Good afternoon, and welcome to M/A-COM Technology Solutions' Fiscal Fourth Quarter and Fiscal 2016 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday, November 15, 2016. I would now turn the call over to Leanne Sievers of Shelton Group, the investor relations agency for MACOM. Leanne, please go ahead.

Good afternoon, and welcome to M/A-COM Technology Solutions' Fiscal Fourth Quarter and 2016 Earnings Conference Call. I'm Leanne Sievers, Executive Vice President of Shelton Group, MACOM's investor relations firm. With us today are MACOM's President and Chief Executive Officer, John Croteau; and Senior Vice President and Chief Financial Officer, Bob McMullan. If you've not yet received a copy of the earnings press release, you can obtain a copy on MACOM's website at www.macom.com under the Investor Relations section. Before I turn the call over to Mr. Croteau, I'd like to remind our listeners that management's prepared remarks and answers to your questions contain forward-looking statements, which are subject to risks and uncertainties. Because actual results may differ materially from those discussed today, MACOM claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and refers you to a more detailed discussion of risks and uncertainties that could result in those differences in MACOM's filings with the Securities and Exchange Commission, including its current report on Form 8-K filed today, annual report on Form 10-K to be filed on November 24, 2015 (sic) [ November 24, 2016 ], and quarterly report on Form 10-Q filed on July 27, 2016. Any forward-looking statements represent management's views as of today, November 15, 2016, and MACOM assumes no obligation to update these statements in the future. The company's press release and management's statements during this conference call will include discussions of certain adjusted non-GAAP measures and financial information, including all income statement amounts and percentages referred to on today's call unless otherwise noted. These financial measures and a reconciliation of GAAP to adjusted non-GAAP results are provided in the company's press release and related current report on Form 8-K, which was filed with the SEC today and can be found at the Investor Relations section of MACOM's website. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for at least 30 days in the Investor Relations section of MACOM's website. And now I'll turn the call over to MACOM's President and CEO, John Croteau. John, please go ahead.

Thank you, Leanne. Welcome, everyone, and thanks for joining us today. I'll begin today's call with an overview of our fourth quarter and fiscal year results for 2016, and then turn the call over to Bob McMullan, our CFO, who will review our financial performance in further detail. I'll then conclude today's prepared comments by providing a summary of our execution during the quarter and year followed by guidance for the fiscal first quarter of 2017. Straight to the results. I'm pleased to report that for our fiscal fourth quarter of 2016, revenue exceeded the top end of our guidance at $152.7 million with adjusted gross margin coming in above the midpoint at 58.5%, with adjusted earnings coming in at $0.54 per diluted share. Looking at our end markets. Networks was up 5% sequentially on the back of strong growth in Metro/Long-haul that more than made up for expected weakness in Access and Backhaul. Aerospace and Defense grew 18%, and Multi-market was up 10% sequentially. In total, revenue grew 7% sequentially and 36% over our fiscal fourth quarter of last year 2015. This caps our third year of outperformance in which we delivered 32% compound annual revenue growth, which more than doubled revenue over that 3-year period. Adjusted gross margin improved 970 basis points over those same years, and more importantly, we expanded adjusted earnings per share by 47% compounded annually over that time period. This is testament to our balanced and diversified portfolio of investments across 3 secular growth drivers and within those secular growth drivers, which consistently delivered results in all market conditions and allowed us to outgrow our industry by integer multiples. Now let met turn it over to Bob to review our fiscal fourth quarter financials in further detail.

