Chris Zegarelli - Senior Director, IR Scott McGregor - President and CEO Eric Brandt - EVP and CFO

Vivek Arya - Bank of America Merrill Lynch Srini Pajjuri - CLSA Harlan Sur - JP Morgan Joe Moore - Morgan Stanley Ross Seymore - Deutsche Bank Stacy Rasgon - Sanford Bernstein Timothy Arcuri - Cowen and Company Christopher Caso - Susquehanna Mark Lipacis - Jefferies Matt Ramsay - Canaccord Doug Freedman - RBC Capital Markets Craig Ellis - B. Riley Ryan Carver - Credit Suisse Mark Delaney - Goldman Sachs CJ Muse - ISI Group Gabriel Ho - BMO Capital Markets Christopher Rolland - FBR Capital Markets Blaine Curtis - Barclays David Wong - Wells Fargo Kevin Cassidy - Stifel Nicolaus Quinn Bolton - Needham Hans Mosesmann - Raymond James

Welcome to the Broadcom Q2 2014 Earnings Call. My name is Adrienne, and I'll be your operator for today's call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. I will now turn the call over to Chris Zegarelli. Chris Zegarelli, you may begin.

Thank you and good afternoon, everyone. Today's call will include prepared remarks by Scott McGregor, our President and Chief Executive Officer; and Eric Brandt, our Executive Vice President and Chief Financial Officer. This call will include forward-looking statements which are subject to risks and uncertainties that could cause Broadcom's results to differ materially and adversely from management's current expectations. We encourage you to review the cautionary statements and risk factors contained in the earnings release, which was furnished with the SEC today and is available on our website and in our most recent Annual Report on Form 10-K and subsequent reports of on Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today's earnings release and the related current report on Form 8-K describe the differences between our non-GAAP and GAAP reporting and present a reconciliation between the two for the periods reported in the release. Please also see the Investors section of our website at investor.broadcom.com for a slide deck that includes additional information disclosed in accordance with SEC Regulation G. Now it is my pleasure to introduce Broadcom's President and Chief Executive Officer, Scott McGregor.

Good afternoon and thanks for joining us. Broadcom performed well in the June quarter, with revenue near the midpoint of guidance, operating expenses at the low end of the guided range, and non-GAAP EPS ahead of consensus. On June 2, we announced that we were exiting the sale of our baseband business, through either a sale or wind down. Since then we have been testing the market for interest in a potential transaction. We made the decision to pursue a wind down, which minimizes the ongoing losses from the business, and enables us to focus on our core strengths that much more quickly. We begun to implement our exit and expect ongoing customer commitments to decline over the remainder of the year. Looking forward, we have a renewed focus on the Broadband, Connectivity and Infrastructure markets. For example, in infrastructure, we are driving a new 25-gig Ethernet switch standard, to help customers manage the exponential growth of traffic in the data center. We also see momentum building in new growth areas, including automotive. In Broadband, we are leading the transition to HEVC and Ultra HD with targeted engagements around the globe. We are also continuing to gain share in PON and see new product cycles coming in Broadband Access. In Connectivity, we continue to drive leading-edge features, to maintain our strength in high end smartphones and tablets. We are also strengthening and diversifying the business, with new low power connectivity solutions for the Internet of Things and the support of iBeacon and HomeKit. Going forward, Broadcom will be a stronger company, as we focus on our core businesses. Our gross margins will go up, profitability will improve, and we will be in a position to return more capital to shareholders. We will go into these items in more detail later in the call, but first, I'd like to turn the call over to Eric, for details on the second quarter results and third quarter guidance.

