Synaptics Inc (SYNA) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Synaptics first quarter 2013 earnings conference call. During today's presentation all parties will be in a listen-only mode.

Following the presentation the conference will be opened for questions. (Operator Instructions).

This conference is being recorded today, Thursday, October 25, of 2012. And I would now like to turn the conference over to Jennifer Jarman of the Blueshirt Group. Please go ahead.

Thank you, operator. Good afternoon and thank you for joining us today on Synaptics' first quarter fiscal 2013 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 www.synaptics.com.

With me on today's call are Rick Bergman, President and CEO; and Kathy Bayless, CFO. In addition to the Company's GAAP results, management will also provide supplementary results on a non-GAAP basis which exclude share-based compensation charges and certain noncash or non-recurring items. Please refer to the press release issued after market close 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 2013, anticipated sequential increases in PC and mobile product revenue for the second quarter, expectations of new design launches with multiple LCD manufacturers over the next several quarters, including expectations regarding the growth of display integrated solutions, the timing of ForcePad and ThinTouch adoption in calendar year 2013, the Company's leadership in innovation and technology, its tools, display integration efforts, and advancements in the total system that position it to win going forward, and the Company's belief it is investing in the right areas and paving the way for sustainable profitable growth.

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, 2012 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 will turn the call over to Rick Bergman. Rick?

Thanks, Jennifer. We are pleased with our results for the September quarter. Revenue of $127 million was towards the high end of the guidance range we provided last quarter. Our top-line results reflect better-than-anticipated revenue for mobile phone touchscreen application, partially offset by lower-than-expected PC revenue.

As a result of the revenue mix change, our gross margin performance exceeded the high end of our expectation as non-GAAP gross margin grew to approximately 48% and, in turn, provided operating leverage delivering strong, non-GAAP net income of $12.7 million or $0.37 per diluted share,near the high end of our guidance range.

We enjoyed seeing many of you at our analyst and investor meeting in August, where we covered a lot of ground in terms of our vision as a human interface company and our strategies for growth as we move forward. Today, I'm going to focus on the latest updates in our core markets. I will then turn the call over to Kathy to review our first quarter results in more detail and to provide our current outlook before opening up the call to your questions.

Let's start with the mobile market. Our ClearPad offerings continue to deliver the industry's broadest solutions portfolio to key partners such as HTC, Samsung, Huawei, Nokia, ZTE, LG, and Sony. With our support for both Android- and Win Phone 8-driven solutions, we are confident in the continuing success of our ClearPad solution. The LG Optimus G, which LG calls a collaboration of some of the best component makers on the planet, as well as the HTC 8X and 8S Win 8 Phone are examples of some of our latest ClearPad solutions.

In addition, with our ClearPad Series 3 family premiere smartphone touch solution, we have raised the bar for high-performance touch on two recent Nokia phones, the Lumia 820 and the 920. With the introduction of support for gloves and fingernails, ClearPad Series 3 technology gives users a seamless, multi-touch experience regardless of input method, which helped solved one of the industry's longstanding challenges with cold weather smartphone operation. In fact, we were recently honored to receive the Nokia award for best supplier for innovation, where we were recognized for product differentiation, innovation, and execution; as well as the Sony mobile supplier award for best improvement,highlighting our role as a total conclusion provider maintaining a balance of cost, quality, delivery, and technology.

I think it's worth noting that from a supplier base in excess of a hundred companies, Synaptics was the only semiconductor-related company to receive awards from either customer,as well as the only company in any category to receive awards from both.

As Synaptics pioneers new technologies and enhance capabilities, we also recognize the need to develop software support tools to quickly and efficiently implement a cost-optimized ClearPad solution. Our most recent smartphone design tool, TouchExplorer, texts and provides immediate visual feedback on finger presence and movements on a device, allowing designers to assess touch performance in realtime. Synaptics continues to be in the forefront of the touch-and-display integration trend,as the industry transitions to thin and bright high-performance mobile devices. As the leader in on-cell and in-cell development, Synaptics is committed to driving the evolution of these technologies as well as our next-generation touch-and-display, driver-integrated solutions. Our activity with multiple LCD manufacturers is increasing. Our design pipeline is growing, and expect to see new business designs launch over the next several quarters. Our current and potential OEM customers appreciate our on-cell and in-cell approach, which is designed to report a high-yield manufacturing process. We are very enthusiastic regarding display-integrated solutions and believe that we will see the number of units double over the next two years to roughly 25% of the market.

