Doug DeLieto - Vice President of Investor Relations Steven E. Creviston - Corporate Vice President and President of Cellular Products Group Robert A. Bruggeworth - Chief Executive Officer, President, Director and Member of Strategic Development Committee Norman Hilgendorf - Vice President of Corporate Development William A. Priddy - Chief Financial Officer, Corporate Vice President of Administration and Secretary

Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division Harsh N. Kumar - Morgan Keegan & Company, Inc., Research Division Edward F. Snyder - Charter Equity Research Quinn Bolton - Needham & Company, LLC, Research Division Aalok K. Shah - D.A. Davidson & Co., Research Division Ittai Kidron - Oppenheimer & Co. Inc., Research Division Michael A. Burton - Kaufman Bros., L.P., Research Division Parag Agarwal - UBS Investment Bank, Research Division Anne Edelstein Blayne Curtis - Barclays Capital, Research Division Todd K. Koffman - Raymond James & Associates, Inc., Research Division

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the RF Micro Devices Third Quarter 2012 Conference Call. [Operator Instructions] This conference is being recorded today, Tuesday, January 24, 2012. At this time, I'd like to turn the conference over to Doug DeLieto, Vice President, Investor Relations for RFMD. Please go ahead, sir.

Thanks very much, Ben. Hello, everyone, and welcome to our conference call. At 4 p.m. today, we issued a press release. If anyone listening did not receive a copy of the release, please call Samantha Alphonso at the Financial Relations Board at (212) 827-3746. Sam will fax a copy to you and verify that you are on our distribution list. In the meantime, the release is also available on our website, rfmd.com, under the heading Investors. At this time, I want to remind our audience that this call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in the earnings release published today, as well as our most recent SEC filings for a complete description. In today's release and on today's call, we provide both GAAP and non-GAAP financial measures. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain noncash expenses or for unusual items that may obscure trends and our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For a complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, available on our corporate website, rfmd.com, under Investors. In fairness to all listeners, we ask that participants please limit themselves to one question and a follow-up. Sitting with me today are Bob Bruggeworth, President and CEO; and Dean Priddy, Chief Financial Officer. I'm also joined by Eric Creviston, Norm Hilgendorf, and Bob Van Buskirk, who lead our Cellular Products Group, Multi-Market Products Group and Compound Semiconductor Group, respectively, as well as other members of RFMD's management team. And with that, I'll turn the call over to Bob.

Thanks, Doug, and welcome, everyone. As we indicated in our press release on January 5, RFMD's December quarterly results reflected market share gains in smartphones; however, these gains were more than offset by less than forecasted demand from manufacturers of handsets in China. Tonight, we will provide additional color on our revenue, gross margin and perhaps more importantly, articulate why we believe the December and March quarters are not indicative of RFMD's growth, margin or earnings potential. During the December quarter, forecasted demand for 2G products did not materialize as expected for the traditional Lunar New Year ramp. In addition, while 3G demand in China grew at a healthy 50% sequentially, it fell well short of the level of our customers had forecasted at the start of the quarter. The less than forecasted demand resulted in a decrease in fab and assembly utilizations and an increase in inventory reserves driving a significant impact to gross margin. In the near term, we are maintaining our conservative stance on the China market, and we've built this into our guidance. We believe our visibility into China will improve after the Lunar New Year holiday. Long term, the secular growth trends in both CPG and MPG remain intact, and RFMD's outlook remains unchanged. The China market will transition to 3G and RFMD is very well positioned to capitalize. RFMD's key 3G/4G drivers, PowerSmart, high-efficiency 3G/4G PAs, switch-based products and antenna control solutions grew in the December quarter, continue to gain key design wins and will grow considerably during calendar 2012. MPG will recover as macro environment improves, and new products and technologies will deliver revenue growth. Our December quarter and near-term outlook should not be interpreted as an indication of a new or revised financial model. Our expectations for target margin performance remain unchanged,…