Thanks Scott. As Chris mentioned, please refer to the data breakout in the Investors section of our web site for additional information that will supplement my financial commentary. Moving to the financial overview; to summarize, total revenue came in at $2.04 billion, up 2.9% sequentially and down 2.3% year-over-year. Q2 non-GAAP product gross margin was up 280 basis points from Q1 to 55%. Q2 GAAP product gross margin was 50.8%. Non-GAAP R&D plus SG&A expenses were flat sequentially, while GAAP R&D plus SG&A expenses were down $5 million. Q2 non-GAAP EPS was $0.65 pr $0.04 above First Call consensus of $0.61 per share. Q2 GAAP EPS was breakeven. Cash flow from operations for Q2 was $225 million. Our cash and marketable securities balance at the end of the quarter was $5 billion. Moving to revenue and gross margin; in April and again in June, we said that we expected Q2 revenue between $2 billion and $2.1 billion. We delivered revenue near the midpoint of the range at $2.04 billion. Our Broadband communications revenue came in ahead of expectations at $625 million, up roughly 12% sequentially, upside in the quarter was across the board. Revenue from our Infrastructure and Networking segment came in ahead of expectations at $635 million, up roughly 10% sequentially. Upside in the quarter was driven by Ethernet switch, particularly in the data center and service provider markets. Our Mobile and Wireless segment decreased roughly 8% sequentially to $781 million, driven principally by a sequential reduction in sales of cellular SoCs to $84 million in the June quarter. Our Q2 non-GAAP gross margin was up 280 basis points from Q1 to 55%, ahead of the upwardly revised guidance provided in June. Our Q2 GAAP product gross margin was up from Q1 to 50.8%. Moving to operating expenses; total non-GAAP and SG&A expenses for Q2 were flat from Q1 levels, which is at the low end of our expected range, principally driven by lower mask and related spending. On a GAAP basis, R&D and SG&A expenses for Q2 were down $5 million from Q1 levels. Moving to the balance sheet; cash and marketable securities ended Q2 at $5 billion; of which, 42% is in the U.S. Cash flow from operations was $225 million. During the quarter we paid $70 million in dividends to our shareholders, and repurchased 6.2 million shares of stock at a cost of $191 million. Our Q2 receivables days sales outstanding were 36 days and net inventory turns were 6.5. Moving to the cellular baseband update and associated restructuring. As a result of our decision to execute a wind down of our cellular baseband business, we recognize the following restructuring and impairment charges during the quarter. First, we recorded restructuring costs of $23 million; this part of the restructuring currently impacts roughly 250 of primarily SG&A employees. In addition, as part of these actions, we also recorded $130 million of non-cash charges for the impairment of certain long term assets, such as property and equipment and EDA tools and licenses, as well as $34 million in inventory write-offs. We expect to record an additional $230 million of principally cash based restructuring charges over the next 12 months related to the further reduction of our worldwide headcount by an additional 2,250 employees, the closing or consolidation of 18 locations, and the termination of certain existing contracts. For further discussion of these proceeding charges, please see our 10-Q that we anticipate filing later today. Moving to expectations; we currently expect net revenue in Q3 to be $2.1 billion to $2.25 billion, of which cellular SoCs should be $50 million to $60 million. From a segment perspective, we expect Broadband to be up slightly; Infrastructure to be roughly flat; and Mobile and Wireless to be up. We expect Q3 non-GAAP gross margins to be 55%, plus or minus 75 basis points, and GAAP gross margins to be 52.5%, plus or minus 75 basis points. We expect non-GAAP and GAAP R&D and SG&A expenses to be down $40 million to $60 million. Finally, the company intends to double its planned share of purchases over the next 12 months to roughly $800 million plus. And now I'd like to turn the call back over to Scott to talk more about the state of the business.

Thanks Eric. Starting with the home platform, our Broadband communications revenue came in ahead of expectations at $625 million, up roughly 12% sequentially and 10% year-over-year. Strength in the quarter was broad-based, including upside in both set top box and broadband modem platforms. Our set top box franchise continues to perform well. In the quarter it delivered 8% sequential growth, driven by share gains in emerging markets, that continued a ramp of richer features, including multi-stream transcoding, more tuners and a stronger mix of MoCA-enabled platforms. The longer term growth drivers for set-top box include the transition to HEVC and Ultra HD. This month, Broadcom powered live Ultra HD broadcast of the 2014 World Cup events, in partnership with Sagemcom, Oi and NETServicos. We are still very early in the transition to Ultra HD and see this strength as a powerful product cycle that will contribute growth over the coming years. Turning to Access; broadband modem sales reached a multiyear high in Q2, and grew more than 15% year-on-year. Strength was broad-based across cable, DSL and PON. In small cells, we announced our latest generation LTE offerings last week, which are optimized for bill of materials cost, and at the core platforms, that leverage our Wi-Fi, DSL, cable and PON solutions. Looking into Q3, we expect modest sequential growth on our Broadband business, driven by continued strength across set-top box and broadband modem platforms. Moving to Infrastructure; our Infrastructure networking revenue came in ahead of expectations at $635 million, up almost 10% sequentially, and almost 25% year-on-year. We saw broad based growth in the quarter, across all major segments, service provider, data center, and enterprise. Growth was driven primarily by sales into the data center and service provider segments. In data center, growth has been driven by the transition to public cloud, share gains, displacement of ASICs with Broadcom ASSPs and product cycle transitions, including the continued ramp of 10-gig. On the service provider side, growth has been driven by LTE buildouts and backhaul deployments, particularly in China. During the quarter, and in partnership with other cloud market leaders, we announced a new 25-gig and 50-gig Ethernet specification to drive performance and cost efficiency in data centers. We believe that the 25-gig and 50-gig technology will be the next intra-RAC interconnect standard in the data center. As we look into Q3, we expect the Infrastructure revenue to decline slightly sequentially. Moving to our HAM [ph] platform, our mobile reduction and sales of cellular SoCs. Connectivity declined roughly 2% sequentially, in line with expectations. On the connectivity sign, we saw sequential growth across non-mobile segments. Our team continues to execute on our vision for the Internet of Things and wearables. We announced new low power connectivity solutions for the next generation wearables, as both support for iBeacon and HomeKit. We also announced our first generation SoCs for wireless charging. On the Access Point side, NETGEAR introduced the world's fastest Wi-Fi router, powered by Broadcom. Looking into Q3, we see strong sequential growth in mobile and wireless, driven by strength in connectivity. In summary, the decision to exit the sale of baseband business, puts Broadcom on the path towards being a stronger, more profitable company, that can return more capital to shareholders. We have a renewed focus on the broadband connectivity and infrastructure markets, and are positioned well in these dynamic segments of the communication semiconductor market. This concludes our prepared comments, and we are now ready for your questions. Adrienne, may we have the first question please?

