Synaptics Inc (SYNA) 2009 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Synaptics 2009 First Quarter Earnings Conference Call. During today's presentation, all lines will be a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Thursday, October 23, 2008. I would now like to turn the conference over to Ms. Jennifer Jarman of The Blueshirt Group. Please go ahead, ma'am.

Good afternoon and thanks for joining us on Synaptics' First Quarter 2009 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 website at Synaptics.com.

With me on today's call are Francis Lee, Chairman and Chief Executive Officer of Synaptics, and Russ Knittel, Chief Financial Officer.

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, 2008, 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.

And now I'd like to turn the call over to Francis Lee. Francis?

Thanks, Jennifer and thanks, everyone, for joining us on the call today.

We are extremely pleased with our first quarter performance, especially given the uncertainty in today's macroeconomic climate. Revenue of $115.9 million grew a strong 34% year-over-year representing an all-time record for Synaptics. Non-GAAP net income of $17.9 million was also a record resulting in record non-GAAP earnings per diluted share of $0.50, a 39% increase year-over-year.

Clearly, Synaptics continues its history of solid execution in capitalizing on a macro trend supporting a digitalized style as touch technology becomes more and more pervasive across a variety of products.

Compared to the same period last year, revenue from PC and non-PC applications grew approximately 19% and 97%, respectively, highlighted by solid demand from notebook and PC peripherals in an almost three fold increase in mobile from revenue.

We continue to see a strong adoption of our ClearTouch solutions particularly as the market's appetite for touch screen phones continues to gain momentum. Synaptics is engaged with all of the top five mobile OEMs among others, and I am pleased to mention that we are providing full capacity of base touch screen solutions for two new high-profile phones both in the early stages of launch.

As you are aware, we executed a 3-for-2 stock split during the September quarter. This was our first stock split since going public in 2002, and we believe this action is a further testament to our confidence in Synaptics' future and our ongoing commitment enhancing shareholder value over the long term.

I will now turn the call over to Russ for a detailed discussion regarding our first quarter results.

Thanks, 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 charges and for the comparable period last year, certain nonrecurring, noncash charges. Please refer to our press release for the first quarter of fiscal 2009 for a detailed reconciliation of GAAP and non-GAAP results.

Record revenue for our first fiscal quarter of $115.9 million was up 20% sequentially and 30% over the comparable period last year and exceeded our guidance range as notebook demand was stronger than we anticipated. Our revenue mix from PC and non-PC applications was approximately 72% and 28%, respectively.

Sequentially, as expected, we did see a decline in revenue from mobile phone applications compared with the extremely strong levels we experienced in the June quarter.

On a year-over-year basis, our PC-based revenue increased by more than $13 million representing approximately 45% of our total revenue growth. This growth reflects strong demand for notebook computers including increased revenue from our multimedia control solutions and higher revenue from our PC peripheral applications.

The attach rate in notebooks for multimedia controls in the first quarter was approximately 19% compared to 17% in the year-ago period and, as expected, down sequentially. As we mentioned on our last call, we have been the market leader for multimedia control applications in notebooks, but as other competitors have entered the market, customers are looking to add additional sources of supply. As a result, we expect this metric may continue to trend down.

During the first quarter, revenue from our non-PC applications grew $15.9 million year-over-year representing approximately 55% of total revenue growth. This growth was driven by a nearly three times increase in mobile phone revenue, which represented approximately 18% of total revenue for the quarter while revenue from MP3 applications was essentially flat compared to the same period last year but up more than 13 times sequentially representing approximately 10% of total revenue for the quarter.

Our non-GAAP gross margin was 40.6% compared with 40.2% in the June quarter. This was slightly above expectations and was primarily a function of overall product mix.

The headcount at the end of September was 435 compared to 420 at the end of the June quarter. The headcount increase of 15 was less than forecasted and based on current open positions and our recruiting efforts, we expect to add more than that number in the December quarter as we continue to scale the Company to meet the opportunities ahead.

As a result of the (inaudible) hiring, operating expenses for the first fiscal quarter increased less than expected totaling $30.4 million compared to $28.2 million in the preceding quarter, which included noncash share-based compensation charges of $5.5 million and $4.7 million, respectively.

Other major contributors to the increased spending included compensation costs related to our headcount additions, product development-related costs, and IT infrastructure costs.

