Maxlinear Inc (MXL) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the MaxLinear Q1 2012 earnings conference call. During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Wednesday, May 2, 2012.

And I'd now like to turn the conference over to Mr. Nick Kormeluk in Investor Relations. Please go ahead.

Thank you, operator. Good afternoon everyone and thank you for joining us on today's conference call to discuss MaxLinear's first quarter 2012 financial results. Today's call is being hosted 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 the second quarter 2012 revenue, estimated accruals relating to potential export control violations, our expectations concerning trends in our Cable revenues, and our efforts to expand our addressable markets, gross profit percentage and operating expenses, our current use regarding trends in our markets, including the anticipated impact of new design wins and the size and potential for growth in our markets and our competitive position in our target markets.

These statements are forward-looking statements within the meaning of the federal securities laws 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 or if we are not successful in expanding our target addressable markets through the introduction of new products. In addition, substantial competition in our industry, potential declines in average selling prices, the cyclicality in the semiconductor industry could adversely affect future operating results.

The potential export control violations present risks of fines, penalties and other enforcement actions from applicable government entities. 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, in particular our most recently filed 10-K and our upcoming 10-Q for the first quarter of 2012.

These forward-looking statements are made as of today, and MaxLinear does not currently intend and has no obligation to update or revise any of these forward-looking statements. The first quarter 2012 earnings release is available on the Company website at maxlinear.com.

In addition, MaxLinear reports gross profit income or loss from operations and net income loss and basic and diluted net income loss 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 effect, intellectual property license, acquisition expenses and expenses of investigation and estimated fines and penalties related to export compliance matters.

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 provide this information to investors and enable them to perform comparisons of operating results in a manner similar to how the Company internally analyses 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.

Thank you, Nick, and good afternoon everyone. Thank you all for joining us today. Before jumping into the financial highlights, I would like to note that in the first quarter of 2012 we witnessed momentum related to strong sequential growth in our Cable revenues. At the same time, we bolstered our position in the Cable segment with announcements of market-leading Full-Spectrum reception cable receivers representing our fourth generation RF Broadband Reception Technology platform. Additionally, we continue to make significant progress towards expanding our presence in Terrestrial markets with exciting new product offerings and [sealing] growth in future markets such as satellite.

Now to the specifics. Net revenue in the first quarter was a record high for MaxLinear at $20.7 million, up 7% over the fourth quarter of 2011 and up 22% from the year ago quarter, which exceeded the high end of our guidance. GAAP and non-GAAP gross profits in the first quarter were 60% of revenue, within our prior guidance range of 61% plus or minus 2%.

GAAP net loss in the first quarter was $6.6 million, or $0.20 per diluted share, which includes stock-based compensation expenses of $2.2 million; $1 million for an accrual related to our performance-based 2012 bonus plan, which if achieved will be settled in stock in 2013; approximately $0.3 million in non-recurring IP license expenses; and $1.1 million in professional fees arising from the voluntary export compliance review initiated by our audit committee. The export compliance matter was disclosed in our fiscal fourth 2011 results and in our most recent Form 10-K filed on March 14, 2012. Non-GAAP net loss for the first quarter was $2 million or $0.06 per diluted share.

I will now discuss the current trends we are seeing in our business. Cable was once again the highlight of our business in the first quarter, with Cable revenue increasing approximately 54% from fourth quarter of 2011. In the first quarter of 2012, Cable represented 58% of our total revenue. We continue to benefit from the continued deployment of DOCSIS 3.0 voice and data gateways by service providers who are addressing the ever-increasing secular demand for broadband data and multimedia access at the home.

We are encouraged by our growth in Cable, as it continues to be broad based with approximately half the Cable revenues attributable to voice and data applications and the remainder derived from video applications. These video applications range from single and dual channel high-definition, digital-to-analog converter set-top boxes, basic set-top boxes, PVR boxes to high-end channel-dense video server gateways.

Recently, in March 2012, we announced our MaxLinear 265 and 267 Full-Spectrum Capture cable receiver solutions. These products represent our fourth generation, industry-leading 40-nanometer CMOS RF broadband receiver technology platform. The MxL265 and MxL267 Full-Spectrum Capture receiver products set the industry benchmark for RF performance, integration and low-power per channel along with a total number of channels received simultaneously.

