Michael Sullivan - Vice President of Investor Relations Michael R. Splinter - Chairman and Chief Executive Officer Gary E. Dickerson - President George S. Davis - Chief Financial Officer and Executive Vice President

Krish Sankar - BofA Merrill Lynch, Research Division Stephen Chin - UBS Investment Bank, Research Division Christopher J. Muse - Barclays Capital, Research Division James Covello - Goldman Sachs Group Inc., Research Division Christopher Blansett - JP Morgan Chase & Co, Research Division Mahesh Sanganeria - RBC Capital Markets, LLC, Research Division Vishal Shah - Deutsche Bank AG, Research Division Satya Kumar - Crédit Suisse AG, Research Division Jagadish K. Iyer - Piper Jaffray Companies, Research Division Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division Edwin Mok - Needham & Company, LLC, Research Division Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division Benedict Pang - Caris & Company, Inc., Research Division Thomas Diffely - D.A. Davidson & Co., Research Division Timothy M. Arcuri - Cowen Group, Inc.

Welcome to the Applied Materials' earnings conference call. [Operator Instructions] Afterwards, you will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded today, November 15, 2012. Today's call contains forward-looking statements, which are all statements other than those of historical fact, including statements regarding Applied's industry outlook, opportunities, market position, cost reduction activities, strategic priorities, products, cash deployment and Q1 of 2013's business outlook. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Information concerning these risk factors is contained in today's earnings release and in our most recent 10-Q and 8-K filing. Forward-looking statements are based on information as of November 15, 2012, and Applied assumes no obligation to update such statements. Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures are contained in today's earnings release and in the financial highlight slides, which are on the Investor page of our website at appliedmaterials.com. I would now like to turn the conference over to Michael Sullivan, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Marly, and good afternoon. Joining me today are Mike Splinter, our Chairman and CEO; Gary Dickerson, our company's President; George Davis, our Chief Financial Officer; and Joe Sweeney, our General Counsel and Corporate Secretary. Today, we'll discuss the results for our fourth quarter and year ended October 28. You can find a copy of our earnings release on our website, appliedmaterials.com, where you'll also find our quarterly financial highlights presentation, which provides additional detail. Let me now hand the call over to Mike Splinter. Michael R. Splinter: Thanks, Mike, and good afternoon, everyone. In our fourth quarter, Applied posted profits at the high end of our outlook, despite challenging industry conditions in semiconductor, solar and display. I would like to take this opportunity to thank the entire Applied Materials team. Their focus and commitment resulted in the company delivering $8.7 billion of revenue and $0.75 of non-GAAP earnings per share for the year. Our strong cash flow performance allowed us to increase our quarterly dividend and share buybacks, returning $1.85 billion to shareholders. Since completing the Varian acquisition, we have made excellent progress with integration. Exiting the year, we have realized over $50 million of run rate synergy savings, well ahead of our target. In addition, we have deployed key talent from the Varian management team to new roles in the company. In June, Gary Dickerson joined as our new president to bring renewed focus on our growth strategy. Gary is leading important changes that will strengthen our product development capabilities, and he will provide details in a few minutes. 2012 was a year characterized by significant fluctuations in seasonality and demand for semiconductor equipment, coupled with an extremely weak market environment for display and solar. We see improving business conditions entering 2013, with orders projected to increase after bottoming in the fourth quarter. In semiconductor, the mobility trend remains the biggest influence on industry spending, with annual smartphone sales expected to surpass 700 million units and tablet sales to grow in excess of 100% year-on-year. Increased competition is fueling innovation throughout the supply chain, and we see demand for advanced application processors, driving the foundries to build out their 28-nanometer capacity and ramp investment for the 20-nanometer node. We expect healthy investment by foundry customers in 2013, albeit at a lower level than 2012. Although growth in mobile is also driving demand for memory, the adoption of cloud-based storage means that we are seeing only a modest increase in the average bits per box. And consequently, NAND bit growth is projected to be in the 50% per year range. Given the low level of NAND capacity investment, there is potential for increased spending in the second half of 2013. DRAM spending is expected to continue at low levels, and we anticipate total memory to remain approximately 25% to 30% of wafer fab equipment investment next year. Soft macroeconomic conditions, combined with the timing of Windows 8, resulted in subdued back-to-school PC sales, and we expect negative PC growth for the calendar year. As a result, we are tempering our expectations for logic spending in 2013. However, the release of new touch-enabled ultrabooks can spur PC growth, providing a potential upside for both logic and DRAM investment. We now believe wafer fab equipment spending will end the year in the $30 billion to $32 billion range. Based on our expectations of a pullback in logic and foundry spending and continued weakness in memory, we see 2013 wafer fab equipment investment down 5% to 15% or falling in a range of $26 billion to $30 billion. We foresee consumer buying patterns and customer concentration again driving seasonality in the demand profile. In Q1, we expect wafer starts and utilization rates to trend lower for the second consecutive quarter, further impacting our service business revenue. In Display, this was the weakest year for TV investment in the history of the LCD industry. Despite low revenue levels, our Display group executed well and remained profitable in every quarter. Supply and demand is coming back into balance, and equipment orders are picking up. We are seeing a significant increase in average TV sizes, up to 2 inches year-on-year, compared to a typical increase of 0.5 inch per year. In addition, there is strengthening demand in the emerging markets. Together, we believe these factors will support industry investments in a range of $8 billion to $10 billion next year and provide a catalyst to build out factories in China. Mobility-related markets represented over 80% of our display revenue for the year, and we expect capacity investments for high-resolution mobile displays and touch panels to remain robust, as smartphones and tablet shipments grow and as these technologies migrate to ultrabook PCs. In Solar, the industry is on track to install over 30 gigawatts in 2012, and we expect double-digit growth of the end market to continue. This demand growth is starting to consume excess manufacturing capacity within the supply chain. However, today, conditions for our customers are extremely challenging, and investment in new capacity remains very low. Until we see clearer signs that solar equipment demand is recovering, we