Good day, ladies and gentlemen. Welcome to the Fourth Quarter 2013 JDSU Earnings Conference Call. My name is Philip, and I will 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 conference over to your host for today, Ms. Cherryl Valenzuela, Director of Investor Relations. Please proceed, ma'am.

Thank you, Philip, and welcome, everyone, to JDSU's Fiscal 2013 Fourth Quarter and Fiscal Year End Earnings Call. Joining me today are Tom Waechter, CEO; and Rex Jackson, CFO. Alan Lowe, President and GM of CCOP, will join us for Q&A. I'd like to remind you that this call will include forward-looking statements about the company's future financial performance. These 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 our most recent filings with the SEC, particularly the Risk Factors section in Part I, Item 1A of our current report on 8-K filed December 14, 2012. The forward-looking statements, including guidance provided during this call, are valid only as of today. JDSU undertakes no obligation to update these statements. Please also note that all results are non-GAAP unless otherwise stated. We include a detailed reconciliation of these non-GAAP results to our GAAP results, as well as a discussion of their usefulness and limitation in today's earnings press release. The release plus our supplementary slides and historical financial tables are available on our website. Finally, we are recording this call today, and we'll make the recording available promptly on our website. I would now like to turn the call over to Tom.

Thank you, Cherryl. I am pleased and encouraged by JDSU's overall continued execution in fiscal Q4. We delivered revenue of $421.3 million, gross margin of 46.1%, operating margin of 7.2% and EPS of $0.13. During the quarter, we navigated through market challenges and performed to plan in Communications Test and Measurement and OS&P. We grew revenue significantly in newer markets, such as gesture recognition and cloud data comm products. Softer demand for telecom products led to less than our expected sequential growth in CCOP. Bookings for Q4 were strong, with book-to-bill ratios above 1 for each of our 3 segments. Book-to-bill was well above 1 for our network-related businesses. CCOP recorded its highest level of booking since we combined the Optical Communications and lasers businesses in late 2008 and saw its largest Datacom booking in the last 10 years. CommTest reported its highest bookings in the last 10 quarters, with particular strength from a Tier 1 North American carrier. We anticipate most of these bookings will be converted to revenue by the end of calendar 2013. We also continued healthy cash generation. Our net cash balance at the end of June was approximately $516 million. We generated $57.1 million of cash from operations in Q4, bringing the total for fiscal 2013 to $187.8 million. This is nearly $70 million more than the $119.1 million generated in fiscal 2012 on comparable revenue. At the same time, our continuing investments in innovation led to a record 65% of combined CommTest and Optical Communications revenue derived from products less than 2 years old. This includes products such as new and redesigned laser diodes for gesture recognition, Datacom pluggables, solutions supporting increased capacity and faster connectivity for fixed and mobile communications and a few others I'll discuss shortly. Fiscal Q4 was the ninth consecutive…

Thanks, Tom. JDSU's consolidated fourth quarter revenue of $421.3 million was sequentially up 3.9% from March, at the low end of our guidance due to less-than-expected telecom revenue from CCOP, as Tom noted earlier. Year-over-year, revenue was down 2.9%. The Americas accounted for $204.5 million or 48% of total revenue, while EMEA has contributed $86.8 million or 21%, and Asia-Pacific approximately $130 million or 31%. Asia-Pacific results benefited from gesture recognition, while EMEA slipped due to sequentially lower demand for CommTest and OSP products in the quarter. Gross margin of 46.1% increased from 45.9% in March and 45.3% last year. The sequential improvement was due to higher revenue, while the annual increase was driven by 4 points of better margin from Optical Communications. Operating expenses were $163.9 million, up $5.5 million sequentially, due mostly to the addition of Arieso, yielding operating margin of 7.2%, up from 6.8% sequentially and down from 8.8% year-on-year. Net income for the quarter was $30.4 million or $0.13 per share, up from March's $24.1 million and $0.10 per share and down from $35.4 million or $0.15 per share last year. This [ph] fiscal year, revenue was approximately $1.68 billion and gross margin was 46.5%, fairly even with fiscal 2012. Operating margin of 8.7% and net income of $131.8 million, or $0.55 per share, were down from 9.3% and $137.5 million or $0.59 per share in fiscal 2012. Please note our Q4 non-GAAP results exclude, among other items, amortization of acquired technology and other intangibles of $18.5 million, a $14.9 million charge for stock-based compensation, restructuring charges totaling $12.9 million and a $111.6 million net tax benefit from the releases of deferred tax valuation allowances for certain foreign jurisdictions. Including the noted items, fiscal Q4 GAAP net income was $92.5 million or $0.38 per share, which…

