Lumentum Holdings Inc. (LITE) 2017 Q4 法說會逐字稿

Good day. My name is Jack, and I'll be your conference operator today. At this time, I would like to welcome everyone to Lumentum's Fiscal Fourth Quarter and Full Year Earnings Call. (Operator Instructions) Thank you.

大家好。我叫 Jack，今天將擔任各位的電話會議接線員。此刻，我謹代表公司歡迎各位參加 Lumentum 會計年度第四季暨全年財報電話會議。(接線員指示) 謝謝。

Chris Coldren, Vice President, Strategy and Corporate Development, you may begin your conference.

策略與企業發展副總裁 Chris Coldren，您可以開始您的會議。

Thank you, Jack. Welcome to Lumentum's Fourth Quarter and Full Year Fiscal 2017 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.

謝謝你，Jack。歡迎各位參加 Lumentum 2017 會計年度第四季暨全年財報電話會議。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兼執行長 Alan Lowe，以及財務長 Aaron Tachibana。

This call will include forward-looking statements, including statements regarding the markets in which we operate, trends and expectations for products and technology, purchasing trends, Lumentum's expected financial performance, expenses and position in our markets. 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 our most recent filings with the SEC, particularly the risk factors described in our 10-Q filing for our fiscal third quarter ended April 1, 2017. The forward-looking statements we provide during this call, including projections for future performance, are based on our reasonable beliefs and expectations as of today. Lumentum undertakes no obligation to update these statements except as required by applicable law. Please also note, unless otherwise stated, all results and projections are non-GAAP. Non-GAAP financials should not be considered as a substitute for or superior to financials prepared in accordance with GAAP.

本次電話會議將包含前瞻性陳述，包括關於我們所營運市場、產品與技術的趨勢與預期、採購趨勢、Lumentum 預期的財務表現、費用以及在市場中的地位等陳述。這些陳述存在風險與不確定性，可能導致實際結果與我們目前的預期出現重大差異。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 2017 年 4 月 1 日之會計年度第三季 10-Q 申報文件中所述的風險因素。我們在本次電話會議中提供的前瞻性陳述（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。另請注意，除非另有說明，所有結果與預測均為非 GAAP。非 GAAP 財務資訊不應被視為 GAAP 編製之財務資訊的替代或更優者。

Our press release with our fourth quarter and full year fiscal 2017 results is available on our website, www.lumentum.com, under the Investors section and includes additional details about our non-GAAP financial measures and a reconciliation between our GAAP and non-GAAP results. Our website also has our latest SEC filings, which we encourage you to review, and supplementary slides relating to today's earnings release. Finally, a recording of today's call will be available by 11 a.m. Pacific Time this morning on our website.

我們發布的 2017 會計年度第四季暨全年業績新聞稿已刊登於公司網站 www.lumentum.com 的投資人（Investors）專區，並包含關於我們非 GAAP 財務衡量指標的更多細節，以及 GAAP 與非 GAAP 結果之間的調節表。我們的網站亦提供最新的 SEC 申報文件（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早太平洋時間上午 11 點前在我們的網站上提供。

Now I would like to turn the call over to Alan for his comments and business highlights.

現在我想把電話交給 Alan，請他發表評論與業務重點。

Thank you, Chris. Good morning, everyone. This is an exciting time at Lumentum. We just concluded our second fiscal year as a stand-alone public company and exceeded the $1 billion revenue mark for the first time. Relative to the prior year, we grew our revenue by 11% and net earnings by more than 50%. We capitalized on our investments in 100G Datacom with FY '17 Datacom revenues being up 125% from FY '16 levels. Also, we put ourselves into the leadership position for the ramp of 3D sensing with more than $200 million of booking -- of orders from customers since April. Our strong results came from both the introduction and ramp of our differentiated new products and our focus on operating leverage. I'm very proud of the Lumentum team for these achievements and thank them for their continued hard work.

謝謝你，Chris。各位早安。對 Lumentum 而言，這是一個令人振奮的時刻。我們剛結束作為獨立上市公司的第二個會計年度，並首次突破 10 億美元營收里程碑。相較前一年，我們營收成長 11%，淨利成長超過 50%。我們把握了在 100G 數據通訊（Datacom）的投資成果，2017 會計年度 Datacom 營收較 2016 會計年度水準成長 125%。此外，隨著 3D 感測的放量，我們也讓自己站上領先地位，自 4 月以來來自客戶的訂單預訂（booking）已超過 2 億美元。我們的強勁成果來自於具差異化新產品的導入與放量，以及我們對營運槓桿的專注。我為 Lumentum 團隊的這些成就感到非常自豪，並感謝大家持續的辛勤付出。

Since our last call, we've made excellent progress on our strategic goals. Our revenue from 100G QSFP28 transceivers nearly doubled sequentially in the fourth quarter. 100G products represented approximately 80% of our overall Datacom revenue. Growth in our 100G more than offset declines in lower speed transceivers. Additionally, during the fourth quarter, we shipped approximately $5 million of 3D sensing revenue. On our last call, we indicated that we had several million dollars of 3D sensing orders. Since then, orders have been very strong for multiple applications. We have a lot of work to do to translate these orders and to ship revenue where we expect 3D sensing to be a material contributor to our business in the coming quarters as well as the coming years.

自上次電話會議以來，我們在策略目標上取得了極佳進展。第四季我們的 100G QSFP28 收發器營收較前一季幾乎倍增。100G 產品約占我們整體 Datacom 營收的 80%。100G 的成長已足以抵銷較低速收發器的下滑。此外，在第四季，我們出貨約 500 萬美元的 3D 感測營收。在上次電話會議中，我們表示已取得數百萬美元的 3D 感測訂單。自那之後，多項應用的訂單表現非常強勁。我們仍有大量工作要做，以將這些訂單轉化為出貨與營收；我們預期 3D 感測在未來幾季以及未來幾年都將成為我們業務的重要貢獻來源。

Our near-term focus in 3D sensing is to ramp production to higher levels than anticipated just 3 months ago. We expect monthly volumes to increase throughout the end of the calendar year to meet our strong customer demand. Like many in the optical communication industry, we continue to have some near-term headwinds. Demand from China has yet to materially improve. Our Chinese customers continue to consume inventory already purchased. It is too early to know if this inventory correction will be resolved in the September quarter, or if it will continue into the December quarter. As inventories decline to targeted levels at our Chinese customers, demand should return to significantly higher levels than what we have seen over the past 2 quarters. The timing of this recovery is uncertain.

我們在 3D 感測的短期重點，是將產能提升至僅在 3 個月前仍未預期到的更高水準。我們預期為滿足強勁的客戶需求，月出貨量將一路增加至今年年底。如同光通訊產業中的許多公司，我們短期內仍面臨一些逆風。來自中國的需求尚未出現實質改善。我們的中國客戶仍在消化先前已採購的庫存。目前仍言之過早，尚無法判斷這波庫存調整是否會在 9 月季度結束，或是否會延續到 12 月季度。當中國客戶的庫存下降至目標水位後，需求應會回到顯著高於過去兩個季度所見的水準。復甦時點仍不確定。

North America telecom demand on average has been strong and growing over the past 2 years. North American demand has also been relatively lumpy on a quarter-to-quarter basis and was down sequentially in the fourth quarter. However, we expect the overall growth trend in North America to continue primarily driven by metro deployments. We believe our North American customers have a strong business outlook and our quarter-to-quarter lumpiness is being driven by the timing of new deployments and customer inventory management.

北美電信需求平均而言在過去兩年一直強勁且持續成長。北美需求在季度之間也相對呈現波動，且第四季較前一季下滑。然而，我們預期北美整體成長趨勢將持續，主要由都會區（metro）部署所帶動。我們相信北美客戶的業務展望強勁，而我們季度間的波動主要是由新部署時程與客戶庫存管理的時間點所驅動。

Fourth quarter revenues were down 13% to $222.7 million. As highlighted earlier, we had strong QSFP28 demand, which was the primary driver of the 28% quarter-on-quarter Datacom increase to $50 million. 100G Datacom grew more than 50% sequentially and CFP2 sales, once again, contributed to growth. Looking to the first quarter of fiscal 2018, we expect telecom revenue to soften further as customers continue to burn off inventory. Despite, these near-term telecom headwinds it is a very exciting time at Lumentum. Our photonics technologies are increasingly critical enablers of leading-edge communications, industrial and consumer applications. Demand continues to grow for bandwidth across the world’s data centers and communication networks. New submarine cables are being lit up and built across the world. In addition to traditional communication service providers, cloud operators are increasingly driving new deployments of optical networks and submarine cables. Hyperscale data centers are transitioning to 100G.

