Synaptics Incorporated (SYNA) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and thank you for standing by. Welcome to Synaptics Third Quarter 2013 Earnings Call. During today’s presentation, all participants will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference is being recorded today Thursday, April 25, 2013. And I would now like to turn the conference over to Jennifer Jarman with the Blueshirt Group. Please go ahead.

Thank you, Operator. Good afternoon and thank you for joining us today on Synaptics third quarter fiscal 2013 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the Company’s website at www.synaptics.com. With me on today’s call are Rick Bergman, President and CEO, and Kathy Bayless, CFO. In addition to the Company’s GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share-based compensation charges and certain non-cash or non-recurring items. Please refer to the press release issued after market close today for a detailed reconciliation of GAAP and non-GAAP results. Additionally, we would like to remind you that during the course of this conference call, Synaptics will make forward-looking statements, including predictions and estimates that involve a number of risks and uncertainties, including, but not limited to, statements regarding the Company’s future financial performance and outlook, including financial guidance for the fourth quarter of fiscal 2013, anticipated growth in mobile products revenue for the fourth quarter, the Company’s expectation of record revenue in the fourth quarter, included anticipated near term out performance driven by the aggressive ramp of the Galaxy S IV. The success of other flagship phones and the impact of the seasonally strong quarter, the Company’s expectation is that it’s first large touch screen designs for notebooks will hit the market in the second half of the calendar year, the company’s expectation is that ForcePad and ThinTouch solutions will begin generating revenue in conjunction with the next major PC cycle in calendar ‘14, the company’s belief that it’s Single Layer On-Cell Multitouch offering will begin projection shipments by calendar Q4, and the company’s belief that it is well-positioned for long-term profitable growth. Actual results may differ materially from any future performance suggested in the Company’s forward-looking statements. We refer you to the Company’s SEC filings, including Form10-K for the fiscal year ended June 30, 2012, for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. We expressly disclaim any obligation to update this forward-looking information. And with that I will now turn the call over to Rick Bergman. Rick?

Thanks, Jennifer and thanks everyone for joining us today. As you can see from our results clearly Synaptics is back in a growth mode reflected by a return to year-over-year top line growth as well as another consecutive quarter of sequential revenue growth. I’m excited to report that we achieved record revenue of 163 million during the third quarter up 24% year-over-year. Our performance highlights our success and diversifying our business into faster growing markets with upside driven by mobile phone touch screen applications reflecting the breadth of our customer base and strength of our product portfolio across a broader array of flagship phones. As a result of the revenue mix our gross margin performance exceeded our expectations as non-GAAP gross margin was 49.8%. We delivered strong non-GAAP net income of 27 million or $0.79 per diluted share. Well above the high end of our guidance range. Today I’m going to update you on our core markets. I’ll then turn the call over to Kathy to review our financial results in more detail and to provide our current outlook before opening up the call to your questions. Before we dive in, I’m happy to finally confirm that Synaptics ClearPad technology is being implemented in the next-generation Samsung Galaxy S IV flagship smartphone, as well as the new Samsung Note 8 Tablet. I’ll answer more color to these design wins in a few minutes, but first let me begin with a discussion of the PC market. The ongoing weakness in the PC market has been well documented. That being said we remain positive about our position based on our ability to provide leading edge products and the incremental content beyond the touchpad. While overall demand for notebooks remains a soft, the expanding opportunities for touch within an array of new form…

Thanks, Rick. As Rick shared, we are extremely pleased with our March quarter results, achieving record revenue of $163 million, a 14% sequential increase, exceeding our guidance range. The revenue mix from mobile and PC products was approximately 64% and 36% respectively. Revenue for mobile products was better than anticipated, up 57% year-over-year and up 28% from the December quarter, consisting predominantly of revenue from mobile phone applications with strong demand across a broad base of customers. We achieved strong mobile phone revenue and unit growth over both comparable periods and tablets continue to provide solid contribution. PC revenue was below our expectations, down 10% from the prior quarter and 5% sequentially, primarily reflecting the widely reported continued softness in the PC market. Synaptics continues to lead the market for notebook, touchpads and ClickPads. Our design activity continues to be strong and ClickPads were over 20% of our total touchpad unit shipment. Our non-GAAP gross margin of 49.8% improved 240 basis points year-over-year and 140 basis points from the December quarter. As a result of the beneficial mobile product mix exceeding our expectations and guidance range. Non-GAAP operating expenses were $48.9 million, up $3.5 million from the prior quarter. The increase was primarily employee-related, including payroll taxes, travel, and additional head count to support our expanding product portfolio and customer base. In the March quarter, GAAP operating expenses were $57.4 million, including $8 million of non-cash share-based compensation as well as a non-cash charge of approximately $500,000 for intangible amortization and change to contingent consideration. The strong sequential increase in revenue and gross margin dollars in the March quarter drove a 36% increase in non-GAAP operating profit dollars and increased operating margins to 19.8% from 16.6% last quarter. Our non-GAAP tax rate was 17.1% in the March quarter compared with…

