Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 JDSU Earnings Conference Call. My name is Keisha, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Ms. Cherryl Valenzuela, Senior Manager of Investor Relations. Please proceed.

Thank you, operator, and welcome to JDSU's Fiscal 2012 Third Quarter Financial Results Conference Call. Joining me on the call today are Tom Waechter, Chief Executive Officer; and Dave Vellequette, Chief Financial Officer. David Heard, President of the CommTest business segment, will join us today during the Q&A session of the call. I'd like to remind you that this call will include forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to look at the company's most recent filings with the SEC, particularly the Risk Factors section of our Annual Report on Form 10-K filed on August 30, 2011. The forward-looking statements, including guidance, provided during this call are valid only as of today's date, and JDSU undertakes no obligation to update these statements as we move through the quarter. Please note that all numbers are non-GAAP unless otherwise stated. A detailed reconciliation of these non-GAAP results to our GAAP results, as well as a discussion of their usefulness and limitations, is included in today's news release announcing our results, which is available on our website at www.jdsu.com. As a reminder, the quarterly earnings press release, supplementary slides and historical financial tables are posted at www.jdsu.com/investors under the Investor Resources section. Finally, and as a reminder, this call is being recorded and will be available for replay from the Investors section of our website. I would now like to turn the call over to Tom.

Thank you, Cherryl, and good afternoon. I will provide an overview of our March quarter and market trend before handing the call to Dave for a more detailed discussion of our financial results. JDSU delivered fiscal third quarter revenue of $409 million, within $1 million of the lower end of our guidance range. The March quarter, typically, has a seasonal revenue decline due to the timing of budget releases by carriers. This year, we experienced a later-than-expected budget and order release cycle. In addition, there has been continued cautious spending by European customers and a higher mix of deferred revenue from software and solutions sales. In spite of the slow start to the quarter, book to bill was above one for JDSU, as well as the CCOP and CommTest segment. CommTest had approximately 50% of its bookings take place in the last 4 weeks of the quarter, which impacted revenue by approximately $3 million. The AOT segment's book to bill came in slightly below one, following exceptionally strong bookings in December. Improved gross margin from CommTest and disciplined control of expenses resulted in an operating margin of 7.3%, at the high end of our guidance range. Each of the business segments was within or above the operating margin guidance ranges we previously provided. EPS was $0.11, and we continued our long streak of positive cash flow from operations. Although we saw lower-than-expected revenues in the quarter, I am pleased with the progress we have made towards obtaining CommTest and AOT target business models, along with a strong end of quarter booking. During our Analyst Day in February, we presented business model targets and action plans for CommTest and CCOP. Specific actions we have taken include the following. In CommTest, a greater mix of software revenue led to a sequential increase…

Thank you, Tom. Before I start, please note that all numbers are non-GAAP unless I state otherwise. Third quarter revenue of $409.2 million was down 1% from the prior quarter and down slightly more than 10% when compared to the third quarter of fiscal 2011. Revenue was impacted by later-than-expected order releases from operators in North America and continued soft demand from European customers due to the current economic uncertainty. Total book to bill for the company was greater than one, with CommTest and CCOP above one. AOT was slightly below one, following strong bookings from the previous quarter. The third quarter's gross margin was 45.5% of revenue, down sequentially from 46.8% and down from 47.6% for the previous year. The sequential decline was related to segment mix and lower CCOP gross margins. Operating expenses of $156.1 million were up $2.2 million from the prior quarter, due primarily to incremental employer payroll taxes and benefit costs typically associated with the start of the calendar year. The third quarter operating margin of 7.3%, down from the previous quarter's 9.6%, was due to lower gross margins and slightly higher operating expenses on lower revenue. Net income for the quarter was $25.3 million or $0.11 per share, which compares to $35.8 million or $0.15 per share for the prior fiscal quarter and to $51 million or $0.22 per share for the year-ago period. A detailed reconciliation of our non-GAAP results to our GAAP results is available in today's press release. Our non-GAAP operating income excludes, among other items, amortization of acquired technology and other intangibles of $21.6 million, a $13.4 million charge for stock-based compensation and a $2.3 million accrual for restructuring and nonrecurring charges, primarily due to CommTest workforce reductions in our manufacturing support organization. Including the noted items, the fiscal third…

