思佳訊 (SWKS) 2009 Q4 法說會逐字稿

Good afternoon and welcome to Skyworks Solutions fourth quarter fiscal 2009 earnings conference call.

This call is being recorded.

At this time, I would like to turn the conference over to Tom Schiller, Investor Relations for Skyworks.

Mr.

Schiller, please go ahead.

Thank you, operator.

Good afternoon, everyone.

And welcome to Skyworks fourth fiscal quarter 2009 conference call.

Joining 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 certainties, including but not limited to those noted in our earnings release and those detailed from time to time in our SEC filings.

I'd like to also 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 relations section of our company website for a complete reconciliation to GAAP.

I'll now turn the call over to Dave for his comments on the quarter.

Thank you, Tom.

And welcome.

everyone.

I'm pleased to report that Skyworks posted solid results in the September quarter, outperforming our addressed markets and delivering strong top and bottom line sequential growth while further strengthening our balance sheet.

Specifically in the quarter, we delivered revenue of $228 million, and that's up 19% sequentially.

We expanded our gross margins to 41%.

We improved our operating margin to nearly 19% and we posted $0.24 of earnings per share, and that's up 50% sequentially and a new company record.

With respect to cash, we generated $70 million of cash flow from operations.

We retired another $17 million of our 2010 convertible debt, and we exited the quarter with $370 million of cash.

Finally, we guided up 13% to 15% in the December quarter on a year-over-year basis with a 20% operating margin and a $1.00 of earnings per share annualized run rate.

Okay.

At a higher level, we're benefiting from a few key strategic market trends.

I'd like to walk through them briefly.

First, the rapid growth of the mobile Internet and increasing demand for always-on connectivity.

Particularly given the ubiquity of social networking applications and the proliferation of smartphones, of notebooks, net books, and embedded wireless devices.

Second, the global migration to innovative smart grid and energy management solutions as utilities and consumers seek to more efficiently utilize and manage gas, water, and electricity usage and optimize grid performance.

And third, the emergence of a host of analog-intensive applications spanning high definition television, automotive, CATV, wireless and wireline infrastructure, medical, military, and industrial markets.

At the same time, we're continuing to make substantial progress along each of our strategic objectives that we've been speaking with you about these--for many quarters now.

Our objectives are to gain share in our targeted markets; our objectives are to diversify our business, to increase traction in adjacent analog markets; and finally, to execute operationally in order to deliver ongoing gross and operating margin improvement as well as higher returns on invested capital.

Now, with regards to gaining market share, and as we hope our results demonstrate, Skyworks is outperforming across the mobile internet spectrum from notebooks and data cards to smartphones to entry level devices.

On the high end, Skyworks is uniquely now supporting all top five top tier handset OEMs, and all key smartphone suppliers with a disproportionate share of the latter growth segment.

In fact, according to Oppenheimer, the smartphone category is expected to grow 21% in 2009, and reach $185 million units this year.

And in then growth is expected to accelerate to 326 million units by 2011 and that's a 33% compounded growth rate.

Now, recall that these devices drive substantially more semiconductor dollar content as compared with traditional 2G and even 3G handsets.

Social networking sites like Facebook, like MySpace, and Twitter are further fueling consumers' demands for broadband network access to share streaming audio, video, and picture content.

And perhaps most importantly, the smartphone food chain, that is the food chain is highly successful with service providers such as AT&T, T-Mobile, Verizon, VODA Phone, deriving highly profitable revenue streams from data services and other embedded wireless devices even during the darkest days of the recession.

Their strategy is quite simple: place application-rich smartphones in the hands of the consumer and both parties benefit.

Consumers satisfy their thirst for real mobile--realtime mobile internet access, while carriers gain from ever increasing RPU levels.

And as a result, the OEMs, our customers, providing the hardware, derive increased value from their devices; which of course we populate with our solution.

Now, at the same time we're diversifying into new markets the second element of our strategy.

For example, we're now participating on the infrastructure side of the mobile internet phenomenon as well.

Here we're now supporting the key market leaders like Cisco, Ericsson, Huawei, ZTE, Alcatel Lucent, Nokia Siemens, with our growing family of networking solutions.

According to mobile network analysts from Informa, mobile data traffic volumes are set to rise 25 fold.

Twenty-five fold from current levels by the year 2012.

And as a result, mobile operators need to begin to install new base stations, routers, back hall network equipment starting now to avoid network traffic jams in the future; and ultimately to preserve their highly profitable data service revenue.

