Sukhi Nagesh - Vice President of Investor Relations Sehat Sutardja - Co-Founder, Executive Chairman, Chief Executive Officer, President, Chief Executive Officer of Marvell Semiconductor Inc, President of Marvell Semiconductor Inc and Director of Marvell Semiconductor Inc Brad D. Feller - Interim Chief Financial Officer, Principal Accounting Officer, Vice President and Corporate Controller

Delos Elder Harlan Sur - JP Morgan Chase & Co, Research Division Cody G. Acree - Williams Financial Group, Inc., Research Division Doug Freedman - RBC Capital Markets, LLC, Research Division Christopher Hemmelgarn - Barclays Capital, Research Division James Schneider - Goldman Sachs Group Inc., Research Division Ryan Carver - Crédit Suisse AG, Research Division Ryan Goodman - CLSA Asia-Pacific Markets, Research Division Craig A. Ellis - B. Riley Caris, Research Division Ruben Roy - Mizuho Securities USA Inc., Research Division Quinn Bolton - Needham & Company, LLC, Research Division Christopher Rolland - FBR Capital Markets & Co., Research Division Sanjay Chaurasia - Nomura Securities Co. Ltd., Research Division

Good day, ladies and gentlemen, and welcome to the First Quarter 2014 Marvell Technology Group Ltd. Earnings Conference Call. My name is Caris, and I will be your coordinator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And I would now like to hand the call over to your host for today, Sukhi Nagesh, Vice President. Please proceed.

Thank you, Caris, and good afternoon, everyone. Welcome to Marvell Technology Group's First Quarter of Fiscal 2014 Earnings Call. With me on the call today are Sehat Sutardja, Marvell's Chairman and CEO; and Brad Feller, Marvell's Corporate Controller and Interim CFO. We will all be available during the Q&A portion of the call today. If you have not obtained a copy of our current press release, it can be found on our website under the Investor Relations section at marvell.com. We have also posted a slide deck summarizing our quarterly results in the IR section of our website for investors. Additionally, this call is being recorded and will be available for replay from our website. Please be reminded that today's discussion will include forward-looking statements that involve risks and uncertainties that could cause our results to differ materially from management's current expectations. The risks and uncertainties include our expectations about our overall business, our product and market strategy, statements about market acceptance of our products, statements about general trends in the end markets we serve and future growth opportunities, statements about market share and statements regarding our financial outlook for the second quarter of fiscal 2014. To fully understand the risks and uncertainties that may cause the results to differ from our expectations and outlook, please refer to today's earnings release, our latest annual report on Form 10-K and subsequent SEC filings for a detailed description of our business and associated risks. Please be reminded that all of our statements are made as of today, and Marvell undertakes no obligation to revise or update publicly any forward-looking statements. During our call today, we will make reference to certain non-GAAP financial measures, which exclude the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related costs, restructuring costs and certain onetime expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to our core operating performance. Pursuant to the Regulation G, we have provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our first quarter earnings press release, which has been furnished to the SEC on Form 8-K and is available on our website in the Investor Relations section. With that, I'd now like to turn the call over to Sehat.