Thank you, John, and good afternoon, everyone. MACOM has again delivered a premier fiscal year 2016 financial results, growing revenues 29.5% to $544.4 million (sic) [ $544.3 million ] , expanding adjusted gross margin 62 basis points to 58.1%; leveraging operating expenses to deliver adjusted EPS growth of 49.3% or $1.91; generating GAAP cash flow from operations of $79.2 million, up 135%; and representing 75% of non-GAAP net income; improving free cash flow to $47.1 million and 45% of non-GAAP net income while continuing to invest in the growth of our business. From my perspective, an excellent year from a financial point of view. Now to the fiscal fourth quarter. Revenue was $152.7 million during the fiscal fourth quarter, growing 35.6% over 2015 fiscal fourth quarter and increasing sequentially 7.3% over $142.3 million in the prior quarter. Revenue by end markets in the fiscal fourth quarter: Networks, $109.7 million and 71.9% of total revenues, up 5% sequentially; Multi-market, $21.6 million and 14.1% of total revenues, up 10.3% sequentially; and Aerospace and Defense, $21.4 million and 14% of total revenues, up 18% sequentially. As we noted in our last earnings call, MACOM's A&D business is expected to grow in fiscal 2017 at double MACOM's target annual revenue growth rate of 20%. Of the total Network revenues in the fiscal fourth quarter, total Optical revenues were $80.6 million, up 5% sequentially, led by long-haul, metro and data center revenue growth up 49% in the fiscal fourth quarter over fiscal third quarter. Non-GAAP gross profit and gross margin in the fiscal fourth quarter was $89.3 million and 58.5% of revenue, respectively, expanding from $64.6 million and 57.4% of revenues, respectively, over Q4 of the prior fiscal year and $81.5 million and 57.3%, respectively, on a sequential basis. Adjusted gross margin quarter-to-quarter improved as…

Thanks, Bob. Let's dive right into our Optical performance during the quarter. In aggregate, revenue from our Optical businesses grew 5% sequentially and now constitute 53% of our total revenue. Revenue from our Metro/Long-haul business grew 49% sequentially. Put in context, revenue from our Optical businesses grew 96% over the past year across the entire portfolio, for metro, long-haul, access, backhaul and data centers. As expected, PON was essentially flat quarter-on-quarter. Looking ahead, visibility remains poor as we expect a seasonally soft Q1, including the usual year-end inventory management effects over in China. In addition, fiber backhaul declined consistent with industry-wide reports of weakness in wireless infrastructure. Despite the recent softness in demand, we expect both of these markets to cycle back as the inventory correction completes after Chinese New Year. Tenders have already been awarded, which we believe will revive demand in 2017. More than offsetting this weakness, our Metro/Long-haul business saw a blowout quarter with 49% sequential growth with high visibility into continuing strong demand through the first half of next year. By our estimates, our leadership position includes over a 60% market share across linear as well as limiting drivers, CFP2 as well as QSFP28, CFP-DCO as well as ACO and across all protocols, including NRZ LR4, PSM4, PAM4 and CWDM. We believe the strength across products, regions and protocols, combined with our newfound breakout in data centers, will more than compensate for any short-term weakness we see in PON or backhaul. We've also concluded that our data center business is now large enough and important enough as a growth vector that it merits that we speak to it separately going forward. So switching over to data centers. We're proud to report that in fiscal year 2016, we enabled over 1 million 100G modules going into data…

[Operator Instructions] Our first question comes from Harlan Sur of JPMorgan.

Good to see the diversification in the business driving some growth here. OpEx was up almost $4.5 million sequentially or up almost 10% sequentially. I guess, what we're all trying to figure out is what drove the significant growth. Is there some near-term opportunities that the team is focusing on? Because you did guide OpEx relatively flattish for the September quarter. And then how should we think about the OpEx trajectory on a go-forward basis? And then I have a follow-up question.

Sure. Harlan, we settle our incentive compensation plans in the fourth quarter, and obviously, we had a pretty good year. So as we go into guidance, we don't have that -- we have certain parts of the -- we know where we are. We have, at this point, overt [ph] approval on everything and finalized the -- those numbers. So variable items that we absorbed in the quarter. Going forward, though, a portion of that represents -- that increase you have mentioned of about $4.5 million represents -- a portion of it is the variable cost, so you will see expenses flat or slightly up in the forward quarter based upon the guidance we gave.

Okay, great. And then congrats on completing the Gen4 qual [ph] and getting orders from your 2 lead base station customers. You talked about receiving sort of initial production orders from these customers, which will most likely, hopefully, start to fire kind of in the March quarter. So help us understand, if all goes well there, when does the MACOM team start to really turn the spigot on and start to drive more -- larger, more production-type levels of shipments into these 2 base station customers. Is it second half of calendar '17? How do we think about the ramp now that you've got fully qualified?