As we highlighted during the analyst and investor date, China constitutes the world's largest smartphone market and now represents 25% of the global smartphone shipment. With a wide-ranging customer base including Huawei, ZTE, OPO, and CoolPad, Synaptics is well represented within the lion's share of the market. Our broad product portfolio spans value-oriented, cost-optimized solutions, including our single-layer offering, to premium, high-end solutions that allow our China-based OEMs to compete globally. As with our broader customer base, our China customers value our unique role as total-system solutions provider, and have a keen interest in our display integration capabilities, strength supporting our strong position moving forward. Recent product launches from Chinese OEMs include ZTE U985 smartphone and a high-end tablet from popular table manufacturer E-Ran E-Myth. Both products are geared towards the mass market in China.

Now, turning to the PC market. We continue to lead the adoption of touch with Microsoft's revolutionary Windows 8 and Windows RT operating systems across a number of thin and light configuration. We are fully engaged in ongoing and vigorous design activity for our TouchPad, large touchscreen, and keyboard product lines with our key partners. In August, we launched the industry-changing ForcePad and ThinTouch keyboard solutions, which were well received by key partners and product analysts. We continue to work through the design and process for both solutions and expect ForcePad adoption to begin by mid-2013 with ThinTouch following later in the calendar year.

We are exploring new-uses models across our solutions portfolio with internal investments in R&D as well as external partnerships with organizations such as the 2012 User Interface Software and Technology Student Innovation contest. Synaptics supplied each team with an external ForcePad that could be used to research and develop interesting and innovative design ideas. We came away from the event with several creative designs from the 27 registered teams from all over the world, demonstrating the vast potential of ForcePad-based usage models.

Our TouchPad family continues to deliver the industry's best touch solution for notebook PCs. In particular, our ClickPad solutions can be found in a latest notebook and ultrabook designs from the major PC OEMs such as HP, Lenovo, ASUS, Toshiba, Sony, and Panasonic. Our partners' products continue to garner exceptional reviews from leading publications such as Fortune Magazine, who referred to the Lenovo X1 Carbon as having the "most responsive multi-touch trackpad we've ever tried on a PC";and a reviewer from The Verge, who noted that the HP Spectre XT had the "best TouchPad I've used on a Windows laptop bar-none."

Because an optimized user experience in Windows 8 is significantly enhanced by touch interface, Synaptics has seen a dramatic increase in external ClickPad and ForcePad design opportunities. A good example of this is the recently-announced Dell external wireless trackpad that is explicitly designed to support Windows 8 gestures, such as swiping in and from the left to toggle through application. In addition, Synaptics saw its Windows 8 large, touchscreen solutions receive official Windows hardware certification through key designs from OEMs such as Lenovo and Razer.

The touch-first Windows interface offers an intuitive touchscreen experience, and Synaptics is engaged in multiple designs with our ClearPad Series 7 to support the upcoming launch for notebooks and tablets. We continue to invest in this green field opportunity, and as the immersive user experience gains traction, we expect to maintain our leadership position in the notebook market with our advanced ForcePad, ThinTouch, and ClearPad solutions as well as our new touch-enable video and display applications. Our broad portfolio of innovative solutions addresses our core market and includes more exciting advances coming over the next few months.

Fiscal 2013 is off to a good start. While industry forecasts for the PC market continue to come down as analysts adopt a wait-and-see attitude towards the adoption of Windows 8 and ultrabooks, we are encouraged by our strong design pipeline and believe that we have the optimal products and technology platform in place if the market continues to evolve. On the mobile side, we continue to have the broadest portfolio and to execute well across both the low end and premium segments. We lead the market in innovation and technology based on our products, our tools, our display integration efforts, and advancements in the total system that position us to win going forward.

As a company, we are investing in the right areas and believe we are paving the way for sustainable, profitable growth. With that, I'll turn it over to Kathy for a review of our financial results.

Thanks, Rick. As Rick mentioned, revenue was $127 million for the September quarter. The revenue mix from PC and mobile products was approximately 49% and 51% respectively. PC revenue was down 9% from the prior year and 19% sequentially, primarily reflecting the widely reported softness in the PC industry combined with the timing of some sell-in ahead of the back-to-school cycle reflected in our June quarter PC revenue.