Clearly, over the long hall, there will need to be upgrades and expansion to existing infrastructure requiring increasing analog and mixed signal content.

And to that end during the quarter, we've introduced a wide range of wireline and wireless networking and base station solutions with several new higher margin products under development and entering our pipeline.

And we're particularly excited about our strategic growth potential within smart grid applications.

This is another targeted vertical market for Skyworks.

Now, to frame our market opportunity here, consider that there are 2.7 billion meters worldwide, 2.7 billion according to IMS Research, of which only 8% are automated today.

Accordingly, we see a massive retrofit and deployment opportunity as utilities seek to more efficiently manage their grids in the name of lower administration costs; and of course, higher returns on investment.

Like the internet itself, smart grids are complex multi-layered network--of networks and are increasingly interactive.

This market landscape is made up of a wide variety of components, applications like sensors and controls, enabling us to leverage several key RF building blocks across a broad ecosystem of energy management suppliers.

For us, these include Itron, Esco, Neptune, Landerson Gear, and Census.

In support of products ranging from handheld meters, meter readers to smart meters, to home automation systems.

And in the latter case, home automation systems, we're supporting both the access point and various nodes throughout the home like thermostats, air conditioners, and appliances, Zigby Solutions.

Of special note, I think, just last week the administration committed $3.4 billion of stimulus money for 100 smart grid projects in 49 states.

Now, as part of the funding, utilities are contributing another $4.7 billion to the projects pushing total spending to $8.1 billion.

Our focus on this particular market segment began a few years ago and it sprang from our analog catalog business as several customers sought custom energy management solutions from us.

Okay.

Finally, the third element of our strategy is to continue to execute operationally.

This aspect of our strategy has become even more--or became even more important as we entered the economic downturn.

In fact, our fab light manufacturing approach and our leaner cost structure allowed Skyworks to post record operating income in 2009 of $125 million, and operating margins of just greater than 15%, even in the context of this market.

I think perhaps most importantly, we're able to generate $210 million in cash flow from operations in fiscal 2009.

This, during the worst industry downcycle in recent memory.

I believe our performance against this challenging backdrop speaks to the resolve of the Skyworks team and, frankly, the strength of our business model.

Now, of special note, we are guiding to a 20% operating margin in the current quarter, in the December quarter; and longer range we now see a path to operating margins in the mid-20s.

And Don will comment on that further in a moment.

So at a higher level, we are transforming Skyworks and are committed to creating a company that can rival some of the best analog franchises in terms of growth, in terms of diversification, in terms of profitability and cash generation; and perhaps most importantly, we're entering this new and exciting phase with a very rich product pipeline, a broad sales channel, and demonstrated operational agility.

All this towards creating shareholder value.

I'll now turn this call over to Don for his review.

Thanks, Dave.

And thanks again for joining us everyone.

I'll first provide a quick summary of our fourth fiscal quarter results then provide our business outlook, including an update on our projected tax rate; and finally, I'll outline our new long-term operating margin target.

First, to our fourth quarter results.

Revenue for the period was $228.1 million, up 19% sequentially, and exceeding our updated revenue guidance range of $220 million to $225 million provided in September.

Gross profit was $93.4 million or 40.9% of revenue, a 40 basis points sequential expansion.

And that was driven by continued factory process and productivity enhancements, product end-to-end yield improvements and finally, double-digit year-over-year material cost reductions.

Operating expenses were $50.9 million, of which R&D was $29.3 million, and SG&A was $21.6 million; yielding $42.5 million of operating income and an 18.6% operating margin.

Our net interest and other expense for the quarter was $410,000 of expense while taxes were $255,000.

Note, both our other expense and cash taxes were favorably impacted by one-time cash benefits equating to $0.01 of earnings per share in total.

And incidentally, you'll note that based on the strength of our 2009 financial performance, and our earnings outlook, we reversed approximately $30 million of our deferred tax asset valuation allowance in our GAAP net income with no benefit to our non-GAAP results.

As a result, our GAAP net income was $56 million or $0.32 of diluted earnings per share, while our non-GAAP net income was $41.8 million or $0.24 of diluted earnings per share, a new company record.

Turning to the balance sheet.

We exited the quarter with cash and cash equivalents of $370 million, a $62 million sequential improvement in our cash balance, even after the retirement of $17 million of 2010 convertible debt.