Thanks, Bob, and hello, everyone. Revenues for the December quarter declined 7.5% sequentially to $225.4 million. Gross profit was $68.1 million with gross margin of 30.2%. During the quarter, we reduced output from our factories to lessen our investment in inventory and mitigate future inventory risk. Additionally, we recorded inventory reserves as a result of near-term demand softness. These actions had a disproportionate impact to margins in the December quarter, and we currently expect a sequential improvement in gross margin in the March quarter. We believe RFMD's gross margin will return to historical levels as revenue growth resumes. Operating expenses were $59.2 million with G&A of $9.7 million, sales and marketing of $13.6 million and research and development of $35.9 million. Operating income was $8.8 million, representing 3.9% operating margin. Other expense was $174,000 and non-GAAP taxes were $3.6 million. Net income for the December quarter was $5.1 million, with earnings of $0.02 per diluted share based on 283.9 million shares. Going to the balance sheet. During the quarter, RFMD repurchased approximately 2.3 million shares of common stock. Total cash, cash equivalent and short-term investments were $295.4 million. RFMD currently has $161.4 million par value of convertible debt, of which $26.5 million is due April 2012 and $134.9 million is due April 2014. DSOs were 47 days, 1 day better than last quarter, and inventory declined $15.3 million or 9% to $147.9 million with turns of 4.4. Net PP&E was $202.5 million compared to $208.3 million last quarter. CapEx during the quarter was $8.7 million with depreciation of $14.4 million and intangible amortization of $4.6 million. Cash flow from operations was $46.2 million, and free cash flow was $37.5 million. Now some comments to assist you on modeling our March financial performance. For the March quarter, RFMD anticipates share gains…

[Operator Instructions] Our first question is from the line of Edward Snyder with Charter Equity Research.

Dean, how would you characterize the hubbing next quarter? How much of your greater than seasonal decline in revenues do you estimate is due to the hubbing of these 3? And is it limited to March or we'll see some of those bleed over into June? And if can we get any color, if possible, on the new products how they shook out in the quarter December, was PowerSmart sequentially up, down, SOI, and Phenom if you could.

Yes, I'll take the first part about the hub question, Ed. We think it could be in the $4 million to $5 million range in terms of revenue impact to the March quarter, and we do not expect that to be an overhang into the June quarter.

And Ed, in regards to our new products, clearly, the growth that we saw in 3G/4G with switches, PowerSmart and Phenom, we saw a nice growth and quite honestly, we're looking for growth again this quarter in those new products.

Dean, did all the products grow or were they limited to just the SOI?

Ed, the question was, did all the products grow or they were limited to SOI? And I believe for competitive reasons, we're going to discontinue breaking out the preciseness of where the growth is coming from. We set out targets early in the year for PowerSmart, for our switch-based products. Phenom has grown very nicely, and we're kind of looking at all these solutions as a bucket of growth drivers going into calendar year '12. That all are doing very well on their own and as a group continue to grow.

Ed, I think what I will say is we commented a lot about Phenom's growth opportunities. Phenom, of the 3, was definitely the fastest-growing and just remember, that's also off the smallest base and we expect that to continue.

Okay. Then a final one, if I could, before I get in queue again. Nokia, did it decline in absolute levels this quarter or did you just finally see it stabilize?

Nokia declined in absolute values this quarter and will likely decline in the March quarter as well.

But I think what's important, Ed, is as we've been talking about, we do believe as we enter the fiscal year, our next fiscal year, we do expect to be growing kind of quarter-over-quarter with Nokia, again, provided they continue to do okay in the market.

Our next question is from the line of Mike Burton with Kaufman Bros.

Can you walk us through the 9 points of margin this quarter and then also for the guide relative, how much is lower utilization versus inventory write-down of mix, especially as we go into the March quarter?

Right. As we indicated, the impact in margins was disproportionate on the December results. For one thing, we wouldn't expect to have a replication of the inventory reserves in the March quarter, and that was between 2 and 3 points of the decline to inventory. And also, because of the way in terms of your manufacturing and the way you run your facilities, when you put the brakes on your facilities very abruptly as we did inter-quarter, it tends to have a more pronounced effect on the cost structure in that given quarter. So from a manufacturing standpoint, manufacturing variance standpoint, we actually realized a bit more during the December quarter than we would expect to realize in the March quarter, even if we run the factories at a lower run rate in the March quarter because again, we're already planning to reduce the utilization rates. The utilization rates were unplanned during the December quarter. That's why we're confident. Number one, we haven't added any new additional capacity. We haven't added any new additional manufacturing overhead, so this is really a revenue-based inventory reserve type issue that we believe will spring back. As we have shown historically, we can do based on growth in revenue. And so even without growth in revenue, we still see margins turn around improving March and then, once we get back into June, we can see the return to more historical margin levels.

