Maxlinear Inc (MXL) 2011 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the MaxLinear First Quarter 2011 Earnings Conference Call. During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be open for questions.

(Operator Instructions)

Today's conference is being recorded April 28, 2011. I would now like to turn the conference over to our host, Suzanne Craig with The Blueshirt Group Investor Relations. Please, go ahead.

Thank you, operator, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss MaxLinear's first quarter 2011 financial results. Today's call is being posted by Dr. Kishore Seendripu, CEO, and Adam Spice, CFO.

During the course of this conference call, we will make projections or other statements regarding future conditions or events relating to our products and business.

Among other statements concerning future events or projections, we will provide information relating to our current expectations for second quarter 2011 revenue; our expectations concerning trends in our cable revenues and our efforts to expand our addressable markets; the anticipated impacts of the events in Japan on our revenues; our current views regarding trends in our markets, including their size and potential for growth; and our competitive position in our target markets.

These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, and actual results may differ materially from results reflected in these forward-looking statements. We are subject to substantial risks and uncertainties that could adversely affect our future results.

Our business and future operating results could be adversely affected if our target markets, including the cable market, do not grow for any reason if we experience substantial competition, including as a result of pricing pressure, as a result of cyclicality in the semiconductor business and for other factors.

In addition, with respect to forward-looking statements relating to Japan, actual results will depend in large part on the course and pace of Japan's recovery from the recent disaster. A more detailed discussion of these risk factors and other factors you should consider in evaluating MaxLinear and its prospects is included under the caption, Risk Factors, in our filings with the Securities and Exchange Commission.

We caution you that such statements are just projections. Accordingly, our future results may differ materially from such projections. These forward-looking statements are made as of today, and MaxLinear does not currently intend, and has no obligation to update or revise any forward-looking statements. The first quarter 2011 earnings release is available on the Company website at maxlinear.com, or you may call our offices a 415-217-7722 and we will fax you a copy.

In addition, MaxLinear reports gross profit and net income and basic and diluted net income per share in accordance with GAAP and additionally on a non-GAAP basis. Our non-GAAP presentations exclude the effect of stock-based compensation expense and its related tax effects, and assumes the conversion at all times during the reporting period of our previously outstanding preferred stock. All shares of preferred stock were converted into common stock immediately prior to the closing of the IPO in March of 2010.

Management believes that this non-GAAP information is useful because it can enhance the understanding of the Company's ongoing economic performance, and MaxLinear therefore uses non-GAAP reporting internally to evaluate and manage the Company's operations.

MaxLinear has chosen to proven this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results. The full reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued earlier today and available on our website, and we ask that you review it in conjunction with this call.

And now, let me turn the call over to Kishore Seendripu, CEO of MaxLinear.

Thank you, Suzanne, and good afternoon, everyone. Thank you all for joining us today. Before getting into the specifics, I would like to take this opportunity to express our condolences and continued support for the people of Japan, who have a special space in the heart of MaxLinear team, given mutual, deep and longstanding relationship.

We realize that there has been some uncertainty regarding Japan, as it relates to our publicly disclosed historical revenue concentration in that country. Adam will address these concerns with as much in sight as we can provide at this time.

With that said, I'm pleased to be able to report first quarter 2011 results consistent with prior guidance, reflecting a resumption in sequential quarterly growth despite the unfortunate tragedy in Japan that unfolded late in the first quarter. Net revenue in the first quarter was $16.9 million, which was above prior guidance, up 7% over the fourth quarter of 2010 and up 5% from a year-ago quarter.

GAAP and non-GAAP gross profit in the first quarter were 64% of revenue, consistent with our prior guidance and within our long-term model of 62% to 65%. Non-GAAP net loss for the first quarter was $0.1 million or $0.00 per diluted share. GAAP net loss for the first quarter was $1.1 million or $0.04 per diluted share.

I would like to now first speak to the trends we are seeing in the marketplace, where at a high level, strength in cable and automotive overcame headwinds in mobile and consumer segments. In cable, one of the major highlights for the quarter was a continued traction and growth realized in both the video set-top and advanced DOCSIS 3.0 data and voice gateway markets.

