思佳訊 (SWKS) 2007 Q4 法說會逐字稿

Good afternoon and welcome to Skyworks Solutions Fourth Quarter Fiscal Year 2007 Earnings calls.

This call is being recorded.

At this time I will turn the call over to Tom Schiller, Investor Relations for Skyworks.

Mr.

Schiller, please go ahead.

Thank you, Chris.

Good afternoon everyone and welcome to Skyworks Fiscal Fourth Quarter and Year-End conference call.

With me today are Dave Aldrich, our President and Chief Executive Officer, Don Palette, our Chief Financial Officer and Liam Griffin our Senior Vice President of Sales and Marketing.

Dave will begin today's call with a business overview followed by Don's financial review and outlook.

We will then open the lines for your questions.

Please note that our comments today will include statements relating to future results that are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially and adversely from those projected as a result of certain risks and uncertainties including but not limited to those noted in our earnings release and those detailed from time to time in our SEC filings.

I would also like to remind everyone that the results and guidance we will discuss today are from our non-GAAP income statement consistent with the format we've used in the past.

Please refer to our press release within the Investor Relation's section of our Company website for a complete reconciliation to GAAP.

I will now turn the call over to Dave for his comments on the quarter and fiscal year 2007.

Thanks, Tom, and welcome everyone.

Today we announced our fourth fiscal quarter and 2007 year-end results.

And I'm very pleased to report that the Skyworks team delivered strong year-over-year and strong sequential profit improvements.

Now our performance this quarter and throughout the year helps to demonstrate our progress since exiting the baseband business a year ago.

Now at that time, you may recall, we outlined a four-pronged strategy.

First, to intensify our focus on areas of competitive strength and differentiation, and this is squarely in the analog and in the RF domain; second, to diversify our business into non-handset linear applications that have high gross margins and annuity-like revenue streams; third, to capitalize on content growth in 3G multi-mode applications supporting all key OEM's; and fourth, to generate sustained, higher financial returns.

Our results today reflect progress along each of these fronts.

Skyworks today is a stronger, a more competitive and profitable Company.

We've increased research and development investments in highly focused areas while simultaneously partnering with the leading chipset providers.

Now this is something we were frankly unable to accomplish when we competed with these very same companies in the baseband arena just one year ago.

And by increasing our internal manufacturing capacity, in addition to developing external second sources for foundry and for assembly services, we're well positioned today to economically capture the increased demand for our linear products and for our front-end solutions.

In short, the Skyworks team remains committed to delivering profitable growth.

Now let me take a moment to specifically address some fourth fiscal quarter and year-end highlights.

First, for the quarter, we increased our revenue by 9% sequentially, we've expanded our gross margin into the mid-39% range, we delivered record EPS of $0.14, and this is $0.01 ahead of consensus, and we generated a record $30 million in cash flow from operations.

Now at a higher level during the quarter we continued to gain momentum with our linear products business by during the year introducing over 100 new analog products as we continue to round out our catalog.

We strengthened our position with existing handset customers as well as securing important new ones.

With our latest high average selling price or high ASP multi-mode front-end modules and RF solutions we captured several reference designs with the industry's top baseband providers which will translate into meaningful revenue in fiscal 2008.

Most recently in the intellectual property front we have acquired Freescale Semiconductor's proprietary GaAs PA/FEM design and related intellectual property, we purchased 16 fundamental HBT and RF MEM's patents developed by Rockwell Science Center and at the same time we divested some non-strategic vocoder pads.

And in the case of Freescale, I would also like to add that we can now count them among our growing list of reference design partners, a core part of our strategy.

Finally, during the year we've also expanded our capacity in both our domestic gallium arsenide fabs, both of them PF HBT, and implemented a hybrid manufacturing model with multiple external foundries with the goal of capturing additional share.

Now at Skyworks, we have developed an operating model which allows us to maintain high internal capacity utilization by creating second sources for high fixed-cost services, services like foundry assembly.