Synaptics continues to leads the market for notebook TouchPads and ClickPads, and design activity continues to be very strong. With the continued ultrabook design ramp this quarter, ClickPads were greater than 20% of our TouchPad unit shipment. Revenue from mobile products in the September quarter was better than anticipated, roughly flat year-over-year and up 7% from the June quarterand consisted predominantly of revenue from mobile phone applications.

We achieved strong mobile phone unit growth over both comparable periods, and tablets were a solid contributor reflective of our inclusion in the Samsung Galaxy Tab 2. Our non-GAAP gross margin of 47.9% improved 180 basis points year-over-year and 170 basis points from the June quarter as a result of the beneficial mobile product mix. Non-GAAP operating expenses were $43.5 million, up $3.7 million from the prior quarter.

The increase was primarily due to the additional headcount associated with our previously-announced acquisition, and to a lesser degree, our annual merit adjustment. In the September quarter, GAAP operating expenses were $52.2 million, including $8.2 million of share-based compensationas well as noncash expenses related to the recent acquisition including a change in contingent consideration of $287,000 and intangibles amortization of $240,000.

Our non-GAAP tax rate was 27.4% in the September quarter compared with 23.4% for fiscal 2012,primarily reflecting our geographic profit mix. Our GAAP tax rate was 29.2%. Our September quarter tax rate does not reflect any benefit of the research credit, which expired in the middle of fiscal 2012.

As previously mentioned, first quarter non-GAAP net income was $12.7 million or $0.37 per diluted share,near the high end of our guidance range. Turning to our balance sheet, we ended the quarter with $313 million of cash. Cash flow from operations was $29.6 million. Overall cash was up $8 million from June, reflecting the strong cash flow from operations partially offset by $5 million for the purchase of the video display operation of IDT and capital expenditures of $16.1 million.

Capital expenditures included $11.9 million for the purchase of our new headquarters building complex and some initial renovation costs to prepare for our move later this fiscal year. In addition, we entered into a contract to sell our existing headquarters building for $14.2 million and anticipate closing the transaction later this quarter or early next. To bridge the time between the closing date and the completion of the building renovation, we will enter into a short-term lease back for this facility. Depreciation was $2.5 million for the quarter.

Receivables at the end of September from $98 million, down $6 million from June reflecting 69 days of sales outstanding. Inventories at the end of the September were $31.2 million, down slightly from June; and inventory turns remained at $9 million. Now I will make a few comments regarding our quarterly outlook.

Looking ahead to the December quarter, we continue to monitor market dynamics and the impact of macro trends on end demand. Based on our backlog of approximately $74 million entering the quarter, customer forecasts, and the expected product mix, we anticipate revenue will be in the range of $134 million to $142 million, up 6% to 12% sequentially. Specifically, we expect both PC and mobile products revenue to be up sequentially based on strength from new product ramps and the holiday season uplift. Taking into account our overall revenue mix, we expect non-GAAP gross margins for the December quarter to be around 47%.

We expect non-GAAP operating expenses in the December quarter to be up from the September quarter primarily from a full quarter of engineering expense associated with the acquisition and some incremental chip design engineering to support our expanded product portfolio. GAAP expenses will also include both noncash intangible amortization and change in contingent consideration of approximately $260,000 and $300,000 per quarter respectively. We anticipate the FAS 123R charge in the December quarter to be in the range of $8.4 million to $8.6 million.

We anticipate that our non-GAAP tax rate for the December quarter and for the year will be in the range of 25% to 26%,reflecting our geographic profit mix;and no benefit from our potential reinstatement of the expired R&D credit. Non-GAAP net income per diluted share for the December quarter is anticipated to be in the range of $0.42 to $0.50 per share.

In closing, the first half of fiscal 2013 is unfolding largely as anticipated. We are excited about our strong design pipeline based on our broad portfolio of solutions and continued track record of execution. We continue to accelerate our leadership position by advancing the human interface in our core markets and expanding our addressable market opportunity through focused investments orienting Synaptics for long-term growth.

With that, we will turn the call over to the operator to start the Q&A. Operator?

Thank you. (Operator Instructions).

