Venk Nathamuni - Managing Director of Investor Relations Bruce E. Kiddoo - Chief Financial Officer and Senior Vice President Tunc Doluca - Chief Executive Officer, President and Director

Romit J. Shah - Nomura Securities Co. Ltd., Research Division Christopher Hemmelgarn - Barclays Capital, Research Division Gabriela Borges - Goldman Sachs Group Inc., Research Division Aashish Rao - BofA Merrill Lynch, Research Division Sumit Dhanda - ISI Group Inc., Research Division Christopher Caso - Susquehanna Financial Group, LLLP, Research Division Christopher B. Danely - JP Morgan Chase & Co, Research Division John W. Pitzer - Crédit Suisse AG, Research Division Mark Lipacis - Jefferies & Company, Inc., Research Division Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division Doug Freedman - RBC Capital Markets, LLC, Research Division Gabriel Ho

Good day, ladies and gentlemen, and welcome to the Maxim Integrated Products Third Quarter Fiscal Year 2013 Results Conference Call. [Operator Instructions] I would now like to introduce your host for today's program, Mr. Venk Nathamuni, Managing Director, Investor Relations. Please go ahead.

Thank you, operator, and welcome everyone to Maxim Integrated's Fiscal Third Quarter 2013 Earnings Conference Call. With me on the call today are Chief Executive Officer, Tunç Doluca; and Chief Financial Officer, Bruce Kiddoo. During today's call, we will be making some forward-looking statements. In light of the Private Securities Litigation Reform Act, I would like to remind you that these statements must be considered in conjunction with the cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements in this call involve risks and uncertainty and that future events may differ materially from the statements made. For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on our website or available from the company without charge. Now I'll turn the call over to Bruce. Bruce E. Kiddoo: Thanks, Venk. I'm pleased to review our third quarter financial results. Revenue for the third quarter was $605 million, flat with the second quarter. Our revenue mix by major market in Q3 was approximately 49% for consumer, 25% industrial, 14% communications and 12% computing. Our Consumer business was up strongly due to strength in smartphones as our largest customer build inventory for the launch of a new platform. Industrial was flat as strength in automotive was offset by a decline in other vertical markets. General purpose industrial was up slightly. Looking forward, Q3 orders were strong. Our Communication business was down due to our Networking and Datacom segment, and Computing was down as expected across all businesses. Gross margin, excluding special items, was 63.5%, up from 61.5% in the prior quarter due to higher factory utilization, lower reserves and one-time items. Special items in Q3 gross margin were intangible asset amortization from acquisitions. Operating expenses, excluding special items, were $216 million, flat with the prior quarter and consistent with revenue. OpEx was slightly higher than our forecast due to higher profitability, driving higher profit-sharing bonus. Special items in Q3 operating expenses included acquisition-related charges, partially offset by the gains on sale of buildings. Q3 GAAP operating income, excluding special items, was $168 million or 28% of revenue. The Q3 GAAP tax rate, excluding special items, was 18% compared to 19% in the prior quarter. This includes a $3.5 million catch-up benefit for the R&D tax credit for Q1 and Q2 of fiscal year 2013. Special items in our Q3 tax provision include a $4 million catch-up benefit for the R&D tax credit for Q3 and Q4 of our prior fiscal year. GAAP earnings per share, excluding special items, was $0.45, up from 42% -- $0.42 in Q2. This is 7% higher on flat revenue due to higher gross margin and flat operating expenses. Turning to the balance sheet and cash flow. During the quarter, cash flow from operations was $212 million or 35% of revenue. Inventory was 110 days, up from 101 days in the prior quarter, as we build inventory in advance of an upcoming product launch by our largest customer. Our current plan is to reduce inventory days after the product transition is complete. Inventory in the channel, excluding catalog distributors, decreased slightly from 53 days to 51 days as channel inventory in dollar terms declined by 6%. Net capital additions totaled $38 million in Q3, down for the third consecutive quarter. Share repurchases totaled $66 million in Q3 as we bought back 2.1 million shares. We also paid $70 million in dividends to our shareholders. Finally, in Q3, we issued $500 million in 10-year bonds at a coupon of 3.375%. Overall, total cash, cash equivalents and short-term investments increased by $543 million in the third quarter to $1.57 billion. Moving on to guidance. Our beginning Q4 backlog increased to $386 million. Based on this beginning backlog and expected turns, we forecast Q4 revenue of $610 million to $640 million or up 1% to 6% from Q3. Gross margin, excluding special items, is estimated at 61% to 64%, which is our long-term model. Q3 fab utilization increased to 80%, with the Q4 benefits of this higher utilization offset by a return to normal inventory reserves and no favorable one-time items. Other variables that may influence Q4 gross margin include product mix and changes in inventory. Special items in Q4 gross margin are estimated at $8 million, primarily for amortization of intangible assets. Q4 operating expenses, excluding special items, are expected to be up around 1%, less than expected revenue growth due to continued tight spending controls. Special items in Q4 operating expenses are estimated at $4 million, primarily for amortization of intangible assets. This excludes potential items that may occur during the quarter. It is also worth noting that we will have increased interest expense this quarter due to the overlap in our new $500 million debt and prior $300 million debt, which is paid off in mid-June. Our Q4 and future tax rate, excluding special items, is estimated at 15% to 20%. For Q4 GAAP earnings per share, excluding special items, we exclude a range -- we expect a range of $0.45 to $0.49. Net capital expenditures in Q4 are expected to be up from Q3, as we invest in new manufacturing technologies. Our share buybacks may increase based on market conditions, given the availability of funds from our recent debt deal. Finally, our Board of Directors has approved payment of a cash dividend of $0.24 per share, approximately a 3% yield at yesterday's closing stock price. I will now turn the call over to Tunç to further discuss our business.

