萊迪思半導體 (LSCC) 2002 Q3 法說會逐字稿

Good morning and welcome to today's conference call. Copies of the Lattice Semiconductor third quarter ending September 3rd, 2002 earnings press release may be obtained from the company's website, which is www.latticesemi.com. This call is being recorded and broadcast live over the internet by on24.com. A live broadcast and replay will be available on the Investor Relations website, www.latticesemi.com, until October 30th, 2002. Now I'd like to turn the call over to the Senior Vice President and Chief Financial Officer, Stephen Skaggs. Go ahead, sir.

Thank you and good morning, everyone. Joining me on the call today are Cyrus Tsui, our CEO. Steven Laub, our President. And Rodney Sloss, our Vice President of Finance.

Before we begin, I'd like to read the Safe Harbor statement. Then I will provide a financial overview and the outlook. Steve will provide a business overview. Then we will have a question and answer session. This conference call may contain forward-looking statements. Including statements about our future quarterly financial results, revenues, customers, product offerings, our ability to compete and our recent acquisitions. Investors are cautioned that actual results and events could differ materially from these statements as a result of a number of factors, including overall semiconductor market conditions, market acceptance and demand for our new products. Risks related to our acquisitions and our integration of these businesses. Our dependencies on our silicon wafer suppliers. The impact of competitive products and pricing. Technological and product development risk. Refer to our current filings with the SEC for further descriptions of these risk factors.

I will now review our statement of operations for the third calendar quarter on a pro forma basis, excluding amortization of intangible assets. Revenue for the quarter was $56.1 million, essentially flat with last quarter and consistent with our original outlook. During the fourth quarter, FPGA products contributed $17.2 million or 13% of revenue. CPLD product revenue accounted for 69% of revenue. And low density products accounted for 18% of revenue. Turning to revenue by geography, for the September, 2002 quarter, the America's made up 43% of revenue. Europe, 26%. And Asia, 31%. Revenue by end market for the September quarter was as follows. Communications, 43% of revenue. Computing, 27% and industrial/other 30%. Revenue mix by channel for the September quarter was as follows. Direct, 50% of revenue and distribution 50%. Proceeding with the rest of the statement of operations, gross margins for the quarter were 60.0%, in line with the 60.2% reported last quarter. Overall operated expenses were flat with the prior quarter and quarterly R&D expense was $21.5 million, up slightly from the $21.1 million reported last quarter, while quarterly SG&A expense was $11.7 million, down slightly when compared to the $12.2 million reported last quarter.

Other income for the September quarter was $2.8 million, down from the $3.1 million reported last quarter. We did not sell any UMC shares last quarter, however, we did realize the gain due to the open market repurchase of $24.25 million in face value of our convertible notes. Our tax rate for the quarter was 26% and the reported tax yield remained at $4.25 million. September quarterly pro forma earnings were $6.6 million, down 6% sequentially from the $7.0 million reported last-quarter. The share count was 110.7 million, down slightly from last quarter, and pro forma earnings per share were 6 cents, flat with the prior quarter.

Turning now to the balance sheet, cash and short-term investments at the end of September decreased approximately $18 million to $290 million. This decrease was entirely due to the repurchase of our convertible notes for $19.5 million in cash. During the quarter, we also spent $4.5 million on capital expenditures while depreciation was $4.8 million. Inventory declined to $61 million from the $64 million reported last quarter and on an aggregate basis, total inventory, using deferred income as a proxy for distributor inventory was $75 million, down from the $81 million reported last quarter.

I'd like to turn now to a discussion of our financial outlook. We entered the fourth quarter with a sequentially improved backlog, but continued limited visibility. As you know, the December quarter is traditionally a weaker one for our industry due to the absence of two shipping weeks during the holiday period. We see no reason why this year should be different and despite our improved backlog, expect less overall turns business this quarter. Consequently, we expect our revenue to be flat, more or less, on a sequential basis. For the rest of the P&L, we currently have the following expectations for the December quarter. We expect gross margin as a percentage of revenue to be flat with the September quarter. We also expect operating expenses to be flat sequentially. We expect other income to be approximately $2 million, our tax rate should remain at 26% and our reported tax yield at $4.25 million. Finally, our shares outstanding should increase to approximately 113 million shares as a result of the shares we recently issued in the Cerdelinx acquisition.

With that, I'd like to now turn the call over to our President, Steven Laub, for his comments. Steve?

Thank you, Steve. Good morning, everyone. I will begin my discussion with respect to comments on the third quarter's results.