In the advanced DOCSIS 3.0 cable gateway segment, we are seeing this platform gaining momentum, and we are increasingly confident in our prospects of the cable segment given our market-leading offering.

Cable revenue increased more than 60% quarter-over-quarter, which exceeded our expectation with cable's relative contribution in Q1 approaching what we had earlier expected to be at the end of 2011. As cable operators respond to competitions of satellite and fiber network providers by upgrading to the broadband DOCSIS 3.0 digital cable network, the resulting set-top box update cycle represents a significant opportunity for revenue growth.

Specifically, during the first quarter, we announced that Hitron Technologies Incorporated has selected the MaxLinear MxL261 digital cable multi-channel tuner-demodulator single-chip front-end IC with its new DOCSIS 3.0 cable modem called CDA-30360. The Hitron CDA-30360 is a high-speed data cable modem, which recently achieved certification from CableLabs. It was designed using both the MxL261 and the Intel Puma 5 chipset.

Along with the continued design win momentum for our MxL261 based cable, data and voice gateway platforms, like the Hitron CDA-30360 modem, we are gaining strong customer design traction immediately using our single channel and dual channel tuner-demodulator SOC cable content solution. As a result, we expect to be in a position to announce new platforms and design wins entering into production in the near future.

Strength in cable was accompanied by growth in automotive, as we saw increased shipments of TV-enabled in-cabin navigation systems for automobiles in Japan. The previously noted strength in cable and automotive are offset somewhat (inaudible), which was primarily attributable to digital to analog converted set-top boxes [going] to saturation of demand, post analog TV broadcast shut-off in Spain and Italy, softness in demand drive [IPTV] set-top box shipments in Europe, and a feasible decline in Japan digital only TV solution.

Areas of growth within consumer that offset somewhat the weakness mentioned earlier included -- in consumer earlier, included standalone HD and PVR set-top boxes in the DVB-C standard based terrestrial TV market in Europe, and the volume ramp of our previously announced MxL301 hybrid TV tuner direct onboard solution in Orion's band of TV sold through the US retailers.

As we have indicated on prior calls, our presence in mobile TV consists of a mature market for RF receivers for the Japan-only handset market and accounts for small and decreasing portion of our revenue.

In conclusion, in the first quarter, despite the tragic events in Japan, the Company delivered revenue that was above our prior guidance, and we continue to see strong design win momentum. We continue to be encouraged by promising market opportunities and product cycles involving our new cable and digital TV SOCs and hybrid TV tuners for TVs in the lateral half of 2011.

Now, let me turn the call over to Adam Spice, our Chief Financial Officer, for a review of the financials and our forward guidance.

Thank you, Kishore. I will first review our results, and then briefly discuss our outlook. In summary, Q1 results were consistent with our expectations. And our strong execution in cable in both video and non-video applications supports our earlier optimism for this business going forward. As Kishore noted, net revenue for the first quarter was $16.9 million, which reflects redemption in growth for the business on both prior year and prior quarter comparative basis.

In our press release, we reported both GAAP and non-GAAP results. Please refer to our press release for the detailed reconciliations between GAAP and non-GAAP results. Our first quarter non-GAAP results exclude the effect of stock-based compensation expense and its related tax effect.

Now moving to the rest of the income statement. GAAP and non-GAAP gross profit for the first quarter was 64% of revenue and consistent with our prior guidance compared to 66% in the fourth quarter and 68% in the year-ago quarter. Similar to the dynamics discussed in our Q4 2010 earnings call, we attribute our lower gross profit percentage in the first quarter to the ASP impact of certain tuner-only solutions, for certain customers priced ahead of [realized] benefits from plant transition and supply for a lower cost secondary foundry.

Non-GAAP operating expenses, which exclude $1.6 million of stock-based compensation expenses, were $11.1 million, up 8% from the prior quarter, which included $7.1 million of R&D expenses and $4.0 million of SG&A. Headcount increased to 224 at quarter-end from 210 in the prior quarter, and 183 at the end of the first quarter last year.

This significant increase in headcount and related spending over Q4 2010 was consistent with our prior guidance. It reflects not only the people impact of certain payroll items, but more proportionately our continued investment in TAM expansion, the benefits of which are now evident in our previously discussed cable ramp. We anticipate being able to discuss additional TAM expansion progress as we move through 2011.

