James Eric Bjornholt - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance Ganesh Moorthy - Chief Operating Officer Stephen Sanghi - Chairman, Chief Executive Officer and President

Craig Hettenbach - Morgan Stanley, Research Division William Stein - SunTrust Robinson Humphrey, Inc., Research Division Christopher Caso - Susquehanna Financial Group, LLLP, Research Division JoAnne Feeney - ABR Investment Strategy LLC Dean Grumlose - Stifel, Nicolaus & Company, Incorporated, Research Division Wills Miller

Good day, everyone, and welcome to this Microchip Technology Third Quarter Fiscal Year 2015 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Microchip's Chief Financial Officer, Mr. Eric Bjornholt. Please go ahead, sir.

Good afternoon, everyone. During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our press releases of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations. In attendance with me today are Steve Sanghi, Microchip's President and CEO; and Ganesh Moorthy, Microchip's COO. I will comment on our third quarter fiscal year 2015 financial performance, and Steve and Ganesh will then give their comments on the results and discuss the current business environment as well as our guidance. We will then be available to respond to specific investor and analyst questions. I want to remind you that we are including information in our press release and this conference call on various GAAP and non-GAAP measures. We have posted a full GAAP to non-GAAP reconciliation on the Investor Relations page of our website at www.microchip.com, which we believe you will find useful when comparing GAAP and non-GAAP results. I will now go through some of the operating results, including net sales, gross margin and operating expenses. I will be referring to these results on a non-GAAP basis prior to the effects of our acquisition activities and share-based compensation. Non-GAAP net sales in the December quarter were $535.8 million and were down 1.9% sequentially from non-GAAP net sales of $546.2 million in the immediately preceding quarter. The December quarter revenue exceeded the high end of our updated guidance for the quarter. Revenue by product line was $345.5 million for microcontrollers, $125.5 million for analog, $33.2 million for memory, $22.9 million for licensing and $8.7 million of other. Revenue by geography was $104.9 million in the Americas, $105.9 million in Europe and $325 million in Asia. I'll remind you that we recognize revenue based on where we ship our products to, which tends to skew some of the revenue towards Asia where a lot of contract manufacturing takes place. On a non-GAAP basis, gross margins were 58.2% in the December quarter, at the high end of our guidance range. Non-GAAP operating expenses were 26.6% of sales, well below the bottom end of our guidance range. Non-GAAP operating income was 31.6% of sales, and net income was $143.3 million. This resulted in earnings of $0.64 per diluted share, which was at the high end of our updated guidance. GAAP net sales in the December quarter were $528.7 million and were $7.1 million lower than non-GAAP net sales, as we changed the contractual relationships with the ISSC distribution network to a sell-through revenue recognition model. On a GAAP basis, gross margins, including share-based compensation and acquisition-related expenses, were $57.1 million in the December -- 51 -- 57.1% in the December quarter. GAAP gross margins include the impact of $2.3 million of share-based compensation, $4.2 million of charges associated with the sell-through of written-up inventory from our acquisitions of Supertex and ISSC and $3.2 million of gross profit on the revenue recognition change previously mentioned. Total operating expenses were $204 million or 38.6% of sales and include acquisition intangible amortization of $47.6 million, share-based compensation of $12.5 million, $0.5 million of acquisition-related expenses and special charges of $1 million. GAAP net income was $86.1 million or $0.39 per diluted share. GAAP net income includes nonrecurring favorable tax events of $3.9 million, including a benefit from the reinstatement of the R&D tax credit. In the December quarter, the non-GAAP tax rate was 10.3% and the GAAP tax rate was 1.6%. The GAAP tax rate was favorably impacted by the $3.9 million of nonrecurring tax events that I mentioned before. Our tax rate is impacted by the mix of geographical profits, withholding taxes associated with our licensing business and the tax effect of various nonrecurring items. Excluding any nonrecurring events, we expect our longer-term forward-looking non-GAAP effective tax rate to be about 10.5% to 11%. To summarize the after-tax impact that the non-GAAP adjustments had on Microchip's earnings per share in the December quarter, acquisition-related items were $0.223, share-based compensation was about $0.05, nonrecurring favorable tax events were about $0.018, the difference in GAAP and non-GAAP noncontrolling interest in ISSC was a favorable $0.008, and a noncash interest expense was about $0.007. The dividend declared today of $0.357 per share will be paid on March 9, 2015, to shareholders of record on February 23, 2015. The cash payments associated with this dividend will be approximately $72 million. This quarter's dividend will be our 50th consecutive quarter of making a dividend payment. We have never made reductions in our dividend, and in fact, this quarter's increase marks the 44th occasion we have increased the dividend payment, and our cumulative dividends paid amount to over $2.4 billion. This program continues to be an important component of how we return value to our shareholders. And during the time period that Microchip has paid dividends, we have also purchased back $1.4 billion of our stock, including the stock buyback that we had when we issued our convertible debt back in fiscal year 2008. Our cash return to shareholders since the inception of our dividend program is over $3.8 billion. Moving on to the balance sheet. Consolidated inventory at December 31, 2014, was $276.1 million or 111 days compared to 109 days at the end of the September quarter, excluding any purchase accounting adjustments. 100% of the written-up inventory from our acquisitions is now out of our inventory balance. Inventory at our distributors increased by 2 days in the December quarter and are at 36 days. I want to remind you that our distribution revenue throughout the world is recognized on a sell-through basis. We intend to grow the days of inventory on our balance sheet in the March quarter as we continue to focus on improving lead times for our customers. The cash generation in the December quarter, excluding the purchase of additional shares of ISSC, our dividend payment, changes in marketable equity securities and changes in borrowing levels under our revolving line of credit, was $145.7 million. As of December 31, the consolidated cash and total investment position was $2.23 billion, and our borrowings under our revolving line of credit were $981.3 million. Excluding dividend payments and our acquisition activities, we expect our total cash and investment position to grow by approximately $140 million to $160 million in the March quarter. Capital spending was approximately $36.6 million for the December quarter. We expect about $40 million in capital spending in the March quarter and overall capital expenditures for fiscal year 2015 to be about $160 million as we are adding capital to support the growth of our production capabilities for our fast-growing new products and technologies and to bring in-house more of the assembly and test operations that are currently outsourced. Depreciation expense in the December quarter was $24.7 million. As discussed earlier, the contractual terms of our relationships with the ISSC distributors changed during the December quarter, resulting in about $7 million of lower GAAP versus non-GAAP revenue. There is another $4 million of product in the ISSC distribution channel related to products sold to these distributors by ISSC under their prior contracts. This will result in GAAP revenue being about $4 million less than non-GAAP revenue in the March quarter. At the end of the March quarter, this transition to a sell-through model will be completed for ISSC, and there will be no further differences between GAAP and non-GAAP revenue recognition related to this change. I will now ask Ganesh to give his comments on the performance of the business in the December quarter and provide an update on the integration activities related to the ISSC acquisition. Ganesh?