Thanks, Rex. I'm pleased with the progress we continue to make on our strategic priorities despite the market headwinds we faced in fiscal 2013. We saw a steady flow of innovation as new products were 60% of network-related revenue in the fiscal year. Innovation not only strengthens our leadership in markets we serve, but also unlocks new high-growth opportunities such as consumer electronics for gesture recognition, data center expansion and cloud-based networking. We grew our TAM meaningfully by expanding our presence in these and other emerging markets. We complemented JDSU product innovation with 2 acquisitions this fiscal year, which added RF Test and Location Intelligence solutions to our wireless product offerings. These acquisitions also expanded our presence in customer base in Asia-Pacific and EMEA. We continue to build on our operating leverage. Over the last 12 months, JDSU significantly improved its manufacturing supply chain and IT footprint through consolidation and outsourcing. We also undertook a broad, thoughtful review of our product portfolio across all 3 segments and pruned product lines which were not accretive to our financial and strategic goals. We expect to see the full benefits of these activities in fiscal 2014. Finally, moving forward, we will refer to our CommTest business segment by a new name, Network and Service Enablement. This name reflects the evolution of our product portfolio, one that includes but goes beyond Communications Test Instruments by offering enhanced visibility across the network and up and down the stack, including service and application performance. Network and Service Enablement more accurately reflects the value we bring to our customers to help them address intense competition, unpredictable bandwidth demand, proliferation of connected devices and applications in an unprecedented period of technology change and complexity. Operator, we'll now take questions.

[Operator Instructions] And your first question comes from the line of Kent Schofield from Goldman Sachs.

I'd like to dive in to what I think you're calling now Network Enablement on the CommTest side of things. It looks like with the guidance, you're guiding to what would be the first year-on-year growth in an extended period of time during the September quarter. So I was wondering if you could look back over the last year or 2 in terms of some of those declines and what's driven that and then what do you think will bring you to growth on a year-on-year basis in the September quarter.

Yes, Ken, so I think primarily if I look back, a lot of it's been the change in the technology that's been going on. And as we mentioned in our last earnings call, the legacy technologies and products have been dropping off very quickly, and we're starting to see the newer technologies really start to ramp. So I think part of that was that lag in investment between the legacy dropping off and the ramp of the new products, such as things like LTE deployment, 100G, et cetera. I think we've also positioned ourselves better for those high-growth areas, both the regional play, whether it be China or some of the other high-growth regions, but also the markets around mobility and providing more visibility and control in the markets for the network operators. So I think that organic development, also the recent acquisitions have really helped us to align well where the growth is coming, and we see that continuing for a period of time now.

Is the 40% number that you gave for the wireless side of things, is that a good proxy to look at the legacy versus the new or is there more to that number? Just trying to get a sense for where we're at in terms of that legacy as a percentage of the revenues so that we can get comfort that we won't see another leg down from kind of that legacy-type deployment.

Yes. As we announced last time, last quarter, we have pruned out some low-speed wireline types of instruments, so I think that was probably the -- we'll continue on an ongoing basis pruning, but that was probably a larger bit of the legacy products still remaining. There are products that aren't in the wireless space that I would consider new generation of products for us, including some of the field instruments where we're actually adding more software content, things like StrataSync, so they can be connected to the cloud, et cetera. So the 40% for mobility is some of the newer products, but we still have other products in the remaining 60% that I would consider high-growth and have moved beyond the legacy type of products.

