Stephen Ferranti David J. Aldrich - Chief Executive Officer, President and Director Donald W. Palette - Chief Financial Officer, Principal Accounting Officer and Vice President Liam K. Griffin - Executive Vice President and Corporate General Manager

Richard E. Schafer - Oppenheimer & Co. Inc., Research Division Alex Gauna - JMP Securities LLC, Research Division Anne Edelstein Richard Sewell - Stephens Inc., Research Division N. Quinn Bolton - Needham & Company, LLC, Research Division Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division Anthony J. Stoss - Craig-Hallum Capital Group LLC, Research Division T. Michael Walkley - Canaccord Genuity, Research Division Michael A. Burton - Brean Capital LLC, Research Division Blayne Curtis - Barclays Capital, Research Division Edward F. Snyder - Charter Equity Research Sujeeva De Silva - Topeka Capital Markets Inc., Research Division Thomas Diffely - D.A. Davidson & Co., Research Division Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division

Good afternoon, and welcome to Skyworks Solutions First Quarter Fiscal Year 2014 Earnings Call. This call is being recorded. At this time, I will turn the call over to Steve Ferranti, Senior Director of Investor Relations for Skyworks. Mr. Ferranti, please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' first fiscal quarter 2014 conference call. Joining me today are Dave Aldrich, Don Palette and Liam Griffin. Dave will begin today's call with a business overview, followed by Don's financial review and outlook. We will then open the lines for your questions. Please note that our comments today will include statements relating to future results that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially and adversely from those projected as a result of certain risks and uncertainties, including, but not limited to, those noted in our earnings release and those detailed from time to time in our SEC filings. I'd also like to remind everyone that the results and guidance we will discuss today are from a non-GAAP income statement consistent with the format we've used in the past. Please refer to our press release within the Investor Relations section of our company website for complete reconciliation to GAAP. With that, I'll turn over the call to Dave for his comments on the quarter.

Thanks, Steve, and welcome, everyone. I'm pleased to report that we're off to a great start to fiscal 2014, as reflected by our strong first quarter performance and above-seasonal guidance for the second quarter. Fueling our success is the proliferation of connectivity in all of its forms across a broad array of end markets and applications. This powerful underlying global trend, combined with our growing analog portfolio, expanding broad market opportunities and consistent execution, all translate into superior ongoing financial results for the company. Skyworks has become an enabler of all things connected, providing custom solutions that help our customers navigate increasingly complex analog design challenges. We leverage a comprehensive portfolio of technologies and leading-edge integration capabilities to create differentiated solutions. And as the world becomes increasingly more connected and analog complexity escalates, we're uniquely positioned to capitalize. And our strategy is paying off. During the quarter, we delivered revenue of $505 million. That's ahead of our guidance and up more than 11% year-over-year. We produced operating income of $141.8 million. That's up nearly 24% from a year ago. We posted $0.67 in earnings per share. That's up 22% versus a year ago. And we generated $159 million in cash flow from operations, which is a record for the company. So in short, Q1 was another excellent quarter for us across all key metrics. And looking ahead, we see our momentum continuing. While March is normally a slower seasonal quarter for the industry, our increasing market diversification and new product ramps are enabling Skyworks to largely offset normal mobile seasonality. More specifically, during the second quarter, we're seeing strength from our expanding portfolio for the networked home, connectivity solutions in the emerging markets, key vertical market opportunities and our ramp of integrated systems solutions like SkyOne. These drivers are helping to mute seasonal trends at some of our OEM customers. This is a clear testament to our diversification. To put our growth trajectory into perspective, EPS for the first half of 2014, as measured by our first quarter reported results and second quarter guidance, is 2.5x the EPS we reported for the first half of 2010, representing a 25% compounded growth rate over that 4-year period. With our expanding market footprint, the stage is set for continued revenue growth, margin expansion and earnings leverage. For more in-depth review of our financial results, I'll turn the call over to Don for his commentary and outlook.

