Welcome to Broadcom Limited’s First Quarter Fiscal Year 2018 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Ashish Saran, Director of Investor Relations. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Joining me today are Hock Tan, President and CEO; and Tom Krause, Chief Financial Officer of Broadcom Limited. After market closed today, Broadcom distributed a press release and financial tables describing our financial performance for the first quarter of fiscal year 2018. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom’s website at www.broadcom.com. This conference call is being webcast live and a recording will be available via telephone playback for one-week. It will also be archived in the Investors section of our website at broadcom.com. During the prepared comments section of this call, Hock and Tom will be providing details of our first quarter fiscal year 2018 results, guidance for our second quarter of fiscal year 2018, and some commentary regarding the business environment. We will take questions after the end of our prepared comments. In addition to U.S. GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. A reconciliation between GAAP and non-GAAP measures is included in the tables attached to today’s press release. Comments made during today’s call will primarily refer to our non-GAAP financial results. Please refer to our press release today and our recent filings with the SEC for information on the specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. At this time, I would like to turn the call over to Hock Tan. Hock?

Thank you, Ashish. Good afternoon, everyone. Well, we really had a very good start to our fiscal year 2018 with first quarter revenue and earnings towards the upper end of our guidance. First quarter revenue of $5.33 billion grew 28% year-on-year and 10% sequentially. On the income front, earnings per share were $5.12, which grew 41% year-on-year and 12% sequentially. But, please, just don’t get too excited by this as Q1 was actually a 14-week quarter and did include partial quarter contribution from Brocade, which we closed during the quarter. But, having said this, we do expect business conditions to remain favorable in our second quarter as well. Although the revenue mix by segment will be quite dramatically different. First quarter revenue, after adjusting for Brocade contribution was all driven by wireless growth. While we expect the second quarter will be driven by double-digit growth of our other three segments, offsetting a very sharp seasonal decline in wireless. As a result, thanks to diversification, second quarter top-line continued to be very stable. Let’s go deeper into performance by segment. Starting with wired infrastructure. In the first quarter, wired revenue was $1.88 billion, declining 10% year-on-year, 13% sequentially, and the wired segment represented 35% of our total revenue. As expected first quarter wired results reflected the bottom of the seasonal decline in demand for both our set-top box and broadband carrier access products. The well known weakness in optical access and metro end markets impacted us as well in this quarter. But in contrast, demand was strong from datacenters, and cloud shipments remained stable. Turning to the second quarter outlook, fiscal 2018, however, we have a different picture, as demand in this wired segment return with a vengeance. We project strong double-digit sequential revenue growth. And this growth is driven by…

Thank you, Hock, and good afternoon, everyone. My comments today will focus primarily on our non-GAAP results from continuing operations unless otherwise specifically noted. A reconciliation of our GAAP and non-GAAP data is included in the earnings release issued today and is also available on our website at www.broadcom.com. Let me quickly summarize the results for the first quarter of fiscal ‘18 focusing primarily on balance sheet and cash flow items. We delivered strong financial results for the first quarter, starting with revenue of $5.33 billion which was at the upper end of guidance. Our first quarter gross margin from continuing operations was 64.8%, 80 basis points above the midpoint of guidance as we benefited from a more favorable product mix in the quarter, driven by higher than expected revenue from the Brocade fiber channel SAN switches. Operating income from continuing operations for the quarter was $2.6 billion and represented 48.2% of net revenue. EBITDA from continuing operations for the quarter was approximately $2.7 billion and represented 50.6% of net revenue. Our day sales outstanding are running on target at 45 days, a one day decrease from the prior quarter. Our inventory at the end of the first quarter was $1.3 billion, a decrease of a $156 million from the prior quarter as we depleted wireless inventory we had built up to support the large ramp in first quarter shipments. We are pleased with this level of inventory going into the second quarter. We generated $1.7 billion in operational cash flow, which reflected the impact in the first quarter of approximately $460 million in payments of annual employee bonuses for fiscal year ‘17, $240 million of cash expended primarily on Brocade restructuring acquisition related activities, and an additional $129 million payment to fund the legacy pension plan. Capital expenditure in…

Thank you. [Operator Instructions] Our first question comes from Craig Hettenbach, Morgan Stanley. Your line is now open.