Absolutely. So that -- those initial production dates are in the March quarter, but it's in the second half of the year that the ramp really turns on hard. The one thing -- now these are the initial programs with 2 specific solutions for those customers. Well, what I mentioned last quarter is those are platforms that are poised to be able to proliferate within those customers to more and more programs. What I would anticipate is, depending on our performance in terms of delivery and so on, that could actually start hitting critical mass and really proliferating in the second half. So we're cautiously optimistic. I can tell you those 2 customers are extremely passionate about adopting and deploying our GaN for various reasons and with very, very strong value propositions that they believe in quite deeply. So it's -- we're off to the races frankly.

Great. Just one last follow-up. On the success of the catalog MMIC business, I mean, this has been part of the, I think, the diversification story, right, because it's driven growth across A&D. It's driven growth across Multi-markets. You're getting solid design win traction across both. You talked about some of your competitors here. How is the team winning here? I mean, what is MACOM's differentiator here? Is it performance? Is it cost? Is it integration? Help us understand what are some of the major drivers of success here?

Typically, not cost or integration. MMICs are relatively small-scale integration. It is definitely performance. We've targeted next-generation parametric performance across each of these product families, but I think, equally importantly, we've positioned ourselves to kind of be on deck that as some of our competitors have hit bumps in the road and are now focused elsewhere for various reasons, undergoing consolidation, we've literally got a who's who list of customers who, frankly, view us as the last guy standing who's really seriously and strategically committed to this category of products and across multiple versions of MMICs. MMICs is a general -- generic category, but it's, well, any one of a dozen product categories, I'd say. But that type MMIC, I mean, to put it in context, Hittite, before they were acquired, had about a $200 million MMIC business. And to put it in context, after 10 years under Tyco, MACOM had a $20 million MMIC business. So the playing field here is wide open for us not just in the context of Hittite but the other guys I mentioned to be able to really dramatically expand our share and drive growth in what is otherwise a modestly growing market.

Our next question comes from the line of CJ Muse of Evercore.

I guess, first question on the gross margin guide, it's down-ticking. A little bit curious if that's just a function of slight top line decline and/or mix shift. And then, I guess, bigger picture, thinking about the growing mix of GaN, data center and continued strength in MMIC into calendar '17, how should we think about gross margin uplift through the year?

CJ, so the guide, again, is subject to mix, not necessarily revenue level. We are still cautious in the transition. We've had improvement, as I mentioned in my remarks, with respect to the 2016 acquisitions. There's still a bit of a burden to carry into next quarter, and that lends itself to the guidance. And there are some -- things are very positive. We've completed the integrations and the swap outs from the manufacturing at the 2 plants we're closing, we'll be moved to Lowell at the end of that quarter. So I think it's -- we're just a little in line from the -- making that all work. We saw improvement, the FiBest, which we've noted, as now using more of our components, has improved, and there's still some improvement there as well. To the bigger question over the year, I think, as we look forward and mix continues to move and the growth rates that we experienced this past year continue and the mix of products that we have, these are at or better than corporate average as we introduce them. So as we have stated, we are still confident. Timing, a bit in question but not very long term. Some plays over the fiscal 2017 time frame we'll get, overall, for the company at that 60% gross margin level.

Yes. If I can build on that a little bit. Some of the areas that we're talking about being seasonally softer over in China, counterintuitively, are some of our highest-margin business. So not only is there seasonality on the top line, but there's a seasonality impact on the mix.

That's very helpful. And I guess, as my follow-up, can you talk about planned use of proceeds with that Term B financing?

Yes. So excellent question, CJ. We had -- we've been monitoring the debt markets over the course of the last 12 months. We came upon a market situation that was very, very favorable. We matched the terms of the original Term B loan we did in 2014, in May of 2014. The offering was extremely well received. We could have raised another $100 million, but not necessarily in line with our overall debt management and leverage targets that we want to stay to, but we took an opportunity to reload. We've talked about the finishing of the integration of our existing acquisitions, and as obviously, we're looking to expand through acquisition. And if the opportunity is there, we have a regular pipeline that we -- that is more or less a backlog. It doesn't mean that everything in a pipeline is actually a transaction, but we're ready to move forward.

That's helpful. If can just sneak one last one in, what should we be thinking about for interest and other expense for the December quarter?

Yes. The incremental increase in interest expense is -- on an annual basis is about $12 million. It is a floating rate loan. Now markets and debt rates have gone up a little bit, but longer term, I anticipate to stay reasonably in the same level. So it's about $3.5 million to $4 million a quarter.

