超微電腦 (SMCI) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Super Micro Computer, Incorporated First Quarter Fiscal 2012 Conference Call. The Company's news release issued earlier today is available from its website at www.supermicro.com.

In addition, during today's call the Company will refer to a slide presentation that has been made available to participants, which can be accessed in a downloadable PDF format on its website at www.supermicro.com in the Investor Relations section under the Events and Presentations' tab. During the Company's presentation all participants will be in a listen-only mode. Afterwards securities analysts and institutional portfolio managers will be invited to participate in a question and answer session but the entire call open to all participants on a listen-only basis.

As a reminder, this call is being recorded Tuesday, October 25th, 201l. A replay of the call will be accessible until midnight until November 8th by dialing 1-877-870-5176 and entering conference ID number 4551906. International callers should dial 1-858-384-5517.

With us today are Charles Liang, Chairman and Chief Executive Officer; Howard Hideshima, Chief Financial Officer, and Perry Hayes, Senior Vice President Investor Relations.

And now I would like to turn the conference over to Mr. Hayes. Mr. Hayes, please go ahead, sir.

Good afternoon and thank you for attending Super Micro's conference call on financial results for the first quarter fiscal year 2012, which ended September 30th, 2011. Before we begin I'd like to advice you of upcoming investor conferences in which Super Micro will be participating. On November 9th we will attend the Wells Fargo Technology Conference in New York and on November 17th we will attend the Southwest Ideas Conference in Dallas, where we will present and participate in one-on-one meetings.

By now you should have received a copy of today's news release that was distributed at the close of regular trading and is available on the Company's website. As a reminder, during today's call the Company will refer to a presentation that is available to participants in the Investor Relations section of the Company's website under the Events and Presentations' tab. Please turn to slide two.

Before we start I will remind you that our remarks include forward-looking statements. There are a number of risks factors that could cause Super Micro's future results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10-K for fiscal 2011 and our other SEC filings. All of those documents are available from the Investor Relations page at Super Micro's website at www.supermicro.com.

We assume no obligation to update any forward-looking statements. Most of today's presentation will refer to non-GAAP financial results and outlooks. For an explanation of our non-GAAP financial measures please refer to slide three of this presentation or to our press release published earlier today. In addition, a reconciliation of GAAP to non-GAAP results is contained in today's press release and in the supplemental information attached to today's presentation.

I'll now turn the call over to Charles Liang, Chairman and Chief Executive Officer.

Thank you, Perry, and good afternoon everyone. Please turn to slide four.

First, let me provide you with the highlights of our first quarter. The first quarter revenue was $247.9 million, or 4.8% lower than last quarter, and 19.6% higher year-over-year. Non-GAAP net income was $10.5 million, or 19.3% lower quarter-over-quarter, and 13.2% higher compared to last year.

Super Micro's non-GAAP earnings per share was $0.24 per diluted share compared to $0.29 last quarter or $0.22 last year. Slide five please.

With these first quarter results we have demonstrated a strong start to our new fiscal year in the seasonally soft quarter. We anticipated this softness in our August guidance and this quarter unfolded as expected by achieving approximately 20% revenue growth year-over-year.

In the past two quarters, we have sold more $0.5 billion of server and storage products indicating good growth momentum. Although in this past quarter there were a lot of macroeconomical concerns in the United States and in Europe in addition to the seasonal summer softness, the impact was relatively minor to our business.

From a geographic productive perspective the United States accounted for 62.1% of revenue and Asia was 15.8%. While both regions were lower quarter-over-quarter, European share rose to 18.8% last quarter after a strong September offset by generally slower summer period.

Last quarter OEM and Direct customer account for over 44% of revenue and both groups continue to grow steadily.

Internet Data Center reached 16.4% of total revenue in the first quarter as certain new products were deployed as a result of higher OEM and direct business.

System sales also continued to be a strong and accounted for over 39% of sales.

I will start with details regarding the progress of our new generation, X9, Sandy Bridge, our dual processor and Interlagos solutions. As most of our customers are eagerly anticipating them, we have been investing heavily on the final push of the development cycle with our consistent growing engineering team. We will again by first to market with the best product among competition.

We overcame the technical challenge in the carefully tuned and tested each new subsystem in the computer solution to ensure them of optimized performance and features before volume production.