Thank you, Eric, and good afternoon, everyone. Let's take a closer look at the performance of each of our product lines, starting with microcontrollers. Our microcontroller revenue was up 10.3% in the December quarter from a year-ago quarter. For calendar year 2014, our microcontroller business was up 13.8% and set an all-time record. Also for calendar year 2014, each of our 3 microcontroller segments, 8-bit, 16-bit and 32-bit, set revenue records. Microcontrollers represented 64.5% of Microchip's overall revenue in the December quarter. You may recall that we told you last quarter that our 16- and 32-bit combined microcontroller business was in the range of $400 million to $500 million annualized. Since then, we have received substantial feedback through prospective employees and industry sources that our competitors were very surprised to learn about the size of our 16-bit and 32-bit microcontroller business. And we're actively seeking more information as to where we were winning. It appears our competitors had assumed that our business was still embryonic and were surprised by the magnitude of the revenue range we provided. We believe that our stealth mode in keeping the actual size of business confidential has helped us in gaining substantial momentum in these product lines. With our competitors now apparently scurrying around trying to triangulate on which markets and applications we're achieving our success, we have decided that we are not going to help their effort. Going forward, we will no longer be breaking out the growth rate of the individual microcontroller segments. As you have seen from our disclosures, the size of each of our 8-, 16- and 32-bit businesses is quite substantial. We did break out the growth rates for several quarters when it was important to communicate a sense for the rate of growth of the 16-bit and 32-bit businesses while they were smaller businesses. Henceforth, consistent with the practice of most of our competitors, we will only be reporting overall microcontroller revenue and growth rate. So for one last time for your records, our 16-bit microcontroller business was up 27.7% in calendar year 2014, and our 32-bit microcontroller business was up 41.3% in calendar year 2014. Based on the growth we've experienced in calendar year 2014 in all 3 microcontroller segments, we believe we're continuing to gain significant microcontroller market share, and we expect the calendar year 2014 market share rankings will bear that out when they are published later this year. Now let's move to our analog products. Our analog business was up 15.3% from the year-ago quarter. In calendar year 2014, our analog business was up 15.7% and also set an all-time record. This business continues to have strong design win momentum in a broad range of applications and represented 23.4% of Microchip's overall revenue in the December quarter, the highest percentage that it has ever been. We continue to develop and introduce a wide range of innovative and proprietary new products to fuel the future growth of our analog business. Moving to our memory business, which is comprised of our Serial E-squared memory products as well as our SuperFlash Memory products. This business was up 2% over a year-ago quarter. In calendar year 2014, our memory business was down 1.5%. We continue to run our memory business in a disciplined fashion that maintains consistently high profitability, enables our licensing business and serves our microcontroller customers to complete their solutions. Our memory business represented 6.2% of Microchip's overall revenue in the December quarter. Finally, ISSC was integrated into our business systems as planned on November 1. At the end of December, we owned 91.1% of the ISSC shares, and on December 25, we delisted ISSC from the Taiwan Stock Exchange. We expect to acquire the remaining shares of ISSC in the first half of 2015 and complete the merger process during that time. Let me now pass it to Steve for some general comments about our business as well as our guidance going forward. Steve?