As already stated, our revenues were essentially flat at $56.1million, and our ORCA, FPGA, FPSC products generated $7.2 million. It is important to note that our ORCA, FPGA, FPSC revenues have grown each quarter since Lattice acquired the business in the first quarter of this year. Particularly noteworthy in this quarter is the record revenues generated by the FPSC products which accounted for over 20% of our total ORCA product sales this past quarter. Sales by end market as compared to last quarter also illustrate two important trends. The first is a continued reduction in sales to communications customers. As these declined as a percent of total Lattice revenues from 55% to 43%. The other trend is the growth in sales to industrial and other accounts. These grew from 22% in Q2 to 30% this past quarter. This is due to two factors. First, continued decline in orders from communications equipment companies, which is impacting nearly all semiconductor suppliers which serve the communications market. The second, we're seeing the positive impact of the sales diversification program we instituted approximately one year ago. The sales diversification program is based on systematically identifying and targeting the largest PLD users outside of communications to pursue from a sales and marketing perspective. The revenues from the diversification program are beginning to be generated. Furthermore, we are enhancing our product line to pursue non-communication customers, as well. This past quarter, we released a version of our ISP mock 4,000 product line, which is optimized for the automotive customer base. In addition, we are currently developing other new products, tailored for non-communication customers, scheduled for release in the first half of next year.

As a measure of our success in CPLDs, Lattice's CPLD revenues were flat this prior quarter. However, since the other two CPLD suppliers typically only comment on their CPLD revenues when they grow and there's been an absent of comment this quarter, it is reasonable to conclude the CPLD revenues declined. Therefore, Lattice gained CPLD market share this past quarter. Going forward, those of you familiar with Lattice are aware that in the last few years, our primary product and revenue thrust in the CPLD area has been with the BFW products, especially our low-voltage BFW products. During the past quarter, our revenues associated with these products rose by approximately 10% and that represents approximately 45% of total CPLD revenues. At the same time, the design activity associated with the low-voltage BFW products continues to increase. Overall, low voltage BFW design opportunities represent approximately 65% of total CPLD design opportunities.

For our new BFW 3 products, which accounted for 7% in the March quarter, of total CPLD design opportunities, this jumped in Q3 and now account for over 20% of total CPLD design opportunities. We believe that the impact of these low-voltage BFW designs, especially BFW 3 opportunities, will translate into tangible revenues for the company in the future. This past quarter, Lattice further enhanced its position as the leader in CPLD solutions as we completed the rollout of our newest BFW 3 product family, the ispLSI 5,000-v family. A 2.5v family with advanced features such as ASIC I.O.. In addition to extending our leading product position in CPLDs, Lattice has, during the last nine months, initiated three other important new product thrusts to drive our revenue growth.

First, Lattice has taken the leadership position in providing devices that combine programmable logic with high speed I.O.. Especially SERDES technology intergraded into a single chip. This is one of the fastest growing areas in programmable logic. Today we offer the industry's broadest selection of solutions, providing the highest performance, the lowest power, the greatest number of channels and the lowest cost. As noted by our recent press announcements, we've boosted the performance of our ORCA ORT82G5 device to 3.7 Gbs per second per channel. The highest performance of any intergraded PLD series device. This device is ideal for 10 gigabit ethernet systems. Furthermore, each member of our recently announced ispXPGA product family, offers 850 megabits per second per channel SERDES in configurations of 4 to 20 channels per device, which is more SERDES channel per device than any other PLD. Just this week, we announced the ispGDX 2, a high-performance crossbar switch device that contains from 4 to 16 SERDES channels per device at speeds up to 850 megabits per second per channel. This family offers the advantages of high performance, versatility and low cost. The cost per channel SERDES in this device is only $2 per channel. The lowest cost per channel offered in any programmable device. To assure leading series base solutions in the future, we've acquired the expertise and brought it internally to our acquisition of Cerdelinx Corporation.

The second major product area for Lattice is our [INAUDIBLE] FPGA or FPSC products. As previously stated, this past quarter, we achieved record revenues from these product as they accounted for over 20% of our total FPGA revenues. In addition, we recently released the ORSO82G5 device a sister device to the ORT device that provides similar performance but is optimized for SONET based systems. We expect that these products will continue to provide an increasing portion of our total ORCA revenues, although they may not do so in a linear fashion. As we've explained before and you've seen from other FPGA suppliers, FPGA revenues are quite dependent on timing of prototype bills by customers and therefore the revenue has shown to be more chunky than linear in this environment. To continue to drive our FPSC products, in addition to the ORSO product this week, we plan on releasing more in the first half of next year.