Net interest income was $809,000 compared with $902,000 in the prior quarter primarily reflecting lower average invested balances resulting from our share repurchase activity in the prior quarter.

As we noted on our last call, we continue to monitor and evaluate our investments and auction rate securities on a quarterly basis. None of our failed auction rate securities have defaulted, and all of them are paying interest at the contractual rates. Based on our latest fair value analysis at the end of the quarter we accounted for a net noncash temporary impairment on our auction rate securities of $980,000 through our other comprehensive income in the equity section of our balance sheet.

During the quarter we received partial redemptions of $1.6 million and anticipate additional redemptions during the remainder of the fiscal year. As of the end of the quarter, the par value of our investments and auction rate securities was $45.7 million, and the carrying value was $35.3 million, all classified as long-term assets on our balance sheet.

Our GAAP and non-GAAP tax rates for the quarter were 18% and 22%, respectively. Next quarter we anticipate our non-GAAP tax rate will range from 19% to 21% reflecting the favorable impact of the extension of the research credit signed into law this month.

For the second half of fiscal 2009, we currently anticipate our non-GAAP tax rate will be in the range of 20% to 23%.

Net income for the September quarter was $14 million, or $0.39 per diluted share compared with $11.3 million, or $0.27 per diluted share in the comparable quarter last year. Our non-GAAP net income in the September quarter was $17.9 million, or $0.50 per diluted share compared with $14.8 million, or $0.36 per diluted share in the comparable quarter last year.

Now a few comments on our balance sheet -- we ended the first fiscal quarter with total cash and short-term investments of $152.5 million compared with $146.5 million at the end of the June quarter.

Cash flow from operations was approximately $2.6 million for the quarter. Capital expenditures were $2.9 million in the quarter primarily for IT infrastructure-related items and test equipment. Capital depreciation was $1.2 million for the quarter.

Receivables at the end of September were $86.6 million compared with $69.4 million at the end of June, primarily reflecting the impact of the sequentially higher revenue level.

DSOs at the end of the quarter increased to 67 days compared with 64 days at the end of the prior quarter reflecting a larger portion of shipments occurring later in the quarter. Inventories at the end of September were $25.1 million compared with $21.1 million at the end of June. Inventory turns this quarter remained unchanged from the last quarter at 11 times.

Now I'd like to make a few comments regarding our business outlook. We entered the December quarter with a record backlog of $103 million, more than 2 times our backlog entering the prior quarter. However, we have seen some shifts recently in order patterns that would suggest some cautiousness on the part of our OEM customers. So based on our current backlog level and the visibility related to anticipated new orders, we believe revenue for our second fiscal quarter will be in the range of $135 million to $145 million, a 37% to 47% increase over the comparable period last year.

While we anticipate growth from PC applications, we expect the major growth driver to be mobile phone applications. We understand that this is a broader range than we typically provide but feel it's prudent given the concerns regarding the macroeconomic environment.

Based on anticipated product mix for the second quarter, we expect our non-GAAP gross margins to be around 41%.

We expect our operating expenses to continue to increase primarily reflecting the impact of our planned headcount growth and our pipeline of design opportunities. For the December quarter, we expect the impact of FAS-123R on our operating margins to be approximately $5.7 million compared with $5.9 million in the September quarter.

Our non-GAAP net income per diluted share for the December quarter is expected to be in the range of $0.65 to $0.75, representing an increase of 62% to 87% to the same period last year.

Concerning our first quarter results and our outlook for the December quarter, we are well on track to achieve our third consecutive year of record revenue. So based on our outlook for the first half of fiscal 2009 and current visibility looking into the next calendar year, taking into consideration the prevalent general concerns regarding the global economy, we currently anticipate that our revenue growth in fiscal 2009 will be in the range of 25% to 35% up from our original estimate of 20% to 30%.

I'll now turn the call back over to Francis.

Thanks, Russ. Our record quarterly results provide further evidence that our strategy of selectively investing in verticals that offer strong ROI is working while also moving us to a quicker diversification within our business.

Turning our discussion of recent product developments within our various markets one quarter, we mentioned the continuing momentum for our ClearTouch technologies including design wins on the Samsung Togo and Sharp NTT DoCoMo mobile phones.