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And we have Vivek Arya from Bank of America online with the question. Please go ahead. Vivek Arya - Bank of America Merrill Lynch: Thank you for taking my question. Scott, now that you have given us very specific number for connectivity, around $700 million or so in the last quarter, you are guiding it up in Q3. How should we think about the sustainable growth rate of that business, as they look out into next year? I understand they are early, but I think that has been a key investor question, as you exit certain parts of the wireless market, what is the impact on connectivity? Should we be thinking about it being flat next year, down 10%, down 15%, any color would be very helpful?

I think it's hard to give you a good number for that, and it's due to a number of factors influencing our business in connectivity. On the negative side, we have headwinds from the loss in the paired connectivity products we had, that were associated with our baseband shift, which will go away. We make some of that back up to the extent that platforms that are friendly to our connectivity solution pick it up instead of us. We expect to see some continued erosion in the low to mid range of platforms as well. On the positive side, we have new technologies ramping. We have some ASP increases, as we are able to add additional functionality for some customers, and we believe that things like Internet of Things and automotive and wearables and things like that will contribute somewhat. Well it's pretty hard to forecast exactly how much that will contribute next year. So with that mix of different things, it's pretty hard to forecast an overall number for you. But those are the different factors that influence the revenue next year. Vivek Arya - Bank of America Merrill Lynch: Got it. And then on the Infrastructure business, very strong, almost 25% year-on-year record, 40% or close to that operating margins. Xilinx just reported some weakness in their wireless business. I understand, its not apples-to-apples. But at what point should we be worried about the infrastructure business running too hot, or are you seeing enough product cycles to justify sustainable double digit growth trajectory in that business? Thank you.

Good question. I think we have seen double digit growth over the last three years in that business, and I do expect them to continue to outgrow peers. The question for us is, how much will be spent by the Infrastructure players, the service providers and cloud data centers and so forth. Our strength over the course of this year, was about two-thirds data center driven, and one-third service provider driven. And to the extent that we see additional waves of LTE buildouts, especially in China, that will be helpful to sustaining that growth. I think we have seen some of the telco service providers say that their capital spend tends to be more first half than second half, so that might impact the second half of this year, but could also be positive for the first half of next year. So we need to see how those different things balance out. Overall, I expect our Infrastructure business to probably be closer to flat, I'd say sequentially, slightly down. But I'd say it's probably closer to flat, going into the next quarter, based on the trends we are seeing. Vivek Arya - Bank of America Merrill Lynch: Thank you.

And our next question comes from Srini Pajjuri from CLSA Research. Please go ahead. Srini Pajjuri - CLSA: Thank you. Eric, you know, given your guidance for OpEx, [indiscernible] $40 million to $60 million in Q3. How should we think about it going forward? I mean, how long do you think it will take for us to realize the full benefits of baseband exit?

So Srini if you look, probably $10 million of spending came out of this quarter, as we began to slow down spending related to the baseband. If you just take the midpoint of the 40 to 60, which is 50, recognize that that only represents two of the three months with the cost reduction in place. So you'd add another 25. So a full quarterized run rate of the reduction is actually closer to a $75 million OpEx reduction. So what you will see is, an additional reduction of OpEx going into Q4. Srini Pajjuri - CLSA: So do you think it will be fully done by the end of Q4?

I would say that the majority of the personnel costs will be done by the end of Q4, early Q1. There will be some facilities and things that will probably run their way through Q1 and into Q2 of next year, but the vast majority of the cost reduction should be out of the company by the end of the year. Srini Pajjuri - CLSA: Okay. And then, maybe it's for you or Scott, in terms of the buybacks, its good to see you guys raising that number to $800 million. But given that you have north of $2 billion in the U.S., what's stopping you there from being a bit more aggressive here?

Well, I mean, we have said in the past that we would like to have about $1 billion of U.S. cash, so we are taking $2.1 billion down to $1.3 billion. I think the right way to think about this Srini, what we have said before is that, we are actually looking at ways to sustainably increase our share repurchases by increasing our U.S. cash flow, relative to what the mix is between U.S. and foreign, and what we really wanted to do is, show our investors that we were not standing still, and that we were starting the movement now, despite the fact that we haven't yet communicated some of the long term changes which could improve U.S. cash flow. Srini Pajjuri - CLSA: Okay, great. If I could ask one more; Scott, just going back to the Infrastructure comment, you said -- I think the guidance for flat to down in Q3, could you give us some color as to why its flat? I mean, I understand, looks like the China build is [indiscernible] but is it what's causing it to be a bit more cautious or is there anything else going on there? Thank you.

Well at flat its substantially growing year-over-year. So as we mentioned in Q2, it has grown like 25% year-over-year, so that's incredibly strong growth and holding at those levels is quite good. We have a number of things that influence us there. We have new product cycles. We are seeing incredible strength in the Trident family of products. We are also seeing some share gains. I mentioned some conversion of internal ASICs into merchant silicon that we provide, so we are able to gain some share. So a combination of different things there, and so it’s a combination of those share gains and those product cycles for us as well as the overall infrastructure spend that drives that number. Srini Pajjuri - CLSA: Great. Thank you.