第四季營收下滑 13% 至 2.227 億美元。如先前所強調，我們的 QSFP28 需求強勁，為 Datacom 季增 28% 至 5,000 萬美元的主要驅動因素。100G Datacom 較前一季成長超過 50%，而 CFP2 銷售也再次對成長有所貢獻。展望 2018 會計年度第一季，我們預期電信營收將進一步走弱，因客戶仍在持續去化庫存。儘管電信業務短期面臨這些逆風，對 Lumentum 而言仍是非常令人振奮的時刻。我們的光子技術正日益成為先進通訊、工業與消費性應用的關鍵使能技術。全球資料中心與通訊網路對頻寬的需求持續成長。新的海底電纜正在全球各地點亮並建置。除傳統通訊服務供應商外，雲端營運商也日益推動光網路與海底電纜的新部署。超大規模（hyperscale）資料中心正轉向 100G。

We continue to make excellent progress with our ROADMs. In addition to capturing a large share of initial -- the initial network deployment this year in China, we have shipped our first of several new advanced ROADMs specifically designed for China's next generation networks. This positions us extremely well as the ROADM Supplier of Choice, both in the near term as well as in the longer term in China. We expect China ROADM growth will be a meaningful growth driver for our Lumentum business in the coming years.

我們在 ROADM 方面持續取得極佳進展。除了在今年中國的初期網路部署中取得可觀市占之外，我們也已出貨數款全新先進 ROADM 中的第一款，該產品係專為中國下一代網路所設計。這使我們在中國無論短期或長期都具備成為首選 ROADM 供應商的極佳定位。我們預期中國 ROADM 的成長將在未來幾年成為 Lumentum 業務的重要成長動能。

We are working with all of our customers worldwide on newer platforms that incorporate higher performance, smaller and more cost-effective ROADM solutions. We believe our new product pipeline will further our leadership position over time. Manufacturers around the world are increasingly using advanced laser-based techniques to increase productivity and precision and enable new processes. Leaders in next-generation consumer electronics, virtual and augmented reality as well as the automotive industry, are looking to laser-based 3D sensing to enhance capabilities and enable new applications.

我們正與全球所有客戶合作，導入採用更新平台、具備更高效能、更小型且更具成本效益之 ROADM 解決方案。我們相信，我們的新產品開發管線將隨時間推進，進一步鞏固我們的領導地位。全球製造商正日益採用先進的雷射技術，以提升生產力與精準度，並促成新的製程。次世代消費性電子、虛擬與擴增實境以及汽車產業的領導者，正尋求以雷射式 3D 感測來強化能力並開啟新的應用。

Our investments in new products and technology position us well for all of these future trends. At Lumentum, we are focused on accelerating the speed and scale of cloud, networking, advanced manufacturing and next-generation 3D sensing applications with our photonics technologies. Our strategy to invest in growing markets, develop the best products and technology and foster the closest relationships with market-leading customers is succeeding and makes our future bright at Lumentum.

我們在新產品與技術上的投資，使我們能夠充分掌握所有這些未來趨勢。在 Lumentum，我們專注於運用光子技術，加速雲端、網路、先進製造與次世代 3D 感測應用的速度與規模。我們投資於成長市場、開發最佳產品與技術，並與市場領先客戶建立最緊密關係的策略正在奏效，並使 Lumentum 的未來前景光明。

I will now hand it over to Aaron for more details on our financial results and our guidance for the first quarter of fiscal 2018.

接下來我將把時間交給 Aaron，請他進一步說明我們的財務結果以及 2018 會計年度第一季的展望。

Thank you, Alan. We recently concluded fiscal year 2017 and achieve new record highs for Lumentum. Net revenue for the full fiscal year surpassed $1 billion and was a new record high as we grew 10.9% compared with last year. GAAP gross margin was 31.8% and GAAP operating margin was 4.8% for the year. We achieved non-GAAP gross margin of 34.7%, increasing 170 basis points from last year, as we are shifting the mixture of products to those with a richer margin profile. Non-GAAP operating margin was 12.4%, a new record high for Lumentum and increased 320 basis points over last year driven by the gross margin expansion and favorable operating leverage from higher volume.

謝謝你，Alan。我們近期結束了 2017 會計年度，並為 Lumentum 創下新的歷史新高紀錄。全年度淨營收突破 10 億美元，並創下新高，較去年成長 10.9%。全年 GAAP 毛利率為 31.8%，GAAP 營業利益率為 4.8%。我們達成非 GAAP 毛利率 34.7%，較去年提升 170 個基點，因為我們正將產品組合轉向毛利率更佳的產品。非 GAAP 營業利益率為 12.4%，創 Lumentum 新高，較去年提升 320 個基點，主要受毛利率擴張以及更高出貨量帶來的有利營運槓桿所驅動。

Now for the fourth quarter result. Net revenue for the fourth quarter was $222.7 million, which decreased 12.9% sequentially and 7.9% compared with the same period last year due to softer telecom demand. GAAP gross margin for the fourth quarter was 30.2%, GAAP operating margin was 1.8% and GAAP diluted net loss per share was $0.90. The GAAP diluted net loss per share includes the impact of a $1.06 loss per share from a noncash unrealized loss on the derivative liabilities for both the Series A preferred stock and convertible note, the noncash effective interest on the convertible note as well as a noncash write-down of deferred tax asset.

接著說明第四季結果。第四季淨營收為 2.227 億美元，因電信需求轉弱，較前一季下滑 12.9%，較去年同期下滑 7.9%。第四季 GAAP 毛利率為 30.2%，GAAP 營業利益率為 1.8%，GAAP 稀釋後每股淨損為 0.90 美元。GAAP 稀釋後每股淨損包含：A 系列優先股與可轉換公司債之衍生負債的非現金未實現損失所造成每股 1.06 美元的影響、可轉換公司債的非現金有效利息，以及遞延所得稅資產的非現金減記。

Our fourth quarter non-GAAP gross margin was 32.9%, which decreased 150 basis points sequentially and 120 basis points compared with the same period last year. The sequential decrease was driven by a 200 basis point decline in Optical Communications gross margin partially offset by an 80 basis point increase in Commercial Lasers gross margin. Non-GAAP operating margin for the fourth quarter was 9.2% and declined 340 basis points sequentially. The decline in operating margin was primarily due to the sequential volume decrease causing unfavorable operating leverage quarter-to- quarter. Non-GAAP earnings per share was $0.39 based on a fully diluted share count of 63.8 million and included $900,000 of interest income and a $3.7 million tax benefit.

第四季非 GAAP 毛利率為 32.9%，較前一季下降 150 個基點，較去年同期下降 120 個基點。其中，序列性下降主要來自光通訊毛利率下滑 200 個基點，部分被商用雷射毛利率上升 80 個基點所抵銷。第四季非 GAAP 營業利益率為 9.2%，較前一季下降 340 個基點。營業利益率下滑主要是因出貨量較前一季下降，導致季對季出現不利的營運槓桿。非 GAAP 每股盈餘為 0.39 美元，以完全稀釋後股數 6,380 萬股計算，並包含 90 萬美元利息收入與 370 萬美元的稅務利益。

Now for some additional detail. Optical Communications revenue was $186.8 million, a decrease of 14% sequentially driven by a $44.7 million or 27% decrease in telecom revenue, partially offset by an $11.1 million or 28% increase in Datacom and a $4.3 million or 35% increase in industrial and consumer revenue. During the quarter, our 100G transceiver revenue increased more than 50% and our revenue from QSFP28 transceivers nearly doubled sequentially. Optical Communications gross margin at 31.1% decreased 200 basis points sequentially, mainly due to lower telecom revenue.

接著補充一些細節。光通訊營收為 1.868 億美元，較前一季下降 14%，主要因電信營收減少 4,470 萬美元（或 27%），部分被資料通訊（Datacom）增加 1,110 萬美元（或 28%）以及工業與消費性營收增加 430 萬美元（或 35%）所抵銷。本季我們的 100G 收發器營收成長超過 50%，而 QSFP28 收發器營收較前一季幾乎翻倍。光通訊毛利率為 31.1%，較前一季下降 200 個基點，主要因電信營收較低。

Commercial Lasers revenue was $35.9 million, a decrease of 10% sequentially which was driven by a decline in fiber laser revenue. Our primary customer is transitioning to our newer, higher-performance Gen 3 design, and while we have been ramping the Gen 3 fiber laser for a few months, we have been capacity constrained during the ramp due to unique equipment and materials compared with our older Gen 2 fiber laser. Fourth quarter Commercial Lasers gross margin was 42.1%, and increased 80 basis points sequentially. Operating expenses totaled $52.8 million or 23.7% of revenue compared with last quarter at $55.7 million or 21.8% of revenue. R&D expense was $32.3 million and SG&A expense $20.5 million.