will take additional steps to reduce our cost structure and associated losses. Looking forward to 2013, we are optimistic about the potential of our markets. In all the industries we serve, we see accelerated changes in device technology and the adoption of new materials. This increasing complexity provides opportunities for Applied to build on our leadership and grow our market share. We recently announced a restructuring plan that will free up significant resources to fund the product development needed to support our customers' roadmap and drive Applied's growth. Our strategic priorities for the year ahead are clear. We'll focus on growing our share of wafer fab equipment. We'll make prudent and targeted investments in Solar and Display, and we will continue to strengthen the organization in areas that are critical to our success. Now let me hand the call over to Gary for additional comments about our business segments and strategic priorities. Gary? Gary E. Dickerson: Thanks, Mike. And I'd like to start by adding my thanks to our employees for their achievements in 2012. Since joining Applied, I've been very impressed with the talent, strong customer relationships and outstanding technology I've seen across the company. Together, these provide a tremendous foundation for growth. I believe we have a significant advantage in the depth and breadth of our expertise, and I'm delighted to be a part of this great team. Over the past 4 months, I've been spending a large portion of my time with customers, and I'm excited by the opportunities they are sharing with us. In Semiconductor, Display and Solar, our customers are accelerating changes in device technology and new materials. As a result, there are increasing numbers of device performance and yield challenges that fall in our leadership areas of precision materials engineering, creating great growth opportunities for Applied Materials. In order to drive growth and increase shareholder value, we are focused on 3 strategic priorities. Our #1 priority is to grow our share in wafer fab equipment. To support this objective, we will increase investment, focusing on 300-millimeter R&D and building a stronger technical team in the field. In Display and Solar, we are investing to extend our leadership in enabling technologies. But as Mike said, until solar market conditions improve, we are implementing a significant reduction in our operating expenses to mitigate the impact of this business on our earnings. We are also extending our planning horizon, and we'll make incremental investments in technical capabilities and R&D programs in current and new markets, where we see clear opportunities to leverage our precision materials engineering leadership and drive profitable growth. To fund our strategic priorities, we have conducted a comprehensive review of spending across the company. As a result, we have been able to identify approximately $200 million that could be made available for growth programs. We have stopped programs where we don't believe we have valuable sustainable differentiation or cannot deliver a good return on investment, and we will continue to review our R&D portfolio and shift investment to our best opportunities. In Solar, we will reduce our operating expenses, going significantly beyond our previously announced plans for this business. Additionally, we are restructuring our workforce through a voluntary retirement program, as well as reduction in force. Beyond reprioritizing our investments, we are implementing changes to the organization and our business processes to upgrade our product development engine to make it more effective and more efficient. These changes will ensure that we develop products with an architectural advantage in device performance, yield and cost. They will also enable us to accelerate development of disruptive technology and time-to-market for new products. Now let me briefly outline the opportunities for each of our businesses. In Semiconductor, the mobility trend is driving customers to deliver high-performance, low-power processors and affordable solid-state storage in a small form factor. This translates to major inflections in lower leakage transistors, low-resistance interconnects, advanced patterning, wafer-level packaging and 3D NAND flash technology. These inflections create spending shifts that are favorable to Applied, as well as high-value device performance and yield challenges that we can address with our technology. As foundries transition to 20 nanometer, they will fully adopt high-k gate-last transistor technology. This moves right into the sweet spot of Applied's leadership areas, and we expect a greater-than-30% increase in our available market. 2013 is a critical positioning year for 20 nanometer, with many process tool of record decisions being made that will impact our future market share. Our organization is focused on winning these decisions, and we anticipate strong growth for our PVD, epitaxy, implants and inspection products. As a result of rising capital intensity in the transistor area, our Front End Products Group, which includes our epitaxy products, posted record revenue in 2012. We expect continued strength in this business as new Epi steps are added to foundry device flows. The move to gate-last transistors also supported the strongest year in a decade for our PVD business. Strength we believe will continue, as customers add new PVD steps to their 20-nanometer processes. Looking ahead to technology changes that will happen in the next 12 to 24 months, we are focusing our investments on key inflections, including 3D finFET, 3D NAND and extending the interconnect roadmap beyond 20 nanometers. These inflections expand our market and provide opportunities for share gains. For example, 3D NAND structures require multiple film deposition steps, which leverages our advantage in depositing very thin film with precise control. In addition, we expect strong growth in selective material deposition and removal. Beyond our core leadership areas, our Inspection and Etch businesses provide opportunities for growth. The inspection market includes many segments, some where we are strong such as defect review and others where progress has been more difficult. We have been adding technical and marketing talent to our team and have substantial customer pull for our Inspection products, including our latest generation Brightfield tool. We have recently penetrated new applications in advanced logic, foundry and memory, and these positions provide a platform for us to grow share in the inspection market. Etch is a large multi-segment market, and our actions have been to build a stronger team and product development in the field. We are focusing this team and our investments in areas where we believe we have differentiated solutions, which are primarily in conductor etch. The customer penetrations we're making in patterning, NAND flash and packaging applications provide a good opportunity for us to grow our share in etch. Turning now to Display. The transition to new technologies, specifically metal oxide transistors and low-temperature polysilicon for organic LED and high-resolution LCD, is challenging for our customers. To address these inflections, we recently introduced a new PVD tool that enables the formation of higher-stability metal oxide transistors and a suite of CVD tools that address customers' requirements for advanced film. We expect the next generation of factories for high-definition televisions and mobile displays to ramp with technologies