Thank you, Bruce. Good afternoon to all our participants. We appreciate your interest in Maxim Integrated, and thank you for joining our call. Let me start by highlighting 3 key March quarter financial results. One, revenue was above the midpoint of the company's guidance. We witnessed improvements in business conditions across multiple end markets and strength in our Mobility business, ahead of the new product launch from our largest customer. Two, gross margins increased 200 basis points sequentially and approached the high end of our target model. This was driven by higher factory utilization and improved operational efficiencies. Three, higher revenue and margins drove $0.04 of EPS upside over the midpoint of our guidance. Our earnings per share for the quarter was $0.45. Let me next provide additional details on our just completed quarter with an overview of lead times and bookings. During the March quarter, our delivery lead times remained steady and customer order lead times were roughly flat from the prior quarter. Bookings increased during the quarter, resulting in a book-to-bill ratio well above 1. Industrial market bookings were strong in the March quarter, and this trend continued thus far in April. I will next provide some color on our major markets. Let me start with consumer. We expect our June quarter consumer end market revenue to be flat to up slightly as our largest customer is starting its major product transition to the recently announced Galaxy S4 smartphone platform. We began shipping S4 products ahead of the launch, and this accounted for the majority of the revenue upside in the March quarter. We are well positioned here, with multiple Maxim products sold into this platform. Our high-integration interface Power System-on-Chip is used on all these new smartphone models. Therefore, we're agnostic to who supplies the baseband and apps processor in the smartphone platform. We're uniquely differentiated due to the breadth of our analog IP, depth of our systems expertise, proprietary high-voltage process technology and agile design execution. The apps processor PMIC will be manufactured by other suppliers in this generation. In addition, we have expanded our product portfolio to include gesture sensors in the Galaxy S4. We are first to market with this technology and provide a differentiated solution based on a fab ending single infrared LED illumination source. We bring to bear our traditional strengths in high-performance mixed signal and ultra-low power consumption. This enables these gesture sensors to be always on and opens the door to new use cases in mobile devices we have not yet imagined. To round up our S4 wins, we have a building block chip in every model as well. We're also excited about extending the adoption of our power management and sensor products beyond smartphones into tablets and hybrid devices. Our strategy is to continue to invest in our Mobility business along 3 vectors: first, diversified technologies beyond power, such as optical, motion and other types of sensors, touch controllers and audio; second, win designs across a wide array of product platforms, such as smartphones, tablets, hybrids, e-books, et cetera; and third, secure additional design wins at multiple customers. Consequently, we remain positive about our prospects for continued growth from the smartphone and tablet end markets. Second, let me discuss the industrial market. We project June quarter Industrial revenue to be up strongly. We experienced a robust pickup in orders from the automotive end market, as well as broad-based improvement from the general purpose industrial categories. In automotive, the sequential strength is driven by production ramps of multiple automotive infotainment design wins and continued adoption of our high-speed serial link products. Additionally, we see strength in our tuners and power management products for infotainment applications. Longer term, we expect continued momentum for our Automotive business as we have secured design wins in multiple technologies such as power management, RF tuners, serial link interface and battery management systems. These wins are across multiple segments such as infotainment, powertrain and advanced driver assistance systems. Turning the focus to distribution, it is important to note that Industrial has a broad customer base, buying primarily through the distribution channel. After rising slightly in the December quarter, inventory days in the distribution channel decreased quarter-on-quarter in the March quarter. Days of inventory was 51 days at the end of the March quarter versus 53 days at the end of the December quarter. As such, distribution inventory continues to remain well below our target model. As I have stated before, we have a differentiated strategy within industrial with approximately half our business focused on targeted vertical markets that require ASSP solutions, while the other half is focused on the general purpose market. The ASSP approach entails providing highly integrated products in select end market segments, such as automotive, smart meters and medical, for which we develop System-on-Chip or SoC solutions. In the June quarter, we expect strong growth in this ASSP business. The general purpose analog segment, which accounts for the other half of our Industrial business, consists of high-performance analog building block products. This segment is served predominantly through distribution and is highly correlated to the macroeconomy. We're well positioned in these building block products since we had a meaningful pickup in bookings from distribution during the March quarter and we have lean inventory in the channel. So we're in good shape in the vertical markets with ASSP solutions and in the general purpose market, with strengthening orders and lean inventories in the channel. Third, let me discuss communications. We project revenue to be up during the June quarter. We expect an increase in business from the Networking and Datacom end markets, while the base station end market is expected to be roughly flat sequentially. We're seeing strength in cable infrastructure products sold into one of our top communications customers. We also expect revenues from the Networking and Datacom segment to increase as we catch up on March quarter delinquencies to some short lead time orders. In the base station end market, we expect revenues to be flat in the June quarter, as small cell deployments moderate following the strength in business in the March quarter. The macro base station segment is also expected to be roughly flat. We have technology to deliver highly integrated solutions across a broad range of communications product lines, such as power management, optical and RF transceivers. This will help drive system level benefits that enable next-generation networks with improved coverage, capacity and lower power consumption. Fourth, in the computing market, revenues will be flat sequentially. We forecast an uptick in business from the server end market offset by a decline in our peripherals business. We expect revenue from the Notebook segment to be relatively flat. In closing, we remain excited about our prospects for growth from the smartphone and tablet end markets and believe we are well positioned for growth in the industrial, medical, automotive and communications segments. We will continue to focus on delivering winning products and technologies that provide highly differentiated solutions to our customers. Venk, you now have the call.