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

Gentlemen, if I could balance your conservative guidance with what seems to be very strong bookings and overall strengthening in terms of [ph] orders, is some of that related to timing? Is some of it related to kind of the lag between orders and revenue recognition? And does the pattern of your order trends imply a sharp ramp by the time we get to the end of the calendar year? Just a kind of sense of the bookings order balance between that and your conservative revenue guidance.

Yes, I think, Mark, it's a little bit of each one of those. We did say that the larger bookings that we've brought in from individual customers we believe will -- most of that will ship out by the end of the calendar year, so some of that spreads over multiple quarters, which is not typically the situation as we look in the past. So that's one item there. I think with more software-related revenue and especially the acquisition of Arieso, we do see timing issues so there is a delay between the time we ship the product or the software out for the customer when we'll actually realize the revenue for the products.

That's helpful. And then, Tom, if you -- if we do get a season of flush this year, some years we do, some years we don't, that would actually be all added to that, I would imagine, and maybe any indications of how you might feel for that?

Yes, I don't think any of the large orders that we received this past quarter are related to any kind of budget flush. It's way too early for that. So if we do see any budget flush in the December quarter, that should be incremental to what we've already received as far as bookings.

Got it. And then one quick one, just your view of CPAC versus what you're working on with CFP2 and subsequently with CFP4. And then lastly, just on gaming. I guess we have a sense of historic units for Xbox and Kinect sales, think about how the gaming world has changed because of the consumption of smartphones and tablets, maybe how we should kind of think about framing the opportunity for JDSU this second time around?

Yes, this is Alan. Thanks for the question. I can't specifically comment about any of our customers' proprietary designs, but what I can say is that we believe that our CFP2 offering and the feedback we've been getting from our early shipments to our customers is going to be first-to-market, lowest power consumption and highest performance. So we're very excited about competing in the open market with that product and then following on next year with our CFP4 offering and then subsequent to that, the QSFP28 offering. So we're pretty excited about the whole roadmap we have on high-speed Datacom going forward and have an entire suite of products. The critical thing there is that the TOSA and ROSA, which are the optical elements in those CFP2, 4 and QSFP28, we designed for the smallest form factor and smallest power consumption requirement of the QSFP28. So we won't we be needing to do a lot of redesigning of the optics part of those modules as we go forward, and we think that will give us a competitive advantage for time to market. As for the gesture recognition question, we really can't comment too much about any specific products in the market, but what we did say at our Analyst Day which is valid is that we believe that our content on this generation of product versus the prior generation of product would be more than 2x the revenue per unit shipped. Does that answer your question?

It did.

Your next question comes from the line of Patrick Newton from Stifel. Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: I guess one housekeeping question before I jump in, and I'm sorry if I missed this in the prepared remarks, but how much did Arieso contribute to the June quarter results and how much have you baked in to the September quarter guide?

We didn't break out specific revenue from Arieso, but we did say it was small because of the -- initially bringing it inside of JDSU. We had healthy bookings as we mentioned and we had approximately $5 million of operating expenses associated with the quarter, and then we didn't provide any specifics in the September quarter as far as revenue. Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: And then I guess jumping into the questions on the Optical Communications side. With the strength in Datacom, I'd love to get your thoughts on is this momentum in record bookings sustainable? I mean, you talked about having a good product roadmap with the CFP2 and also 4, but would love your thoughts on the market aspect, and could you provide us with Datacom as a percentage of your optical revenue? And then dovetailing off what you said, Alan, that your CPF4 is not going to require a redesign of the optics portion that would imply just an electrical redesign. Is it fair to say, then, that the launch of that could be a fiscal '15 type of product?

Absolutely. I think it's gaining by the electronics and the chip spends and tape-out of that specific component that goes into that CFP4. As far as your question about the length and duration of the strength of Datacom, I think it's here to stay for quite some time, given the growth in the cloud and the enterprise and the data centers that we see visibility to both directly from those players, as well as through our NEM customers who are forecasting strong demand for quite some time. So I think it's sustainable. I don't know if it's sustainable at the rate we had the bookings over the last quarter. But certainly at this point in time, it's -- the horizon is certainly longer than we can see on telecom. Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: And the percentage of revenue contribution?