The third major product area is our newly released ispXP products. These products are the industry's first to combine non-volatility, infinite reconfigurability and instant-on capability. Capabilities critical to a significant percentage of programmable logic users. The ispXPLD adds additional unique capability. It is the first CPLD-like product family to offer a building block to get a configuracy to logic or memory, therefore serving many more applications and attractive to a far larger market opportunity than what is available to traditional CPLDs. They've only been offered in the marketplace since last quarter, but the activity and interest from our customer base is exceedingly high as measured by design opportunities. While the business environment for our industry and sales continues to be subdued, the technology Lattice is offering to our customers has never been as valuable and compelling. We believe with these products, Lattice has the largest market opportunities available to it in its history; a more competitive supplier and is substantially the foundation for our revenue growth for 2003 and 2004.

I will now open this session up to questions.

Thank you. Today's question and answer session will be conducted electronically. If you have a question, please press the star key followed by the digit 1 on your touch-tone phone. We will call on your in the order that you signaled why called upon, repeat your name and company name before posing your question. Please ask one question at a time. Time-permitting, we will come back to you for additional questions. Our first question, Dave Duley, Wells Fargo.

Yes, Dave Duley, Wells Fargo. I wondered, for a reference point, can you give us the percentage of FPSC revenues last quarter as far as total FPGA? And comment on the book-to-bill during the quarter?

As I mentioned, the FPSC as a percent of revenue as far as total FPGA was over 20% this past quarter. In fact, FPSC revenues for us last quarter were a record for us. Our book-to-bill is close to one.

What was the percentage FPSC last quarter in the second quarter?

Oh, in the second quarter. Just to share with you and this probably also will sort of let you better appreciate why we call these revenues non-linear, they actually grew over 500% sequentially between Q2 and Q3.

In the future, is that the type of, you know, what you expect --

No, as I said in my comments, we expect this business to continue to grow and continue to grow under perhaps an increased percentage of overall FPGA business, but it's going to be non-linear or I think the term that has been used in the past is chunky, with the FPGA business. In fact, this quarter it may be that the business is flat or slightly down.

Okay. Could you give us a quick commentary on the communications business and your outlook there for when it might bottom?

The best people to give you the outlook are the communications equipment companies. They see it before we do. But with respect to what we're seeing there, the communication continues to be weak. Obviously what we're seeing is consistent what the other PLDs suppliers have been echoing. That the wire line is particularly weak, that 3G ramp is far slower than people had anticipated and that the only area that is on a relative basis better than others would be some shipments of wireless equipment. But overall, communications continues to be weak and thinking about when it's going to bottom, again, I think that the equipment guys have a better sense for that than we do.

One final question from me is in your industrial and other that seems to have shown pretty nice improvements, could you tell us what the applications are that you're finding in that other category that are exciting and providing growth?

In the other category besides industrial would be consumer applications, we're seeing growth in plasma displays, set-top boxes, digital cameras and so forth.

Thank you.

As a reminder, please limit yourself to one question and requeue to come back to you. Our next question from Mark Edelstone with Morgan Stanley.

Good morning, guys. Just a couple more questions on the FPSC. At this point, how many designs are actually shipping? And how many designs are under way? And can you give us a general sense as to what kind of minimum ticket size or minimum kind of volumes you would expect to have in each of the designs that ramp up?

With respect to, hi, Mark, with respect to certain designs shipping, virtually all of them are based on efforts Lattice put forward. We don't disclose a specific number of designs or rose per design. And in fact, a lot of the, you know, information on this will be new business for us, as well. So, I think hypothesizing what that is at this point is really not going to provide a lot of particularly effective guidance, I think, to the street.

Maybe just another angle, then, can you tell us, Steve, why you're winning designs? What are the key things customers are focused when they do an FPSC as opposed to a cell-based ASIC or just doing a generic FPGA, what allows you to get the design win?

Well, some real values of these products is it has, within that technology, you have a generic FPGA with an embedded ASIC within the same chip. So you're getting, as compared to a standard FPGA, a time to market advantage, you're getting a IP that would already be used embedded in the product that is already tuned for the customer's application. Getting a significant lower cost product than a generic FPGA, and in some respects you are getting capability that you can't even implement in a FPGA, such as the SERDES technology which cannot be built in a standard generic FPGA. We're winning the designs because our products here are fundamentally better products for these customers than any other alternative they have to utilize for their applications. That's why we acquired this technology and this business.

