Synaptics Inc (SYNA) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Synaptics' first-quarter fiscal 2011 earnings conference call. (Operator Instructions). This conference is being recorded today, Thursday, October 21, 2010.

I would now like to turn the conference over to Mr. Alex Wellins from The Blueshirt Group. Please go ahead, sir.

Good afternoon and thank you for joining us today on Synaptics' first-quarter fiscal '11 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 Russ Knittel, the Company's interim President and CEO, and Kathy Bayless, the Company's CFO.

In addition to the Company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes non-cash share-based compensation charges and certain other nonoperational and non-cash items. Please refer to the press release issued after the market closed today for a detailed reconciliation of GAAP and non-GAAP results.

Additionally, we would 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, including, but not limited to, statements regarding the Company's future financial performance and outlook, including financial guidance for the second quarter of fiscal 2011, current views regarding trends and opportunities in the Company's markets, including their size and anticipated growth, marketshare assumptions, the Company's competitive positioning and ability to differentiate itself in its markets, trends in unit costs and selling prices, design activity, design wins, timing of anticipated revenue and market demand for the Company's products and solutions, expected product mix and general economic conditions.

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, 2010, 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 will turn the call over to Russ Knittel.

Thanks, Alex, and I would like to welcome everyone to today's call. As you're aware, based on our announcement last week, I have been appointed to serve as interim President and CEO filing Tom Tiernan's departure.

The search for a permanent successor is underway. While we have not set a specific timeline for completing the search, we believe Synaptics represents an excellent opportunity, and we are confident that we will attract a pool of highly qualified candidates.

As for myself, many of you on the line know me. For those of you who don't, I have been with Synaptics for over 10 years. Most recently I have been working with the executive team after stepping down as Chief Financial Officer in September of last year. And I am well aware of all aspects of our business.

I look forward to working with the management team and our talented employees to enhance our business position and execution on our key initiatives to take advantage of our expanding market opportunity.

Synaptics delivered another record revenue level in Q1. Revenues reached $153 million, up 28% over the prior year. Non-GAAP net income grew 41% to $24 million or $0.67 per diluted share from $17 million or $0.48 per diluted share in the same period last year.

Our top line came in well within expectations, although revenue from PC market was weaker than anticipated, reflecting the general softness in consumer notebook demand. This softness was offset by very strong demand for our mobile touchscreen applications, resulting in another record quarter of Mobile touchscreen revenue. Based on this performance Synaptics is off to a strong start to the 2011 fiscal year.

I will now turn the call over to Kathy, who will review our financial results with you in detail. And then I will provide you with a closer look at our design wins and trends in our markets before we take your questions.

Thanks, Russ. As Russ mentioned, fiscal Q1 marked another record quarter of revenue for the Company. Revenue of $153 million exceeded consensus expectations and increased 28% year-over-year and 5% sequentially. Revenue from PC applications was less than anticipated, with an increase of 6% over the prior year, and a decrease of 7% from the June quarter, reflecting weaker than expected demand for notebook-based products.

Shipments of our multi-finger gesture-enabled touchpads continued to increase from 84% of our unit mix in the June quarter to 90% in the September quarter. However, shipments of our ClickPad solution were down slightly, reflecting the weakness in consumer notebook demand.

Within the non-PC category revenue from mobile applications reached our highest level to date, reflecting strong demand for our touchscreen solutions in mobile phones. Specifically mobile revenue grew 107% year-over-year and 23% over the preceding quarter.

The overall revenue mix from PC and non-PC applications was approximately 51% and 49%, respectively. Revenue from mobile applications was 47% of total revenue, up from 40% in the preceding quarter. Our non-GAAP gross margin in the September quarter was 41.2%, which exceeded our expectations and was up 40 basis points from the prior year, reflective of our overall product mix.

Non-GAAP operating expenses, excluding share-based compensation, increased 8% from the prior quarter to $32.9 million, in line with our expectations.