Thank you, Ganesh, and good afternoon, everyone. Today, I would first like to reflect on the results of the fiscal third quarter of 2015 and calendar year 2014. Then, I will comment on the progress of some of our acquisitions and then provide guidance for the fiscal fourth quarter of 2015. We are very pleased with our execution in the December quarter. Our original revenue guidance for December quarter at the midpoint was down 4.5% sequentially. In early December, we revised that guidance upwards to be down 3.5% sequentially at the midpoint. Our actual results were down 1.9% sequentially, which was better than seasonal. Looking at the calendar year 2014, it was our first year to cross the $2 billion revenue mark. Calendar year '14 revenue came in at $2.107 billion, up 12.8% from calendar year '13. All of our strategic product lines of microcontrollers and analog posted strong performance in calendar year 2014. The December quarter was also our 97th consecutive profitable quarter. I want to thank all the employees of Microchip for their contribution in this remarkable achievement of 97 consecutive profitable quarters. Now in the last conference call, we told you that we will be shutting down production in Supertex's San Jose fab as well as test facility in Hong Kong. There is excellent progress on both fronts. The last wafer starts in San Jose fab have already been made and the fab will close in the March/April time frame. The transfer of Hong Kong test to our high-volume Thailand facility is also on schedule for this quarter. As we said before, we believe that closure of the San Jose fab and the Hong Kong test facility will add about $0.05 to $0.07 of accretion on an annual basis after the older last-time buy inventory has been shipped out. Now I will provide guidance for the fiscal third quarter of 2015. As we said in the last conference call, we completed the small correction in the September quarter, and then the December quarter turned out to be better than seasonal. March quarter is historically a very strong quarter in Europe and a weak quarter in Asia due to Lunar New Year holidays. The quarter is usually up low single-digit percentage sequentially. We expect this March quarter to be seasonally normal and expect the revenue to be up 1% to 3% sequentially. On a non-GAAP basis, we expect our gross margin to be between 58.2% and 58.4% of sales. We expect operating expenses to be between 26.2% and 26.6% of sales. We expect operating profit to be between 31.6% and 32.2% of sales. We expect non-GAAP EPS to be between $0.65 and $0.67 per share. Now I also promised to you that we will review our business units, geographical data, direct customers and distributors with a fine-tooth comb to make sure that our miss in September quarter was not driven by anything that has changed competitively that we may have missed. I'm happy to report that we have completed a total review and our miss in September quarter was nothing more than a quick correction and softening that we saw led by China. Beyond that, there was no other corrective action on our part. As you have now seen 2 quarters of data from the industry, you can see that our cumulative performance of 2 quarters, September and December, is in the top half of our MCU and analog peer group, and our 2% sequential growth guidance at the midpoint for the March quarter should further alleviate any of your concerns. Overall, our 2014 performance demonstrates Microchip has continued to gain market share in microcontrollers and analog. In closing, as I take stock of our business, I have never been more confident of our market position and our future prospects with the investments we have made and are continuing to make for the long-term success of Microchip. With this, operator, will you please poll for questions?