that increase Applied's market for our CVD and PVD products by at least 30%. In Solar, we remain confident in this market as an attractive long-term growth driver for the company. Our current product portfolio, as well as new technology and development is focused on enabling higher cell efficiency and driving much lower cost per watt. With this portfolio, we believe we can capture approximately $100 million of revenue for each gigawatt of new capacity the industry adds. The combination of our strong field team and product leadership puts us in a great position when customer investment resumes. However, as long as the current market conditions exist, we will significantly scale back our investment in this business. In summary, as we refine our plans in the year ahead, our direction is clear. We will implement the organizational and portfolio changes required to fully fund our largest growth opportunities. We will expand our planning horizon to make sure we win future technology inflections, and we will focus on converting our development tool of record positions at the 20-nanometer technology node into volume orders. Let me now hand the call over to George for further details on our performance and outlook. George? George S. Davis: Thank you, Gary, and welcome to everyone on the call today. In our fourth fiscal quarter, Applied delivered revenue of $1.6 billion and non-GAAP earnings per share of $0.06, the upper end of our outlook. Fourth quarter GAAP results included the charges of $124 million related to our workforce actions and a $421 million impairment of EES goodwill. These actions, coupled with $0.06 of acquisition-related charges, resulted in a GAAP loss of $0.42 per share. Full year GAAP earnings were $0.09 per share, and non-GAAP EPS was $0.75. Orders in the fourth quarter declined 19% from the prior quarter to $1.5 billion, reflecting lower semiconductor equipment demand, partially offset by modest order increases in our other segments. Net sales decreased 30% to $1.6 billion, led by a greater-than-40% reduction in semiconductor equipment sales. Non-GAAP gross margin declined to 38.4%, primarily due to lower volumes, inventory reserves and lower factory absorption. Total non-GAAP operating expenses were $518 million, below our $545 million target, primarily due to accrual adjustments for variable compensation and other employee-related costs. For the first quarter of fiscal 2013, we expect non-GAAP operating expenses to be in a range of $525 million to $545 million. During the quarter, we took a number of actions across the company to enable increased funding for our critical priorities. These actions include further reductions in solar spending, the workforce restructuring, varying synergies and the reprioritization of existing spending. In total, we expect these actions will make available approximately $200 million in 2013 for critical programs and new capabilities that support our highest ROI opportunities. Our focus is on funding to grow share and expand our markets. I will now cover the expected financial impact of the voluntary retirement program and reduction in force actions announced in the quarter. When fully completed, these actions will make available more than $140 million annually for new investments. The total cost for this program is expected to be between $180 million and $230 million. We incurred a charge of $106 million in the quarter for the program and expect the majority of the remaining GAAP charges to be incurred primarily in the first half of 2013. The impairment of EES goodwill recognized in the fourth quarter reflects the deterioration of the solar equipment market and our customers' financial condition, coupled with lower market valuations. These factors led the company to reassess the recoverability of EES goodwill. Our non-GAAP effective tax rate for the year was 26.2%. We expect our fiscal 2013 rate to be in line with 2012 and within a range of 25% to 27%. Cash from operations was $411 million, reflecting our continued focus on working capital and the impact of lower revenue. Share buybacks in the fourth quarter amounted to $516 million or 3.6% of the shares outstanding, and we paid dividends of $111 million or $0.09 per share. For the fiscal year, we repurchased 126 million shares or just under 10% of shares outstanding at an average price of $11.22 and paid dividends of $434 million. Given the cash requirements for severance and variable compensation programs in Q1, we expect our share repurchase for that quarter to be at a reduced level. Cash and investments ended the quarter and our fiscal year at $3 billion. We are entering 2013 in a strong position, following a year in which we completed the $4.2 billion Varian acquisition and returned $1.85 billion to shareholders in dividends and share repurchase. Next, I will comment on our segment results as compared to the prior quarter. SSG orders were down 36% to $741 million, driven primarily by a lower foundry and NAND bookings, partially offset by logic. Net sales decreased 44% to $870 million, in line with our outlook, with declines across foundry, memory and logic customers. SSG's non-GAAP operating margin was 10.9%. In AGS, orders were up 8% to $576 million, reflecting the seasonal effect of annual contract renewals. AGS net sales were up 7% to $621 million. This result includes $85 million for a thin-film solar line. Excluding this item, revenue would have been down 7% on lower wafer starts and utilization rates in semiconductor factories. Non-GAAP operating margin was 27.5%. In Display, orders increased modestly to $83 million. Net sales for Display were $93 million, with mobility investments again accounting for the majority of revenue. Non-GAAP operating margin was 4.3%, as the segment remained profitable despite the low levels of revenue in the quarter. In EES, orders increased to $65 million, led by orders for our WEB Coating tools with solar equipment orders remaining at depressed levels due to ongoing overcapacity issues and cash [ph] conservation by our customers. Net sales were approximately $62 million, at the mid-point of our outlook. EES had a non-GAAP operating loss of $46 million. We expect losses to narrow throughout the fiscal year, as we reduce the combined OpEx run rate for the solar and WEB businesses to below $30 million per quarter by the second half of fiscal 2013. This new OpEx level reflects a nearly 50% reduction from where we started in 2012, while absorbing the solar implant spend, which had remained at SSG for the first year of integration, but now will be reported in EES. Next, I'll turn to our outlook for Q1. Net sales from our Semiconductor business should be in the range of flat to up 10%. We expect orders to be up more than 25%, as customers prepare to increase capacity. Net sales in AGS are expected to be down 15% to 25%, reflecting the absence of the thin-film solar revenue of $85 million we received in fiscal Q4 and the effects of lower factory utilization. Excluding the thin-film solar revenue, net sales would be down 5% to 15%. We expect net sales in Display to be flat to down 30% off a low base. We are seeing the beginning of the order ramp to support LCD capacity additions in China, with display orders expected to exceed $150 million in our Q1. Net sales in EES are expected to be down greater than 30%, again, off a very low base. Overall, we expect net sales for the company to be flat to down 15%, and non-GAAP earnings per share to be in the range of 0 to $0.06 per share. Now, Mike, let's open the call for questions.