Oh, percentage of revenue 15% to 20%, is that accurate? Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: Of optics?

Of optics, yes. Patrick M. Newton - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then just one last one, if I could squeeze it in, Tom, I'm curious on the fiber laser side of your business. You seem very confident about your next generation fiber laser, increasing cutting speeds and maybe making up for some of the shortcomings of this current generation. How comfortable are you with your relationship with Amada and how sustainable that business is? And the reason I asked is in a conference presentation today, the largest supplier of fiber lasers commented that -- or I guess implied that they think that they'll have Amada as a cutting customer in a year or so. So I'd love your thoughts on that relationship.

Maybe I'll start to answer and then turn it over to Alan who's even closer to it than I am, obviously. But no, I think from the top level down in Amada down to the engineering level, we have very good relationships. It's been a relationship or a partnership that's been going for over 4 years now. And I think on both sides, we're very pleased with the relationship. One of the indications is that we haven't gone beyond Amada to sell these products up to this point because we really think it's a strong relationship and there's lots of opportunities and go-forward opportunity with Amada. So from my perspective, we have a good relationship and I would expect that to continue. We obviously need to continue to earn their business and we plan to do that. I'll turn it over to Alan if he has any additional comments.

Yes, I think as we progress forward with our roadmap on fiber lasers, the focus is really to drive beam-quality laser diode cost and overall system cost, and we think that we've addressed each of those variables with our next-generation of laser that's under development and being tested. So we're pretty excited about that, and so is Amada. So we're going to continue to support them and they're supporting us, so the partnership is very unique and one that's special and very key to JDSU and Amada.

Your next question comes from the line of Amitabh Passi from UBS.

First question just has to do with the P&L. OpEx, you continue to guide that higher. And I think even if I normalize for Arieso year-over-year, on flatter sales, looks like OpEx is up $6 million. Just trying to understand what should we expect from the OpEx trajectory over the next 2 to 3 quarters?

Well, I think that the main drivers of that are, yes, Arieso, which was about $1.2 million in the stub [ph] of Q3 and it was between $5 million and $6 million operating loss in Q4 going forward. We are increasing our investments in R&D, a meaningful amount in both CCOP and NSE, so I think that you should take the uptick that you see going into Q1 and hang on to that for the fiscal year.

So should we assume an incremental $2 million to $4 million for the next 2, 3 or 4 quarters?

I don't think it increases like that the rest of the year, I think you should put it in and hang onto it.

Okay. And, Tom, just a quick one for you. Any updated thoughts in terms of -- about the weakness in EMEA. It sounded like a business that kind of flatlined there for a few quarters. It seems like you saw another downtick. Just trying to understand the dynamics there and what we can expect out of China over the next couple of quarters.

Yes, I think as far as EMEA, we did see -- if you look at percentage of revenue, as Europe was a smaller percentage and dropped down. So I think it was related to 1 or 2 particular customers. I don't see that as a trend, I think, that will pull back up this next quarter as far as EMEA or Europe is concerned specifically. I think as far as China, we are starting to see some activity around the 100G and the building out of the 200,000-plus base stations for TD-LTE. So we're starting to see that activity, we haven't seen a lot of orders yet, but that activity is moving and the -- those players in China have -- customers have continue to commit to getting those deployed in this calendar year. Whether that's doable or not, we'll have to see, but that's the intention. So we would anticipate that picking up as we go forward to this fiscal year. And again, I think with the increase of the technology and the need for more testing and validation type of capabilities and solutions, that plays well for us in that market. And then I think the optical components business, we've done very well in that market in the past, and the buildout of 100G and the backbone, et cetera, should be very meaningful to JDSU.

And just one final one, it's a clarification. You said CCOP had its highest bookings since the late 2008. Just excluding gesture, would you still say bookings were at a record level?

No.