Our non-GAAP R&D and SG&A spending represented 42% and 24% of our revenue for the quarter respectively. Non-GAAP loss from operations was $0.3 million in Q1, compared to non-GAAP income from operations of $0.2 million in the prior quarter, and $2 million in Q1 of last year. GAAP loss from operations was $1.9 million in Q1, compared to $1.1 million in prior quarter, and GAAP income from operations of $1.4 million in Q1 of last year.

Non-GAAP earnings per share and GAAP earnings per share in the first quarter were $0.00 and negative $0.04 respectively on fully diluted shares outstanding of 32 million. The difference between the fully diluted non-GAAP earnings per share and the fully diluted GAAP earnings per share is primarily due to stock-based compensation expense of $1.6 million in the quarter and its related tax effect.

Moving to the balance sheet, our cash, cash equivalents and investments balance was approximately $91.8 million, compared to $94.5 million in the prior quarter. Our cash used in operations in the first quarter was $2.1 million. Accounts receivable totaled $7.6 million at the end of the quarter, compared to $3 million in the previous quarter. The days sales outstanding for the first quarter were approximately 41 days as compared to 18 days in the previous quarter, driven by lack of linearity of shipments in the quarter.

As a reminder, we only recognize revenue on a sell-through basis. So we are [now subject] to revenue fluctuations caused by changes in distributor inventory levels. Our in-house inventory at the end of the quarter was $5.2 million, compared to $7.4 million in the previous quarter. Our inventory turns improved to 3.8 in the first quarter, compared to 3.2 in the prior quarter.

Our own inventory levels, consisting primarily of work in process, decreased as shipments in the channel returned it to a more normal rate as demand rebounded from the Q3 and Q4 2010 inventory correction discussed on our Q4 2010 conference call.

That leads me to our guidance. We expect revenue in the second quarter of 2011 to be up approximately 7% on a quarter-over-quarter basis to approximately $18 million. We expect similar dynamics in Q2 as played out in Q1. Specifically, we expect our cable and automotive revenues to continue to increase on a quarter-over-quarter basis on both an absolute and percentage basis, offset somewhat by modest decline in consumer and mobile.

We expect non-GAAP gross profit percentage to be approximately 64% in the second quarter, within our long-term range of [62%] to 65%. And as we've indicated in the past, our gross profit percentage forecast has a variance of plus or minus 2%. We continue to carefully manage our discretionary operating expenses, strive for a proper balance between consistency with revenue growth and the need to continue to fund development programs for 2012 and beyond.

As such, we are continuing to selectively add key R&D talent, and total operating expenses will increase in the second quarter due to additional headcount and to the annual merit increases implemented in Q2. We expect that the percentage increase in op expenses will be less than our forecasted revenue increase for Q2.

As Kishore mentioned earlier, the unfortunate tragedy in Japan has created some questions regarding potential impact to MaxLinear's business. For fiscal 2010, revenue directly attributable to Japan, which includes revenue attributable to the sale of integrated circuits into Japanese automotive industry and sales of integrated circuits for electronic devices destined for Japan consumer and mobile markets, accounted for approximately 57% of our net revenue.

In the first quarter of 2011, Japanese derived revenue declined 47% of our net revenue of sales, our cable products increased relative to other products. We currently expect this trend to continue through the end of 2011, driven in large part by the growth of North America and European cable and hybrid TV volumes.

Also at this moment, our Japanese customers have resumed purchases of our products in line with normal expectations, though any impact of supply shortages for components in the final finished products sold to end customers is unclear.

In summary, the first quarter results reflect exciting progress in the business, including resumption of sequential revenue growth led by strong contribution from our strategic investments in cable across a range of video set-top and advanced DOCSIS 3.0 data and voice gateway markets. We continue to be optimistic about our growth trajectory given the design win momentum and new product development that continue to drive expansion of our TAM. And believe we are well positioned for growth in 2011 and beyond.

With that, I would like to now open the call for questions. Operator?

Thank you.

(Operator Instructions)

Our first question comes from the line of Quinn Bolton with Needham & Company. Please go ahead.