Thanks, Dave. Despite macroeconomic uncertainty and limited visibility in the current quarter, we are optimistic with respect to JDSU's longer-term outlook due to the strong demand drivers and trends across our core businesses. Our book-to-bill ratio is greater than one for the overall company and for the majority of our businesses. New products such as PacketPortal, TrueFlex and tunable SFP+ have been met with very high customer interest. Third-party research supports our view that we are winning market share in areas such as ROADMs and wireless instrument. Our products continue to earn industry accolades. During the quarter, JDSU innovation was recognized with awards for leadership in LTE/4G, IP video, Ethernet and mobile backhaul network buildout and enablement. Looking ahead, we anticipate that investments in the network are poised to accelerate in the second half of the calendar year. We're encouraged by recent announcements of a consolidation in the optical communications market. We view a leaner industry structure as favorable development and an opportunity to extend the leadership position we have established in the fastest-growing segments of the market. With respect to CommTest, we continue to increase our investments in mobility and video, as we believe these 2 areas will grow faster than the overall test market. In summary, we continue to execute our strategic priorities. JDSU's differentiated product portfolio and solid balance sheet position us well for growth in both our core markets and adjacencies. We will continue to focus on profitability and cash flow generation while investing in R&D that will further differentiate us in the marketplace. Operator, we'll now take questions.

[Operator Instructions] Your first question comes from the line of Patrick Newton with Stifel, Nicolaus. Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: A question for both of you. I guess, how far are we into the process of consolidating your CommTest manufacturing footprint supply chain? And was a meaningful portion of the streamlining of operations already present in the current quarter? And then kind of dovetailing off the same CommTest theme, you had a statement in your slide deck stating that you have confidence in attaining the CommTest segment targeted model by the end of the calendar year or that your confidence continues to grow. Is it fair to interpret that to mean that you expect to eclipse $250 million (sic) [$215 million] in CommTest revenue in the December quarter?

It's -- Patrick, I'm going to -- let me take the first part of that, and I'm going to let David Heard address the last part. As far as the activity that we announced, these are -- this is headcount that will be reduced from our manufacturing support structure over the next 3 quarters as we reduce our CM footprint. So I'll let David handle the rest. I want to let you know the benefit, it gets realized over the next 3 quarters. David?

Yes, Dave. So I think that, that question really ties to the confidence question, because I think you're asking how far are we along and what gives us confidence. Did I get that right? Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: Yes, that's right.

Yes. So as Dave mentioned, we committed in our February Analyst Day that CommTest would be reaching its intended goal at revenues of $215 million, gross margins of 64% to 66% and operating margins of 20% to 23%. And when we look at the current period today, we are at 61.6 points of gross margin on $177.8 million of revenue, and that is without the flow-through of the reduction of the supply chain by 50%, as we committed at the Analyst Day. What gives us confidence is we have taken those actions in terms of the identification of personnel notification and the negotiation with our contract manufacturers along that path. We are on our target and performing as promised along those categories, and so that is just one element of what we talked about at the Analyst Day of our business model improvement plan with that supply chain consolidation. The other elements Tom covered nicely in the overall discussion, the earnings discussion, about new products. We also have higher-margin mixed products that we talked about in the Analyst Day, primarily driven around mobility and software. Tom mentioned PacketPortal. He mentioned another revolutionary product, PacketInsight, that both are accretive to the overall CommTest model. So against the milestones that we outlaid in that February session, we've made clear and definitive progress, along not only the supply chain, the overall operating efficiency and the new product level being at all-time high for us at 60% of new product revenues, but that's even on a much lower, today, proof point based of revenue to gross margin. So that gives us clear and definitive, demonstratable confidence. Did that help answer your question? Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: Yes. I guess just as a follow-up. So you addressed -- when you say increased confidence of attaining the model, you addressed the growth gross margin aspect and you addressed the operating margin aspect, but there's also the revenue component. So the revenue is greater than $215 million is the bogey that you set out there in order to reach that model. When -- if you have increased confidence, are you also implicitly saying that with these products coming, with PacketPortal, with PacketInsight, that you think that, that $215 million is achievable by the December quarter?