Our first question comes from the line of Kevin Cassidy with Stifel Nicolaus. Please go ahead.

Thanks for taking my question. Congratulations on a great quarter and good outlook. There's speculation in the market or rumors in the market about a supply shortage on panels. Can you address that or have you seen any problems like this?

Kevin, it's -- thank you, first. This is Rick Bergman. No, I have not heard any rumors. I was just actually in Asia, visited with a few of the panel manufacturers and didn't hear anythingwith that regards. The small panels or large panels?

I believe it's large panels.

I haven't heard that as a constraint from our PC customers now.

Okay. Great. And maybe on the keyboard product you had purchased also, can you say what the interest level is with that?

Just like we said back in August, as you can imagine, it's very high. With great interest, we've watched the launches of the Microsoft surface tablet this week, and as you can see, it looks like the keyboard is a real hit for their solution; and we have, what we believe, even better technology for the fixed or the hard keyboard with our ThinTouch technology.

Okay. But no actual design wins to announce yet?

As we noted, it's really in our fiscal 2014 before we'll see revenue from that product. There is a lot of work. As you can imagine, it's a very complex device mechanically and from a physical and qualification perspective. So there's a long design cycle because you are actually part of the physical part of the notebook of an OEM, as an example; so expect really more of a year from now time frame before we see revenue on that.

Okay. Great. Thanks and congratulations again.

Thanks.

Thank you. Our next question comes from the line of Rob Stone with Cowen and Company. Please go ahead.

Hey. Congrats on the good results given pretty crappy market conditions.

Thanks, Rob. Thanks for that.

I like that. Great description.

That said, I wonder if you could comment on mobile pricing trends, your mobile revenue roughly flat year-on-year. One of your competitors is talking about some increase in the rate of quarterly price erosion. Any color you could give there?

As far as pricing goes, I mean, it's always competitive; and I don't think we in general have seen any big trends. So, I mean, we've had a very, very broad product offering and so pricing and ASPs is pretty much a mix of all the different products we have shipping in the market at any point in time. But it's aggressive so, I mean, there's --

I wasn't going for an ASP per se but more the -- this competitor was talking about sort of 3% to 5% quarterly erosion in the 2013 time frame. Would you concur with that? Is that kind of a pricing climate?

Yes. I would say that range is not that unusual, actually, for mobile products.

Okay. And I note that the video stuff is included in mobile. Can you say how much that contributed in the quarter?

It's actually very small. So, I think, as we talked about it at analyst day, it's really more of a contributor in the second half of this fiscal year when we will start to see it pick up.

Okay. Thank you.

Thank you. Our next Daniel Amir with Lazard Capital Markets. Please go ahead.

Thanks a lot, and congratulations on a good quarter. A couple questions here. First on the mobile side, can you give us a bit of insight into your in-cell technology? Where does it stands in terms of design activity and interest in terms of the handset market given that, you know, there's a couple hand sets out right now? You know, there's -- Apple came out with their own in-cell. Where is the level of interest right now and how big a differentiator do you think that is in the mobile market for next year? And I have one follow-up. Thanks.

Sure. As we said, we really saw interest in in-cell pick up at the beginning of this year from, actually, going from concept to manufacturing. And we get to see a few innovators come out in calendar 2012 with phones, and then you see more broad-based adoption in 2013 and nothing to detract from that. The interest continues to be substantial inany display integration technologies.

As I talked earlier, we see interest in in-cell as well as on-cell technology. A little bit different. One is more oriented towards the premium part of the market, and on-cell is more towards the low end of the marketplace, but both offer a lot to the LCMs. So interest is quite high.

Okay. And then in terms of the PC market, you have a lot of positive commentary around Windows 8. I mean, what's your sense in, kind of, how should we see it playing out for Synaptics given that there's mixed reviews so far on Windows 8? Will you be able to maintain your share that you have currently have in the notebook market in Windows 8 world? Or is this much more a year from now as we start seeing Windows 8 taking off maybe on the enterprise side? Is that when you'll start benefiting from it?

Ultimately, what we need is growth to return back to the PC marketplace, and whether that ends up being a notebook being shipped with Windows 7 or Windows 8. Kind of across the board, we are seeing that the larger movement to larger ClickPads and larger area, which helps us on the ASP side in both cases. I'm not sure there's a huge dependency per se whether -- what the exact mix is on Windows 8 versus Windows 7. Obviously, Windows 8 brings the opportunity for the large touchscreen opportunity there as well.