商用雷射營收為 3,590 萬美元，較前一季下降 10%，主要由光纖雷射營收下滑所致。我們的主要客戶正轉向採用我們更新、效能更高的第 3 代（Gen 3）設計；雖然我們已經爬坡量產 Gen 3 光纖雷射數個月，但由於相較於舊款第 2 代（Gen 2）光纖雷射，Gen 3 需要獨特的設備與材料，因此在爬坡期間我們受到產能限制。第四季商用雷射毛利率為 42.1%，較前一季提升 80 個基點。營業費用合計 5,280 萬美元，占營收 23.7%；相較之下，上季為 5,570 萬美元，占營收 21.8%。研發費用為 3,230 萬美元，銷售、一般及行政（SG&A）費用為 2,050 萬美元。

Our balance sheet remained strong exiting the fourth quarter with cash and short-term investments of $555.3 million. During the fourth quarter, our net inventory increased by $28 million sequentially. There were a few factors driving the increase. First, we completed the closure of a fab in Connecticut late in June and we transferred production to our fab in San Jose, California. In order to support the move, we produced some transition inventory. Secondly, with the sequential revenue decline, we were unable to slow down the supply chain. Already having materials and capacity in place, we built some product that will be needed over the coming months. And thirdly, we accelerated our 3D sensing ramp immediately after receiving customer approval for production readiness early in the fourth quarter. Capital equipment additions were approximately $41 million in the fourth quarter and our spending remained elevated due to our investments in both facility improvement and equipment to bring up our manufacturing facility in Thailand, which was purchased back in March.

我們在第四季結束時資產負債表仍維持強勁，現金與短期投資為 5.553 億美元。第四季期間，我們的淨存貨較前一季增加 2,800 萬美元。增加主要由幾項因素所驅動。首先，我們在 6 月下旬完成關閉康乃狄克州的一座晶圓廠，並將生產轉移至加州聖荷西的晶圓廠。為了支援搬遷，我們生產了一些過渡性存貨。其次，隨著營收較前一季下滑，我們無法同步放慢供應鏈節奏。在既有材料與產能已到位的情況下，我們生產了一些未來數月將需要的產品。第三，我們在第四季初取得客戶對量產就緒的核准後，立即加速 3D 感測的爬坡量產。第四季資本設備新增約 4,100 萬美元；由於我們同時投資於廠房改善以及設備，以提升我們在泰國的製造基地（該基地於 3 月收購），因此支出仍維持在較高水準。

Now on to our guidance for the first quarter of fiscal 2018, noting again that all projections are on a non-GAAP basis. 3D sensing revenue will increase materially in Q1 and is only limited by our ability to ramp faster. However, telecom and Commercial Lasers revenue is expected to decline sequentially. We project net revenue for the first quarter to be in the range of $245 million to $265 million, with operating margin in the range of 13% to 15% and earnings per share to be in the range of $0.50 to $0.60.

接下來是 2018 會計年度第一季的展望，再次提醒所有預測皆以非 GAAP 基礎呈現。第一季 3D 感測營收將顯著增加，唯一限制在於我們能否更快地提升產能爬坡速度。然而，電信與商用雷射營收預期將較前一季下滑。我們預估第一季淨營收介於 2.45 億至 2.65 億美元，營業利益率介於 13% 至 15%，每股盈餘介於 0.50 至 0.60 美元。

Now I will turn the call back over to Chris to begin the Q&A session.

現在我將把電話會議交回給 Chris，開始問答環節。

Thank you, Aaron. (Operator Instructions) Jack, let's begin the question-and-answer session.

謝謝你，Aaron。（接線員指示）Jack，我們開始問答環節。

(Operator Instructions) Your first question comes from the line of Simon Leopold with Raymond James.

（接線員指示）第一個問題來自 Raymond James 的 Simon Leopold。

I wanted to see if we could get a little bit more understanding on the trajectory of the 3D sensing. So you indicated up materially in September, but listening to others in the supply chain, we have the impression that there should also be a multiplicative effect in the December quarter, and then just in terms of rounding out the 3D comments, you talked about $200 million in orders, what time period does that represent, is that 1 years' worth of orders or is that over a longer period? And I have a follow-up.

我想看看是否能更進一步了解 3D 感測的發展軌跡。你提到 9 月會顯著上升，但從供應鏈其他公司的說法來看，我們的印象是 12 月那一季也應該會有倍數式的放大效應；另外就 3D 的評論補充，你提到有 2 億美元的訂單，這代表的是哪一段期間？是 1 年的訂單量，還是更長期間的累計？我還有一個追問。

Thanks, Simon. Yes, the trajectory on 3D sensing, we're focused very hard on ramping as fast as we possibly can, and that's what we put in our guidance from -- with respect to our expectations for this quarter. December quarter will be up materially from the September quarter although we're not going to give guidance. The orders that we've received to date, and these are from multiple customers, are primarily for deliveries or requested deliveries in this calendar quarter -- this calendar year, sorry.

謝謝你，Simon。是的，關於 3D 感測的發展軌跡，我們正非常專注於盡可能快速地提升產能爬坡，而這也反映在我們對本季的預期所提供的指引中。12 月季度將會較 9 月季度有顯著成長，儘管我們不會提供指引。截至目前我們收到的訂單（來自多位客戶）主要是要求在本曆季——抱歉，是在本曆年內交付或要求交付。

So in calendar '17?

所以是在 2017 曆年？

Yes.

是的。

Wow, okay. And just my follow-up is an easy one. The QSFP28 strength, there are many, many flavors of those kind of products, CWDM or LR4. Can you give us a little bit more detail of where the strength is coming from in terms of flavors of QSFP28?

哇，好吧。那我接著追問一個簡單的問題。QSFP28 的強勁表現，這類產品有很多很多種規格/型號，例如 CWDM 或 LR4。你們能否更詳細說明一下，QSFP28 的成長動能主要來自哪些規格（flavors）？

Yes, Simon, in terms of the fourth quarter, basically half was LR4, half CWDM for QFSP28 flavor.

可以，Simon，就第四季而言，基本上一半是 LR4，一半是 CWDM 的 QSFP28 規格。

Your next question comes from the line of Patrick Newton with Stifel.

下一個問題來自 Stifel 的 Patrick Newton。

I guess to put a finer point on 3D sensing, given the $200 million in orders, given that you hope to be recognizing them in this calendar year, can you just level set us on how much 3D sensing revenue has been recognized through the June quarter, and what you have embedded explicitly in the September quarter guidance?

我想把 3D 感測再講得更精準一些：考量到 2 億美元的訂單、以及你們希望在本曆年內認列，能否請你們先幫我們校準一下，截至 6 月季度為止已認列了多少 3D 感測營收？以及你們在 9 月季度指引中明確納入了多少？

Yes, we said in the prepared remarks we had $5 million in the June quarter. And that was from multiple customers, so keep in mind we had legacy customers as well as new customers in that $5 million. Embedded in the September quarter, as we said, we expect telecom and lasers to be down slightly from the current levels and Datacom flat to up slightly. So you can do the math on our expectations with respect to the 3D sensing in the September quarter from there.

是的，我們在事先準備的講稿中提到，6 月季度是 500 萬美元。而且那是來自多位客戶，所以請記得，這 500 萬美元中包含既有客戶以及新客戶。至於 9 月季度的內含假設，如我們所說，我們預期電信與雷射會較目前水準小幅下滑，而資料通訊則持平到小幅成長。因此，你可以從那裡推算我們對 9 月季度 3D 感測的預期。

Great. And then I guess, just on the gross margin side, Aaron you gave some reasons why the gross margin declined sequentially given the factory move, inventory build and not able to slow down as fast, but can you comment at all on the pricing environment? And then as we look forward, given that 3D sensing will become a bigger portion of mix, can you help us understand the delta between optical and 3D sensing gross margin and how to think about that over the next several quarters?

很好。接著我想問毛利率方面，Aaron，你提到毛利率季對季下滑的一些原因，包括工廠搬遷、庫存建立，以及無法那麼快放慢速度，但你能否評論一下定價環境？另外往前看，隨著 3D 感測在產品組合中的占比提高，能否協助我們理解光通訊與 3D 感測毛利率之間的差異，以及未來幾季該如何看待？

Sure. Thanks, Patrick. In terms of gross margin for the fourth quarter, so we were down about 150 basis points sequentially. 2/3 of that decline, so about a point was tied to the volume decline and the rest was mix related. So the margin decline had very little to do with the pricing environment and our cost reductions have been able to keep up the price erosion. So we didn't see a lot of debt on the gross margin in the fourth quarter from a price standpoint. As we go forward, your question about OpComm margins and 3D sensing, so looking at the aggregate first, in totality, our margins are going to accrete or expand as we go forward as 3D sensing does have a higher gross margin than our corporate average today. We're not going to specifically call out what the 3D sensing margins are, but they are higher than the corporate gross margin average. So Optical Communications where the 3D sensing resides today from a segment perspective, will continue to increase. When you look out 6 to 8 quarters, there’s no reason why we can't get our gross margins up into the high 30% range, now today we're in the 34% range. There's no reason why we can't expand our margins 200 basis points to 300 basis points over this next 6 to 8 quarter.