Okay, and -- but for the March guidance, is there any still inventory work downs that are incorporated into that margin guide?

Yes.

Is that something that we should expect? And generally, these can take a couple of quarters. You talked about returning to historical margins. As we look out maybe into the June quarter, I know you don't guide out there, but could we expect that we're through most of that inventory work down at that point? And if so, shouldn't we maybe see a bump up from the mix? Or is there other mitigating factors there?

Well, mix is a little difficult to project out even though as 3G/4G becomes an increasing proportion of our product mix, that is our friend, and certainly as MPG begins to grow again, that will also positively impact mix. We do see the March quarter as the bottoming out quarter, as you will, and clearing out quarter for inventory levels. And we would expect to, as we exit the March quarter, be ramping back up again in anticipation of growth going into June and beyond.

Our next question comes from line of Ittai Kidron, Oppenheimer & Co. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: Dean, I was hoping to dig a little bit again into the whole China topic. I understand the inventory. That makes complete sense. I guess, what I'm trying to understand is, how do you get a sense whether what part of the shortfall is related to an inventory buildup that happened through the June, September timeframe versus weak end market demand? How should I think about that? And second, as a derivative of that, how do you make sure, since you don't have enough clearly visibility necessarily all the way through, how can you tell what's your market share position? I mean, could it be that it has deteriorated? How do I get my hands around that? And lastly, again also tied into this whole China discussion, how much of your China revenue is 3G versus 2G? And how would you expect that to change over time?

Ittai, all good questions and we'll do our best to address them. And I want to make sure, so we're going to keep all the comments just to China. And just to be clear, when we talk all of China, this is the Chinese manufacturers. So this will be Huawei, ZTE, Lenovo and all the other 300, 400 manufacturers that we sell to. So all these comments are geared towards that. And I think it is a few moving pieces as you've asked. And I think what we can say is over time, we clearly expect 3G to become a significantly larger portion of our portfolio in China. As I said in my opening comments, we grew about 50%. It's just we had expected to grow a lot more. And I think as we continue to see the rollout of the TD-SCDMA, wideband CDMA and further out TD-LTE, it's clearly going to become a big growth for us. And as you know, we've got our design resources there, our factories there and have built good relationships for a lot of those baseband manufacturers as well. We feel we're pretty good -- in very good position for the transition of 3G. But I think most of your questions were about what happened with the 2G market? Did you lose a little bit of share, and what all transpired there. I think I'll let Eric go ahead and cover that.

Sure, Bob. The guidance for March, we were definitely taking a pretty conservative stance on 2G in China. But I think that from what we learned in December, which is that there's a clear transition to 3G happening today. Net-net, that's certainly good for us. We have a lot of content in 3G and well represented, as Bob said, across the baseband manufacturers. But as we're going through this transition, we saw -- if you look at the carrier data, for example, about 80% of the net adds in December quarter were 3G. That's up from 20% of the net adds just a few quarter ago. So we're seeing a heavy push by the carriers to 3G. Unfortunately, 3G today is only 15% of the total subscriber base, so you're still not -- you're not seeing the kind of replacement rates driving the handset demand for 3G, at least 2G, pretty low I think in the meantime as we're making that transition. Export market is lower for 2G. You expect that to be pretty dependent upon the macro situation and currency rates and so forth. So I think there's a lot of factors going into the 2G situation the way we've seen it. But just based on what we learned in December, we're being pretty cautious with March until we get to it very [ph] near. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: Eric, if I can just follow up on that, how do you know your market share position in the vendors, number one? And number two, regarding inventory buildups, is your level of transparency into inventory in 3G going to be any different than it is in 2G now?

Okay. So we'll start with the market share question. We have fairly good visibility into that. We work, of course, with all of our largest customers, and we have worked with them directly. Then we have distributors as well for the mass market there. We get sell-in and sell-through data pretty reliably by week from both of those sources. I think what we saw in the December quarter, we have to say, net at the very top level, that there was a share shift. What we saw was during a very weak market for 2G, the phones that we're selling were the very, very low tier, so the lowest-cost handset than those generally aren’t the place from our producers we're representing. We're more in the medium and high tier on 2G. So I think that net-net, there probably was a share shift that happened during the December [ph] quarter. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: And your visibility inventory-wise between 3G and 2G, is it going to be any different?