During the quarter, we generated $70 million in cash flow from operations, we recorded $10 million of depreciation, and we invested $15 million in capital expenditures.

Now, to our business outlook for the first fiscal quarter of 2010.

Although we continue to remain cautious on the broader economy, based on our improving order visibility and backlog strength we anticipate 13% to 15% year-over-year revenue growth driven by mobile internet, energy management, and diversified analog applications, as Dave mentioned earlier.

Assuming $240 million in revenue, we plan to expand gross margin to the 41.5% to 42% range with operating expenses of roughly $51.5 million enabling us to deliver a 20% operating margin.

Below the line, we anticipate $700,000 in expense for net interest and other expense.

As for taxes, recall that we had previously guided to a 15% cash tax rate beginning in fiscal 2010; but with the implementation of tax initiatives in the first half of 2010, and the use of our remaining R&D tax credits, we are reducing our estimated fiscal 2010 cash rate to approximately 8%.

In turn, you can expect Skyworks to achieve a $1.00 per share annualized run rate off of a base of 179 million shares beginning this quarter and with further improvements planned as we progress into fiscal 2010.

In fact, since we are on track to achieve our financial model, today we are outlining a new operating margin target for Skyworks.

Given our top line growth plans, scale, product gross margin improvements and operating expense leverage, we now have a path to operating margins in the mid-20s.

We believe this longer term model is highly achievable and strikes the right balance between gaining market share, enhancing margins and most importantly, maximizing free cash flow dollars.

That concludes our prepared remarks.

Operator, let's open the lines for questions.

Very good.

(Operator Instructions)

Our first question will then come from Uche Orji with UBS.

Thanks for taking my call.

First question is about your long-term operating model of 25%, just wondering how the radius parts will move here in the sense that what is the gross margin expectation and how much revenue growth you would need for this, and also if you have any time line in mind to achieve this target?

Well, thanks for the question.

As we articulated over the past year or so, our previous targeted model of 240 million in core revenue that they were going to be at 42% gross margin and 20% operating margin.

And as our Q1 guideline--guidance indicates, we're expecting to achieve these targets this quarter.

So given our future product mix, new markets and the value of our new products we see at that path in the mid-20s for operating margin.

And this expansion's going to be a combination of both gross margin expansion and leveraging our operating expense base.

Right now, we're just not providing the detailed elements today, but we certainly will over time.

Okay.

Thank you very much.

And secondly, could you say who your 10% customer was this quarter and who was your largest customer?

Sure, we had two 10% customers this quarter.

We had Samsung, Sony Ericsson.

I just want to note that LG, Nokia and Motorola all of those were in the high single digits for the quarter with Samsung being the top customer for the quarter.

Our next question then is from Ittai Kidron from Oppenheimer.

Hi guys.

Congratulations on good results and the market numbers you quoted for smart phones, it sounds like a very reliable source.

I was wondering if you can talk--first just a household question, Don, with regards to the share count, you've retired some of the debt, how should we think about the share count evolving here?

I don't know if the convert is in the outstanding shares count here or not.

Second, with regards to your mid-20s, I understand it's a long term, but does that require a fundamental change in mix between your linear and cellular, or do you think that on the current mix just by continuing to drive your leverage you can get there; or is it really a product mix that needs to change?

Ittai, I'll address the first question, we guided $179 million in Q1.

As far as the converts, the debt that is outstanding through any of the core ends we have just gone through, there already is dilution for some of those converts based on the fact that they have been in the money.

On a go-forward basis, they have a cash settlement option, so we have a option of when the debt matures, we have this first tranche maturing on March 1st, to either settle an equity or to pay cash.

Our intention is to pay it in cash.

So we don't expect any--I wouldn't expect any future dilution in the converts.

And Ittai, this is Dave.

With respect to the long-term model that Don outlined, I'd really call it, frankly, more of a midterm model.

If you go back and look at historically with Skyworks as we have increased our revenue, we had a pretty consistent model where we've drop through a fairly healthy percentage of that have increase in revenue to the bottom line.

It's been a combination of gross margin expansion and operating income expansion.

So, that's really what we see.

It is not any fundamental shift in the overall business, but it does take advantage of some of the newer products and newer markets, and the degree of diversification we're now having as we enter 2010 and the associated high contribution margin that those products bring.

But they're identified programs.

Very good.