Thanks, Sukhi, and good afternoon, everyone. Today, we reported first quarter revenues of approximately $734 million, a decline of 5% from the prior quarter and at the high end of our guidance range. During the quarter, we experienced better demand in our Storage and Networking end markets, while Mobile and Wireless was slightly below our expectations. We delivered the following non-GAAP results for Q1: gross margin of 54.6%, operating margin of 12% and earnings per share of $0.19. In addition, we continue to return cash to our shareholders, as we repurchased roughly 20 million shares, totaling about $200 million, and paid approximately $30 million in dividends during the quarter. And now, I'd like to provide a brief update on each of our end markets, starting with Storage. I would first like to reiterate that we have always believed and operated under the assumption that storage needs for consumers and enterprises will continue to rise as the amount of data consumed increases. This belief has led us to steadily invest in advanced storage technologies, many of which are still years from commercialization. As you know, HDD OEMs have recently commented that they are seeing stabilizations in the HDD TAM despite the weaker PC market. They have indicated that this stabilization is being driven by increased adoption of hard disk drives in non-PC consumer applications. As a result, in Q1, our Storage end market exhibited better-than-typical seasonality. This, along with share gains, resulted in flat sequential revenues for us. As you recall, Marvell's shares in HDD increased by roughly 5 percentage points in fiscal 2013 due to the ramp of our 2.5-inch, 500-gigabyte per platter devices at all the drive OEMs. In fact, we are now seeing adoption of our 500-gigabyte per platter technology in new types of desktop applications, such as all-in-one PCs, which are slowly replacing traditional desktops. Moving forward, our advanced product roadmap is creating strong traction at customers for new enterprise and traditional 3.5-inch desktop and near line applications. As a result, we expect continued steady HDD share gains this year. In addition to better trends in HDDs, we have stronger than initially expected double-digit sequential growth for our SSD business in Q1. Our strategy of partnering with top-tier NAND OEMs is resulting in excellent traction for our advanced SSD solutions. Consequently, we expect to gain at least 5 percentage points share in SSD along with the expected growth in the overall SSD TAM this year. We're also leveraging our technology leaderships in HDDs and SSDs to help our customers to migrate HDD to hybrid storage devices. While the market for hybrids will be small this year, we are all positioned to benefit from this growth, which, we believe, will be more meaningful over the coming years. For Q2, despite the continued weakness in the PC market, we expect our Storage end market to be roughly flat with double-digit growth in SSDs, offset by a slight decline in HDDs. In summary, we believe our continued focus on investments in advanced storage technologies are resulting in steady share gains in both HDDs and SSDs. Next, moving to Mobile and Wireless. Our revenues in this end market declined approximately 24% sequentially in Q1. We believe Q1 was the trough for this business. We continue to make strong progress in Mobile at multiple Tier 1 OEMs, with our integrated 3G as well as 4G platforms. Recently, a leading Asian Tier 1 OEM started productions of a new smartphone and a tablet based on our dual-core platform. This is just the beginning, and we are confident that additional devices will be introduced by this OEM as well as other Tier 1 OEMs in the coming quarters. Moving beyond our dual-core offering, we're also seeing fast adoption for our recently introduced quad-core 3G platform solution, for which we have already started initial shipments. Furthermore, we are making significant progress in LTE, having already successfully demonstrated our 4G LTE modems at this year's Mobile World Congress. And earlier this week, we announced a fully integrated, quad-core 5-mode Cat 4 LTE solution, specifically targeted for the mainstream 4G market. This LTE solution doubles the graphics performance compared to the 3G solution and also supports features, such as voice over LTE. Our LTE solution has already passed the operator test in China and is on track to achieve certification in North America this year. As a result, we expect at least one leading [indiscernible] OEMs to bring to market a 4G LTE smartphone using our solution this year, with more following early next year. Next, in Wireless Connectivity, we -- as we mentioned in our last earnings call, we are continuing to see increased traction for our 2x2 combo solutions, both for 802.11n as well as 11ac. We have won multiple designs with our new combo solutions in tablets, ultrabooks and gaming and video platforms. Our combo solutions offer both superior performance as well as support for multiple operating systems. This is leading to increased opportunities for our solutions, specifically in the tablet and the ultrabook markets. In addition, for mobile handsets, we are seeing 100% attach rates for our connectivity solution for both our 3G and 4G unified platforms. In our traditional connectivity markets, such as gaming, we expect to benefit from multiple new consoles that are being scheduled -- they are scheduled to be introduced this year. For the enterprise, we continue to see strong traction for our 4x4 solutions for access points, hotspots and service provider gateways. In summary, with the increased demand for connectivity in consumer as well as enterprise products, we anticipate our connectivity business to deliver solid year-over-year growth in fiscal 2014. As I mentioned earlier, Q1 was the bottom for our Mobile and Wireless business, and for Q2, we expect both Mobile and Wireless to grow double digits sequentially. Now turning next to our Networking. Our Q1 results were better than anticipated and down only 2% sequentially. Our Networking business continues to perform better than most of our peers on the strength of share gains and new customer product ramps. We continue to innovate and bring to market new solutions for the data center, enterprise and infrastructure networking markets. For example, this quarter, we introduced new 10G and 40G physical layer devices that offer high performance and strong security features for our customers. In addition to these new PHY devices, we introduced a new family of our Prestera packet processors. They are capable of processing data up to 1.28 terabits per second. In addition to investing in software internally, we are also partnering with excellent software companies to run their software on our networking silicon to provide new services for mobile backhaul, carry Internet and data center networks. The combination of our high-performance networking solutions and advanced software capabilities is being well received by our customers and is ideally suited for emerging software-defined networks of the future. Our continuous investment in networking, especially in these new areas of growth, leave us confident that we will