Synaptics Inc (SYNA) 2007 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Synaptics Q4 Fiscal 2007 conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (OPERATOR INSTRUCTIONS) This conference is being recorded today, Thursday August 9, 2007. I would now like to turn the conference over to Alex Wellins of The Blueshirt Group. Please go ahead, sir.

Good afternoon, and thanks for joining us today on Synaptics' Q4 and fiscal 2007 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the Company's web site at synaptics.com.

With me on today's call are Francis Lee, President and CEO of Synaptics, and Russ Knittel, the Company's CFO.

We'd like to remind you that during the course of this conference call Synaptics will make forward-looking statements, including predictions and estimates that involve a number of risks and uncertainties. Actual results may differ materially from any future performance suggested in the Company's forward-looking statements. We refer you to the Company's SEC filings, including Form 10-K, for the fiscal year ended June 30, 2006 for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. We expressly disclaim any obligation to update this forward-looking information.

With that said, I'll turn the call over to Francis Lee. Francis.

Thanks, Alex. Thanks, everyone, for joining us on the call today. I'm pleased to report that we cap off fiscal '07 with strong performance in Q4.

Revenue for the quarter of $71.6 million was up 63% over the prior-year period and represented our second highest quarterly revenue level to date. Excluding the impact of non-cash, share-based compensation, non-GAAP operating margin in the fourth quarter was 15.2%, and non-GAAP net income increased by approximately 135% year-over-year to $10 million, or $0.36 per share. These results culminated in a stellar year for Synaptics, as we achieved record revenue of $266.8 million, an increase of approximately 45% over the prior fiscal year. Non-GAAP net income for fiscal '07 grew 57% to $37.6 million, or $1.31 per share. I am very appreciative and extremely proud of the efforts of our worldwide employee base and am grateful to all of those who contributed to our success over the last 12 months.

During fiscal '07, revenue from PC applications grew us approximately 44% and represented approximately 85% of revenue. During the year, we expanded our leadership in the notebook market and benefited from the (inaudible) option of a multimedia control applications in our PC peripheral initiatives.

Revenue from the non-PC segment grew 50% in fiscal '07 and represented 15% of total revenue. Our progress in this segment was highlighted by increased demand from the portable digital entertainment market, as well as our growing traction in the mobile phone market. Today we have announced multiple mobile design wins with 5 well-known OEMs - Motorola, Samsung, Pantech & Curitel, WildWay, and LG.

During the year, we also previewed our long awaited Onyx concept phone, which led to the release of our ClearPad solution in the first of positive touch screen phones on the market from LG, the LG PRADA phone. In addition, we launched our OneTouch offering, which is now in active production within the mobile segment and which we believe will be an important part of our solution portfolio for fiscal '08 and beyond.

Now, I'd like to make a few comments about the specific progress we have made over the past three months. Synaptics PC business remains strong and we continue to benefit from the consumer's ongoing migration from desktops to notebooks. In addition, the increased adoption of our LightTouch multimedia control applications.

At CompuFest Taiwan in June, we announced Synaptics DynamicTouch. This light touch control bar replaces conventional multimedia buttons with virtual contextual onscreen controls that automatically adapt to provide customized function. For example, icons, such as fast forward and rewind, may appear in DVD mode, while icons to adjust screen brightness may appear in system control mode. Users can also personalize touch control behavior, including audio feedback, touch sensitivity, illumination, and control functions.

During the quarter, we also continued to expand our participation within the PC peripheral space by providing the scrolling functionality for the large step MX rechargeable cordless air mouse. The air mouse replaces a traditional scroll wheel with Synaptics scroll strip, enabling hyper-fast scrolling at the touch of a finger, whether the mouse is being used on a desktop or in midair.

Turning to the handheld market. This quarter, we saw our first OneTouch design win go into production in the mobile market, as our customers begin leveraging the capabilities of our configurable solutions. I'm pleased to announce that this includes the new LG Chocolate mobile slider phone. The VX8550 second-generation phone has a 4-button user interface for navigation and function keys, enabled by our OneTouch capacity of solutions. The phone also features a touch keypad with vibration feedback and an improved navigation wheel, making it a positive interface, very user friendly. Available from Verizon Wireless, the new LG Chocolate is one of our first 2 mobile implementations for the U.S. market.