Yes, thank you. Hock, can you talk about the strong rebound expected in the wired segment? I know, you mentioned datacenter continues to be strong. Also, anything around kind of traditional enterprise, we are seeing some rebound in enterprise IT spending, and how much of that helps the segment a bit?

We’ve seen strength and we saw it obviously in bookings in Q1 for shipments in Q2. And we saw very large -- very -- a lot of strength in both enterprise as well as cloud datacenters in both respects. It’s just strong. And it’s strong across full range of our networking products that I commented on. We also saw strong bookings which will translate into revenues obviously in Q2, very strong revenue recovery in our broadband carrier access, which basically reflects DSL, digital subscriber line, PON, and attach enterprise and carrier Wi-Fi. And that’s typically seasonality and it came back very, very strongly. What we don’t see a sharp recovery is obviously fiber optics in networking, though fiber optics out of datacenters continued to be there -- not continued but has shown renewed strength. So, basically datacenter cloud that are showing -- enterprise showing a lot of strength to offset what I call, metro networks and in our case, still continued flatness in set-top box.

Got it, thanks for all the color there. And then, just a quick follow-up for Tom just on Brocade, the integration, just now that you have the business, kind of how you see it performing? And then, anything we should aware of just from a margin perspective and as you take some cost out?

Yes. We’ve been really pleased with Brocade. Obviously that’s something that’s been in the works for some time. And the business we were targeting there was the SAN switching business. It’s continued to sustain as we had envisioned throughout not only close [ph] period but obviously as a very good start as part of Broadcom, going forward. Clearly, it’s a unique asset from a financial standpoint as well, Craig, it’s margin accretive to the Company. We see that continue to contribute positively to earnings and free cash flow. And frankly sort echo some of the comments I said in the prepared remarks, really reflects the kind of transactions we’re looking to target going forward.

Thank you. And our next question comes from Ross Seymore with Deutsche Bank. Your line is now open.

Hock, I just want to talk about the wireless business. I think, everybody is pretty up-to-date on why the volatility both to the upside and then to the downside in the April quarter, given what’s your largest customer is doing. I want to think a little bit longer term. As we think about the rest of this year and next year, can you talk about what you see from a content perspective across the two components of your wireless business as well as from a market share perspective?

Well, a good point. I guess, let’s talk about content. And as I’ve articulated before, earlier, in previous call and that view hasn’t changed. On the sustained basis, I’ll put it over the next five years, in a multiple sockets we have been, which as you know represents both RF frontend, Wi-Financial/Bluetooth combo chips in wireless connectivity, and touch, basically touch, phone touch and to some extent wireless charging as well. Combined all together, we have those many sockets on a sustained basis over the next I’ll put three years, possibly five years. We see that content sustaining growth in the teens, double digits. This has been the way it was for the last five years and the trend towards increased content whether it’s 4G, 4.5G or 5G, we do not see that changing.

How about on share side of things.

Okay. On the share side, I mean, I’d say this way. We have positioned the business we are in and it’s not just wireless, by the way, no differently in wired, enterprise storage and industrial, the core businesses, we call them franchises that we are in, all 20 of them product lines. We picked them in product line franchises to be businesses that we are very clearly out there in the lead. Technology and market share and where we continue to invest a lot of money for further innovation for progressing technology. The bottom-line to what I’m trying to get at is, in those businesses, what we worry about or what we have left to worry about are really ankle-biters. And to be honest ankle-biters’ biggest problem, they cannot bite above the ankle.

Okay. And I guess as my follow-up question, one for you, Tom. You made it pretty clear about it the use of cash flow on the dividend side, the 50-50 split. But your commentary about what you may do with the other 50%, give a little more detail than we’ve heard in the past, and you’ve included the phrase about paying down debt and share repurchases. Was that meant to be something that those are increased probability or are you just stating the obvious as far as potential uses of the other 50%?