I think it'll be roughly the same. We have, of course, as we're ramping 3G entry, we're doing more of that with our larger customers, where we'll have maybe a little better visibility and in particular better planning, I think, as we ramp these products up. But, in balance, it will be roughly the same.

The next question comes from the line of Harsh Kumar with Morgan Keegan & Company. Harsh N. Kumar - Morgan Keegan & Company, Inc., Research Division: I'm wondering if you could clarify your position and your stance in China in 3G, and why you feel so comfortable as the market moves to 3G that you will have a lot of that share that you had in 2G come back to you as 3G share. And maybe take us through what kind of [indiscernible] you have or give us some flavor about that.

Right. So in 3G, we're actually feeling extremely positive about our position there. I think the fact that we grew 50% sequentially in 3G in China in December despite the overall market being what it was, I think that it's clear that we're again beginning to take share in 3G. We've talked about reference design positions across all the media tech platforms. We've talked about Qualcomm reference designs in China that were won last quarter. We're also very well represented with Spreadtrum, especially in their TD platforms going forward, and then we announced another one, which should be a fourth baseband supplier as well that's entering the 3G market in China, and we're on there as well. So we feel like we have very broad coverage and the Phenom class of products that we're bringing to this market really does bring exceptional performance and then our switch products as well allows to really help solve the entire reference design that's sort of incompletely. I think TD in particular is an area we'll be focused on going forward. We have new products coming out. One of the only products on the market that'll offer a very compact multimode solution for TD in multimode with 2G. So we're very excited about the overall placement we have in 3G entry and all of the design wins we're getting today point to a lot of share growth there. Harsh N. Kumar - Morgan Keegan & Company, Inc., Research Division: Yes, that's fair. And then, as a follow-up, I was wondering if you could comment about gross margin past. I know you mentioned that it will come back to with revenues. Is it strictly tied to revenue ramp that will drive the gross margin increases? Or can we expect it to maybe outperform in --through some other factors? I don't know if you could list the factors?

Yes, well, Harsh, I'm not -- kind of looking for some data here real quickly, but I'm not say that history will repeat itself exactly as the past, but we can go back to a period of reduced demand back in the 2008, 2009 time frame where our revenue dropped fairly quickly, our margins fell to close to 20%. Then as revenue started coming back the following quarter, the margins went right back to the mid to upper 30s. So again we're not painting that scenario for the March quarter because we're not projecting revenue growth, but I do think as you see revenue growth return in the June quarter, you can expect a very rapid uplift in gross margin. Like I said, there's nothing fundamentally changed in cost structure with the company. In fact, if anything, we're more lean now in terms of cost structure than we were a year or so ago, and probably, more competitive from an overall supply chain standpoint. So I think what you're seeing is a product of being very vertically integrated in terms of manufacturing and the effect of abrupt slowdown in our manufacturing facilities, which in no way indicate a change in our long-term model view.

Our next question comes from the line of Aalok Shah with D.A. Davidson & Co. Aalok K. Shah - D.A. Davidson & Co., Research Division: A couple of quick questions. Dean, first housekeeping, in terms on MPG versus CPG, I don't know if you made a comment yet, but give us some sense of what the mix was. And then secondly, the 10% customers in the quarter. And then, Eric, couple of questions for you. In terms of Samsung, I think in the last call you guys said that you expect your Samsung revenues to be up year-over-year on a fiscal basis, and I'm wondering if that still holds true? And then lastly, Dean, I think in your last answer you had mentioned about -- you mentioned that you have a lower cost structure, but I'm curious as to are you guys seeing a little bit more of an ASP pressure at this point given the Chinese market continues to be pretty soft right now?

Yes, well, I’ll take the MPG revenue of $45.6 million for the quarter, so MPG was -- we have projected down 10%. They actually ended up down a little more than that, roughly 13%, but we all know that the markets there are in the very, very early stages of bottoming out and beginning to recover. Let's see, the second part of the question was?

We had 2 10% percent customers, similar to last quarter.

Yes, and I'd like for Eric and also for Norm to answer the effects of ASPs on their business.

So this is Eric. In terms of cellular business, we continue to see normal pricing as we've talked about in the past few calls, there's pockets of competitive pricing in 2G here and there, but broadly the market is moving towards performance plays in 3G and 4G and total systems solution. So it really -- pricing overall hasn't changed much.