Hey, guys. This is Jason calling in for Quinn. Congratulations on the nice results. Just a couple of questions. First, I guess it looks like the consumer business was weak in the first quarter in your guidance. Could you just touch on maybe when you expect that to bounce back a bit? Thanks.

Hi, Jason. We had a pretty good quarter. It seems to be pretty -- confidently ramping right now. So, it all came from weakness we face in our consumer business, primarily driven by two factors. One is, uncertain volumes or weaker volume demand on the digital to analog converted terrestrial set-top boxes of the European market. And the other weakness is weakness will happen towards the -- two reasons.

One is, it was the Chinese New Year issue, and then immediately following that in two weeks after that, the earthquake. So about a couple of our customers did not pick up orders until two weeks later. So we just -- basically they resumed orders in the second quarter.

So looking ahead, you can see that the weakness was partially driven by Japan at that level because of disruptions in the factories and our customers being able to take orders, only those that had some factories in the northern part of Japan. And we're happy to say that now they are up and running.

So, looking forward to the next quarter, while we do not what the macroeconomic effects of the Japanese tragedy imply in the longer run, which is the second half of this year, the normal order pattern has returned. And then we believe that there will be some amount of recovery that we expect in our digital televisions with the Japanese market. We are beginning to see that a bit.

So, we do not see any unnatural causes as losing market share or any other such events behind the weakness in the markets with consumers that we are prognosticating here. It's primarily driven by the fact that -- for the ability to forecast when the recovery will happen in the Japanese consumer segment and in terms of our own orders.

And at the same time, given the digital to analog converted set-top box market shipments to Europe being predicated on retail sales of people have reverted to what I call spot orders, and we are just being -- we are being a bit cautious in forecasting our consumer revenues looking forward into the next quarter.

Okay. Yes, that's very helpful. Thanks. I guess just so I understood correctly, you saw about two weeks of your customers not picking up orders from Japan, but those are all back on to normal ordering patterns at this point?

Absolutely. In fact, we are back to normal turns. As you are aware, when we enter the quarter, we are approximately two-thirds or slightly more growth. And we'd like to share that that is the case even now. So we see the normal patterns returning in booking, and we are optimistic that things will return to normal in the near future.

Okay, great. You guys have touched in the past on a new product development that was potentially set up for launch in the middle of summer 2011. Could you just maybe give us an update on that? Are we still on track for a mid-summer launch?

There are several products -- actually three of those that are in the mid-summer launch period. And the product we talked to you about -- we mentioned about MxL261, which is the multi-channel tuner-demodulator SOC for the cable DOCSIS, and also for the media gateway markets and video set-top box market.

And those have strong design win traction, and we feel that we are on track to meet the strong customer demand for the back half of this year, and everything is going well on that front. And then others that Adam spoke in his call, which is regarding new investments and new product areas outside of the -- outside the tuner-demodulator areas, and we hope to be able to share with you some information regarding that in the next quarterly call.

Great. That's it for me. Thanks, guys.

Thank you. Our next question comes from the line of Tore Svanberg with Stifel Nicolaus. Please, go ahead.

Yes. Thank you, and congratulations, on the results in a tougher environment. Maybe first question, you talked about being two-third booked already for the quarter. So if I look at the linearity, you've already seen some pretty good bookings so far in April.

Yes. This is Adam. We actually entered the quarter in about the same shape as we traditionally have. So there is -- we typically go in between two-thirds and maybe a little bit more than 70% booked, and this quarter is consistent with that.

Okay. And how big is cable at this point as a percentage of revenue?

So when we've been talking in the past, we've indicated we were targeting cable to be between 25% and 30% of the business exiting 2011. And we are just under the low end of that range already for Q1.

Okay. Very good. And how big was handset in the quarter? Was it less than 10%?

Handset was -- yes, it was less than 10%.

Okay. And the DSO jumping so much, I know you talked about linearity, was that basically the Japan dynamics or is there something else there?

So, Japan really wasn't a big factor. There were other factors that can play. We just had -- I think as we came through the Q4 period where there is the inventory correction and so forth, I think for customers it's a little bit longer to kind of get their feet underneath them and to get confidence in placing orders. That came a little bit later in the quarter than normal. So that's really what drove it. It wasn't a Japan-specific situation.