I think, Ross, what it’s trying to reinforce is that Hock and I are focused on doing what’s in the best interest of shareholders. And we’ve had the opportunity to reflect after this week’s event on obviously the go forward capital allocation strategy. And we feel, looking at the landscape that the strategy we’ve had in place here for quite some time remains the value to drive these returns. And I think we want to maintain that we continue to be very focused on shareholder returns. And if that strategy no longer presents this type of returns, then we will focus elsewhere.

Thank you. And our next question comes from Stacy Rasgon from Bernstein Research. Your line is now open.

Hi, guys. Thanks for taking my questions. First, given the gross margin upside in Q2 on the heavy mix shift of the businesses, how should we be thinking about the drivers of gross margin into the second half of the year? And given that the mix shift that we’re seeing into Q2, maybe different as we move through the rest of the year, how…

I will take it. Look, I think, there’s a couple of things going on, both there’s short-term and there’s longer. Let me comment on both. Short-term, when you look at the seasonality in the business over the fiscal year, obviously, the second half of the year is typically more wireless-weighted. Wireless, as everyone knows, tends to carry slightly lower than corporate gross margin. So, I think, I wouldn’t get too excited in terms of where gross margins go from here through the end of this fiscal year. However, that being said, as you look longer term, consistent with the business model, how it’s been driving last 11 years, we continue to see content gains. We continue to have very good product leadership across the 20 franchise businesses. We’ve added Brocade which is margin accretive. So, we don’t see any reason, as I said in the prepared remarks, that as we sustain mid single digit revenue growth, you’re not going to see leverage, not only from an operating and free cash flow perspective but a lot of that’s going to get driven by gross margin expansion. We don’t see any reason that that can’t continue.

And we have articulated in prior calls as far as a couple of years ago that this business model we have put in place is one that on an annualized basis, take it, as something longer term, we tend to drive gross margin expansion around 100 basis points each year, maybe plus-minus 25 basis points. But year by year, if you look back several years, we’ve grown gross margin or we have expanded gross margin around 100 basis points. And we believe that trend still continues.

So, my follow-up question, I just wanted to ask about sustainability of the storage. So, we’re seeing some upside, you admitted Brocade was little stronger than you had expected. And I think you’ve talked about this business like longer term, just given the drivers of the different segments maybe flattish. But in reality, it’s quite volatile. We have years where it’s very strong and years where it’s very weak. I know last year when we were seeing the strength in storage, you kind of warned us not to get too excited about the sustainability of that. How should we be thinking about the sustainability of that growth? And frankly, even in your other non-wireless segments, as we’re seeing that strong double digit growth into Q2, how should we think about sustainability of that versus your long-term organic growth target?

Yes. So, I think you’ve got to unpack it a little bit right there. So, in the enterprise storage, we’ve got obviously the LSI businesses, the SaaS connectivity business which is an absolute franchise. It is going to move from a cyclical standpoint with the Intel server platform releases. Obviously, we’re in with Purley we had very good leadership position with the new products in that area, and so that business is doing well and we expect that can do well this fiscal year. Contrast that with HDD; obviously HDD we think is in slightly structural decline. We also have very good leadership position with those product lines. And so, there has been more volatility than probably Hock and I would have anticipated in that business over the last several years. And I wouldn’t think that would change frankly going forward, as you look out. And then beyond that Brocade, frankly, Blockade is probably the one that’s the most stable in our view. Of course, we’ve owned it shortest period of time, but as you look forward and that’s a business that we think can sustain at the levels that we saw on a full run-rate basis in the first quarter. So, we think when you put all that together, I’d echo kind of where I think you’re going, which is, this is kind of a low single digit type growth rate segment as occurring report?