Thanks, George. [Operator Instructions] Marly, let's, please, begin.

[Operator Instructions] Your first question comes from the line of Krish Sankar from Bank of America. Krish Sankar - BofA Merrill Lynch, Research Division: Mike, the first question I had was, when you look at the order rebound in the January quarter, how much do you think is driven off just from a seasonal bounce off these low levels in October versus actually a true cyclical uptick? And who -- which segment, whether it's NAND, logic, foundry, is actually driving that uptick in Jan quarter? Michael R. Splinter: Sure. Thanks, Krish. I think we've seen the SSG business be quite seasonal and orders have been starting to show up in Q1 for the last few years. And, kind of, the order and revenue pattern has been, at least in our fiscal year, stronger in Q2, Q3; weaker in Q1 and Q4. I think this is quite a similar pattern to that, and the uptick is primarily in foundry and logic spending. Krish Sankar - BofA Merrill Lynch, Research Division: If I could just have a quick follow-up for Gary. Thanks for giving the priorities for the company. You highlighted conductor etch. I'm just kind of curious, any plans on the dielectric etch business? If I do the math, you probably generated a little over $100 million in revenues last year in that segment and very low market share. So what are your priorities for the dielectric etch? Gary E. Dickerson: Yes. Maybe let me talk about etch overall. We're shifting our R&D investment in etch to areas where we have the largest opportunities and focusing on areas where we have the most pull from customer -- customers and the highest probability of success. Etch is a large multi-segment market. The strongest position for us is in conductor etch, where we have differentiated technology leading to new penetrations that give us a great opportunity to grow share. There are some applications. Again, etch has many different segments. There are some applications within dielectric where we have a strong position. We're seeing very strong pull from customers. And we definitely will pursue those. But the biggest opportunity for us is in conductor etch. I'd also like to say about the team -- is we've added some major additions to this organization. I really like working with this team and believe we have a great opportunity to grow share in this market.

Your next question comes from the line of Stephen Chin with UBS Securities. Stephen Chin - UBS Investment Bank, Research Division: First question for Gary. Gary, you talked about share gains as your #1 priority, and you also had a chance to do a strategic review. The question is, are you at a point where you think you have done a strategic view of the entire silicon business and the other businesses? And are you willing to share what your maybe near- to mid-term share gain goals are in etch and inspection? Gary E. Dickerson: Yes. Let me just give an overview. As we talked about earlier, we've made significant reductions in OpEx to focus on growing our share in wafer fab equipment. And as I said earlier, this is the #1 focus for the company. If you look at what is going to happen over the next 2 years that will have a big impact on our performance, it's really the 20-nanometer transition. And this transition is really focused on the transistor, low leakage, low power, high performance. And this is in the sweet spot of our leadership in transistor equipment technology. As I said earlier, we anticipate in this transition, significant growth in Epi, PVD, implant and inspection in this 20-nanometer transition. The transition creates a great opportunity for us to grow our available market and increase share. We also -- there are also a number of other device technology inflections that are good for Applied, and this is where the majority of our spending is being focused. Within SSG, we've shifted a large amount of R&D dollars to focus on areas with the best returns, some of those we talked about earlier in the call. So I would say, again, overall, I'm optimistic -- very optimistic with the major transition that will impact our business being right in the sweet spot of our leadership position. And overall, I think we have a great opportunity to grow share. I don't -- we're not going to give specific market share goals in all of the different segments. But I do believe, based on customer pull and penetrations that we're making, that we have a good opportunity to grow share in those businesses. Stephen Chin - UBS Investment Bank, Research Division: And one question for Mike. Mike, a question on the 2013 WFE. You had previously said you expect a similar seasonality at 2012 into 2013. So should we expect a much stronger first half '13 as we come out of the second half '12? Michael R. Splinter: Yes, thanks. When we look at wafer fab equipment spending for all of '13, it's a little bit hard to tell right now what the second half will look like. I really think the big part of that is how the macro environment plays out, economic environment plays out and, more specifically, how well PCs do in that environment because that could stoke spending, both in logic and DRAM for the second half. The first half, we will see logic increase, as I mentioned, but we'll also see the foundry spending profile. And as I said, that for us is second quarter and third quarter of our fiscal year. So that kind of plays in -- cuts across first half and second half calendar year, but generally stronger in the first half. Overall, I would say, as we look at the total WFE, we think it will be weaker next year based on lower foundry and logic spending.

Your next question comes from the line of C.J. Muse with Barclays Capital. Christopher J. Muse - Barclays Capital, Research Division: I guess, first question, Mike, can you talk a little bit about visibility, in particular, to the foundry logic uplift that you're seeing and, I guess, importantly, how that may have changed in the last week to month? Because it sounds like maybe things are getting incrementally better. Michael R. Splinter: Yes. I think, actually, we would say, from our projection -- our original projection last quarter was that we thought WFE for 2013 was going to be a little bit stronger, especially in logic. I think we've lowered our expectations on growth in logic spending. I think our expectations on foundry are pretty much where they were. We thought that it would be down off a high peak in 2012. Now the -- if we look at our seasonality picture that we've seen now for 2 years in a row, we start to see orders grow for SSG products in Q1. We believe that's what we're seeing today. It is not -- we don't believe it will be as accentuated as it was last year with such a high peak in Q2 and dropping in Q3. A little hard to tell right now, but maybe a little more muted trend than we saw last year. Christopher J. Muse - Barclays Capital, Research Division: Okay. That's helpful. And then, if I could ask a follow-up. Gary, thank you very much for the color. I guess a question in terms of magnitude of share gain and timing wise -- and I get you don't want to put numbers around that. But I'm just curious, when you think about the inflection at the transistor level at 20-nanometer and how AMAT is really at the sweet spot there, plus new investments in hiring as well as investments in field services, what will drive the most share gain near term? And then, how do you think about the layer in of other share gain from those other levers as you invest in the business? Gary E. Dickerson: Yes. Again, the 20-nanometer is really the major focus over the next couple of years. It will -- some 20-nanometer investment will hit towards the end of 2013, the majority in 2014. And as I said, it's really focused on the transistor, and this is where we have clear leadership in a number of different enabling products. So we've seen record performance in Epi, best performance in PVD in a decade. Certainly, there are more steps that are being added in this 20 -- the full adoption of high-k gate-last 20-nanometer processes that will fuel significant growth in those businesses. Implants and inspection, also, we have a really good position in 20-nanometer based on our DTOR positions with customers. So that's really the major focus for us and the major opportunity for us. And as I said, it's a more than 30% increase in our available market and really right in the leadership areas that we have as a company. So we look at this as being one of the best transitions that's happened for Applied Materials in many, many, many years.