And follow-up question, regarding your remote meter business, maybe you can, Don, you can just qualify at least from a ballpark standpoint how much was that this past quarter and what is the run rate you think you can get to exiting next fiscal year?

Sure, Ittai, this is Liam.

That business, as you know, is really in the early stages, we have to be a meaningful and long-term growth cycle.

We were up sequentially in September, we'll be up even more in the current quarter, the December quarter.

Right now, it's the fastest growing segment of our analog mixed signal business and roughly about 15% of that portfolio.

Our next question is from Steve Ferranti with Stevens.

Thank you.

I'm wondering if you guys could give us your sense of what inventory looks like out there these days?

Certainly been some anecdotes of some pockets of inventory and some corrections going on.

Wondering if you could describe to us what you're seeing.

Okay.

Well, this is Dave.

Our visibility has improved somewhat, I'll say from where it was certainly three to six months ago.

Our markets have begun to stabilize and inventory is normalizing after there was some restocking that occurred again here in the last six months.

So clearly, there are pockets of concern.

This market, as you know, is a bit choppy.

I will say this, that when we provide our guidance and our commentary in the prepared remarks, is that we're really discussing very well-defined and specific program ramps.

And it's helping to somewhat insulate us from some of the volatility that you've seen out there.

In any event, we do see choppiness but we also are fortunate to have these clearly defined ramps.

Okay.

Then just a quick follow-up for me.

Can you tell us what percentage booked you are to the midpoint of your guidance?

That's my last question and great job on the quarter, by the way.

Thank you.

Thank you.

We've--in an attempt to be conservative, we're fully booked to the guidance.

Our next question then will be from Aalok Shah with DA Davidson.

I want to follow up on Steve's question there.

In terms of where you see some pockets of inventory, could you describe that on a geographical basis where you think you might be seeing that?

Well, as I said, clearly there's been a lot of discussion about Korea, and a company--one company in particular, a customer of ours.

But I must say--so that's where the concern has been, that's been registered with us, we think over the last quarter.

But I think in that case we're really quite fortunate, we have some base band partnerships there that are allowing us to take some share, both in the case of wide band CDMA and EDGE and in GPRS where we have a strong position.

So we haven't been subjected to the same level of volatility as apparently others have experienced.

Having said that, we're modeling that customer even with these ramps to be flat to modestly up in the December quarter.

And then as a follow-up, just real quick.

In terms of Ittai's question about the mix to try and get to the mid 20% type of operating margins, does it require your linear business to become a bigger percentage of total revenue?

How should we think about your linear business now going forward?

This is Don.

When we built this model, just like we did the previous model, we never assumed any shift in the mix between our diversified analog business and our handset business.

You can assume that going forward, that is the way we're looking at the model.

So any change in that mix is going to be upside for us.

As we built this model.

And one thing I'd point out to add to Don's comment, is this isn't the handset business that you might have thought about, one, two, certainly one year ago.

Even within our handset business, we have some really margin-rich and very complicated sole source mostly custom devices and designs.

So when we talk about smart phones and we talk about some of these really sophisticated mobile internet devices and various form factors, the dollar content is higher but so is the contribution dollars--so are the contribution dollars.

Our next question is from Richard Shannon with Northland Securities.

Hi guys.

I guess my question revolves around expected ASP declines for next year versus how they've trended in 2009 thus far, I guess specifically on 3G.

Any change in that expected pricing curve?

Sure.

Well, certainly 2009, given the recessionary environment, particularly on the front half of the year was difficult from an ASP perspective.

We see now pricing stabilizing now with inventory being rebalanced and overall market conditions improving slightly.

Going into 2010, I think we're going to do pretty well with respect to ASPs.

It's will be less erosion for us in our current model.

Some of that comes from diversified analog, which tends to have a much better ASP profile, and also significant ramps in 3G, where we're in very good position with respect to pricing and we should be coming out of that quite strong.

Okay.

Great.

My follow-up question is on your transition to 6-inch substrate manufacturing.

Do you have any update on the timing when you expect that to switch over and what kind of an impact would that have on your outsource foundry partners?

Do you expect it takes relatively more away from them as you do so or is there going to be some sort of balance in there?

Hi, Richard.

This is Don, thanks for the question.

We have been producing 4-inch and 6-inch wafers over the past several quarters as we are ramping the new 6-inch line.

Our full cut over plan is for approximately mid-year this year, there's been no drag on the margins during that time.

When it's fully up and running the second half of the year, we do expect some margin expansion as a result of that.