Successful implementation of this approach provides us with a great deal of supply chain flexibility.

It lowers our capital investment and it provides us the ability to meet upside demand.

And we're convinced that this approach will improve our gross margin and help us lower our capital spending.

Now I'd like to further elaborate a bit on a few specific accomplishments during the quarter in our two product areas.

First, linear products.

We've now ramped into volume production, new remote meter reading solutions for utility and industrial applications and when you consider that there are an estimated 2.5 billion households and businesses worldwide that still require manual gas, water, power meter readings, there is clear demand for an economic RF solution that can provide these real-time logistics.

And we're ramping some of those into production now.

We've now reached a high volume production levels with multiple high performance receivers in support of several top-tier base station OEM's.

These receivers provide more RF content, more dollars to Skyworks, and at the same time they are lowering our customers' bill and material costs and they are reducing the size of the overall base station.

A win-win.

We've sampled our first BAW filter plus power amplifier module in a wireless LAN access point manufacturer and this is now augmenting our existing volume [BG&N] wireless front-end wireless business.

We continue to be very encouraged by the growth prospects of this business, our linear products business which now represents nearly 1/4 of our revenue and our participation in an addressable market that is nearly four times, four times the size of the wireless cellular handset industry.

Now turning to our handset business, the transformation from voice-centric phones, 2G phones, voice-only, to multi-media EDGE, WEDGE, wideband CDMA platforms continues to accelerate and it continues to gain momentum.

With this trend, the complexity in the front-end module increases as each new operating frequency band requires additional amplifier, additional filtering and switching and control.

This is now expanding our ASP's by as much as three-fold from a 2G design.

At the same time, there is a narrowing of the competitive landscape given the requisite degree of technical and manufacturing breadth particularly when compared to the less challenging 2G power amplifier market.

Of special note during the quarter, we began multi-mode front-end module shipments to yet another Tier 1 handset OEM and we're absolutely delighted to be entrusted with business spanning all of the industry-leading manufacturers today.

And at the same time, and not to be underestimated, Research in Motion (RIM) and MediaTek in China are quickly becoming two of our fastest growing customers given RIM's strong growth among enterprise users and MediaTek's success in delivering low-cost platforms for emerging markets.

Now given that the number of suppliers today who posses the breadth of technology and the available capacity to address these needs is decreasing, we believe Skyworks is uniquely positioned to capture share for front-end content that will grow from roughly $1 to $2 in 2G in CDMA and GSM phones to nearly $6 in 3X and multi-mode handsets.

This is an incremental opportunity for our Company measured in the billions of dollars over time.

So in summary, the Skyworks team continues to focus on building an increasingly diversified business with stable earnings growth driven by defensible competitive advantages in linear products and in handset RF end markets.

With our strong market position and our dedication to operational fundamentals, we believe we can outgrow our addressable markets and we believe we'll further expand gross margins and operating margins.

Now I'd like to turn this over to Don for his review.

Thank you, Dave.

Before I provide my overview of our results, I'd like to say that as Skyworks' new Chief Financial Officer I'm excited about the Company's financial outlook.

Skyworks is very well positioned, as Dave has underscored.

One of my areas of focus will be to ensure that our growth opportunities deliver earnings leverage and maximize our return on investment.

Based on our product pipeline, I believe we have a business model capable of delivering higher returns.

Specifically, at a $250 million quarterly run rate I see a path to generating operating margins approaching 20%.

At the same time, we will continue to strengthen our balance sheet.

Now for my comments on the quarter just completed.

Revenue for the fourth fiscal quarter was $190.5 million, up 9% sequentially and at the higher end of our guidance range.

Gross profit for the quarter was $75.1 million, or 39.4% of revenue, a 65 basis point sequential expansion.

Our continuous improvement in gross margin reflects the following - delivering on yield improvement initiatives, higher equipment efficiency and factory utilization and enhanced product mix as multi-mode FEM's and linear products become an increasing part of our business.