當然可以。謝謝你，Patrick。就第四季的毛利率而言，我們季對季大約下降了 150 個基點。其中 2/3 的下滑（約 100 個基點）與出貨量下降有關，其餘則與產品組合有關。因此，毛利率下滑與定價環境關係不大，而我們的成本降低也足以跟上價格侵蝕。所以從價格角度來看，第四季對毛利率的拖累不大。至於你問到 OpComm 毛利率與 3D 感測，先看整體：隨著 3D 感測占比提高，我們的整體毛利率將會逐步增厚或擴張，因為 3D 感測的毛利率高於我們目前的公司平均水準。我們不會具體揭露 3D 感測的毛利率，但它確實高於公司平均毛利率。因此，從部門角度來看，3D 感測目前歸在光通訊（Optical Communications）之下，該部門的毛利率將持續提升。展望未來 6 到 8 個季度，我們的毛利率沒有理由不能提升到接近 30% 後段的區間；目前我們大約在 34% 左右。在接下來 6 到 8 個季度內，我們沒有理由不能把毛利率擴張 200 到 300 個基點。

That's corporate average, correct?

那是公司平均，對嗎？

That's correct, corporate average. And then I did also mention the wafer fab closure from Bloomfield, Connecticut and moving it into San Jose. As we have been mentioning on previous calls, we expect to get a 70 to 80 basis point improvement from that reduction. We'll start to see that benefit in the next couple of quarters.

沒錯，是公司平均。另外我也提到，我們將關閉康乃狄克州 Bloomfield 的晶圓廠，並把產能移到聖荷西。如同我們在先前的電話會議中提到的，我們預期這項縮減將帶來 70 到 80 個基點的改善。我們會在接下來幾個季度開始看到這項效益。

Your next question comes from the line of Rod Hall with JPMorgan.

下一個問題來自 JPMorgan 的 Rod Hall。

So I wanted to start off with North America, see if you guys could maybe give us a little bit more color on what's going on, and particularly, I know you called out that inventory management and timing of deployments are the 2 reasons. Can you give us some kind of a ranking of those 2 things? Do you think it's more inventory management or is it more deployment timing that's driving the weakness this quarter and next? And just any further color on what's going on in North America and then I have a follow-up.

我想先從北美開始，看看你們是否能提供更多背景說明目前發生了什麼，特別是我知道你們點出庫存管理與部署時點是兩個原因。你們能否對這兩項因素做個排序？你們認為本季與下季的疲弱，主要是庫存管理造成的，還是部署時點造成的？另外也請再補充一些北美的情況，之後我還有一個追問。

Yes. I think the challenge we have with the North America deployments specifically metro and that's not just 1 customer or 1 carrier, is the deployments are very lumpy and our customers need to be prepared as those carriers decide to deploy. And so I would say that the primary driver for the slower telecom revenue in North America was inventory management and is inventory management going forward. But as I said, that could change overnight and we could be expedited next week as a result of decisions being made at carriers or the MSOs. So I think it's primarily inventory related.

是的。我認為我們在北美部署（特別是都會區 metro）的挑戰——而且不只是一位客戶或一家電信商——在於部署非常不均勻、波動很大，而我們的客戶需要在那些電信商決定部署時做好準備。因此我會說，北美電信營收放緩的主要驅動因素是庫存管理，而且未來也仍將是庫存管理。但如我所說，這可能一夕之間就改變；如果電信商或 MSO 做出決策，我們下週就可能被要求加急出貨。所以我認為主要是庫存相關。

And Alan, could you just say on that, what's your expectation from now to the end of the year? Are you kind of thinking that the way that North American deployment goes or those deployments go is roughly the same by the end of the year, or you think it’s a little bit lower? Or how do you think we end up at the end of the calendar year?

Alan，關於這點你能否再說一下，你對從現在到年底的預期是什麼？你是否認為北美部署的走勢到年底大致相同，還是會略低一些？或者你認為到本曆年年底會是什麼樣的結果？

That's a really good question and one that I think is probably better answered by our customers. I will say that we are still in the first quarter of deployments in North America for metro. So I think we've got multiple years to go in building that out. The question in my mind is, how many cities get built each quarter and that's really a function of when the carriers decide to pull the trigger on capital.

這是個非常好的問題，我想可能由我們的客戶來回答會更合適。我會說，我們在北美都會區（metro）的部署仍處於第一季。因此我認為我們還有好幾年的建置期要走。我心中的問題是：每一季會建置多少座城市？而這其實取決於電信商何時決定扣下資本支出的扳機。

And then I wanted to -- my follow-up, I just wanted to ask you on 3D sensing capacity, what are you guys doing -- it sounds like the orders have moved up quite a bit more than maybe you expected like you said 3 months ago. What are you guys doing with regards to capacity? Are you laying more capacity on or putting in place more capacity by the end of the year, what are you doing with respect to that?

接著我想——我的追問是關於 3D 感測產能：你們正在做些什麼？聽起來訂單比你們可能預期的還要提前不少，正如你們說的，和 3 個月前相比。你們在產能方面採取了哪些措施？你們是否會在年底前增加更多產能或建置更多產能？就這方面你們打算怎麼做？

Yes, I mean we are -- even 3 months ago we were adding capacity through this calendar year to meet the demands of what we thought were at the time. And as you said the expectations and demands have actually increased since our April earnings call. We've been expediting capacity increases at our foundry partners and helping them with their suppliers of capital equipment to bring that on earlier. In addition to that though, we've also been working on -- figuring out how do we accelerate the productivity improvements of the capital that we have to get more out of the existing assets. So the lead times for some of the best equipment and processing equipment are long and so a combination of trying to pull those deliveries in as well as getting more out of the existing assets at our foundry partners is what we're focused on.

是的，我的意思是我們——即使在 3 個月前，我們仍在透過今年這個日曆年度增加產能，以滿足我們當時所認為的需求。而且如你所說，自從我們 4 月的財報電話會議以來，預期與需求其實都已經提高了。我們一直在加速我們晶圓代工合作夥伴的產能擴增，並協助他們的資本設備供應商，讓這些產能能更早到位。除此之外，我們也一直在——思考如何加速我們既有資本的生產力提升，從現有資產中榨出更多產出。因此，一些最好的設備與製程設備的交期很長，所以我們目前聚焦在兩件事的組合：一方面設法把那些交付時程往前拉，另一方面在我們的晶圓代工合作夥伴那邊，從既有資產中取得更多產出。

Can you -- is there any way you can quantify the capacity increase relative to what you originally thought, like are you increasing capacity by the end the year 50% over what you thought you would have to deliver 3 or 4 months ago, or any kind of quantification you can give us on that?

你能不能——有沒有辦法量化一下相對於你們原先想的產能增加幅度？例如，到今年年底你們增加的產能是否比你們在 3 或 4 個月前以為需要交付的水準高出 50%，或是你能提供任何形式的量化數字？

It’s hard to say. I think back of the envelope, it's probably not 50%, but it’s 25% to 30%, would be my guess. I think if we could do more, we would -- our customers would probably take it.

這很難說。我想粗略估算，可能不是 50%，但我猜大概是 25% 到 30%。我想如果我們能做得更多，我們——我們的客戶大概也會照單全收。

Your next question comes from Alex Henderson with Needham.

下一個問題來自 Needham 的 Alex Henderson。

The first question I have for you is on this $200 million in orders deliverable in the 2017 time frame. I mean, do you think you can actually attain that or is that something that they would have like to have, but you're going to be forced to slide some of that into the first quarter next year? And then the second question along the same lines is, as we look out to calendar '18, have you any sense of scaling of that business into the following year? I mean, is it -- would you expect that if you are doing $200 million in a half that it would be somewhere in the $300 million to $400 million for the full year '18?

我第一個問題是關於這 2 億美元、可在 2017 年時間範圍內交付的訂單。我的意思是，你覺得你們真的能達到嗎？還是說那是他們希望能有的，但你們會被迫把其中一部分延到明年第一季？第二個問題同樣沿著這個方向：當我們展望 2018 日曆年時，你們對於這項業務在隔年擴張的規模有任何概念嗎？也就是說，如果你們在半年做到 2 億美元，你會不會預期 2018 全年會落在 3 億到 4 億美元之間？

Okay. First question, are we going to be able to deliver it all, I think certainly that's our customers' expectation, and again, this is multiple customers, but our expectations are assuming that we execute to our plan, is that we do satisfy those orders in this calendar year -- at the balance of the calendar year. As far as 2018 demand is concerned, I think a lot will depend on how well we execute this year and how much business we earn from our customers with respect to how much they can count on us for. So it's all about how we execute this year and then how successful our customers' products are in the market. So it's hard for me to give you a number, but I'd say that our expectations are that we're going to execute and earn our customers' trust and earn their business.