Thank you, Tunç. So that's the end of our prepared comments. We would now welcome your questions. [Operator Instructions] Operator, please begin polling for questions.

[Operator Instructions] Our first question comes from the line of Romit Shah from Nomura Securities. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: Bruce, at the midpoint of guidance, you're assuming gross margins declined 100 basis points. However, volumes will be -- it looked like they'll be up in the June quarter. And just judging by your mix, Industrial and Comm will grow faster than Consumer and Computing. So why would gross margins decline in June? Bruce E. Kiddoo: Thanks, Romit. So once we get to kind of these levels of gross margin, we always kind of guide to our long-term model, which is 61% to 64%. So I think when we think about Q4 gross margins, you're right, we are going to see some benefit of the increase in utilizations in Q3, as we know that will roll over and will give us some help in the Q4 quarter. We do think there's probably just a little bit of downward pressure on gross margins this quarter. Inventory reserves came in a little bit low in the third quarter. We're assuming they come in at their normal level. And we had a couple of just one-time items that helped us in Q3 that we don't expect to repeat in Q4. So in general, we expect some downward pressure on gross margin, but the guidance we gave was just our long-term model. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: Okay, that's helpful. And as a follow-up, Tunç, I just wanted to get your impressions of the S4 ramp. I noticed that consumer came in stronger than you had originally guided, but the June outlook of flat to up is a little lighter than I was expecting.

Well, essentially, what we experienced was, obviously, we had significant design wins, and I outlined that in my prepared remarks. We've got several sockets that we have across the whole platform, and we talked about all 3 of those. We wanted to make sure that we supported our customers very well. And essentially, whenever they requested deliveries from us, we decided that we needed to support them. And they wanted to be ready prior to their launch, so that resulted in us ending up shipping to them what they requested from us and pulling some of that into the March quarter actually, into the month of March mostly. And that kind of increased the amount of -- the revenues that we had for them in March. Essentially, we shipped it by about a month or so early, so we shifted it from one quarter to the other. So essentially, that's why you're seeing what you saw in terms of our guidance for June. Now, if you actually looked at the combination of the 2 quarters, then our guidance really is not -- it's just as it would've been expected in normal seasonality in terms of the strength. So I think, it really weren't -- wasn't that big of a surprise knowing what we knew internally as to how our largest customer wanted to do their product ramp for their new platform.

Our next question comes from the line of Blayne Curtis from Barclays. Christopher Hemmelgarn - Barclays Capital, Research Division: This is Chris Hemmelgarn on for Blayne. First question, did you break out smartphones as a percent of revenue this quarter? Bruce E. Kiddoo: So this is Bruce. Generally speaking, they've been in the kind of the high 30s. I think this quarter, just because of the launch of the S4, which Tunç talked about, they hit -- I think they hit -- they may have touched 40%. Christopher Hemmelgarn - Barclays Capital, Research Division: That's helpful. Just kind of a quick follow-up. Tunç mentioned that you guys were largely agnostic to -- given that you could sell a variety of different apps processors. I could be wrong here, but I thought you might get a little bit different -- ASP is dependent on the GS4, dependent on which build it was specifically. I just wanted to check on that. And additionally, if -- assuming that is the case, you know any guidance into where you're seeing strength in the Qualcomm AP or the Samsung model, or just what you're seeing there?

Well, as I said, our products are used across all the platforms. Therefore, it's really not that easy for us to tell actually which ones have -- what percentage of the phones are built with which applications processor. So I'm afraid we're not going to be able to help. Even if we could, we probably shouldn't be helping. But in general, our products are being used across the platforms now for basically for all 3 of those sockets. Bruce E. Kiddoo: And just to clarify, to your point, in the S3, there was a difference between different geographic versions of the phone. In the S4, we have consistent content. We have all 3 chips across all geographic versions of the S4.