[Operator Instructions] Our first question comes from Craig Hettenbach with Morgan Stanley. Craig Hettenbach - Morgan Stanley, Research Division: Can you give any update on the ISSC and Supertex deals from a revenue perspective in terms of how that business is progressing? And I know things like cross-selling takes some time, but just how you see that materialize as we go forward.

So we're not breaking out the revenue specifically for those 2 acquisitions any longer, but we're well on our way into integrating those product lines into our sales force and into our distribution network and are getting very good initial feedback on both. And so we're quite excited about the future opportunity, and the original plan associated with the acquisitions are intact. Craig Hettenbach - Morgan Stanley, Research Division: Got it. As a follow-up, Steve, there continues to be a lot of buzz around IoT. Can you give any context in terms of what you're seeing from a design perspective or customer engagements or any context around numbers as you look to kind of size up the opportunities for IoT?

Well, there is no standard definition of what you include in IoT or not. Different companies have different definitions. Some include the entire microcontroller, analog, sensor and the entire chain of products that go with it, along with the Wi-Fi solution, and some not. So I will say in general, we are excited about the opportunity presented by the IoT market. We have all the pieces needed, the intelligence in microcontroller, analog, smart memory, sensors, all of the connectivity protocols, Wi-Fi, Bluetooth, RF, ZigBee and everything else. And we think we have increasing presence in this fast-growing market. The broadest adoption of smartphones and tablets is accelerating the demand for more things to be connected, and Microchip is incredibly well placed by having all the components needed, like I mentioned, microcontroller, analog, memory, sensors as well as all the RF, Wi-Fi, Bluetooth and other building blocks. We have ready-mix suite of phoneware solutions to go with various connectivities. And we have a set of partners who can provide the cloud solutions and storage needed for people to be able to ping the data off the cloud. So I think we have really all the stuff needed. We have very substantial revenue in the IoT market. Depending on how you describe it, it could be many hundreds of millions of dollars, and there's a significant growth in the segment. Beyond that, I wish somebody were to define exactly what IoT is.

We'll go next to William Stein with SunTrust. William Stein - SunTrust Robinson Humphrey, Inc., Research Division: Steve, in the past, I think a big part of the company's growth strategy has been around acquiring companies, mostly in the analog space, to then cross-sell with the microcontrollers, and it's worked quite well historically. In calendar '14 though, I believe, on an organic basis, your analog and interface product grouping actually undergrew micro's, again, organically. And I'm wondering if you think that's -- first, if you could confirm I'm correct and then maybe comment as to why that might have happened and whether you think that will reverse in the next calendar year and perhaps you'll see greater attach for analog?