And to add to that. The last few years -- what Tom is saying is the only volatile part of it is the hard disk drive business. And that’s relative -- for years, it has [indiscernible] whole enterprise storage business we see there, [ph] components are very, very stable, grow low-single digit, nothing exciting but very, very predictable and stable. What happened probably a year or two ago, was Flash coming in the picture and stoppages and creating impact. To the extent, it creates impact which is on the consumer prime side of hard disk drive and that creates some level of impact. Beyond, as client goes down -- as the portion of the hard disk drive market and the datacenter part of the business expands what we called near line, you will see that volatility start to go away to. And what you will end up with then, our enterprise storage business has an extremely stable business, single-digit growth if at all but extremely profitable.

Thank you. And our next question comes from John Pitzer with Credit Suisse. Your line is now open.

Yes. Good afternoon, guys. Congratulations on the strong results. Hock, my first question goes back to the wired segment in the January quarter. And this might be kind of a move point just given how strong your April guidance has been. But, I’m still trying to figure out that business being down 10% year-on-year, you characterize it as sort of a seasonal low. But I’d assume year-over-year compare would touch that. And you did have the extra week this quarter that you didn’t have last quarter. So, I guess I’m just trying to figure out what -- you mentioned a bunch of factors in your prepared comments, and trying to figure out what was the most significant factor. And as you think about the long-term growth in this business, to the extent that you have a 5% growth rate for the overall business, how does this business fit in? Because arguably with your exposure to datacenter and cloud, this is probably the business that investors are willing to pay the highest multiple on. But, it’s one that’s over the last several quarters has actually been growing much slower than the other businesses. And I know, there’s a lot of different businesses inside of wired. But how would you think about the long-term growth rate and the moving parts on that?

Right. That’s the best part of the question. But to try and answer your technical part, which is what the hell happened in Q1 and all that. First, if you compare year-on-year. If you compare year-on-year, which was Q1 a year ago, don’t forget what we did a year ago, there were some exceptional items in a year ago. What we did as part of the integration of classic Broadcom to Avago is where to dispose of certain assets. And as part of that, we sold manufacturing rights, which we articulated at that time when we announced the earnings to certain companies out there as part of the disposal process on overlapping products in the integration. And that checked down the revenue artificial one-time a year ago. So, we had that little compare to hit. And the amount there wasn’t small. It was over $60 million, $70 million, small by total standards of $2 billion but nonetheless it’s just a percentage and you worry about the 10%. So that’s one thing I wanted to add on. But on Q1, to address your question on it, our wired infrastructure -- our wired business is really two parts when you look at it. One is data center, very much data center enterprise business, which is networking and that’s about just almost -- it’s roughly half. And you have the other half, which is small carrier related, operator -- service provider related, which is really the set-top business that carrier access business and a part of our optics business, optical transceiver business, just as a part of optical transceiver and datacenters. And it’s very interesting that the enterprise and datacenter business which was holding up in January quarter, but the other side was all down, all down, including optical that relates to fiber-to-the-home to networks and operators, especially in China and as well as carrier access, seasonally down, set-top box seasonally down quarter. So, we have one side being dramatically down, one side holding up. Then comes April, and we see the part that’s down a lot, starts to recover quite strongly, especially in carrier access, operator, [ph] the fiber optics in China on networks and set-box have not, but that part of it popped. [Ph] What we really start to see is also the other -- the half of the business in datacenter enterprise took on huge strength. A big part of it is some of the -- we start to ramp on some certain new products. I don’t want to get into specific, you probably know that they are networking and they are in AI especially as well as various other programs all related to cloud and enterprise been very strong. And that’s what drove this April strength. And that’s the kind of the whole story.

That’s helpful, Hock. And then, Tom maybe as my follow-up, I think, I understand the OpEx guidance going into the April quarter relative to period cost that come in on the payroll and Brocade. But I’m just kind of curious, given that you’re going from a 14-week to a 13-week, how is that impacting sequential OpEx? I would have thought just having one less extra week would have helped you on the OpEx front. And how do we think about OpEx trending from April on to the second half of the year?