LG has also implemented a Synaptics One-Touch solution in the LG music phone called the LX570. This phone features a music player affected by 5 capacity buttons on the front of the phone, all powered by one of our OneTouch chips. These external touch controls illuminate with red LED for sleek and hip industrial design. This phone is also currently available in the U.S. and is being offered by Sprint.

Before I move into a discussion of the general business environment, I'd like to mention that in January Synaptics celebrated its fifth year as a publicly-traded company. In the past five fiscal years, our compounded annual revenue growth rate was 22% and our compounded non-GAAP annual EPS growth rate was approximately 24%. We're also proud to note that during the same five-year period our stock has outperformed the NASDAQ by nearly 5 times and the S&P 500 by more than 7 times.

At the time of our IPO, we articulated our long-term view regarding this option of capacity of face -- interface solutions in a growing number of occupations and markets. Over this period, we have seen the market develop in line with our vision, with Synaptics playing an instrumental role by leveraging our innovation, our effort expanding intellectual property, and our system engineering know-how to enable our customers to develop next-generation products.

Today we have shipped over 300 million interface solutions. We believe this trend will only further accelerate in the future. The capacity face -- interface solutions becoming more and more prevalent within today's emerging mobile and digital lifestyles.

Naturally, we expect this growing interest in demand will bring increased competition, which further validates the expanding market opportunities in front of us. Regardless of the evolving competitive landscape, one thing is clear, that Synaptics will continue to be a pivotal player in the marketplace and we will continue to set ourselves apart by offering the most compelling portfolio of capacity interface solution available in the market. Whether through our custom modules or configurable OneTouch offerings, our customers will continue to benefit from our 12-plus year of system engineering expertise and access to our full solutions staff, from concept, to design, to manufacturability, to support.

As we enter the new fiscal year, we expect the PC market to remain robust and our focus on maintaining our leadership position in this segment. We look forward to making continued progress in our target markets, supported by the accelerating development of new applications requiring intuitive interfaces that play directly into Synaptics' strengths.

Design activities and overall demand remain very robust across all of our markets and we expect to continue hiring staff to support our growth objectives. We added over 20% in our headcount last fiscal year, many of them outside of the U.S. Part of the growth went into establishing key design centers in both Taiwan and Korea to better align our resources to serve increased demand of our global customers.

Based on our outlook today, we continue to have an aggressive worldwide recruiting plan in place. While always mindful of the challenges we face in the dynamic fast-growing markets we serve, we believe we have the key elements in place to ensure our continued success. We remain extremely confident in our long-term growth strategy and are well positioned to deliver record revenues and profits in fiscal '08.

I will now turn the call over to Russ, who will review our detailed financial results for the fourth quarter and provide guidance on our outlook.

Thank you, Francis. In addition to our GAAP results, I will also provide supplementary results on a non-GAAP basis, which excludes non-cash, share-based compensation costs accounted for in accordance with FAS 123R. And, as we pointed out in our prior calls, FY07 represents a 53-week period.

Revenue for our fourth fiscal quarter of 2007 was $71.6 million, up 11% sequentially and 63% over the comparable period last year. On a sequential basis, our increased revenue in the fourth quarter primarily reflects strong demand for our PC solutions, which grew approximately 19% compared with the third quarter.

Revenue from non-PC applications was down 26% sequentially, primarily as a result of reduced demand from the portable digital entertainment market, somewhat offset by increased cell phone revenue.

On a year-over-year basis, our fourth quarter revenue from PC applications grew approximately 60% and accounted for 89% of total revenue. We believe our robust PC revenue growth reflects strong demand resulting from the continued migration from desktops to notebooks, further supported by the increase in adoption of our multimedia control solutions in consumer notebooks, for our tax rate for the quarter was over 17%, and, in addition, our expanding business with MPC Peripherals.

Fourth quarter revenue from non-PC applications was up approximately 88% year-over-year and represented 11% of total revenue, reflecting increased demand for our custom multimedia control modules and the adoption of our ClearTouch and OneTouch solutions in the mobile phone market.

GAAP gross margin, which includes non-cash, share-based compensation charges, was 39% in the June quarter, down 10 basis points from the preceding quarter. Our non-GAAP gross margin was 39.4%, unchanged compared with the March quarter.

Our gross margin continued to reflect strong growth in the low-end notebooks and a product mix with generally higher third-party content, in addition to increased competition, as we previously discussed.

Total OpEx for our fourth quarter, which includes non-cash, share-based compensation charges of approximately $3.6 million, were $20.9 million. This compares with OpEx of $18.8 million in the preceding quarter, which included non-cash, share-based compensation charges of $3.2 million.