Operating expenses were $52.4 million of which R&D expenses totaled $31.8 million and SG&A costs were $20.6 million.

Our operating income for the quarter was $22.7 million, generating a return of 12%.

Net Other income for the quarter was $388,000 while taxes were $128,000 which did exclude a non-cash tax benefit of $3.5 million reported in our GAAP results.

Net income totaled $23 million, up 36% sequentially and 120% on a year-over-year basis.

Earnings per share was a record $0.14, one penny ahead of consensus estimates and reflecting a 2X improvement from the $0.07 we reported this time last year.

Now turning to the balance sheet.

We exited the quarter with cash and cash equivalents as well as short-term investments of $254 million which was up $19 million from the prior quarter.

More specifically, we generated a record $30 million in cash flow from operations, recorded $10 million in depreciation and invested $12 million in capital expenditures primarily on FAB and assembly and test capacity.

Now to our business outlook for the first fiscal quarter.

Given strong order visibility and the ramp of our newest analog and front-end module designs, we once again anticipate top-line growth approaching 10% on a sequential basis.

Assuming revenue of $207 million, we would suggest modeling gross margin of between 39.5% and 40% and operating expenses of $54 million to $55 million, yielding a 13% operating margin.

Below the line we are forecasting interest expense of $200,000 and a cash tax rate of 3%, or $800,000, which translates into $0.15 to $0.17 of earnings per share based on 162 million shares outstanding.

As a reminder, we currently have NOL's and tax credits on our balance sheet that will shield approximately $250 million of future earnings from taxes.

For financial modeling purposes, you should assume a cash tax rate of 3% for your 2008 and 2009 model years as we continue to utilize our NOL's.

That completes our prepared comments and, Operator, please open the lines for the question and answer session.

(OPERATOR INSTRUCTIONS) Cody Acree, Stifel Nicolaus.

Congratulations, guys, on a great quarter and, Don, welcome.

Thank you.

Don, just one brief clarity, did you give a share count guidance rushing through there?

Yes.

162 million.

162?

Great.

Thanks.

You mentioned a ramp of a leading Tier 1 leading OEM this last quarter.

Can you give any quantification of contribution material, non-material, meaningful [execution] to Q4 and expectations of maybe that OEM ramp through 2008?

Cody, yes, this is Liam.

That's a great question.

We appreciate that.

As you know, we have been diligently working with each of the top five OEM's over the last year and even now into '08.

We've made tremendous progress along the way, specifically around WCDMA and EDGE as we move into this multi-mode arena.

But there are some specific accounts that we can't get into the details on here, as you know, but again we look forward to growth among the top five.

We're pleased that we've been able to secure each one of these with a highly sophisticated multi-mode design and we expect to report two or three gains as we move through the year.

And then lastly, if I may, could you go through just a view of inventory health OEM versus what's out in the distribution channel?

Cody, I must say I don't see any significant inventory overhang issues if you mean of the end-product or the components we make.

It seems to be quite stable from my perspective.

There is some tightening of supply on some componentries out there that we've been able to secure multiple sources so it's not going to be an issue for us.

But there is some tightening of the supply chain but we don't see an inventory overhang impacting business.

Amit Kapur, Piper Jaffray.

Given your recent announcement of the conversion from four inch to six inch, could you maybe walk through some of the potential gross margin impacts of that transition and how you're working to maybe minimize some of those impacts?

Sure, Cody, I'll take that one.

If you look at our business model, we talked about it in the prepared comments.

We've done a lot of work over the last couple of years to provide copy exact for our critical processes, PF and HBT being two of them.

So we now have partners who are able to build not only serious demand but a significant amount of our demand.

We're doing that in assembly and test, as well.

So, as a result, we don't have to do a bricks and mortar expansion.