Yes. It’s a good question. Look, we -- there is a lot of things going on. You’ve got the payroll uptick because of RSUs which is material. You’ve got Brocade transition costs, which we have the benefit of having a longer time between sign and close. So, we’re very much actually past day two [ph] now and are on way to being fully integrated. So that should come off and bring numbers down. So, as we look at the second half of the year, look, I would be thinking, you’re not going to see OpEx go up anymore, probably there is trend down slightly. But we’re running at or about these levels when you exclude the Brocade transition expenses.

Thank you. And our next question comes from Vivek Arya with Bank of America Merrill Lynch. Your line is now open.

Thanks for taking my question and congratulations on the continued strong execution. For the first one, Hock, I just wanted to go back to the prior line of question around wired segment, but maybe from a longer term perspective, if you just set aside the seasonal aspects. What is the right way to think about a two to three-year growth rate for the wired business? You obviously have the strength in your cloud switching and AI businesses. But, is set-top-box going to be a headwind longer term, just conceptually, do you think your wired business sort of grows in line above or below your overall company 5% growth rate?

That is the one that will grow around 5%. And it’s because -- I didn’t finish the previous question totally, I do apologize, but to answer the question on that, when you look at our wired business, it has two parts. One is enterprise datacenters, which includes the switching -- basically a lot of it is a switching, the controllers, routing, even part of routing, and even fiber optic that go to datacenters. That area we have been seeing is growing very, very fast. Now, occasional hiatus, flattening out, not going down but flattening out is happening generally as I indicated, even though demand continued to be good. But it keeps grow, and grows I would say close to probably on a year-on-year basis probably close to 10%. Then, we have the other side of business, which is more related to network service providers. And those are more volatile, more seasonal. But if you take it on an annualized basis, I would say, it’s practically flat. And that’s why I say on an average let’s say mid single digits, when you average out on a annual basis over a five-year period that it’d be running at that rate. It’s very strong enterprise and cloud products or -- enterprise and cloud and there continues be a lot of innovation in that area, which are right in the cycle, which we drive inside a lot of it, which includes new applications, new ways to optimize datacenters and cloud, less so in enterprise but definitely in cloud. And associated with it fiber optics that ties to cloud computing, and against that a more traditional but nonetheless very, very stable and sticky service provider wired business in the video delivery, set-top box, OTT as well and carrier access, which gateways, both on -- gateways especially for carriers. So, it’s a mix of the two and the dynamics of the two but it’s very clear that big part of the half is growing very fast relatively speaking and the other half doesn’t grow.

Got it. And for my follow-up, I appreciate that you want to talk about the earnings but acquisitions have been a key part of your strategy longer term. And if I look at most of your targets, they have been sort of digital and logic companies. Are you open to also looking outside at perhaps analog or microcontroller assets? So, without being specific about the targets, are there any frozen comps you can think of looking at analog versus digital assets in the future?

Well, obviously, we don’t want to get into the specifics. And I think what I would say is we’re open to anything that helps. One, it is consistent with our business model; two, it helps us drive the kind of returns well in excess of alternatives. So, we have obviously shown openness. We obviously did Brocade, which is more of an appliance systems business but very consistent with our strategy and will remain that way going forward.

Thank you. And our next question comes from Amit Daryanani with RBC Capital Markets. Your line is now open.

I guess two questions for me as well. On the wireless side, Hock, I think you talked about mid teens content growth and not too worried about competition there. I am wondering, do you think pricing dynamics could be different in the industry as you go forward because two of your largest players, still the biggest players in the industry are really struggling to I would say drive unit growth at this point. So, do you think pricing could be different as you go forward in this industry versus what you are seeing?