(Operator Instructions) Our first question comes from the line of Rob Stone with Cowen & Company. Please go ahead. Rob Stone – Cowen & Company: Congratulations maybe doesn’t quite get it.

Thank you very much. Rob Stone – Cowen & Company: I’m pleased to say I got my Galaxy S4 earlier today and it definitely has much more accurate and responsive touch interface than the GS 3 I had before.

Well that’s a fantastic product and we are proud to be part of it. Rob Stone – Cowen & Company: I wanted to ask Rick about the ThinTouch and ForcePad. You talked about specifically the PC product cycle where I guess OEM design wins would hit in a calendar ‘14. Do you anticipate that you will have some revenue in calendar ‘13 from accessory products or not?

Rob, if we do it will be fairly limited. That market isn’t huge. We continue to work with the leading OEMs in that space but our expectation is more seen in the opportunity in the calendar ‘14. Rob Stone – Cowen & Company: Okay. So I know you’re not ready to give fiscal ‘14 guidance yet, but just thinking sort of big picture about the PC notebook market, given that you will start shipping your first large touchscreen PC designs in the second half of the calendar year when do you think, in general the PC market may return to growth? The PC segment for you, I should say.

For this calendar year, unfortunately we don’t have a crystal ball. I think everybody is kind of entered guesses for growth and been wrong over the last couple of years, actually. Our expectation at this juncture is flattish to slight growth as we move into the second half of the year. At some point replacement cycles will kick in. We all know that price points are coming down for the really interesting Ultrabooks and touch enabled platforms and I do think we’ll see an uptick. It’s just when is that nice uptick that’s going to surprise everybody, and the positive is going to happen and at this point I think, us just like everybody else, isn’t going to venture to guess on that. Rob Stone – Cowen & Company: Given the emphasis on more lower price points, are you seeing a change from historical trends as far as your own pricing?

Well the value of touch continues to go up. Windows 8, whether it’s a touchpad or the touchscreen, you can really tell that the advantage is there. The touchpad’s are getting bigger and so on. So we aren’t directly feeling it in ASP pressure, but as an industry certainly that’s part of every OEM discussion on how they can hit the 499 price point, or even the 399 price point for notebooks. Rob Stone – Cowen & Company: Great. Thank you very much.

Our next question comes from the line of Paul Coster of JP Morgan. Please go ahead. Paul Coster – JP Morgan: Yes, thank you. I’m wondering if you could just talk a little bit, Rick, about the ASP or the value of your sale into the PC end market. Through the end of this year and then into next year as you start to load up with the ForcePad and ThinTouch product.

Well, let me take a crack and then I’ll let Kathy add any color or detail to it. So as the current either TouchPads or ClickPads go inside that gives us opportunities, certainly moving from a TouchPad to a ClickPad. There is an ASP increase. And we’re not going to give can you give you kind of precise numbers. But a gradual hill of percentage of our products being shipped to customers now are becoming ClickPad. And that certainly is helping the negative to flat growth that we’ve seen in the notebook marketplace. And then certainly ForcePad type solutions is yet another notch above that. ThinTouch frankly is an entirely different ballpark given the nature of keyboard can be in entirely different price range then a touchpad. And at some point, yes, that will actually give us a great opportunity to participate paid in more of the bottom of the notebook.

And then there’s also the large touchscreen as Rick talked about, so I mean, we are – from a product standpoint, I mean, it’s primarily today, right, and in notebook TouchPad to ClickPad to ForcePad and then the next wave is as we add touchscreens into the notebook bottoms and other things and then further along than we get to the keyboard. Paul Coster – JP Morgan: So you’re expecting revenue growth in the PC segment in the second half of this calendar year. Can you just confirm that please?