好的。第一個問題，我們能不能全部交付？我認為那當然是我們客戶的期待，而且這是多個客戶；但我們的預期是——假設我們能按計畫執行——我們會在這個日曆年度內、也就是今年剩餘的時間，滿足這些訂單。至於 2018 年的需求，我想很大程度取決於我們今年執行得如何，以及我們能從客戶那裡贏得多少業務——也就是他們能在多大程度上依賴我們。所以關鍵在於我們今年的執行，以及我們客戶的產品在市場上的成功程度。因此我很難給你一個數字，但我會說，我們的預期是我們會把執行做好、贏得客戶的信任，並贏得他們的業務。

So again, is it likely that, that magnitude of full year '18 would be a reasonable way to think about it, or am I just off mark? I mean, can -- we have no basis to forecast on, so it would be very helpful if you can give us at least some sort of general indicator on it.

所以再確認一次，認為 2018 全年達到那個量級是合理的思考方式嗎？還是我完全偏離了？我的意思是——我們沒有任何可用來預測的基礎，所以如果你至少能給我們一些大方向的指標，會非常有幫助。

I mean, my expectations are that it continues to increase, especially as we add additional customers. So I don't think your number is crazy. Again -- but it has to do with how well we execute and how we build our customers' trust. But given the pipeline of additional customers that we have, my expectation is that this is a growing business from this launch here.

我的預期是它會持續增加，尤其是當我們新增更多客戶時。所以我不覺得你的數字很離譜。再次強調——但這取決於我們執行得多好，以及我們如何建立客戶對我們的信任。不過考量我們手上新增客戶的管線，我的預期是，從這次量產/上市開始，這會是一門成長中的業務。

Can you talk at all about the pricing environment as we go from '17 to '18? Or can you talk about what your expectations are relative to the number of cameras we'd be looking at on an individual device, or any metrics along those lines to give us some qualitative sense of how the design parameters are going to change over time?

你能談談從 2017 到 2018 的定價環境嗎？或者你能談談你們對於單一裝置上會配置多少顆相機的預期，或是任何類似的指標，好讓我們對設計參數隨時間如何變化有一些定性的理解？

Well, pricing environment is really a function of how well we execute and how well we do in the second half of calendar '18. I think we have agreements in place that's allowed us to make commitments to our partners to buy a lot of capital equipment. And so for the next year, we are pretty well agreed upon in contract basis for pricing. As far as the number of devices per device, I'm not going to comment on that. I think again, we're working with multiple customers on different applications that have single devices as well as multiple devices. And so I really can't comment on what our customers' expectations are -- that they do with these devices.

嗯，定價環境其實主要取決於我們執行得多好，以及我們在 2018 日曆年下半年表現得如何。我想我們已經有一些協議，使我們能對合作夥伴做出承諾、採購大量資本設備。因此就明年而言，在合約基礎上，我們對定價已經有相當程度的共識。至於每台裝置上的裝置數量，我不打算評論。我想同樣地，我們正與多個客戶在不同應用上合作，有單一裝置的，也有多裝置的。因此我真的無法評論我們客戶對於——他們會如何使用這些裝置——的期待。

One last question, then I'll cede the floor. Can you -- given your ramp and expectations, have you changed either your yield expectations or your market share expectations? I think you've said your yield seemed to be coming in quite a bit better than you’d initially expected and it sounds like vast majority of the market is still the right descriptor of share, are those 2 still accurate?

最後一個問題，然後我就把時間讓出來。你能不能——基於你們的爬坡與預期，你們是否調整了良率預期或市占率預期？我想你們曾說良率似乎比一開始預期好很多，而且聽起來「市場的絕大部分」仍然是對市占的恰當描述；這兩點現在仍然正確嗎？

I think for the most part, yes, I think we're pleased with our execution on yields. We certainly could do better, but I think we're -- our expectations are being met with respect to yields at this stage of the game, and then market share I think we're in a pretty good position and have a very good market share of the business of our customers today.

我想大致上是的；我們對良率的執行表現感到滿意。我們當然還可以做得更好，但我認為——就目前這個階段而言，我們在良率方面的表現符合我們的預期；至於市占率，我認為我們處於相當不錯的位置，並且在我們現有客戶的業務中擁有非常好的市占。

Your next question comes from the line of Joseph Wolf with Barclays.

下一個問題來自 Barclays 的 Joseph Wolf。

Just a quick follow-on there, if you could give us any color in terms of competition, do you see the competition right now and the related pricing as similar to yours, meaning your competitors could also deliver as much as they can produce, and that you have a yield and capacity lead right now and that will change over the course of 2018. Or are there other things that you see as being competitive advantages right now?

我這邊快速追問一下，如果你能就競爭態勢提供一些看法：你是否認為目前競爭與相關定價和你們的情況類似？也就是說，你們的競爭對手也能把他們能生產的都交付出去，而你們目前在良率與產能上領先，並且這種情況會在 2018 年的過程中改變？或者你還看到其他目前可視為競爭優勢的因素？

Well, I think our strategy to partner with high-volume industry-leading foundry partners is paying off from our perspective, and we've been working with these foundry partners for years and so it's not a simple task to do, to do this kind of ramp. I can't really comment on where our competitors are and specifically where our competitors' pricing are because I frankly don't know their pricing. I will say that the data we have where -- we were expecting that certain number of units 3 months ago and that number has gone up, healthy, we're in pretty good position.

嗯，我認為我們與高產量、產業領先的晶圓代工合作夥伴結盟的策略，從我們的角度來看正在發揮成效；而且我們與這些代工夥伴合作多年，所以要做到這種爬坡並不是一件簡單的事。我無法真正評論我們競爭對手目前的狀況，尤其是他們的定價，因為坦白說我不知道他們的價格。我可以說的是，根據我們掌握的資料——我們原本預期 3 個月前會是某個出貨量，而那個數字已經健康地上升了——我們處於相當不錯的位置。

And then just switching gears to the margin guidance, if I look at -- it seems like similar levels to the margins that you hit in the fiscal second quarter at the same revenue level, but if we look forward to the mix and the commentary on the gross margin, can you just give us some of that color on where different line items will come out given the mix that you expect and the new opportunities? Should it be very different or is there a big R&D expense we should be expecting in 2018 as you ramp up some of these opportunities?

接著換個話題談毛利率指引：如果我看——看起來在相同營收水準下，毛利率大致與你們在會計年度第二季達到的水準相近；但如果我們往前看產品組合以及你們對毛利率的評論，你能否提供一些背景，說明在你們預期的組合與新機會之下，不同費用項目大概會落在哪裡？會不會差異很大？或者在 2018 年，隨著你們推進這些機會的爬坡，我們是否應該預期會有一筆較大的研發費用？

So Joe, thanks for the question. In terms of that, as we look into fiscal year 2018, from an overall OpEx standpoint with our base business being where it's at, today the OpEx percentage of revenue is actually a little bit higher than where we were when we were doing $260 million a quarter at this base business. So in terms of OpEx, I would anticipate us being somewhere between the 21% to 22% range as we go through FY '18 and as we continue to ramp 3D sensing, the incremental spend will not grow as fast as the top line, but you can see us get down into the 21% range. As we have mentioned before, we're going to continue to invest heavily in areas where we believe markets are large and growing and, as Alan had mentioned in his prepared remarks, 3D sensing has multiple application beyond the initial consumer model here that’s taken off. And we've been a leader in this market for some 4 years or 5 years as we had been in the gaming console business many years back, and there's no reason again, why our margins won't expand and from a targeting standpoint, like I had mentioned, the gross margins should get up into the high 30% -- so 37% to 38% looking out 6 to 8 quarters is not unreasonable. And a lot of that will flow through to operating margin.

所以，Joe，謝謝你的提問。就這點而言，當我們展望2018會計年度，從整體營業費用（OpEx）的角度來看，在我們基礎業務維持目前水準的情況下，今天營業費用占營收的比例，實際上比我們當時基礎業務每季做到2.6億美元時的水準要略高一些。因此就營業費用而言，我預期在FY '18期間，我們大概會落在21%到22%的區間；而隨著我們持續拉升3D感測，新增支出不會像營收成長那麼快，但你會看到我們降到約21%的水準。如同我們先前提到的，我們會持續在我們認為市場規模大且成長中的領域加大投資；而正如Alan在事先準備的發言中所提到的，3D感測除了目前已經起飛的初期消費者機種之外，還有多種應用。而且我們在這個市場已經領先大約4到5年了，早年我們也曾在遊戲主機業務中耕耘多年；因此同樣地，沒有理由我們的毛利率不會擴張。從目標角度來看，如我提過的，毛利率應該能提升到接近40%的高30%區間——往後看6到8個季度，達到37%到38%並非不合理。而其中很大一部分將會反映到營業利益率上。

Okay, that’s helpful. Just finally, and maybe it's early, but given the current market and the inventory comment on North America for telecom, as you exit the year, do you sense that there's going to be any pricing issue on the core telecom components for 2018 -- the calendar 2018?