Thanks, Dave, and thanks for joining us, everyone. We appreciate it. Revenue for the first quarter was $505.2 million, ahead of our prior guidance and up more than 11% versus the year-ago quarter and nearly 6% sequentially. Gross profit was $224.7 million or 44.5% of revenue, in line with our prior guidance and up 150 basis points from the year-ago quarter. Operating expenses were $82.9 million, consisting of R&D expense of $50.8 million and SG&A expense of $32.1 million. We generated $141.8 million of operating income and that yields a 28.1% operating margin and that's a 280 basis point increase versus the year-ago quarter. Our cash tax rate for the quarter was 10%. That produced net income of $127.7 million or $0.67 of diluted earnings per share, $0.01 better than our guidance. Turning to our first quarter balance sheet and cash flow statement, we generated $159 million in cash flow from operations. We invested $16 million in capital expenditures with depreciation of $21 million and we repurchased 670,000 shares of our common stock, representing a $17 million investment. Given our confidence in our business outlook, we continue to believe that repurchasing shares of common stock represents a highly attractive use of our cash. And finally, we exited the quarter with $649 million in cash and no debt. Now for our second quarter business outlook. With the demand visibility and order backlog we have in place today, we expect second quarter revenue to be $470 million, significantly better than normal seasonality and representing 11% year-over-year top line growth. At this revenue level, we suggest modeling gross margin in the range of 44% to 44.5%, with operating expenses of approximately $83.5 million. We continue to see opportunities for sustainable margin expansion, as we leverage our capital investments and benefit from growing demand for our margin-enhancing integrated custom solutions and precision analog products. Below the line, we anticipate $200,000 in expenses from interest income and other expenses and a cash tax rate of around 10%. We project our tax rate to remain at these levels for the remainder of our 2014 fiscal year. We expect the share count to be around 191.5 million shares, resulting in second quarter EPS of $0.59. All of the underlying drivers are in place for Skyworks to continue to outperform. It's worth noting that our second quarter 2014 guidance represents our fourth consecutive quarter of over 20% year-over-year earnings growth, and that highlights the consistency of our execution in placing our financial returns among the best-of-breed in the semiconductor industry. We are within striking distance of achieving our mid-term business model of 30% operating margin, which, as a reminder, generates around $3 in annualized earnings per share. And with that, I'll turn the call back over to Dave for his comments on the market.

Thanks, Don. For the remainder of the call, I'll provide some perspective on the growth trends in the market and how we position the company to capitalize. Skyworks is at the forefront of enabling the connected world by providing high-performance analog solutions for end markets, ranging from communications infrastructure and network access points to mobile platforms and connected devices within the home, as well as within key verticals like automotive, industrial, like medical. Looking at the high-level drivers of our market opportunity, entering 2014, we see 3 key trends fueling our growth: First, the adoption of higher data rate services across a broader global footprint; second, the rapid proliferation of connectivity into new vertical markets and expanding device categories; and, third, connected devices incorporating more and more network standards. And I'll spend a few minutes going through each of these in a bit more detail. Starting first with increasing global demand for high data rate services like 802.11ac and like 4G LTE. The uptake of these technologies, as well as the implementation of multi-antenna architectures and carrier aggregation are still in their infancy, accounting for only a fraction of connected devices today. OEM manufacturers and network operators are rapidly rolling out these technologies in their drive to provide users with a premium connected experience, meaning seamless connections, faster download speeds, improved signal range and longer battery life. Over the next couple of years, we expect the global footprint of devices utilizing these standards to grow substantially, and we see tremendous opportunities ahead within the emerging markets where broadband penetration rates are low. Population density, however, is high. And there is a general lack of wired communications infrastructure. As an example, Crédit Suisse estimates that the number of LTE-enabled smartphones in Asia will grow by over 70% over the next 2…

[Operator Instructions] For our first question, it comes from the line of Rick Schafer with Oppenheimer. Richard E. Schafer - Oppenheimer & Co. Inc., Research Division: Just had a couple of questions. The first, I guess, is what is driving, I guess, this near-term strength that you're seeing? I know you talked about seeing an above-seasonal March quarter here. Is it any one particular customer or end market, or is it more broad than that?

Thank you, Rick. The way we see March shaping up is, I think, there'll be fairly normal historical seasonal patterns in mobile. Obviously, we're seeing some OM -- OEMs impacted more than others. I think the difference is our opportunity, or our target, is much broader than others and is basically driven by end market diversification and content gains. I think the specific areas of strength are: We're seeing continuous success and sequential growth in the Connected Home products that I think we talked about a bit in our prepared comments; we're seeing strong demand in emerging markets; we're seeing strong demand in some of the new verticals; and, by the way, we're ramping high ASP and high-margin products like SkyOne. So I think it's a combination of those offsetting seasonality. Richard E. Schafer - Oppenheimer & Co. Inc., Research Division: Okay. And then, just as a follow-up, in TD-LTE -- and correct me if I'm wrong, but I think you've said in the past you're close to about 50% of MediaTek's quad core designs or reference designs. Is that still true? And what does that trend look like this year? I know you -- as you called out Asia, I think, specifically talking about the opportunity there with LTE devices over the next couple of the years, I'm just -- if you could quantify anything there that would be great.