And our next question comes from Harlan Sur from JP Morgan. Please go ahead. Harlan Sur - JP Morgan: Thank you for taking my question. Given the ramp of your high end 5-gig combo solution into one of your tier-1 customer platforms in the second half, looks like your mobile and wireless business is growing about 15% to 20% sequentially in Q3, and that's even with the sharp decline in the baseband business. I guess the question is, given what appears to be continued solid traction at the high end, do you anticipate your high end combo business will grow this year over last year, and how does your design win pipeline at the high end look, as you sort of think about kind of the next 12 months?

Well we certainly do expect strong sequential growth into the third quarter for our products there, and that is driven by product cycles and some launches from key customers. I can't give you much more detail on those, you will have to wait till those roll out. In terms of overall growth this year, I think that's probably challenging, because the loss we see on the baseband side, as we pull back on the baseband, and some of the challenges we have had in terms of share there. So in terms of design wins, we see very strong design win programs going forward. We have got great products, and we are coming out with new technologies and a lot of different things, and so I think for us, its very much business as usual in terms of winning those high end designs. Harlan Sur - JP Morgan: Thanks for that Scott. And then the Broadband business obviously grew very nicely in the first half of this year. You are guiding for slight growth in Q3. You mentioned set-top boxes in access. As you look into the second half, any specific drivers? I know you talked about Ultra HD, HEVC, maybe a new product cycle in PON. You've also talked about emerging market share gains. Any specific drivers you can point to in the second half, and is it a more developed country or emerging country, emerging market driven?

I think we got a very nice tailwind with emerging countries right now. We got some good share gains there. We got great products and you may recall a number of years ago, we were trying to penetrate that market, but basically using repriced U.S. products which wasn't working so well. We now have targeted products for the emerging countries that are more favorable margin for us, and a better fit for the features that they need. So that's going really well. Ultra HD and HEVC, I see this as more of a revenue driver into next year, rather than this year, so that's where growth will come from next year. And while the revenue isn't until next year, that is a very big factor for design wins this year. So all of the set-top box, MSOs and so forth, looking at deploying designs, are really choosing based on the quality and the maturity of the HEVC and Ultra HD technology, and I think we are unparalleled in that space. Harlan Sur - JP Morgan: Thank you.

And our next question comes from Joe Moore from Morgan Stanley. Please go ahead. Joe Moore - Morgan Stanley: Great, thank you. I wonder if you could talk about the gross margin improvement in the third quarter, what drives that with the connectivity growing as a portion of the mix?

Yeah Joe, I would say a couple of things, one is you're right that we do see a pickup in the connectivity, which does create a bit of a headwind, but I would say that, we continue to see improvements in the mix within our business units, which is helping the gross margin over the quarter, and really to produce a 55% gross margin, which we think is a pretty stable gross margin for the business. Joe Moore - Morgan Stanley: Okay great. Thank you. And then in terms of the close to 40% segment margins in Infrastructure and Networking, that's pretty high relative to history. Do you see redeploying some of the expenses from wireless into that segment? How should we think about segment profits there?

I think the segment profits are very strong, and Joe there tends to be a cyclical effect, when we see growth that high, typically, the growth outpaces the OpEx of the groups, and so it runs the OI up. So I don't think you should model 40 as the ongoing OI for that segment, but it certainly will be true, as we are in high growth phases, and it could be there again. Joe Moore - Morgan Stanley: Great. Thank you very much.

And we have Ross Seymore from Deutsche Bank on line with the question. Please go ahead. Ross Seymore - Deutsche Bank: Hi guys. Just want to focus on the connectivity side with two questions. First, for the strong third quarter guidance, now is that more content going up on the ASP side, the units, any color on that front will be helpful?

Its definitely an ASP improvement as well as some volume launches with key customers, and so it’s a combination of those things. So it should be a very-very strong quarter for connectivity. Ross Seymore - Deutsche Bank: Then I guess, looking a little bit longer term, Eric, you talked to us a little bit about what the OpEx trajectory would be, with exiting baseband. Can you give us a little bit of color on what you think the revenue trajectory will be, not only on that side, but if you have any update on what you think the low to mid-end of connectivity will also do, in addition to that baseband revenue? Thanks.

So Ross, we have no change to what we have said in the low to mid-end of connectivity in terms of our exposure. I would say with respect to baseband, you can see it come down from 142, and this is all in the Q, to 84, to a number that's somewhere in the 50s in Q3, and I wouldn't be surprised if that number gets cut in half in Q4. I think after that, we won't forecast, and we will sort of view it as upside, because we don't believe that will be material for the business. Ross Seymore - Deutsche Bank: Great. Thank you.

And our next question comes from Stacy Rasgon from Sanford Bernstein. Please go ahead. Stacy Rasgon - Sanford Bernstein: Hi guys. Thanks for taking my question. I think that somebody mentioned, you got core business margins that are kind of at record highs at this point. What are you guys thinking for a long term operating model for the business, once the baseband exit is in the rearview mirror? What kind of operating margins for the steady state do you think you can get? And should we be expecting, I guess, a change to your historical expectations, which I think were in the low 20s?

