場。所以就我們而言，長途下來、都會起來，對我們沒問題。我們出貨的產品類型相近，因此兩個市場我們都能服務。我會說你講得沒錯，許多營運商的支出看起來正從長途核心網路移往都會端；而那裡 ROADM 數量高、傳輸埠（ports）數量高、10G [可調式] 需求也高。這也是我們目前正在配額（allocation）供應、努力改善供給的一項產品。所以對我們來說不管哪一邊都可以。我確實同意你對營運商目前支出方向的看法：更偏向都會。而且我會說都會仍在非常、非常早期的階段。目前部署的城市只有少數，不到五個城市，所以我認為我們真的還在早期階段。

And one last one from me, please. Six months ago when we talked about the development of the QSFP28 market, the optics inside the data center, there was a lot of arguments and debates in the industry about what price points would look like at the end of this year, at the end of 2016. And what's your current view on what the pricing environment looks like versus what you thought it might look like six months ago? Thank you.

我最後一題。六個月前我們談到 QSFP28 市場的發展，也就是資料中心內部的光學元件，當時業界對於今年底、2016 年底的價格點會長什麼樣子，有很多不同的論點與辯論。你們目前對定價環境的看法，和六個月前你們原本以為的相比，有什麼不同？謝謝。

I don't think it changed much. I think we haven't been lowering prices, just because of capacity limitations and quite frankly, someone at CFP2, or CFP4, at higher ASP is a better deal for us. So we haven't seen a lot of change in expectation with regard to pricing. At the same time, we've been developing next generation QSFP28s to address that market, should it continue to be under pressure in the future. So I think we'll be ready for it, if and when it comes. I do think though that as the transition happens in the early part of next year, there is going to be a worldwide shortage of QSFP28s, and I hope that the pricing is rational at that time.

我不覺得有太大改變。我想我們沒有在降價，主要是因為產能限制；坦白說，做 CFP2 或 CFP4、以更高的 ASP 來看，對我們是更好的交易。所以我們對定價的預期沒有看到太多變化。同時，我們也在開發下一代 QSFP28 來因應該市場，以防未來持續承受壓力。所以我認為如果、以及當它發生時，我們會準備好。不過我確實認為，隨著明年初的轉換發生，全球會出現 QSFP28 的短缺，我希望那時候的定價是理性的。

Great, thank you for taking my questions.

很好，謝謝你回答我的問題。

Thanks, Simon.

謝謝你，Simon。

Doug Clark, Goldman Sachs.

接下來是 Goldman Sachs 的 Doug Clark。

Great, thanks for taking my question. I want to come back to some of the comments that you made on ROADM capacity in particular; I want to make sure I understood it correctly, in that it sounds like you're actually pausing capacity expansion on ROADMs until you get a better handle on what China demand looks like. Is that indeed true, and off that assumption, does that mean ROADM should stay at these, while elevated levels, somewhat flat?

很好，謝謝讓我提問。我想回到你剛才對 ROADM 產能的一些評論，特別是想確認我理解正確：聽起來你們其實正在暫停 ROADM 的產能擴張，直到你們更清楚中國需求會是什麼樣子。這確實是事實嗎？如果這個假設成立，是否意味著 ROADM 會在目前這種偏高的水準上，大致持平？

I think what I said was we're very close to the peak level we were five years ago and that we have committed to capital that's coming online and came online last quarter coming online this quarter. But that I think that we're satisfied until we see either signals that instead of two cities in a month there's going to be five cities in a month in the future. So, and then the China, with the incremental capacity that we need to pull the trigger on. But at the same time, we're working on productivity improvements, yield improvements to be able to get more out of the capital that we have online today. So I would expect that a 10% productivity improvement over the next six months without capital adds, which is common as a result of continuing down the learning curve.