continue to outperform our networking peers. For Q2, we expect our Networking end market to grow low- to mid-single digits sequentially. In summary, demand in Q1 for Storage and Networking was better than originally anticipated, while Mobile and Wireless was slightly below our initial expectations. We are starting to see the benefit of our prior investments, as they manifest in above-market growth as evidenced by our current outlook. We continue to make strong progress in mobile with both our 3G and 4G LTE platforms at multiple Tier 1 customers. We're seeing new opportunities for our connectivity combo solutions across multiple applications. In addition, we continue to make headway on share gains and growth in HDDs, SSDs and networking. Finally, we remain committed to returning cash to shareholders through our buyback and dividend programs. With that, I would like to turn the call over to Brad to go over first quarter financial results and second quarter outlook. Brad D. Feller: Thank you, Sehat, and good afternoon, everyone. As Sehat mentioned, we reported revenues for the first quarter of fiscal 2014 of $734 million, a sequential decline of approximately 5% from the previous quarter and at the high end of our guidance. In Storage, our overall revenue was roughly flat from the prior quarter and represented approximately 53% of total sales. Our HD business declined less than we expected due to better-than-typical seasonal demand and continued share gains. In addition, we continued to see strong growth in our SSD business during the quarter. In Networking, our revenue was down 2% sequentially and represented approximately 24% of total sales. Despite general market weakness in networking, we saw double-digit sequential growth in network processors and PON. Our Mobile and Wireless end market declined roughly 24% sequentially and represented approximately 18% of overall sales. In the quarter, we had weaker-than-initially-expected shipments of older-generation products to a North American handset customer due to the successful launch of their new-generation devices. Moving next to margins and expenses. Our non-GAAP gross margin for the first quarter was 54.6%, which was higher than our expectations due to better mix and a few nonrecurring, onetime benefits, including sell-through of previously reserved inventory. Our non-GAAP operating expenses came in at $313 million, which was in line with our guidance range. This resulted in a non-GAAP operating margin of 12% for the quarter. Net interest and other income was $3 million, and we recognized a tax benefit of $7 million for the quarter. Taken together, this resulted in non-GAAP net income for the first quarter of $98 million or $0.19 per diluted share. This was about $0.05 higher than the midpoint of our guidance. Roughly $0.03 of this upside can be attributed to the tax benefit and the onetime, nonrecurring benefits, which positively impacted our gross margin. The shares used to compute diluted non-GAAP EPS during the first quarter were 522 million as compared to 544 million reported in the prior quarter, showing the benefit of our continued share buybacks. Cash flow from operations for the first quarter was $84 million and free cash flow for the quarter was $53 million. This was better than our expectations to the overall improved results in the quarter. Now summarizing Q1 results on a GAAP basis. We generated GAAP net income of $53 million or $0.11 per diluted share compared to $50 million or $0.09 per diluted share in the prior quarter. The difference between our GAAP and non-GAAP results during the first quarter was mainly due to stock-based compensation expense of $34 million and about $11 million related to amortization of intangible assets and acquisition-related costs. Now turning to the balance sheet. Cash, cash equivalents and short-term investments were $1.7 billion, a decrease of $186 million sequentially. During the quarter, we repurchased approximately 20 million shares for a total of $200 million. Over the past 11 quarters, we have repurchased and retired approximately 204 million shares or about 29% of our outstanding shares. We also paid dividends of $30 million in the quarter or equivalent to $0.06 per share. Accounts receivable was $370 million, an increase of $40 million from the prior quarter, driven by improved linearity of shipments during Q1. Our DSO remained at 43 days for the quarter. Net inventory at the end of the first quarter was approximately $271 million, an increase of roughly 8% sequentially to meet anticipated demand, as the revenues begin to ramp in Q2. Moving next to our outlook for the second quarter of fiscal 2014. We currently project second quarter revenues to be in the range of $770 million to $810 million. At the midpoint of the range, this represents a sequential increase of roughly 8%. By end market, we expect Storage to be flat, with double-digit growth in SSDs, offset by a slight decline in HDDs. We expect our Networking end market to grow low- to mid-single digits. And finally, we expect both Mobile and Wireless to grow double digits sequentially, driven by the release of new smartphones and tablets, based on our unified 3G platform for mobile, as well as new devices utilizing our advanced wireless connectivity solutions. We currently project non-GAAP gross margin of 52.5%, plus or minus 100 basis points, for Q2. Recall that our long-term gross margin target range is between 50% and 55%. There are many moving parts which impact our gross margins in any given quarter as we saw in Q1. We have indicated in the past that as we gain traction in some of our high-volume consumer mobile and wireless end markets, our gross margin will likely trend towards the lower end of our target range. However, we are continuously working on reducing our costs through multiple actions, including transitioning our packaging from gold to copper and moving rapidly to advanced process nodes. This will help offset end market mix in the future. For Q2, we currently anticipate non-GAAP operating expenses to be in the range of $315 million, plus or minus $10 million. We anticipate R&D expenses of approximately $255 million and SG&A expenses of approximately $60 million. At the midpoint of our projected guidance, this should translate a non-GAAP operating margin of approximately 13%, plus or minus 1%. The combination of interest and other income should net out to approximately a $1 million benefit. Tax expense should be approximately $1 million. We currently expect the diluted share count to decline to approximately 517 million shares. Taken together, we currently project non-GAAP EPS to be about $0.19 per diluted share, plus or minus a couple of pennies. On the balance sheet, we currently expect to generate approximately $100 million in free cash flow during the quarter. We anticipate our cash balance to be about $1.8 billion, excluding any M&A activity, continued share buyback or other onetime items. We currently expect our GAAP EPS to be lower than our non-GAAP EPS by about $0.10 per share. About $0.07 of this is related to stock-based compensation expense. With that, I'd like to turn the call over to the operator to begin the Q&A portion of the call.