Where essentially we've already acquired most of the equipment over the years that are capable of doing six inch, we are in the process of cutting that equipment over, qualifying new processes, buying some new gear.

But since this isn't a bricks and mortar play for us, it will fit pretty comfortably in the capital expenditure profile we've had for the last several quarters.

So it's going to be a different model for us.

We're going to increase -- we've already increased capacity, we're leveraging that now and beginning to fill the capacity we added throughout '07 in our foundries, we're exercising and working closely with those second tiers.

So you should think of it as being a similar CapEx quarter-over-quarter number that you've seen come up in the last few quarters.

Great.

That's helpful.

Then maybe my follow-up -- maybe could you update us on the transition you're seeing from PA modules to front-end modules and give a sense of how you see the WCDMA front-end module market trending in coming quarters?

We are seeing a pretty aggressive acceleration and specifically at the higher end, EDGE and WDCMA, towards integrated FEM's adding either a switch or a filter and in some cases both.

So we are seeing the adoption occurring quite rapidly.

We are also seeing the trend towards multiple PA's in phones happening now.

We're seeing European phones with band 1 and band 8 and WCDMA made with an EDGE device that may have a 9 pro switch.

We're seeing U.S.

phones with a band 2, a band 5 and an EDGE device.

So all of that is materializing and we feel pretty good about it.

As you know, Skyworks is uniquely positioned to have not only the GaAs/HBT technology for our PA's but also strength in TM switching and assembly and test in-house.

SO we're bringing that all together and it's definitely a trend that's going to play well for us.

Mike Burton, ThinkEquity Partners.

How many 10% customers did you have in the quarter and for the year?

For the quarter we had three, Sony Ericsson, Samsung and Motorola.

And then also for the year, as well?

Yes.

Thanks.

And then can you break down the percent of sales you currently sell into radios, perhaps as a bundle, with the PA and then maybe just the radio portion of those revenues?

Our revenue for transceivers, standalone transceivers and handsets, is in the mid-single digits.

None of those are sold in standard alone parts, Don.

They are all --

They would all be (inaudible).

Jeroen Bos, UBS.

Quick question, one of your customers, MediaTek, this morning made some comments about shortages on the power amplifier side.

Maybe you can comment what you are seeing there and if it's related to maybe a better than expected ramp at your new, large OEM?

Great question.

And as we noted in the prepared comments, MediaTek is a very important customer for Skyworks and if you're following that company, tremendous year-over-year gains.

And their business is largely driven by gains in emerging markets with SOC solutions and GPRS.

We are alongside MediaTek in a significant number of platforms here.

We gained market share and, quite frankly, the shortages that you are speaking about right now are creating opportunities for Skyworks.

Our supply chain has done quite well when delivering these products and we've been a welcomed partner with MediaTek and we don't see any problems in our food chain at all in supporting them.

So let me be more specific.

The shortages they are referring to are not Skyworks and it's creating an opportunity.

We're picking up share as a result of those shortages?

Great.

And maybe a follow-up, maybe I missed that.

Can you comment on what the linear growth revenues was sequentially and if you see any negative impact on the slow-down we see on wireless infrastructure side at the moment?

Well, the linear products has been hanging in there at about a fourth of our revenue.

So that didn't move material at all in the quarter.

We did see some softening of the infrastructure business at an account.

However, we are offsetting that with some strength in some of our more diversified catalog business and wireless LAN product in some of the broad based standard product mix that we talk about.

So, yes, we did see some softness.

We offset it and it remained roughly 1/4 of our revenue.

Edward Snyder, Charter Equity Research.

Regarding Freescale, so you're picking up Freescale's business.

What exactly are you getting for them.

Will the acquisition be dilutive or accretive near-term, long-term?

And what does this do to your share at Motorola or any other vendors.

I know they sold to RIM and Sagem, also.

So is share play and do you expect maybe a little better pricing because of it?

Thanks, Ed.