Sure. Yes. This is Liam on that. MediaTek continues to be a really important customer for us. We are on their latest quad core platforms and their newest LTE platforms. And what that means for us is really a significant upgrade in content versus a traditional 2G or even a 3G phone, so we're seeing content around the power amplifier suite moving into more multi-mode complex systems, but we're also, in addition sweeping an ASM technology with switch, GPS in some cases and even seeing Wi-Fi attached. So it's a meaningful cycle, and we're in the very early innings of that upgrade throughout China.

Our next question comes from the line of Alex Gauna with JMP Securities.

I wonder if you could give us a little bit of color on how China Mobile appears to be factoring into what you just delivered and what you guided to, maybe some indications on how you feel the build-out is going to be and if there's any risk, you think, of a hangover, if we have channel fill and not so much channel sell-through and, I guess, some color on that.

So I think -- let me, kind of, answer it maybe in a broad way. We're actually -- what we're seeing in China today and we're seeing some pretty strong growth here, is that, more than anything, the upgrade cycle -- irrespective of which carrier, the upgrade cycle is sweeping in a lot more analog functionality and connectivity in ac [ph] and some of our products for switching and control. We're seeing strong attach rate with QRD, strong attach rate with MediaTek, including some of their workhorse, smartphone, quad core models. And I think, if you look at the big players in China, think of Lenovo, Huawei, Coolpad, and if you look at some of those teardown reports, we've got a lot of content and very high penetration rates. So I think, if you combine all those, we're just pretty broad there and we're seeing a lot of incremental content.

Okay. And then, you've mentioned the diversification strength across some various areas, most of them still having to do with wireless connectivity. Could you comment on where you are in terms of evolving some of your HPA opportunities that aren't cellular attached? I know you talked about Connected Home, but you briefly mentioned power management. Where are you seeing that? How are things going on the wireless infrastructure side?

Sure, Alex. Yes. I mean, outside of the core mobile business, we are seeing a lot of diversification and opportunities, home automation, ZigBee-enabled lighting. For example, we have a design win with Philips, where they're using blue light LED inside of a wearable patch for therapeutic purposes. The Fitbit example that Dave mentioned, another outstanding opportunity for us is leveraging Wi-Fi. We're moving into power management with DC-to-DC and voltage regulators. We have LED backlight in automotive applications. Just a broad reach of opportunities, and we feel that our team in the field is picking up more and more opportunities each quarter. We're very excited about where that can go.

And, Alex, we've built out a system engineering and an applications infrastructure throughout the world. We're really getting better and better at identifying sockets where we can penetrate, we can customize, gain some real value and add value to our customers. I think, just if you look at the orders we booked this quarter, and I mentioned a few of them, but -- there was Philips. There was Nest. There was FitBit. There was Belkin. So it's really across the board, everything from the cable modem to the gateway products to all kinds of appliances. So it's really across the board.

Next, we go to the line of Vivek Arya with Bank of America.

This is Anne Edelstein calling in on behalf of Vivek. I guess, the first question is, I look at the way that you are guiding operating expenses in the current quarter, it's coming up somewhat quarter-over-quarter as revenues are declining. Can you just talk -- is that a one-off? Can you talk a little bit more about that and how that factors into your pace [ph] to 30% operating margin?

Sure, Anne. This is Don. We've been pretty consistent about our ongoing investment in some of the key areas in the business. Particularly, if you look at the OpEx increase that we just saw from fiscal Q4 to the December quarter fiscal Q1, all of that increase was in R&D and that's a similar pattern that you'll see in our guide from March, and it's really just reflective of some critical investments that we're making in R&D teams to support our continued focus and ability to grow in some of these new vertical markets. So we feel really good about those investments. We've been consistent about our OpEx slowly increasing this year and -- but there's a tremendous amount of leverage still left in the model, when you look at the revenue growth.

Great. And then, I guess, a little bit more on the China opportunity. How well positioned do you think that you are currently to grow as the TD-LTE market, sort of, takes off this year? And how do you see your opportunity maybe diversifying a bit into some of the lower end phones?