Last quarter we began entering into presale activities to sample and qualifying server for Sandy Bridge and Interlagos with our customers on specific projects. We are anticipating the launch of Interlagos with great momentum next month.

For Sandy Bridge we will continue to increase our sampling and seeding programs and work with large data center customers for early shipping -- for early ship program during this quarter and we expect that they will generate additional revenue. However, we anticipate a significant revenue growth from those new solutions to begin in the early 2012.

Let me briefly touch base on the subsystem side of our business since they are essential to our completed system offering. Regarding components pricing and availability, we continue to see a decline in memory pricing last quarter and we did a much better job managing inventory and the timing of our projection since the impact since the Japanese earthquake (inaudible).

On the (inaudible) side we recently have partnered with Microsoft to provide a Window OS as a part of our complete systems solution. We are optimistic that this collaboration will bring additional value to our customers and revenue to us in the long term.

I would now like to provide you with an update on our capacity expansion. We have made significant progress at our Taiwan facility. The first one is on track to be completed in the next couple of months and we should begin occupying the building and the setting of our first assembly line in December. We expect to have production rolling out of two lines in the first quarter of next year. This is really a special achievement in our efforts to improve the logistical foundation of Super Micro.

Furthermore, the completion of phase one in the next few months will allow us to house more R&D engineers as well as some administrative activity in Taiwan. When the facility is fully ramped by the second half of 2012 it should provide a strong regional operation force to supply Asia and Europe at an attractive cost to the Company.

In addition to Taiwan we have nearly completed the expansion of our production facility here in the United States, San Jose Campus. This will add significant logistical capacity to our U.S. operation and allow us to consolidate warehouse. To prepare for our capacity expansion we have continued to add headcount in the last several quarters.

For example, we have been adding production staff in Taiwan scheduled to be on line later this year. Additionally, we have been adding R&D engineers in Taiwan because we intend to utilize the specialized local talents. We also added hardware engineers to help prepare for the upcoming launch of next generation platform.

Regarding our current solutions, storage and GPUs grew sequentially and year-over-year as demand continues to grow. In especially oil and gas, university, medical and science labs we began decoding rack solutions sales only recently and our rack sales were up strongly over last quarter. Other relatively new products such as Switch MicroCloud and the 8-Way Server are ramping quickly now. Overall we are very excited to see the progress in the development of our product line to provide our customers with total solutions and our customers are responding with a steady growing demand. Slide seven and eight please.

I would now like to update you with more detail on our new and leading technologies. First, our new X9 Sandy Bridge dual processor solutions are in sample state now with target of Q1 2012 for high volume production release. We will update our industry leading platform such as Twin and introduce a new architecture such as (inaudible) U and WI/O. The new X9 platform boasts additional memory, connectivity, PCIE performance and bandwidth.

Second, the AMP [introductory] solutions are exceeding with our official November release. It offers up to 16 [core] CPU which has proven very popular among HPC and other applications. Our GPU optimizes the product line in 1U, 2U, 4U and Blade Platform provides extreme performance in calculation intensive applications and has been the most popular GPU server in the market, while continuing the momentum of leading the market. Our new generation [Rockman] GPUs is including 1U for GPU and 2U six GPU support in high volume production now.

Our embedded server line featured in low power, low noise and small footprint is optimized for special server application enterprise and IPC applications. This new product line brings us additional revenue from the new market segment and our new work station product line featured in new workstation (inaudible) with the high efficiency super quiet power supply in high performance I/O support. Our new specialized workstation product line to support the Everest Processor optimized for high frequency trading, [those] bank for trading applications.

Our cloud environment optimizes 1G, 10G, Layer 2 or Layer 3 and Layer 3 Switch have been in high volume production now. Our 10G and 24-port and 48-port SLP products and 10G Base-T switch for Blade and for Standalone box will be ready for volume production very soon and the cost and performance should be most outstanding in the market.

Our new generation MicroCloud is just in production. The first version is in the 3U (inaudible) with eight [unit] processor nodes. It's a high density and high efficiency design (inaudible) an optimized solution for hosting and cloud applications in extremely low power consumption and [congregation].

Our long awaited data center managed and power management software is in formal beta stage today and will be ready for normal release later this year. This software will make it easier for our customer to manage their server and storage equipment.