Your next question comes from the line of James Kisner from Jefferies.

Just wanted to focus a little bit on the telecom shortfall. I mean, it looks like you were suspecting [ph] not quite perhaps $10 million more in revenue. But just wondering like what were the specific areas that you saw weakness, I mean what specific applications, I presume 100G [indiscernible] was strong? Is it possible you saw a little correction in some area? Could you just give us more color on that telecom softness?

Yes, this is Alan, James. I think what we -- when we gave guidance for Q4, we had expected our VMI pulls from some of our customers to be stronger than they actually ended up being. And to give you some color on that, I'd say mostly on the legacy 10G, 40G componentry and modules. But as you saw from the script, our Tunable XFP revenue was actually up quarter-on-quarter. So I think we're just seeing a faster tail-off in the legacy modulators, tunable lasers and modules as well as some softness in some of the legacy amplifiers that would go along with some of those product deployments.

Okay. That's interesting, so I mean -- I assume what you mean is that XFP and SFP+ together were up sequentially, right? Because you had 21% together and SFP+ tripled, so XFP declined sequentially, correct?

I would say it's probably down to flattish, yes.

Just wondering, is XFP, just as a quick follow-up, is that a -- is XFP maturing? Are you seeing share loss there? Do you expect that business to kind of grow again or should we just try to look at this block of XFP, SFP and SFP+ together and say maybe that is going to continue to grow sequentially sort of over the long run? Like how do we think about that? And just one other follow-up before I pass is just the gross margin impact on op communications from this, sort of, inventory obsolescence is 28.2%. Is that something that rolls off sequentially and how big was it?

So I think you can consider tunable XFP and SFP+ as one chunk, and we expect that to grow, especially as the cost of these products go down through the last 3 years of us really having leadership in the market. I think we've come down the learning curve and cost curve significantly. I think the other thing that Tom mentioned is our 1.5-watt tunable SFP+, when we get down to 1.5 watt, we'll be taking traditional DWDM SFP+ slots. And as we drive the cost down, I think we'll continue to take more and more share from those fixed wavelength or DWDM XFP -- SFP+ slots, and there's a lot of racks out there using SFP+ DWDM. So I think overall, that market space will continue to grow as we introduce new products and get new design wins. Are we seeing more competitors? I think it's the same one, and 1-point-something competitors that we've seen over the last couple of quarters. But again, I think our leadership and our experience in this field and our factories has given us certainly a competitive cost advantage that we can continue to drive our cost down and continue to maintain market share.

Your next question comes from the line of Troy Jensen from Piper.

Quick clarification. You said 15% to 20% of sales were Datacom. Is that of CCOP or was that of the Optical Comm bucket?

Optical Comm.

Optical Comm, okay. Can you help us out with what other products outside of CFP and CFP2 are you classifying as Datacom freeze?

Well, all the SR, short-reach VCSEL-based products, things like our QSFP+, 40G Datacom products, so 10G, 40G short-reach, 40G more intermediate-reach, stuff that's in the short-reach that either is within a data center or data center to data center. Or things like 40 kilometer [ph] and 80 kilometer, we consider telecom.

Okay. And then maybe a question for Tom, I guess, or Rex. Historically, you guys have had some gross margin initiatives here, streamlining contract manufacturers and reducing supply chain stuff. So just curious, most of that heavy lifting is behind you. And now, to get the margins up, is it going to be ramping the revenues or is there more to do on the COGS side here?

Yes, I think we'll continue to work on the COGS side, but I think most of the heavy lifting is behind us. As we mentioned in a number of the businesses, we had some pretty heavy E&O charges this past quarter. We don't expect those to go forward at that level. Mix will continue to work in our favor as we go forward, especially with software revenue. So it's really a combination of that mix continuing to improve and less of what we've done as far as clean-up around outsourcing or manufacturing and the impact it has had on some of our inventory charges over the last couple of quarters. I think those are the main -- probably the main activities that would impact the gross margins going forward.