The MxL265 and MxL267 devices capture the full 1 gigahertz cable spectrum and receive 16 or 24 channel respectively anywhere in the cable spectrum at a power per channel that is lower by a factor of five to 10 compared to discrete single-channel tuners. Each device replaces several discrete tuners in a gateway or a set-top box with just one broadband multi-channel receiver, which minimizes PCB footprint, eliminates expensive external RF components, and simplifies design and cost of customer platforms that require multiple channel access.

The MxL265 and MxL267 devices also support eight upstream channels for interactive services. More importantly, these cable Full-Spectrum Capture receivers validate our underlying fourth generation 40-nanometer CMOS RF broadband technology platform, which is at the core of our new target addressable market expanding product initiative in satellite and other allied markets.

Moving to the Terrestrial market, our Terrestrial revenues were down 26% quarter-on-quarter in first quarter 2012, as the TV market continues to struggle at a very macro level beyond the typical effect of seasonality. Despite near-term macro softness in the Terrestrial markets worldwide, we continue to garner strong design win momentum in key areas such as hybrid TV.

In the Terrestrial market, we're investing to position ourselves for future growth in target addressable market, expanding set-top box system-on-chip solutions. Earlier in first quarter of 2012, we announced MxL683, which is a tuner demodulator system-on-chip receiver that supports the ISDB-T broadcast digital TV standard deployed to the large population regions of Japan, South America, Indonesia and the Philippines.

These solutions can be leveraged across a wide range of terrestrial platforms from TVs to cable, satellite, PVR, Blu-ray and IP set-top boxes. We continue to see strong design win momentum in both hybrid TV and in hybrid terrestrial and IP set-top boxes. Recently, we announced that Cyfrowy Polsat, the largest Polish media group in satellite TV platform, has selected our MaxLinear 601 global TV tuner for use in its own T-High Definition 1000 set-top box, which is the heart of a new nationwide hybrid broadcast digital TV and IPTV service.

In conclusion, in the first quarter, we delivered revenue that was above the top of our guidance range and represented another record for the Company. We also continue to generate strong design win momentum in both cable and terrestrial applications. We're not only excited about our near-term revenue growth opportunities, but also look forward to the launch of additional market-leading product offerings later in 2012 that will significantly expand our addressable market.

With that, 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'll first review our results and then briefly discuss our outlook. In summary, Q1 revenue was a record $20.7 million, as Kishore mentioned, above the high end of our guidance, up approximately 7% quarter-on-quarter as compared to our guidance of up 3% to 6%. This was up 22% when compared with the prior year Q1. As Kishore noted, net revenue for the first quarter was driven by very strong sequential performance in Cable, offset by weakness in Terrestrial and was accompanied by strong design win momentum across a wide range of product areas.

Now, moving to the rest of the income statement. GAAP and non-GAAP gross profit for the first quarter was approximately 60% of revenue, within our prior guidance of 61% plus or minus 2 points versus 61% in the fourth quarter of 2011 and 64% in the year ago quarter. We achieved gross margin stability in the face of significant pricing pressures in certain Terrestrial markets, as we fought to maintain and grow share in key focus areas such as digital terrestrial set tops and hybrid TV.

Our Q1 GAAP operating expenses were $18.9 million, which includes $2.2 million of stock-based compensation; $1 million for an accrual related to our performance-based bonus plan for 2012, which if achieved will be settled in stock in 2013; $300,000 of non-recurring IP licenses; and $1.1 million in non-recurring professional fees related to a previously disclosed export compliance related matter.

Net of these items, our OpEx was $14.3 million, which is $1.4 million higher than the prior quarter, but slightly lower than our prior guidance. Q1 GAAP OpEx included $11.9 million of R&D expenses, which include stock-based compensation of $1.4 million and $0.3 million for non-recurring IP licenses. The majority of the $1.7 million step-up in R&D quarter-on-quarter were driven by expenses related to our first 40-nanometer tape-out.

Q1 GAAP OpEx included $7 million of SG&A, which includes $800,000 in stock-based compensation and $1.1 million for professional fees related to the previously mentioned export compliance matter. The audit committee has largely completed the independent export compliance review with our voluntary submissions to the government to follow shortly and as such, we believe the vast majority of legal spending is behind us at this point.