And as far as our wafer, the foundries providing us a wafer supply, that's a critical part of our overall manufacturing strategy.

It's a redundant source of supply for us, it's critical.

They're going to continue to produce some volume, and as we ramp the overall business, there's going to be the right kind of mix to drive the margin enhancement as we go forward.

Our next question is from Anthony Stoss, Craig-Hallum.

Hi guys, great job.

I don't know if I missed this, can you give us the percent of your revenues that was the linear products group?

Sure, it was--the handset was roughly 80% this quarter while the linear--the diversified analog business was about 20%.

Any geographic strengths that you saw in the quarter, and any changes to that December or going forward?

Sure.

We have seen, in general, better performance out of the eight pack markets, particularly China, also Korea, and some of our partners in China, specifically Media Tech support not only local markets, but also some emerging economies in India, Africa, Southeast Asia.

We have seen some strength there.

When we look at the December quarter, we've modeled those markets to be very conservative and not a significant part of the growth this quarter,but we still consider them meaningful for 2010.

And I think with respect to energy managements of some of the diversified non-handset businesses we are seeing strength in North America and US.

Follow-up, if I may.

March visibility, we're hearing from a lot of our contacts that may not be down as much as seasonal.

Any thoughts on March?

Thank you.

I think it's really just a little too early to comment on March, frankly.

Okay, great job guys, thanks.

Thank you very much.

Our next question is from Ed Snyder with Charter Equity Research.

This is Mike Alexander in for Ed Snyder.

Your cash quarter, the cash generation this quarter was very strong and I just wondered as you build up cash, what is the minimum level that you need to keep on hand and once you've paid off the debt, what are some of the uses of cash that you're thinking?

Thanks for the question, Mike.

Yes, we had done a very good job over the past year and a half to continue to strengthen the balance sheet.

If we step back and you look at our working capital fluctuations and to be somewhat conservative, we view that number somewhere in the $125 million to $140 million range with the way the business is structured today.

That's kind of our baseline cash.

Keep in mind, we have retired $120 million of the debt over the last 12 months.

We have, after buying back 17 million of the 50 million that's due March 1st.

So coming up on March 1st we have another 33 million that we're going to pay.

At that point, we are going to have a healthy cash reserve balance to entertain options of whether we go out and buy additional debt, whether we buy back stock or any other kind of critical investments that we might see appropriate.

Great.

Thank you.

And then as my follow-up, I wondered if you could update us on the Axiom business that you acquired last quarter.

Is there any initiatives on there or is it just kind of chugging along?

Well, that's a great question, thanks.

This is Dave.

First of all, we're very happy with the acquisition.

We've got some really good design IP.

And the team, while small, is integrating nicely with the rest of Skyworks.

The revenue has been relatively small; but I think as we add that IP to our arsenal, we're really able to create some new designs that are, I think, pretty slick.

And we've been able to address some customers.

There is a customer set that is addressing segments of the ultra low end market that were really not attractive to us that now meet our margin requirements and we're able to address that.

We've been able to expand our ultra low end market.

We'll next go to Nicole Conway, Thomas Weisel Partners.

Good afternoon.

Hello.

Hi.

I'm in for Corey Sandberg.

So going back to your guidance, it appears maybe conservative being fully booked to your number, and I was curious if there's anything behind that, if you see maybe indications of double ordering, anything like that?

No, I wouldn't read anything more into it than we're just attempting to be prudent.

This is what we normally do.

We try to guide with the highest confidence that we can.

And so we've done nothing--nothing different this time.

Okay, great.

And then as a follow-up, I was curious about the potential mix shift towards your linear business.

Could that potentially happen, be like a 2010 event where you start to see a shift towards that or would you expect that to be further out?

Well, I think the shift is--the shift's getting a little bit blurred.

Because when we talk about the mobile internet, for example, those are really quite a diversified suite of products.

They're high dollar content, and in most cases, they're high margin.

And so it's not your grandfather's PA, for example.

So it's a little bit blurred.

We do not anticipate--we haven't anticipated any major shifts as we provide this guidance.

And as we look to our long-term model and Don outlined.

There are certainly opportunities for us to move what has been kind of a catalog standard business that's now being augmented by some, we think, pretty exciting verticals, like smart energy, smart grid markets.