好的，這很有幫助。最後一個問題，也許還有點早，但考量目前市場狀況，以及你提到北美電信的庫存評論，當你們在年底退出時，你是否感覺2018年——也就是曆年2018年——核心電信元件會有任何定價方面的問題？

Yes, I mean, I think there's always pricing concerns and cost concerns that we're focused on trying to drive our cost down to meet the expectations of our customers. Assuming this environment as we get into the annual price negotiation, one could expect that we would be on the higher end of the 10% to 15% range. But that hasn't started yet, and I'm hopeful that the inventory in China will burn off and North America will start deploying more and we’ll have a more supply demand balance. I will say that for specific products like ROADMs and ROADM line cards, those prices have been agreed upon, again into 2018 already. So that in my mind is already fixed and set for most of our high-volume customers, but it's the other coherent components and other products that may be under some pressure on the higher end of that 10% to 15% range.

是的，我的意思是，我認為我們一直都會關注定價壓力與成本壓力，並專注於設法降低成本，以符合客戶的期待。假設在我們進入年度價格談判時環境仍是如此，可以預期我們可能會落在10%到15%區間的較高端。但談判尚未開始，我也希望中國的庫存會消化掉、北美會開始增加部署，讓供需更為平衡。我會說，針對像ROADM以及ROADM線卡這類特定產品，價格其實已經談妥，並且已經延伸到2018年。所以在我看來，對我們大多數高出貨量客戶而言，這部分已經固定且確定；但其他相干（coherent）元件與其他產品，可能會在10%到15%區間的較高端承受一些壓力。

Your next question comes from the line of James Kisner with Jefferies.

下一個問題來自Jefferies的James Kisner。

I guess the first thing was, you've been saying that the orders are for multiple customers. I guess can you clarify, is it fair to say that the vast majority of that is -- it's really primarily one customer, or is it more diversified than we're thinking?

我想第一點是，你們一直說訂單來自多個客戶。我想請你澄清一下：是否可以說其中絕大多數——其實主要來自單一客戶，還是比我們想的更分散？

It's primarily one customer, but I wanted to make sure that it was clear that we are working with other customers, both legacy customers that we’ve had in the gaming and personal computing industry as well as additional customers that are going through qualification in anticipation of getting into volume in calendar 2018.

主要是一個客戶，但我想確保大家清楚，我們也正在與其他客戶合作，包括我們在遊戲與個人電腦產業多年來的既有客戶，以及其他正在進行認證、預期在曆年2018年進入量產的新增客戶。

And then separately, one of your competitors has been talking about -- it's very clear they are implying that there is a ramp in high-power version of this laser, not just the low power version. Is it fair to say you're participating in that opportunity as well, or both opportunities?

另外，你們的一位競爭對手一直在談——很明顯他們在暗示這款雷射不只是低功率版本，還有高功率版本正在爬坡。是否可以說你們也在參與那個機會，或是兩個機會都參與？

Yes.

是的。

That helps. Could you also just talk more about a less interesting topic, I guess, for some folks is the Lasers business. So I mean it seems like this business has a problem like every 1 or 2 quarters and you're having trouble getting your arms around it. And given the margins it's important for earnings, you talked about having trouble getting equipment, is that something you didn't see a quarter ago? Is there something here that's not beyond your control, like what's it going to take to get that business sort of back to this $40 million level and stay there like -- what kind of trajectory you expect in that business in the next few quarters?

這很有幫助。你也能多談談一個我想對某些人來說比較不那麼有趣的主題——雷射（Lasers）業務嗎？我的意思是，看起來這個業務幾乎每1到2個季度就出一次狀況，而你們似乎很難把它完全掌握住。考量到毛利率對獲利很重要，你提到設備取得有困難，這是你們在一個季度前沒有預見到的嗎？這裡是否有什麼不是你們能控制的因素？例如，要讓這個業務回到每季4,000萬美元的水準並維持在那裡，需要做些什麼——未來幾個季度你預期這個業務會是什麼樣的走勢？

Yes, it's a good question, James, and one that I've been frustrated with. So I’ll say it is 100% in our control, not out of our control. We did some late design changes to optimize the product and the quality of the product and reliability of the product that then had us changing some of our suppliers and some of the equipment needed to build the product. And so I'd say that, that is well within our control. We should have anticipated it, we didn't and we're addressing that from an execution standpoint. But we do have to fix it and we do have to be able to be predictable in our execution with our customers. And today, it has been not satisfactory in my mind. So I'd say we are on track, we now have the design, equipment, the materials coming in, but we are constrained due to these changes that we should have anticipated a while back.

是的，James，這是個好問題，也是我一直感到挫折的一點。我會說這100%在我們的控制之內，並非我們無法控制。我們做了一些較晚的設計變更，以優化產品、產品品質與產品可靠性，這使得我們需要更換部分供應商，以及更換一些用來製造產品所需的設備。因此我會說，這完全在我們可控範圍內。我們本應預先預期到，但我們沒有；我們正在從執行面來處理。但我們確實必須修正它，也必須能在對客戶的執行上做到可預測。而就我看來，目前的表現並不令人滿意。所以我會說我們正走在正軌上：現在設計、設備、材料都在到位，但由於這些變更——我們本應更早預期——我們目前仍受到限制。

So it sounds like, I think revenue wise, this could get a little better in the near term but it’s going to take a few quarters to improve, is that fair?

所以聽起來，我想就營收而言，短期內可能會稍微好轉，但要改善可能需要幾個季度，這樣理解公平嗎？

My expectation is -- and we guided that Lasers would be flat to down a little bit this quarter, I think that's continued. The Gen 2 was in the number, in the Q4 number. It's gone now. So it's all Gen 3, so it's really a function of how fast we can ramp Gen 3. My expectations are that Lasers increases in the fourth quarter, but we're not there yet, we're not giving guidance. I would say though that the fiber laser demand in the Gen 3 is quite strong, both at our main customers as well as additional customers. So it's really in our ballpark, in our wheelhouse to execute and ramp that up as fast as we can.

我的預期是——我們的指引是本季雷射業務將持平到小幅下滑，我認為這仍然成立。第二代（Gen 2）已包含在第四季的數字裡。現在它已經沒有了。所以現在全是第三代（Gen 3），因此真正取決於我們能多快拉升Gen 3。我預期雷射業務在第四季會成長，但我們還沒到那一步，目前不提供指引。不過我會說，Gen 3的光纖雷射需求相當強勁，不論是在我們的主要客戶，或是其他新增客戶都是如此。所以這真的在我們的掌控範圍、我們的專長領域內——就是要把執行做好，並盡可能快地把產能拉上來。

Just making one quick clarification here. You said that ROADMs was an inventory issue, is it fair to say you don't think you're losing share or there's not a second source for ROADM line cards in North America, and then I'll pass after that?

我這裡快速確認一下。你說ROADM是庫存問題，是否可以說你不認為你們在北美有流失市占，或北美的ROADM線卡並沒有第二供應來源？我問完就把時間讓出來。

I think that -- we have -- if you look at the major carriers in North America, I don't think we've lost any share there. I think the primary issue is the inventory and the timing of the deployments. I think we are in a very, very good position in China and the rest of the world is counting on our ROADMs, current generation and future generation. So I would say that we're not losing share per se. I wouldn't say that the ROADM market was down as much as our ROADMs were last quarter, but I think that's a specific customer inventory issue and not one of losing share.

我認為——如果你看北美主要電信營運商，我不認為我們在那裡有流失任何市占。我認為主要問題是庫存以及部署時程。我認為我們在中國的地位非常、非常好，而世界其他地區也仰賴我們的ROADM——不論是現行世代或未來世代。所以我會說，我們並沒有在流失市占本身。我不會說ROADM市場下滑的幅度有像我們上季ROADM出貨下滑那麼大，但我認為那是特定客戶的庫存問題，而不是市占流失的問題。

Your next question comes from the line of Doug Clark with Goldman Sachs.

您的下一個問題來自高盛（Goldman Sachs）的 Doug Clark。

My first one is on the balance sheet inventory. I know you mentioned 3 particular reasons why it increased. The one in terms of -- just on shipments to customers and kind of building inventory because of excess supply and timing, how much of that $28 million sequential increase was that particular factor versus the other 2?