Well -- thanks, Anne. I think that the -- one way to look at it is -- the way we kind of decompose that market and there is going to be some big customer winners or at least high volume drivers within that market. And so, we focused very intently on them. We've done -- as I mentioned, we've done a really good job, we think, with Lenovo, with Huawei, with Coolpad, with some others that are really going to drive a great deal of volume, plus there are hundreds of indigenous OEMs. But we've done really well with, I think, the volume drivers. We've also focused for a long time, as you know, with MediaTek. And I'm really very pleased with the amount of penetration we've got in all their reference designs, particularly the workhorses we think that are going to drive high dollar content smartphones. We've got everything from ASM-based products. Now we've got some connectivity products, multi-mode PA switches. So again, the whole -- and I guess the third element, is the whole theme of -- as these phones become more -- smartphones become more complex and indeed feature phone transitions to smartphone and then smartphone move more towards 4K, they're having very high penetration rate of some pretty sophisticated analog processing, and that's where we've been excelling is being able to sell more of the system solution by having our applications engineers and system designers hand-in-hand with our chipset marketers in that region, whether it's MediaTek, QRD -- or Qualcomm QRD, and that's where we're gaining volume and we're gaining share.

Next, we go to the line of Richard Sewell with Stephens.

It's Richard calling in for Harsh. So first question, looking out over this year, how are you thinking about the growth opportunity in mobile and specifically in the smartphone end market?

First of all, we're still very bullish on mobile in general and smartphone specifically. We talked about China as a real theme that we're benefiting from. But even in traditional Tier 1 accounts, we continue to see the need for higher data rates, more advanced protocols and that brings complexity to the table. So as we look out through 2014 and the platforms we're designing now for 2015, the performance of these products is going up and up and our ability to deliver simplicity here is exactly what these customers want. So we're really excited about it -- the content theme is coming together. There's more bands. There's a lot of complexity in filtering and tuning. The analog suite that we bring to the table is another real key driver for us. So we like that. We think it's a great trend. We're seeing it with our Tier 1s. And as we talked about already today, we really like what we're seeing in China.

Great. And for my follow-up, what are some of the remaining levers to get to that 30% up margin you always talked about?

It's pretty consistent, Richard, with what we've talked about. It's -- number one, it's -- we have said consistently that we need to be at about $550 million per quarter in revenue. With that and with the spending profile we're looking for the rest of the year, that gives you the continued leverage on the OpEx expenses, which help. And we're going to continue to drive margin expansion. And that's a long list of items, whether it's leveraging the CapEx investments we're making, it's the improved margin on some of the new system solutions that are rolling out, it's our hybrid manufacturing model, our ability to keep our utilization at a very high rate, it's how we manage the supply chain. It's multiple things. So if you -- we would expect to drop that incremental revenue to about [ph] 48%, which will continue to drive margins. So it's a combination of both.

Next, we go to the line of Quinn Bolton with Needham & Company. N. Quinn Bolton - Needham & Company, LLC, Research Division: Dave, I'm just wondering, you've talked a lot about IoT this -- on the conference call. Clearly, you guys are well positioned with high-performance analog, power management and some of your connectivity solutions. But things like microcontrollers and sensors are also pretty key solutions and could align pretty nicely with your product portfolio. Do you guys have a strategy potentially to either partner or potentially look to expand your product portfolio into those types of devices for IoT?

Yes. Thank you, Quinn. That's a great question. The horses we're riding in '14, '15 will continue to be what we were doing in much of '13, which is -- the earlier question that Richard had was about our feeling about smartphones. Irrespective of what the growth rate of smartphone is, one thing is for certain, that customers need to see more analog solutions that sweep in functionality because they're finding it too difficult to meet the constraints of the baud space, current consumption and so on. So we have been increasingly, even if we don't sell it in an integrated platform like SkyOne -- in as integrated a platform as SkyOne, we're able to bundle those products and guarantee the system global performance by working with our customers at the radio baud level. And recently, that's begun to sweep in more and more high-performance Wi-Fi, ac and the like, multi-mode Wi-Fi, GPS-shielded devices that incorporate filtering. We talked about power, lighting and display. That's a big deal, where you're trying to drive very high-performance camera flash, for example, or display. So there's a lot of power management and voltage regulation that this complexity is driving, and we think we're the only folks out there today who can take a complete suite of products and, from a system standpoint, lay it out for them. Now when you look at the next click, I am very intrigued by the opportunities for, for example, MEMS-based technology to do things in not only in the microphone space but in gyros and sensors and then taking that product outside. So we are investing, we are creating partnerships that are going to allow us to go to the next click because I think the next big wave is going to be around sensing level functionality and all kinds of motion controls. And we're going to play there, and we're investing now. N. Quinn Bolton - Needham & Company, LLC, Research Division: Okay. Great. And then, the second question I had is -- I mean, you guys are obviously very well positioned in Wi-Fi front-end. There has been some talk about 2 x 2 MIMO potentially moving out -- or moving down from the tablet space into some of the higher end smartphone platforms. Do you guys have a view -- is that a real opportunity for you in 2014, or do you think, for power reasons, that you'd most likely stay 1 x 1 in smartphones?