Our next question comes from the line of Jim Covello from Goldman Sachs. Gabriela Borges - Goldman Sachs Group Inc., Research Division: This is Gabriela Borges on behalf of Jim. I want to follow up on your commentary on general purpose analogs. You mentioned another quarter in channel inventory declines, but also that given that level of demand and orders are improving, I was hoping you could give us some color on what you're hearing from distributors in terms of willingness to restock. Bruce E. Kiddoo: So this is Bruce, I'll take that. So we definitely saw within the third quarter, we saw our kind of general purpose up slightly, and we expect that to be our kind of our core industrial to be up again in the fourth quarter. From a distribution point of view, and if we really focus on the U.S. and Europe, because that's where the kind of the bulk of our industrial business sell through the distributors, both end market bookings and resales were up strongly in both the U.S. -- the U.S. was probably up in high single digits quarter-over-quarter, both resales and end market bookings, and Europe was up probably mid-double digits, both resales and market bookings. Obviously, Europe had the -- was coming from a lower base. But overall, we saw, I think, good strength in our industrial bookings in the quarter. We continue to see that. As far as your question specifically on restocking, we're not seeing that right now. They're taking off the ordering product based on higher resales. But like our days of inventory showed, they actually went down. Inventory actually went down from 53 to 51 days. So again, I think right now, it's all being driven by end demand, and we're not yet seeing a restocking. Gabriela Borges - Goldman Sachs Group Inc., Research Division: That's very helpful. And as a follow-up, if I could, I'd like to get your thoughts on the outlook for small cells this year. What kind of visibility do you have in the deployment in the second half of the calendar year? And how they occurred more so as a portion of the Comm segment?

So I'll take that one. So in terms of small cells, what the -- we've had some good design wins and some revenue in previous quarters. And what's essentially happening right now is that what we're observing is that the customers, meaning our customers, as well as the service providers, are kind of analyzing or reviewing all their options in terms of improving coverage and capacity for their customers. So it's in a bit of an analysis mode as far as we can tell for them to kind of understand how they should build out their systems. And clearly, they do have various methods of providing service to their customers. So from our viewpoint, what we see is that we have developed products and technologies that can really benefit from small cells being used very extensively. Those benefits, we've demonstrated because our customers have been interested in our products. But exactly how this is going to shape out, we're going to have to wait and see right now. But we believe that from a -- from our point of view, it looks like the architecture of using small cells distributor, especially in metro areas, seems to us like it's a better architecture. But in the end, it's a decision that's made by the service providers. So we're essentially have developed the technology, have offered it, the design wins are there, but how it's developed is not really that clear to us right now.

Our next question comes from the line of Aashish Rao from Bank of America. Aashish Rao - BofA Merrill Lynch, Research Division: Tunç, for the past 2 years, Maxim has only focused on the high-end smartphone opportunity where you've been able to offer a very differentiated solution. But growth here in some of these premium smartphones is slowing significantly, and 2 major vendors noted the same this week. So just wondering if you see a need to refocus your strategy towards designing chips for the $150 to $250 smartphones, which are expected to be the biggest growth driver over the next 5 years.

Well, clearly, our initial strategy was with the resources that we had. We have to make sure that we deployed them in a way that it gave us the best return on investment. And that, in the early years, basically was to make sure that we service properly the high-end market. However, when we look at how the market's going to grow, we do agree that there will be growth in the midrange or even low-end smartphones. And we do have products that we've developed or are developing that can address some of the needs in those markets as well. But in every case, we have to make sure that we're focused on adding value. So we seek those sockets where customers need something that we've got that our competitors can't do. And when we find those, we actually have not been shy, and we have developed products that will go into all types of smartphones, whether it's the highest end like an S4 platform or other midrange or lower range smartphones. So I think that there will be growth in that space, and we've definitely been watching it. We're just focused on making sure that we can add value. Aashish Rao - BofA Merrill Lynch, Research Division: Got it. So even if there's a slowdown, do you think you have sufficient design wins to help offset any slowdown in this premium smartphone space?

Premium, yes. And also remember that in the prepared remarks I talked about, when I said we're working on 3 vectors, one of those was also to diversify our product or technology base. And that applies not only in high end but also in the midrange smartphones, and it applies in all other kinds of smartphones as well because our belief is that many of the features that are today in a high-end smartphone do eventually migrate into the midrange and low end as well. So all those products will be available for other segments of the smartphone market. Aashish Rao - BofA Merrill Lynch, Research Division: Cool. And then as a follow-up, Intel's launching its Haswell chip. And one of its major innovations to address the ARM challenges including this voltage regulator on die. I realize notebooks aren't a focus area for Maxim currently, but what is the risk that some of the mobile SoC vendors begin to do the same? Do you think they can do that? Or is it just too complex, they just don't have the scale, design and validation resources that Intel has to integrate something like this?