[Operator Instructions] And your first question comes from the line of Glen Yeung with Citigroup.

This is Delos Elder for Glen Yeung. I wanted to ask a question about the PC market in the back half of 2013. I know you're gaining share there, but could you just address -- are you gaining share in a growing or shrinking pie?

Oh, Delos, that's pretty hard for us to answer. Now obviously -- I think we've mentioned this in the past as well. We're not directly -- we're 2 steps removed from the PC OEMs and, obviously, we hear the same news as you guys do about a weaker PC market. But if you just go back to what Sehat said in his prepared remarks and what some of the drive customers have said, they're seeing increased applications for hard drives and non-PC applications, right? And I think one of our big customers said that on their earnings call as well. So while it's hard for us to really predict what the PC market is going to be doing, drives seem to be holding their own.

And then as a follow-up, I know you're talking a lot about the improvement in your Mobile and Wireless division. Can you talk a little bit about how this can be broken down into device types? I know you said both smartphone and tablet, but can you give us a sense of which would be more and then also by geography, if possible?

Actually, we only have a single product, okay? As we've mentioned several times in the past, we are focusing our solution to just a single-platform device so -- specifically, in the prepared comments, the device, okay, the products -- the smartphones as well as tablets, that's runs exactly on the same identical device. So no, there's not anything specific difference between the silicon -- between the -- yes, between the 2 products.

So in other words, Delos, if you look at the 3G platform, the dual-core or quad-core devices, they can go into smartphones or tablets. And it really depends on what the customer wants to use it for.

Okay, you can read through this by, okay -- what you can read through the -- between the lines, means that our smartphone solutions are in the class of a tablet-class performance. So this is -- this actually is our strategy of entering this -- in this market to become a bigger player by building products that the end user will appreciate. And just only -- just for the dual core and then moving the quad core and so on. It will be a better performance.

Your next question comes from the line of Harlan Sur with JPMorgan. Harlan Sur - JP Morgan Chase & Co, Research Division: Great to see the strategic initiatives starting to drive some growth here. So it sounds like the unified 3G baseband platform is a big driver of the incremental growth here in Q2. Could you guys just share a little bit more color here? Is it both TD and W-CDMA smartphones that are ramping? Does it include some Tier 1 handset OEMs as well? And more importantly, do you expect your unified 3G platform to continue to drive growth through the second half of this year? And then I have a follow-up question.

Yes. The answer to you is, yes, in all those areas. So it would be more specifics, okay, it's -- the single platform, okay, support 3Gs -- both TD and 3Gs, so both handset devices, okay, will be in productions. Tablets -- there'll be tablets. They will support 3Gs, as well as tablets support TD and as well tablets that don't have anything, only just WiFi. So -- and as we projected early on that -- earlier in the last couple of quarters that we're putting a lot of focus in this area. And we expect that every quarters, we'll see a measurable improvement. So that, okay, by the end of the year, okay, we'll have a much better positions in this market. Brad D. Feller: Yes. And Harlan, we are focused on the top tier OEMs.