Yes. It's a great question. We talked a lot about MIMO technology and access points using 3 x 3, even 4 x 4 multiple screens and access points to extend range and performance. We are actually, to your point, seeing this now in smartphones, and we think the benefit provided to the consumer is outstanding. It's, again, higher data rate, greater levels of connectivity, expanded range and the value to the consumer is there. And for us, it actually effectively doubles the content in phones that go 2 x 2 or 3 x 3 would be a triple. So we're excited by it and we like the fact that, again, the relentless demand for connectivity, for data -- for wireless data continues and the kind of solutions that we talked about here are really in high demand now.

And our next question comes from the line of Steve Smigie with Raymond James. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: You guys obviously discussed and listed in your press release a whole bunch of non-handset-related drivers. And I was hoping you could give us, sort of, your typical breakout, the cellular group versus analog and -- but in addition to that, I guess, typically, you're like 60-40 or something like that. But within that Wi-Fi portion, that's usually -- a lot of it still seems to be going to handset. So could you say how much is handset and non-handset all in? And what I'm trying to get at is, where are you now and where can you go 3 years out on that non-handset portion?

Yes. Steve, I'm glad you asked that question because the -- I think we recognize that the split we have discussed -- we continue to discuss the 6 [ph] which is today around 60-40. That's consistent this last quarter, really kind of hearkens back to a couple of years ago -- a few years ago when we talked about 80-20 with 80% being dominated by PA and transmit module products and 20% mostly infrastructure, some Home, some Smart Energy. The fact is that business today is very different. So if I look at where the growth is coming from -- maybe this will help answer your question. In mobile, for example, the growth is -- our PA business, for example, is declining as a percentage of sales. It's still growing, but it's declining as a percentage of our revenue. And what's growing fast is these mobile analog solutions we're talking about, GPS, Wi-Fi, power display, as well as highly integrated solutions like power amplifier duplexers, SkyOne and the like. That's where the growth. And then, the second growth engine has been in non-mobile. We've talked about the Connected Home. We've talked about automotive and medical. So that's really the way we are running the business today. And I think, as we go forward, we'll be looking for ways to kind of articulate better for you what that split is because I think the 60-40 is probably not as useful as it once was. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay. And you guys really helped us out last quarter. You gave some color, an extra quarter out where you sort of gave us some thoughts on March. I was hoping you might be able to give us some color into June. Obviously, more and more, we're seeing some big OEMs drive that but [indiscernible]. How should we think about seasonality for your -- for you in June? And how is it looking right now?

Yes. I think it's a little too early to get very specific. I would say that I don't see any reason to believe that it won't be a normally modest up quarter. That's usually the case in the June quarter. And as we look at our business rolling out in 2014 for Q2, Q3, Q4, we see similar trends as -- in Q3 as we do in Q2 or in June as we do in March, which is these share gains, content gains, diversification gains largely offsetting whatever seasonal mobile business may be thrown at us. We expect to have a good June quarter. We expect the mobile market to be up modestly a few percentage.

Our next question comes from the line of Anthony Stoss with Craig-Hallum.

Dave, can you give us a sense on the analog side for March? In terms of your overall guide [Audio Gap] you expect that business to be up sequentially in March. Also, I know there's a lot of different products and units that you could get [ph] on the Internet of Things. I'd love to hear your view on how you can piggyback multiple chipsets and what your view is on overall content for Skyworks in the Internet of Things.