And speaking for MPG though, this is Norman, we really don't see anything extraordinary happening in pricing. Just having normal ASP erosion that's all. Aalok K. Shah - D.A. Davidson & Co., Research Division: I'm sorry, Eric, just to follow up on the Samsung question. I mean, how do you guys feel you’re positioned at Samsung now?

Yes, I think the first part of your question was whether we still plan to grow fiscal year with fiscal year with Samsung? Aalok K. Shah - D.A. Davidson & Co., Research Division: Yes.

Certainly, no question. And in fact, in the December quarter, our year-over-year growth of Samsung was very, very large. We continue to win obviously a lot of new business with Samsung represented across all their platforms and tiers, all their basebands, we mentioned that we've ramped PowerSmart itself even across another Samsung tier with another baseband supplier, so they're helping to drive, to converge architecture broadly across their platforms. They, I think, will be a big consumer of Phenom as well. We're ramping this quarter, Phemon slots with Samsung. It will be a very important part of the product portfolio for us. And then looking forward to LTE, that's going to be really big for us with Samsung. We know how to work with their design teams, to help them optimize their phones, especially for this new generation. Our applications team in Korea is amazing. Design and sharing, really focused on Samsung. We expect we were their largest RF supplier in 2011, and we expect to be their largest RF supplier in 2012. Aalok K. Shah - D.A. Davidson & Co., Research Division: And, Eric, just to start one more clarification, in terms of baseband providers that you supply with -- into for PowerSmart now. I mean, what's the number of partners you have there?

Yes, in production with 2 so far and looking forward, as we go to LTE, we really have a growing list of baseband relationships there as we roll out the LTE version of PowerSmart, and so we have frankly more than we can handle in terms of baseband integration projects right now for LTE with PowerSmart.

Our next question comes from the line of Quinn Bolton with Needham & Company. Quinn Bolton - Needham & Company, LLC, Research Division: Eric, just wanted to sort of follow up on that China 2G, sorry to harp on it, but if I run the numbers it looks like China 2G should have declined for you by 30%, 40% in the December quarter, it might be down by as much as 1/2 in March, I mean are those kind of ballpark figures what you're seeing in that China 2G business?

I'm not exactly sure what baseline you're running off of but those sound steep. Quinn Bolton - Needham & Company, LLC, Research Division: It sounds too steep?

Yes. Quinn Bolton - Needham & Company, LLC, Research Division: Okay. Second question then, just looking at the China 2G/3G, when do you expect or when might you expect 3G business in China to be greater on a dollar basis than 2G? Is that something that you see happening over the next couple of quarters or is that further out?

No, I think it's definitely possible within the next couple of quarters at the rate we're going. We're growing 3G very quickly and again, our thesis on this 2G versus 3G thing is that 2G has officially started its decline, and we think 3G is going to be growing very rapidly and especially on a dollar basis, of course, we see the content. And that's one other note just to add here, I think if you look at the baseband supplier's numbers, we talked about a 2 to 3x multiplier, from 2G to 3G which is great, they have a much higher multiplier. So if you look at their dollars, I think as they replace 2G with 3G, you're going to see -- they're going to get hold much faster than we will. But I think within the next couple of quarters, we'll be there as well. Quinn Bolton - Needham & Company, LLC, Research Division: Okay. And then just 2 quick clarifications, on this March revenue, you said that you thought you would outperform the smartphone market. Are you looking for the 3G/4G business to be flat up sequentially or does that decline with just a lower rate than the smartphone market? And then for the hubbing effect, is that hubbing effect captured all in the MPG business or does that come across both CPG and MPG?

As far as our 3G/4G business, flat up slightly, so not declining. And then as far as the hubbing goes, it's about 50-50, I would say, maybe a little bit more towards CPG as far as the impact.

Our next question comes from the line of Vijay Rakesh with Sterne Agee & Leach. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: Just regarding the March quarter here, I was wondering what your China and Nokia exposure look like now?

Sorry, I'm not sure I understood your question, but we're not breaking out our business forward-looking, about any of our customers, especially those that haven't reported yet. So I want to be very careful with talking about Nokia, and we really haven't given you much color as what percent our business is of China. What I can say is, it's probably going to be a lower percentage in March than it was in December. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: What was it in for December for Nokia as opposed to [indiscernible]?