Oh, yes. I forgot about that part. So the answer is yes. So the top tier OEMs are the one going to production first, in fact. Harlan Sur - JP Morgan Chase & Co, Research Division: Okay, great. And then from a financial standpoint, the team has committed to keeping OpEx dollars relatively flattish this year over last year, roughly about $1.2 billion. You're maintaining that run rate here in the first half. Can you keep it flat in the second half as well? And if you are, how is the team going to continue to balance out the incremental investment dollars required to gain scale in the mobile device market and still commit R&D dollars to other forward-looking initiatives, like 64-bit ARM or 100-gigabit Ethernet or 10-gigabit PON and other related development efforts? Brad D. Feller: Yes. so I'll address the first part of the question, Harlan, which the answer is yes. We're comfortable we can keep operating expenses at the current level, which would drive us to roughly flat for the year. We have a lot of initiatives under way, under the covers, to make sure that we can do that. But yes, we're comfortable we can keep it at these levels.

And the other part is the -- one of the reason that our expenses is high compared to our revenue for the last several quarters is because, okay, we have been investing, okay, in a lot of new areas, a lot of technology areas that takes a lot of years. Your question specific about 64-bit, that's one of the many things that we're investing. So that's quite a bit of investment in engineering prepare for the 64-bit ARMs, which is not going to be meaningful, okay, in terms of revenue this year. It will be a 0 revenue this year. But next year and a year from -- and more later down the road, it will become more important. So a lot of the investment has to happen early on, and we are already prioritizing our investment. So basically, another way to answer, okay, how do we can keep the expense flattish is just by focusing on investment that's going to matter in the next several years.

Right. And Harlan, in the last 2 years, our investments -- or operating expenses have actually gone up double digits each year. Our revenues have actually trailed a little bit, right? So what -- the investments have been made. Now we're reaping some of the benefits. We expect to reap some of the benefits.

And your next question comes from the line of Cody Acree of Williams Financial. Cody G. Acree - Williams Financial Group, Inc., Research Division: Maybe if we can just go back, Sehat, again to the Mobile and Wireless side, the one thing you haven't mentioned so far is your prior target of 10%. Are we moving away from that? Is that a continued target? And maybe to the extent that you can talk about -- maybe the contribution that you expect at least from a size standpoint from Asia and then maybe also from the Tier 1 players.

Yes, I -- specifically, related to our target, I personally am not moving away from my original target. I know, as I said from day 1, this is a very high target for us to achieve. At the same time, I believe that the 10% is a very reasonable -- it's something that we have to strive for. And we have the right technology. We -- I mean, we have the right technology. We have global 3G standard -- device capable to support W-CDMA, as well as TD-SCDMA now, which was recently introduced. So we have a device that's same -- on the same platform, meaning like the software will be fully compatible. We are supporting LTE. And not just any LTE, we're supporting Cat 4 LTE, meaning Release 9 LTE, versus what's in production today. It's Release 8 LTE in the market. So we -- I felt it's just a matter of time, okay, that we will achieve the 10% target.

What's your -- what was your other question, Cody? Cody G. Acree - Williams Financial Group, Inc., Research Division: Yes. The other question was really in the networking space, you talked about share gains there. We've seen some puts and takes as far as maybe end activity. I'd like to get maybe a bit more color on what you think we're seeing from an investment standpoint more broadly and then where is it that you specifically think you're taking share.

I think, in general, if you look at the -- in areas in networking -- in areas that we're investing, so investing in building more advanced PHYs, and like some of the advanced PHYs there, we continue to put a lot of investments just in the -- trying to make the cost and power for the 10-gig Ethernet over copper to be lower, to increase the adoptions of 10 gigs in the enterprises. We're also investing in network processors, because a lot of these programmable network processors are becoming the choice by the carriers for base stations and deployments. So -- and if we all believe that consumer wants to have wireless connectivity for their devices, we believe that tablets and smartphones are going to be more ubiquitous. Okay, LTE is going to be the de facto choice for delivering this data to the users, and those -- that means that the networks and the infrastructures, those programmable network processor will be very important. And software also that runs on these network processors will become important as well. Now other areas like investing in switch fabrics, okay, for the data centers, okay, if you believe that data centers -- if the computing moves to the data centers.

So I think what -- to summarize, Cody, our investments there in enterprise -- at least in networking are span enterprise, span the data centers, span the infrastructure area as well as software -- internal software as well.

And your next question comes from the line of Doug Freedman with RBC Capital Markets. Doug Freedman - RBC Capital Markets, LLC, Research Division: Could I focus in -- for a few seconds on the SSD market and how you see that developing? Clearly, it does seem like we might be hitting a bit of a knee in the curve there. Is there a point in time that you think there'll -- you'll have enough revenues from the SSD side of the business that you can break it out as a percentage of sales for us? And can you just give us an update on the progress that you're making there?