Yes. Thanks. I think that our March non-mobile business will be roughly flat. And so, most of the seasonality is occurring among those OEMs in our mobile business. And if I think within that roughly flat, which is much better than seasonality, it really is -- as we talked about in the prepared comments, it's a combination of, obviously, traditional Wi-Fi products and more Wi-Fi content where we're looking to have multi-mode Wi-Fi that has more ac content and so on and so forth. We're also seeing ZigBee content that's meaningful. There's also some real power management and voltage challenges with some of these devices -- these gateway devices we talked about, and we talked at length in the prepared comments about an engagement we have with a service provider today. There's a lot of dollar content and a very cool complex products. And the content there is multiple dollars and it's GPS, it's Wi-Fi, it's cellular. So I think it's really all of the above in the Home, and we've talked about brand new nascent products for us. I mean, we're just starting to see meaningful revenue coming from medical devices we talked about, in some automotive devices, in the Volkswagen platform we have in the press release. That's kind of a sleek product going into an in-mounted dash entertainment [ph] Volkswagen device.

Okay. And then, lastly, on your SkyOne comments, the traction you're seeing there, is that more in the low end, midrange phones [ph] love to hear your view on where it's ending up.

Sure, Tony. Yes. So as we mentioned in the prepared remarks, we have 2 customers right now in production, HTC and Samsung. We're making great progress with both. We're in high-volume production on some very sleek smartphones. There's a number of customers right now that are in various stages of sampling, some traditional Tier 1, some players in Asia. But we certainly expect, as we see success with those 2 customers, we expect several more to ramp during the calendar year.

And our next question comes from the line of Mike Walkley with Canaccord Genuity.

This holiday season, it seems that the carriers were more aggressive in subsidizing LTE tablets, especially on the Android side. Have you seen a discernible mix shift from WiFi-only tablets to LTE? And is that helping some of your growth drivers into the near term?

Yes. That's a great question. As you know, we've seen really nice attach with Wi-Fi and tablets, and we're also, by the way, seeing tablet expanding dramatically from some of the real strong U.S.-based Tier 1s to a burgeoning market in China. So there -- that's good. So we see unit increase there that's substantial. All of that's been WiFi-enabled. But it is true we're starting to see more and more LTE -- full cellular LTE engines attaching with Wi-Fi. In the past, it may have been about 25% to 30% penetration. We've seen some companies go 100%. But certainly, the dial is moving up, and that does present a real significant pop in content for us.

Yes. I think, Mike, it wasn't much -- it's not a big driver in this last quarter, but I think the trend is clearly there and I expect it to be meaningful in out quarters.

Okay. And then, follow-up question -- and that's helpful, Dave. A follow-up question, just going back to some of these interesting design wins and kind of the Internet of Things market, a lot of these early-stage ramps are much smaller than, say, a handset ramp. So how do the gross margins compare now and how can the gross margins in this division maybe improve over time as some of these things, like Nest, could ramp into really big units longer term?

Yes. Mike, as we've said, if you look at the suite of products and systems solutions that we're delivering in the diversified analog space, they are typically accretive to the overall corporate margins. So as we're successful, continuing to gain share and grow that business, it's going to, without question, move our margins forward. But I do want to point out, the margin expansion that you're seeing as well is the value add that we're doing in the complex system solutions that's tied into the mobile space as well. We're having some real good success there, too. So it's both. But clearly, the analog -- that analog piece of business growth margins will expand.

And next, we go to the line of Mike Burton with Brean Capital.

Wanted to follow up on that question -- on the previous one on SkyOne ramping this quarter. Can you remind us the type of dollar content you get there compared to your average and maybe help describe some of those initial platforms you've secured?

Certainly. Yes. Well, SkyOne is a meaningful increase in content versus even our traditional Tier 1 engagements. So it provides not only a full multi-mode, multi-band power amplifier solutions, we bring in expertly matched and tuned filters. It's configurable. We can make a unique platform for any given customer. And what we also provide is a great deal of the engineering systems benefit. So a customer that has a time-to-market challenge or is spending their R&D budget on look-and-feel industrial design software screens, we can unburden them completely from this cycle engine [ph], so there's a lot of value. The 2 customers that we named, they're really just the beginning. Very proud to be within Samsung, I mean, they're the market leader in this space across the board. They found a great deal of value in our solution. HTC, another player that does incredible industrial design and really good brand, really good look and feel. We were a perfect solution there. And there's a long list of others that we're in various stages of sampling today, so we're quite bullish on our opportunity there.

Okay. And then, also, can you talk a little bit about the wireless infrastructure market? How big is exposure there now for you guys? And have you begun to see any life there? And then, just lastly, any 10% customers?