Stacy, probably the best way to answer your question is to give you a picture of what it looks like now. We said we will talk more about it, and I would say, that's more of the product of the portfolio work we will do. But if you look at the quarter two as it stands today, we reported $0.65. If you include the shared overhead that sticks in the company at the end of this period, and you remove the effect of cellular from the company, it adds about $0.15 to $0.17 of EPS to the current quarter. So something just around the low 80s would be the number that it would add, and if you take that number and sort of plug it into the revenue, it adds about five points to what we actually booked at 20.45ish points. So you are looking at a number that's sort of 25.5% and so, as a company, we anticipate the operating margins will expand, as Scott mentioned, and Q2 was a good picture, once I peel apart the cellular piece for you, in terms of the underlying operating margins of the company actually look like.

So Stacy, for 15 years, we basically said our operating margins were in that fixed range, and I think what Eric's saying here is that, at Analyst Day this year, we are prepared to talk about how much they will go up. We are still working on that exact number and range though.

And our next question comes from Timothy Arcuri from Cowen and Company. Please go ahead. Timothy Arcuri - Cowen and Company: Hi. Thanks. Just a follow-up to that question; relative to the savings that you're saving in baseband, can you somehow segment out, how you're going to redeploy those savings between broadband and IMG, because the comment to the last question would suggest that you're not going to redeploy many of those savings. So I am wondering, how to think about that? Thanks.

Okay. So first of all Tim, that's a misunderstanding, and I apologize if we weren't clear. When I gave you those five points, that actually factors in the component of the costs that are sticky, in terms of share d engineering, and the $50 million of reinvestment that we talked about. So if you didn't include those, actually it would go up even slightly higher than that. And so, we are going to work through our portfolio process, but we have a number of opportunities we believe in Broadband and in Infrastructure, which we will deploy that incremental $50 million against.

And our next question comes from Christopher Caso from Susquehanna Financial. Please go ahead. Christopher Caso - Susquehanna: Yes, thank you. Wondered if you could talk a little bit about your approach to M&A opportunities going forward? That's always been a tool in the Broadcom arsenal. I guess, with the increased buyback that you're planning here, does that limit your ability or reduce your ability to M&A going forward, and maybe just talk in general, what your feeling is now, post baseband?

Historically Broadcom has bought on the order on one or two companies a quarter, and I think you will continue to see us active in the M&A space. We tend to prefer a lot of the smaller transactions though, smaller mid-sized transaction. So by that, we mean, small hundreds of millions of dollars generally on-size, and we have made excursions significantly above that. But I don't see that as a common thing for us, I think you will see us look for those relatively small tuck-in opportunities that are new technologies, and I don't think our share buyback will compete against those. We will generate more cash as a result of the reductions in cellular baseband, and so I think that will allow us to achieve both of those objectives.

And our next question comes from Mark Lipacis from Jefferies. Please go ahead. Mark Lipacis - Jefferies: Thanks for taking my question. Eric, you just kind of helped us back into the operating margin pro forma. Would you care to take a crack at what that gross margin would look like also?

So Mark, of those five-ish points, about a point of that is gross margin and about four points of that is OpEx. Mark Lipacis - Jefferies: Okay, thank you. And then, is there a -- when you talk about raising your sustainable U.S. cash flow. Is there a scenario where that is not equal a higher tax rate?

It could equal a higher tax rate, although we believe that there is probably, based on the way the structure is in place, that there may be a local optimum, which is accretive in terms of the buybacks versus the incremental tax. And so, we are looking at that, and that's really the thing that's taking the time in communication.

And our next question comes from Matt Ramsay from Canaccord. Please go ahead. Matt Ramsay - Canaccord: Yes. Thank you for taking my questions. Scott, I wonder if you might talk about some of the areas for incremental investment with the baseband savings that Eric mentioned, there would be some savings that were kept to invest in the new businesses on some areas that you had touched on in the past. I think for automotive, maybe some based for connected home with the connectivity business, fold it into the home business and things like ARM-based servers. I know that's broad, but anything you can give us on incremental growth drivers with new investments would be helpful. Thanks.

The areas you list are certainly candidates for those kinds of investments, and we will certainly look at those. I am going to not comment on that right now. I think that's something we will talk about more at the Analyst Day, as we outline where our products are going forward. But we have a list of very promising high ROI opportunities in both baseband -- the broadband business as well as the infrastructure business, that frankly have not gotten this much attention in the latter couple of years, as we have been very constrained on what we can spend. So the $50 million will be put to very good use, and these are high ROI projects, and so I think we will get good return on that investment.

And our next question comes from Doug Freedman from RBC Capital. Please go ahead. Doug Freedman - RBC Capital Markets: Hi guys. Thanks for taking my question. Can you walk us maybe through a little bit of the thinking between wind down and asset sale? I understand you might not have been able to find somebody to buy the business, but was hall avenues pursued there, and then my question really is, is there some IP value that remains in the wireless business that, while the business itself may not be available for sale, is there an opportunity to possibly monetize the IP further?