At the end of the first quarter 2012, our headcount remained flat versus the fourth quarter of last year at 256. GAAP loss from operations was $6.5 million in Q1 compared to $4.3 million in the prior quarter, and GAAP loss from operations of $1.9 in Q1 of last year. Non-GAAP loss from operations was $1.8 million in Q1 compared to $1.1 million loss in the prior quarter and $0.3 million in Q1 of last year.

GAAP earnings per share and non-GAAP earnings per share in the first quarter were negative $0.20 and negative $0.06 respectively on fully diluted shares outstanding of 33.3 million. The difference between the fully diluted GAAP earnings per share and the fully diluted non-GAAP earnings per share in the first quarter is primarily due to the $2.3 million of stock-based compensation expense; $1 million for an accrual related to our performance-based bonus plan for 2012, which if achieved will be settled in stock in 2013; $300,000 in non-recurring IP license expense; and $1.1 million in professional fees related to previously disclosed export compliance matter.

Moving to the balance sheet. Our cash, cash equivalents and investments balance was approximately $83.4 million at the end of the first quarter 2012 compared to $85.7 million in the prior quarter, and $91.8 million at the end of the year ago quarter. Our cash used in operations in the first quarter 2012 was $1.1 million, approximately $800,000 lower than in the fourth quarter 2011 and slightly better than the year ago quarter of $2.1 million.

Accounts receivable totaled $11.1 million at the end of the first quarter compared to $10.4 million in the prior quarter. The days sales outstanding for the first quarter were approximately 49 days, essentially flat as compared with the previous quarter, and 41 days at the end of the year ago quarter. As a reminder, we only recognize revenue on a sell-through basis, so we are not subject to revenue fluctuations caused by changes in distributor inventory levels.

Our in-house inventory at the end of the quarter was $6.8 million, down approximately $1.3 million compared to the $8.1 million in the previous quarter, and up approximately $1.6 million versus the $5.2 million at the end of the year ago quarter.

Our inventory turns were 4.5 in the first quarter compared to 3.5 in the prior quarter, and 3.8 in the year ago quarter. Our own inventory levels, although declining on a quarter-on-quarter basis, are still higher than our long-term model, as we've elected to build inventory of new products ramping to support upside opportunities primarily in Cable and hybrid TV.

That leads me to our guidance. We expect revenue in the second quarter of 2012 to increased 15% sequentially to $24 million. Built into this range, we expect our Cable revenues to continue to increase on a quarter-over-quarter basis across a broad range of applications on both an absolute and percentage of total revenue basis, accompanied by the resumption of modest growth across a range of our terrestrial applications.

We expect GAAP and non-GAAP gross profit percentage to be approximately flat at 60% in the first quarter. As we've indicated in the past, our gross profit percentage forecast could vary plus or minus 2% depending on mix and other factors.

We continue to ensure that we fund strategic development programs targeted at delivering topline growth in 2012 and beyond. Despite a positive net hiring in Q1, we anticipate modest net headcount additions in Q2, primarily in key R&D functions and expect that Q2 2012 GAAP operating expenses will decrease by approximately $1.3 million to $17.6 million on lower export compliance-related expenses and no new 40-nanometer tape-outs. Similarly, we expect Q2 2012 non-GAAP operating expenses will decrease by approximately $300,000 to $14 million, as the lack of 40-nanometer tape-outs in the quarter is offset somewhat by modest hiring and the effects of our annual merit cycle implemented in the current quarter.

In summary, we are expecting growth to continue in the second quarter 2012 across both Cable and Terrestrial end markets and our strong design win momentum witnessed in recent quarters bodes well for our growth trajectory as we progress in 2012.

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

(Operator Instructions) Tore Svanberg, Stifel Nicolaus.

Yes, thank you, and congratulations on the nice quarter. Two questions here. First of all, looking at Q2, obviously, the growth is going to be pretty strong there and obviously Cable continues, but what about Terrestrial? Could you talk a little bit about the dynamics there? It looks like you expect that business to stabilize in Q2. Is it coming from new hybrid TV design wins or just help us understand what's happening there?

Hi, Tore, this is Kishore. I thought you'll have no questions this time. Okay. So let me get through this here. So Q4 is a seasonally high quarter for the Terrestrial set-top box markets, primarily driven through audience in Asia, primarily in China. So we went through the Q4 peak, so in Q1 we got a seasonal debt.