Yes. On the infrastructure side, I mean, it's an important market for Skyworks and it's been relatively flat over the last few years. We have strong position with Ericsson, with Huawei, with ZTE, Nokia-Siemens, so all of those players. We're starting now to see, finally, some upside with LTE rollouts. Everything that we've spoken about with respect to China and even the smartphone gains in the U.S. are moving towards 4G and LTE solutions. There needs to be that commensurate network infrastructure to handle the data. So we're finally seeing it. It's not double digit right now, but it's slowly moving in that direction. Fortunately, for us, over the last few years, we've really been doing a nice job expanding our reach, adding a lot of new products there, whether they be power management products or highly customized analog solutions. So we'll be in good shape when that market picks up.

And, Mike, the -- it was -- the 10% were Foxconn and Samsung during the quarter.

Next, we go to the line of Blayne Curtis with Barclays.

A couple of questions. One, I just want to better understand the comments on seasonality. You said the nonmobile would be flat. I guess, everybody has got the old metrics, the 60-40, and I'm assuming that comment assumes some portion of that 40% is also mobile. I know you didn't break out Dave, but if you could just clarify that.

I was -- when I talked about the nonmobile being relatively flat, I just mean everything that's not in the smartphone. That's what I mean.

Got you. And then, if you could just talk about seasonality. It's hard, and there's no real -- given the concentration in customers, things like the seasonality changes every year. Last year, you benefited from a new product ramp. Are you seeing any benefits to the upside as far as major products? Or kind of, if you can just talk about what you're seeing from a seasonality in mobile. Are you seeing products platforms ramp down? Are you getting any benefit? You mentioned SkyOne, but I'm assuming that's not a huge number. Is there any sort of ups versus normal seasonality in mobile besides SkyOne?

Yes, we actually do, Blayne. We see a couple of customers -- or some customers being pretty dramatically down. It's just normal the way they've rolled their products out. We see others up. We see some customers within China up. We -- it's no secret that Samsung tends to take their inventory down and have a soft December. That occurred for us. That's less so in the March quarter, so that's a contributor. We are ramping SkyOne. As Liam mentioned, that has high dollar content. And again, this portion of the business that is nonmobile or outside of a smartphone, we're seeing some nice tablet growth, some nice high dollar content products in these vertical markets. So I think it's really a combination of all those things. But we're certainly not immune from OEMs taking the smartphone volumes down in March. We see some of that.

The next question comes from the line of Edward Snyder with Charter Equity.

SkyOne. So I think there's some confusion in the investor base when Qualcomm talks about RF360. I think a lot of folks think SkyOne is a similar product, but it's quite a bit different, isn't it, Liam? It looks like maybe MMPA, some amplifiers, but much more focused on the hardened bands [ph], but more utility. Can you just give us a really brief descriptions of, one, what's in it; and, two, how it varies from what a lot of people think is going on with RF360?

Well, one of the most important parts is that it's made up of proven core building blocks that have been proven in Skyworks for years. We also have the ability to uniquely configure the solution, so it is not a one-shop-fits-all, kind of, solution. A lot of the work, the tuning, the matching, bringing in multiple bands of filters, using different technologies, as Dave pointed out, we have a very strong partnership with filter players [ph]. We can bring in BAW solutions, we can bring in SAW -- temp comp SAW. We can weave in our own power management, ET-based solutions if needed and then deliver unique MMPAs that wrap around it. So the ability to configure -- highly configure customer by customer rather than give a single monolithic solution is very important to us. We found each engagement to end up uniquely with a different design, and we found our benefit to deliver time-to-market. Our systems and tuning expertise from our teams, all to be really differentiators for SkyOne.

And then, you've mentioned several times that not only just high dollar content but also your margin profile this product is -- is it accretive to mobile, accretive to consolidated margins? Can you give us a feel for that? And does that include any of -- you mentioned the [indiscernible] controller, et cetera or digital controller. Does it include any of the ET products, by that, I mean, amplifiers or modulators?

As Liam said, it's a platform. So case-by-case, the margin profile can swing. But generally, it's at or above our best margins we would see typically in the mobile space. So that's kind of the way to think of it.

And, Ed, with respect to ET, it does not include the ET modulator today. It does include ET PAs tuned and designed from the ground up to be high performance in ET mode.

Next, we'll go to the line of Suji De Silva with Topeka.

So can you talk about what you're seeing in the marketplace from integrated solutions like Qualcomm's RF360 if you're seeing traction there, perhaps, competitively?