Your next question comes from the line of Jim Covello with Goldman Sachs. James Covello - Goldman Sachs Group Inc., Research Division: On the Solar piece, what's the difference between what you're doing and sort of getting out of the business entirely? It seems like there's a very significant scaling back of the effort here. I mean, what's left? Gary E. Dickerson: Well, as we -- as Mike talked about earlier today, we certainly anticipate that end market demand is going to continue to increase over time. And we can add about $100 million per gigawatt of new capacity, given a reasonable market. This can be a good business for Applied Materials. We have a strong position in technology to enable higher cell efficiency, enabling lower cost per lot, and a real advantage in products that are important to making this happen. The spending reductions -- there's always a balance in these types of situations. We clearly understand that we need to reduce the drag on earnings, impact on the company overall. But we also want to be investing when this market returns. We have a very strong position, and we still think this can be a good business for us. James Covello - Goldman Sachs Group Inc., Research Division: The next question, it's going to -- at the risk of sounding a little bit like pandering here. You guys seem to be seeing the market a little more clearly than some of your competitors. At SEMICON, when you guys kind of had a -- announced a more dour market outlook, a lot of people said, "That's just AMAT losing share." And then, lo and behold, over the next 2 quarters, they were all missing numbers and guiding down to where you guys already were. Now your competitors are insisting on a flat to up market next year, and you guys are calling it, I think, more consistent with what the customers are saying, which is down 10% or so. Why do you think you're seeing it a little sooner than your customer -- or than your competitors in this cycle? Michael R. Splinter: Well, Jim, I think we really try to go out and talk to the customers and understand what their investment profile is. We really do take this item seriously because we have to plan our business around where we believe wafer fab equipment spending is going to end up. And I think that's the primary aspect. But I think, overall, our planning team has a good approach to figure out really what the puts and takes are on figuring out what's driving the market as well. When you think you have negative PC growth, I think, there's an aspect to the logic spending that we have to take into consideration and how much impact that then has in particular on DRAM spending. George, I don't know if you'd add anything to that. George S. Davis: No, I think -- I appreciate the comment. And one of the things that we see -- we tend to have an extra month because we have fiscal quarters. And we often will see a change in the order pattern and we try and get it out as quickly as we can. And I think that's what you saw at SEMICON. And we wish we had better news back then. We wish we hadn't been right but...

Your next question comes from the line of Chris Blansett with JPMorgan. Christopher Blansett - JP Morgan Chase & Co, Research Division: I just wanted to see, Mike, if you can give us an incremental breakdown on where you see the relative spending in SSG next year, given the down 5 to 15? Michael R. Splinter: Sure. I think maybe I can be helpful if I look at the top end of the range and the bottom end of the range. On the top end of the range, we would have to see a return of strength in PCs, a big -- pretty big uptake in ultrabooks. I think that's possible. There's some compelling models out there. That would drive increase in logic and DRAM spending. And then we would expect 3D NAND to come in a little stronger probably than we're projecting right now, as that technology gets ready for production. On the downside, I would say, first of all, on the downside, we would have to expect that the overall world economy is not good and not as maybe as good as it is today. And then continued slide in PC sales, which we're not expecting in our current model. I think that would be the big aspects. And then when you look at the segments inside of spending, we think foundry and logic spending are going to be down modestly next year, kind of in that 10% range. And then memory spending is pretty much going to be flattish at a low level of 25% to 30% of overall wafer fab equipment spending. With some bias, that NAND spending could go up later in the year, but I think it's too early to call that. Christopher Blansett - JP Morgan Chase & Co, Research Division: That's very helpful. And then I had a quick question on the OpEx maybe throughout -- this next fiscal year. Obviously, you're reducing some expenses in what you consider some noncritical areas. But in the end, when you think about the restructuring of the EES division and some of these cuts, I mean, should we assume that you're just simply going add OpEx cost back for areas of growth? Or at a given level of revenue, say, 12 months from now, we do expect a lower level of OpEx associated with the company? George S. Davis: Our real focus right now is on making sure that we're fully funding the growth opportunities that we see. I think Gary laid out pretty clearly also the opportunities that we see to gain market share over the next 12 to 18 months. And we want to make sure that funding is not the issue there. So we are taking significant actions. We do think, as we said, that it frees up $200 million of investable funds relative to what we saw in 2012. Now some of that will net out at the end of the day, but we would expect really all of the -- for planning purposes, I would expect all of the restructuring savings to go back into spending.