So in terms of the sale process, we retain a bank, JP Morgan, to help us do a pretty thorough canvassing of the different opportunities. We had many talks and some significant interests. One of the challenges for us is that in the sale of the business, the time it takes to go through regulatory approval, can often eat up a lot of value you would receive in selling the business, and so it would add certain challenges and hurdles you would need to get to, in order to be a positive economic benefit to the company. The other factor we considered is, is it a benefit for the company to be able to put this behind us and move forward in terms of driving our investments in new areas and really focusing on where we want to see the company going forward. So we considered all those factors, and that led to the conclusion that we came to, which was, it made sense to wind down to the business, rather than to conclude the sale. In terms of your IP question, very good question; Broadcom has incredible IP in the cellular space and we retain all of that, and it is an opportunity for us to monetize going forward, but we haven't yet discussed, how we might do that.

And our next question comes from Craig Ellis, B. Riley. Please go ahead. Craig Ellis - B. Riley: Yes, thanks for taking the question. The question is regarding the connectivity business. I think on the early June announcement, the plan was to pull that in to Broadband communications, is that still the plan Scott, and if so, what changes strategically in terms of how connectivity is run under broadband versus how it has been around, that's much more of a hand-based platform in the past?

So it is not only the plan to do that, but it has already been done. And so that is now a one group under Dan Marotta, who runs our combined Broadband and Connectivity business. I think it offers some really interesting opportunities, and if you think about the Internet of Things market, it tends to be a home or an office that has a gateway or some internet capability coming into that point, and all different kinds of devices and capabilities tie off of that. So you could imagine in the home, you might have home automation, or security cameras, or smart meters, things like that. They all need to tie into some sort of infrastructure, and so this is a wonderful way to bring all of that together, where we have the connectivity, technology, typically, wireless LAN or Zigbee with the Infrastructure side there, with the gateways, where we have a number one market position in all of the last mile technologies into the home, in our Broadband group. So Broadcom is number one in DSL, in Cable, in satellite, in fiber, all the different ways that data goes into a home or an office, Broadcom has a number one position there. So a real opportunity to tie those together, and I think you're going to see us diversify the business, where it was very cellular handset focused in the past. I think you will see us diversify into a lot of these other areas, which frankly, I believe are going to be the high growth areas in the next decade.

And the next question comes from John Pitzer from Credit Suisse. Please go ahead. Ryan Carver - Credit Suisse: Yeah, this is Ryan on behalf of John. Just a couple of clarifying questions. First, for the September quarter gross margin, are there any one time benefits that are helping the gross margin? Any -- you recognize in previously written down inventory, or is it all simply a matter of intermix within wireless? And I guess, my second clarification is around the expense reduction; I think its your -- when you initially discuss the wind down or sale of baseband, you talked about $550 million to $600 million of total savings and $550 million of net. I think that 500 basis point number you just shared with us Eric for 2Q, gets us to about 102. So I guess could you maybe talk through, is 550 net still the right absolute number, and if so, how should we think about that, maybe into next year, and maybe relative split between sort of COGS and OpEx, we think of it sort of an 80-20 as you [indiscernible] for the second quarter?

So the 550 net is the right number and its unchanged. You can already see a piece of it coming through, and you can see in fact again, a full quarter effect of the OpEx reductions that I mentioned for Q3 are closer to $75 million, as opposed to the midpoint at $50 million, and underneath that, there are certain things going up in other business units, and actually even a little bit more coming down in mobile and wireless. So we are unchanged as it relates to our view of the OpEx reductions that we anticipate getting in the business. Second, with respect to your gross margin question, one of the differences between GAAP and non-GAAP is just inventory write-down associated with our decision to exit cellular, which I mentioned in my comments. So just like we had asset impairments, we also impaired the inventory associated with the decision to exit cellular. The non-GAAP number of 55% has nothing odd or abnormal going on, its really just the strength of the mix of the business, and the underlying standard margin of the company.

The next question comes from Mark Delaney from Goldman Sachs. Please go ahead. Mark Delaney - Goldman Sachs: Thanks very much for taking the question. I was hoping you could elaborate a little bit more, how you're thinking about seasonality in the back half of the year, and I think the fourth quarter has been slow seasonally in several of the businesses in the last three years. Is there anything underlying in the business this year that you think would make 4Q different than how seasonality has been in recent years?

You're correct on historic seasonality. So historic seasonality was down sort of low to mid single digits in Q1 and high single digits, historically, sort of Q2, Q3, and then down sort of a little bit in Q4. That shape of the curve is roughly the same, and we are trying to look at how that has changed over a recent period -- over longer periods of time, when you take out cellular. So the shape of that curve is right, although I suspect that it’s a little bit more muted. So its down roughly probably low to mid single digits in Q1, and similarly probably in Q4, and then up greater than that obviously in Qs two and three. Mark Delaney - Goldman Sachs: Thank you for that Eric. And then for one more follow-up question on the OpEx; in the first quarter, there is normally OpEx increases as part of your ongoing business, I am hoping you could help us understand a little bit as you think to 1Q 2015? I understand there is things you already reinvesting in with some of the savings, and a lot of savings from [indiscernible] baseband. So if we flow through the savings you already talked about, that you will get by the fourth quarter, on the remaining business, should we think about an increase in OpEx there in 1Q, or should it still be, relatively constrained?