Yes. Thank you. We don't see -- the short answer is, no, we don't see traction competitively from the RF360 today. I will say that, by its nature, that product and to some degree, our SkyOne -- or, at least, elements within our SkyOne family, they're very highly integrated products, lots of bands, lots of filtering. We see certain customers -- while perhaps somewhat limited in scope, that really need somebody to come in and step up and provide more functionality. PA-centric, albeit but more functionality. And so -- and then, on top of that, we try to bolt and we do bolt around that front-end functionality, that transmit chain functionality, a lot of GPS, power management, tuning devices. So I would say that we don't see competitive threat today, if you will, but we do see an opportunity to compete in the sense that both products provide for that segment of the market a complete solution. I'll also mention that we really are seeing a lot more content attach rate with Qualcomm, whether it's QRD or Qualcomm here with a lot more product. So I'm really delighted with the amount of partnership, the relationship and the fact that we have a lot of dollar content.

That's helpful color. And then, on the balance sheet, you did a good job buying back shares here, but you're generating a lot of cash and building up a significant amount of cash balance. What's the comfortable level of cash for you guys? And would you contemplate dividend given the strength of your fundamentals?

Yes, Suji. We did -- Thanks. We ended the quarter at $649 million in cash, and we're really happy with our consistent ability and the velocity with which we convert the strong earnings into cash flow. We're always looking at the capital structure. And clearly, when you look at our financial growth opportunities in the model going forward, that we're going to continue to buy back stock. We think it's an excellent way to deliver shareholder value. And just to frame that for everybody, we -- over the last 5 quarters, we have spent around $190 million on share buybacks. We still have over $200 million approved by the board of share buybacks. So we'll continue to be in the market to do that. You balance that with maintaining the financial flexibility for strategic growth initiatives. So that's one of the things that we do. And then, we absolutely are looking at a dividend as a possibility in the future. There's no question.

And next, we go to the line of Tom Diffely with D.A. Davidson. Thomas Diffely - D.A. Davidson & Co., Research Division: Hoping to get a little bit more on your capital spending plans or your capital addition plans for the year.

Hello. Yes, sure, Tom. I would -- we don't really provide guidance going out, but CapEx for us is really volume dependent. So as we're making CapEx investments above our depreciation level around $20 million, that's a positive thing. The payback on the capital we're putting in is generally very, very short, and it's based on our visibility to volumes. I think it's safe to say that you should be thinking about something slightly above our depreciation level for now for the last 3 quarters of the fiscal year. That's a safe starting place. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then, when you look at some of your integrated modules, can you talk more about the potential to get access to BAW filters in the future?

Sure. Well, it's interesting, the integrated modules, whether it be PADs or SkyOne, if you look at the teardown reports, we've got a fairly big footprint now in filters. We are in production today with a host of different SAW devices. We're now shipping temperature-compensated SAW products and designing those into our modules. And we expect, throughout 2014, for there to be some bands. There won't be very many of them, but there'll be some bands because of the tight band spacing and coupled with high frequency, where there will be some BAW devices. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And do your suppliers have access to that yet?

Yes, yes.

And next, we go to the line of Vijay Rakesh with Sterne Agee. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: I just want to get your thoughts on who your top 10 -- the 3 -- or top 3 major customers in the quarter [indiscernible] how do you see the China market?

Well, Vijay, the top 10 -- the only 10% customers this quarter were Foxconn and Samsung.

And I think the China market, we're expecting to see very robust smartphone growth. We're seeing 4G attach. We've got a good lineup of our products with QRD, Qualcomm and with MediaTek and others, and we're benefiting not only from the increased complexity on the transmit side, but we're sweeping in a lot more high-performance Wi-Fi connectivity power lighting and display and some voltage and power. So we're seeing an increase in content as the shift to smartphone occurs. So we feel very good about China. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: Got it. And if I may have a follow-up, when you look at the gross margins, you're doing very well on the gross margin side. What are the levers that should go through 2014 on that? Obviously, some are very nicely, but how do you see that going forward?

For '14...

As I said, we want you to continue to model an incremental 48%, which is going to expand margin as we grow. And it's driven by a long list of items, the products -- the new products we're releasing, the design, the system solutions, the value-add that's driving margin. Our focus on the metrics in the factory in driving yield and productivity leveraging the CapEx investment, so it's a long list of things that will continue to enable us to drive that margin expansion forward.

Ladies and gentlemen, that does conclude today's question-and-answer session. I'll now turn the call back over to Mr. Aldrich for any closing comments.

Well, thank you, everyone, for participating tonight, and I look forward to seeing you all at upcoming conferences.

Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.