GAAP operating expenses were $40.5 million compared to $38 million in the preceding quarter, and included non-cash share-based compensation charges of $7.6 million and $7.5 million, respectively.

Our headcount at the end of September was 608, up 4% from the prior quarter. The increase primarily reflects engineering personnel to support our continuing business growth.

Our non-GAAP tax rate was 20.5% in the September quarter, in line with our expectations. And our GAAP tax rate was 17.2%.

Non-GAAP net income was $24.2 million or $0.67 per diluted share, up 41% and 40%, respectively, compared with $17.2 million or $0.48 per diluted share in the September quarter a year ago.

GAAP net income grew 91% to $19 million or $0.52 per diluted share from $10 million or $0.27 per diluted share in the year-ago period.

Turning to our balance sheet, we ended the quarter with $231 million of cash, an increase of $21 million over the September quarter. Cash from operations for the quarter approximated $19 million. Net cash provided by employee participation in our equity plan contributed $5.2 million.

Capital expenditures were $3.8 million and depreciation was $2.5 million for the quarter.

Receivables at the end of September were $116 million compared to $101.5 million at the end of June. Days sales outstanding of 68 increased from 63 days in the prior quarter, reflecting the timing of sales throughout the quarter.

Inventories at the end of September were $15.1 million compared to $18.7 million at the end of June, with inventory turns at 24 compared to 19 in the prior quarter. We expect to increase our inventories this quarter as we replenish our die bank.

Looking ahead to the December quarter, we continue to carefully monitor market dynamics relative to customer order patterns and consumer demand. While we continue to see some caution in the notebook market, we anticipate another record revenue quarter in fiscal Q2.

Based on our backlog of approximately $81 million entering the quarter, our expected product mix customer forecast, we anticipate revenue will be in the range of $154 million to $162 million, up sequentially, and an increase of 16% to 22% compared to last year.

Our outlook reflects our current expectations for another strong quarter of demand for our mobile touchscreen solutions.

Similar to last quarter, our revenue outlook assumes limited contribution from portable digital entertainment applications, which accounted for 14% of our revenue mix in the year-ago quarter.

Using our current backlog as a proxy, we expect non-GAAP gross margins for the December quarter to be in the range of 40% to 41%.

We continue to carefully manage our operating expenses in line with our target model, and expect non-GAAP operating expenses to increase in the December quarter; however, at a slower rate than in the September quarter, as we continue to scale to meet the opportunities ahead.

We expect our GAAP operating expenses in fiscal Q2 to include one-time charges of approximately $1 million and $1.4 million, respectively, for cash-based compensation and a non-cash FAS 123R charge related to Mr. Tiernan's departure. We anticipate the FAS 123R charge in fiscal Q2, excluding the incremental charge, to be in the range of $8.1 million to $8.3 million.

We anticipate that our non-GAAP tax rate for the December quarter and the year will be in the range of 19% to 21%. Non-GAAP net income per diluted share for the December quarter is expected to be in the range of $0.64 to $0.71 per share.

I will now turn the call back over to Russ for an update on our business.

Thanks, Kathy. I will pick up with a review of our key markets, starting with PCs. As the market leader in notebooks, we continue to drive innovation and launched many new touchpad designs in the quarter with leading OEMs, including Acer, Asus, Dell, Lenovo, Sony and HP.

In PC peripherals Synaptics TouchPad has been incorporated into Logitech's new keyboard controller, which features an integrated keyboard, touchpad and remote control that give users a natural way to search, navigate and enjoy Google TV.

Our Scrybe 1.5 gesture-based workflow offering has been released to OEMs for integration into their upcoming notebook product offerings. This value added software feature is evidence of our continued innovation, and should prove to be a differentiator in touchpads, as well as other emerging products, where the absence of a physical keyboard encourages gesture-based usage models.