In summary, our first quarter results have shown strong start to the fiscal year, the new fiscal year. We have been successful in building our foundation for the future. With our strong product lines our large capacity expansion in Asia and our increasing engineering talents we are fully prepared for a strong growth with the launch of a new generation of products in the near future. For more specifics on the first quarter, let me turn it over to Howard.

Thank you, Charles, and good afternoon, everyone. I will focus my remarks on earnings, gross margin, operating expenses and similar items on a non-GAAP basis, which reflect adjustments to exclude stock compensation expenses. Reconciliation of GAAP to non-GAAP is included in the financial statements of the Company in today's earnings release and in the supplemental detail in the slide presentation accompanying this conference call.

Let me begin with a review of the first quarter income statement. Please turn to slide eight. Revenue was $247.9 million, up 19.6% from the same quarter a year ago and down 4.8% sequentially. The increase in revenue from last year was primarily due to server solutions, which incorporate our growing Blade GPU storage product lines, as well as the ramp up of our full rack solutions.

The sequential decrease in revenues from last quarter was primarily due to seasonal weakness in the industry. On a percentage basis full rack solutions and switches were the fastest growing product lines from the prior quarter. These products continue to gain traction as well as our new MicroCloud.

Turning to product mix, the portion of revenue from server systems was 39.4%, which was an increase from 35.7% a year ago and a decrease from 40.4% last quarter. ASPs for servers was $1,700 per unit, which is up from $1,500 per unit last year and down from $1,800 last quarter. We shipped approximately 57,000 servers in the first quarter and 973,000 subsystems and accessories.

We continue to maintain a diverse revenue base with over 500 customers with none of these customers representing more than 10% of our quarterly revenues.

In our Data Center revenue was 16.4%, which was an increase from 16% in the prior quarter. Furthermore, 2.1% of our revenues came from the U.S. and 55.8% from our distributors and resellers.

Slide 10 and 11. Non-GAAP gross profit was $39.8 million, up 19.9% from $33.2 million in the same quarter of last year and down 1.5% from $40.5 million sequentially. On a percentage basis gross margin was 16.1%, up from 16% a year ago and from 15.5% sequentially.

Price changes from Ablecom resulted in no change to gross margin, gross profit in the quarter with total purchases representing approximately 18% of total cost of goods sold compared to 20.9% a year ago and 14.9% sequentially.

The year-over-year increase in gross margin resulted from an increase in sales server solutions, which typically have higher margins offset in part by declining margins of subsystems and accessories.

Sequentially gross margins were up, due primarily to the sale of less memory and hard disk drive components, which we bought in response to Japan earthquake offset in part by higher inventory reserves.

Slide 12. Operating expenses were $24 million, up from $18.7 million in the same quarter a year ago and up from $22.7 million sequentially. As a percentage of revenue operating expenses was 9.7%, up from 9% year-over-year and 8.7% sequentially. Operating expenses was higher from an absolute dollar basis year-over-year and sequentially. We saw year-over-year increases in absolute dollars, primarily in R&D, as we continue to invest in headcount to drive our innovations and product portfolio, especially in preparation for Sandy Bridge and Interlagos releases.

Sequentially we saw an increase in operating expenses of about $1.3 million, primarily due to R&D expenses growing about $592,000 related to annual salary increases and headcount increases to support new technology launches. In addition, general and administrative expenses grew by $365,000, primarily due to professional fees associated with the Company's fiscal year-end audit.

The Company's headcount increased by 66 sequentially to 1,338 total employees.

Operating profit was $15.8 million, or 6.4% of revenues, up by $1.3 million or 8.8% from $14.6 million a year ago and down $1.9 million, or 10.6% from $17.7 million sequentially.

Our building expansion in Taiwan is scheduled to be completed at the end of this quarter. This expansion will drive our ability to service our customers and improve our operational efficiency around the world.

Net income was $10.5 million or 4.2% of revenue, up $1.2 million or 13.2% from $9.3 million a year ago and down $2.5 million or 19.3% from $13 million sequentially.

Our non-GAAP fully diluted EPS was $0.24 per share, up $0.02 from $0.22 per share a year ago and down $0.05 from [$0.29] per share sequentially. The number of fully diluted shares used in the first quarter was 44,317,000.