Well, it depends upon market growth and then the market is growing. I mean, we expected that we would be growing pretty much with the market and then with incremental opportunity for growth with large touchscreen is the near-term. Paul Coster – JP Morgan: Okay. The other thing I wanted to just draw upon briefly was you’ve gotten $10 in cash per share. What are you going to do with this. I guess, there is going to be some folks out there that would love to see some of this cash go back to shareholders in the form of a buyback perhaps.

Sure. Paul, a couple comments here. We have over a prior quarter, obviously we did a pretty aggressive share buyback that this past quarter we didn’t, we’re putting a new building we are making other investments that Kathy detailed in her script. I’m still under the belief that our number one priority should be continuing to grow the top line for the company. And will continue to look for opportunities there as well. But certainly if we still have opportunities to buy our own shares and we’re not announcing anything at this point. We have plenty of room left in the authorization at this juncture and we’ll continue to look at that as an opportunity. Obviously U.S. cash versus overseas cash is always a question as well. Paul Coster – JP Morgan: Okay. Thank you.

Our next question comes from the line of John Vinh with Pacific Crest Securities. Please go ahead. John Vinh – Pacific Crest Securities: Hi, thanks for taking my question and congratulations on the very strong results.

Thanks John. John Vinh – Pacific Crest Securities: Hey, first question I had was just on some of these kind of new events touch capabilities you guys talked about 3-D touch, glove touch. How do we think about those in terms of a competitive and a pricing point of view. Is it something that you think that your competitors will be able to replicate in a short period of time. And then from a pricing point of view, are you getting a premium for these advanced capabilities in the marketplace or is this just help stabilize kind of your natural price declines going forward?

Okay. John, let me tackle the front end of that question and then maybe Kathy can take the second half. In terms of the capabilities, I mean, I’m really excited about, if you recall cover in the case of Samsung their brand name is Air View. In fact I was watching a video on the street this morning and the editor who had done a review on the S4 took this out of a broad array of features that of course Samsung puts into any new phone as the number one feature. And that’s really once you start to play with the phone it just makes it a lot easier to do. And in fact that’s what Synaptic’s role in the world is, is to make computing devices easier for humans to use. So, we’re particularly proud about that particular innovation and it is – it’s hard. We have – we believe we have a time-to-market advantage. We believe we have a unique feature working with Samsung. And it’s not something that’s 10% you do a little more. This is a – you really have to design from the grounds up for this particular feature. So, we have no idea what our competitors are working on. We have a lot of tough competitors out there. I’m sure they’re zeroing in on that feature, but we have a nice advantage right now and we’ll leverage that with additional phone manufacturers out there in the industry over time. On the ASP’s?.

On the ASP side John, it is a – as we’ve always talked about I mean, the leading features and functionalities, we always are able to price those higher. I mean, as of the overall it’s the ASP on a particular feature, I mean, it would fall within the normal category of our high-end feature premium phone solutions. And the competitive, the mobile market is always competitive from an ASP standpoint. Prices continued to go down and the more that we can do to deliver leading-edge functionality and features into the market that helps to mitigate those price reductions on an overall basis. John Vinh – Pacific Crest Securities: Great, thanks. And then my follow-up question is on gross margins. As you guys are indicating you’re kind of seeing acceleration in your mobile revenues and Samsung launches its new flagship phone in the June quarter. Your gross margins looks like at the midpoint they’re slightly down or flattish. I would imagine that you would’ve gotten a mix up in terms of gross margins. Can you talk about what the dynamics going on there our?

Yeah, if you look at June quarter, as we talked about in any quarter, we had a very wide range of gross margins within the entire product lineup. So the mobile side of the business is very strong. It’s growing. But then you have to – underneath that you have to look at the individual SKUs that are driving the unit volumes in any particular quarter. So there is always pluses and minuses depending upon the individual SKU mix. John Vinh – Pacific Crest Securities: Thank you.

Our next question comes from the line of Raji Gill with Needham & Company. Please go ahead. Raji Gill – Needham & Company: Yes, thank you and congratulations on excellent results. Just a question on the OpEx if I can. With the big ramp of the revenue and the gross margins, it seems like OpEx is going up a little bit more in the June quarter. Can you maybe talk about that or characterize that a little bit more?