So I don't have the data broken out. We usually break out the data for a quarter or so, and after that, it's very, very difficult because the businesses get intertwined. When we buy a company, part of the thing is then, on a combined basis, to make intelligent selection about where Microchip's effort should go, which piece of the business is better positioned to go forward, an example could be when you acquire a company, you have some that kind of effort going on inside. And then you acquire a company which has a similar effort which is farther along. And after you acquire it, let's say you merge it together and you pursue the platform that you acquired, which would lower the revenue that you would have otherwise gained if you hadn't acquired them because you have similar products. So after about a quarter or so, which is really is important for The Street to know what's the core growth and what's the acquired growth, if you continue to carry it in any fashion a year out -- 9 months out, a year out, then you're really doing disservice because our job is to really to make the best assessments of where we put the effort, where the sales force sells it, where the field application engineer spends time, what is the best solution to present to our customer. And if you happen to present the acquired company's solution, more in favor of -- and not presenting our solution, if that's a negative indicator for you by looking at the core versus acquired growth, then we're not doing our job right, and I don't think that's what we're doing. William Stein - SunTrust Robinson Humphrey, Inc., Research Division: Okay. Maybe I'll try a different topic for a follow-up. Can you talk a bit about your capital spending plans? I think you mentioned them briefly, but I missed them in the prepared remarks. But maybe if you could attribute to which product category they relate, and how we should expect your capital planning to go forward through the year.

So as far as our capital plan is concerned, our capacity is very common. Our microcontrollers are loaded with analog functionality, a lot of the power management, analog conversion, a lot of interface functionality. Those are really on our microcontrollers also. And customer makes a choice whether he wants to buy a very high-end integrated microcontroller product or he wants to buy a lower-end microcontroller product and adds a standalone analog. So as a result, the processes we develop are internal factories as well as when we buy the product to foundries, those are common technologies and common capital. And it's very similar in the back end. Many of the testers and handlers are predominantly common. There is some customization. But -- so the capital doesn't really make a difference. Capital is very common.

We'll go next to Chris Caso with Susquehanna Financial Group. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: We can start at just asking a question with regard to industry conditions, and it's clear that it sounds like we've had a bit of an improvement here. Is there anything exceptional that you're seeing in the underlying business that deviates from normal seasonality in any particular geographic channels or industry segments at this point?

We are not -- essentially we are commenting only on our business, not the industry conditions. As we see our business, our guidance is built on performance in each channel, U.S., Europe and Asia, and direct distribution to be seasonally normal. Christopher Caso - Susquehanna Financial Group, LLLP, Research Division: Okay. And just moving on with what's happened with some of the foreign exchange rates, particularly the yen. And I know that shouldn't have a particular effect on your business, but it does affect your Japanese competitors. Are you seeing any different competitive behavior as a result of the foreign exchange movements? And then maybe while you're on that topic, I know it's been your goal to take some share from the Japanese as well. Maybe you can comment on what you think your progress is there.

Well -- so as the Japanese yen depreciates, there's no question that somebody who produces entirely in Japan, their products become slightly cheaper, although a lot of the Japanese production has also moved to foundries and they have closed or sold a lot of their fabs and they're buying from similar foundries in Asia like we are buying. A lot of their assembly and test has been moved out after the earthquake. So the effect of yen is really much more muted than it ever was. The impact of really the lower cost, if there is any, is really much, much slower and it takes a long time because, really, it's at a designing level. Whatever is designed in our proprietary products, customers really cannot change. So the question really will be on new designs, can somebody from Japan be more competitive? And I think that's really -- there is a lot of hurdle people have. There's IP. There is installed base. There is development tools. There is legacy of products, software the people have designed in. So especially in our business, that impact is really fairly small and takes a very long time. It would be much more drastic in a memory business where you can really substitute one product for the other product to model. But in a microcontroller, analog designing business, I think it's a very negligible impact. But there is a second impact, which is really positive when you measure the market share. The market share dollar, as reported by Gartner or SIA or anybody else, is in dollars. And the majority of the sales of the Japanese companies is in Japan. They produce there, they sell there, they sell in yen. So when you take the yen sale and you convert them to dollars, it's going to be much smaller. That impact is immediate. So when you calculate market share, market share in dollar terms on a percentage basis is going to grow right away. And the other impact you're talking about is very long term, very slow and may or may not happen and we have a lot of time to come to that.