Your next question comes from the line of Mahesh Sanganeria with RBC Capital Markets. Mahesh Sanganeria - RBC Capital Markets, LLC, Research Division: Just following up on the seasonality comment. Is it fair to say that last year, when you had this very strong first half, that was the big component was Korea. And this time, it's less Korea. So if we -- that drove the most seasonality last year than compared to this year? Michael R. Splinter: Well, it kind of gets down to specific customer expectations. I would just say that it's primarily -- the seasonality is still primarily consumer driven, smartphone driven, consumer cycle driven. And so, as much capacity increase that's needed in that area will likely will see those sales, orders and sales in the first half of the year. Mahesh Sanganeria - RBC Capital Markets, LLC, Research Division: Just one more follow-up. I'm just wondering your forecasting, if it's more top-down driven or more your visibility from the customer. Because what surprises me is that last year, when the NAND was in oversupply and the prices were declining 20% quarter-over-quarter, most of the companies were pretty bullish on NAND spending. And now, we have prices stabilizing to going up. And I hear a very, very muted outlook. So I'm just wondering what am I missing? Why the outlook this way? Michael R. Splinter: For us, on NAND, the issue is that right now, our bit growth projection is about 50%. And to really get a need for increased wafer capacity, we believe you have to get that bit growth above 70%. So that's the reason that we do see that supply and demand is coming. Customers have taken actions to get supply and demand into much, much better balance in flash memory. But our thinking is that they're going to be able to achieve a 50% bit growth through technology improvements, moving to the next generation of technology as opposed to building new factories and facilitizing those factories and adding wafer starts. We'd love to see solid-state drives really take off next year. That could happen with ultrabooks. And that would certainly drive that bit growth above 70% and then require more investment there. But that's kind of our rationale that, I think, is consistent with the view. . George S. Davis: And when you look back to 2012 and the forecasts that were coming out, it really was a bottoms-up talking to our customers and to the signals that our account teams were seeing. And what you saw is in the second half of the year, customers pulled back. And everybody was very encouraged by the smartphone growth expectations for the year, tablet growth expectations. And what you just didn't see was bit growth within the device. And so you just didn't get the growth, particularly with a week, solid-state drive market in '12 that people have hoped for. And that's the world we're kind of entering 2013 with.

Your next question comes from the line of Vishal Shah from Deutsche Bank. Vishal Shah - Deutsche Bank AG, Research Division: Just on memory spending. If I look at the October quarter orders, your orders are below 100 million. That's consistent with, I think, the orders that you saw back in 2009. So I'm just wondering, what kind of profile you see for orders, especially if you think memory orders are going to be flattish next year? And then same thing on logic. If you look at the October quarter orders, they almost doubled last quarter, from last quarter. And if your orders are going to go up again in the first quarter, then are we looking at another similar sort of sharp decline in orders in the back half of the year? Michael R. Splinter: I think it's way too early to forecast the back half of 2013 right now. There's just too many puts and takes. If capacity demand was all about smartphones and consumer products, I think we could make a better projection. But I think there's a real chance for Windows 8 PCs to be stronger in the year and therefore drive more spending, which would change the profile half-over-half. Other than that, I think, memory spending, it's kind of chugging along the bottom. And I don't think the fluctuations are going to be that great other than, as I said, we could see strengthening in NAND the second half of the year. But I don't think it's going to be a big impact on the seasonality or variability in the first half of the year. George S. Davis: We still see memory orders combined less than 20% of the expected orders for our Q1. Actually, memory or DRAM will be up quarter-over-quarter but it's off such a low base, it's just not material to the overall outlook. Vishal Shah - Deutsche Bank AG, Research Division: That's very helpful. Just one other question. In the down 15%, 5% to 15% year, how should we think about AMAT's revenue overall, especially considering some of the puts and takes in Display and EES? Michael R. Splinter: Well, nominally, it -- our SSG revenue will follow wafer fab equipment, plus whatever share gains that we have. And we feel quite bullish about 20-nanometer. But 20-nanometer is going to be maybe 25,000 or 30,000 wafer starts in 2013. So we'd see that in that latter part of the -- of that effect in the latter part of the year.

Your next question comes from Satya Kumar with Crédit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: I just wanted to probe you a little bit on the foundry expectations for next year. I was wondering if you can -- if you look a bit in the foundry segment and across the different customers, are you seeing like most of the decline coming across just one particular customer? Or do you see a broad-based trend? Michael R. Splinter: I would say it's not a broad-based trend, Satya. But I think I'd probably leave it at that. Satya Kumar - Crédit Suisse AG, Research Division: And just one more question on foundry. Like, if the foundry -- if you look at the foundry utilization at leading edge, do you see they are changing? I mean, from what we hear, it's still at a very tight supply/demand dynamics there. And the logic content continues to grow, there's fundamentally no change. And the units also are continuing to grow on the mobility side. So I was just wondering, like is the view that next year, foundry could -- would be declining. Just off the reflection of the current outlook from your customers, even when you look at it from a top-down level, things could be a little better next year? George S. Davis: Yes. This is George. If you look at year-over-year, foundry will still be far and away the strongest part of the demand from our customers. But it will be down. And our expectation today is that overall foundry spending will still be down and is a contributor to the reduction overall in WFE.

Your next question comes from the line of Jagadish Iyer with Piper Jaffray. Jagadish K. Iyer - Piper Jaffray Companies, Research Division: Two questions. Gary, first, given your expertise in process control, can you talk about where are some opportunities in process control? What are some low-hanging fruits? And what are some real term -- long-term opportunities where Applied can make a big impact? And I have a follow-up. Gary E. Dickerson: Okay, in -- I would start by saying I've never seen a business with more customer pull than our PDC business. And we're shifting our investment into areas where we have the largest opportunities and most pull from customers. The areas that we're making incremental penetrations are in inspection and logic, foundry and memory, especially in logic and foundry, we see some traction. So that would be the area, I think, that is the biggest opportunity for us. But again, in my career, I've never seen a market or a business with more customer pull than the PDC business. Jagadish K. Iyer - Piper Jaffray Companies, Research Division: This is a follow-up for George. So, George, given that you allocate more resources now as you kind of reshift the resources, how should we think about the operating margin of the silicon segment as it bounces up in 2013 compared to your prior cycle? George S. Davis: When we set the models for performance at the last meeting or at the last analyst meeting, we had brought the models down somewhat in semiconductor to reflect the expected increase in spending. I think, overall, we'll still be operating within our model range as a company, both at the segment and at the overall level.