Yes. So we're not providing guidance above the current quarter in terms of the top line. I think the important part to kind of walk away with is with the late capital release that we saw primarily in North America, because we all know CapEx budgets and OpEx budgets have never been tighter, and so I think our investment focus on mobility and video are at the high priority of where those dollars are spending. And as we look at the CapEx flow for the remainder of the year, I think we feel pretty good and well positioned being at 60% of our products being of those new products, and those products being positioned in mobility and video. A, they're high priority. B, they're growing at a much faster rate than the rest of the communication test market. And so I think that's what we feel good about. Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then one last one. Just still for you Dave on the PacketPortal side. I think in your prepared remarks you talked about some purchase ordered -- some purchase orders secured for PacketPortal. And I think at your Analyst Day you had said that there should -- you had some expectations of a ramp in the first half of calendar '13. So based on the commentary and the press release relative to your Analyst Day, is -- has there -- is that representative of a pulling in demand for PacketPortal?

I think as we look at the outlook for -- no, there is not a change in what we provided in the Analyst Day. I think the good news is with the release of PacketPortal, we've seen a nice funnel of activity from the carriers. We've seen a large funnel of activity from application providers that can provide applications on our platform, both of which are very, very encouraging. We're also mindful that when we deploy this groundbreaking technology into networks, it takes time, and that's why we've kept with the same time frame in terms of when it has an impact on revenue. Dave, anything to add there?

No, I think that's fine.

Next question comes from the line of Nikos Theodosopoulos with UBS.

Just a couple of quick ones. Back on CommTest, you mentioned 50% of bookings occurred in the last month. Is that -- I guess you're implying that, that's higher than normal. What would you normally see in terms of the last month bookings in that business?

Maybe closer to the low 40s.

Okay, all right. On the budget cycles taking longer to release, would you say that was in all regions or predominantly in the U.S. since that's where you saw the most significant sequential decline? And are you seeing that the release of the budgets continue into April?

So the -- so it was mostly in North America, as you noted that -- as we noted that North America is where the decline was for CommTest in the revenue. And so it's mostly there. And what we're seeing is we're seeing the back-end load of that in the bookings this quarter. That's what we put in our -- contemplated in our guidance that we provided today. So that contemplates exactly how we're seeing the business coming in.

Okay, okay. And then just one last one. On OpEx, it was a little bit lower based on, I guess, additional employees from acquisitions and other things. Was there some kind of offset this quarter? Why -- I mean, it's good that it came in lower, but I was just curious what led to the slightly lower number.

Are you talking about CommTest operating margin?

Total operating expenses for the company.

Well, total operating expense for the company, it basically came in lower as we saw the -- as the demand was coming in, right. We -- therefore, 2 things happened. One, we had contemplated in our previous guidance that we would have variable compensation or bonus compensation being accrued in the quarter. And because we didn't meet our threshold, we didn't have that accrual. That's why you see the OpEx for next quarter increasing because we hit certain thresholds that have us accruing for that. And then we obviously reduced other expenses as we saw that the orders were coming more back-end loaded.

Your next question comes from the line of Kevin Dennean with Citi.

Quick question on ROADMs. I guess what gives you the confidence that it's not share losses that -- or that you're getting designed out of some customer wins that you may have already?

Yes. So, Kevin, we're -- well, basically, the -- we've looked at the bookings for the last 3 quarters for ROADMs, and they've been pretty constant in a pretty tight range. So this looks -- in our view, it had more to do with the -- when the orders came from the carriers to the NEMs. And so that basically -- from the polls that NEMs had forecasted they'd be doing and what they did do, it looked like they have more of a correlation to where they were getting the orders from the carrier.

And then on CommTest, can you share with us how much revenue Dyaptive contributed this quarter, and what you're expecting for the June quarter?

So it's low-single digit millions right now, and we look for it to start to move up to mid-single digit millions. But right now, it's been in the low-single digit.

Okay. And then just to follow-up, maybe this could be directed towards David Heard. So if we say Dyaptive, call it, $3 million this quarter, CommTest declined 7.5%, 8% year-over-year, can you talk about what's in that decline? Because it sounds like you're positioned in the right markets between 40G and 100G. You mentioned 40G, 100G ramping 25% year-over-year. The NSD acquisition should position you well on wireless. I'm just surprised that we're not seeing better annual growth. Can you talk a little bit about what's happening there?