Yes. Obviously, you're right in observing that we're really not that focused anymore on the notebook core power. I -- frankly, I have my doubts, whether in the long term, this is the right approach to integrate power all the way into the CPU module. And I think that because I got my engineering hat on, and it says that putting more heat where all this heat is generated is probably not the right thing to do, whether it's in a notebook computer or even when it's in a smartphone. So in my view, that the likelihood of that happening is not very high, especially I think in terms of putting it on monolithic dies is almost not possible. But putting it in a hybrid approach aggravates the heat problem, so I'm not sure that, that's going to be the right approach anyway.

Our next question comes from the line of Sumit Dhanda from ISI Group. Sumit Dhanda - ISI Group Inc., Research Division: Bruce, so a quick question for you. Your backlog's up 9%. You talked about an acceleration of orders in March and into April, but the midpoint of the outlook is just up a couple of percent, I guess 3%. So I -- my question is why not a more positive outlook, given the strength you're seeing both from a bookings and backlog perspective? Bruce E. Kiddoo: Sure. I think as Tunç talked about, we're guiding Consumer, our largest business, to be flat to up slightly. And within that, we're actually guiding Mobility to be flat, and we think some of our home entertainment products will be up. And so that's how we get the up slightly. And the main reason for guiding mobility flat was the reason that Tunç talked about, which was the -- kind of the shipments to our largest customer in the third quarter ahead of the S4 launch. And then as they kind of work through that launch in understanding exactly what the timing of that ramp will be, we obviously work very closely with Samsung and try to understand what those requirements will be and forecast the most likely case. I do think it's worth noting that even with our largest business being flat, we're still guiding up 1% to 6% or 3.5% at the midpoint, right? And I think that's because of -- a lot of that strength that we've talked about is in the Industrial business as well, where we're seeing -- we expect that to be up strongly. Our strategy around the vertical markets, automotive, medical and smart meters, we expect all to be up strongly, and we're also seeing some strength in our core industrial. So I think that the strength in the Industrial business is allowing us, even in a quarter when we're -- when our largest customer is going through a product transition, we're still able to guide up 3.5%. Sumit Dhanda - ISI Group Inc., Research Division: Okay, fair enough. And then just as my follow-up, I know Tunç, you said that it's hard for you to figure out exactly what your content is in each model, a version of each model. But just based on the comment that you have 3 chipsets across all geographies and you have the gesture sensor, it would seem that at a high level, you have higher content in the S4 versus the S3, or is there an ASP dynamic that I'm missing in this analysis?

Well, we actually have -- what we decided to do is since the content that we have is actually used on multiple platforms like in other products like even tablets or Notes, for example, from Samsung as well, it's really hard for us to talk about ASP dollars for phone anymore because it is going into multiple sockets. And we, for competitive reasons, actually don't want to share what the socket content is. So I'm afraid I'm not going to be able to answer the question you're asking. But I do want to add something about the question you asked before to Bruce. If you do the arithmetic, since we were -- went over our guidance by 2 points in the prior quarter, if you move that over to this quarter, if we had shifted later, that makes our growth about 6% to 7% if you did that arithmetic correctly. So we see this, our growth is in line with what you would expect from a seasonal perspective.

Our next question comes from the line of Chris Caso from Susquehanna Financial. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: Just to follow up on the bookings that you talked about, and it sounds like a lot of that strength is in industrial, I guess I assume, based on the guidance and the increase in backlog that a number of those new bookings are coming outside the current quarter, if you could comment on that. And just as we follow up on to seasonality, into the September quarter, obviously, a lot of that has to do with your customer sell-through levels. But typically, I guess, we should assume that normal seasonal behavior would be a fairly strong ramp within the consumer in the handset group. Bruce E. Kiddoo: So this is Bruce, I'll take that. So certainly, bookings were up. They were up across all of our end markets. And certainly, they were probably up the strongest in Industrial and in Consumer. That said -- and beginning backlog is up 9%. But let's remember, we actually started the last quarter with low beginning backlog, right? And we had higher returns than normal required in Q3, because of kind of the position we came out of December. So when we look at our beginning backlog for Q4 and we look at that against our guidance, we're about 62% booked right now. And from that point of view, that's about normal. We were a little bit low last quarter, so we're back into a normal range. So I would say our backlog is filling in as expected and kind of per normal patterns, and it's just a little bit of a -- compared to last quarter, the last quarter was -- we're actually a little bit low. This quarter, we're at a normal level. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: Right. So in other words, you need fewer returns this quarter as compared to last quarter? Bruce E. Kiddoo: That's correct. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: Right, okay. And just as a follow-up to that, with regard to the handset business, any updates for us with regard to your efforts to diversify your content outside your largest customer? Is there anything we can expect this year that's meaningful or anything that you guys are comfortable talking about?