Yes. Okay, we have stated from the -- from -- for a while, already for -- maybe for the last couple of years that we believe that SSD is going to becoming an important role in the ultrabook markets, okay, markets, okay, ultrathin laptops. And okay, we still believe that, okay? But having said that, okay, we also have been saying that it takes times for the market to grow to be significant volume compared to traditional HDDs. After all, the traditional HDDs are shipping in the, what, 600-million-units-plus market. So -- and then the other part is, okay -- at the same times, okay, the price points is about 10x for the same capacity of HDD. The SSD is still priced of 10x. So it's good to be -- it's going to be a matter of when the investments in the next-generation stops for flash will happen to be able to drive the cost of the flash to reduce the cost of the SSDs. And we don't really care one way or the other, okay, when this thing happens. We're investing in both sides. We believe both sides will continue to -- the revenue will grow. Now of course, the smaller part of the SSD will have a faster growth rate. It's natural, okay, for the same number of units growth. Okay, percentage wise, it's going to be much higher than the HDDs. But we also believe that, in the long run, in the next several years, the growth of HDDs, okay, will go back to -- will recover as the markets -- as lower-cost PCs get to the market. On earlier call, we talked about the markets or PCs. In my personal opinion -- my personal opinion is if the PC market price drops down like, say, $200-plus the market for PCs, as well as non-PC market, they will need this HDD. We'll be there. So we are not -- we're not concerned. As a company, we're not concerned about the -- our opportunity, okay, in this market.

Doug, do you have a follow-up? Doug Freedman - RBC Capital Markets, LLC, Research Division: Yes. Sehat, you just mentioned that the next-generation NAND will expand the market. We're hearing from some suppliers that they're looking at moving to 3D NAND architectures. Have you seen those products yet? Are you working with those manufacturers? And is that going to have an impact on the controller market?

The -- yes, we are very well aware of the 3D NAND. We do expect the 3D NANDs will be in production some times next year. I think that's as much as we can talk about.

And your next question comes from the line of Blayne Curtis with Barclays. Christopher Hemmelgarn - Barclays Capital, Research Division: This is Chris Hemmelgarn on for Blayne. First question is just -- I don't think you mentioned this. Could you talk about your 10%-plus customers and just what share they were of revenue this quarter?

So I think, typically, there's been just one in Storage. And Chris, we'll get back to you on that off-line. Don't have it handy in front of me. Christopher Hemmelgarn - Barclays Capital, Research Division: Okay, we'll talk about that later. No worries then. Second question is, it looks like you may be giving your guidance for next quarter slowing the pace of your share repurchases a little bit. Is that the case? Is -- I mean, is that a conscious choice or... Brad D. Feller: No, no. You shouldn't read anything into the guidance on us slowing down. We'll continue to be active with the buybacks. Obviously, be very opportunistic in the quarter. But you shouldn't read anything into the guidance to say we're slowing down.

And Chris, the 517 million share count that Brad guided -- provided guidance on did not include any share buybacks. Christopher Hemmelgarn - Barclays Capital, Research Division: Got you, that's very helpful. One last quick follow-up, I guess, then. Just talk a little bit about how the overall com market is looking for you in the back half. You guys certainly are still seeing some share gains and all, but I -- just the overall market environment.

I mean -- the interest [indiscernible] market, a lot of people are looking at growth in the back half of this year. Obviously, from all the CapEx increase, we do see some initial -- our Networking business is actually going to -- doing quite well in the past few quarters relative to our peers. But we're going to wait and see how it plays out in terms of whether our customers will actually benefit from the CapEx increase. It's a little early for us to comment on that, Chris. But we're watching it closely.

And your next question comes from the line of James Schneider with Goldman Sachs. James Schneider - Goldman Sachs Group Inc., Research Division: If I look at the storage market for a second, specifically in hard drives, you guided that down slightly in this conventional hard drive business. I would've thought that maybe you would've seen some growth there, given that many of your customers are guiding the TAM flattish and you're gaining share. Can you give us any sense about what might be going on? Is there a little bit of component inventory out in the channel? Or are just being a little bit more conservative than some of your customers are? Brad D. Feller: Yes. So the reality is most of our customers guided to flatter or slightly down. There's -- the share gains still to come. Some of the enterprise gains are coming slowly as we expected. And then there's obviously always pricing declines. So nothing necessarily to read into that -- and that's saying we're slightly down. James Schneider - Goldman Sachs Group Inc., Research Division: Okay, fair enough. And then, actually, it leads into my second question, which is on the SSD controller market. Obviously, we're expecting pretty healthy market growth there in terms of units overall. Can you talk about the ASP environment on SSD controllers, what you're seeing there, and what kind of pressure is being driven by some of the captive players that may have 3-bit-per-cell technology?