我想我說的是：我們已非常接近五年前的峰值水準，而且我們已承諾的資本支出正在上線——上一季已上線一部分，這一季也會上線。但我認為在我們看到訊號之前，我們會先滿意於目前狀況；例如從「一個月兩個城市」變成未來「一個月五個城市」。然後中國那邊若需要額外產能，我們再去按下啟動鍵（pull the trigger）。同時，我們也在做生產力改善、良率改善，讓今天已上線的資本能產出更多。因此我預期未來六個月在不增加資本支出的情況下，生產力可提升 10%，這很常見，因為持續沿著學習曲線往下走就會發生。

Got it. Okay. Yes that make sense, that's helpful as well. Looking at the December quarter guide as well, in turn of operating margins, the midpoint is kind of flat to up sequentially on higher revenues, can you talk a little bit about the delta between gross margins expectations for next quarter? And you also have talked about a few different areas of OpEx investment, it's remained fairly contained in the past three quarters. What levels do think we are going to get to in terms of either absolute dollar or intensity here?

了解。好的。是的，這樣就說得通，也很有幫助。再看你們對 12 月季度的指引，就營業利益率而言，中位數在營收提高的情況下，序列上大致持平到小幅上升。你能否談談你們對下季毛利率預期之間的差異（delta）？另外你們也提到幾個不同的營運費用（OpEx）投資領域，過去三季 OpEx 一直控制得相當好。你們認為接下來 OpEx 會到什麼水準（不論是絕對金額或費用率/強度）？

Hi Doug, this is Aaron. So in terms of the Q1 results, we did 12.7% operating margin. OpEx was roughly 21.5%, we did see some good operating leverage. As we go forward, we mentioned we're going to be continuing to invest in new projects. As mentioned, we have 3-D sensing as well as other programs inside of [Opcon], the lasers we are continuously investing in. So OpEx is going to tick up a little bit in the December quarter and we think gross margins will as well. In terms of the midpoint of our guide, over 13%, compared to where we've been the last couple quarters and even four, five quarters ago. We think it's a huge improvement to where we've been. In terms of the longer-term model, we don't guide long-term. But we don't believe we are at the end of the stake here in terms of operating margins by any stretch of imagination. We're still targeting 14% to 15% operating margins as we go out six to eight quarters.

嗨 Doug，我是 Aaron。就第一季（Q1）業績而言，我們做到 12.7% 的營業利益率。營業費用（OpEx）約為 21.5%，我們確實看到一些不錯的營運槓桿。展望未來，我們提到會持續投資新專案。如同所說，我們有 3-D 感測以及 [Opcon] 內部的其他計畫，還有我們持續投資的雷射。因此，12 月季度 OpEx 會小幅上升，我們認為毛利率也會上升。以我們財測區間的中點來看，超過 13%，相較於過去幾個季度，甚至四、五個季度前的水準，我們認為這是非常大的改善。就長期模型而言，我們不提供長期指引。但我們完全不認為營業利益率已經到頂了。我們仍以未來六到八個季度達到 14% 到 15% 的營業利益率為目標。

Okay. That's helpful -- actually one additional follow-up, if I can. There have been a number of mixed data points just on hyperscale data center trends, in particular, from the ecosystem. It sounds like you're not necessarily seeing that, given some customer diversification and underlying demands for either 40 gig or 100 gig, is that a fair characterization that you're not seeing downward pressure or budget freezes?

好的。這很有幫助——如果可以的話，我還有一個追問。關於超大規模（hyperscale）資料中心趨勢，尤其是從生態系來看，有不少互相矛盾的數據點。聽起來你們不一定有看到那種情況，考量到一些客戶多元化，以及對 40G 或 100G 的底層需求；這樣描述是否合理，也就是你們沒有看到下行壓力或預算凍結？

I think, if you look historically, we've had very little exposure at 40 gig in the hyperscale data centers and most of our 40 gig Datacom stuff is going to our NEM customers and client-side components, or going into NEMs that didn't sell into enterprises. So I think from that perspective, our exposure to hyperscale has been very limited over the last year. So everything, as we transition to the 100 gig inside the data center is incremental to us, it doesn't cannibalize from prior products. So, I think as I said earlier, I think that the 100 gig, the transition has flipped from what we thought was going to be now into the first half of next year and everything from that perspective would be incremental to our available market. And, I think we're positioned pretty well. I do think there has been a pause and whether that's because of the Tomahawk chip or budget freezes or what have you, it's not clear to me. But I would say that every expectation I have is that the first half next year is when the transition really happens in a meaningful way.