Yes, sure. I think 2 points probably to make. One of which is, when we looked at the CapEx hold, it was the -- historic in terms of the late release in North America of carrier CapEx. And we've always had a very strong participation with some of the large -- world's largest service providers, not just abroad, but also here domestically. And so with that happening so late in the quarter, obviously, the ability, as Dave discussed, to have revenue hit the books is slightly impaired. So good news is the demand was there. The bad news is it took them a while to lay out their budget. And your second piece on the segmentation question is, what we're beginning to see is, yes, strong demand continues for 100G and 40G, but a lot of that is also, right now, in the U.S. in terms of its built. So when you had a late release, some of that didn't get flowed through where we are. Overall, we saw very strong growth in the wireless portfolio quarter-over-quarter and year-over-year. And that's not only from things like the Dyaptive acquisition, but it's synergy with the rest of the total portfolio as it pertains to wireless.

And, David, just one quick follow-up. You mentioned at the Analyst Day pruning the portfolio of some older, lower-margin products. Is that process fairly well complete, and is that having an impact on what we're seeing in terms of annual growth rates?

Yes, good question. I think year-over-year -- I think at Analyst Day, we talked anywhere from $6 million to $7 million of quarterly impact that, that currently has. While you're never really done managing the portfolio, yes, I think the major efforts in terms of our business model improvement are underway and flowing -- beginning to flow through the income statement. We expect, again, our major investments to be growth in that basic broadband network Ethernet 40G/100G, media access and content via IPTV, DOCSIS 3, mobility across the board and in cloud, in things like 12G, 16G and Fibre Channel over Ethernet. That's where our major investments are focused, and we think those markets are going to show growth faster than the market as we move forward.

Your next question comes from the line of Ehud Gelblum with Morgan Stanley.

I apologize if you went over this before. I was still kind of confused on a couple of things, been trying to put some pieces together. It sounds like things got better in the last 4 weeks in the quarter, hence, the stronger order and booking strength in the last 4 weeks and in a couple of other things you talked about there, yet the guidance doesn't necessarily reflect it and the commentary that you said in a couple of places was that things haven't really gotten better, haven't really changed yet. How do I put those 2 pieces together? Have things picked up, and therefore, things getting better? Or are things exactly as they were January 20 or whatever?

I think they have gotten better, and that's reflected in the -- again, the second quarter in a row book to bill greater than one for almost of our businesses. AOT was very strong. It was 1.15 approximately in December quarter, so combined, that's over 1. We focus more on what we think is going to happen the second half of the calendar year is where I think we focus, that we do think there'll be more of a general pickup based on what we're seeing in the market and hearing from our customers, but definitely saw improving trends as we got into the last part of the March quarter.

So any particular geographies you think that's coming from? Is it North America that's going to be stronger? Is it going to be Asia or China or Europe as far as the end markets go? Obviously, you don't sell into the end markets but you -- I mean, actually, CommTest...

If you look at APAC, it was pretty strong percentage-wise for us this past quarter, and we expect to see continued growth there. Europe remains sluggish. I think that's true for almost all businesses that we look at today, and we don't expect that to pick up any significance in the next couple of quarters as we work through some of the macroeconomic conditions there. Latin America's healthy for us. We think there's a lot of activity there going on, getting into Olympic and World Cup and those types of things. There's a lot of preparation going on there. So most of the regions of the world we would see a pickup with the exception of Europe, and we think that's going to be sluggish for a while.

So the pickup you're expecting in the second half of the year, what's that going to be driven by, and what is -- what indications are you having -- are you seeing for that?

Well, let me take that, Ehud. I think first indication is if you look at the spending there, for example, Verizon and AT&T did in Q1, their -- the combined number is down about $650 million year-over-year of CapEx, and they both have talked about being flat year-over-year. The stuff that I read says that they're going to be more like 45% in the first half of the year and 55% in the second half. And certainly, an indicator based on what Q1 was, it looks like it would be more back-end loaded. So that's...

Dave, that's the stuff that we see out here. I mean, that's us playing games and doing our best with the numbers. But you have better insight because you've actually -- have conversations with customers. And so on what better insights do you have?