We also introduced proximity sensing as a feature, which is shipping in two Dell monitors. Design activities continues at a very healthy pace across our target market. I now would like to make a few comments about specific progress we have made over the past few months.

Recently, at CTEK Japan we announced expansion of our advanced Gesture portfolio with the variability of our two-fingered flick and ChiralRotate Gesture for Touchpad. Depending on the application, two-fingered flick enables users to use two fingers to either flick horizontally, to navigate back and forth through images, documents, and objects, or to flick vertically to minimize and maximize in applications. ChiralRotate lets user move one finger in a circular motion to rotate images and graphics quickly and easily.

This is in addition to assisting advanced features, which ChiralMotion is growing Momentum and Pinch, and are incorporated in a TouchPad solution for the HP VooDoo NE 133 notebook computer, which launched last month. The same Gesture is also shipping in the Fujitsu Lifebook series, which includes the P1010 that also features Synaptic's Light Touch scrolling solution, both currently shipping in the US and Japan.

Our portfolio of Gestures is compatible with hundreds of Microsoft Windows applications and offers tremendous value and productivity to any notebook or peripheral keyboard that integrates Synaptics industry-wide leading TouchPad interfaces.

As a reminder, mobile phone and handheld device manufacturers can also benefit by integrating enhanced Gestures into the design using Synaptics solutions. Our ClearPad touch interfaces incorporate our enhanced Gesture recognition technology giving customers the options to enable single-finger gestures such as Tap, Double Tap, Momentum, Press and Flick as well as multi-finger gestures such as Pinch and two-finger flick.

I am also pleased to announce that a new Toshiba Qosmio G50 notebook computer incorporates two Synaptics solutions. In addition to a TouchPad, the G50 also features our LightTouch buttons that control the multimedia functionality. This product is currently shipping in the US and is another example of our Synaptics technology can improve useability and industrial design.

The newly announced Sony Vaio Type C notebook computer shipping in Japan also features three Synaptics solutions -- a TouchPad, Light Touch button, and scrolling for multimedia functionality in an innovative new implementation for Proximity Sensing in a capacitive sensing. Specifically, it allows the user to move their hand back and forth on the top of the computer to change the colors of an illuminated bar underneath the laptop.

Synaptics is also beginning to see traction of our solution in mini-notebooks or netbooks. These products are smaller than your typical notebook with screen sizes of 7 to 10 inches. Our TouchPad design wins in this area include the Dell Inspiron 9, the HP Mini-Note 2133, and the Acer Aspire One, all of which are currently shipping.

We are also excited to announce our first design wins in two digital flat-screen televisions for a top-tier OEM. The models will begin shipping in November and features Light Touch control buttons that allow the user to power on and off, change the channel, and adjust the volume. This is another example of how our technology has brought the leverage bar across different vertical markets and further demonstrates how our solutions enable essential functionality without sacrificing sleek industrial design.

In a mobile phone market, our solutions are becoming more and more entrenched within the capacity-based touch screen phones. Finger-based input on touch screens by handheld devices is intuitive and easy to use with adaptable UIs that allow the user to access only those functions needed within a specific application. Synaptics' ClearTouch solutions have been designed into two new touch screen phones currently being launched in the market.

Due to confidentiality obligations, I am only at liberty to share details on one of these design wins today -- the T-Mobile HTC G-1 phone. The first phones ship in with Google's Android platform. As you know, we are one of the founding members of the Open Handset Alliance and initiated the strongly committed to bring openness in the mobile industry. The G-1 TouchScreen utilizes our ClearPad Touch interface, which allows users to flick through different applications and easily view content. Every report in the press regarding [p] orders suggest the G-1 phone is being well received.

In addition, the firmly established handset is a leading player in a rapidly expanding market for capacity-based (inaudible) solutions. This quarter's product highlights illustrate a number of key factors. On the PC side, OEMs are realizing the value of implementing multiple solutions from Synaptics.

In addition, our ability to innovate coupled with the adaptable nature of our technology enables Synaptics solutions to be easily carried over into alternative phone factors like netbooks as was entirely new product categories such as television.

Finally, ongoing enhancements such as our expanding Gesture library further emphasize the broad range of features we offer OEMs, providing them with the flexibility to optimize functionality without compromising industrial design.