我想，如果回顧歷史，我們在超大規模資料中心的 40G 曝險一直很小；我們大部分 40G 的 Datacom 產品是供給我們的 NEM 客戶與客戶端元件，或是供給那些不賣給企業端的 NEM。因此從那個角度來看，我們過去一年對 hyperscale 的曝險非常有限。所以，當我們在資料中心內轉向 100G 時，對我們而言都是增量，不會侵蝕既有產品。我想如我先前所說，100G 的轉換時點已從我們原先以為的「現在」延後到明年上半年，而從這個角度來看，所有需求都會是我們可服務市場的增量。而且我認為我們的布局相當不錯。我確實認為市場有一段暫停期；至於是因為 Tomahawk 晶片、預算凍結或其他原因，我也不清楚。但我會說，我的所有預期都是：明年上半年才是這個轉換真正以有意義的方式發生的時點。

Great. Thanks very much.

很好。非常感謝。

Thanks, Doug.

謝謝，Doug。

Rod Hall, JPMorgan.

JPMorgan 的 Rod Hall。

Hi guys, thanks for taking the question. I guess I just wanted to start on telecom, the total telecom revenue number, it looks like is up about $21 million, and your ROADM number on your 17% growth, I guess up about $9 million. So at least $12 million of increase from non-ROADM business and I just wondered, is that all mostly metro increasing? Can you just give us some color within that non-ROADM increase and what's going on there? I also wanted to talk about the -- whenever this Datacom ramp, the QSFP28 happens, I'd be curious to know if you'd handicapped it, Alan, more in Q1 or more in Q2. Which of those is two is more likely in your mind for a significant ramp? But beyond that, do you think there's sustainability in that demand or do you think we'll see a big pulse of demand and then it fall off again? Curious what you think there.

嗨各位，謝謝讓我提問。我想先從電信（telecom）開始，整體電信營收看起來增加約 2,100 萬美元，而你們 ROADM 的數字在 17% 成長下，看起來增加約 900 萬美元。所以至少有 1,200 萬美元的增量來自非 ROADM 業務；我想了解那是否主要是都會（metro）在增加？能否就這個非 ROADM 的增量提供一些細節，說明那邊發生了什麼？另外我也想談談——當 Datacom 的拉升、也就是 QSFP28 的放量發生時，我想知道你（Alan）怎麼判斷：比較可能在 2017 年曆年第一季（Q1）還是第二季（Q2）出現顯著放量？你心中哪一季更可能出現明顯的 ramp？此外，你認為那個需求具有延續性嗎？還是會先出現一波很大的需求脈衝，然後又再度下滑？想聽聽你的看法。

And then lastly, in 3-D sensing are people going around saying there's a (inaudible) there's a lot of competition for that? And that the margins therefore would be unsustainable, could you just comment on that? I assume you disagree with that. But why do you disagree, is it difficult to make these VCSELs, can some of the other competitors not make the same quality product, et cetera? Thanks.

最後，在 3-D 感測方面，外面有人在說（聽不清）那裡競爭很激烈，因此毛利率將難以維持；你能否評論一下？我猜你不同意這種說法。但你為什麼不同意？是這些 VCSEL 很難做嗎？或是其他競爭對手做不出同樣品質的產品等等？謝謝。

Okay, thanks, Rod. Let me take a shot at the non-ROADM telecon growth last quarter. I would say we did see strength in the 100G components, both modulators and tunable lasers. And we saw a rebound in our submarine revenue in the quarter. I'd say those are probably the two major drivers outside of ROADMs. Did I miss anything here?

好的，謝謝 Rod。我先嘗試回答上一季非 ROADM 的電信成長。我會說，我們確實看到 100G 元件的強勁需求，包括調變器（modulators）與可調式雷射（tunable lasers）。另外，我們在本季也看到海底電纜（submarine）營收回升。我想這兩項大概是 ROADM 以外的兩個主要驅動因素。我有漏掉什麼嗎？

That's basically it.

基本上就是這些。

As far as QSFP28 ramp timing. I would say probably count on second quarter of calendar 2017, but that we would expect some initial ramp up in the first quarter to the QSFP28. I would say, but it's probably sustainable. When we were on the front end of the 40 gig transition in hyperscale, where we had exposure to a large hyperscale customer, and it's in our form 10, we saw that business sustain for a year plus. And the only reason it didn't sustain longer than that was we were relying on an outside source for our optical sub-assemblies. And the 100G space we are all 100% vertically integrated, we think we'll have a competitive advantage from a cost standpoint, we would expect that to go on for multiple years. Until the 400 gig or 200 gig transition takes place.