The tax rate in the first quarter on a non-GAAP basis was 33.1% compared to 35.8% a year ago and 26% sequentially. The decrease in taxes from the prior year was primarily due to the R&D credit, which was effective for this quarter but not in the same quarter last year.

The increase in current quarter from the prior quarter was due to pending expiration of the R&D credit and lower tax deductions for stock options. We expect the effective tax rate on a non-GAAP basis to be approximately 33% for the December quarter.

Turning to the balance sheet on a sequential basis, slide 13, cash and cash equivalents and short and long-term investments were $96 million, up from $75.2 million in the prior quarter and up from $89.4 million in the same quarter of last year.

In the first quarter free cash flow was a positive $17.1 million. The net change in cash was a positive $22.3 million for the quarter.

Slide 14. Accounts receivable increased by $2.8 million to $87.8 million and DSOs was 32 days, an increase of three days from the prior quarter.

Inventories decreased by $3.7 million to $189 million with the days in inventory increasing by one day to 84 days. The decrease in inventory was due in part to selling off some of the inventory accumulated as a result of the Japan earthquake.

Accounts payable increased by $10.3 million to $123.6 million with the days payable outstanding increasing by one day to 52 days, primarily due to the timing of payments to vendors.

Overall cash conversion cycles days were 64, an increase of three days from 61 days in the prior quarter.

Now for a few comments on our outlook, as indicated previously during the first quarter we saw strength in our broad product lines, especially in blade and storage products. We started to see ramping in our full rack solutions and switch products, which we started investing in during the past year.

In addition, we have begun sampling and presales activity for Sandy Bridge and Interlagos Solutions. So, as we enter the December quarter, which is sequentially a seasonally strong quarter for the industry, we have a host of new products and platforms available for our growing customer base. As noted earlier, we are working with our vendors and partners to minimize the impact to our hard disk drives supply due to Thailand floods.

In addition, we are scheduled to complete construction of our Taiwan facility at the end of this quarter. Therefore, the Company currently expects net sales for the quarter ending December 31st, 2011 in the range of $260 million to $280 million.

Assuming this revenue range, the Company expects non-GAAP earnings per diluted share of approximately $0.27 to $0.33 for the quarter. It is currently expected that this outlook will not be updated until the release of the Company's next quarterly earnings announcement. Notwithstanding subsequent developments, however, the Company may update the outlook or any portion thereof at any time.

With that, let me turn it back to Charles for some closing remarks.

Thank you, Howard. Our results for the first quarter were strong when compared to the same quarter last year and we have made a good start to the new fiscal year. We look forward to moving into our Taiwan facility this quarter and beginning production. We are continuing to prepare for these product lines for the upcoming launch of Sandy Bridge. We have strong foundation in place for which to execute our strategy to grow our revenue and increase our profitability.

Operator, at this time let's open to questions.

(Operator Instructions). Finally, we ask that you limit yourself to one question and one follow-up until all in the queue have had an opportunity to ask a question. We will then come back to you for additional questions. (Operator Instructions).

And at this time we'll go first to Mark Kelleher with Dougherty & Company.

Thanks for taking the question. Congratulations on a good quarter. You mentioned, Howard, you mentioned the Thailand floods. Can you elaborate a little bit more on how that might be affecting your Q4 and maybe how much hard disk drive inventory you have as a cushion?

Yes, Mark, this is Howard. Thank you for the compliment. With regards to the hard disk drive inventory situation or the Thailand floods, we do maintain safety stock so right now we're assessing it and we're looking through that and we're working our way through our hard disk drive inventory to make sure we have enough for this quarter.

So you're still evaluating that?

We're still looking through it. Right now it's a developing situation but, again, we have maintained what I would call reserve inventories.

It looks like certain impact for sure but because we're used to having a very good safety inventory control so hopefully the impact won't be too big.

Okay and as a follow-up there was some higher priced DRAM in inventory that you were working through. Is that all gone now?

Yes that's (inaudible) and indeed has been improving a lot in last two quarters so this quarter we have less concern in that area.

Okay thanks.

Aaron Rakers, Stifel Nicolaus.

Yes thanks, guys, and my congratulations as well. First question, I guess more of a clarification, you had referenced Internet data center vertical as being 16.4% of revenue. I am a little bit unclear. I think your presentation kind of indicates that that was 16.4% of OEM plus direct revenue so can you clarify that for us? And I think upon that clarification I think you had one significantly large customer last quarter come into that vertical. Can you update us on, you know, are there any large customers really skewing that because it looks like an extremely continually solid number?