At the same time, the revenues in TVs, while we've not -- we have been gaining market shares in designs and revenues, for example, with customers. We've already announced with Sharp. Those have not gone as high as we were expecting at this time of the year, so we expect the growth to start -- to commence from second quarter onwards. And we are calling, most likely the Terrestrial revenues of -- first quarter of 2012 to be the bottom actually. So we're expecting growth to come stronger in TVs as we move to the rest of the year.

That's very helpful. Thank you. And you had the [full-line] capture technology launched or announced this quarter and that's 40-nanometer. First of all, when can we expect to see some revenues there? And then second of all, when can we see some additional products on 40-nanometer later this year? Thanks.

We call that Full-Spectrum Capture technology. So those products actually have been sampling already for the last two months now. And they've got great design traction. However, this is for the cable markets, and usually there is a lag from the starting of sampling to the design-in. You have approximately a year at least when you start seeing revenue shipment in a meaningful way in the new products in the Cable market.

So I don't think you should expect to see revenues in a meaningful way coming through with the Full-Spectrum Capture products until a year from now at best. So in the meanwhile, we have the best wideband spectrum capture tuners namely our MaxLinear 261 that is shipping very strongly in our 65-nanometer technology node. It will be the mainstay. It's the latest of the greatest [excitement] in the marketplace for the DOCSIS 3.0 gateways and modems and we are very excited about the success it's having in the marketplace. And that builds a nice incumbency provision for MaxLinear with our Full-Spectrum Capture cable receiver products that we are sampling now.

Great. And then looking at DOCSIS 3.0, I know you've talked about maybe 7%, 8% penetration this year, is that number still holding at this point?

Actually, we feel that the momentum is pretty strong. If you track some of the major OEMs like Arris or the end operators like the Time Warner or Comcast's earnings releases, it's very clear and with the recent press releases as well, they're getting significant traction in converting customers to higher bandwidth services in the 40-megabits per second range on an average and they see a very nice uptake. So I would say at this stage, the 70% milestone mark, we feel very, very confident about. Can it be better? Based on the euphoria right now, it could be better, but I would still mark-to-market as a 70% penetration at this stage.

Very good. Just two very quick ones for Adam. Adam, first of all, in light of the $24 million guidance, could you talk a little bit about your visibility there? I know you usually don't give backward numbers, but just from a turns perspective, are you actually going to be needing less this quarter than last quarter?

Yes, Tore. I think that what we do provide in past is kind of an indication of where we went into the quarter as far as percentage of book to our guidance with our forecast. And we've ranged anywhere in the last, say, five quarters, we've been anywhere between low-50s and, I would say, low-70s with a normal range of percentage booked around kind of 66%, 67%. We came into this quarter over 80%. So we're sitting very, very well. We don't need a lot of turns business to meet our number and we're very confident with our number.

Very nice. Last question, at $24 million, I assume you would be cash flow neutral or cash flow positive?

Yes, but on a cash flow basis, I think that we'll be probably -- if you think of neutrality on the cash line, that's probably a pretty guess that we might generate a little bit. And on a non-GAAP profitability basis, we do see turning the corner in this current quarter with the $24 million. I think, that's consistent with what we've been talking about with, breakeven for us around $24 million to $25 million and given the lower spending that we talked about in our guidance, that's consistent with turning the corner in this quarter.

Sounds good. Great job, guys. Nice quarter. Thanks again.

Thanks, Tore.

Quinn Bolton, Needham & Company.

Hi, guys. I'll offer my congratulations for hitting the breakeven profitability in Q2 at least on the guidance levels. Kishore, I was wondering if you could just talk about the sort of visibility into the Cable business. It's been up pretty strongly now, I think, for several quarters in a row. And I guess, I just wonder, are there any signs that inventory may be building or any evidence of strong sell-through? I mean, obviously, with this kind of hockey stick, it's great to see, but it always makes you wonder if inventory is accumulating somewhere in the channel? And then I've got a couple of follow-on questions.

So there are only two points of checks we can make, right? One is the -- at the OEMs, even if they're manufactured through Asian contract manufacturers, check at the end OEM. And the other place we can check is understand with the operators where they're -- how is the uptake of these new higher bandwidth services? On both measures, I think, there is a pretty nice velocity right now.

And I can see at the OEM level, the inventory buildup is not there in fact, if anything. I hate to say this, because it tends to be a lumpy market in terms of how the ordering patterns go. But I would say we are right now just in time in terms of shipment, so that bodes well at least. As far as we go, we only give our guidance for the quarter and Adam just said that we got very good booking levels entering the quarter.