And Nokia was a 10% during the December quarter, that's all we said. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: Got it. And also in the last call you mentioned that Qualcomm, you are kind of working and you had some announcements in the low-end previous side, just wondering how that relationship is going with Phenom and across their breadth of products?

Yes, continue to stay well-engaged and Phenom in particular, I think, is going to be ramping a lot of Qualcomm-based platforms throughout this year, and we're engaged in very -- tightly in the engineering level on future generations. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: Great. And also in MPG, I know it kind of came down here in the quarter, when do you see it going back to more normal levels on MPG revenue [ph] because obviously that carries better margins as well.

Yes, right now, we see MPG leveling off. We think that we see things leveling off the current level right now and then picking up throughout the next year. The capital spending was very low in wireless infrastructure in the second half of 2011, and then slow infrastructure spread -- spend spread into other areas including some broadband cable TV, probably even some WiFi CPE from what we're seeing. But what we're hearing from our customers is to plan for a very strong year in 2012 for -- as some of the capital spending recovers and makes up for the second half of 2011.

We'll move on to our next question from the line of Blayne Curtis with Barclays Capital.

Not to keep harping on the China issue, I just want to understand a little bit better. I mean over the last few quarters, it doesn't -- it seems like 2G is down about 60%. I was just trying to understand, is that all China? And then within that I mean, obviously, we haven't seen the results from the rest of your competitors but it doesn't seem like others are seeing such a decline, so just wondering you mentioned the high end you are more positioned, did your white box not fall off as much, and then if you just touch on pricing in that market, too.

Yes, this is Bob. And I'm going to take at least your comment about what others have seen. I can't comment on what you've heard from others that have reported at least in our direct space, but clearly, China we were the #1 market share position of about 40%. Now I think we probably, if for any things that happened in that market we'd probably be impact a little bit different. Also I wanted to comment that our China business as you pointed out in the white box guys, we still got a very strong business with Huawei, ZTE, Lenovo and many others and what Eric talked about earlier was, some of the white box shifting even to a lower tier within that segment. And we did see that shift but some of our business was not quite as strong in 3G in China as well. Although we grew significantly but not as much as we had planned and there is a transition going on and 2G is declining. But to say our business is off 60% seems a little bit large, so I don't know if you weren’t starting with the right number. Again, in my opening comments it says, we describe our China business today that includes all of the manufacturers in China that are like Huawei, ZTE, Lenovo, et cetera. You might have been starting with a different base, I don't know.

I got you. And then you seem pretty constructive on your positioning for LTE next -- or this year and beyond. Can you talk about whether it's more Phenom-based or whether you're seeing traction with PowerSmart and you mentioned Samsung but just how pervasive you feel your win base is?

As far as LTE goes, just to be clear, I mean, we like our position, whether it's PowerSmart, our Phenom PAs and our switch and signal conditioning products as well because again, the complexity that you see in the front end with switches, the performance that we're able to show makes a significant difference. But I'll let Eric speak a little bit about the traction and the take up and what we're seeing with the products.

Yes, I think, maybe it's helpful to think of timing. We will be ramping Phenom solutions into LTE sooner. Those are going to market, ramping with platforms today whereas PowerSmart will be -- it's sampling today, integration is happening throughout the year and production late this calendar year, essentially for the LTE version. In both cases, I think, as Bob was saying, what’s really interesting for us is that we're looking at a much more complete system solution here than we have even in the past. Our switch products and antenna control solutions in some case are actually being bundled with those power amplifier solutions to create a total solution. So for PowerSmart, LTE, for example, we expect to have the antenna switch module as well as part of the RFMD solution. Many of the Phenom solutions for LTE are ramping with our antenna switch modules, antenna control solutions as well and that's because we really work on the system problems of linearity and isolation as you're switching through the multimodes and multibands and, of course, current consumption in thermal performance, so it's really what we're focused on. So and a lot of the benefits from PowerSmart and Phenom are similar. We've got similar core architectures in there that allow us to very efficiently support many different handset manufacturers who deal with those solutions.

Our next question comes from the line of Todd Koffman with Raymond James. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: Dean, can I just get a clarification? I thought I heard you call out that Nokia declined in absolute dollars, I'm assuming you're referring sequentially and then I thought I heard you say and you expected that Nokia to decline in March as well, which I'm assuming is sequentially. Is that correct?