Well, as you probably are aware, Freescale has elected to get out of the power amplifier business and to focus on their core strength.

So as a result we have acquired their intellectual property, we have acquired their patents, we have acquired the rights to their designs and reference designs.

And, frankly, we're really quite pleased to be able to add Freescale to our list of baseband partners going forward, something that we are very interested in continuing to expand and something that we really couldn't do when they competed with us in the power amplifier and front-end.

By the way, Ed, I don't know if you caught the fact that we also acquired about 16 pretty fundamental RF MEM's and HBT patents from Rockwell Collins while at the same time divesting of a few of the vocoder pads.

So we didn't acquire any assets, we didn't acquire people.

And to answer the question, will it be accretive?

In the very short-term -- in the next couple of quarters it's an insignificant amount of revenue.

However, as we move beyond the next couple of quarters as these new reference designs go into production and as we begin to, frankly, take some of that terrific IP and apply it to our base business, we think this will be quite accretive.

The next couple of quarters insignificant but quite accretive to revenue and profits as we move out in time.

So what does this -- how does it work at Motorola now?

I know Freescale was supplying some of the PA FEM's and PA's to Motorola's phones.

Will they continue to build the legacy product and you'll just take over all the new stuff or how does it work?

Well, at Motorola -- I can't divulge too much of the specifics but suffice to say the next couple of quarters this won't be a significant driver of any revenue at Skyworks.

It won't be dilutive either.

But now at Motorola we're in the CDMA RAZR Series, we're in the EDGE RZR II.

We're smattered, now, across all of their wideband CDMA platforms.

We're across virtually all of their low-end W Series via the ODM channel.

So right now we're in their top, their mid and their low-end and as we move throughout '08 we will have the vast majority of Motorola's share.

Jeff Kvaal, Lehman Brothers.

Obviously, just returning to the theme of component tightness in the industry for a minute, do you feel like the overall component side is not necessarily yours or someone else is contributing to perhaps restraining unit volumes for you in the fourth quarter?

I don't think so.

If we look at our visibility we see -- the visibility is quite strong right now.

The market looks very strong from where we sit from an overall unit volume and our share as we, in our prepared comments described.

So I would say that while there are component shortages, I haven't seen direct evidence that any of our customers can't build phones because they can't somehow acquire those components.

Liam, do you want to add to that?

No.

I agree.

I agree with that.

And I think our supply chain, as well, is pretty sophisticated in managing the sourcing side of the equation and they are working to ensure that the demand can be realized.

In general, I think the seasonality in the fourth quarter as being up approximately 10% so in an environment where the market is healthy and you guys clearly are gaining some market share.

One might think that there would be an opportunity for you folks to outperform, maybe not in the December quarter, but perhaps seasonally would be less down in March, as well.

Does that thesis make sense?

We have -- that's what I -- when I made the comment that we have strong visibility, that means we are largely booked to this guidance and we're very comfortable with the guidance and I agree with your assessment that December should be a seasonally high quarter.

George Iwanyc, CIBC World Markets.

Don, could you follow up on your comment about reaching 20% operating margin at the $250 million run rate level?

How do you get there and what type of gross margin and OpEx are you expecting?

Sure.

We're very focused, as I said in our comments.

We see a path from our new business model standpoint at $250 million to generate operating margins close to 20%.

And it's really focused on in two areas.

And that's in gross margin and the leveraging of our operating expenses.

And from a gross margin standpoint, given our diversified product mix and our demonstrated operational focus, and I really think you can see that if you look at the margin improvement that we've baked into this model over the last several quarters, and it's really a result of driving product yields, equipment efficiencies and really focused on material costs.

We've done an excellent job of being focused and executing in that area.

And we believe we can generate margins at that revenue level in the low 40's.

Then when you look at our operating expense base, there isn't a lot of incremental cost that we have to add to generate that revenue.

So we expect some leverage and we would expect that number to be at something below 25%.