So I feel that the momentum is there, we're not anywhere where we're building inventory. So can I hazard a guess into the third quarter? Yes, I don't see the buildup will happen into the third quarter on the inventory side. Fourth quarter, that's too far for us to talk about. So I would say at this point, we feel very good that there is actually no inventory in the channel right now.

Okay, great. And then just sort of coming back to that question of the 40-nanometer tape-outs, it looks like that was the reason for the step-up or part of the reason for the step-up in Q1, and then the step-down in Q2. As you look into the second half of the year, do you start to get more tape-out heavy? As you continue to roll out new products, you'd mentioned some new products and TAM expansion products that you'll be introducing later this year, just kind of wondering if those have already taped out or whether they're less expensive tape-outs?

Yes, so just to remind folks, so depending on what type of product is, as far as what category of products and what parts of the markets that we're servicing, if it's a new area versus a legacy market for us, determines whether or not we capitalize the mask or it gets expensed to R&D. And so, the mask that we saw in Q1 in the first 40-nanometer tape-out was an R&D mask, so it was expensed.

We do have at least one other 40-nanometer mask scheduled for the second half of the year that will also be treated accordingly in R&D. And that's consistent with, I've been talking to folks about, we've been thinking that the OpEx, non-GAAP OpEx would be bouncing around kind of the $14.5 million to $15 million per quarter throughout the year.

And I think that our [OpEx], we came in lower now as far as guidance for Q2. So I think you can think of that range as still being $14 million to $15 million on the non-GAAP OpEx, which again includes another R&D 40-nanometer tape-out later in the year. And then we do have some other tape-outs, but some of those are for existing product areas, which would be capitalized and amortized over time to COGS.

So I want to add one more thing here to, Adam, that if you really look at the Company as we're taking a lot of measures to get the OpEx under control. And when you talk of step-up in Q1 in the 40-nanometer related mask expense, it was really slated to go out in Q4 last year and as we -- Adam spoke about it was for Q4, Q1 combined our OpEx actually is lower than what we guided for. So I think we're making the trend of really being very cognizant about our -- how we operate the Company.

At the same time, we're being very aggressive about very disciplined investments in TAM expanding activities, trying to go invest towards more higher tier markets that are much more -- very difficult to do, the barrier to entry is very high and really coming to our [fleet] with extremely tough RF capability requirements. So I think all in all, I think, I don't look as Q1 expense being up, I really look at as an accumulative basis that we're actually doing better than what we had guided the Street for.

So, Quinn, just to come back to your question real directly, you asked whether the tape-outs are related to new TAM expanding areas. That second 40-nanometer tape-out that I mentioned was going to happen in the second half of the year. That is related to a new TAM expansion effort and that's why it hits it up in the R&D expense category.

Okay, great. And then Tore had asked the question about penetration of DOCSIS 3.0 and I think you felt pretty comfortable about that 70% level this year. Just wondering if you've had any sense what the split between 4x4 versus 8x4 modems are. I mean, are we seeing pretty strong conversion over to 8x4 architecture or is there still a fair number of 4x4 modems being shipped?

I would say that based on our knowledge, 4x4 is now a discontinued stream. If there is any that may be very, very minuscule that we are not really keeping a track off. All new shipments, new designs are 8x4. And actually moving forward with our latest offerings with the Full-Spectrum Capture, that game is going to be upgraded to 16x4s and maybe even 32x4 in the future. So really the markets head in a direction where simultaneous capture with scalable bandwidth -- [of course], theoretically, unlimited bandwidth is where the market wants to go. And we have the right product category to support that right now.

Great. Thank you very much.

Anil Doradla, William Blair.

Hey guys, congrats on the quarter. When I look at kind of a big picture, 2012, 2013, can you give us a sense how you would like the Cable and video business to look like in terms of split longer term? And in terms of the Terrestrial, can you walk us through what could potentially happen, the puts and takes on the margin front given that you have been referring to the rise of the hybrid tuner? Thanks a lot.

Hi, Anil, this is Kishore. So I would say that -- you had a number of questions in that one. So the first one is on the Terrestrial markets. Really, looking forward the Terrestrial markets, this also answers your 2013 sort of question. What are the growth drivers heading into 2013? Really speaking, Cable is going to be the driver for 2012 in a big way, and we expect hybrid TV to start contributing for us in revenues in a bigger way starting in sometime October, November time frame of this year.