Our next question comes from Steve Smigie of Raymond James.

I was wondering if you could talk a little bit more about the GaN business and the opportunity there. It seems like we're about to really hit the stride in terms of the ramp there. Just more in the context of a multi-year scenario, can you give some thoughts as it looks today, and obviously, it could the change over time, where do you hit 25% of the market GaN, 50%, 100%? And is it necessarily all cannibalistic or -- of LDMOS? Or can it be just additive as well?

Well, I guess, there's scenarios where it's additive, our observation is where, 1 year or 2 ago, it was more of a technology evangelism state, I think, universally. Even the LDMOS guys have acknowledged and recognized the fact that the market is ready for a wholesale transition. I think there's differences of opinion about how quick it will move. My observation is, in the past, for instance, the transition from prior VDMOS and other technologies to LDMOS, once they start moving, they move fast. And it's not unrealistic to say that we could grow into a natural share condition. This market has operated with kind of a duopoly or an oligopoly type supply condition, and I would expect that we could go into that position over the next 3 years. Our aspiration is to be a very clear #1, and I think given the position we have, now validated legally in terms of the intellectual property that we hold for what is realistically the only version of GaN that can supply the mainstream part of the industry, I think we're very well positioned to do so. We've got the support teams in place. We have the value propositions very clearly demonstrated to everybody who matters, and the customers no longer even question that. But I think the remaining challenge we're going to have, which is that challenge you always want to have, is being able to scale that operationally from a production standpoint, both wafer supply impact [ph] and assembly and test. It's not trivial to be able to supply millions of units of this class of device. But we've got the team onboard now that's been there, done that with previous generations of technology. So there's no question we're out of the gate in the fiscal second quarter, and it's going to -- I think it could be quite a ride.

Yes, that's great. And yes, just a quick follow-up on that was, as you mentioned, it's the lawsuit, you got the injunction. What are the next steps on that? And then my real follow-up question was on the new lasers that you introduced. It seems like you got something like 70% share, I believe, in PON. What's the opportunity here for the new lasers? Could you get a similar share level?

Sure. So in terms of the outlook of the litigation with Infineon, once -- I mean, common practice is once you achieve the preliminary injunction, it's kind of game, set, match. And I think one would hope that rational minds would prevail, and we reach settlement. But you never know. I mean, it could drag on for 2 years, which it is what it is. I can tell you, the dominant majority of the stuff that we really cared about in the litigation, that we're passionate about, has already been awarded as part of the preliminary injunction. So we're off to the races, and that's, if anything, just a distraction, frankly, on a go-forward basis. On the other issue in terms of the opportunity with the 25-gig lasers, I would say our value proposition and the economic benefit of Etched Facet Technology in data centers is -- potentially dwarfs that of EFT in PON. And the reason is where, in PON, we were displacing incumbent vendors with very mature technology, very stable technology that they had been supplying, albeit with a superior cost structure and capacity capability. In data centers, there are no entrenched competitors. In fact, the people who have been supplying to date are -- have been supplying basically re-purposed telecom lasers, which really aren't optimized for the costs or capacity that's required for data centers. The Etched Facet Technology, I mean, we meet, from a parametric performance standpoint, everything that the incumbents do but for a small fraction of the price. These are very rich ASPs. There's a lot of economic leverage to deliver to our customers, to be able to drive the cost structure. As we talked about in our Analyst Day, we have the opportunity with the self-aligning EFT, the safety stuff to leverage in. In the second calendar quarter, the June quarter, we'll be rolling out production of the L-PICs, which profoundly change the cost structure for that front-end analog photonic content for data centers. So that is a breakout for us this year that is not unlike the kind of growth driver we had with PON last year. Where PON is kind of saturated and will be a cash cow funding all this stuff, data centers is just an absolutely fantastic opportunity, all on the back, frankly, of the Etched Facet Technology.

Our next question comes from Blayne Curtis of Barclays.

This is Tom O'Malley on for Blayne Curtis. Can you provide some color on what segments are stronger and weaker heading into the December quarter?