What we're saying that -- what we're seeing out there in the public is that's what we're also -- we're hearing that in the public. And that's basically part of our confidence because of our conversations are supported by what we're hearing out in the public, Ehud.

Okay. But you actually are having real conversations with real customers that are saying, "We are going to spend more in the second half, but just second Q2 may not be quite as strong, so kind of bear with us but you'll see things better in calendar Q3, Q4, which is..."

The conversation support what we're reading out there in the public, right, that -- they're talking about activities of investments that they're going to be making, and then the triangulation is what we read out there in the public, so.

But as long as you're not getting information from us and we're getting our information from you and kind of goes around on something turbo cycle. And so the last thing is, when you do look at the total communications market and there is some consolidation as you said, do you think there's need for more consolidation, and would you be looking to be a consolidator or a consolidatee? Do you think you need and could use some more?

No. I think very similar to what we stated in the Analyst Day, we're not looking to consolidate the industry per se, if there are specific asset opportunities out there for specific technologies that may be of interest. But we're not really looking to consolidate the industry. We're very pleased with our progress and our strategy to keep working up the food chain, higher levels of integration, differentiated products, and we'll keep down that path.

Your next question comes from the line of Nathan Johnsen with Pacific Crest Securities.

Actually, 2 questions. First on -- in terms of seasonality. Typically, the September quarter is weak and, I think, particularly CommTest because of the European summer. I was wondering, given the trajectory that you guys have in terms of book to bill and the fact that Europe's already pretty low level, if we would potentially see a lower seasonal headwind in CommTest in the September quarter. And then secondly, just in terms of the ROADM recovery for the rest of the year. I was wondering if you guys anticipate that the ROADM mix will pick up throughout the year, and if that should effectively grow faster than the rest of your business.

I'll take the ROADM part first. We did have very strong book to bill in ROADMs, so that's encouraging, and we do believe that's tied into the major projects that are being rolled out by the network operators. So we are encouraged by those 2 parts of the ROADM. As far as the September quarter, we really don't have visibility out, specifically around CommTest into the September quarter. We really don't give guidance beyond the quarter we're in. So I wouldn't really speculate on that level of seasonality at this point. As we get obviously through the June quarter into the next earnings call, we can give some specific details around that.

Your next question comes from the line of Mark Sue from RBC.

The macro -- the concerns that you bring around the macro and CapEx concerns and related to what we're seeing now, however, offset by the optimistic need for the second half, it sounds very similar to the discussions we had a year ago. Now since then, the revenues for your both -- in both the CommTest and the CCOP business are declining year-over-year. So I'm just trying to get a sense, when does that stop, the year-over-year decline? And on the structural things that are going on as it relates to the environment or the group in particular, which is kind of limiting your ability to grow revenues, is it a question of when, or is there something larger you think that's going on?

I think -- Mark, this is Dave. First, from a finance standpoint. What we've seen, if you look at year-over-year, we've seen Europe drop off quite a bit. The EMEA environment Q3 year ago was doing about $127 million, in Q4, $123 million. In the last 3 quarters, we've been doing just about $100 million. So that has really been the biggest gift as far as our revenues go, is that the drop-off in the European market. So I think that's what we're contemplating in the guidance we have, is that we don't expect Europe to be coming back from this level of about $100 million a quarter right now. We are seeing positive signs, as we've already stated earlier, from the North America market, where the largest carriers are talking about spending more in the second half, and, as David mentioned, more than 60% of his revenue now is coming from recently introduced products that typically have better margins than the historical portfolio. So those are the things that give us confidence. Europe though, we're not anticipating coming off of this $100 million or so quarterly number.

Yes. I think there are transitions going on in addition to the macro, where we're moving to more of the spend around mobility, and that's where obviously we're lining up our future project, products and solutions. We're quite excited about that. LTE are rolling out. And then we did see acceleration of 40G and 100G, both on the -- as we mentioned on the component side and the test solution side. So there are those transitions going on. It does, at some point, cause a pause before those accelerate, and we believe we are in a bit of that pocket, along with what's happening in Europe. And that's causing some of the slowness that, again, we expect to pickup more in the second half of the calendar year as we get through some of these transitions and the plans are laid out and the spending accelerates in these areas, and our products now are lining up well for that acceleration.