And that's the typical design cycle for the big TV launches for 2013 shipment cycle, and we hope to be in some of the top players in the TV markets shipping our MaxLinear 601 TV tuner. So with that success comes [putting] pressure in the margins, I would argue, in the hybrid TV market. And so, our expectation is that the consumer markets and the TV markets and the set-top box markets are going to be more pricing sensitive in ways that will put pressure on our margins.

However, as Adam guided to you, looking forward we are seeing stabilizations of gross margin through 2012. And 2013, we'll have similar efforts in place regarding our operating costs. Our COGS models we'll have transitioned to newer technology nodes. Our products and cable we'll have transitioned to 40-nanometer nodes. So all in all, we intend to strive toward the targets that we have guided to you of late in the 60% range. And so we believe that that's a model we can work toward. Now, if you have hyper success in the hybrid TV market, will that depress the margins? Yes, it would. But that's a good thing, because we'll have more contribution dollars and we'll have more currency to work with.

Secondly speaking, what is the next growth driver into 2013? We have the ISDB-T MxL681 and 683 products for tuner demod SOC. Those are products that are very, very well received in multiple markets, in the TV markets, the Blu-ray DVD markets, at the same time also the satellite set-top box and gateway markets where they are supporting terrestrial reception as much -- as many number of channels of that as satellite channel reception. So we have a number of growth drivers that are slated for 2013.

And getting back to the question of the new TAM expanding products, when they would be sampling and when we could expect them, our expectation is that on the third and fourth quarter time frame, we should be able to announce new products in these TAM expanding areas that would generate revenue, hopefully, in the latter half of 2013.

So there are a number of drivers [to look]. In 2012, we have Cable as a single most powerful driver of our growth. So 2013, we have a number of them. And so, all in all, we feel that our growth trajectory should be maintained moving forward into 2013 as well. So does it answer your question, Anil?

Absolutely. Excellent. If I dig a little bit on the Cable side, I mean, based on your vast experience of dealing with these cable operators, from a product cycle point of view in terms of penetration, in terms of growth, can you give us a sense of how long typical product cycles last? And the second question is, people are already talking about DOCSIS 4.0. And how would this current cycle play out in terms 4.0? So can you give us a sense, typical -- is the Cable product cycle multi-year, multi-quarter at least from your perspective?

I think, considering that DOCSIS 3.0 really got launched now in a really big meaningful way and look at the number of years DOCSIS 3.0 actually waited to really even deploy, I would say that DOCSIS 4.0 is pretty far off, because there's infrastructure upgrades involved. We have not even -- they have not even started the standardization process yet. The discussion has just started. I think, that's -- if you call five years, several years away, I think, that's a reasonable estimate and maybe that's a good estimate of being on a positive side of things.

[And I know the] DOCSIS 3.0 has just started and so I think we feel our design wins are multi-year cycles. So if you consider 2012 and 2013, we feel that our existing MxL261 wideband capture product is well entrenched, if you will, in its product category, technologically on a power basis, performance basis. It is so far ahead of the rest of the peers that we feel that the Full-Spectrum Captures, we really have moved the benchmark where the use case is going to take a little bit longer to play out.

So we feel it's at least a two-year cycle, the 261 product, and then we have the right product right now that launch into the 2014 time frame or late 2013 in the media server markets with a Full-Spectrum Capture. So giving you the long answer here is that don't worry about DOCSIS 4.0 right now. We feel that we got a good position in the gateway and modem markets. We got product offerings for the video segment. We're having, as Adam mentioned, remarkably positive success in having a good video business growth as it is in this current quarter. So I think the Cable is going to play out for us very meaningfully, in very dependable way over the next two years.

Excellent. And looking forward to it. Thank you.

Thanks. Thanks, Anil.

(Operator Instructions) Gentlemen, I show no further questions in queue at this time. Please continue.

So thank you, operator. As a reminder, we will be participating in the Deutsche Bank Semiconductor One-on-One Conference in San Francisco on the May 9, as well as the JMP Securities Conference in San Francisco on the May 14, and hope to see many of you there. To conclude, the first quarter of 2012 was an eventful quarter with record revenue and a view forward to even stronger growth in the current quarter.

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

Ladies and gentlemen, that concludes our call for today. Thank you very much for your participation. You may now disconnect.