Okay. Thanks a lot.

Thank you. Our next question comes from the line of John Vinh with Pacific Crest Securities. Please go ahead.

Hi. Congratulations on the strong results and guidance. First question from me is, can you give us a little bit more color on the outlook for the December quarter? Are you expecting both segments to be roughly up the same or expecting mobile to be up more than PCs?

Hey John. When I look at the -- if he just kind of look at the backlog, I would say that as far as the backlog goes, it's relatively similar from a mix standpoint. For the mix that we saw this quarter, I mean, mix could change a couple points one way or the other, but beyond that not much else changed.

Okay. And on the PC front, obviously that continues to be a pretty tough environment. What's driving the sequential uptick in PCs in the December quarter?

It's really just the broad range of the product and the number of skews that are launching. Also, our positioning in ultrabook is very strong, and the continued adoption of our ClickPad solutions. So, good trends basically overall.

Also, just to add a little bit. Of course, seasonality, and then I think everybody in the PC space saw a little bit of a sag in calendar Q3 in anticipation for the Windows 8 launch tomorrow.

Got it. Okay. And then my follow-up is on Samsung. You've talked about Samsung on the tablet front. Can you give us an update and help us better understand your position with Samsung on the smartphone front?

Of course, we can't pre-announce any customer products, so I'll just say what I've been saying in the past, which is that the tablet has been a great proving ground for Synaptics technology and getting us back in as a qualified and high-volume supplier to Samsung. And with any major OEM, you kind of have to get the first one and then you build from there. I can just say that we're carrying new design wins and building our position at Samsung, and we have a specific phone to announce. We'll let you know.

Great. Thank you.

Thank you. Our next question comes from the line of Jeff Schreiner with Feltl and Company. Please go ahead.

Thank you for taking my question. Kathy, I think you mentioned it, but I just want to make sure we're clear here. You're up about 18% sequentially in the PC revenue side in June and down about 19% sequentially in September. Is that more of a function in terms of the shipments being pushed and pulled between the quarters?

Some of that is. So we typically have a stronger June because we do have some sell-in ahead of sell-out.

Okay. But as my follow-up, I guess, the 19% sequentially is much more of a decline than what the industry recently has reported, at least according to IDC. And you look at your reported revenues versus what we're seeing in the overall competitive landscape. Synaptics has had historically a leading share position in TouchPad. Has that started to change in Windows 8?

Jeff, I would caution you, and your question kind of leads to this about looking at specific quarters and drawing big trends from that. Conversely, then, for the current quarter we're in, we're probably a little bit higher than the rest of the PC industry as well in terms of our PC guidance. So given the nature of the product that we ship, it tends to get built in early in the manufacturing cycle. And so, certainly, as channels fill in and get depleted, there's impact that can swing -- move things around quarter boundaries. We are confident with our share on TouchPad going forward where we have historically been.

Thank you very much.

Thank you. Our next question comes from the line of Charlie Anderson with Dougherty & Company. Please go ahead.

Good afternoon. Thanks for taking my question. I think last call, you guys had indicated you were thinking you could be maybe up modestly in revenue for the fiscal year. I just wonder how the PC dynamics have changed. If you still believe that? And then I have a follow-up.

Sure. Great question, Charlie. Actually, in our press release based on our first quarter and now the guidance we're giving on second quarter, it's kind of following the script that we had envisioned for the fiscal year, where we do continue to expect to see the modest growth that we had talked about during the last call despite some of the challenges in the PC growth.

So does that mean that you got stronger on mobile relative to how you started the year?

Well, I think that, yeah. As we said in the first quarter, mobile was definitely a strength. So mobile was stronger. We are saying that, from a mix standpoint as I said a little bit earlier, the mix is probably going to be similar for the December quarter. So, again, looking at this quarter, next quarter, mobile is a little bit stronger than we had anticipated.

Got it. And then I was wondering about use of cash. You guys did a few acquisitions last quarter. The buy-back seems to have slowed. I didn't hear that you bought back any shares. And a lot of your cash, the vast majority is overseas. I just wonder how you're thinking about use of cash right now given the dynamics of it being overseas as opposed to here. Thanks.