I would now like to update you on the litigation with Elantech. We have an agreement to settle, and the parties have filed to stay the action while the deal is finalized. Their agreement (inaudible) the broad cross license of certain patents in all fields of use, and we do not expect the settlement to have a material impact on our business.

Our financial results demonstrate Synaptics is extremely well positioned to compete in markets around the world based on the leadership as innovator, an infrastructure that is designed to drive effective cost structures and a global presence. We are pleased to put this matter behind us and believe it will enhance our ability to compete effectively across multiple markets including the notebook market and new ways to address the growing interest and [motivating] the Gesture as a way to enhance the user experience.

Now I would like to make a few comments regarding the general business environment. While we are closely monitoring the widespread macroeconomic concerns and have tried encapsulating and preventing uncertainty in our guidance, (inaudible) including our record backlog provide us with confidence in our business as we head into the typically strongest quarter of the year. We are anticipating growth and a (inaudible) business and (inaudible) our new application and mobile phones will be less reflective of macro trends and more a function of our penetration and of option rates within the mobile phone market.

While we will be able to continue to diversification of a business will help us weather the potential economic downturn, we are not immune to market frustrations, and we'll be carefully watching consumer spending and sell-through data over the holiday season to gauge and demand and potential impact on near-term business levels.

In these uncertain times, it is important to emphasize the Synaptics fundamentals, including our balance sheet, are extremely healthy. Fiscal 2009 is off to a very strong start and every indicator our growth strategies and we remain cautiously optimistic as we continue to anticipate another year of record revenue.

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

Thank you. (Operator Instructions) Heidi Poon, Thomas Weisel Partners.

Congratulations on a great quarter, guys.

Thanks, Heidi.

Can I just get a little bit more detail on the agreement with Elantech? It seems like Elantech sort of jumped the gun and made some press release and talked to the press in Taiwan, so I think they're sort of hinting at expanded market share in the notebook business. But you just indicated how you don't expect a material impact on your business. Could you give us a little bit more color on that?

Sure, Heidi. Like I said in the prepared statement here, we don't expect the settlement to have a material impact on our business, and we believe that because Synaptics, frankly, is well positioned to compete in markets around the world based on our leadership as an innovator, you know, that infrastructure. And also there is a very effective cost structure in our corporate presence, but we are very pleased to put this matter behind us, and so we can return focus to our business.

And, furthermore, I think it will enhance our ability to compete effectively across multiple markets including the notebook market and new ways to address the Gesturing as a way to enhance the user experience. If it is any comfort, Heidi, I'll tell you, mobile phone is a very good example of Synaptics' ability to compete effectively.

So, Heidi, why I cannot comment on what they have said, and they are not set, you know, I am very pleased this matter is behind us, and we feel that has got very little material impact on our business, and we feel very comfortable that it will enhance our ability to compete because of the track record that was demonstrated as well as the infrastructures that we have put in place.

Great. Since the original lawsuit with Elantech was about multi-touch, what does it do for your multi-touch design activity, going forward?

Well, the elements of this patent here is there is a broad cross-license in the [offers of use] in certain patterns. You know, like I said, I think it will enhance our ability to compete in that space.

Great. Secondly, could you give us an update on your ASP range? The guidance for December of 41% is above a lot of expectations, but it seems like there has been a lot of rumors around about your cell phone margin range. Could you give us some update about that?

As you indicate, our revenue for the December quarter, the major growth driver, is going to be cell phone applications, and a lot of that is coming from these ClearTouch applications that are being integrated into the total touch screen phones, the SmartPhone category. Those are relatively new to the market. They don't have as much volume today and because of that, they can have higher pricing because nobody's had a chance yet to work on economies of scale or efficiencies within the supply chain because it's relatively new.

So do you have a sense of your long-term target for gross margin? Are you sticking with a 40 to 45 given this growing mix of mobile phones?

We haven't changed our long-term target model for gross margins, and it does remain to be 40% to 45% at the corporate level on a blended basis. As we've indicated in the past, we really don't see a unique gross margin profile when we look at one vertical market versus another, because the gross margins really are design dependent, and it's relatively independent of the end market that the design will ship into.

Great. Can you comment on the design trend on the OneTouch solution, your chip solution versus module?

Okay. OneTouch continues to do what we wanted it to do for us in the marketplace. It gives our customers an opportunity to engage with us on two different paths. We continue to see growth in the OneTouch applications, but the rest of the business is doing well. And so today OneTouch, as an element of our business, is still less than 5%.