I think, first of all, we clearly have been working with multiple customers in this field. We've got design wins with them as well. I think it is a little bit early to be very specific. So in general, I don't really want to talk about these until maybe they're seeing it in the tear-down that's done for the industry quite often. But I can assure you that we've definitely been working with a lot of customers and winning them as well. But our challenge remains what we've said before. If you do operator chart of who's got market share, the other customers are really small compared to the top dog. So it's -- the results we get financially, which is what matters in the end, is really going to depend on how successful these customers are where we've won designs at. And the specifics, I'd rather not speak about because our customers also don't want us to talk about these things because it reveals what their strategies are ahead of publicity on their products.

Our next question comes from the line of Christopher Danely from JPMorgan. Christopher B. Danely - JP Morgan Chase & Co, Research Division: In terms -- and since you're not going to comment on any specific content in the S4, how about this question: Do you think that your sort of total revenue opportunity in the S4 will be the same or more or less than it was in the S3, and why?

Well, I think it's going to be pretty similar. And the reason I say that is because we have, as you know, some of the sockets we've not been able to retain, in particular the applications processor power management IC. But we have added other functions in the phone as well that we won that are new for us, where we had no revenue before. So I don't really see a significant enough difference. Having said that, it's really hard to predict because we -- in the previous platform, our revenues per phone were all over the place, and we kept talking about this as well. So from a design win perspective, I think we're in good shape. Getting it quantified exactly as to what our average dollars were, it's not very easy. So -- and I don't think we can say much more than that. I don't think we gave out an exact number in the past, and we're not going to give an exact number in the future either. Bruce E. Kiddoo: And, Chris, this is Bruce. Another way to think about that is if you look at Samsung overall, right? And our ability to grow our business, not only in their phones but also in their tablets, the Notes and their tabs, we expect Samsung overall to continue to grow. So from that point of view, and that's really how we look at it is how are we doing at that account, and we believe we're continuing to do well there. Christopher B. Danely - JP Morgan Chase & Co, Research Division: Great. And so for my follow-up question, well, it just sounds like we're just dealing with a little bit of a June quarter revenue that got pulled into March. Going forward, if we look into the September quarter, do you think that all of that sort of inventory build at your top customer will be worked through and we would return to, I guess, a normal seasonal growth in the Consumer segment? And then can you also just remind us what we should be thinking about or what would be a normal seasonal sequential growth in the September quarter would be?

First of all, it's -- we really don't have visibility into how -- and 2 things, basically, what Samsung's plans are in terms of how they're going to -- how aggressively they're going to roll out the product. And the other thing that we don't really know, unfortunately, is what the consumer acceptance level is going to be for the new product. So when you put those 2 together, it's really difficult for us to forecast even 3 months out, which is what you're asking about, what kind of demand changes we're going to see for smartphones. Obviously, it's a great growth area and opportunity for the company, but it also has this uncertainty in it that you always have to live with. In terms of seasonality, I see Bruce has picked up the sheet that's got that number on it, so he'll give it to you. Bruce E. Kiddoo: Yes, I mean, Chris, obviously, the June and September quarters are always our strongest, up kind of mid single digits from that point of view. But again, as we've said in the past, it's very tough to -- when the variance is greater than the mean, it's tough to peg down to a seasonal. I think it is dependent exactly on what Tunç said, and what is the consumer acceptance of this platform.

Our next question comes from the line of John Pitzer from Crédit Suisse. John W. Pitzer - Crédit Suisse AG, Research Division: Tunç, I just wanted to make sure that, a clarification to Chris's question, when you talked about total revenue opportunity, was that on a per-phone basis or was that over the life of the entire progress? Because the S4 is expected to sell significantly more units than the S3, at least on our models.

Well, we're -- I think that the way we answered the question was really about the whole -- what we expect for that customer. And it's not even just the phone. As Bruce pointed out pretty clearly, it's the phone, it's other platforms like the Note, tablets that they make. So I was really commenting about the opportunity size for us at our largest customer, not really being specific about the phone model. John W. Pitzer - Crédit Suisse AG, Research Division: That's helpful. And then guys, you always do a good job on the gross margin line. I'm just kind of curious, given how strong your position is at the high end of the smartphone market with Samsung, as you think about going after future growth opportunities, Tunç, is there sort of a revenue at the device level below which the margin profile doesn't suit what you're trying to do? Or help me think about how gross margins will start to trend if you need to go down the stack of ASP's defined growth? Or is your integrated model as such that even at those ASPs, you can still put together pretty healthy gross margins?

So essentially, we've picked the target gross margin for the whole company, 61% to 64%. And at those margins, we believe we can grow the business. So we thought that was a good balanced level. So we're going to go after basically segments or products where we can get the best return on our limited resources, which is engineering. And what I'm expecting is that our executive management pick the product areas that are the right one, and they're going to have a mix of gross margins. It's not going to be fixed. And I've always been -- I always steer away from giving a lower limit because that's where the margins end up. When you say we're not going to go below this number, that's what the business units begin to gravitate towards. So essentially, my direction to them is pick the products in the markets where we add enough value to create -- have returns that are the best returns for our limited resources in the company.