I think that the historic -- the stuff we've been doing over the last year or 2 have been described as more event-based, working on the supply chain, working on consolidating CEMs. We do have opportunity going forward from an operational standpoint to narrow variances, improve yields and those sorts of things that you would -- you should expect those to be a process as opposed to an event. But that plus mix will really drive the gross margins.

Okay. And just one last question for Tom. I think fiscal year '13 probably you had fewer acquisitions than we've seen you do historically. And correct me if I'm wrong there, but do you plan on being more acquisitive in the coming fiscal year?

We did 2 in -- within the fiscal year, so that's probably about the normal pace, I would say 2 to 3, in the fiscal year of the size of acquisitions we've done. So looking out, it's hard to project the timing always but that's probably about the run rate we would anticipate as we go forward.

Your next question comes from the line of Alex Henderson from Needham & Company. Alexander B. Henderson - Needham & Company, LLC, Research Division: Two questions to start with. The first is can you just give us a little bit more granularity on what the implications of the staff reductions on OSP is and how that plays out through the revenues? I think you said $6 million reduction, but you've got it sequentially growing 2% to 8%, so I'm trying to reconcile that. And does that change the margin perspective on that business? I mean, 33% reduction in headcount seems like a pretty big swat [ph] to overhead. So how do we think about the margins recovering there and the timing of the revenue fallout impacting that?

So Alex, it was 28% headcount reduction and 33% on the footprint. So that will happen between now and the end of the calendar year. We're going through some lifetime buy situations with our customers right now, and we will accommodate those lifetime buys through the end of December. So you can think of it as a phase-down. Through the end of December, there'll be some lifetime buys that those products typically have lower gross margins. So as we get through those lifetime buys, we'll have some negative impact on the gross margin. Once we get through December and we've completed the lifetime buys and we've gone through the reductions as far as headcount and footprint, then you would anticipate -- we would anticipate the gross margins and operating margins to come up and... Alexander B. Henderson - Needham & Company, LLC, Research Division: Just so I get clarity on that, so the revenues stay up until the lifetime buys are completed then they fall off in the first half at the same time that you get the margin benefit of the staff reductions and footprint reductions, is that the timing?

That's correct. And we said this past quarter, that was equivalent to about $6 million of revenue from those products. Alexander B. Henderson - Needham & Company, LLC, Research Division: Okay. And then the second one, I think you said that there was some inventory write-down that was larger than expected in the quarter. Can you talk about just what that was?

So there's a little bit of a hit in CCOP, which was small and not of notice for us as a particular concern, I just call that ordinary course of business. We have been very focused in CommTest and NSE and working through the supply chain consolidation that we mentioned earlier, working on pruning some of our legacy businesses and that does cause us to take additional charges from an E&O perspective. But I do think that, that is substantially behind us after this quarter.

Your next question comes from the line of Simon Leopold from Raymond James. Simon M. Leopold - Raymond James & Associates, Inc., Research Division: Just a couple of things I wanted to touch on. One was the Test and Measurement business was in line with our expectations this quarter and up nicely sequentially and I think matched your expectations. But in light of a number of your competitors presenting negative results or preannouncing, what do you attribute the relative health of your test and measurement? Is it the mix of wireless or some other factors that you could highlight?

Yes, I think it is this move more to a heavier play in wireless and more software content in our products even with the instruments products, even the wireline instruments products. So I think we're moving faster than at least 1 or 2 of our competitors in that area. And again, we believe we've taken market share as a result of that. So I think that's what's really helped us to differentiate ourselves these past couple of quarters and will enable us to do that also going forward. Simon M. Leopold - Raymond James & Associates, Inc., Research Division: Okay. And then do you have the ability to call out what portion of revenue would be related to 40G and 100G coherent?

I don't think we've broken that down specifically. So no, to answer your question, we don't. Simon M. Leopold - Raymond James & Associates, Inc., Research Division: Okay. And how about ROADMs in the quarter, and I'd like to not just get a perspective on what's happening in the quarter but maybe from a longer-term trend in that, I would believe, if there's an increase in optical spending in metro rather than long haul that you might see a little bit more of a pickup in ROADMs. So if you could comment on what's going on both near and longer-term on your ROADM products.