至於 QSFP28 放量的時點，我會說大概可以預期在 2017 年曆年第二季，但我們也預期第一季會開始有一些初步的 QSFP28 拉升。我會說，這應該是可持續的。當我們在 hyperscale 的 40G 轉換初期、且我們對某個大型 hyperscale 客戶有曝險時（這在我們的 Form 10 裡有揭露），我們看到那項業務持續了一年以上。之所以沒有持續更久，唯一原因是我們當時仰賴外部來源提供光學次組件（optical sub-assemblies）。而在 100G 領域，我們是 100% 垂直整合，我們認為在成本面會有競爭優勢，因此預期這會持續好幾年，直到 400G 或 200G 的轉換發生為止。

And last question on the competition on 3-D sensing, we have competition in everything that we do. I think our advantage is that we've been in the 3-D sensing business for eight or nine years, we understand the consumer side of the market and we understand high-volume manufacturing for that space. And, we have a track record of extremely high reliability of those products and data to back that up. So, I think that gives us a competitive advantage from the other guys who may claim that they have a lot of capabilities in VCSELs as well as edge-emitters.

至於最後一題：3-D 感測的競爭。我們做的每一件事都有競爭。我認為我們的優勢在於，我們在 3-D 感測業務已經做了八、九年，我們了解消費性市場端，也了解該領域的高產量製造。而且我們在這些產品上有極高可靠度的實績，並且有數據可以佐證。所以我認為，這讓我們相較於其他可能宣稱自己在 VCSEL 以及邊射型（edge-emitters）也有很多能力的廠商，具備競爭優勢。

I just wanted -- on your answer in the first question, Alan, to come back to that. With regard to Metro, has anything changed in terms of your thinking on the acceleration of the deployment there? And can you kind of just say, it's only a couple cities down so [we understand it well]. But where do we see the real ramp in this to multiple cities accelerating? Do we see it that Q1, do we see it late this quarter? What do think is happening on timing there?

我想——針對你在第一題的回答，Alan，我想再回到那點。關於都會（Metro），你對那邊部署加速的看法有任何改變嗎？你能否大概說一下，目前只有少數幾個城市在推進，所以 [我們很了解]。但我們何時會看到真正的放量，擴展到多個城市並加速？會是在第一季（Q1）嗎？會是在本季稍晚嗎？你認為時程上正在發生什麼？

I'd say that I've had expectations probably that it would have been even more aggressively deployed than what we're seeing both from the second half of calendar 2016 as well as what we're being told for the first half of 2017. But that I think is a result of really stretching out the deployment, if you recall, last couple of calls, we've been saying maybe a two and a half to three year deployment, I think it's more probably like a 4 plus year deployment. And I think that, that's a good thing for us, by the way, so we don't have to continue to spend so much capital to meet the ramp of the North America Metro and China combined. So I think that's not a bad thing for us. But I'd say it's probably slower than what we had hoped for and what we had expected.

我會說，我原本的預期可能是部署會比我們目前看到的更積極——不論是 2016 年曆年下半年，或是我們被告知的 2017 年上半年。但我認為這是因為部署時程被拉長了；如果你還記得，過去幾次電話會議我們一直說可能是 2.5 到 3 年的部署，我現在認為更可能是 4 年以上的部署。順帶一提，我覺得這對我們是好事，因為我們不必為了同時滿足北美 Metro 與中國的放量，而持續投入那麼多資本支出。所以我認為這對我們不算壞事。但我會說，速度可能比我們希望的、以及我們原先預期的要慢一些。

Great. Okay, thank you.

很好。好的，謝謝你。

Thanks, Rod.

謝謝，Rod。

Patrick Newton, Stifel.

Stifel 的 Patrick Newton。

Alan and Aaron, thank you for taking my questions. I guess on the electrical component issue, was that across CFP2-4 and QSFP28 product families? And then given the full capacity resumption in the November timeframe, can you help us understand what amount of revenue is left on the table relative to the $10 million you cited for the September quarter?