Our next question comes from the line of Mark Lipacis from Jefferies. Mark Lipacis - Jefferies & Company, Inc., Research Division: Let me just drill down on the utilization rates a bit. Bruce, I think you said you -- the front end was utilized 80%. Can you talk about if that's internal -- was that the internal utilization or does that include the outsourced manufacturing also? And then could you also comment on the back-end utilization, where those rates and how long does it take to ramp up capacity there? Bruce E. Kiddoo: Sure. The 80% number we gave, which is where we were in the third quarter, that was for internal. And so those are the ones we track obviously to the extent that we have still about 50% of our fab outsourced. We view that clearly as a variable cost and therefore, utilization isn't as critical from an overhead absorption point of view. Internally, we're still kind of running in kind of the low 60s from a utilization point of view. That's a little bit misleading, because we have a whole series of kind of test platforms out there that kind of cover our entire product line. But from that point of view, I think we have adequate capacity from a test point of view. Recall in fiscal year '12, we've spent some capital dollars to add a new test floor at our facility in Cavite, Philippines. So I think we're very well positioned on the test side. Mark Lipacis - Jefferies & Company, Inc., Research Division: Okay, great. And then on the infrared gesture recognition product that you have, is that a product for your largest customer only? Do you have design wins at other customers with that product?

Actually, I have to admit that I don't know the answer to that question. We do -- we have introduced this to other customers, and I'm quite certain that they're going to be very interested in it. But if you asked me specifically, do I know if we'll win another customer, I don't. So we'll get back to you. Bruce E. Kiddoo: Yes, I'll follow up with that one.

Our next question comes from the line of Tore Svanberg from Stifel. Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division: I don't want to continue to focus too much on this topic, but if you look at the largest customer and the socket you lost with the applications processor, was that lost on the -- was it internally or externally? And the reason I'm asking the question is because there's this great fare in the investment community that you're going to continue to lose sockets internally at Samsung. So if you could address that, that would be great.

Okay. So we know that we don't have that socket. I don't think it's appropriate for us to really comment on who essentially won it. But in terms of our design win opportunities at Samsung, we definitely have introduced a lot of new technologies to them. So we essentially have to win every socket on the merits of our products, and that has not changed. I mean, that's been the same for the last 5 or 6 years, and it's going to be that way going into the future as well. So what we find ourselves needing to do is to make sure that we've got products that are a lot of value added to the customer, and we essentially have to battle it out on every socket. And I think that what we're finding out is that we can always find new technologies, new product -- new classes of products that we didn't even have before, and we'll continue to win those sockets. And in the power management space, we've got a lot of IP in the company that many of our competitors, including chipset vendors like Samsung internal or Qualcomm or Broadcom, don't have. So I think that the company does have -- meaning Maxim, does have valuable IP that our customers value. And I think they're going to use us as long as we can supply that value to the customer. We are told that we know we're much faster than many of our competitors in getting this IP on a single chip, and our breadth of know-how in doing a lot of different functions is not matched by any other competitor. So I think we're in good shape. But the pressure is always there. I mean I have to accept that, too. Bruce E. Kiddoo: Tore, this is Bruce. Just -- we actually feel good that we now have this, what we call, this interface SoC or interface power management chip on every platform, right? We think from that point of view, we've identified an area where, as Tunç said, we provide unique IP and a solution that Samsung is using across all of their platforms, plus the ability to integrate in the gesture sensor, future opportunities from a motion sensing point of view. I think we're -- again, we have to go to the areas where we can add value. The good news is there's a lot of growth in those areas and a lot of opportunities for us as a company. Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division: That's fair. And shifting gears, as my follow-up, the Industrial business is expected to be up quite a bit in the June quarter. Is that just a market bouncing back or do you actually have some market share gains or some new platforms that you're penetrating?

Well, I think it depends on which fields you're looking at. I think in the general purpose fields -- I mean, in general purpose products or building block products, obviously, we do have a lot of good products. But the changes in that market or in those types of products don't occur very quickly, so it's really more correlated to what's happening in the overall economy of the world. But if you look at the other fields, more vertical product lines, we do have good wins. And we see particular strength in automotive, which I talked about in my prepared remarks. We also see strength in our metering business. So we -- what we feel we're seeing is in the ASSP markets, the signals come a lot quicker as to whether you're growing the business because of market share gains or not, and we are seeing that in that field. It is harder to absorb that in the building block area because it's a very slow-moving market. So on that one, it's hard for us to pin it down on areas that we're really winning.

Our next question comes from the line of Doug Freedman from RBC. Doug Freedman - RBC Capital Markets, LLC, Research Division: You guys have been just moving a little bit away from sort of the demand drivers and looking at the cash flows that the company creates. Can you give us an idea of your priorities going forward? In the past, you've been pretty acquisitive looking for technologies. It does seem like you have a pretty broad suite of technology now. Do you still see those same opportunities in the market? And how should we think of your use of cash going forward? Bruce E. Kiddoo: Yes, Tunç?