So there is a step down of spending in Q3. There will be a step down in spending in Q4. I don't know how much spending will be left by the end of Q4, but I suspect there will be somewhat of a step down in spending, relative to cellular between Q4 and Q1. And that's offset by the usual fringe and merit step up, how that plays out in terms of upwards, down or flat, I don't know yet, we are far away from it, Mark. But that's sort of the moving pieces that we are working through now.

And our next question comes from CJ Muse from ISI Group. Please go ahead. CJ Muse - ISI Group: Yeah, good afternoon. Thank you for taking my question. I had two questions on connectivity. The first one, in terms of stickiness of your high end business, can you talk about how customer specific designs around software, around your solution can cause that to remain sticky for you, and then secondly, on the last call, you are talking about high teen operating margins, given that connectivity was much more of a modular business. Is that how we should think about the business going forward?

So in terms of our connectivity business, we drive that business by really pushing the technology envelope. So we are always looking for new features, new capabilities, new improvements in the standards, unlike for example, the cellular infrastructure business, the connectivity business can move to new standards much more rapidly, because there isn't a large capital expand [ph] from the infrastructure that prevents it from moving forward. So as such, we can innovate very rapidly there, and that has been the core of driving that business. We certainly encourage our customers to take advantage of all the software features that we offer, and many do extensively, and so, they get a real benefit from working with our products there.

And the only thing I was going to say is, the targeted margin for that business, as we said at Analyst Day has been mid to high teens, and I think we will manage that business that way.

I apologize. The next question comes from Ambarish Srivastava from BMO. Please go ahead. Gabriel Ho - BMO Capital Markets: Hi. This is Gabriel Ho calling in for Ambarish. Thanks for taking my question. Just a follow-up question on the ING Group, just wanted to get a sense of your visibility in terms of the China infrastructure build?

Well the China infrastructure build we believe will continue for the next couple of years. There are multiple waves of deployment of LTE basestations in China. The uptick of China LTE handset sales seems to be going quite strong, based on the reports I have seen in the last few weeks, and I think will be continued driver for that business.

And the next question comes from Romit Shah of Nomura. Please go ahead. Romit, your line is open? Okay, we will go to the next person, Christopher Rolland from FBR Capital Markets. Please go ahead. Christopher Rolland - FBR Capital Markets: Hey guys, thanks for the question. So Trident II is obviously a great product for you guys. Can you talk about where we are in that ramp now, what you guys might have for a follow-on in timing there? And then also you mentioned 25-gig product out there, is that a Trident II replacement or is it just sort of an intermediate stop, perhaps on the way to 100? Thanks guys.

All good questions, and I think you can count on us to continue to push the edge of technology in that space. Will there be [indiscernible] follow-ons; yes. But I am not prepared to talk about when, or exactly what features they have. Will the bandwidth go from 10 to 25 to 50 to 100, yes, and obviously, most of the world is still deploying 10-gig and 25-gig is not deployed at all yet. So these are all upside opportunities for us going forward, to continue to drive that business, and I think that's what Broadcom does really well, which is pushing the envelope on that whole interconnect technology.

And our next question comes from Blaine Curtis from Barclays. Please go ahead. Blaine Curtis - Barclays: Hey thanks for letting me ask a question. Maybe just Eric, just mechanically, you rolled the connectivity business into the Broadband business, do you plan on reporting that going forward, you still are showing the hand in when would you roll that through, and where you thought that could be vulnerable without a platform. Where do you think you are, in terms of losing share in that segment? Thanks.

So let me take the first half, I will let Scott take the second half. So through Q2, we ran our business, business as usual. Organizationally, we began moving, or we are going to begin moving literally today and tomorrow, the various pieces of the organization into broadband. So we were BCG of old and Broadcom of old, literally through Q2, up until today. So financially, we are where we are. As you go into Q3, as we do make the changes Scott mentioned, what you will see in Q3 is that we will roll the connectivity business financially in Q3, into broadband. We will remove the shared overhead associated with cellular, that would get pushed to the other businesses, that's not going away. So you can actually see the underlying shared over head of the businesses. And so when you take out the cellular piece, the only piece that's not going to broadband, is our VoIP business. The VoIP business which was in mobile and wireless will go to ING, and to size that for you, its roughly $25 million to $35 million a quarter.

So I think that covers the overall segment model there, and we will continue to evolve that going forward. And again, we just started with the management at the very top, in terms of operationally driving that, and we have got ways to go on the financial side. Is there a specific question you had in terms of the segments?

He has dropped from the queue. (Operator Instructions). Meanwhile, we move on to David Wong from Wells Fargo. Please go ahead. David Wong - Wells Fargo: Thanks very much. Can you give us some idea of what your R&D spending priorities will be going forward? And in particular, what R&D spending might go on the connectivity business that's being folded into broadband?