So we think there's an opportunity to grow it faster than the handset, but with this mobile internet phenomena in the much higher dollar content we're achieving in smartphones and some of these other devices; these two businesses are expected, at least in terms of our modeling, to grow in relative lock step with one another.

Our next question is from Cody Cody Acree with Williams Financial Group.

Hello, Cody?

Cody, your line's open.

You may have to pick up your handset, check your mute button?

Well next we'll go to Nathan Johnson with Pacific Crest Security.

Thanks for taking my question.

I was curious if you guys could provide an update on order trends, particularly over the last few weeks as new platforms from OEMs are hitting the market.

Are you seeing more confidence out of your customers in terms of what their expectations for Q4 are?

Or are you seeing potentially some nervousness going forward?

This is Liam.

Order trends actually look quite good at this point; but at the same time, as Dave mentioned, we're being reasonably cautious.

We are looking at the signals across the landscape here in the mobile ecosystem that we sell into.

We are seeing, again, a mix shift here.

We have certain OEMs that are gaining share, others maybe a little more flattish.

In aggregate, we look to be modestly up as we've outlined, and order flow supports our guidance.

Great.

That's really helpful.

Just was hoping to get an update on the ramp at Nokia.

I know you guys have been looking to have them as a 10% customer; and I know you guys have also talked about looking eventually to get to be at least a third of their business.

Where do you think you can get in fiscal 2010?

Do you think you can get halfway to that goal of a third of their business or just was hoping to get some color around that?

Absolutely.

Yes, we are very, very much committed to the share gains that we have outlined with Nokia being a third of their business, that we believe that's an event that is solely within our control.

We have the programs and the designs, well positioned to execute on that end.

So I would say a 15% position would be a fair target, if not low for 2010 at Skyworks.

Nathan, this is Dave.

I would add that it is really our goal to not only to penetrate and to get closer to the leaders, but also to become a very close partner to the leading base band manufacturers.

So as a result, we really are striving to be less dependent on any one OEM.

So as we have seen pretty massive share shifts and the emergence of the smartphone sector, for example, we've been able to ride through that because we don't have the kind of concentration that I think many have experienced in this industry in the past.

That's really a goal of ours, Nokia, we want to be a third of their business and if that volume is somewhere else, then we hope to have that business as well.

Great, thanks for taking my questions.

(Operator Instructions)

There appear to be no further questions in the queue, I'd like to turn the call to--well, we have a reprompt from Aalok Shah, DA Davidson.

Hey, Don, just one quick question on the balance sheet, it said that the other income line went up a little bit.

Can you describe what that was?

Sure.

That was the premiums that we paid on the converts.

Okay.

Recognize that we bought 17 million of principal, but what drives the price of the converts is the underlying shares.

So whatever the market price is, you link that back to the conversion price and then there's a premium because we're trading above the conversion price.

That's all that that was.

Great, thank you

We do have a follow-up from Ittai Kidron, Oppenheimer.

Don, had a question for you.

Your accounts payable have increased sequentially quite significantly.

Are you not paying your bills, maybe you can give us a little bit more color into that?

No, we track--there's a metric, it's our days payable outstanding, it's like a DSO measure for how you track how quickly you caught sales, there hasn't been any dramatic change in our days payable outstanding over the last three or four quarters, there's nothing different going on there.

Very good.

And we return to Cody Acree, William Financial Group.

Hey, guys.

Thanks and congrats.

Just one quick one, I had to drop off here for a second.

Just market share versus market trajectory, obviously outpacing many of your peers, what's your take on the driver here, is it you or is it the market?

Well, I think I'll take a crack at that, Cody.

Sorry about that.

It's really a combination.

There are clear areas where we have been fortunate enough to take some share through the efforts of our base band partners and with some of the products that we fielded here over the last several quarters.

So we are taking some share in some sectors, but I think equally if not more important is the market is changing; and we've work very hard to field designs that are mostly highly customized, highly specific to the application.

And as a result, more often than not and more often than ever in the past for our company, we are sole sourcing these applications.

It's more of a mix phenomena, but we are taking some share as these platforms are refreshed.

Very good.

Thanks guys.

Congrats.

Thank you, Cody.

With that, there are no further questions in the queue.

I'd like to turn the call to Dave Aldrich for an additional or closing comment.

Thank you.

That concludes our call today and on behalf of the entire Skyworks team, thank you for your participation.

We look forward to seeing you at upcoming conferences and on on-deal road shows.

Again, this does conclude today's conference call.

We do thank you for your participation.