Alan 和 Aaron，謝謝回答我的問題。我想問關於電性元件（electrical component）問題，那是涵蓋 CFP2-4 與 QSFP28 產品家族嗎？另外，考量到你們在 11 月左右恢復滿載產能，你能否協助我們理解：相較於你們提到 9 月季度少了 1,000 萬美元，現在還有多少營收等於是「留在桌上」沒有拿到？

Yes, so it was on the CFP2, CFP4, and one of our QSFP28 versions. Our silicon photonic version didn't use this component but that didn't have an issue on our PSM4. I would say, we are ramping today, we're very happy with the speed and scale of which we got back into volume production at our contract manufacturer, and the speed and scale at which the supplier who had the problem has been able to fix the problem and ramp up. I think we underutilized, probably, the first three weeks of this quarter but I would say, that probably by next week we'll be in full scale utilization of our capacity. So to compare that 10 million miss from last quarter, it's probably a 5 million miss from our full utilization of capacities this quarter. But, we continue to work on productivity improvements and yield improvements to lessen that over time.

是的，影響的是 CFP2、CFP4，以及我們某一個版本的 QSFP28。我們的矽光子（silicon photonic）版本沒有使用這個元件，但我們的 PSM4 沒有出現問題。我會說，我們目前正在拉升，我們對於在代工廠（contract manufacturer）恢復量產的速度與規模非常滿意；同時，對於發生問題的供應商修復問題並拉升產能的速度與規模也很滿意。我認為本季前三週我們可能有些產能未充分利用，但我會說大概到下週，我們就會達到產能的全面利用。因此，若拿上一季少了 1,000 萬美元來比較，本季相較於滿載產能大概少了 500 萬美元。不過，我們會持續推動生產力改善與良率改善，讓這個差距隨時間縮小。

And then, how big was the 100G business in Datacom in the September quarter, and then what percentage of ROADMs was TrueFlex?

然後，9 月季度 Datacom 的 100G 業務規模有多大？另外，TrueFlex 佔 ROADM 的百分比是多少？

100G Datacom was roughly $23 million.

100G Datacom 大約是 2,300 萬美元。

It should of been $33 million.

本來應該是 3,300 萬美元。

It should of been $33 million, it was $10 million light. TrueFlex would've been about 80% of the total ROADM number.

本來應該是 3,300 萬美元，少了 1,000 萬美元。TrueFlex 大約佔 ROADM 總數的 80%。

And last one for me on the laser business and the 15% sequential downtick you're forecasting in December, can you help us understand the mix between your fiber business and non-fiber business?

我最後一個問題是關於雷射業務，以及你們預測 12 月將出現 15% 的季比下滑；能否幫我們理解一下你們光纖業務與非光纖業務之間的組合占比？

I think our expectation is that both go down.

我想我們的預期是兩者都會下滑。

Relatively, similarly fast?

相對而言，下滑速度差不多？

I would say so, yes.

我會這麼說，是的。

Great. Thanks for taking my questions, good luck.

很好。謝謝回答我的問題，祝順利。

Thanks, Patrick.

謝謝你，Patrick。

Meta Marshall, Morgan Stanley.

Meta Marshall，摩根士丹利。

Great, thank you. Back to the downtick in laser demand, I know you guys mentioned that it was due to the materials processing market being down. Realizing that you don't guide more than one quarter out, but is that something that you think could be a one quarter disruption just as your own budgets are tight or is it something you feel like could continue multiple quarters? And second, on the back consolidation, is the timing of that still second-half 2017, or due to capacity constraints and just overall attention focus, will you need to move that to a little bit later? Thanks.

很好，謝謝。回到雷射需求下滑的問題，我知道你們提到是因為材料加工市場走弱。理解你們不會提供超過一季的指引，但你們認為這可能只是單季的擾動（例如你們自己的預算較緊），還是你們覺得可能會延續好幾季？第二個問題，關於後段整併（back consolidation），時程是否仍是 2017 年下半年？還是因為產能限制以及整體注意力的分配，可能需要延後一些？謝謝。

Thanks, Meta. In terms of the laser demand, we do see an impact here near-term in Q2, our laser business has been relatively lumpy, but we don't believe that it will be at this range over time. I think over the next couple of quarters after the December quarter, it should stroke it back to the level to where we were before. Like we had mentioned, there's customer projects and product transition timing and things like that are also impacting it, other than just the seasonality.