Yes, I think the, what I'll call, legacy ROADMs are continuing to have a long life cycle, and I think you can take that and have kind of a steady run rate business. And then you can add to that our TrueFlex products that we started ramping last quarter and then will dramatically ramp this quarter will be additive to that. So those -- at least our first one, which is our Twin 1x20, is more at the core. And as Rex or Tom indicated earlier, we've been getting lots of pull-in requests as that product has been very well accepted by the NEMs, as well as the service providers, and so they're taking it to market earlier. So I think you can take the combination and look at them separately and say legacy ROADMs is pretty solid and you can put these on top of it. And then as we introduce the entire line of TrueFlex products, I think we'll see incremental business as we take share from our competitors, as well as you indicate, as they go more and more to the metro and edge of the network. Simon M. Leopold - Raymond James & Associates, Inc., Research Division: And what other products and what's the timeline? I assume lower port counts would be coming?

Both lower port counts as well as, you can imagine, instead of a 1x20 Twin, a lower port count Twin and as well as a TrueFlex standard 1x9 for those that want the flexibility of our TrueFlex products at where they put today in the metro or the network. But I think the 1x20 Twin and the lower port count Twin is really something differentiated and one that we'll take market share from our competitors at.

[Operator Instructions] And your next question comes from the line of Subu Subrahmanyan from The Juda Group.

I have 2 questions. First, Tom, maybe you can just comment on big picture, somewhat the disconnect we're seeing between your customers and the component vendors initially, it was limited to maybe a couple of U.S. customers in 100G. But more recently, we've seen a broader update for the optical transport vendors. Is it a matter of timing and if you could talk about what is driving some of the growth expectations going into September?

So are you specifically talking about transport or just 100G in general or -- I'm not...?

I'm talking about DWDM transport in general for your customers. It seem to be seeing revenue growth while some of the component vendors have not seen it yet.

Yes, I think it's more of a timing issue. And if you recall over the last, say, 3 quarters, we transitioned some major customers to VMI. And I think until those customers get comfortable, that we're actually going to have VMI inventory in the VMI hub. They maintain a level of inventory for comfort level. And now as we've proven that we'll fill those VMI hubs, I think there's more -- less of a reliance of safety stock in their end, and I think we're still seeing that kind of work its way out last quarter. And I think that's why we saw optical VMI inventory -- optical VMI revenue go from 42% to 35%. I think that's behind us now, and we'll see more of a consumption-based revenue going forward, and that's why we've guided as we did, the up 5% to 10% in the December [ph] quarter.

Your next question comes from the line of Ian Ing from Lazard.

So as you're growing your Datacom business, what's your view on pricing for -- with QSFP and CFP products? Do you see them sort of normal or are you getting help from few suppliers with lots of sustained demand?

There's always pressure on pricing. I think it's incumbent upon us to continue to drive our costs, yields and supply chain to be more efficient to keep up with those ever -- never-ending customer demands for lower prices. So I don't think we're seeing any change in behavior or expectations with respect to Datacom price reductions. And in fact, given the strong demand, I think you might see less of an emphasis on price reductions as much as the technology introductions of a CFP2 which you might take a spot of a CFP, where the power consumption and cost is quite high, CFP2 will be introduced at a lower power consumption, a lower price point, and you'll see a migration from CFP to CFP2 and then to CFP4, QSFP28.

And your next question comes from the line of Dmitry Netis from William Blair. Dmitry Netis - William Blair & Company L.L.C., Research Division: In light of that 5% to 10% guide for the next quarter in the CCOP business, can you give a sense, you said Datacom is going to be up; will telecom also going to be up? Is that -- how should we think about the mix between the telecom/Datacom for the next quarter?