Well, you look at the phone dynamics, actually at the high end, smart flagship status, and if you take the key assumption which we do subscribe to, that flagship status remains and continues. To remain in a flagship status, those phone makers, particular phone makers have to innovate, have to offer features that continue to push their envelope. They are probably more mindful as they will be for cost, overall cost. But a lot of our components are not gimmicks, realize. They are like basic fundamentals to a phone working in various bandwidths. To give you an example of 5G. 5G adds on a lot more spectral bandwidth, which means you did more content. Just simple basic fundamental says that going to 5G means, you find new spectrum bandwidth to operate in an every spectrum you find, you need more components in that direction. You need more bandwidth in wireless connectivity; you push in that direction too. So yes there will be. Now not necessarily every place points this. Touch screen, people might be cheaper and not push it much into it, we understand that. So that’s a mix of both, which is why I say on a long-term five-year trend, the fundamental feature requirements will be let’s drive growth because you are running with more of higher -- more requirements in terms of performance, even it’s as basic as operating in more spectral bandwidth as you go from 4G to 5G and on and on. And that alone by itself will drive if you continue [ph] that low at least low double digit in content. That’s all getting around it.

Got it. That’s very helpful. And I guess, Tom, if I could follow up with you, you guys have been 43%, 44% net income margins today. I think, your free cash flow margins are about 1,600 basis points or so below that number. Structurally, at what point do you see these two things converging? And ideally, I would hope free cash flow margins improve, not the other your answer. When do you see that happens, when do you see these one off things abating away for you guys?

Well, I think it’s happening. I mean that was the point of spelling it out for Q2. I mean, in Q1, you do have something that happens every year, which is we pay out our annual performance bonuses and hopefully we’ll be able to continue to payout the bonuses we’ve been paying out over the past many years, going forward. So, I’d expect that. But beyond that, the onetime items around the Brocade acquisition and the restructuring activities there as well as paying down the -- actually one last legacy pensions we have where there is a liability, those are onetime items. So, if you took those away, we’re already running well above 40%, which is actually very much in line with non-GAAP net income. So, we feel pretty good we’re already seeing that convergence especially as you look into Q2.

Thank you. And our next question comes from Harlan Sur with JP Morgan. Your line is now open.

Yes. Thank you for taking my question and great to see the diversification in the business playing out. You guys -- Hock, you provided a longer term view on wired. Kind of more near term, looks like the double digit quarter-on-quarter growth in April is going to take you guys back to year-over-year growth. Given the trend that you’re seeing, strong datacenter and cloud, you’re ramping several new big ASIC programs, hopefully, kind of normal seasonal trends in broadband through the end of the year; second half you’ll be ramping Tomahawk 3, Jericho 2 but maybe still some headwinds on service provider. Net-net, do you expect full year fiscal ‘18 that your wired business is going to grow?

Yes, for sure. Our fiscal ‘18 compared to fiscal ‘17, we see our wireless business growing, and we articulated that out mid-single digits; there is quarterly ups, quarterly downs that all taken think on an annual basis. It’s just the trend from enterprise but more than that datacenters, switching from the cloud and pushing very hard for a lot more silicon products in those datacenters. Bandwidth, they need more bandwidth, they need setup pipes, [ph] they need offloading, which means chips, controller chips that are getting very smart. And I think that do things beyond what a standard CUP would do. Again, all these opportunities take -- that drive this silicon growth in this area. Bandwidth alone is driving us to keep coming up with newer and newer generation, faster and faster by the way.

Great. Thanks for the insights there. And then, the strength in the ASIC business has been highlighted over the past few calls. Switching, routing, AI, deep learning, these are big complex digital chips. But, you also have a pretty strong ASIC franchise in mixed signal analog ASICs, things like human interface, the touch, 3D sensing, wireless power, power management. I hear that you guys’ forward design win pipeline in this segment continues to be quite strong. Can you just talk about the differentiators that the team brings to the table here in mix signal, analog ASICs that is keeping the pipeline pretty strong?