Yes. So Metro/Long-haul ends up strong. We have good visibility. The really issue with that is shaping from a seasonality standpoint. A lot of the orders have been placed for delivery after the first of the year, so it's really a timing standpoint. That's why I said the year-end inventory effects, totally predictable from our past. PON remains soft. Ever since -- for the past 3 years since we had Mindspeed onboard, they came and educated us that PON was always seasonally soft. The explanation is people tend not to dig up the ground during the winter season to lay new fiber. So there's a demand seasonality with the addition of the inventory effects. So a couple our key optical markets, just seasonally soften, but they come back roaring in the March quarter. The one slight thing there is you have Chinese New Year that kind of tempers that a little bit and then the June and September quarters are boom quarters. As you look at the past 4 quarters we delivered, that's been -- we would anticipate a very similar shape. On the A&D business, we've continued to progress the MMICs. The design adoption and the consumer adoption all remain strong. We have some elements of seasonality there, but less so.

And you guys spend a lot of time talking on MMICs. But how is ground-based radar rates progressing? And can give us an update on the progress in Norman, Oklahoma?

Yes. So we ship the -- we completed the shipments of the production unit. That's being assembled and it's going to be installed in Norman, Oklahoma. I haven't heard that, that has been completed. It may have been, but I don't tend to track that field trial. I can tell you there is a lot red hot activity among our customer base and people preparing to respond to RFPs, preparing to be able to ship production for that radar installation. I think the very interesting development in the past week is with the new administration talking about infrastructure investment. There is nothing more logical for infrastructure from our standpoint than doing what's drastically needed in the U.S., which is upgrading the air traffic control infrastructure and weather forecast infrastructure. So by all sense of customer activities in terms of preparation and partnering, that's looking more and more real. But again, the caution we have, short term, we have explosive growth opportunity in advance of that as we articulated on the back of the MMIC content, so we don't have to wait for tiles to drive our growth for the next year.

[Operator Instructions] Our next question comes from the line of Tore Svanberg of Stifel.

First question is on GaN. So John, based on our due diligence, we're starting to see GaN popping up in people's supply chain, and I'm just wondering how you kind of balance that because, on the one hand, that could mean an acceleration of maybe GaN coming earlier but then on the other hand, you've got to sort of keep an eye on all the IP out there. So how do you balance those 2?

Yes. So I can tell you, when -- there's a lot of people talking GaN. They talk a good game. If you look at the actual operational requirements to deliver RF power transistors into that market, it is notoriously -- it's a roller coaster and unpredictable. In my previous life, I saw demand increases literally doubling within 30 days. You have to have a supply chain which is CMOS like in nature, meaning you have to be working out of factories that can handle surge capacity and be able to deal with just even regular capacity and be able to scale up and down both ways. That is exactly what GaN on Silicon does, and which we uniquely, and underscored with the legal developments over the past quarter, we uniquely have. Customers recognize that. There are some kind of early generation niche programs, new frequency bands that have been serviced by GaN on Silicon Carbide. But realistically, from a supply chain and cost structure standpoint, those sources, regardless of who it is, simply aren't prepared to be able to handle the mainstream. That's why, fundamentally, what we're doing is we're attacking the heart of that $1 billion market, not the periphery.

Very good. And a question on the Optical business. You talked about 60% share of the high-speed analog. And I was just wondering, would that refer to drivers, TIAs and CDRs across all standards? Or was that more of a comment in regards to certain of those components for certain standards?

No. In fact, I want to emphasize, that's across all standards. We're not talking about some -- playing statistical games, wherein some narrow niche, we have large market share. This is across all standards, all protocols, 60%.

Very good. And last question, you mentioned you are now going to be breaking out data center. So I assume you're going to be breaking out data center revenue starting in the December quarter. Is that the way I should think of it?

Yes, I mean, we'll be -- just like we started talking about PON and Metro/Long-haul, providing color on the overall dynamics, we'll be doing that on data centers on a go-forward basis. When we actually rolled up the data center number, it ended up, frankly, larger and larger growth than we anticipated. It's over growing PON basically. Our investments are almost 100% in data center in that category of product, and the opportunity for further growth just in that category is great. But the fantastic thing is there is, yet again, the same TAM available for the lasers sitting right next to the high-performance analog content. And as I mentioned with the EFT technology, we're extraordinarily well positioned, arguably even better positioned to capitalize and command even greater market share with that. And then right behind that is the silicon photonics that we -- the OpEx that we had talked about at the Analyst Day, which are -- we have wafers in line that we will -- that we expect to be shipping production. So it's that close. It's the reason why I made the comment that, if anything, time lines are pulling in. I didn't even anticipate that we would be this far along with the analog, never mind the lasers and the silicon photonics. So I think that, that's going to be a very hot topic not just in the December quarter but throughout 2017 and beyond.