Vijay Rakesh, Thinkpanmure.

Hi, guys, good quarter on guidance. Just going back to -- it looks like good margin guidance here, too. But looking at the margins on the -- can you give us some color on the margins on the handset, the notebook, and the netbook side?

Again, the margins are really independent of the vertical market that we serve, and it's really (inaudible), it's just the net cumulative impact of the designs themselves, and each design is unique and has its own gross margin profile.

Of the netbooks, I know, you have said it's below silicon, but are the margins kind of in line with the [corporate] of the netbook side, too?

Again, our targeted margins on a blended basis remain to be 40% to 45%, and within a particular application, there isn't a unique margin profile.

Got it. And on the backlog, the very strong backlog, you had $103 million, you said. How does it break out between notebooks and handsets?

Both were fairly well represented in the backlog going into the quarter.

Okay. And it looks like here, as you look at the guidance for the December quarter, it looks like a pretty strong start. But it looks like on the back, for the second half, you are kind of being -- it looks like not much change to the overall guidance -- it doesn't look like the seed estimates would change a whole lot, but why is -- are you being conservative in the second half of fiscal '09 or is it just macro or are you seeing something else? Are you seeing the Apple iPhone being competitive? Can you give us some color there? It looks like you have a pretty strong start for September and December.

Our outlook for the first half is very strong, and that's what allowed us to drive or guide up our revenue range for the full year. So we feel very good about that and, you're right, it does -- the range we're giving for the full year is fairly broad at this point, and I think that's prudent, given the concerns that everybody has about the macro environment, and visibility there for everybody, I think, is impacted by that ongoing view that there is some softness developing. But I don't think anybody has a full appreciation for that yet, and we've tried to contemplate that and capsulate it into the guidance we've provided.

Great, thanks, Russ. Good job, guys.

Thank you, Vijay.

Jeff Schreiner, Capstone Investment.

Good afternoon, gentlemen, great quarter. I wanted to ask -- kind of stay with the last question there, Russ. You know, given the large guidance range, it is kind of a unique thing the company is doing today -- not something, historically, that's been done before. Could you really give us the drivers that get you to the high end as opposed to maybe what drives you into the low end? From what you've been saying, it seems like it's purely economical or macro. Are there other drivers involved in the guidance that you're giving?

No, we think it will primarily be in-demand driven. So we see the opportunity, obviously, to end up somewhere within that range with a reasonable degree of confidence, but it's going to be consumers showing up at the stores and buying products that will make the difference.

Okay. Were there any changes to 10% customers in the quarter, Russ?

No.

And, coming kind of back, I think, you know, a couple of people have touched on it a little bit -- the corporate margin is 40 to 45, and I know that it's the corporate margin that you're focusing on, but has there been some degradation in maybe legacy products as the newer products are ramping up with higher margins and offsetting that degradation, or are we just, again -- we all are getting too concerned with a number that's a blend of so many moving parts?

I'd say it's the latter. At times when we introduce new products to the market, they start out with lower margins, and then we cost produce as we go into production ramp over the life of the product, and sometimes it's the other way around, where we start with relatively higher margins, and they decline, over time, based on the price concessions you give to the OEM during the manufacturing life of the design.

So there are a lot of moving parts here, and I think it is -- there's just too many moving parts here to focus on, and it's just a reflection of the overall blended design mix that we're shipping at any point in time.

One final question, and I appreciate the time, gentlemen. For you, Francis -- how is the market now -- it's starting to expand, obviously, with touch screen and the iPhone effect and what we're seeing in handsets, and we're starting to see it, even, maybe moving to notebooks in calendar year '09. Are we still at a point in the cycle where functionality or technology is the real driver for year-end customers as opposed to price? And when do you see that possibly beginning to shift?

Oh, Jeff, I'm a firm believer that people buy these devices because of applications and not because of technologies, okay? So to the extent that you and I will spend money to buy any number of those gadgets because there's a reason for it beyond the early adopters of the crowd, okay?