Excluding the impact of non-cash, share-based compensation in the June quarter, non-GAAP OpEx were approximately $17.3 million, a $1.7 million sequential increase. The sequential increase in non-GAAP OpEx primarily reflects the combination of higher compensation costs related to our ongoing recruiting initiatives and incentive plans and higher product development-related project expenses.

We added 33 people in the fourth quarter, bringing our total employee headcount at the end of June to 312, compared with 279 at the end of the March quarter. As Francis indicated earlier, we expect our headcount to continue to increase going forward as we add skill sets necessary to meet our business objectives, scale the organization to meet both our internal and external initiatives, and support our expanding operating levels.

Net interest income was $2.3 million compared with $2.2 million in the prior quarter, representing higher average invested cash balances.

Our GAAP and non-GAAP tax rates for the quarter were 20.5% and 24.8%, respectively, and benefited primarily from the accrual of incremental research tax credits associated with stock option activity during the quarter, the release of tax reserves related to statute expirations and amended return filings, and a higher mix of profits and lower tax rate jurisdictions. GAAP tax rate also reflects a significant tax benefit from qualified stock option activity during the quarter. As we pointed out in our SEC filings, we expect to continue to see significant volatility in our GAAP effective tax rates in connection with qualified stock option activity.

Net income for the June quarter was $7.4 million, or $0.27 per diluted share, compared with $5.6 million, or $0.20 per diluted share, in the March quarter. Non-GAAP net income, which excludes $3.9 million of non-cash, share-based compensation charges and the associated tax benefit of $1.4 million, was $10 million, or $0.36 per diluted share, compared with $8.1 million, or $0.28 per diluted share, in the March quarter.

Now, a few comments about our balance sheet. We ended the fiscal year with total cash and short-term investments of $265 million, compared with $245.2 million at the end of the March quarter. Cash flow from operations was approximately $11.6 million for the quarter and $26.3 million for the year. Stock option exercises contributed approximately $7.4 million for the quarter and $21.5 million for the year.

During the year, we used approximately $32.3 million to repurchase approximately 1.3 million shares of our common stock.

CapEx were $1.9 million for the quarter and approximately $5.8 million for the year. A significant portion of our capital spending for the year was related to the implementation of the first phase of our new ERP system. Capital depreciation was $711,000 for the quarter and approximately $2.3 million for the year.

Receivables at the end of June were $56.7 million, compared with $49.1 million at the end of March, reflecting the combined impact of increased revenue level and slightly extended pay cycles.

DSOs at the end of the quarter were 71 days, compared with 69 days at the end of the prior quarter, primarily reflecting the general timing of pay practices in China.

Inventories at the end of June were $12 million, compared with $9.1 million at the end of March. As we continue to build our guide bank in anticipation of increased customer demand for our products. As a result, our inventory turns in the quarter declined to 16 times, compared to 17 times in the March quarter.

Now, I'd like to make a few comments regarding our business outlook. Based on our $46.9 million backlog entering the September quarter, order patterns in the first month of the quarter and our current visibility, we are expecting revenue to be up 16 to 19% sequentially. This represents an increase of 51 to 55% compared with the same period last year.

Considering our beginning backlog, in combination with new orders already received and anticipated additional orders during the remainder of the quarter, we anticipate our non-GAAP gross margin for the September quarter may be approximately 40%. We expect the impact of FAS 123R on the September quarter operating margins to be approximately $4 million, compared with $3.9 million in the June quarter. Non-GAAP net income per diluted share for the September quarter is expected to be in the range of $0.39 to $0.41.

As we look forward into the December quarter, which is typically the seasonally strongest quarter of the year, current indicators suggest that revenue may increase 10 to 15% sequentially, as compared with our September quarter guidance levels. Looking out into the second half of the fiscal year, taking into consideration our existing design wins, our design activities, and identified pipeline of opportunities, our current outlook suggests that revenue may grow 25 to 30% in fiscal 2008.

Factoring in our staffing plans and anticipated increase in product development expenses related to our growing pipeline of design activities, we fully expect that our OpEx will continue to grow moving forward. Our headcount increased approximately 23% in fiscal 2007 and we currently anticipate adding at least that amount in fiscal 2008.

We anticipate that our non-GAAP tax rate will be approximately 32 to 34% for fiscal 2008. And beginning with fiscal 2009, we expect our non-GAAP tax rate to decrease into the low 20% range.