Yes, Aaron, thanks for the compliment again. Yes the 16.4% refers to total revenue as a percentage of total revenue.

And any thoughts or indications is there a significant customer contribution in that because I think you had one customer that was very large last quarter, correct?

Yes in the June quarter we had one customer that was 11% of total revenues and they were in the Internet data center area. This quarter we had no customers in any vertical that was over 10% of our revenues, so you see us being more diversified quite frankly into a number of new growing customers.

And then the other question is I think I was surprised by the gross margin line, 16.1%. By my math it would seem to imply that you had a fairly solid increase in the actual server system gross margin. Can you touch on what trends you're seeing between the segments and how we should necessarily think about that over the next couple quarters?

I guess the March and June quarters were both [kind of] some active impact from a higher cost of dealer price and however addressing that situation has been improved this quarter.

So you'd say both systems and subsystem gross margin increased sequentially?

This -- I mean, for September and June quarters yes we suffered a little bit from higher costs, memory cost.

Okay thank you.

Rajesh Ghai, ThinkEquity.

Congratulations from my side too. On the Romley ramp what's the timing that you are assuming at this point of time? I notice that your guidance for the December quarter is a little neutered compared to the historical growth rate. Are you assuming some sort of a pause ahead of a big ramp in the first half of next year, calendar year?

Okay yes. I mean the December quarter our gross, we tried to be more conservative for two reasons. One is the Thailand flood. I mean we are closely inspecting, surveying the impact. And the second is our Romley -- I mean the Romley or Sandy Bridge, that really high volume production will be Q1 so this quarter we will see some seeding but not really high volume.

And are you -- in case you know, you said you were evaluating that Thailand situation. I just wanted to make sure it's a right now it looks like significant hard drive capacity is going to be impaired. Is it a possibility that it impacts your ability to produce product this quarter or do you think that you might just have to -- and you might have enough inventory to take care to address that situation and what kind of a pricing impact are you modeling in your gross margin assumption for next, for this quarter?

Yes this quarter we have some safety inventory for sure but it does concern about if it will impact or become bigger. Then we may have some -- we may have to pay higher price to fulfill some demand, especially by December. That's why we tried to be more conservative.

And what kind of a price increase are you modeled in the gross margin assumption for next quarter?

At this moment we heard -- I don't know if people were talking differently but a 10% higher in some hard drive costs and some other model maybe even 20% but at this moment still not quite solid.

Okay and one last clarification, you said the Taiwan facility is going to ramp. Is that going to be in the March quarter of 2012 or is that going to be in the September quarter of 2012? I just want to clarify that.

Yes, Rajesh, we're on schedule. As I told and I think Charles mentioned also, we're on schedule to complete construction by the end of this quarter in the December time frame so then we'll be beginning to ramp right after that and taking occupancy of that and putting in lines and beginning to ramp that.

Great thank you so much.

(Operator Instructions). Glenn Hanus, Needham.

Hi and congrats as well. Let's see, so gross margins this quarter should we look for some sequential growth in gross margins in the December quarter and can you talk about the puts and takes on the gross margin this quarter?

Yes, Glenn, I think one of the main things is we talked about like I said the Japan inventory, that being behind us taking us two quarters and to here that's pretty good. And in the June quarter we saw less with that as we talked about and the September quarter so we think we're beyond that per se. Obviously, as we have new products on board and trying to sample and get ready for the Romley and Interlagos that's always a good thing for us.

On the flip side of that and I'll say also that the memory pricing or DRAM pricing was pretty stable this quarter so that was also good for us. We've talked about the hard disk drive situation. That can go plus or minus; let's put it that way, depending on how it turns out at the end of the quarter. And then on the negative side I guess, like I said, we're on schedule to ramp the Thailand facility. We look pretty good there but we'll still be incurring some cost to ramp that to get it ready for production capabilities in the first quarter.

Okay can you give us any color directionally on whether we can see some gross margin expansion this quarter or should we more think about that in March in conjunction with Romley?

[Overall] I guess that December quarter probably margin will be slightly better than before but how much, Howard, do you have more ideas here?