We'll go next to Chris Danley [ph] with Citigroup.

Stephen, in the press release, you talked about your guidance and you said with the current economic backdrop. So can you just go into your thoughts on the current economic backdrop, maybe talk about if you're seeing any differences by geos out there or what the distributors that you guys deal with are telling you about their business?

Well, I think it's basically -- that thing is superseded by saying everything is seasonally normal. If you take geography by geography, everybody is aware of what's happening in Europe in the currency, in the economy and all that. So that backdrop is taken into account. When you look at -- in Asia, that backdrop is taken into account. The China GDP has slowed down from what it was before. What they have done is similar in package [ph]. So whenever we know as of today, it is -- that's the background and that's taken into account. And looking at all that, I think business still looks seasonal.

Great. And for my follow-up, in terms of the upside to guidance on the gross margins and the OpEx, was that all driven by better-than-expected execution on the acquisitions? Or was there some upside to the core business?

So I'd say on, gross margin, it was modest, right? We had a relatively tight range and -- so we were 0.1% above the midpoint of our guidance. So that's just kind of noise level. OpEx, there was quite a bit of improvement there. Chris asked -- the other Chris asked some questions on FX, and the FX did have a positive impact on OpEx in the December quarter, but some of that was offset with a foreign exchange loss as we do some hedging against that. So I would say from an OpEx and gross margin standpoint, things performed pretty much as expected. The company did a good job of controlling costs and FX helped us a little bit on the OpEx line.

[Operator Instructions] Our next question comes from JoAnne Feeney with ABR Investment Strategy. JoAnne Feeney - ABR Investment Strategy LLC: I just wanted to get a little clarification on the guidance, given the difference between the non-GAAP and the GAAP numbers and that difference moving in the opposite direction this quarter. Is the 1% to 3% based off of GAAP, non-GAAP? And does it refer to the GAAP or non-GAAP number this quarter?

So if we presented that wrong, the non-GAAP and GAAP difference are going in the same direction. In the December quarter, there was a $7 million difference and GAAP revenue was lower than non-GAAP. Same thing in the current quarter. We're expecting that GAAP revenue to be about $4 million lower. Obviously, if you're looking at percentage increase changes, GAAP to GAAP, non-GAAP to non-GAAP, there's a difference. And we're giving our guidance of 1% to 3% growth, midpoint of 2%. That's based off the non-GAAP numbers. So hopefully, that's clear. JoAnne Feeney - ABR Investment Strategy LLC: Great. And then as a follow-up, wondering if you could elaborate a little bit on the margin outlook. In particular, are you planning to increase factory loadings anytime soon? Are you using more foundries than you were, say, last quarter? And then are there any mix shifts going on in your foreseeable future that would impact the margin outlook and your move towards the midterm model?

Well, if you look at over the last couple of quarters, I think our overall internal inventory got too low. I believe the bottom of it was about 103 days, wasn't it?

About 105.

105 days. And we let it get too low. Somewhere, some of the upsides we achieved in earlier quarters. But when the inventory gets too low, then we start to have longer lead time and delivery issues and all that. So we have made conscious efforts, both inside and outside, at the foundries as well as internally growing capacity to bring that inventory more in line. And you've seen the inventory now ending last quarter was 1...

111.

111. So we've made some progress. We think it's still not where we want it to be. We want it to be between 115 and 120 days, so slowly, slowly. And as you are growing revenue, then you also acquire more product, and in calculating inventory, dividing by a larger number to calculate the days. So it will take a little bit of time, but we'll continue to work towards trying to get the inventory north of 115 days.