As mentioned earlier, global touchscreen revenue was a record level, more than doubling year-over-year, as we benefit from robust market growth. We continue to expand the number of mobile phone models with Synaptics ClearPad touchscreen solutions shipping in the market, with a new high of over 35 models in production.

We continue to see a representative mix of designs across our portfolio of modules, tails and chips. And pricing for our module solutions continues to come down, reflecting the ongoing cost reduction efforts we have highlighted previously.

We recently announced native touch support for Microsoft Windows Phone 7 platform. The Win 7 mobile operating system utilizes multi-touch technology. And ClearPad native multi-touch support simplifies the design-in process for developers so that they can easily incorporate Synaptics touchscreen solutions.

Synaptics ClearPad solutions are shipping to many top-tier smartphone OEMs, including some recent high-profile designs. In addition, our most advanced ClearPad Series 3000 is now shipping in models, including the LG Optimus 7 E900, and the LG Quantum C900, which are based on the Win Phone 7 platform and the Huawei U8800. All three designs will soon ship in North America.

HTC has also adopted our ClearPad 3000 Series across a number of smartphones, including the Wildfire for T-Mobile, the Desire HD and the Merge for Verizon Wireless in the US.

A sampling of notable design wins utilizing our ClearPad 2000 touchscreen solution include the Sony Ericsson Xperia X8, the Huawei IDEOS for China Telecom and T-Mobile, and the Huawei U8500 for T-Mobile and Tata in India.

Recent design wins with ZTE are selling in China and Europe, including the R750, the 945 for Vodafone, and the Blade.

As you are all aware, the emerging category of tablet PCs represents a great opportunity for our ClearPad 7200 Series, and we are actively working with major OEMs to bring our solutions to market, and we currently anticipate revenue sometime in the second half of fiscal 2011.

Relative to new markets, last quarter we highlighted Synaptics work with remote control manufacturers on implementing an optimized hardware level specification for touchpad technology in next-generation devices. We continue to innovate in this area.

For example, we recently announced our two inch diagonal touchpad solution found in the Philips DUAL remote control. This touchpad recognizes gestures, helping to simplify navigation, and is an example of the growing opportunities to leverage Synaptics solutions within the digital home environment.

Synaptics is off to a great start in fiscal 2011. We continue to lead the notebook market. And as evidenced by our record revenue and number of phone models shipping, our mobile business is experiencing rapid growth.

As with all businesses, capacitive touchscreens are a competitive, fluid market. We compete on a design by design basis, and as typical in high-tech markets, our customers often prefer to have alternative sources of supply. Therefore, it is important to remember that within any individual OEM there will always be design wins and losses or share shifts as part of the normal course of business.

At the same time, we continue to be resource constrained and take a selective approach towards choosing those projects that offer the best ROI. We believe we have the right approach in place and are competing very effectively.

Looking out to the full year, design activity is expanding and we continue to be well-positioned in our share of design wins across a wide variety of OEMs. Synaptics is well-positioned to participate in the markets we serve. And subject to the broader macro environment, we remain cautiously optimistic regarding our overall growth outlook for fiscal 2011.

The broad-based adoption of touch technology in consumer electronics is just beginning. We are excited by the growth prospects and are making the necessary investments to meet the expanding opportunities in front of us.

With that, we will now turn the call over to the operator to start the question-and-answer session.

(Operator Instructions). Paul Coster, JPMorgan.

Can you confirm to us that the tablet opportunity, the ClearPad 7200, is a multichip solution? Is it also a module opportunity? And can we -- can you give us any thoughts on -- initial thoughts on the average selling price for that segment of the market?

Paul, this is Russ. With regards to our 7200 Series it could be a single-chip or multichip solution, depending on the size of the touchscreen that we are driving.

I think there is an opportunity there for module chip or tail solutions, depending on the way the customer wants to engage. And again that is one of the competitive advantages we have in the market.