Yes I mean again, Charles was pointing to, like I said, the benefits from some of the sampling we're doing with Interlagos and with Romley, also with some of the componency that we do have in stock, higher pricing we may be able to obtain on that. There's cause and effect on margin so there are some positive things for us that we see right now up front for us.

Okay on the operating expenses, it came in a little ahead of what I was modeling. As you look out over the next few quarters, do you think we can start to drive operating expenses back down below 9%?

Yes I mean in past the three/four quarter we did increase a lot of [band] power because we had to train our talented people in the production in the logistics, even in R&D, call it become too in offshore and that's why our overhead grew quite a little bit but so for most of the people pretty much already were trained so in next few quarters I believe our headcount growth will be more under control.

Okay great and maybe at the macro level could you talk about what you're seeing by geography? You did pretty well. Do you think it was more share gain on your part or that the overall macro situation was not so bad? Could you maybe talk about that by geography?

Yes I mean, as you know, we did not focus that much on east, U.S.A. East Coast before but we have spent a lot of effort to develop the market in the past few quarters so we did see some gain over there. And in Europe we had to continue to grow our sales and marketing team and we have a good feeling about that. In Asia yes we had spent a lot of effort to develop the market there in the last 12 months and it looks like it's getting mature to us.

Okay thank you.

We do have a follow-up from Aaron Rakers with Stifel Nicolaus.

In reference to one of your earlier comments, can you tell us how much expense overhang you're currently deriving from the ramp of the Taiwan facility and how we should think about that after that facility comes on line?

Aaron, like I said, right now there's no -- from the construction part of it, the investment part of it, that's not come on board yet. You know, that's still building and those will be taken over a long period of time so the load from there won't be that heavy even when it does come on board. And then, as Charles mentioned earlier, we did ramp some headcount there. That's already built into the number so it's a matter of basically utilizing that excess capacity if you want to call it that or excess manpower that we have, basically fully utilizing it.

And then the final question from me is if you think about what you guys -- you know, $270 million midpoint of your guidance, how are you thinking about that sequentially between the two segments? If I look back you've had historically a very strong December quarter. Obviously Romley timing and everything else involved here but I think on average you've done over 20% sequential growth in the system side. How are you thinking about the mix of business given your guidance for this quarter?

I guess you are right. The Romley Sandy Bridge brought in production in Q1, not December. That's why we tried to be more conservative with December quarter but yes December usually our strong quarter.

So, with that, I mean are you assuming a fairly consistent mix of business that you saw this last quarter?

Yes I think so, Aaron. If you look through the percentages of last couple of quarters we've held pretty steady with regard to our server versus subsystem mix, albeit we had some componentry that we had to get rid of in the June quarter but I think you'll see us being fairly steady.

Okay.

Alex Kurtz, Sterne, Agee.

Hi. This is Amelia filling in for Alex today. A quick question following up on the Internet data center question, how did you see the competitiveness in this vertical over the quarter in terms of the deals you saw? Were they better or worse versus last quarter or did you see any large deals or specific pricing pressure around these deals?

It looks like not a big change. It's competitive since a long time ago and that's why we continue growing our higher value architecture, software value and kind of lower our operation costs by expand our facility to Asia.

Okay great, thank you.

Glenn Hanus, Needham.

I think an important part of your value proposition over the years has been your first to market advantage and you tend to drive some better margins during that time. Just given that the Romley Sandy Bridge has slipped out a bit, has that impacted your first-to-market advantage at all and sort of given some of the competitors a chance to catch up to you?

I believe we still have a very good chance in terms of TTM, time to market, because for Sandy Bridge product line it's a wonderful, really high performance but also very complicated. There are lots of technical challenges. For example, how to make a system really power saving and really pushing the performance to maximum, how to really optimize the cooling, the cooling function, including kind of a rather free air cooling, so there are lots of technologies there so I don't believe Sandy Bridge we have the less opportunity than before.

Great thank you.

It appears at this time we have no further questions. I would like to turn the call back over to Mr. Liang for any additional or closing comments.

Thank you for joining us today and we look forward to talking to you again at the end of this quarter. Thank you, everyone. Have a great day.

Thank you. Ladies and gentlemen, this does conclude the Super Micro first quarter fiscal year 2012 conference call. We do appreciate your participation. You may disconnect at this time. Thank you.