In closing, we're extremely -- we executed extremely well during fiscal 2007. We achieved record revenues and posted strong profits and we're very excited by the prospects for fiscal 2008, which we expect to be a record year for revenue and profitability. The progress we made during the past 12 months has further strengthened our foundation for long-term success. We have aligned and expanded our global resources and broadened our solutions portfolio with the launch of our OneTouch offering which, together, enable us to better meet our customers' growing needs.

In addition, we continue to leverage our balance sheet to improve our capital structure and increase shareholder returns through our stock repurchase program. We are very well positioned to capitalize on the expanding opportunities in front of us and look forward to continued progress in both our core and new markets over the course of the new fiscal year.

That concludes our formal remarks and we will now turn the call over to the Operator to start the Q&A session.

Thank you, sir. (OPERATOR INSTRUCTIONS) Rob Stone, Cowan & Co.

Congratulations, guys. Lots of good stuff going on.

Thank you, Rob.

Could you put a little more color on OneTouch? I think before you had said that there were a number of wins and you mentioned 2 products that were shipping in the U.S. What is the number of OneTouch designs overall?

Well, Rob, as you know, we launched OneTouch back in January of this calendar year, and during our last conference call we had talked about the design activities, it was strong, okay, and you can expect revenue realized in the June quarter. And, indeed, what we're telling you about some of those mobile design wins is a result of the activity that has already happened.

And I remain to be very bullish about the adoption of our OneTouch, okay? And, as you know, for a lot of reasons we decided to do that to leverage our expertise of designing the entire solution, manifest itself in documentations and design rules and tool kits, so that our customers can expedite their design activities, leveraging the knowledge that we have had. And I continue to see that to be very well accepted.

Now, the only thing about it is, obviously, Rob, we cannot, and we will not, talk about products until our OEM partners have released it on the marketplace. So just like what we have been saying before, Rob, I'm very optimistic about the activities that have happened and will continue to update you guys as we move forward in subsequent quarters.

So, without going into any specific customers and products, I mean, I completely understand it's up to the customer to announce and when they launch, but can you give us a sense if 2 OneTouch designs are shipping now, how many might be shipping between now and the end of the year based on what you already see in terms of design wins? Or is OneTouch different in the sense that somebody gets an SDK and then you don't know when a product is coming?

Well, we did see revenue during the quarter from multiple design wins for OneTouch and there were multiple revenue streams for the quarter. We did announce, because we were able to talk about the LG phone that's available in the U.S. today, which has our OneTouch solution in that. We are expecting to see additional design wins go into production over the course of the year, but we really can't comment on the number.

Okay, so beyond saying multiple, can you say how many OneTouch products contributed in the June quarter?

It was more than one.

Well, you mentioned 2 are shipping so -- okay, all right, I'll stop prying on that question. Are you starting to see OneTouch activity outside of the handset space?

Yes, absolutely, Rob.

Okay. And, finally, you mentioned competition in notebooks as a factor in margins in the fiscal year, that, and the mix of consumer, but your margins are going to uptick a little bit this quarter. Can you say what's influencing that? Is it the influence of OneTouch designs or is the notebook mix getting a little better?

Well, it's a couple of things, Rob. One is OneTouch, as we've said before, we do expect to be accretive to our longer-term blended range of 40 to 45%. But as we've discussed before, any one quarter 15 to 25% of our revenue is coming from designs that weren't shipping in the previous quarter. And so when you look at the product mix in the September quarter relative to what we were shipping in the most recent quarter, the June quarter, we are expecting to see our margins tick up as a result of that new product mix.

So, given the propensity for new things to be launched into the fall, I know -- I realize you're not giving gross margin guidance for the December quarter, but the influence of better margins on newer products is potentially something that would keep margins with a four-handle into the fiscal second quarter also?

Again, your comment is correct. We're not providing guidance beyond the current quarter, but certainly the fact that we can guide up in the September quarter relative to June is a positive in terms of the mix that we've seen in the prior three quarters.

Great. Thanks very much.

Thank you.

Hugh Mai, First Albany

Congratulations, guys.

Thank you, Hugh.

I guess, going forward, how do we -- how should we think about the mix between the OneTouch versus the modules within the cellular phone opportunity?

Well, One-Touch is really a manifestation of selling our capabilities, even though the financial transaction is a chip, okay?