Our next question comes from Vivek Arya of Bank of America.

I had one longer term and one question on fiscal '17. So on the longer-term side, the concern with Optics in the past has been that it's been -- there have been a lot of boom/bust cycles. That's why there isn't one large optics vendor. But this cycle, every optical vendor appears to be doing quite well. So maybe the question is what is different about this cycle versus what we have seen in the past. Why is this cycle more sustainable? And if everyone is doing well, who is losing share? Or is it just that the pie is getting so much bigger that everyone can do well for some time?

No. There are some losers. I'm reluctant to talk about the competitors that aren't performing very well. I can tell you, in our part of the market, the guys who we view as a sustainable position will be Inphi in terms of the analog content. So it really is down to they with us on the metro/long-haul side. Semtech tends to compete more on the PON and moving into the data center space for the analog content. We're -- there's no question, we are right now in a very sweet spot as it relates to metro build-outs layering on top of long-haul build-outs. I guess, you could make an argument that it's more sustainable given the fact that the exploding demand for bandwidth is real this time, and customers are already talking about moving on to 400 gig, 400G. And they're still in the process of deploying 100G, so there seems to be an insatiable demand. That said, our working assumption is each one of these segments within Optical will have its day. PON, 2.5-gig PON may soften for a bit. 10-gig PON is right behind it, but there's typically -- you can have a valley before the peak with 10 gig. That's okay. Metro right now is carrying the day. The whole data center thing -- opportunity for us with cloud service providers as arguably as big as everything we've done so far on the telecom service provider side. So that's -- and that's a totally different CapEx driver. So we assume that the boom and busts will remain, that it's characteristic of the markets, and our answer to that is to diversify.

Yes. And just to add to that point, Vivek, we play in all geographies with multidiversity of carriers. So Japan, China, North America, Europe, we're probably, as John says, the leader, but we're also the most diversified in terms of markets.

Yes. There's another dimension of subtlety here, Vivek. The -- we passionately adhere to a component model. We don't have to sell everything to everybody, and by no means do we leverage people out with bundling things. We have customers who build their own lasers, and we're more than happy to sell them our high-performance analog stuff. And they respect us for it. So -- and same thing, when we bring -- roll out merchant market silicon photonic stuff, they can use our stuff or not. So -- and customers respect us for that. We know our position. We have TOSAs, ROSAs, but we only address the subsegments of the market and the customers and opportunities that are high margin. And the rest of the people, we use our capability as a reference design. We coach and work with our customers to help them do a better job using our components, using our optical subassembly expertise. So it's -- I think we've got a very different model from what a lot of other people are pursuing. I'll leave it that way.

Got it. Very helpful. And then as my follow-up question, I think you recently raised some money, and I think M&A has been one preferred use of cash in the past. But just strategically, given the growth opportunity in front of you, would you prefer to continue to do sort of smaller tuck-in technology type transactions? Or do you think there is an opportunity to take the next step and do something larger than what you have done before?

I think we've done both. We've done transactions of various sizes. We're not shy. We're not meek and mild, but at the same time, we're not megalomaniacs. To us, it's all about discipline. We want to pay the right price. The asset, regardless of the size, should be accretive, should be accretive to gross margins, should be accretive to operating margins, should be accretive to earnings. And there aren't a lot of those assets available out there. But when they become available at the right price, you can as sure as hell bet that we're going to act.

Yes. And the other point is we talked about -- in integrating these acquisitions, we don't talk so much about the investment that's been going on over the past. GaN has been multi-year investments, where, once these products turn on, the -- that investment mode is behind us as it is in the 25-gig laser, for example, and we're just selling product. So we have capacity to do other things.

Our final question comes from Quinn Bolton of Needham.

Two quick questions on Optical and then 1 on the new products. Just on a clarification on the Optical, John. The 60% share you have in TIAs and drivers, was that a long-haul/metro comment? Or was that data center? Or was it inclusive of all of those segments?