That is correct. Yes, it's seasonally down March. I mean, I don't think you would expect an increase in our business with Nokia. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: Yes. Unrelated, did you call out the -- how big the inventory write-down was that you took in the December quarter?

Yes, we said that the reduction in gross margin it was between 200 and 300 basis points.

Our next question comes from the line of Vivek Arya with Bank of America Merrill Lynch.

This is Anne Edelstein calling in for Vivek. We were wondering if you guys could provide a comparison of the pricing environment as it shifts from 2G to 3G to 4G.

I guess, Eric will take that from a cellular perspective and, Norm, you'll take it from a baseband, or for the infrastructure, the base station part of it.

As I mentioned earlier, the 2G products certainly has certain pockets where there is more price competition than normal but that's relatively limited. And if you look at 3G and 4G really, it's about performance still today. And total system integration making the products as small as possible, transition to multimode, multiband systems and then bundling total solutions together with switch leadership and so forth. So in those markets we're not seeing the kind of price competition per function. And obviously, we're seeing in total significant expansion, the total ASP per handset that we're getting.

Then from an infrastructure perspective, it's still little bit difficult to compare because architectures are very different between the different generations of infrastructure equipment, and we get into much more highly integrated components with the 3G infrastructure in particular. So it's a little difficult to compare really ASPs, one generation to the next.

Yes, and I think I'll add one last comment to Eric's about the ASPs per handset or the dollar content. I think maybe if you were asking what are we getting for typical 2G phone today, it's well under $1 for a PA. In fact, it's trending a lot closer to $0.50 and maybe $1 of total RF content. And when you get into a 3G phone, there's a 3 to 4x multiplier on there and a 2 to 3x multiplier for the 3G entry market. Then when you get into LTE, you even have a greater multiplier. And I think that is the RFMD thesis, the investment thesis that more of our business is shifting to 3G entry, to 3G into LTE and thus our dollar content is probably poised to expand more than just about anyone in the space that I can think of as these products continue to play out and as 2G becomes a lesser percentage of our total business.

And then as a follow-up question about your MPG segment, just wondering what you guys are doing to make movements into 802.11ac?

Yes, there's a lot of activity in 802.11ac. Today, I say our greatest activity is with the reference design partners. The certification has not occurred yet on that set, but just like we saw with 802.11n, OEMs are poised to release product even in advance of their certification there, so we’re seeing a lot of activity, and we think is going to have a faster ramp even than 11n. What we're hearing is that you can expect it to be material with an inflection point in calendar 2013 for handsets in CPE.

Our next question comes from the line of Parag Agarwal with UBS Investment Bank.

Just a question, a high-level question, now if you look into remainder of 2012, would you rank, order your growth drivers for revenue investment that you expect PowerSmart to be the biggest driver or Phenom or anything else that is in absolute dollars?

I don't think I've looked at it. I think what I can say, coming off the base, it's clear our Phenom products are going to be fastest-growing, clearly with the work that we've already won in 3G and 4G, it's going to be the fastest-growing. I'm not sure if I aggregate it altogether because also adding in the switch content...

Yes, I think -- yes, when you look at the landscape, one significant design win here or there, can so much skew the amount of revenue growth in a particular platform or particular phone model, which could heavily weigh one way or the other, the switch base products or the Phenom-based products or even the PowerSmart products and in particular, our antenna control solution. So, it's really a forward-looking statement that it's very much customer-driven by specific models that will be launched throughout the calendar year. But I think we have very broad coverage though, across what will be released.

Yes, I think the other thing we've said on prior calls was that the sales funnel for Phenom is much larger. Primarily, as you know, the largest baseband manufacturer out there being Qualcomm that's who those are aligned with, whether they're the discrete PAs or the multimode multiband PAs, clearly, that's going to drive a lot of growth. So I think, again, we're coming off a low-base, it's clearly going to be our fastest-growing and has an opportunity to grow faster than what we have with PowerSmart but it's still a little early to say as Dean has laid out, just looking at the number of wins we have, the number of baseband manufacturers and depending on the schedules for LTE, as we look at because we look at most things in the fiscal year and not in the calendar year so I think that's where we're headed they're both going to grow extremely nicely year-over-year, along with our switch-based products. Go ahead, Eric, if you want to add some color.