Right.

And, obviously, the power of OneTouch is turning it loose to the hands of our customers so they can design their products in. And, as such, right, we like activities in OneTouch, more and more designed in such a way that we might not even directly get involved, some opportunity to start from the beginning.

But, predominantly, the module solution is still going to enjoy the lion's share from a revenue split perspective of our revenue base, if nothing or anything else because of the sheer size of it. But you can expect, okay, the percentage of the OneTouch revenue to continue to grow up, okay, and we are very excited about the funnels of opportunity that lies ahead of us in OneTouch.

Rob asked me a while ago whether the OneTouch is seeing design activities outside the mobile sector and my answer to him was yes, okay? So I can only see this thing continuing to move forward in a very exciting rate for us, I hope.

So is it fair to say that your gross margins should trend, I guess, downward if 100% of your cellular phone opportunity is module-based?

Well, I mean, Hugh, as we talked about before, right, we see the OneTouch as having accretive support for the gross margin percent, right? Now, but then it's got to have some meaningful percentage of the split before it makes a significant difference.

Okay, got it. And how were the ASPs on the notebook side?

Well, I mean, the competitive landscape there is really not a whole lot different, Hugh, okay? And continues to be consumer-based in a lot of computers, okay? Solutions, like the MMB product, remains to be, for reasons that we have talked about, to be in the tougher mix from a gross margin perspective, okay? But we don't see anything that's different than what we have been talking about in the past.

Okay. Well, congratulations, guys and I'll get back in the queue.

Thank you.

(OPERATOR INSTRUCTIONS) Jeff Schreiner, American Technology Research

Good afternoon, gentleman.

Hi Jeff.

I was just wondering, Russ, could you provide just on a more broad sense, as typically is done by the Company, where ASPs and units were on maybe a year-over-year basis or sequentially?

Year-over-year in notebooks, unit shipments were very healthy. And, in fact, we believe we further enhanced our leadership position year-over-year. So we did gain some points in market share and I would guess that's somewhere between 2 and 5 percentage points.

Overall, though, given the continued migration primarily in the consumer space from desktops to notebooks, and the real strength and demand coming from the sub-$1,000 notebook category, we are generally selling into a lower priced product mix which has an impact on our pricing. So we have seen our overall average selling price for TouchPads tick down. Now, the counterbalance for that has been the adoption of our multimedia control solutions, which has helped offset that to some degree, but overall year-over-year our total content, revenue content, for notebook is down.

Okay. And just where I was trying to go is more or less, let's just say the total Company units and total Company ASP. How has that kind of impacted in the fourth quarter?

Well, total Company units, I mean, PC, including notebooks, peripherals, the multimedia control slips, and what we've done in MP3 devices and mobile phones, I mean, units year-over-year are up dramatically. Revenue is up 45% year-over-year.

Okay. Just was trying to get a directional range and I appreciate it. I was wondering a little bit more if we could talk about the competitive landscape that was referenced earlier, specifically within notebooks. Has landscape drastically changed from what it was, let's say, 6 months ago? Or are you just seeing competitors within the marketplace who you've competed with previously become somewhat more aggressive?

Well, I don't think we commented specifically to competition within notebooks in our formal remarks. We talked about just generally increased competition that we've talked about on prior calls, as well. Again, what we're seeing, most of the new or emerging competition is coming for the low end applications, which are buttons or scroll strip capability, and most of that new competition has been in the form of semiconductor companies.

Okay. Could you just, one last question, I appreciate the time. In regards to spending and the increased headcount, where, directionally, should we look at the Company in terms of how it's OpEx may grow in relation to R&D versus G&A? It sounds like, perhaps, there may not be as large of R&D investment this year as there was in fiscal year '07, as opposed to maybe the continued addition of headcount to drive higher revenues. Could you kind of give us a little help on that?

Sure. There's no question that when you look at our OpEx spending for fiscal '07 relative to '06, a disproportionate amount of the increased OpEx year-over-year came in the sales and marketing area, as we continue to expand the markets and our coverage within those segments. Going forward, I think you should use our historical growth rates for OpEx as an indicator. And I think, historically, OpEx has increased somewhere between 15 to 20% year-over-year.

Okay. Thank you very much gentleman.

Thank you, Jeff.

Anthony Sloss, Craig-Hallum

If you wouldn't mind venturing a guess for us. You said 25 to 30% revenue growth for fiscal year '08. Help us understand what you expect in terms of PC versus non-PC. Is it similar to what you found this year or any more color would be helpful?