We haven't announced any design wins there, so I guess I will defer talking about what we think the potential pricing might be there. But needless to say, we do view it as a very fertile opportunity for us, and we expect to participate in that market in a big way.

Okay, my follow-up question, as you look forward to the remainder of this fiscal year are you still of the opinion that this is a 40% plus gross margin for the medium term, even perhaps the long term?

Well, as of now we haven't changed our operating model. Historically we have run in the 40% to 45% range for gross margins, and most recently we have been in the 40% to 42% range.

Again, today we continue to sell that portfolio of modules, chips and tails. Because we are so design by design dependent, and the gross margins for each design can vary pretty widely, it is hard for us to project with any certainty gross margins beyond the current quarter.

And I know when Kathy is putting together her outlook for margin for the quarter she uses the backlog we have going in as a proxy. So for the current quarter we are still within that range. And I don't see anything in the foreseeable future that would change that in any big way.

Lauren Stoller, Lazard Capital Markets.

Can you give us a little bit more color on why you are so comfortable with your projections for the mobile market? Is it mainly based on a few successful design wins or do you see new designs ramping, a number of them, or any color that you can give there?

It is based on the design mix that we are shipping today and the expected product launch volumes and the ongoing orders we are getting for products that are ready in the market.

Are you talking about the second quarter or --?

No, the outlook -- yes, second quarter -- fiscal second quarter.

So the second-quarter outlook, we just came off September quarter with growth in the mobile space of over 100% year-on-year. And right now if we look at our backlog of $81 million, notebook continues to be a little bit weak because of the macro demand situation. And mobile is very strong, so it represents a fairly high percentage of the backlog.

So would you say that you're taking share or do you think that it is just general market growth?

I think what it is true in this market today is that it is expanding at a very rapid pace. And as we said in our prepared comments, we are winning more than our fair share of the designs. But it is expanding at a rate that there isn't any one company today that could service the entire market's needs. But, again, we think we are competing very effectively.

Despite the investments we are making in resources, to which some of you guys have commented, we continue to find ourselves in a position today where we can't take on all of the opportunities that we are aware of. So we still have to pick and choose those opportunities that make the most sense for us.

So I think the message here is the market is growing very rapidly. I don't think -- I think it is too early to have a discussion about marketshare. In fact, as a company, as we said in the past, we don't even target unit marketshare as an objective. We try to look at value add as opposed to units themselves.

But, again, it is a rapidly growing market. I think we are competing very effectively, evidenced by the consecutive quarters here of mobile revenue. So we are very pleased with our positioning there and have a lot of confidence in our ability going forward.

Raji Gill, Needham & Company.

Just a question on the mobile side with respect to the business model. I know this question gets drilled on a lot, but did you see any particular shift in the business model more to say module, chip or a hybrid solution this quarter versus last quarter, or this quarter versus say the year-ago quarter?

No, Raji, we haven't seen a mix shift there. In fact, we still have -- the design wins we have in that space are well represented across each of those three variations, and there really hasn't been a trend that has emerged for us.

Even within the same OEM account, we can be shipping multiple solutions that reflect either a module, tail or a chip. So we haven't seen any emerging trends. And that is why today I continue to believe that our approach of allowing our customer to engage with as in whichever variety they choose is a competitive differentiator for us.

Why do you think though that within the OEMs that they would use a module versus a chip for a particular SKU? Because, obviously, your competitors have -- are designed into some very high profile wins that are ramping with high levels of volume, and they clearly don't supply a module.

So I am trying to get a better understanding of the thinking, the thought process behind the OEM when they decide to choose a business model, and then separate that by the actual SKU.

Well, again, all I can tell you is we are also shipping in some high-profile phones with Tier 1 OEMs, as you know. And I guess you'd have to talk to them about what their rationale is for picking one versus the other. All I can tell you is it is proven to be a differentiator for us in our willingness to engage in different models depending on how the customer feels about that specific phone design.

Yair Reiner, Oppenheimer.