Yes. As we said consistently over the last few -- a couple of years, the fact that the market for SSD is of low volume, as well as the SSD tends to have a bigger die sizes, bigger packaging and so on. The price is, okay, is naturally higher than the controller for the HDDs. So it's still the case, okay? The markets has not moved to low-end SSDs yet at this point. So until that market -- until that happens, the pricing will always be higher. And then maybe like a couple of years from now, when the market moves to very low-end SSDs, the market -- the pricing maybe will approach the HDD pricings. What was the second question? Brad D. Feller: Impact of 3D NAND.

3D NAND, yes. The 3D NAND, Sehat. James Schneider - Goldman Sachs Group Inc., Research Division: No, the 3-bit-per-cell. I'm sorry.

Oh, the 3-bit-per-cell, yes. Yes, the 3-bit-per-cell is just a -- it is anticipated by us. We are building -- if you look at our controller, the -- one of the main reasons that our customers are using our controllers is because our error correction capability is superior compared to many of what's available in the market, including what people's building in-house. So our controller is already designed for, okay, for 3-bit-per-cell and beyond, okay? And when the time comes, okay, their device will be capable to support those weaker flash.

So Jim, I think, our controller actually supports it. It's just a matter of when our customers bring those market -- bring their devices to market, the 3-bit-per-cell.

And your next question comes from the line of John Pitzer with Credit Suisse. Ryan Carver - Crédit Suisse AG, Research Division: This is Ryan Carver in for John. Just a question on gross margins. Kind of last time that Mobile and Wireless was 18% of revenue, gross margins were about 550 bps higher than the quarter you just reported and -- so you mentioned gross margins were trending towards the low end of your current range. I guess, part one of this is, can you remind of kind of what that target range is? And I guess, two, can you kind of walk through some of the non-Mobile and Wireless changes that have caused the gross margin decline? Is it purely HDD ASPs? Or are there other sort of drivers at play that has caused this decline? Brad D. Feller: Yes. So just a reminder on the range, Ryan, it's 50% to 55% in gross margins. And there's a lot of moving parts. As I said, in my prepared remarks, there's a lot of moving parts which impact gross margins. So ASP declines are normal in our market, right? But we've had impacts to higher costs for advanced process node, math sets, gold, all those different areas. So it's -- those are the main things that drive it. But there's a lot of moving parts within margin. But we're committed to keeping it in that 50% to 55% range. As we continue to see success in Mobile and Wireless, it will drift towards the lower end of that range.

And Ryan, remember, when our margins were in the high 50s and dropped about 400 basis points, we actually mentioned that earlier on, about 400 basis points of that decline was -- could have been attributed just to gold prices -- high gold prices.

But the other part is, Sukhi, I think we also mentioned so many times is that, in the 3G space, okay, the market is very competitive. So the margin is naturally lower there. So okay, we're not shy from going into competing in 3G. But we believe -- we do believe that as we go to be more successful in the LTE space, the margin will back -- will go back -- tense [ph] up at that time.

You have a follow-up, Ryan? Ryan Carver - Crédit Suisse AG, Research Division: Yes, great. I mean, that kind of leads to my follow-up question. In terms of the 4G solutions and the go-to-market strategy, I guess, can you just kind of walkthrough -- I mean, there's a couple of players -- competitors in the 4G market in China already. Clearly, there are a number of competitors in the U.S. market. I guess, can you kind of walk through the -- your go-to-market strategy for expanding into the 4G side where -- in China? And then maybe talk through some of the U.S. market objectives. I mean, you talked about this one LTE customer. Is that a traditional LTE customer or a traditional North America customer you've had? Or maybe just kind of walk through that dynamic for us.

Yes. So the LTE is the -- our strategy in LTE is, from day 1, is to build an LTE solution that is worldwide standards, meaning it supports both TDD as well DD capabilities. In certain markets, like in China, okay, there are huge amount of bandwidth in the TDD space that will be available. So that feature is absolute must. In the North America, the majority carriers are using FDD, which -- with one carrier specifically having a number of large TDD bands. A lot -- even company -- India and Japan, okay, have TDD as well as -- TDD, as well FDD, is also very important. So our strategy is to qualify -- to have certifications this year on all the markets -- well, as much as we could get this year. So that we can go production both, not just in Asia, but we go to production also in North America. So again, working with Tier 1 OEMs is yet another still strategy to bring LTE into production quickly, because the Tier 1s are the one that will be able to bring volume -- high volume quickly.