Right. I guess that answered the other pieces of your question. That percentage of foundry of our business continues to be 38% to 40%. There's no significant change there, just very modest changes. Each quarter can go up or down, and we aren't anticipating any significant mix shifts of the business.

In our internal fabs, both of our fabs and both of our assembly and test facilities, they're all working at record loading. So there's really high amount of activity. And some of the gross margin we're seeing is really negatively impacted by 2 acquisitions last year. It's no longer impacted by the acquisition we did 2 years ago like SMSC. We totally lost time there, gross margin and operating margins in the range of Microchip. But the later acquisitions, Supertex and ISSC, their gross and operating margins are still well below Microchip. They're improving, but they're not quite there yet and it takes longer time. But if it was just our own performance, it's really better than the gross margin you're seeing.

We'll go next to Kevin Cassidy with Stifel, Nicolaus. Dean Grumlose - Stifel, Nicolaus & Company, Incorporated, Research Division: This is Dean Grumlose calling in for Kevin. My first question is in the automotive area. Do you plan on also participating in Ethernet or stay with the MOST approach? Or how do you see this particular competitive scenario playing out?

So we do ship both Ethernet and MOST into automotive applications today. They're going to different types of applications. Networking in the car is a focus for Microchip. We dominate the space that is around infotainment networking today. With the most network, we have many new products planned. And whatever the market requirements are that are appropriate and cost effective and competitive, we will have those solutions. Dean Grumlose - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. And in the area of connectivity, especially connectivity that you have acquired, do you have the ability to integrate this with your microcontrollers? Perhaps, you could add some color around your strategy in this area.

Rather than speak to the strategy, let me speak to what the capability is. Clearly, the technologies that are involved to build the networking products have similarities with the technologies that we build our microcontroller and analog products on. And yes, you will over time see appropriate levels of integration where some of the capability will show up on our microcontrollers.

Yes, I want to clarify one thing, though, which again touches on the strategy. If your strategy is to go get one large $50 million account, whether it's in networking or smartphones or whatever, then that integration is very important. Then you take a microcontroller, take the RF, take everything and you're delivering SoC to that customer. If your strategy is to try to sell that 2,000 accounts, long-tail customers like Microchip does that have substantially higher margin and a better business model longer term, then integration is not always the best answer because everybody wants a different microcontroller and density and speed and bit size and different performance levels and different things in it. So then you have a problem in choosing a microcontroller. And if you choose a very large, higher-superset microcontroller, then you make it expensive for everybody else. So the best answer to serve 1,000 customers is not always integrated, but the best answer to serve one large customer is always an integrated SoC. So those have strategy implications.

[Operator Instructions] We'll go next to John Pitzer with Crédit Suisse.

This is Wills Miller calling in for John Pitzer. First, can you help me think about seasonality throughout 2015? More specifically, The Street is modeling up roughly 4% sequentially in June quarter versus seasonal of roughly 7% to 8%. I'm curious because the June quarter was seasonally strong for SMSC. Is this something -- is there something The Street may be missing?

Well, we didn't prepare this call to be able to answer anything regarding June in terms of guidance.

Right. I think the only thing I would say to that is you need to be careful when you look at our historical numbers in terms of when we did acquisitions and the impact of those on any particular quarter when looking at trying to determine what seasonality is. But Steve's right, we haven't given guidance beyond the March quarter.

Okay, great. And then can you just talk a bit about your expectations by end market for 2015, what do you expect to be the main drivers?

So we don't really usually have end-market commentary. We serve 90,000-plus customers around the world. A large number of them buy product from distribution and same customers in different divisions, their end market is either industrial or consumer or it can be PC and some have automotive divisions. And so therefore, we don't break our business down by end markets like that.

And it appears we have no further questions at this time. I'll turn it back to our speakers for any final remarks.

Okay. Thank you for attending the call today, and we will talk to you next quarter. Bye-bye.

Thank you. This does conclude today's program. We appreciate your participation. You may disconnect at any time, and have a great day.