Yes, at this point in time, our current outlook is that both Datacom and telecom will grow in the September quarter. Dmitry Netis - William Blair & Company L.L.C., Research Division: Okay, great. And the other question I have is on PacketPortal, I think you added 5 customers this quarter. What percentage of revenue -- I mean, I don't know if you're disclosing this, but if you could give some indication of where the revenue is today and where you think that might be going. I think you have presented us with the TAM opportunity for that product, but just trying to get a sense of maybe the timing or the actual revenue recognition in PacketPortal.

In FY '13, it was a small revenue number. What we said at our Analyst Day in February for FY '14, we expected $10 million to $15 million of revenue generated from PacketPortal. And again, because it's all software product, there is some delay in revenue recognition, but that's what we expected in FY '14. We -- as I mentioned on the call here, we did book our first $1 million order and we booked a smaller order with the -- the first time with a Tier 1 operator in North America, so we're really starting to hit the milestones as far as starting to see the build for what we expect to do on revenue in FY '14.

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

My follow-up question or clarification question is on gesture. Just -- can you give us an idea if the increments for the September quarter growth from June to September is going to be roughly the same size as the increment from March to June or if it'll be more or less growth driven by gesture? And then my question is on the optical telecom business. I actually -- you sound pretty cautious about the market trends in optical telecom and most of your customers and competitors, I think, recently have started to sound much better and they're talking about the macro as a positive headwind -- or sorry, tailwind rather than headwind. You still sound like the telecom is more of a headwind from a macro perspective. And I'm wondering if you can just comment on shares, specifically on telecom components. Do you think that there's any share shifts happening in telecom components?

Maybe I'll talk to gesture and then turn it over to Alan on optical telecom. So we did say we saw a nice ramp in the June quarter. On gesture, we expect to continue to grow, but you -- we won't see that same level of ramp as we saw from March to June as we go from June to September. So it'd be a healthy quarter, but not as large a jump as we saw from March to June.

Yes, as far as the macro tailwinds, I think the big question in my mind is when does China really fully deploy. And we've been talking about it for, I don't know, 3 quarters now and it still hasn't been anything meaningful so -- I mean, meaningful from percentage compared to what the numbers say they're going to be. So I would say, though, that a lot of our competitors are growing dramatically in Datacom, and we saw that similarly with our bookings last quarter. So we're expecting Datacom to continue to grow again, as I stated just a minute ago, telecom is going to grow. And if the VMI pulls come through stronger than we expect, then telecom will grow more than we expect in -- or at the high end of our guidance. But at this point in time, the guidance that we've given is where we think we’re going to end up.

Your next question comes from the line from Richard Shannon from Craig-Hallum.

Just a question on gesture recognition. It sounds like the customer pipeline is starting to fill here as you talk about another customer, LeapMotion. Wonder if you could tell us how it's filling beyond the September quarter, maybe give us a sense of maybe how many customers you might expect shipping in December, and also any thoughts in other markets like TVs or maybe even handsets? And then just finally, on gesture, do you expect seasonality? What do you see for seasonality in December? Is that typically going to be up or down in a cycle like we're seeing this year?

Yes, this is Alan. As we said in the past, we have active 4 customers, of which one we've launched this quarter and LeapMotion that we talked about. We have 2 other customers that are very active that won't impact this calendar year, but we expect them to impact calendar year '14, and those are both in the personal computer space as well as the home entertainment or television space. But again, those will impact really some point in time in calendar '14. As far as the seasonality, as we saw in the first generation of product that we had, there was a steep tail-off after the December quarter and during the December quarter, and I think it will all depend upon how successful that product is in the market. Right now, we certainly don't want to be any reason for our customer not meeting any of their demand, so we're going to be ready to meet their demand and we'll update you on our next earnings call as to what we think that'll look like. I truly hope it's a highly successful product and that we won't see a huge seasonal problem. But I think, typically, we do see some downturn due to the seasonality.

Ladies and gentlemen, this concludes our question-and-answer portion of today's conference. I would now like to turn the call over to Tom Waechter for closing remarks.

Thank you, operator. As our call concludes, I'd like to thank our employees, business partners and long-term shareholders for your interest and your continued support of JDSU. Have a great evening.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation and you may now disconnect. Have a wonderful day.