Well the connectivity business is a very large business and we will continue to spend on the different areas. I think the change in emphasis will come from more of a focus on diversification, into some of the areas I mentioned around the Internet of Things and some of the new technologies, and less of an emphasis on the cellular handsets. I think that's the biggest change you will see, and again, I think you could see Dan Marotta talk about that at our Analyst Day in December.

The next question comes from Blaine Curtis from Barclays. Please go ahead. Blaine Curtis - Barclays: Hey thanks. I don't know what happened there. The second part of the question Scott was just, of the low end TAM that you highlighted, that may be vulnerable, where do you think you are at this point? Have you lost any of that TAM to-date, or is that something that's still ahead of you? That was my question.

Its hard to measure that. I think certainly the place where you're going to see it first, is as our basebands decline, the associated combo chips that go with those basebands, and I size that originally at around $100 million. I think some of that has happened, as you have seen our basebands begin to decline, we will see more of that happen over the next year. This is a multiyear phenomena, and I don't see it as a sudden thing at all, and certainly, we are not going to cede it, but it is something that will happen there. We are probably not going to update that or say where we are in terms of that, and I think we are going to focus on where we are winning and the segments that we are growing. Blaine Curtis - Barclays: Thanks.

And our next question comes from Kevin Cassidy from Stifel. Please go ahead. Kevin Cassidy - Stifel Nicolaus: Thank you. Your Ethernet business you said had grown, can you just say like how much that grew quarter-over-quarter and can you give us more details on your mix, 1-gig versus 10-gig to going to 25, and when that would happen?

I am sure -- this is Chris, I can give you some color on that. I mean, as we printed, the Infrastructure business was up about 10% sequentially in Q2. There are many ways to look at the mix as it relates to ports and revenue from a port perspective, obviously 1-gig is still the highest number of ports, but 10-gig is the highest mix in terms of revenue, and we expect to see 25-gig starting to layer in over the next year or so. So stay tuned for more news on 25-gig.

And the next question comes from Quinn Bolton from Needham. Please go ahead. Quinn Bolton - Needham: Hey Scott what's -- the headwinds from baseband attached and low end connectivity? Can you give us some sense going forward, what kind of growth rate do you think Broadcom is targeting? You guys, I think you've grown faster than the semi industry for every year, since going public, with the exception of one. Are you still targeting to grow faster than the semiconductor business going forward, than you think with some of those headwinds, that you might moderate that growth expectation?

Well I think you have to look at the segment separately. I think if you look at our Broadband and Infrastructure businesses, those are very strong businesses, and I don't see any reason -- I mean, those are outgrown fears for the last decade, and I don't see any reason why we wouldn't continue to outgrow peers in those spaces. Very strong performing businesses. Obviously, the cellular baseband revenue will decline to zero over the course of this year and into next year. In terms of connectivity, I think you have to break that into the different pieces as well. I think we will certainly see growth in terms of new areas, Internet of Things, wearables, automotive, lots of new markets. I think you are going to see new technologies, and then the attach rate on baseband shifts, I think, will decline, as our baseband business declines. And then I did highlight before in that low mid-range, that's where we see the biggest risk. Its possible that happens quickly, its possible it doesn't happen at all. So it’s a little hard for us to forecast there, and certainly, we are going to keep fighting for it and continue to drive innovation to hang on to as much of that as we can. So I think you will see us make a pretty strong effort there, and the outcome of that, again, is a little hard to forecast. I think in terms of the growth of the connectivity segment this year, into next year will be challenging because of those headwinds. But I certainly see our other businesses continuing to perform well, and I expect that to sort of normalize over time, and put us back on sort of the normal Broadcom trajectory.

And the last question comes from Hans Mosesmann from Raymond James. Please go ahead. Hans Mosesmann - Raymond James: Thanks for fitting me in. Scott, a couple of questions. 28 nanometer to 20 nanometer, is that strategy or the ramp to the new node, has that changed now, that you're exiting cellular? And then as a follow-up, can you give us an update on your ARM-multicore strategy in the data center? Thanks.

Sure. In terms of 28 and 20 nanometer, we continue to move forward on that, and that certainly was not driven by cellular. Cellular was just one of the groups that made use of that technology. So that moves on unchanged. We will do 28-nanometer chips across all our other groups. In terms of ARM versus where we deploy that and so forth, we have announced a very-very high performance multi-core ARM network processor. We will continue to develop that technology. We have announced that only at an architecture level at this point, but we will continue to work with customers and as we firm our plans to take plan beyond pure network processors, we will certainly talk about that. But that's for future opportunities.

And that concludes our questions. I will now turn the conference call over to Scott McGregor for closing remarks.

Thanks everyone for joining us today. Broadcom has a renewed focus on core growth opportunities across Broadband, Connectivity and Infrastructure. We are continuing to evolve strategies to drive profitable growth, and at the same time, return more capital to shareholders. We made progress on all these fronts in the last quarter, and we will update you on our vision for the company at our Analyst Day, on December 9th, in Irvine. For more information about this event, please give Chris or Samir a call. With that, thank you very much again for joining us, and have a good day.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating, and you may now disconnect.