Sure. Raji, I mean, really the operating expenses if you look at from company standpoint we are – we’re in a growth mode and so if you look at supporting more customers, the broader range of product solutions. We are bringing in new solutions to – for display integration into the market new solutions for larger touchscreens so we are continuing to invest and then also we got a broader customer base where we need to – where we need to add resource to support those customers around the world. Raji Gill – Needham & Company: So that level of OpEx in the June quarter is something that we should be kind of increasing based on that compared to that base going forward. Is that a fair kind of assumption to make?

You should assume that there would be some increase quarter-to-quarter because you know we’ve got new things rolling out over the future quarters and we’re continuing to build our support structure and brings new solutions into the market. Raji Gill – Needham & Company: And the question on the technology, you’re obviously very familiar with other different types of sensor technology that’s coming out from smaller companies. I was wondering if you could maybe comment on alternative to the ITO sensor such as copper, Metal Mesh and if you have a view on that and if that something you are considering or are you focusing on other ways to deliver the product to the market?

Hey, Raj it’s kind of number one supplier in touch we have to look at multiple technologies across the board because it can really depend by the OEM, the application and so on. So as OGS approaches it seems to be primarily you’re talking about the larger touchscreen. That is the clear market leader at this point which uses ITO obviously. But we are seeing a lot of interest in Metal Mesh as well and then other things metal and glass and future concepts. So we support the ecosystem, so in the case of Metal Mesh, there is Uni-Pixel, there is OhmFilm, JTouch Fuji etcetera. that’s actually a fairly long list of potential suppliers there and we work with the ones that ultimately be OEMs want us to work with. Raji Gill – Needham & Company: The last question for me on Intel, so good traction on Intel with the Huawei that’s a big program. Can you talk a little bit about how themselves being adopted now since it’s kind of been about a year or so. Where do you see that adoption going in the second half and into 2014 to expect kind of additional OEMs to start to migrate over the Intel? And saw that on the Galaxy S4 that’s an on-cell device is that correct?

Yes in the latter question answer is yes. It’s on-cell capability. On in-cell we characterized at the beginning of our fiscal year we expect calendar ‘13 for there to be a steady cadence of Intel announcements over the course of the year. So Huawei 1 was the first and you should expect as we move through the balance of the year to see multiple other Intel design wins that are announced into the marketplace. Raji Gill – Needham & Company: Okay. Great. Thank you.

Our next question comes from the line of Kevin Cassidy with Stifel. Please go ahead. Kevin Cassidy – Stifel: Thanks and congratulations on the great quarter. Nice outlook. On the S4 I think there is some confusion in the market about whether you are in every version of the S4. Can you just clarify that?

Kevin, as a mentioned early on one of the other questions, the ERB or the Huawei capability is a pretty tough capability to implement and involves close interaction with the applications and the display. And so on. Obviously, that’s the question more for Samsung than it is for us. But to my knowledge we’re the only solution for the S4. Kevin Cassidy – Stifel: Okay, great. And I guess as far as the order ramp goes that you beat your guidance by so much was it – surprise to you how much the order rate was?

Yeah as Rick talked about it, the March quarter, I mean, we saw very, very strong pole across the broad range of the customer base. And I think we started talking a couple of quarters ago, at the phone, the flagship phones that we announced and talked about you know even in the December quarter, carried over into the March quarter. There is new phones that were launched and around mobile world Congress. The strong slate out there, so I mean we’ve seen strong demand throughout the March quarter for not only the ones that have been shipping on a continuing basis, but launch of the next wave of the new flagship phone. So we’re very excited about the overall trends out there.

Kevin, if you look at some of the phones we’re in, it was really about a broad ramp of these various phones. And the strength of the market has been very good, but if you look at the reviews and some of the results we’re seeing from some of the phone manufacturers. Nokia talking about the impact of the 720 and 520 BlackBerry, LG and so forth. So we’re fortunate that are OEMs have just put out fantastic smart phones and they’re taking the market by storm, and of course one of the biggest ones which is as for as well. Kevin Cassidy – Stifel: Great. So looks like revenue run rate. And then maybe what you’re suggesting is the PC side will contribute more in the second half too?