謝謝，Meta。就雷射需求而言，我們確實看到短期影響在 Q2；我們的雷射業務一向相對波動，但我們不認為長期會維持在目前這個區間。我想在 12 月季度之後的接下來幾個季度，應該會回升到我們之前的水準。正如我們提到的，除了季節性之外，客戶專案、產品轉換時程等因素也在影響。

Yes, taking just to add on top of that, if you saw our announcement earlier this week, we announced a 3 kW and 9 kW fiber laser engine. Those products go into production in Q1 and I think that will drive incremental pick up in revenue for our fiber laser business.

是的，我再補充一下：如果你看到我們本週稍早的公告，我們發布了 3 kW 與 9 kW 的光纖雷射引擎。這些產品會在 Q1 進入量產，我認為這將帶動我們光纖雷射業務營收的增量成長。

Second question, in terms of the SaaS consolidation, we had mentioned in the past that the middle of first half of the year we should be consolidating and so we're still on track for that. So by the second half of the calendar 2017, we should see accretion into gross margin of roughly 72 to 100 basis points.

第二個問題，關於 SaaS 整併，我們過去提到應該會在上半年中段進行整併，因此我們仍按計畫推進。所以在 2017 年曆年下半年，我們應該會看到毛利率約 72 到 100 個基點的增厚（accretion）。

Great. Thank you, guys.

很好。謝謝各位。

Richard Shannon, Craig-Hallum.

Richard Shannon，Craig-Hallum。

Hi, guys. Thanks for taking my questions as well. Maybe a question on 100 gig Datacom. You referenced the past questions about the delay of the pickup on that business relative to your expectations from a quarter ago, I'm talking about Tomahawks Switch delays and perhaps other spending pushouts or whatever. Alan, I'm curious whether you're seeing any discussion on the market about whether 100 gig NRZ is really the optical speed platform to be standardizing on, or could we see other ones out there like a [Phan 4] based 200 gig or something else and could that be part of the reason why there's maybe a pushout on the 100 gig?

嗨，各位。也謝謝你們回答我的問題。我想問一下 100G Datacom。你們在前面的提問中提到，這塊業務的回升相較於你們一季前的預期有所延後，我指的是 Tomahawk 交換器延遲，以及可能還有其他支出遞延等等。Alan，我想了解市場上是否有在討論：100G NRZ 是否真的是要標準化的光學速率平台？或者我們可能會看到其他方案，例如基於 [Phan 4] 的 200G 或其他方案；而這是否可能是 100G 出現遞延的原因之一？

Yes, I don't think that's the reason for it. I don't think there's a availability of 200 gig Pham 4 or the 400 gig Phan 4 for quite some time. Vince, do you want to add to that?

是的，我不認為原因是那個。我不認為 200G PAM4 或 400G PAM4 在相當一段時間內會有供應。Vince，你要補充嗎？

Yes I think, what we're seeing today in terms of delay had nothing to do with something else that's better coming along. It's more that one, the industry is sold out heavily on 100 gig optics already and then obviously as people have been asking on the call, there may be other challenges in the 100 gig ecosystem with regard to switching silicon or others parts that our data center customers need to pull their entire network. So I think it's that coming together of all of those pieces now has shifted out in time, not competition coming from 200 gig or 400 gig in the future.

是的，我想我們今天看到的延遲，與有更好的替代方案即將出現無關。比較像是：第一，整個產業對 100G 光學產品的需求已經非常強勁、幾乎供不應求；第二，正如大家在電話會議上問到的，100G 生態系可能在交換晶片（switching silicon）或其他零組件方面還有挑戰，而資料中心客戶需要把這些零組件都到位才能拉通整個網路。因此，我認為是這些要素同時到位的時間點往後移了，而不是未來 200G 或 400G 的競爭所致。

Okay. I appreciate that perspective. Follow up question for me on the topic of 3-D sensing. You've characterized your opportunity as not just the mobile space, but also in other areas like automotive. Curious whether across the gamut of these applications, what kind of laser technologies are being contemplated. It seems like at least with mobile that's mostly VCSEL. Curious whether these other applications might contemplate other use as well or more focused on VCSELs there?