So you can do the math and you can see that we start approaching that 20% return.

And can you give us an idea of the timing you're looking at over this to reach these type of numbers?

Well, we don't provide guidance out any more than a quarter.

However I must say that, again, we believe the unit volume growth in the overall industry is going to be strong.

We believe that multi-mode, where we're quite well positioned even relative to 2G with higher dollar content, is going to become a disproportionate percentage of the market and linear products is growing.

So we don't provide guidance for more than a quarter but this is not a number we just pulled out of the air, either.

Aaron Husock, Morgan Stanley.

I guess just first following up on the OpEx side, R&D was a little bit higher then than what I was expecting in the September quarter.

Can you confirm what drove that sequential increase and whether the same factors drive it up again or down in December?

In our fourth fiscal quarter it really was just the timing of some of the investments we're making on projects.

We had some higher material costs associated with specific projects and just some timing associated with masks and some other variable expenses in R&D.

We also had some -- we've been making some capital investments that really focused on improving the whole development cycle and some of that depreciation started to hit in the fourth quarter.

So that's really what was driving the increases.

And did R&D dollars, did they go up again in December or do you see a little bit of a decline in some of those mask costs fall off maybe?

I think it's going to be relatively flat based on the program profile that we're seeing right now.

Brian Modoff, Deutsche Bank.

Couple questions, first you had Other income of $3 million that contributed $0.02 to your bottom line.

What was that and is that part of your guidance for the following quarter?

Hi, Brian, this is Don.

Well, as I talked about -- we talked a little bit about the approach to take for our tax rate on a go-forward basis.

As I mentioned, we have NOL's and tax credits on the balance sheet that are adjusted by a valuation allowance.

And the accounting rules require that we look at that quarterly.

And when you get to a certain level of assurance of profitability you have to adjust the valuation allowance, we actually did that in the fourth quarter, so some of that was a balance sheet entry.

A portion of that actually benefited the tax expense which was about $3.5 million in the fourth quarter.

That's on a GAAP basis.

Now we adjust that on a non-GAAP basis back to our cash tax rate which is 3%.

So that's what you saw in the fourth quarter.

So Brian, when we provided our guidance and we delivered the earnings per share this quarter that was a percent of guidance, we did not take benefit.

We backed out that benefit.

So it's not correct that that benefited our pro forma results.

So are you saying the Other income was a tax adjustment?

Yes.

That we backed out for pro forma purposes and that we did -- and so consistent with our guidance we backed that out.

And then [RF&G's] going to be launching some wideband front-end modules at Nokia in the back half of next year.

That collapsed the number of PA's used in a device from 5 down to 2.

Are you prepared with technology to compete with that when they come with that product?

Yes.

James Faucette, Pacific Crest.

Most of my questions have been answered although I am wondering if you could comment on a little bit about what level of engagement you've been able to achieve thus far with some of the up and coming baseband providers, specifically, STM, Infineon and BroadCom?

Yes, James, we've actually been doing quite well along the baseband front here, some of the names you mentioned and some others like TI.

We are right now working with just about everyone, I would say the top five or six market share players in baseband.

ST with some of the changes that we're seeing with our major Tier 1 accounts is now becoming a new emerging focus for us right now.

Infineon, we've been working with for quite some time and have some engagements with them in Korea, BroadCom, a lot of things happening there and our power amplifier technology fits very well across the whole suite of suppliers that you mentioned.

Another one here that I definitely see as being a big part of our story, 2008, is Texas Instruments.

We've been a strong partner with them on the low cost of platforms and the low cost GPRS world.

We have several engagements with them in EDGE, not only power amplifiers but also with our Helios 3 Radio Solution.

And I think you're going to hear more positive comments about TI and the other names that you mentioned as we move through the year.

So on a relative basis, would you expect as those people, particularly the STM's, Infineon's and BroadCom's, as they generally take market share over the next few years, at least as is expected, would you expect your positioning within them to allow you to also take share or is it more of a trade-off where your position within those suppliers is likely to be about in line with your overall market positioning?