Okay, thanks a lot, guys.

Thank you.

Our next question from Hans Mosesmann with Prudential Securities.

Yes, thank you. One question, linearity. How did that progress throughout the quarter? Thanks.

It was overall reasonably linear throughout the quarter. The business.

And that was expected?

Yeah, our business traditionally, is relatively linear as you should know from our past. I think throughout the quarter, perhaps there is some expectation in the summer you would find that would be a little bit softer in July, August and a little bit stronger in September. We found the overall in the quarter was reasonably linear.

Okay, thank you.

Our next question from Robert [JOURVSKY] Jeffries and Company.

Hi. Could you tell us what was interest expense during the quarter? Also, do you have guidance for Cap Ex and DNA?

I will let Stephen Skaggs take over those questions. Steve?

We don't break out interest expense. We report other income. That was about $2.8 million. We do report the number of convertible notes that are outstanding on our balance sheet and the interest rate on those was 4.75 per year. You can calculate that yourself base upon the outstanding face value of notes. With respect to Cap Ex going forward, we've said the outlook for the year should be about $15 to $20 million in capital and we're still comfortable with that for the entire year. And with respect to -- I think you said D&A, should be constant with the number I provided.

Okay. What was the share count at the end of the quarter?

110.7 million.

Okay. Great. Thanks a lot.

Our next question come Jack Romaine, SG Cowen.

Could you guys please talk about the strength in your industrial and other markets and provide us more detail there. Is there a possibility of any kind of inventory rebuild here? Or is this new programs?

With respect to strength in the industrial marketplaces, I think you're getting a mix of two things, you're getting overall that the end market is stronger than some of the other end markets, for example, communications, which has been our traditionally largest end market. So, I think overall that has held up better. With respect to the inventory buildings and new programs, my sense is that generally it is really new programs that are instituted in digital consumer area, more than any type of sort of inventory adjustments.

Would you expect the strength to continue into Q4 as you look into a relatively flat quarter, are you expecting continued strength in the other division and continued weakness in communications?

Well, you know, it's, again, everybody who's been-- I think hypothesizing what's going on go on in the marketplaces has been -- I think looked back in retrospect with respect to their predictions. But overall, I think the kind of direction we've seen through this year will be continued through Q4.

Okay. And then just one housekeeping, any 10% customers?

No. I don't believe so.

Okay. Thank you.

Yep.

Our next question from Tad Lafountain with Nehman and Company.

Was there a sift in the quarter in ASPs? And what the relative ASPs are between the CPLD segment and the FPGA if there is variance in terms of the average selling price between those two segments.

With respect to ASP's in the quarter, overall accompanying ASP rose slightly in the quarter because of mix issues. With respect to ASP's between CPLD and FPGA, we don't comment on the differences there.

Our next question from Larry Borgman, Canter Weiss.

Thank you. Some of the other -- two questions, some of the other companies indicated they were surprised by September weakness, butt apparently you didn't see that and secondly, could you highlight why -- what areas you thought you were picking up market share in the CPLD versus some of the other competitors?

Well, with respect to sort of overall, you'd say, you know, what happened with respect to business in September, the sense is there is there was another question with respect to seasonality. You expect September will be stronger than July or August. What we saw was that September was consistent July and August Friday that standpoint, you can see that expectations and reality were not -- were a little divergent on that. With respect to your second question, where are we getting market share in CPLD? It is pretty hard to appreciate in this marketplace -- holding flat means you're getting market share, guys are declining on an overall basis. We've had a lot of new products we've released in the last year, year and a half in the CPLD area. We have a strong product position, the strongest we've ever had in that marketplace and overall we're seeing the impact of that.

Thank you.

Our next question from David Wu with Morgan Stanley.

Yes, two questions. Can you comment on the geographical mix? Europe was surprisingly strong in the third quarter. Also, I guess the America's reflect the decline in comp business. Can you also talk about what kind of reception and what have you found when you call marketers XPGA families of PGA's relative to your expectations and also going up against pretty entrenched competitors out there.

With respect to revenue by geography, as far as our expectations, I'd say going to this quarter is really a continuation of the same. North America probably will continue relatively weaker than the other geographies. Europe, probably essentially flat on an ongoing basis moving to this quarter. I would say Asia is an area where I think you may actually see a relatively stronger growth. Going forward. With respect to the reception of the XPGA products, you know, overall we're very excited by these products, we're seeing a lot of interest on these products, but it is very early to give you any sort of concrete specifities,we just released the products in the last quarter. With respect to concrete ways to monitor that business and measure it, we're still a few quarters from being able to do that for you.