Yes, let me talk about the technology, and Bruce can talk about the cash. So from a technology standpoint, we still do have our eyes open for technologies that are available to us to acquire instead of organically develop. Your observation is absolutely correct. It has slowed down. I think we hadn't done a major deal for 1.5 years now, maybe even longer. And your other observation is also correct. We've kind of rounded up what we needed in the past 4 or 5 years. But having said that, I've never been naïve enough to say that we've got everything we need. Therefore, we still look around and look at tuck-in acquisitions where we can add either talent or kind of fill up our product portfolio with technologies that our customers say they need into the future. So acquisitions, tuck-in acquisitions have not come to an end even though we've gone through a dry spell. So when we see something, we want to be ready with enough cash on hand to be able to acquire technology that we need. And on the rest of that, I think, Bruce, you can comment. Bruce E. Kiddoo: Yes, Doug. So obviously in addition to kind of growing the business through these tuck-in acquisitions, obviously, we'll continue to pay our dividends, we're strongly committed to that. We're going to pay off the note in mid-June, right, the $300 million note, so we'll pay that off in mid-June. And then we're going to continue our buyback program, and that's always been a matrix-driven program. But I think kind of given the availability of funds, you may see that increase, dependent on market conditions, of course. But we think that's another opportunity to return cash to shareholders and drive value. Doug Freedman - RBC Capital Markets, LLC, Research Division: Great for the color there. And Tunç, one more for you, if I could. When I look at the markets in high-performance analog, it's quite often that technology change takes place and you've had to exit markets as the performance is no longer there. Are you seeing, in any of your markets, a situation that you can actually possibly go back and reengage in a market because the criteria in that market has changed? One that comes to mind for me is the fact that we're seeing notebooks reach down to such a low power level that it's almost becoming powered by a product similar to something we might see in a handset.

Yes, we're -- okay, so you started the question as if it was general, but I understand now you're talking mostly about notebooks. Doug Freedman - RBC Capital Markets, LLC, Research Division: No, it's both. But I'm just using that as an example to try to demonstrate the question.

Yes. No, I think nothing's forever. I mean if we have a market that we've found no way to add value and exit, and then something changes and we can see that we can add value, we will absolutely go back and look at it and potentially reenter that market. So it's -- we'll make the right decisions depending on what the conditions are. The example you gave is a good one, and I'm glad that you picked that one actually because there are notebook-like products that are coming out, that are powered by processors that are not Intel processors, and their power requirements are quite different. And when the architecture looks more like a tablet or a smartphone and we can add value, we definitely will go after those sockets. And I think there are some that have come out, if you look at a tear-down, you probably would see Maxim products in them. So absolutely, we're -- we always have to have our eyes open and not write the market off just because it didn't look right at the time. It turns that now, it's a good market where analog and mixed signal performance is valued, we'll hop right back in there.

And our final question comes from the line of Ambrish Srivastava from BMO.

So this is Gabriel Ho for Ambrish. Let me ask a question. Just a follow-up on the Sensors business, can you let us know what is your sensors as a percentage of Consumer segment? Bruce E. Kiddoo: So this is Bruce. So sensors today is very small. Obviously, it's just ramping today with the S4. So as a percent, it's small today.

So I think, so if you take sensors, we can divide it and let me add a few more things to what Bruce said. It's -- Bruce is absolutely correct in terms of our optical sensors, it's pretty small, because it's just starting. But I think that it's got good potential for the future. We see many other things we can do actually with the technology we've developed. In motion sensors, in the Consumer space, we've got very small to almost nothing in terms of revenue. We have -- we're pretty much where we expected to be after we did the acquisition of SensorDynamics. We have successfully brought up the MEMS technology internally. We developed our first 3 degree of freedom products and introduced them and are shipping them actually to a customer now. We're well on our way with our first 6 degree of freedom products. These are -- this is where we have real performance differentiation we've demonstrated and confirmed that, by a few customers that really liked it. But it's kind of -- we don't talk about it right now because it's kind of early to talk about revenues because it's probably won't be before calendar year '14. So glad you asked this question. I wanted to talk about this, and it gave me an opportunity to do so. So the sensor space is an important investment area for the company, and I think it really provides a lot of value to the end consumer of the product. And there will be a lot of demand for these gadgets that we make to be an extension of us as human beings. So that's why we're investing in it and not much revenues. So it's a great potential for us to grow in the future.

So as a follow-up, could you let us know or give us an update regarding your smartphone content opportunity, including the sensors?

Well, so our -- I mean that's a pretty wide open subject that you're asking about. But what we see is when we look at our available market for -- and that does include sensors and everything else, currently we're approximately like 15% in some of our smartphone opportunity. So I mean, from that, you can probably derive what our estimate of the market size is. And it is -- that's what we estimate for the analog mixed signal, including sensor requirements, in the smartphone area. So, I mean, you can calculate it back from there.

Thank you, operator. This concludes Maxim Integrated's Conference Call. We'd like to thank you for your participation and for your interest in Maxim Integrated.

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.