So, to me, you know, what I'd like to see here is functionalities because technologies make it easier to have on the gadgets now, okay, and a good example of that is how MP3 music player continued to morph into PMP devices, okay? PND devices are probably more prevalent, and I believe GPS functions one day will be just like images in every cell phone. So I would like, Jeff, to look at those applications that will trigger individuals to put down whatever money of cost at the end of the day, when you look at consumer product is a large market, the ASP and the cost will also drive the adoption rate. I would say, first and foremost, you've got to have compelling applications followed by a cost the threshold of the cost that's going to see a wide adoption of it.

Now, having said that, right, okay, when you look around it, technologies and the related cost reduction is in there, making it easier to adopt as well as making it cost effective to do that.

Now, the other thing that I would say besides application is investor design. So after you put the application down there, there is such a thing as a [cooling] of the device, okay? And a lot of our technology like, for example, proximity sensing, okay, is really kind of make it somewhat of a wow factor. When you start triggering something -- illumination is going up high and lower as you approach that, that will be another factor that will help our OEM partners to differentiate our products.

So I'm actually very excited that our technology continues to be proven in the marketplace in both of those areas and, therefore, when Russ and I forecast outlook for the year, in spite of the softness and concerns in the macroeconomic environment, I still continue to convince that the prospect for our capacitive touch solution and together with the experienced infrastructure that we'll be in ourselves, is going to bode well for our future.

(Operator Instructions) Rob Stone, Cowen & Company.

Congrats on all the good news. These days we certainly can use it.

Thank you.

I wonder, as you think about the outlook for the full year, I know you guys don't give guidance on a per-segment basis, but as you're thinking about your PC notebook or the segment that you report as PCs, which includes more than just notebooks, if you could comment on the various growth drivers or assumptions that are behind that. For instance, what are you thinking about for notebook unit growth going into calendar 2009? And is your forecast driven by that, or do you see increase in content because of the examples you gave of multiple solutions per notebook? Or how much are peripherals and other non-notebook devices contributing to that segment?

Well, as Francis said in his prepared remarks, I think, to some extent today, we are a bit isolated -- or insulated -- from the broader macro environment because of the early adoption and penetration rates within the newer category of SmartPhones. So in that market, we're less dependent on what's going on with organic unit growth as we are design wins that are ramping and shipping in the market that weren't in the market last year. So that's a net tailwind for us, if you will.

When we put together the outlook for the total fiscal year, looking at the PC segment, we did bake into that the low seasonal expectations as we go from calendar year '08 into calendar year '09. So I think we've baked in a reasonable amount of prudence, and are not being overly bullish in the PC segment. We expect that there will be some impact there, but we do benefit from the additional touchpoints, and Francis gave some examples of that on the call.

In addition, we are seeing some traction in the PC peripheral space, which, again, represents incremental revenue growth for us, year-over-year. So, overall, I mean, those are the things that we've considered in providing that outlook, and we believe it reflects a reasonable range that we'll be able to achieve given the very strong start to this fiscal year that we've had.

I actually wasn't questioning the validity of your assumptions on the total revenue. There have been some reports out there suggesting that the penetration of touch screens could triple on handsets, so I absolutely agree with you that it's a penetration-led story there.

What I was trying to get to, if you're willing to give such an answer, is what you are thinking about for notebook market unit growth in the next year or so as one of the underlying assumptions?

We have assumed below seasonal growth.

I understand that in terms of December and probably a downtick in March, but if we were looking at sort of a rolling year-on-year type number, are you willing to say what you're thinking about for annual year-over-year unit growth in the PC notebook segment?

Not specifically other than we are expecting it to be below what the original expectations were for the total year.

Okay, fair point. In terms of the mobile phone segment, you mentioned being engaged with all the majors. We know there are a couple of important designs shipping this quarter. Any comment relative to -- do you still see significant opportunities in terms of launching with people who haven't launched coming, for instance, after the holidays?

Well, as we said going into this fiscal year, our expectations are based on the engagements we have with the OEMs that across the year we will see, we believe, continuing new design wins that will be ramping, and they'll be ramping with multiple OEMs. So we continue to feel very good about the opportunities that that segment represents for us.

This might actually sound like a humorous question for Francis, since we talked about mobile phones every quarter since the IPO, but in terms of the state of the market now, about how long is the engagement typically ahead of launching a significant new design? I don't mean a one touch, off-the-shelf purchase, but when you're doing these custom designs how far in advance do you guys know about a design like that that's coming?