我的第一個問題是關於資產負債表上的存貨。我知道您提到存貨增加有 3 個特定原因。其中一個是關於—就出貨給客戶以及因供給過剩與時點因素而建立存貨這部分，在連續季度增加的 2,800 萬美元中，有多少是由這個因素造成的，相較於另外兩個原因？

So that factor was probably half of the increase Doug, in terms of -- again. So we've been adding a lot of equipment capacity over the last 6 quarters as China was turned on and North America metro as well. Having parts and equipment on hand, it made sense to go and build some of this out and it’s product that we're going to be selling over the coming few months. And so we made the decision to go ahead and build it out, so roughly half of the build was tied to that.

Doug，就這個因素而言，大概占了增幅的一半—再次說明。過去 6 個季度，隨著中國市場啟動以及北美都會區市場也在擴張，我們一直在增加大量設備產能。手上備有零件與設備是合理的，因此我們決定把其中一部分建置出來，而這些產品會在接下來幾個月內出售。所以我們決定先行建置，大約一半的存貨增加與此相關。

Okay, that makes sense. And then a follow-up question on the QSFP28 revenues up about 50% sequentially. Since pricing is kind of more regular and rolling continuously, can you talk about the pricing dynamics in that industry as you and kind of the rest of the industry ramp volumes and continue to see pretty nice increases in revenues there?

好的，這很合理。接著追問一個關於 QSFP28 的問題：營收較上季成長約 50%。由於定價相對更常態、且會持續滾動調整，您能談談當您以及產業其他公司提升出貨量、且營收持續有不錯增長時，這個產業的定價動態嗎？

Yes, I think it's really 2 separate markets that the QSFP28 addresses. The LR4 which really the client side of telecom and that kind of is stable with fewer competitors, it's a very high reliable telecom kind of performance that is needed for those kinds of products and those products are stable and very solid from a pricing standpoint. The hyperscale QSFP28, CWDM4, PSM4, those kinds of products, it's a tough business. I mean, the margins are challenged, the pricing is challenged, but we are still getting significant orders for the products and we're being told our prices are significantly higher than some competitors. So I think it’s a question in my mind is, will some of these competitors that are providing aggressive prices actually deliver or will we continue to be able to capture share with what we think is an appropriate price for the current generation product. Now that said, we've got a second-generation product coming out this quarter and then we've got another generation coming out in early calendar 2018 with very differentiated technology and cost points that I think we can address the hyperscale market even if the pricing decline comes to the point where our customers are asking it to go.

是的，我認為 QSFP28 實際上對應的是兩個不同的市場。LR4 主要是電信的客戶端市場，競爭者較少、相對穩定；這類產品需要非常高的電信等級可靠度與效能，因此從定價角度來看相當穩定且扎實。而超大規模（hyperscale）的 QSFP28，例如 CWDM4、PSM4 這類產品，則是很艱難的生意。我的意思是，毛利率承壓、定價也承壓，但我們仍然收到大量訂單，而且我們被告知，我們的價格明顯高於某些競爭對手。所以我心中的問題是：那些以激進價格供貨的競爭者，是否真的能交付？或者我們是否能以我們認為對當代產品而言合理的價格，持續取得市占。不過話說回來，我們本季會推出第二代產品，並且在 2018 年曆年初再推出另一代產品，具備高度差異化的技術與成本結構；我認為即使價格下滑到客戶要求的水準，我們也能因而切入超大規模市場。

Okay, that's helpful. And then one kind of follow-up question, just on China in particular. I'm curious if -- or if you can help quantify kind of what the decline in this June quarter was and kind of if you're expecting a further sequential decline in the September quarter or if we’re just holding at a kind of stable low levels, given the inventory reduction dynamics continuing to persist?

好的，這很有幫助。再追問一個問題，特別是關於中國。我想了解—如果您能協助量化一下 6 月這一季的下滑幅度，以及您是否預期 9 月這一季還會再連續下滑，或是考量到去化庫存的動態仍在持續，我們只是維持在相對穩定的低檔水準？

I think it's more stable low levels. If you look at the first half of our fiscal year compared to our second half, it was down dramatically. The 100G components were down, pump lasers weren't down, so that's again, still an indicator of future growth or tight supply and not over inventory situation, but I'd say our expectation is that it stays at that low level, plus or minus a little bit in the September quarter, and then we'll see what happens with tenders and buildouts in inventory as we look into the December quarter. But I think at this point it's too early to tell whether it goes into the December quarter or we see a rebound in the December quarter.

我認為會是較穩定的低檔水準。如果你把我們會計年度上半年與下半年相比，確實大幅下滑。100G 元件下滑了，但泵浦雷射並沒有下滑；因此這仍然是未來成長或供給吃緊、而非庫存過剩的指標。不過我會說，我們的預期是 9 月這一季大致維持在該低檔水準，上下小幅波動；接著我們會觀察標案（tenders）與建置，以及當我們看向 12 月這一季時的庫存狀況。但我認為目前還太早判斷，這種狀況會延續到 12 月這一季，或是我們會在 12 月這一季看到反彈。

Your next question comes from Mark Kelleher with D.A Davidson.

您的下一個問題來自 D.A. Davidson 的 Mark Kelleher。

Just as a follow-up to that, I'm just curious as to the visibility you have into the inventory drawdown in China. Can you see that inventory, is there -- has there been an increase or decrease in the velocity of that being taken down, or are you just getting sort of indirect commentary from your suppliers?

延續剛才的話題，我想了解您對中國庫存去化的能見度。您能看到那些庫存嗎？去化速度是否有加快或放慢？還是您只是從供應商那邊得到一些間接的評論？

Yes, from our customers, I'd say we have good visibility in the raw material and what they have that they haven't built yet. We have less visibility into what their finished goods are and I think that's the challenge we have. I do think the deployments are happening. There was discussion about tenders being awarded this week, which would be a good sign and earlier than I had expected them to be awarded. So I do think the drawdown is happening. We just don't have as good visibility as the finished goods and systems with our components in it as opposed to their raw material.

是的，從我們客戶那邊來看，我會說我們對原物料以及他們尚未投產（尚未組裝/製造）的部分有不錯的能見度。但對他們的成品庫存，我們的能見度較低，我認為這就是我們面臨的挑戰。我確實認為部署正在發生。本週有討論到標案可能會得標，這會是個好跡象，而且比我原先預期的得標時間更早。所以我確實認為去化正在進行。只是相較於原物料，我們對於包含我們元件的成品與系統端的能見度沒有那麼好。

And kind of the follow-up to that, can you just talk about your expectations for your ACO ramp?

再接著追問一下，您能談談對 ACO 放量（ramp）的預期嗎？

Yes. So we continue to make progress. I think we are sampling more and more customers every week and every month getting feedback and getting into the qualification stage. I'd say that in reality, it's probably not material until the end of the calendar year and probably more likely into calendar 2018 because it is a challenge here when there is an incumbent there to be able to first look at the mind share of the customer and then to make our product look like their product and work well with their DSPs. So we're going through that right now, and I think we're making good progress. It's really more -- for us it's a calendar '18 then.

好的。我們持續取得進展。我認為我們每週、每月都在向越來越多客戶送樣，取得回饋並進入認證（qualification）階段。但坦白說，實際上要到今年曆年年底才可能變得較為顯著，而更可能是在 2018 年曆年，因為在既有供應商已在位的情況下，這裡的挑戰在於：首先要取得客戶的心佔率（mind share），接著要讓我們的產品在外觀與行為上像他們既有的產品，並且能與他們的 DSP 良好配合。所以我們正在經歷這個過程，我認為進展良好。對我們而言，重點會更落在 2018 年曆年。

Your next question comes from the line of Troy Jensen with Piper Jaffray.

您的下一個問題來自 Piper Jaffray 的 Troy Jensen。

I got a question for Alan. Alan you made some comments in the prepared remarks about ROADM growth and the next-generation ROADM. I'm just curious to know if you think or your thoughts on the market in China, if you think it's kind of been delayed? And the reason I'm asking is, Andrew Schmitt had put a note out here recently talking about a new generation of WSS or ROADMs, and I think he's calling them an MxN. I think it's the Multicast Switch is integrated in on the line card here or something. So could you just touch a little bit about what this next-generation ROADM is, are competitors going to have it, and the time line for when we think China really does turn on for ROADMs?