So, use of cash, we did have a few things going on with the acquisitions; and also we did acquire a new building complex for our corporate headquarters. So we used some cash and some other vehicles, we bought back a small amount of stock last quarter, but in general, our philosophy of stock buy-back hasn't changed. We have about $100,000 left on a current authorization, and we do expect to continue to look at stock buy-backs on an on-going basis, on an opportunistic basis.

Thanks for taking my question.

Thank you. Our next question comes from the line of Li-Wen Zhang with Blaylock Robert Van, LLC. Please go ahead.

Thank you. Thank you for taking my question. I would like to know the gross margin impact from, actually -- sorry about that. I would like to know the gross margins for the video display products. Is it above your corporate average or will it be down below your corporate average?

It's generally within the product mix of the traditional PC and mobile mix.

Yes. I see. And then, do you have any design waiting for the ultrabook with touchscreen features?

We do have -- our pipeline is growing as we talked about at analyst day. The touchscreen opportunity that we're seeing is more targeted towards the second half of this fiscal year.

One thing really interesting, one of the comments earlier was of mixed Windows 8 reviews; but to me at least, this week when the first reviews came out, they were kind of two universal things. One was, Windows 8 is clearly a touch-first interface, which whether it's TouchPad or the touchscreen clearly favors Synaptics. And the other thing is, if you have a tablet, boy, it's really nice you have a real thin keyboard attached, built in as part of the unit; and again, that bodes well for us in the future for our ThinTouch keyboard solution.

Thanksand congratulations.

Thank you.

Thank you. Our next question comes from the line of Anthony Stoss with Craig-Hallum Capital Group. Please go ahead.

Hey, guys. Rick, you went on in your prepared remarks about China and listed a lengthy -- at least a couple of your customers shipping to China. On the mobile side, could you give us a sense of how much of your handset revenue you believe was shipped into China?

Did that lead to the strength that you saw in the quarter? Is that what you are expecting in the December quarter? I guess I'm just trying to get at how much of your business on the touch side was China based. Thanks.

Sure. We don't break out our geographic mix for products. But we are well positioned in China and China is growing fast, and as my remarks said, it's the number one smartphone market. When I say we're well-positioned, that's with the Chinese domestic vendors. I kind of rattled off the list of the major players there, and we have done quite well in China. In terms of our first quarter strength, it was actually broad-based around the world. Where we saw some strength come in from a number of customers, but that didn't include the Chinese ones, but certainly it was good to see some of the smartphone manufacturers that have struggled a little bit over the past year actually to stabilize and start to grow again.

Okay. And one quick follow-up. Normally your March quarter is down. I know you're not guiding, but anything that would change that normal seasonal view?

Well, we've talked about what we've been seeing from the product portfolio is really a growing product portfolio base. So as we talked about at analyst day, it's a matter of new programs that are starting to ramp today and then continuing to grow throughout the year with some of the video products, additional large touchscreen opportunities, and just in general, we see growth around the whole product portfolio. So again, we're not guiding quarter-on-quarter, but I think we feel from a product positioning that we have got a very strong product portfolio and several growth engines.

Okay. Thanks, Kathy.

Thank you. (Operator Instructions). Our next question comes from the line of Shaw Wu with Sterne Agee. Please go ahead.

Hi. This is Nicole on behalf of Shaw. Congrats on the good quarter. Just wondering if you have any updates on the ThinTouch keyboard opportunity related to your recent acquisition?

Yes. Nicole, in terms of the earlier question about interest and yes, interest is very strong. As I mentioned, it's a type of product that actually takes a long time from initial samples to productization given the complexity and how it actuality fits into, for example, a notebook computer; but we're quite happy with the acquisition that we made. We continue to pour resources into bringing that product to market, but expect to see it more at the beginning of our fiscal 2014 as opposed to being a fiscal 2013 play, and that's kind of consistent with the schedule that we gave when we made the acquisition.

Thank you.

Thank you and at this time I would like to turn the call back to management for any closing remarks.

Well, thank you for joining us again today, and we look forward to the next quarter's call.

Thank you. Ladies and gentlemen, that concludes the Synaptics first quarter 2013 earnings conference call. We thank you for your participation. You may now disconnect.