了解。我很感謝這個觀點。我的追問是關於 3D 感測。你們把機會描述為不僅在行動裝置，也在汽車等其他領域。想請教在這些應用的整體範圍內，正在考慮哪些雷射技術？看起來至少在行動裝置主要是 VCSEL。好奇其他應用是否也會考慮使用其他技術，或同樣更聚焦在 VCSEL？

I'd say it's a combination of both VCSELs and edge-emitters. Most of our volume to date has been edge-emitters. But as we look forward to automobiles, there's going to be many, many sensors in any automobile and some may be VCSEL based, some may be edge-emitter based, depending on what the application is. And as I said, if you look around the computers that we are in today, those are edge-emitters, but lost of interest in VCSEL based 3-D sensing. So I think there's a market for both, depending on the application, the distance that the 3-D sensing needs to be able to detect as well as the power consumption and things like that are going into the decision. But it's really by application, the customer and we decide the best technology for the application.

我會說兩者都有：VCSEL 與邊射型（edge-emitter）。到目前為止，我們的出貨量大多是邊射型。但展望汽車，任何一輛車上都會有非常多的感測器；有些可能以 VCSEL 為基礎，有些可能以邊射型為基礎，取決於應用。如我所說，你看看我們目前所在的電腦周邊，那些是邊射型，但市場對以 VCSEL 為基礎的 3D 感測也很有興趣。所以我認為兩者都有市場，取決於應用、3D 感測需要偵測的距離，以及功耗等因素都會納入決策。基本上是依應用而定，由客戶與我們一起決定最適合該應用的技術。

Okay. And Alan, does Lumentum's differentiation between what type of laser you're offering change materially? Do you feel like it's very strong in whatever laser technology you are supplying?

了解。Alan，Lumentum 在你們提供的不同雷射類型之間，差異化是否會有實質改變？你是否覺得無論供應哪種雷射技術，你們的競爭力都很強？

I think we have strength in both. We've been in the VCSEL business for a long time, we've been in the edge-emitter business for a long time. And just for the fact, when we show potential new customers the field reliability and the testing that we've done on our 3-D sensing -- really as a result of the same team that's working on our submarine products that haven't worked for 20 years at the bottom of the ocean -- these guys are super smart and know how to test and design a technology and a product to meet the needs of consumer electronics or automobile industry or submarine cables. So I think we have a strong competitive advantage because of the history of both 3-D sensing and submarine pumps.

我認為我們兩者都很強。我們做 VCSEL 很久了，也做邊射型很久了。再者，當我們向潛在新客戶展示我們在 3D 感測上的現場可靠度與測試成果時——這其實來自同一個團隊，他們也在做我們的海底產品，那些產品在海底已經運作了 20 年——這些人非常聰明，知道如何測試與設計技術與產品，以滿足消費性電子、汽車產業或海底電纜的需求。因此我認為，因為我們在 3D 感測與海底幫浦（submarine pumps）方面的歷史，我們有很強的競爭優勢。

That's great perspective, thanks for that, Alan. That's all for me, guys. Thank you.

這個觀點很好，謝謝你，Alan。我這邊就到這裡。謝謝各位。

Thank you. There's no more questions in queue at this time. I like to turn the call back to Mr. Lowe for any closing remarks.

謝謝。目前佇列中沒有更多問題。我想把電話會議交回給 Lowe 先生做結語。

Thank you, Vince. I want to thank our customers for their business and partnership. I also want to thank our employees for all their hard work in growing our business and putting us into an excellent position. We continue to see strong demand from our customers and I believe we are in a worldwide bandwidth expansion, making the future bright at Lumentum. We regularly discuss our business at investor relations events. These events are listed on our website in the Investor Relations section and are regularly updated. This concludes our call for today, would like to thank everyone for attending and we look forward to talking with you again in another three months. Thank you.

謝謝你，Vince。我要感謝我們的客戶對我們業務的支持與合作夥伴關係。我也要感謝我們的員工，感謝大家在推動業務成長、讓公司處於極佳位置上所付出的努力。我們持續看到客戶端強勁的需求，我相信我們正處於全球頻寬擴張的趨勢之中，讓 Lumentum 的未來充滿光明。我們會在投資人關係活動中定期討論我們的業務；這些活動列在我們網站的投資人關係（Investor Relations）專區，並會定期更新。今天的電話會議到此結束，感謝各位參與，我們期待三個月後再與各位交流。謝謝。