Well, Anthony, we don't provide forward guidance or outlooks by segment, but I can tell you that to get to 25 to 30% growth year-over-year we would have to see strong increases across all of the target markets that we are seeing revenue from today. So that would include PCs, mobile, handheld, PD applications.

Okay. Also, in your thought process on that guidance, is there any abnormally large new customers that might be in the mix or help us understand that as well?

Well, we believe the way we've realigned our resources, and with the introduction of OneTouch, we are better positioned today to serve our customers' growing needs across all of the markets. And current indicators would suggest that those initiatives that we've already implemented will have an impact in allowing us to serve a broader customer base, and that's across all of the segments as we move into fiscal '08.

Okay. Thank you.

Andrew Neff, Bear Stearns

Two questions, if I could. One, are you comfortable in your long-term gross margin target of 40, 45% or has that changed? Second, how is it when you look at fiscal '08, what are the factors driving '08, the low end versus the high end, sort of the thinking behind that?

Okay. As we've discussed on prior calls, we haven't changed our long-term blended gross margin range and it continues to be 40 to 45%. The last couple of quarters, we were slightly below that on a non-GAAP basis, and for the current quarter, we're guiding to at the low end of that blended range. Again, it's hard to say for us, given the refresh cycle that we see for new products as we move from one quarter to the next, what specific margins will be in the intermediate to longer term. But we haven't changed that total blended range yet of 40 to 45%.

Again, we've talked on prior calls about the impact we expect to see from OneTouch. It's something we just began to see revenue from in the June quarter and we'll see additional revenue in the September quarter and we do expect those to be accretive to our overall margin targets. And in addition to that, though, a significant portion of our revenue today is still coming from customized modules and each design is different. And, as we've indicated previously, we can see gross margin ranges of more than 25 percentage points on a custom solution. So when you throw all of that into the mix, we, today, are still holding the 40 to 45% blended range. As we have more data points or more visibility, if we think we need to change that range, we'll try to give you some heads up on it.

Your second question, Andy, in terms of the factors for --

In terms of --

-- our '08 outlook?

Technology gains in the '08 incentive growth.

Again, we are expecting to see growth from all three of the primary segments that we're serving today - PC, mobile, and the portable digital entertainment category. Both modules and OneTouch solutions selling into PC and handheld devices.

I guess what I'm asking are you basing that on industry trends or on hard orders, or I mean, I guess too early to have hard orders, but in terms of --

Again, Andy, we're doing that based on the designs that we have today that are shipping and we understand what the expected life cycle are of those designs. There's additional design activity we're engaged in today where we think we have pretty good visibility into the outcome. And then there's the identified opportunities across our customer base across those markets that we're currently competing for. So when we look at all of those today, and we do that from a bottoms-up viewpoint, the outlook for us suggests that we should see 25 to 30% growth next year.

I think, Andy, the other way to comment on that is there is no question that the market opportunity for Synaptics' technology, its products and solutions are expanding, okay? And when we talk about design activities in all of those vertical sectors, we are, indeed, seeing increased expanding opportunities and we are seeing ourselves getting inquiries and discussions in all of those sectors. So I think the thing that underlines our forecast here is, a) just like what Russ is talking about, they are design activities and design wins and stuff like that that we already engage in. Of course, still have not realized in revenue yet, but all the leading indicators in design would suggest that we should have a pretty good year, coupled with the fact that we feel pretty good about the environment in terms of the adoption of capacity of touch solution in a multiple of places.

Thanks gentleman.

(OPERATOR INSTRUCTIONS) There are no further questions in the queue. I'll turn it back to management for any closing remarks.

Well, thank you everybody for being on the call today. It was really a remarkable year for Synaptics, with record revenue and strong profitability growth year-over-year. We expanded our solution portfolio with the addition of our OneTouch offering, further entrench ourselves in the PC market, make solid progresses in our new market, and have many more opportunities ahead of us, as the applications that enable our technology continue to expand. I'd like to conclude by, again, thanking our employees, partners, customers, board members, and you, our investors, for support over the past year. I look forward to updating you on our progress during the coming year. Thank you.

Thank you. Ladies and gentlemen, that does conclude today's Synaptics Q4 Fiscal 2007 conference call. Thank you for your participation and for using the AT&T Teleconferencing. Have a good day. You may now disconnect.