Thank you, and congrats on the good mobile number. On the last call you gave an initial view of full-year 2011 revenue. We didn't get an update this time around. Is that initial guidance still on the table or should we disregard it for now?

No, I think as we commented in the prepared remarks, subject to the macroeconomic environment today, we have -- we did see softness from consumer and notebook demand in the September quarter, which we hadn't anticipated. And it was more than offset by very robust demand for our touchscreen solutions.

So we think we are very well positioned going forward. And subject to no major change in the macro environment in the second half of the fiscal year, I think we are tracking to that original outlook.

Okay, great. Thanks for the clarification. Can you give us an update on your [in-cell] development. I think there is widespread consensus that within a year, two, three, a lot of capacitive touch will be built into the LCD screen. Can you tell us how the development is going there? And when do you think you'll have products potentially going to be ready to ship in volume?

Well, I think as we look out into the market it is likely that you will see touch sensors incorporated into LCDs. We are currently working with companies in the supply chain and OEMs in anticipation of that. When that is going to happen in a big way, I think, is yet to be determined, but we are certainly prepared for that eventuality.

So, again, whether the sensor itself is built into the LCD it really doesn't impact the total capability and functionality that we bring to the device itself.

Ian Ing, Gleacher & Company.

Thanks for taking my question. I just had one question, so maybe you could expand on this a bit. Could you talk about weighing change versus continuity as you look forward for new CEO candidates?

For the long term you have been a broad solutions provider, addressing multiple end markets, bringing down the cost of the handset modules. And when Tom took over a little more than a year ago, the message we got and observed was that there is really no change in strategy. So is a new CEO going to be in a position to perhaps adjust or adapt the strategy working with the Board? I'm just wondering your thoughts on that.

As of today, based on the results that we have posted, and my current view going forward, I think the current strategic direction is correct. Now when somebody else joins the Company and we can see how the markets are developing, will they have the ability to change strategy going forward working with the Board, the answer to that would be yes.

But sitting here today I would not expect to see any abrupt change in our strategic direction in the short to mid term, independent of the CEO's background coming in.

Steven Fox, CLSA.

A couple of questions. First of all, On the tablet opportunity, you said second half of fiscal 2011, but there are a number of products rolling out now. Can you just talk about whether it is a design relative to matching up with your current products or is it a function of getting your own price point down in order to be more affordable to get designed in? What is holding you up from getting wins sooner than that?

Well, again, it is a category I think that represents a lot of growth for us. We are working with OEMs, and we currently anticipate, based on where we are, that we will see revenue in the second half of this fiscal year. We haven't announced any design wins to date, and when we have an update there we will share it with you.

But you haven't announced them, but you have them, or you're confident that you're going to win some?

We are confident that we will participate in that segment.

Shaw Wu, Kaufman Brothers.

Just a clarification. You said on the second-half of your fiscal year or your calendar year in terms of the tablet space?

I think we will see some level of revenue from large screen applications towards the end of this fiscal year.

Okay, thanks. Then just on the -- a little more -- I'm going to ask -- this question was asked earlier. Just on the -- in terms of your mobile business, it looks like you have added -- I guess, last quarter I believe you commented you had around 30 design wins. This quarter it is a record of 35. I am just trying to understand, is the growth trajectory coming more from new wins or is it more from existing wins? Thanks.

I just wanted to -- let me follow up on that. So what we talked about is we have in the past, when we talk about the 30 designs, those are actual phones shipping in the market. So last quarter we said we had over 30 phones -- 30 actual phones shipping in the market. This quarter we said we had in excess of 35 phones shipping in the market. So these are -- the numbers that we are giving are really phones that are actually shipping in volume out into the market at this point.

(Operator Instructions). Rob Stone, Cowen and Company.

I know you guys don't give explicit guidance by segment for your forward view, but can you give us a directional sense based on your backlog and the feedback you're getting from the OEMs whether the PC segment is going to grow in the December quarter or what is the trend at least directionally?