Actually, I think these changes that we're alluding to here are very positive for us in terms of gaining share.

Those names that you mentioned are going to gain share in an account that, right now, we have plenty of head room in.

And we think they are going to facilitate our ability to really take it to the next level with certain key customers.

So we're very excited about it.

We're engaged with everyone that you mentioned and we think it is not a trade for us, it's an upside.

Edward Snyder, Charter Equity Research.

In terms of your business with the largest OEM's, we kind of touched on Motorola there, are you seeing upside demand in the top tier OEM?

I know you were in the 3G business.

It's kind of a recent addition but is it expanded beyond that into like EDGE or 2G business, also?

Because we keep hearing about material weakness in one of the competitors there and it seems like a number of your competitors are picking up share there.

I was wondering if you're also seeing in your business.

Well, thanks, Ed.

Again, I can't be, as you can appreciate, I can't be terribly specific here so I'm going to broaden the question a little bit.

We do see increasing demand, believe it or not, even though they've consolidated a great deal of share among the top several OEM's and so we absolutely see that.

We see continuing the trend of consolidation of share on the back of the brand strength, scale and so on.

So as we see our demand profile moving throughout not only this quarter, but throughout 2008, we think that demand remains healthy and there's a little bit of an interesting spin on that.

When we talk about MediaTek, we also think that those indigenous and many of the emerging markets are now being serviced by sort of a reference design approach that lowers their overall build materials and time to market.

So we're able to address a large swath of the market by addressing a couple of baseband partnerships.

With respect to the second half of the question, Ed, it is typical for us to bundle a solution in the front-end domain that includes the multiple bands of wideband CDMA frequency.

I think it was an earlier question that was maybe trying to get at that along with EDGE.

Because if you look at, let's say a design that may have quad-band EDGE with band 1 for Europe of wideband CDMA, there's a pretty complicated filter bag, a multi-throw switch that may be a six or nine throw switch.

There's a lot of control and logic that goes into that and increasingly what we see is a system that goes from the transceiver, drives most of the control logic and the filtering and switching from a front-end module that encompasses quad band EDGE that would then output to multiple bands or wideband CDMA.

So it is more typical than not that with our customers we sell both the wideband CDMA and EDGE at the same time.

And, incidentally, we are selling wideband CDMA and EDGE to all the top OEM's.

So even though it's not always the case that they are bundled, it usually is and we sell both to -- across the board.

(OPERATOR INSTRUCTIONS) Aaron Husock, Morgan Stanley.

If you think about the December quarter, should we expect your RF sales and your linear sales to grow at roughly the same rate or should there be a bit of a disparity?

Which should grow faster?

And then also on the linear side, it seems like you're getting some more wireless LAN traction alongside BroadCom.

When should we expect a material ramp-up in that?

With respect to the mix, I think it will be similar in December.

You are right, we alluded to a little bit of a mix shift away from, at least in the short-term, a little bit of the infrastructure business although we've got some new products ramping there as well.

We talked about in the prepared comments, they are in the press release.

But we do see linear products being up quarter-over-quarter with a little bit of a different mix.

So I don't think it's going to vary much from that 3/4, 1/4, frankly, in the short-term.

Right.

And with respect to your question related to wireless LAN and BroadCom, we are ramping those products right now.

We've got more than eight different designs in production with BroadCom that span VG platforms up to 11 end and there are several other wireless LAN OEM's and ODM's that we're working with as well.

It appears there are no further questions at this time.

Mr.

Aldrich, I would like to turn the conference back over to you for closing remarks.

Well, thank you very much.

This concludes our call today.

And on behalf of the entire Skyworks team, thank you for participating and we look forward to updating you on our performance next quarter.

This concludes today's conference.

We do appreciate your participation.

You may now disconnect.