Uh-huh. Where have you found the early successes?

The early successes are, you know, traditional FPGA applications and widespread across different end markets.

Thank you.

Our next question comes from Sumit Dhanda, Banc of America Securities.

Hi, guys, a couple of questions. First, can you generally comment on your longer term outlook and growth for CPLDs versus FPGAs, taken into account the current environment for overall programmable logic growth? And second question was Altera made a fair amount of noise on their newest cyclone line of FPGAs it seams suggest that, you know, their pricing is a lot more competitive than some of your new general offerings, can you sort of speak to that, please?

Speaking to the first issue, long growth, with respect to long-term growth for PLD, I will comment on that first. My sense is that as the semiconductor market recovers, and I will let you figure out when that's going to happen, our since is that the PLD market will, as it did before this downturn-grow faster than the overall market, primarily because the sort of changes structured that are occurring in the marketplace are favoring PLD usage as a preferred solution for logic implementations by customers, especially with respect would to what's occurring with respect to mass cost and how it's effecting ASIC usage. Our sense is that FPGAs will grow nicely in the environment. Perhaps SPGA may be a slightly higher growth rate, but overall, both should have good success going forward. What was your second question? With respect to the cyclone product line from Altera?

That's right.

Now you're talking about a product line that's not really in the markets yet and how we're going to be competing and how it positions this -- this product line is positioned against the SPARTAN line, we believe, from Zylinx. Which are both [INAUDIBLE] bare bones products from a stand point of functionality, and I think that's really where these products compete. They said it's remain a consumer marketplace, low-end type of product.

Okay, thank you.

Our next question come Robert Toomey, RBC Dain Rauscher.

Yes, a question regarding some of the new markets that you're addressing. With the new products and technologies you've acquired and are developing, have you sized your addressable market potential now versus where it was a year or two ago. Have you been able to put numbers on that?

If you think about it, go back a year or two ago, the only markets we were in were CPLD marketplaces, that's 30 to 33% of the total PLD marketplace. So, our addressable market today is we can compete broadly throughout the FPGA market as well as the rest of the PLD marketplace. I would say our addressable market has tripled overall from where we were just a year ago.

Okay. Great. And of the new products you have under development, are there ones you think can grow faster at this point than another? Can you comment on that?

I think it's a little early to comment which of the products will grow at what particular speeds. I think the one we feel very good about is the different product thrusts that we have whether it be in the SERDES area, the FPSC area , or the ispXP products all three of these new ones, our sense is that they're all going to be contributing substantially to our revenues in the future.

Okay, great. And one last question as to do with acquisitions, you've been pretty busy on that front in the last year or two. Are you continuing? You had a lot of cash, are you continuing to look at potential acquisitions? And do you see that as ways of augmenting your growth and market share going forward?

We looked at acquisitions in the past as a way to obviously pursue into new marketplaces and acquire technology, we think are important for us moving forward. We will always continue to do that. I think, though that, the first focus of any company is driving its internal operations and driving a new product out of internal operations.

When you think about the cash you have, can you talk about what you do with the cash?

What we do with the cash, Steve, do you want to comment that?

Well, the, you know, we have a debt outstanding the form of convertible notes, so, we need have cash to provide for that. Our operation generates cash on a quarterly basis. We are cognizant of the fact that the semiconductor business broadly defined as a capital intensive business, you know, in the past our cash has been used to make strategic investments in foundries or acquisitions, as you noted, Bob. We want to have a healthy cash reserve to maintain the flexibility to manage our business in the best interest of pushing it forward over the long run. We will look at each opportunity opportunistically.

Great, thanks very much.

Our next question from Kevin.

Good morning, Steve. The overall guidance for the December quarter in some ways sounds similar to your two principal competitors, but on the other hand, given your historical weakness in December with the two less shipping weeks, to me sounds a bit better. If you could possibly highlight product area that you feel more confident about for the quarter that would lead to you feeling reasonably confidence with that guidance. And if I could ask a second question after that, how you're feeling about inventories because there are three, three and a half quarters including this stuff out in the channel.

With respect to product areas, we don't typically comment on what product areas are growing and not having as much growth and driving the next quarter's growth. I think overall, as Steve gave out the guidance that we would be essentially flat this quarter with the prior quarter. The sense is that given our position today with respect to what we have in backlog and anticipation of what we expect for this quarter, we feel that's an accurate guidance to give. I can't really comment on, you know, is this going to be driven by the FPGA or the CPLD or what. We don't comment what products will drive what particular growth.