It still looks somewhat soft to us. If we look at the backlog right now there is revenue from PC and non-PC in the backlog, but realistically we are looking at a very strong growth quarter again for mobile. So mobile is a higher representation there.

Okay, so that seems to be a trend that is kind of in the opposite direction of guidance that came from the microprocessor vendors in their latest updates. What do you think accounts for the difference of direction?

I am not sure that it is necessarily different, so it is -- I have heard reports from the microprocessors as chips being up or flat going into the December quarter.

Anthony Stoss, Craig-Hallum.

Russ, if you wouldn't mind talking about your notebook share, if you think that you still have your -- similar amounts to the last few quarters.

Also, any new competitors that you see on the horizon trying to enter the notebook space? Thank you.

No, I think our share position is relatively constant. And we haven't seen any new competitors in that market.

Got you. Thank you.

Rob Stone, Cowen and Company.

Kathy, I was just trying to ask for a follow-up to my question, if you see anything else going on in terms of mix, revenue per unit, or inventories are something that would account for softness relatively speaking in PC revenues?

No, I don't think so. Typically, as Russ said, we haven't seen any change from a share standpoint. We still are the leader in the market. We do see differences sometimes quarter on quarter just because of our sell-in versus sell-out from a quarter to quarter basis.

I think the only other thing is I mentioned earlier in my prepared remarks was that the weakness that we saw in notebook was, similar to everybody else in the industry, was around -- primarily around the consumer part of the notebook market. And that is where we have been selling our ClickPad.

So our ClickPad revenue was a little bit light. And our ClickPad typically carry a little bit better ASP. So there is a little bit of, I would say, less -- within units and ASP we are a little bit light.

So budgeted ASP trended a little bit down because of the ClickPad mix. My final question was, can you comment on what percent of revenue came from chip only solutions in Q1?

As Russ said -- as Russ talked about, as far as the mix goes it is still a relative mix between module, chip and tail. And the mix is moving around back and forth a little bit, but it is still a pretty solid mix between module, chip and tail. And we haven't broken out any specifics here.

Li-Wen Zhang, Pacific Crest.

Thank you for taking my call. Your inventory decreased by $3.6 million. Do you have a supply constraint issue going on?

As far as the inventory, the inventory did go down a little bit in the last quarter. I think it was -- a lot of people talked about there were tightness from component standpoints in the June quarter going into September. So we drew down our die bank, and we're going to be working on improving -- bringing our die bank back up in this quarter and December.

All right, thank you. That is all I have.

John Vinh, Collins Stewart.

Thanks for taking my question. Just back to backlog, if I look at your backlog relative to last quarter, Kathy, it is actually down sequentially, but the midpoint of your revenue guidance is slightly up. I was wondering if you could maybe comment on that?

Sure. The backlog at $81 million is within our normal range. And the backlogs typically range 40% to 60% entering any particular quarter. So the backlog is very typical, and is more than reasonable considering what our turns business is.

Great, thanks. Then just a follow-up question on notebook PCs. You said that it was kind of soft in the quarter given consumer. Can you maybe just comment on order linearity in the quarter on PCs, did it progressively get stronger and a quarter? Or maybe if you could just give us a little bit more color there that would be helpful.

I think when we gave -- we gave our guidance originally in July, so from that point in time going into the quarter it weakened from what we originally thought. I think it is still just -- there's a little caution out there from the notebook market standpoint.

Blayne Curtis, Jefferies & Co.

Actually just if I could expand on the last question. The PC market, are you still seeing the bookings fall off, or have you seen some sort of stabilization?

Then, secondly, half that business you ship into module makers, so if you could just provide some commentary on the inventory levels there as well?

I think the backlog is in good shape. So, again, it is within our norm. And as we said, from what is in the backlog is just a little bit heavier weighted into mobile, because that is where we expect most of the growth in the quarter.