Well, Rob, as you mentioned [mice], right. Okay, it really depends on the functionality of the cell phone, right? Some of them more revolutionary and some of them are more evolutionary in nature. But I think you get the general color here is the lifecycle is going to be shorter, and the design cycle is going to be shorter. It's probably going to be within six to 12 months, if you ask me to use a rough ballpark figure.

Okay. Final question -- on the flat screen TVs that you mentioned, which geographic markets are those shipping in?

Well, obviously -- for obvious reasons, we haven't talked about that, and we'll just leave it at that.

Okay, all right, if you're not permitted to say, I understand. Thanks very much.

Yair Reiner, Oppenheimer.

I was just saying, first of all, congratulations on the fantastic results and very impressive guidance.

Thank you.

First, just a brief cleanup question -- Russ, did you mention the percentage of attach rates for the multi-touch -- I'm sorry -- for the multimedia touch on PCs on notebooks?

Yes, for this quarter it was approximately 19%, which, compared to 17% in the same quarter last year.

Okay, great. And then just a follow-up question on Elan -- in 2005, you signed a cross-licensing agreement with Alps, and I believe that was for single-touch on notebooks. As you understand it now, following this cross-license agreement with Elan, do they have all the IP they need to, to compete in the notebook segment? Or do they also need to turn to Alps to do a cross-licensing agreement with them before they can effectively compete for the OEM business?

Well, we do have a relatively broader cross-license with Alps than we do with Elantech. I really can't comment on whether or not Elantech feels they have all the IP required to compete effectively in the market.

Okay, very good. And the other thing is, in terms of the MP3 market, directionally, do you expect it to be kind of the same range next quarter as it was this quarter? What's your visibility there?

Well, as we said before, the MP3 market, for us, is much more opportunistic than the other two markets in terms of visibility. And in our prepared remarks and related to the guidance, we did say that we expected to see growth from PC applications, but the major growth driver for the quarter will come from cell phone applications. We are actually expecting revenue from MP3s to be down sequentially.

Okay, very good. And just a final question on the competitive landscape right now on the wireless side. From what I can tell, you guys have essentially won all the major RFPs that have been out there, I guess, with the exception of the iPhone. What do you think either you are doing right or your competitors are doing wrong? You've had such fantastic success.

Well, Yair, first of all, we'll never underestimate our competition there, okay? So let me tell you that we believe, okay, we have a very strong execution record in terms of working with our OEMs. We focus on offering a complete solution rather than pieces, you know, of the solutions, okay? As you know, we have almost half a billion units off in the fixed solution experiences now. We have vast located, very close our customers, so that we have very good response in that. We are working hand-in-hand, side-by-side in terms of developing solutions.

One note that I would like to highlight here is these products are all customized. I mean, it is not something that has been a product; people will look at the catalog and buy. So really priced, very good collaboration between R&D teams and product teams to make sure that happens, and we are just have a very good experience track record in delivering those solutions.

Having said, that, you know, the market continues to evolve, okay? And we have to stay in the forefront in terms of innovation, and you will see us continue to invest in the marketplace to strengthen the areas where we feel we need to, vis--vis the market characteristics.

Okay. I guess I just have one other question -- in the past, you've talked about being [reverse] constrained and I guess not being able to go as aggressively after all the opportunities have been out there. Is that still the case, or do you feel that you are, at this point, more or less able to go after the business that you want to go after?

Well, we still have a very robust pace of design activity inside the company. It's probably not as out of balance as it was previously, but we haven't seen a big dropoff in design activity.

Vijay Rakesh, Thinkpanmure.

Hi, guys, just one follow-on on this Elan thing -- the settlement with Elan, is that for notebooks and handsets both, and also Elan was not able to ship outside of Taiwan, but there were not able to ship freely to the US. Does this allow them to do that?

Well, these are -- the cross-license patents are all US patents on both Synaptics and Elantech's parts. So they're just US-based patents. And the patent license is broad, and there are no restrictions as to field of use.

Ladies and gentlemen, that does conclude our question-and-answer session. I would like to turn the call back over to management for any closing remarks.

Thank you for being on the call today, and we really look forward to updating you again next quarter. Bye-bye.

Thank you, ladies and gentlemen, that does conclude our Synaptics 2009 First Quarter Conference Call. Thank you for your participation. You may now disconnect.