Certainly opportunity but at this point along with what we’ve already talked about our opportunity there to expand our footprint our content in each notebook. The market factor is there, so we’re all waiting for that upturn to occur. Kevin Cassidy – Stifel: Okay great. Thank you.

Our next question comes from Charlie Anderson with Dougherty & Company. Charlie Anderson – Dougherty & Company: Good afternoon also my congrats, it’s great to see the operational improvements manifest themselves on the top line, so congrats on that. I wanted to ask about the relative contribution of tablet. You mentioned some design wins there. And then also the touchscreen Ultrabook, if you could just kind of size those for us in terms of what’s the relative contribution that we’re going to see in the guidance and then move forward?

Hi Charlie. As far as the tablets go we talked about the pipeline isn’t expanding for the tablets. We’ve been very pleased with the Galaxy Tab 2 from Samsung as this has been shipping in the market. We just talked about this in the call script and now we’ve added, we followed on with that the Galaxy Note 8 inch solution. And there is this other OEMs where we have designs that we’ll start seeing become additive over the next several quarters, so very excited about the tablet market. It’s from a market standpoint it’s got a very, very strong growth trajectory and we’ve got the right solution to continue to grow in the tablet space.

Another comment I would add there, I think everybody in the industry has been somewhat surprised by the success of this 7 to 8 inch tablets. At one point it was kind of a belief that was a trainer and other than e-readers, you won’t see a lot of opportunity there, but obviously there’s not that many and then a bunch of other tablets that are going out there were in the Note 8 which is fantastic. The other interesting thing is our display integration technologies are also coming into play. There on cell in Intel which presents another opportunity for us further down the line in calendar ‘13 and ‘14. Charlie Anderson – Dougherty & Company: And then your expectations around the Ultrabooks?

So Ultrabooks again, as far as the market goes I mean we’ve seen for Windows 8 and Ultrabook, what we’ve seen from an market overall is the consumers really want to have touchscreen in those devices. So from a market standpoint we see numbers penetration rates going up over the last several months. The latest ones that I looked at were by 2014 there should be 25%, 30% of all notebooks with large touchscreens and then it continues to grow after that. And from our perspective I mean the thing that we’re really focused on is delivering high performance cost optimized solutions so we can really push the penetration of large touchscreen. Charlie Anderson – Dougherty & Company: And then I hate to have to be the one asked the question but the last two suppliers of the Galaxy S2, Galaxy S3 lost their socket the next year. Can you just kind of talk to us maybe about the lessons you saw from that and what going to allow you to keep it going forward here?

Okay there for a moment Charlie, we talked about how we up to this date we’ve gotten about 500 versions of the same question which is are you in the Galaxy S4. You get the award – being the first one to ask about the next generation. Certainly one of the key things and to me again it’s not about a single customer. It’s about the DNA of our team here. And I haven’t really mentioned the tremendous effort. And that ultimately is the underlying strength of why we’ve been successful today and why this is a great day for Synaptics is actually the team that we have at Synaptics. So unrelenting support of customers is kind of across the board. We got to do better at every customer but across the board our OEM customers can see how much that we put into supporting them and showing up every day off and on the weekends not unusual to be there at midnight or whatever. And with that whether its Samsung or the other customers we’ve been able to really built close partnerships and help them with not just the chip but with the solution. And as we move forward through 2013 will have to earn every design win. But we are prepared as a team to earn those design wins. So obviously I’m not going to project whether we win or lose. S4 you saw us hold – the next generation until today of course, we can’t confirm or deny that the current platform. So set expectations appropriately. You won’t get any answers on the next-generation platform either until our customer announces. So with that I hope I have addressed your question. Charlie Anderson – Dougherty & Company: Yes. Thanks so much.

(Operator Instructions) Our next question comes from the line of Jeff Schreiner with Feltl & Company. Please go ahead. Jeff Schreiner – Feltl & Company: Thanks for taking my question today. Great results no doubt the F4 is a big win for Synaptics. Rick, I think one thing I would like to understand is where you recognizing the Note 8. If it’s a tablet it would seem to be that it would be in PCs. Is that how you are still looking at the Note 8 design?