Okay. And a question for Kishore. Could you talk a little bit about these new DOCSIS 3.0 boxes that you are seeing coming to the market, especially when it comes to channel bonding? I mean, are we always starting to see a pretty high channel count in some of those boxes?

Tore, the answer is yes for the most part. We look at the market in two segments. These are the tuner-only shipments that are basically for PVR, DVR boxes in Europe that we ship into the major OEMs for the DVB-C type cable market. Those are the video market.

However, in the entire DOCSIS 3.0 North America and even rest in Europe shipments were DOCSIS 3.0 data, there are what we call 8 x 4 products. That is eight channels downstream being bonded and four channels being dedicated for data, and four channels being configurable as dedicated data or video channels or voice channels.

So, all our shipments right now in the DOCSIS 3.0 market are for the eight-channel bonded stream markets. So, yes, the answer in short is yes. But all the shipments in DOCSIS 3.0 are for multiply bonded channels, primarily the 8 x 4 stream.

Very good. And last question, back to Adam. Adam, with your revenue guidance for Q2, would you expect to be cash flow neutral or positive from operations in the June quarter?

We don't give that level of guidance on a quarterly basis. What we're comfortable in saying is that the operating expenses are going to grow at a rate lower than revenue and that some of the cash that was consumed in what the capital in Q1 will reverse itself somewhat in Q2. So we do expect overall the cash levels of the company to increase in Q2.

Great. Thank you, very much.

Thank you. Our next question comes from the line of Anil Doradla with William Blair. Please go ahead.

Thanks a lot, guys. So, Adam, and Kishore, if I look at your cable segment, can you quickly help us understand how much does that segment depend upon Japan, especially as you grow in with the DOCSIS 3.0? Is there any dependence on Japan?

Anil, welcome to your first analyst call I must say. Thank you for starting coverage. Actually I'm very happy to see that we get zero revenue from cable for Japan market. Cable is a story right now the product cycle growth story. We feel that our investments and really being steadfast investments over the last two years in cable is now beginning to pan.

And even more important is that the diversification strategy of the company by geographic region and application is happening. And as in the press release, you'll have noted that compared to Q4 to Q1, as a result of cable, you've seen that the Japan revenues have dropped significantly and this trend will continue throughout the year.

So we are optimistic that -- more than optimistic. We are positive that by the end of the year, Japan will be an important fraction of our revenues, but definitely there will be no revenue source as a major of our revenues. So, much more than the California state population, by the way.

So basically the key takeaway is that the core driver in 2011 does not have any risk associated with some of the headwinds that we're seeing in Japan. Good. The second part was, I mean, you are a company that comes up as one of the top-five perhaps that has the significant exposure to Japan.

And clearly based on your performance and your guidance, what is the disconnect? Are we being over-cautious in thinking that Japan is going to impact you? Are we missing some aspects of the story where maybe you guys are not at all impacted, or is it just the case that upside that was coming from you from Japan may not be there? Can you help us understand kind of big picture how does Japan really work in the context of MaxLinear specifically?

So, in the context of MaxLinear, if you really look at what MaxLinear ships in the Japanese end market, pretty strong platforms. One is the digital television platform. One is the automotive platform, and the other one is some PCTV platforms.

And the fact that Japan is going through a transition from analog shut-off to digital, these and the fact that there was some inventory correction in Q4, the television sales have not dropped off. I think there may have been a small shock effect, but people are going to be replacing their televisions. So, we don't expect a mean rate of consumption of new digital televisions to change.

So you could argue that maybe there was an upside impact to our forecast, which I think today I can tell you, yes, there was an impact at that level. However, I don't expect in an advanced economy that's going through what I call a transition, analog to digital, the digital television sales stock.

And the second piece is that if you re-look at the Japanese economy, it's a place where the earthquake hit the most, where the northern part of Japan with very sparse population. It's a very tiny economic impact of the Japanese buying bar, if you will. So other than the psychological dimension of the buyer, I do not see why you should have a macro demand in fact on our television.

The second piece is automotive. Automotive was also going through attachment of high-definition television inside the automotive vehicles. And that is also driven by a new application coming in place. We can look at it as a product cycle scenario there, going from a zero -- a very low attachment of a new application to people rapidly adopting a new application.