Two independent comments, they both happen to be 60% share. So 1 is on metro/long-haul, 60% share across all standards so again, whether it's limiting or linear drivers, whether it's ACO versus DCO, all standards. Again, we're playing no games in terms of taking subsets of the TAM and claiming high percentages. So it's across everything. And then separately, the revelation we came to is our HPA. This is the ex Mindspeed stuff. Kind of behind the scenes, we haven't talked a lot about it. Didn't want to telegraph a competitive move, but they really shifted from a focus on PON, which is very cost constrained in that product category, more of a commodity, over to data centers, and they've had a breakout in the past year. When we added things up, bottoms-up from customers, we realized 2 things. One is from everything we could see, we had 60% share of all analog content across all those, and at the same time, the numbers added up to enabling over 1 million units, 1 million ports, which is in excess of what anybody's reported that has been shipped. So it's clear that data center -- that 100-gig connectivity within data centers is off to the races unequivocally, which is fantastic news. And in this first wave of products, being the analog content, we've already established a great position.

Just on the Optical business, I know you'd said that the long-haul/metro grew 49% quarter-on-quarter. I think you said PON was flat. Data center obviously grew. Just wondering, was there a part of the business outside of, I guess, fiber backhaul that was soft? I guess, with all that growth, it -- I would have thought you might have had better than 5% sequential growth in Optical. I'm just wondering if I missed something.

PON's an equally big number and that we -- as we had predicted remained flat, flat quarter-on-quarter. So that kind of diluted the growth. But the fiber backhaul was a not inconsequential amount of business that we had. That softened at the same time as PON, and that's what brought the number down to 5%.

Got it, okay. And then just lastly, you obviously talked about great new opportunities in MMICs in data center lasers and GaN on Silicon. I'm just kind of wondering, if you look at calendar '17 for those 3 opportunities, are they all sort of roughly the same revenue opportunity? Does one significantly overshadow the others? I'm just thinking, each of those sound like they could easily become $10 million to $20 million opportunities over the course of the year. Just wondering if I'm thinking about that the right way in terms of contribution to the top line.

Interestingly, we're just going through the analysis, looking at some of these SAMs, and they each add up to in the 2019 time frame pretty clearly with a $1 billion round number in terms of TAM, SAM opportunity. So -- and we're extremely well positioned for the reasons I described in the scripted remarks. In each one of those, predicting how big they are and, even here, you start getting into predicting the minds of your customers and how quickly they move. But I'll give you -- I'll leave you with this interesting concept. We've been fully invested in data centers. We've been fully invested in GaN. We've been fully invested in MMICs with negligible revenue contribution. The operating leverage, as those things turn on and add on top of the growth drivers that have brought us to date, notably, the metro/long-haul stuff, it's layers upon layers of growth contribution that we don't have to materially add -- you do have to add some, but I think we can limit operating expense increases to arguably half the rate of sales increases. And we can blast through that 30% operating margin and really march over the coming years to 40%. And that's very real. I mean, all the things that I talked about have real first tier customers, valid value propositions, and what's before us now is almost entirely operating -- scaling operations, which, as I said before, is the problem you want to have.

And at this time, I'd like to turn the call back over to John Croteau for any closing remarks. Sir?

Great. So before closing today's call, I'm pleased to announce that we recently hired Steve Ferranti as VP of Investor Relations. Steve comes to us with long-standing relationships within the financial community, which is the byproduct of his time at Skyworks as well as his years of experience as a sell-side analyst. This is a new position within MACOM and is aimed at helping to further enhance investors' understanding and appreciation of MACOM's growth opportunities and, ultimately, enhancing shareholder value. I'd also like to add that -- to highlight several investor conferences we'll be attending over the next 2 months. We'll be at the Raymond James Technology Conference in New York on December 5 and 6, followed by the Barclays Global TMT Conference in San Francisco on December 7 and 8. We also plan to attend the Bank of America Merrill Lynch Conference in Boston on December 15 and Needham's Conference in New York on January 10 and 11. If you'd like to request a meeting while we're in your area, please email us at ir@macom.com. That concludes our remarks, and we appreciate you joining today's call. Operator, you may now disconnect the call.

Thank you, sir, and thank you, ladies and gentlemen. You may disconnect your lines at this time. Have a wonderful day.