Your next question comes from the line of Patrick Ho with Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Just first off. Historically, Applied has been very well exposed to the DRAM side in terms of memory. With 3D NAND approaching and being adopted in the next several years, I guess, a 2-part question, where do you see the TAM for Applied? And what market segments do you see the biggest growth opportunities? Michael R. Splinter: Thanks, Patrick. We see 3D NAND really as a great opportunity for us. On this multilevel, stack type of process, there are many very precise film deposition steps where we have leadership and some additional high aspect ratio etching also, where we've had good customer pull, additional CMP steps. So overall, the 3D NAND we see as an opportunity that can grow our available market more than 25%. So we look at this as really, really a great opportunity. It's really in the sweet spot of our precision materials engineering and our leadership and deposition. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Great. And my second question. Given some of the issues with EUV at this point and the adoption rate for that process technology. How do see those delays, I guess, impacting Applied, I guess, on the positive side, in terms of additional tool sales or the move to multiple patterning. How does that help you over the next few years? Michael R. Splinter: Yes, good question. So the double or quad patterning does represent an opportunity for us in that many of the patterning films, we have a very strong position. So we see that as an opportunity, and we also have some pull from customers in etch for some of these films. But certainly, the deposition side of it is a good opportunity. And again, some incremental opportunity in the patterning etch.

Your next question comes from the line of Edwin Mok with Needham. Edwin Mok - Needham & Company, LLC, Research Division: First question is for Gary. Regarding your comment on the 20-nanometer. I would suspect that given some of the fabless expect to start investing in the second half of 2013, that some of the DTOR position might have already been won or at least secured. Can you kind of quantify where we are at in terms of those position being already awarded versus opportunity that you guys can still go after? I just want to kind of get a sense of where we are in terms of that opportunity there. Gary E. Dickerson: Sure. Yes, no, as I said, again, 20-nanometer is really our primary focus and certainly will be a really big opportunity for Applied Materials. And this is, as I said, really all about the transistor, low leakage, low power, high performance and really in a sweet spot of where we have leadership in transistor equipment technology. So we see ourselves as being very well-positioned. The pull from customers is very, very strong, since we have a lot of the enabling technology for that transition. And we're in a good position. I would say, in terms of the DTOR positions, we're very, very optimistic. And again, overall, this is a great opportunity for Applied Materials. Edwin Mok - Needham & Company, LLC, Research Division: Great. That was helpful color. And then just quickly jump on Display. In terms of this rebound in order in the fiscal first quarter, how sustainable should we think about this order recovery? And how do you guys view this? Do you view this cautiously or do you think it's the beginning of a big cycle? Michael R. Splinter: Well, we do think that TV investment is back. As you know, the last couple of years, that our business has been sustained primarily by mobile investments. And the thing is that's happening now for us is that there's a lot of technology change happening. So that as we look to this next phase of investment, our TAM should be about 30% higher than it was in the previous investment cycle, as customers go for metal oxide transistors on the backplane, or they're going to go for LTPS with organic LED displays. So I think this is an area that, after quite an extended downturn, is starting to come back.

Your next question comes from the line of Mehdi Hosseini with Susquehanna Financial Group. Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division: The name is Mehdi Hosseini. I have 2 easy follow-ups. And, Mike, you're exiting fiscal year with $1.6 billion of backlog and talking about double year fee down 5% to 15% in calendar year '13. So unless there is a massive upward revision to this double year fee, even if January quarter bookings are up, I just don't see how your revenues for fiscal year '13 could be up on a year-over-year basis. And simply because the backlog has eroded so much. Do you have any color on that? Then I have a follow-up. Michael R. Splinter: Well, as we said, if WFE is down, we would expect SSG revenues to follow that, Mehdi. This is the -- well, we're not making a full year revenue projection at this time because our visibility in the second half isn't what we would like it at this time. We do see that we are in, again, the seasonal pattern that we've seen the last few years. We're still in a market where solar is depressed and wafer starts and utilization are not good in semiconductor factories. So we'll see a dip in service in this first quarter. But then we think as utilization improves throughout the year, service should get better. So all in all, unless we see a recovery of the market, we won't grow in 2013. Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division: But just conceptually, given where the backlog is and where double year fee spending is indicating and SSG down, conceptually, revenues for AMAT could be down on a year-over-year basis. George S. Davis: It could be if SSG is down. And you're right, we're starting with a very low absolute level of backlog in SSG. One of the things to remember that is different in the foundry-LED world, the turns business that we see in SSG is -- has grown over time. So you can have a quarter where 70% of your orders were booked and shipped within the existing quarter. So I think we really have to see to what extent foundry spends this year relative to last year. The heavier the foundry spending, obviously, the more rapidly you'll see a closing between growth and the backlog. And even within, I think, logic, if PC -- confidence in the PC market goes up, I think, you could see a relatively short term between orders and shipment of tools in that space as well. Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division: And then my follow-up has to do with etch and opportunities for share gain. One of your key competitors last week was talking about 70% of the N+1 decisions made and they're the #1 in the conductor edge. So are you focusing more on an N+2 transition? Or if you think you can grab market share for N+1 next year, how should I reconcile the #1 market leader and their commentary of the share gain with what's you're talking -- what you have mentioned today? Gary E. Dickerson: Yes, I think we can't comment on what other people are saying. But what we do know is the pull that we have from customers, the penetrations that we're making in the market and the opportunities that we have with all of that from what we see directly from our customers, we think we have a good opportunity to grow our share. Michael R. Splinter: Yes.