Okay, and then on the inventories? What your thoughts are with the current levels of still, you know, having three to three and a half quarters of inventories between what's out there in the channel, too.

Yeah, this is Stephen Skaggs, Kevin. With respect to inventory, we feel we're making good progress and working the inventory balances down in absolute terms and also increasing the inventory turns. If you look at inventory measured in aggregate, including deferred income, I think you will find since the beginning of the year downturn we've worked the inventory balances down fairly regularly and with a large amount of success and in that time, we also acquired a new business in a gear that I would remind everybody that requires additional inventory to support. So, we think we've done a good job, you know, working it down. With respect to the current balances, we believe that all the inventory will sell its generic product and we continue to have vibrant markets for those products. I should note that each and every quarter we consistently value that inventory with a lower up cost or market methodology that requires us to Markdown the inventory to an amount that reflects what we believe we can realize for that inventory. And notably, those charges are reflected in our gross margin each and every quarter. So, you know, we think the inventory will sell. We're working it down. And we think that our process provides you with a gross margin that is a realistic gross margin and more importantly, one that provides a good, historic trend for you to evaluate with respect to our actual costs of doing business.

All right. Thanks for your comments.

Our next question from Tyrone Lee, Credit Suisse First Boston.

The question would be when do you expect revenue contribution or rather material revenue contribution from our PLD products? And if you could give us any additional -- you know, your sense of plans for growth over the next couple of quarters?

You know, the revenue contribution from any sort of, you know, complex product and typically the FPGAs are complex products, you to have them designed in and then have the customer go to production. That process is taking close to 18 months now. Our expectation is before you would see real production volumes of these products, you're really talking the end of 2003 for that. The products just got released last quarter.

Great. Thanks.

Star 1 for questions. Our next question from Charles Boucher with Bear Stearns.

Hi, one of your competitors is making a point of their aggressive move into 300 millimeter manufacturing. It doesn't appear you're making a particularly aggressive move there. Can you talk about the reasons why you wouldn't be doing that this time? And when do you think it will make sense? When does it make sense for you? And will you be able to make the move expeditiously when the time is right?

You know, we're constantly evaluating that question. Our sense is to make that move when it comes economically justified to make that move. I know that others have discussed it and the particular supplier you commented on talks often about the moves in the area and about how it should lead to a lower cost and so forth. But I think the best measure, perhaps, of evaluating that move can be seen by, you know, the gross margin of the relative companies. If I'm not mistaken, I think our gross margin this past quarter actually exceeded that of our supplier and at the same time, we achieved that without having done a $100 million plus inventory writedown over the past year or two. So, I tend to think that today it's not really justified to make that move, but we're value waiting that.

What's the major factor now in your view that makes it economically unfeasible?

People aren't seeing the yields today at that level that they had anticipated seeing. And fundamentally it's really from a cost standpoint, it just isn't there.

Okay, thanks.

Our next question from Joseph Toe, Pacific Crest Securities.

Good morning. Just a couple of quick questions. What were turns for the quarter?

They were in the high 60's for us.

Okay. Great. And can you elaborate a little bit more with regards to what you're going to see in terms of long-term gross margins and also a second question behind that, you know, how you see growth going on for CPLD specifically toward Lattice and not the overall market?

Gross margins, our anticipation is that they've been roughly at 60 to 61% verse the past year or two and the sense is that we think that's probably about the right area to be for gross margins, to the extent that you're pushing your gross margin up too high, perhaps you're not encouraging your marketplace by driving prices down consistently with your cost. We think that's probably the right level. With respect to our CPLD growth as compared to the overall market, our sense is that in the CPLD area is that we should, given our product position and so forth, should continue to gain market share in that area. So, whatever the books may be, we should be able to grow a bit faster than that.

Do you have any idea as to like do you have any measures you might be able to give us in terms of how much market share you're getting?

We use what's reported by each of the major suppliers. On a, you know, preferably a quarterly basis or annual basis. To the extent that other suppliers provide that information, we can provide you with that. We provide the information each and every quarter in an open and consistent fashion and the other two major CPLD suppliers tend to only comment on it when they have a quarter they believe worth commenting on.

Thank you.

Having no further questions, I'd like to turn it back to you for additional closing comments.

Great. Thank you, everybody, for attending. That's all for now. If you have follow-up questions, call us at usual numbers. Thanks.

This concludes today's conference. You may now disconnect.