Yes, I kind of look at it differently. I look at market segments maybe so in terms of growth drivers in that respect. I mean 3G entry is going to be a big growth driver for RFMD. We're positioned to capitalize on that. There's a lot of consumers around the world making the transition from 2G to 3G, so that's going to be a big driver overall for the year for us. And then LTE, it is really amazing some of the phones that we'll be ramping later in this year in terms of the total content available there, it's very routine today to be looking at 4 bands of 2G, backward compatibility, 4 or 5 bands of 3G and then one, 2 or 3 bands of LTE all in the same handset. And in fact, even our PowerSmart LTE that again, we'll be ramping this year, we're looking at customers have required us to have 8 bands, any one of which can be configured to 3G or 4G on-the-fly, backward compatibility with 4 additional bands of 2G. So, yes, it's up to 12 bands of coverage. That will come standard in PowerSmart LTE and then we'll have bolt-on bands for the outlying LTE bands as well. So when you really look at that dollar content that's being driven by the LTE and higher end smartphones, that's going to be, I think, a key driver for us.

And coming to the gross margin, just wanted to make sure that you expect to go back to your historic gross margin with the same level of revenue investments that there's no fundamental change in your gross margin structure, is that right?

Yes, I'd like to reiterate, once again, no fundamental change in our gross margin model, since there's been no changes in our -- in adding capacity or our manufacturing costs. In fact, like I said, if anything our manufacturing costs are leaner today than they were a year ago.

Our next question is a follow-up from the line of Edward Snyder with Charter Equity Research.

A couple more housekeeping, if you could. You said the very early stages, Dean, I think you said very early stages of bottoming in MPG. It sounds like you've not seen an uptick in that business yet. Can you characterize the orders towards the end of the quarter and then, Eric, you said the PowerSmart was in production with 2 baseband vendors, does that mean that you're shipping production volumes to phones using those basebands? What does it mean to be in production with those 2 vendors?

Ed, I'll turn that over to Norm for the MPG comment.

Sure. In MPG, we've seen the business stabilize late December just kind of looking at the bookings relative to shipments. We've seen it stabilize at these levels. We're seeing some upticks in certain areas. Just not quite enough to break out of the noise but we're running at currently at the same level as last quarter.

Yes, a couple of things, there is traditionally, some seasonality in the MPG business in the March quarter, and we often mention that we had a couple of key infrastructure companies transitioning to hub, so those are a little bit of a headwind for the MPG group but we'll see how the quarter goes.

And your question about PowerSmart. Yes, we're in a full production now with 2 basebands at Samsung.

And then, will Nokia decline as a percent of revenue in the March period? And then Samsung, any color you can give on the quarter? Was it up or down sequentially on absolute levels?

This is Bob and what I said earlier is we really didn't want to get into what percent Nokia was going to be forward-looking because they haven't reported yet. So we did say they're going to decline through normal seasonality, and we did not break out Samsung as a percent of sales this last quarter or the quarter before, just other than both Nokia and Samsung have been our 10% customers and neither one of them has reported.

Yes, Samsung came in right on expectation, so a little higher than expectation for us during the December quarter.

And then could you say the same thing about the new -– 3 new products? I know you don't want to give any detailed guidance, I appreciate that. I'm just looking for, are the new products, the 3 horses [ph], did they meet your expectations? Was there a little softness in any of them or they -- I mean, how would you characterize this, the stronger inline or slightly lower than what you expected?

I'd say the whole category of those new products we're -- that we talked about in 3G, 4G were at or slightly better than target.

Our next question is from -- actually, we don't have any further questions. At this time. I'd like to turn the conference back over to management for any closing comments.

Thank you very much for joining us tonight. We hope we've made clear tonight our belief that RFMD's 3G and 4G products are poised for substantial growth in 2012. We expect MPG will recover as the macro environment improves, and new products and technologies will deliver revenue growth. Finally, we have exciting new product cycles extending well into the future, and we expect sequential revenue growth to resume in the June quarter enabling broad improvement in our financial performance. Good night, and thank you.

Thank you, sir. Ladies and gentlemen, if you'd like to listen to a replay of today's conference, please dial 1 (800) 406-7325 or (303) 590-3030 using the access code of 4500529. This does conclude the RF Micro Devices Third Quarter 2012 Conference Call. We'd like to thank you for your participation. You may now disconnect.