So, all in all, we are not in old markets. We are in the new economy. When the new markets of digital television, high definition television, PVR applications that have got what I call a natural instinctive need for people, and they're going to be buying them.

And with regards to really a macro effect and in terms of consumer demand, I don't think our situation is any different from anybody else (inaudible) whether they have a (inaudible) in Japan or not. So I think that we expect -- today at least we can say that we expect our mean rate of demand to be maintained. We're not expecting any upside, and that's just as well for now for us. I hope that answered your question, Anil.

No, no, that definitely helped. So, just focusing a little bit on the snapback, Adam and Kishore, if there was not a potential upside and given that the economy is coming back and they are building whatever they need to build, can you see a situation where you have the effects of a pent-up demand in the second half?

Oh, God, it's not fair for me to count the eggs before they are hatched, so to speak. But I'd tell you one thing. Right? Let's just get back to a technology.

What is it about our technology that makes us so successful in getting design wins at tier one place starting out as a company in the first place in Japan, which is one of the most demanding places out there in quarterly performance. Extremely low power products, factors of two to four, lower than anybody out there for any application.

Now you think of the world in Japan, a world that is coming out of a shock of energy constraints and shortages. They want to be much more energy efficient. I really think that all the design wins we have, the sockets we have are going to be even more locked up and we should be able to capture new design wins going forward in Japan.

So despite all the negative news, there is, if you will, a silver-lining out there that MaxLinear's technology is going to continue to be the preferred choice technology for low power applications in the consumer market like this television. So we hope to benefit in the next design cycles with our new products and existing products as well.

Very good. That helps. And finally -- one finally, if you don't mind me sneaking it in, ARM announced their earnings yesterday. And one of the key drivers for them was set-top box and additional TVs. They talked about a significant pickup in shipments and chipset vendors playing out.

How does ARM's entry into the space impact you guys? Is there some synergies there or is it totally -- ARM's entry and your focus is totally independent on one another? Can you help us a little bit understand that trend?

So firstly, I think one of the things that's happening today in the world of TV and broadband data is that the world wants to move more and more towards IP networks. Right? So, to the extent that the platform that incorporate ARM become more and more important, low power is important. That means probably they are coexistent in the same platforms where ARM is going to be there.

And the second piece is that you have this Google-type Android platforms, and that commoditize the back in silicon. So, platform control through one or two vendors is going to be reduced. And in a way, it will horizontalize the market, and then best-in-class performance products like MaxLinear's front-end would become more meaningful to the platform.

By and large, today we do not see any strong correlation between ARM's entry into the market versus MaxLinear, but ARM's entry into the market is just a confirmation of the general trend of what's happening in the set-top box plays, power becoming very important, and then just a separation between flexible open platforms and [interlocked] platforms sort of becoming less desired in the system.

Okay. I'd say this, Kishore, because we know that you guys are tied up for the Intel platform. So in that context, do you see that as a threat or you are not worried at this stage?

Anil, I -- maybe there is the other way to look at the situation also, which is obviously the other large set-top box player out there, one of the other merchants is obviously a MIPS house. And so, to the extent that the volumes are moving more towards ARM as it's coming out of that bucket is actually good for us because of the attach rate to other steel partners that would be unassociated with that MIPS platform.

And in general, if you really look at the Intel platform, I think it's a pretty strong platform within our item processors.

And what that is allowing them to do is offer higher value services with flexibility for the larger high-end platforms and server platforms. And to the extent that Intel is a good partner, we benefit from their victories of the major platforms for high-end server-type platforms.

And secondly, we also work with the non-Intel platforms as being agnostic to who the back end is. So to the extent that the platform's low power is incredibly important, we are shipping in products in media gateways and stuff where the user front-ends with a non-Intel back-end as well.

Great. Very good. Thanks a lot, guys. Congrats, and keep up the good work.

Thank you.

(Operator Instructions)

Our next question comes from the line of Ross Seymore with Deutsche Bank. Please, go ahead.

Hi, guys. Just a couple follow-up questions. And forgive me if I missed the answer prior. I had a little bit of cell phone issue. But the cable business did much better than expected as far as a percentage of sales. You said it's now just under that 25% mark you expected actually this year at. Does that lead you to change the percentage of revenues you think it will be exiting this year?