Your next question comes from the line of Subu Subrahmanyan with TheJudaGroup.

I had 2 questions. First, on the optical comm market. Can you just talk about demand trends if you x out the impact of flood? It seems like demand trends kind of bottomed out in the September timeframe and have been flat, maybe even slightly down from there. Is that -- if you x out the impact of the manufacturing issues, is that kind of a fair comment? I'm wondering when you typically think about the cycle after several downtick quarters, it's typically followed by upticks. And how are you thinking about resumption in the growth cycle there?

I think one of the other factors there is that we talked about Europe. I think a couple of the European NEM actually have gone through some pretty heavy transitions, and I think that did impact the spending over the last quarter, 1.5 quarter, as they were transitioning some of their organization, making those changes, and that does tend to slow down the release of orders in certain projects. So that's another element that we didn't really speak about that I think is having an impact or has had an impact on the optical comm side of things.

Tom, are those the NEMs or the carriers? I'm sorry, I didn't catch that.

Those are NEM. There's a couple of NEMs who -- and publicly announced restructuring of their organizations, which were pretty significant. And that has a natural impact of slowing the ordering process down until you get through those transitions and have the leadership in place to make the decision going forward.

Understood. And the question was asked before, but I thought I would try again. If you'd look at achieving the operating margin numbers you're talking about by the December quarter, there's obviously a revenue variable part to it and a cost structure, margin structure variable part to it. Are you communicating that you expect to have the cost and margin structure in place and then the revenue will -- obviously, it will depend on demand. We don't have visibility for that. Or are you trying -- are you implying that you just think that given the recovery through the course of the year, that the revenue would hit -- there's a likelihood that the revenue would hit those levels as well?

Yes. It's really the margin and operating expense structure to support that. We're not giving guidance for December on the revenue levels, just what those revenue and the levels would need to be -- we have a high-confidence level, especially, I think, around CommTest and AOTs already there on the structure. Now we'll get there, but we aren't giving guidance on the revenue for December quarter at this point.

I would say also the third future measure of that, that gives a bit of a good outlook is we think about that as, as Tom talked about, the innovation index and the new products. What that says is we've got new products very well aligned with the strongest drivers as we talk in intimate discussion. All the new products that Tom mentioned were collaboratively innovated with our customers. And so we know when the demand returns and the CapEx returns, and we know that the network is under pressure and that 40G, 100G aren't going to go away. In fact, they're necessary to get that content out there that we'll be positioned to win.

Your next question comes from the line of Michael Genovese with MKM Partners.

Great. Yes, just one question. And I think we've been talking about these issues, but I just want to ask this directly. We had the delayed release of the budgets in the first quarter and the guidance for the second quarter which is sort of seasonally normal to maybe even a little bit softer when we were maybe expecting it to be stronger. Just looking at the difference between the CCOP and the CommTest guidance, the CommTest is much stronger sequentially than CCOP. Help me understand why CCOP is 0 to 4%. Is it -- is there something to do with the Commercial Lasers in there? Is it particular product lines on optical components? I mean, why the subdued almost sub-seasonal outlook for the second quarter?

A portion of that is -- you see that the slower growth is -- it's reflective of the bookings have been coming in. But also it's reflective of what Tom was just talking about, is the European market -- that we're seeing a softness there. There's been a number of restructurings by the European NEMs, so that's impacting that set of numbers. In the CommTest, the growth rates you're seeing there is because of the, again, recovery in the North American market demand, right. You can see the significant decline in the numbers being from North America in test, and so that's why they have more of a -- I call it, a bounce back and where CCOP just has more of a, I would call, slow and steady growth, flat to growth kind of number.

So there's no real difference between the Lasers and the components outlook for 2Q?

Well, Tom did note that the large number that we shipped for the fiber laser had more to do with our -- the customer priming their manufacturing line, so that -- we don't expect the fiber lasers to necessarily be at that level again. So overall laser revenue would probably be in the same range, and the growth that we're talking about will be -- almost all will be in the optical side of it.

Your next question comes from the line of Simon Leopold with Raymond James.