I was talking particularly about the PC business. How have you seen the order trends, are they still clicking down or have you seen some sort of stabilization there?

I think they're reasonable.

Okay. Then a question for Russ. I think I've asked this before, and someone asked it previously on the call, but maybe a different way. When you look at the design wins that you're working on, going forward, do you see a different mix with those design wins than what you are shipping today?

No, we see a very representative mix across the portfolio approach we have taken, modules, chips and tails. There is no emerging trend from our perspective.

Charlie Anderson, Dougherty & Company.

Good afternoon everyone. Thanks for taking my question. Just to go back to the full-year outlook, I think last quarter you guys said you'll grow with the PC market in upper teens, and hence that will be slower. I wonder if we just need to flip that now?

Well, I think -- yes, if you go back to what we saw in the September quarter, and the fact that we are looking for the majority of the growth in the December quarter to be around mobile, our view would be that, yes, mobile would be stronger, notebook wouldn't be quite as strong.

And then if I --.

A total flip? We will see.

So if I look at what you guys are doing -- what you did in Q1 in notebook and then sort of this -- still maybe soft in Q2, what I'm wondering is do you use tablet offsetting or propelling you back to that upper teens in the back half, or is it not enough if we stay where we are? Thanks.

I think based on our current view today, your first comment is correct. I think from what we were looking at coming to the fiscal year, it looks like mobile will represent a bigger portion of our total overall mix for the year than we had anticipated going in. So, again, reflecting and taking into account the softness in the consumer related notebook area, and what we saw as robust demand for our touchscreen solutions in the current quarter, is certainly carrying that momentum into December.

And as I said earlier, I think the back half of the fiscal year, I think, given the softness in the PC market generally, there is probably some concerns out there about how that second-half is going to develop. But if it stays as is, then we believe we are still on track for what we were targeting to begin with.

Rob Cihra, Caris & Company.

Thanks very much. Two questions. First on the notebook side, you did call out the weakness in consumer notebook, which has been obviously weak really since the beginning of the quarter. But corporate had been holding, and can you just tell us if corporate notebook had indeed been holding in better or as far as how you would put the corporate market now?

Then second question, I guess, on mobile phone just would be the great year-over-year growth, over 100% revenue, you probably won't answer it, but I will ask anyway. Can I get an idea of what the mix going on. Your units year-over-year were up, I assume, obviously more than that.

But any kind of a ballpark in terms of how much more? Or put another way, what your blended ASP was in mobile phone year-over-year, not a number, but at least just kind of a ballpark. Thank you.

Well, let me take the notebook question that you asked first. So in netbooks your question related to the commercial market. And you are right. Commercial market has held up for us. We talked about for the last, I think, three quarters that we have seen growth quarter -- year-on-year for commercial. So we did see some commercial growth again year-over-year.

Yair Reiner.

My question has been asked. Thank you.

Raji Gill.

Just a question on the pricing environment, especially with respect to modules. How would you look at that pricing this quarter? And then also, do you expect another step function down as some of the cost of the supply chain to produce that module start to come down, for example, the sensor suppliers, etc.?

Well, we have seen cost reductions and ASP reductions in modules. We have talked about that for several quarters. So, again, this technology is still fairly new. There is a limited number of players in the market, so there is a lot of work on going from a process standpoint, and bringing other players in from a sensor standpoint, to try and make the sensors more efficiently, bring the cost down. And then as the costs come down, the ASPs come down, because we are passing those costs savings along.

Yes, but any quantifiable metric in terms of what pricing was like in modules. Was it down 15% year-over-year, is it down 30%?

Well, we have -- again, for several quarters we have talked about it. It has been fairly significant, so a year ago or more it was probably 30% higher.

Thank you. There are no further questions. That does conclude the Synaptics first-quarter fiscal 2011 earnings conference call. Thank you for your participation. You may now disconnect.