Jeff, actually we are breaking out solutions based upon whether they are touchscreen solution or whether they’re more of the TouchPad, ClickPad, ForcePad type solution, so anything that the touchscreen we’re categorizing and what we call mobile. So that would include whether it’s a phone or whether its phablet or whether it’s a small tablet, a large tablet and even moving into larger touchscreen. Jeff Schreiner – Feltl & Company: Okay. That’s very helpful. Thank you. I guess, I’d like to also understand you talked about continuing to win further mobile designs and that’s kind of helping the June guidance. Should we assume that there’s been some additional wins within Samsung besides the S4. They do have a couple of flagship products at least one more that is scheduled to be out in the summer. How should we be thinking about the Samsung revenues at this point. Is it really kind of what you’ve got today or is there may be more in the comp?

Well, as you well know Jeff, Samsung as a number of design platforms and wins available. So it’s ongoing and to a certain degree it’s tough to predict. But as I was saying as we built strong relationship. We put in a strong team in Korea to support Samsung. And just like I said a year ago, our expectation is we’ll continue to grow our footprint to the customers been very successful in the marketplace. So we’re eager to work with them and we know we’ve got to be on the top of our game because they’re a very tough customer. Jeff Schreiner – Feltl & Company: Okay. Thank you.

Our next question comes from the line of Liwen Zhang with Blaylock Robert Van. Please go ahead. Liwen Zhang – Blaylock Robert Van: Thank you and congratulations as well. My first question just to clarify regarding on the touch solutions for the notebook touchscreen and Rick mentioned, so will the shipment starting in the second half this year?

Yes, Liwen that’s what we’ve talked about. We’ve talked about our initial, if you look at our SKUs and pipeline of opportunities and designs that we should start seeing them in the holiday season. Liwen Zhang – Blaylock Robert Van: Okay. Got it. And my second question is mobile solution by mix – by application towards the end of year. Can you give us some mix on by application for the mobile solution?

Not exactly sure what you’re asking for. Can you provide us more information? Liwen Zhang – Blaylock Robert Van: Yeah, I’m sorry. Just the mobile segment towards existing 2013? And what would the mix be by the application like smartphone, tablet and notebook.

Okay. The mobile – the whole mobile portion of the business that we talked about it includes all of those screen types and its high percentage of it is mobile phone applications. Tablets contributing nicely, but it’s not 10% yet. It did grow over quarter-on-quarter and as we talked about our large touchscreen solutions are targeted for holiday season. Liwen Zhang – Blaylock Robert Van: Thank you. That’s all I have.

Our next question comes from the line of Anthony Stoss of Craig-Hallum. Please go ahead. Anthony Stoss – Craig-Hallum: Hi, my congratulations to the entire Synaptics employee base. Two-fold, Kathy, on your inventory build in the March quarter ahead of these lunches is there anything that has you nervous at all in terms of production or enough raw materials to support your growth. And then the second part is Rick on the intel side when should we expect to see some of your intel design wins a move to either tablets or even notebook screens or any kind of larger screens. Thanks.

Okay as far as the inventory goes, I mean, we have a great supply chain and good relationships with all of our partners in the supply chain. So we’re very positive and comfortable working with that supply chain and feel good about the growth that we’re seeing and the right – having the right supply chain in place to continue to feel the growth opportunities out there for us.

And then in terms of the display integration solutions, you specifically said Intel. In long-term I actually continue to believe for all screen sizes Intel makes sense. But we’ve also said it’s not going to be a light switch type of event. We’d expect this year more and more announcement on a smaller screen or smartphones and then overtime probably a couple of years before you’ll see it really moving into what I would typify as a large touchscreen 13 to 15 inches. And then of course the tablet size is the 7, 8, 9 inch sizes will be somewhere in that timeframe. On-cell however, I would expect the timing to be more consistent with what we talked about in my prepared remarks where you’ll actually see tablet on-cell solutions towards the latter part of this calendar year. Anthony Stoss – Craig-Hallum: Great. Thanks guys. Good job.

Thank you.

There are no further questions in the queue. I’d like to turn the conference over to Mr. Bergman for closing remarks.

Thank you, again for everyone. Obviously it was a quite exciting quarter for Synaptics and I appreciate everybody joining our call. And I certainly look forward to updating you next quarter.

Ladies and gentlemen, this does conclude our conference for today. Thank of for your participation. You may now disconnect.