I think it's too early to make that call because the cable business is lumpy. But I think that all the design platforms that we have gotten design into in the middle of last year and then we had a new design win traction. If they all gather momentum, obviously they would be upside on the cable. At this point, we want to be cautious and watch the strength lay out for us.

Adam, do you want to add --?

No, I think that's largely right. But I would say that at this point it makes sense that that range of 25% to 30% is naturally bumping up somewhat. I don't think we can quantify what that bump-up to quite yet, but it's safe to say that's moved up somewhat.

And I guess there's two sides of that equation. Right? If you have a snapback in the consumer side, then the math gets a little harder as a percentage of sales. And to that level, what's -- to the extent there is anything that is normal seasonally for you guys in your consumer business, how should we think about what seasonality would be in that business?

In the cable business or in the consumer business?

In the consumer business.

It's still hard to predict at this stage because we've never had gone through one fourth quarter that looked normal in the short history of the Company. But typically, third quarter is supposed to be a high quarter in the consumer that did not pan out last year.

And if you just go with that sort of seasonality, for us, typically somewhere within the second quarter and till the end of the third quarter, it seems to be -- beginning of the fourth quarter it seems to be the place where you get a surge in orders from our customers. So, I would say that would be the range.

Ross, I would say too that given the stage of the Company that we are, we are very much a product cycle company more than a seasonality play. The product cycles have a much stronger influence, than anything that we're seeing from a seasonality perspective.

I guess is it, from that perspective, is fair assumption to say you didn't see seasonality in the back half of last year, not really because of product cycles, but because of inventory burn in some of the on-demand trends in areas like TVs etc.

To the extent you've taken your medicine burning down that inventory, I would think all else being equal, you will have the product cycle that you always have plus the tailwinds of both some semblance of the normal seasonality plus inventory refilling in the channel. Is there any problem with that logic?

I think if all those stars align, I think it's correct. I think that the stars didn't all align last year. So, I think we're just a little reluctant to assume that that's going to be the case this year. But we hope that what you just laid out, plays out.

Got you. And then the last question from my side, and I missed this again for cell phone issues, the OpEx guidance you gave and the general idea of how we should think of OpEx through the year versus what revenues do.

Again, sticking in the Q2 timeframe, because we don't give guidance beyond that, we are -- as I mentioned on the prior call, our model is to grow OpEx at a rate lower than our revenue growth. I thought it actually might take beyond Q2 for that to happen, but we're actually able to do that in Q2. So, I think that's good progress.

And so, again, as we move forward in the year, we're going to maintain -- we're going to try to maintain that at the same level of discipline and actually obviously increase that band between the percentage of OpEx growth versus revenue growth. So, that's probably the clearest guidance we can give.

We said revenue is going to be at 7%, OpEx was going to be less than that. You can apply your own judgment based on kind of where you think the natural growth in headcount might look like on a quarter-over-quarter basis, but it's in the low-to-mid single digits as far as OpEx growth.

Got you. Okay. Great. Thanks, guys, and congrats on weathering a very large storm.

Thank you.

Thank you. I show no further questions in the queue at this time. I'd like to turn the call back to Mr. Seendripu for closing remarks.

Thank you, operator. As a reminder, we will be participating in the 10th Annual JMP Conference in San Francisco on May 11th, and the Deutsche Bank Semiconductor one-on-one conference in San Francisco on May 12th. And we hope to see many of you then.

To conclude, our longer term growth trajectory and growth vectors remain positive and unchanged. Based on quarter-one results and our quarter-two guidance, 2011 continues to unfold with positive business momentum. Particularly, as it relates to our cable and hybrid TV solutions, we're especially encouraged by the product cycle revenue growth in our cable segment.

Thank you all for joining us today, and we look forward to reporting on our progress to you in the next quarter.

Ladies and gentlemen, this concludes the MaxLinear first quarter earnings 2011 conference call. If you'd like to listen to a replay of today's conference, please dial 1-800-406-7325 or 303-590-3030, and enter the access code of 44336254 followed by the pound sign. Thank you for your participation. You may now disconnect.