Your next question comes from the line of Ben Pang with Caris & Company. Benedict Pang - Caris & Company, Inc., Research Division: You commented on a number of wafer starts for foundry for 20-nanometer. What's the expectation for 28-nanometer? And I have a follow-up. Michael R. Splinter: Yes. I think what we believe right now is that we'll finish 2012 pretty close to 200,000 wafer starts per month in 28-nanometer -- that's kind of the combination node. And we'll see 75,000 to 100,000 incremental wafer starts in 2013. That's basically how we're modeling the -- 2013. Benedict Pang - Caris & Company, Inc., Research Division: So it's about, maybe on a spend rate, would it be still be like 1/3 of the foundry budget will be on 20-nanometer because of the higher capital intensity? Michael R. Splinter: Yes, I think that's a pretty good assessment of what we're thinking, in that neighborhood. The capital intensity is quite a bit higher at 20. Benedict Pang - Caris & Company, Inc., Research Division: So under those parameters, can Applied's foundry SSG business grow? Michael R. Splinter: Certainly, if we're gaining share and -- the business can grow. We're not making a projection at this point, for the year. And I'm sure your question is really based on a calendar year approach, which we're really not ready to look at the second half of 2013 at this point. But we think we have a strong position in 20, we think we should be seeing those share gains materialize as 20-nanometer really starts to ramp. And then... Benedict Pang - Caris & Company, Inc., Research Division: Okay. And then just one quick clarification from George. In terms of the money that you guys freed up by doing the reduction in force and early retirement, you commented that, that scales back in fully by the end of the fiscal year? George S. Davis: Say that, I'm not sure I understand the question. Benedict Pang - Caris & Company, Inc., Research Division: You guys freed up $200 million, right? George S. Davis: That's correct. That's $200 million '13 versus '12. Right. And so what you'll see is with the redeployment, '13 and '12, from a modeling assumption, you can leave your OpEx pretty flat.

You next question comes from the line of Tim Diffely with D.A. Davidson. Thomas Diffely - D.A. Davidson & Co., Research Division: I've got a longer-term question here. Based on your comments earlier about the inflection points and increased capital intensity, what's your view kind of longer term, maybe 5 years out, of the WFE market? Does it just bounce around this $30 billion level or does it increase over time? Michael R. Splinter: Yes, I think that depends really on the end market. I don't think we're prepared to make a 5-year forecast on WFE today. Certainly, if the market continues strong, capital intensity is improving, that would tend to make you think that WFE is going to increase modestly over the next few years and there could be a peak in that cycle due to certain investment. But I think it's too early to make a projection that far out. Gary E. Dickerson: I guess one other thing I would say is that, again, our #1 focus is to grow wafer fab equipment market share. There are a number of inflections that are coming over the next several years. Certainly, 20-nanometer, as we said, is all about the transistor, where we have leadership. Thin fab is also focused on the transistor and a good opportunity to grow our available market and share. 3D NAND, there are multiple film deposition steps that require extreme precision. And that's another area that's a good opportunity for us. And I would say also, longer term, what we're seeing is an increase in changes in device technology around new materials that really leverage our leadership in precision materials engineering and create a great opportunity for Applied Materials. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then, ultimately, when we get to the 450-millimeter wafers, does that create a bit of a step function down in capital intensity then? Just because of the economies? Michael R. Splinter: Well, first of all -- the first thing that it will create is a new buildout in 450 because you have to replace all the equipment at some point in the future, depending on a lot of factors, then the capital efficiency will be what it is. But for right now, we're very focused on 300-millimeter share gain. This is the most important thing to our company. It's the most important thing to our customers. They're trying -- these next few generations of technology have very difficult inflection points. We have to make sure we're helping them get the performance and the cost out of their products in these next few generations. And that's where we're spending all of our time focused on.

Your next question comes from the line of Timothy Arcuri. Timothy M. Arcuri - Cowen Group, Inc.: One for George and one for Gary. George, I wanted to ask about how you think about right-sizing EES? If you just take the new run rate in OpEx, you were guiding to about $30 million a quarter. So that's $120 million a year. And if you assume like a 30% gross margin, you have to do like $500 million in EES just to sort of break even. So I mean, I'm sure that you think that the opportunities are much bigger than that. But why is that the right number? Sort of how do you think about in terms of a megawatt basis or like tops-down. How do you think about how to size the OpEx spend for that business? And then I have one for Gary as well. George S. Davis: First off, hey, welcome back, Tim, nice to have you on the call. In terms of the right-sizing for solar, this is something, obviously, that we look long and hard at. And we've taken a significant reduction in our costs in that area over the last 2 years accelerating this year. And so the spending that you're seeing there is really for our core leadership positions in a very select set of technologies that we think are going to be the most leveraging to our customers' technology roadmaps going forward. We think it's a growth market that's important. We think it's something that will ultimately differentiate Applied in its ability to grow. And so, I think, at $30 million, we're pretty much where we think we need to be, given our outlook for the market and what we need to sustain our capabilities. Gary, I don't know if you wanted to add anything to that. Gary E. Dickerson: No, the only other thing I would point out is the $30 million includes both solar and Web. So the solar OpEx number is actually less than that. Timothy M. Arcuri - Cowen Group, Inc.: Right. Okay, makes sense. And, Gary, just for you, I heard you talk about materials more than I've ever heard. I mean, in 15 years, I've never heard Applied talk about materials that much. And I'm -- and it's interesting, and I'm wondering whether there's some expertise in-house that you're -- that you've come in and you've uncovered? Or whether that's something you have to go out and acquire? Because you've typically worked with the materials suppliers. But it sounds like you think you want to sort of own that expertise a little more. Gary E. Dickerson: Well, again, if you look at the inflections, as I said before, it really is right in the sweet spot of our leadership in the transistor and materials engineering. So again, 20-nanometer, FinFET, is all about the transistor. And the 3D memory is also a number of new materials where we have leadership. So I think -- and this is over the next several years. If you look at what technologies people will be introducing beyond the next several years, I think this trend towards materials being critical to enable the device performance and customer differentiation is going to increase and create a great opportunity for us. And I'd say it's not just in the semiconductor business, as Mike talked about, and I had in the script earlier in Display, we're seeing an increase in the materials that we will deliver in the Display industry and increase our available market by more than 30%. So I think this trend is one that hasn't happened to Applied in many, many years and creates a great opportunity for us going forward.

Great. Well, thanks, Tim, for your questions, and we'd like to thank everyone for joining us this afternoon. A replay of this call will be available on our website beginning at around 5 p.m. Pacific time today. So thank you for your continued interest in Applied Materials.

This concludes today's conference call. You may now disconnect.