This is Georgios Kyriakopoulos in for Simon Leopold. Can you talk about the customer split between cable and telecom in your CommTest business, and how this compares to seasonality [ph]? Were you positively surprised by any of the verticals or end markets?

Yes. So while we're not breaking out the particular revenues from our cable customers and the traditional telcos and those lines are obviously beginning to blur, we continue to see a very strong demand based on DOCSIS 3 from the cable providers, with a strong growth in content across the network. We saw it a little bit lighter than normal in this last quarter, in Q3. We had a very, very strong Q2 as it related to the cable providers, because they were clearing out their end-of-year budgets and preparing for the next wave of DOCSIS turn-up on the ports that are out there in the network. It's interesting to note that the total opportunity for DOCSIS is still only at about 10% of the overall penetration, in terms of lines turned up versus homes passed and CMTS that are activated in the network.

Okay, sure. You also mentioned about the delays in releasing carrier CapEx. Was this attributed to any specific customer, or it was widespread?

It was concentrated on a group of large customers. It wasn't uniform, but it was concentrated on where the spend dollars typically are in terms of purchasing power.

Okay, sure. And lastly, you announced the TrueFlex ROADM last quarter. Can you please tell us if -- the new ROADM flavor? Had it gained any acceptance among customers? And do you still expect to recognize revenue from this product in 2012? Like how many, for example, customers are in trials, or have you experienced or expect any customer push-out of legacy ROADMs in anticipation of the TrueFlex, especially you're...

You're talking about the 1x20 WSS TrueFlex, the ROADM?

Yes, sir. Yes.

As we mentioned, we're in sampling. The response to that's been very favorable. We would expect the volumes of that to actually occur in the first part of calendar year '13, and we will see some revenue before that, but it won't be significant volume at this point.

Your next question comes from the line of James Kisner with Jefferies & Company. James Kisner - Jefferies & Company, Inc., Research Division: First, housekeeping question. Did you guys mention, at some point, how big gesture recognition was?

No, we didn't. As we've noted previously, at one point, it was just slightly under 4% of revenue, and most recently, it's been less than 2% of revenue. James Kisner - Jefferies & Company, Inc., Research Division: So that's the way it was in this last quarter. It was less than 2%.

Yes, it continues to be less than 2%. James Kisner - Jefferies & Company, Inc., Research Division: Okay. And just to drill on down on gross margin here in the CCOP division. I mean, it's obviously down quite a bit. Was the erosion worse than you expected? I mean, obviously, you're guiding up operating margin sequentially. How much of that is gross margin? Can you just give us some color there around the gross margin weakness and the progression as we go forward?

Actually, when we gave guidance on the last call, we talked about an ASP decline expectation of 6%. It actually came in at 4.8%, and the revenues actually came in lower than the range we had anticipated for CCOP. So the amount of the erosion was less because of the fact that the ASP came in lower than what we anticipated. So we see it improving, one, from the fact that now the ASP is going to be more of a 2% to 4% range, and we expect the revenues to improve.

A bit of it to do with the mix of ROADMs.

And the mix, right. That the ROADM revenue was lower, that also, yes, exactly kind of affected it. James Kisner - Jefferies & Company, Inc., Research Division: Got it, okay. And just one last one here. On 40 gig and 100 gig, I guess I'm curious -- I mean, can you tell us, on a combined basis -- I guess it'd be mostly 40gig or all 40gig now. How much of your business in CCOP, Optical Communications is it -- is 40 gig or 100 gig? Is it still less than 5%? Is it more than 5%? I guess I'm curious how quickly could those 2 together end up being 10% of your business, if they aren't already.

Yes. We didn't -- we haven't given the exact percentage, but you're probably on a reasonable range there. As we mentioned, 40 gig is the -- starting to accelerate, and we're starting to get some 100-gig products to the field. But obviously, it's smaller percentage of our revenue today. But we do see that accelerating.

And there are no further questions in queue at this time. I would now like to hand the conference back over to Tom Waechter for any closing remarks.

Thank you, operator. As our call concludes, I'd like to thank our employees for their numerous achievements and strong support of our customer base. I'd also like to thank our customers, partners, vendors and long-term shareholders for their continued interest in JDSU. Have a great evening.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect your lines. Good day.