The goal is -- yes, our mix signal thing or you call it the analog thing and the digital is, we have one of the strongest I call it analog team in terms of DSP and converting analog with real world signals to digital in order for us to do organic stuff, faithfully ADC, analog to digital converters, which is one of our key strengths. So, we don’t publicize it very much because that’s what we do. We have people see us as a very strong digital company but you can’t just do digital alone. What we have is actually one of the strongest analog to digital conversion capability in the world. And that has enabled us to do a lot of things very well in many ways from the public eye. We can do a digital frontend ADC for even things like base stations as an example. And we do it for human interface as part of our capability and we do it for coherent receivers in DSP -- on a DSP basis. We have a strong capability of people who, best way to describe it, virtually walk on water from the view point of many of our customers. And that has enabled us to keep getting the strong backlog of programs that we are actively engaged in, in the various core business franchises we’re in. This doesn’t deviate us from our core franchises actually, I’d just say that. It just enables us to drive those core franchises deeper and deeper into performance whether it be next generation technology, whether it’s driving 100 gigabit per second studies or driving ADCs that push the boundaries of where -- spend on product, technology, driving products and touch screen controllers and various other things. So, we see that as very useful to capability towards continuing to sustain our leadership in those various core franchises we are in.

Thank you. And our last question comes from Edward Snyder with Charter Equity Research. Your line is now open.

Hock, the comment you just made here was actually in line with what I was going to ask you about your core franchises. You’ve got these franchises; you’ve been articulate about where you are going to go, where you don’t go. But there seems to be this other area, the custom ASIC area, you did routers for Cisco few years ago and then you’ve got into AI. And then one of your largest customers, when you got Broadcom, you obviously moved into connectivity. But you also jumped into areas that would be considered unnormal for Broadcom a while ago like wireless charging which market itself is really way below where your margin profile is. But you’ve done really good job of that. So I know it’s not a franchise but isn’t it the case that your custom ASIC is becoming kind of a franchise onto itself with the select groups of customers where you can go in and do things they can’t do and offer service. If that’s the case, what are the boundaries terms of what you can and can’t do in that kind of franchise? Thanks.

That’s very, very insightful and perceptive question. You’re right. We have something to see there and we’re very careful. But we have been asked by -- I mean some of it, of course we take [ph] it out ourselves. But in some cases, certain customers who meet technology that pushes envelope like speeds of -- the accuracy and speeds of ADCs for instance. We’ve been asked by certain customers into areas beyond what we’ve touched on. And I also mentioned that on the ADC, on the front end of the base stations as an example where we’ve been told by customers to design a CMOS [ph] silicon, what used to take non-CMOS processes to do and be able to achieve the same performance with much lower power and potential integration possibility. All that comes in. And you’re right, we don’t know where the limits are but we’re very careful that we do not expand resources in the wrong manner back to ROI. Every dollar or every resource we put into a program, we are very conservative, very reserved [ph] you may say about ensuring we get a very good ROI. And that comes in making sure customers put skin in the game together with us when they ask us to do programs where we are expected to as I could say walk on water. We want to make sure that we get a high probability of the good ROI in doing that. But it goes to enhance our overall business model of franchises in the various end markets we are very, very good at.

So, it is safe to say in that kind of a context, because the feedback we’ve gotten was that I believe it does sound like you guys do exceptional job in terms of delivering on time and performance that could get. But at least it will puzzle then, because I would have never expected you to get in the some areas that you’ve moved into like wireless charging for example, much more analog, much more low margin. Is it the case that once you start engaging with these customers, like the internal custom ASIC group that they’ll start throwing problems to say can you do this, and so it opens up a mind or much wider swap of technologies that you could go into, if the agreement is cash correctly, so that we maybe see you do stuff that maybe a bit more uncharacteristic to be having custom ASIC group?

Again very insightful and we see that. And I’d just say we’re very disciplined, extremely disciplined just by the way we do our acquisitions, recent example et cetera, just kidding. But typically, we are very, very disciplined. And here in the use of resources in developing a program that is outside what we consider to be franchise areas, call areas, we will be very, very careful; very, very disciplined. We don’t take everything thrown in our direction.

Thank you. That concludes Broadcom’s conference call for today. You may now disconnect.