我有個問題想問 Alan。Alan，你在事先準備的發言中提到 ROADM 的成長以及下一代 ROADM。我想了解你對中國市場的看法，你是否認為它有點延後了？我之所以這麼問，是因為 Andrew Schmitt 最近發了一份報告，談到新一代的 WSS 或 ROADM，我想他稱之為 MxN。我理解是把 Multicast Switch 整合到線卡（line card）上之類的。所以你能否稍微談談這個下一代 ROADM 是什麼、競爭對手是否也會有，以及我們認為中國何時會真正啟動 ROADM 的時間表？

Yes, I think there’s the ROADMs that are getting deployed today and those are the ROADMs we make today for North America metro and that we introduced last year or the year before. As I said in the prepared remarks, we have shipped next-generation stuff and it's really the end-by-end type of ROADM that is very custom for the China applications. We have many of those engagements going with our Chinese customers and that's why we think that we're really positioned well for the longer-term next-generation of deployments in China as well as the near-term deployments. I'd say that the near-term deployments have been kind of lumpy with respect to the China telecom deploying a few 100 ROADMs, in fact trying it out. I think we're not expecting a lot in our guidance for this quarter from a deployment standpoint, but I think we're going to ship some, but it's really more of an end of the calendar year and into 2018 when the next generation end-by-end starts coming out in a meaningful way.

是的，我認為目前正在部署的是現行的 ROADM，也就是我們今天為北美都會區市場所生產、並在去年或前年推出的 ROADM。如同我在事先準備的發言中所說，我們已經出貨了下一代產品；那其實是端到端（end-by-end）型的 ROADM，針對中國應用做了高度客製化。我們與中國客戶之間有許多這類合作案正在進行，這也是為什麼我們認為自己在中國長期的下一代部署以及近期部署上，都具備很好的布局。我會說，近期部署相對零散（lumpy），例如中國電信部署了幾百台 ROADM，實際上是在試用。我們在本季的財測中，從部署角度並未預期會有很多貢獻，但我想我們仍會出貨一些；真正有意義的端到端下一代產品放量，會更偏向今年曆年年底並延續到 2018 年。

Can you just explain the difference in the new, the next generation, is it the Multicast Switch integrated in?

您能否解釋一下新一代、下一代之間的差異，是把 Multicast Switch 整合進去了嗎？

I wouldn't characterize it as a Multicast Switch being integrated in. I would say it's an alternative architecture where…

我不會把它描述為把 Multicast Switch 整合進去。我會說這是一種替代性的架構，也就是……

You need a Multicast Switch.

您需要一個 Multicast Switch。

Yes, we may not need a Multicast Switch to achieve even further functionality in the advanced ROADM architectures.

是的，在更先進的 ROADM 架構中，為了實現更進一步的功能，我們可能不需要 Multicast Switch。

Okay. And as far as shipping these, will they just ship for samples or ship for revenues?

好的。那就出貨而言，這些會只是出樣品，還是會出貨以認列營收？

They are samples. As part of our development -- joint development agreements we have with some of our customers in China.

這些是樣品。作為我們開發的一部分——我們與中國的一些客戶簽有共同開發協議。

Your next question comes from the line of Richard Shannon with Craig-Hallum.

您的下一個問題來自 Craig-Hallum 的 Richard Shannon。

Maybe I’ll dive into the QSFP28 topic. You talked about -- a little bit about growth both from LR4 and CWDM4 in the June quarter. Curious if you can lay out for -- how you expect the growth for your business to go in the next couple of quarters? You mentioned some -- maybe some tougher pricing, although you're expecting some lower cost design in CWDM4, but wondering where you're focusing your attention?

我想我先切入 QSFP28 的話題。您談到在 6 月季度，LR4 與 CWDM4 都有一些成長。想請您說明一下——您預期未來幾個季度，貴公司業務的成長會如何發展？您提到可能會有一些——也許定價會更具挑戰，雖然您預期 CWDM4 會有較低成本的設計，但想了解您把重點放在哪裡？

Well, our expectations -- my expectations are that both will grow, I think unit growth and CWDM4 will far outstrip the unit growth in LR4. But we do expect growth in both. I think one of the things that we said in the prepared remarks was that we're starting to see the CFP2 contribute to our growth. And so I think there's a long tail in CFP2 in China. We have a good market share there, but I'd say that our expectations are growth in both LR4 as well as CWDM4 especially as we introduce these new generations of CWDM4.

嗯，我們的預期——我的預期是兩者都會成長。我認為在出貨量成長方面，CWDM4 的出貨量成長將遠遠超過 LR4。但我們確實預期兩者都會成長。我想我們在事先準備的發言中提到的一點是，我們開始看到 CFP2 對我們的成長有所貢獻。因此我認為在中國，CFP2 會有一個長尾效應。我們在那裡有不錯的市占率；但我會說，我們預期 LR4 與 CWDM4 都會成長，尤其是在我們推出這些新一代 CWDM4 之後。

Okay. I'll follow specifically on the CFP2 topic -- the CFP2 topic there, Alan. I think one of your competitors suggested it would be kind of a slow fade over time. It sounds like you're expecting some level of growth there. Can you differentiate that or help us understand why you think at least there's going to be some growth beyond this quarter?

好的。我想就 CFP2 這個主題再追問一下——關於 CFP2，Alan。我想你們的一位競爭對手表示，這會隨時間慢慢淡出。但聽起來你們預期那邊會有一定程度的成長。你能否區分一下，或幫我們理解為什麼你認為至少在本季度之後還會有一些成長？

Well, I think it's primarily China. I’d say most of the North America deployments are QSFP28 today or have transitioned or are in the process of transitioning. I'd say that the client side of the China deployments are going to be CFP2 LR4 for quite some time. So there’s, I think a long tail just like we saw on the long tail on CFP, they're still being deployed, although they are finally starting to go down in a meaningful way. I think there's going to be a multi-quarter if not multi-year deployment of CFP2s because there’s chassis out in the network that have slots that need CFP2s. So I think that there’s, first of all the inventory looks like it's kind of taking care of itself on CFP2 in China. So that's why we saw a pick up and we expect to see it continue to pick up as the deployments happen in China.

嗯，我認為主要是中國。我會說北美的大多數部署目前是 QSFP28，或已經轉換、或正在轉換中。我會說，中國部署的客戶端在相當長一段時間內都會是 CFP2 LR4。所以我認為會有一個長尾效應，就像我們在 CFP 上看到的長尾一樣——它們仍在部署，雖然終於開始以顯著的幅度下滑。我認為 CFP2 的部署會持續多個季度、甚至多年，因為網路中仍有機箱（chassis）存在，而其插槽需要 CFP2。所以我認為，首先在中國，CFP2 的庫存看起來正在自我消化。這也是為什麼我們看到回升，並預期隨著中國的部署推進，這種回升會持續。

Your next question comes from Meta Marshall with Morgan Stanley.

您的下一個問題來自 Morgan Stanley 的 Meta Marshall。

I just wanted to kind of see if this is a good summary of areas where you were still kind of adding capacity and it being kind of pump lasers, ROADM, 3D sensing and QSFP28, are there any areas else that we should think that you are adding capacity?

我只是想確認一下，若把你們仍在增加產能的領域做個總結，是否可以說主要是泵浦雷射、ROADM、3D 感測以及 QSFP28？還有沒有其他領域我們應該認為你們也在增加產能？

Yes, I think that's a pretty good summary (inaudible).

是的，我認為這是個相當好的總結（聽不清）。

Okay. And then I might have just misheard kind of in your prepared remarks, but you mentioned a write-down of a deferred tax asset, was I correct or was there more explanation of that or just kind of normal course?

好的。然後我可能在你們事先準備的發言中聽錯了，但你提到遞延所得稅資產的減記（write-down），我理解得對嗎？還是對此有更多說明，或只是正常流程？

That's correct, yes. There was a write-down of deferred tax assets, roughly $30 million or so where from a likelihood standpoint, we would not be using those assets going forward.

是的，沒錯。遞延所得稅資產有一筆減記，大約 3,000 萬美元左右，因為從可實現性的可能性來看，我們未來不太可能使用到那些資產。

Okay. Most of the questions have been asked, so I will pass it on.

好的。大多數問題都已經問過了，所以我就把時間交給下一位。

I would now like to turn the call back over to Alan Lowe, President and Chief Operating Officer for closing remarks.

我現在想把電話交回給總裁兼營運長 Alan Lowe，請他做結語。

Thank you, operator. I want to thank our customers for their business and again thank our employees for their hard work in growing our business and putting us into an excellent position in the market. We are in the middle of a worldwide expansion of bandwidth. Photonics are increasingly becoming critical to manufacturing and to the next generation high-volume 3D sensing applications 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.

謝謝，接線員。我要感謝我們的客戶對我們的支持，也再次感謝我們的員工辛勤努力，推動業務成長，並讓我們在市場上處於極佳的位置。我們正處於全球頻寬擴張的中期。光子技術正日益成為製造業以及下一代高量產 3D 感測應用的關鍵，讓 Lumentum 的未來一片光明。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專區，並會定期更新。

This concludes our call for today. We would like to thank everyone for attending and we look forward to talking with you again in another 3 months. Thank you.

今天的電話會議到此結束。感謝各位參與，我們期待在 3 個月後再次與各位交流。謝謝。

This concludes today's conference call. All participants may now disconnect.

今天的電話會議到此結束。所有與會者現在可以掛線。