And your next question comes from the line of Srini Pajjuri with CLSA. Ryan Goodman - CLSA Asia-Pacific Markets, Research Division: This is Ryan Goodman for Srini. I had another question on the SSD opportunity here. So you're forecasting double-digit growth in SSDs for the coming quarter while at the same time, NAND prices are holding up much better than they have in the past. And one of your customers actually is forecasting a slight decline for the quarter. So just any color you could give on what's giving you confidence there? And any comments on what you're seeing in terms of OEM inventory levels in that sector? Brad D. Feller: Yes. So the growth in SSDs is across multiple customers. So this is new design wins that are going to come to market. So there's no real impact for existing inventory in the market. There is several new design wins across multiple customers that we think will drive into volume starting this quarter, which will drive up our SSD revenues nicely this quarter.

And Ryan, remember, I mean both -- some of the major flash providers have guided to 50% to 60% growth in SSDs this year already, right? And you're seeing some of them being -- also being price aggressive in the market. We also know that NAND flash pricing is kind of holding up right now, but they're also -- I mean, these customers have also said publicly that they're focused on selling as many SSDs as they can this year. So I think we'll be able to piggyback off of that and do better than what they're saying the market will do. Ryan Goodman - CLSA Asia-Pacific Markets, Research Division: Okay, great. And then just a follow-up, kind of a different tangent here. Just any updates on the CMU litigation in terms of timing? I think last time we talked, it had been -- you expected a court decision as soon as May, which it might be a little late by now -- or even in June. So any updates there? Brad D. Feller: Yes. So the -- in the first week of May, the post-trial motions were heard in Pennsylvania. We haven't heard anything out of the judge on final rulings, and we expect over the coming months that she will come out with those final rulings. But that's really the only update at this point.

Your next question comes from the line of Craig Ellis with B. Riley. Craig A. Ellis - B. Riley Caris, Research Division: In the prepared remarks, you talked about some different dynamics in the hard disk drive space, with non-PC-related products a little bit stronger than PC-related products. Can you just talk about the mix of revenue between PC and non-PC controllers from Marvell? And how do you expect that mix to evolve over time?

So Craig, that's a little harder for us to judge because when we sell our product into our drive customers, all we know is they can go into certain types of applications. But they don't tell us what the mix is. So the best judge for that will actually be to talk to our customers to get that information. Craig A. Ellis - B. Riley Caris, Research Division: Okay. As a follow-up, since I'll need to go to them to get that, moving to OpEx, Brad, you talked about a number of initiatives that you have working in the background, the key operating expenses flattish on a year-on-year basis. Can you talk about what some of those are? And is there a potential, given that -- it sounds like there's multiple that operating expense would actually go down quarter-on-quarter in the back half of the year. Brad D. Feller: Yes. So the biggest one is what Sehat alluded to earlier, which is really product prioritization. So we're looking at every device that is in development, making sure it's the right device, making sure that we have the right number of chips in certain markets. They're the ones that are going to bring revenue in the next few years. And making sure that we're very focused, given that the majority of our OpEx spend is in R&D. That is the biggest one. In terms of it declining the second half of the year, obviously, I'm going to try. But I think if we can keep it at consistent levels to where we are today, I'll be happy. Craig A. Ellis - B. Riley Caris, Research Division: Okay. And maybe I'll sneak in one more. You talked about the LTE product in -- shipping that this year. Is that going to contribute meaningful revenues this year? Or is it really more of a 2014 revenue story?

Yes. The starting shipments we expect to have at least one customer, as we say in the call, by the end of this year. So there'll be multiple other customers going into productions in the following quarter next year. So obviously, the -- in terms of meaningful revenue, it will be more meaningful next year. This year will be more of an initial production ramp.

And your next question comes from the line of Ruben Roy with Mizuho Securities. Ruben Roy - Mizuho Securities USA Inc., Research Division: First of all, Sehat, I just wanted to make sure I understood the -- in terms of the significant Mobile and Wireless growth for Q2, the TD growth, is that mostly coming from new products? Or is it a balanced mix between new and sort of the older-generation technology? And I guess the -- on the wideband CDMA side as well, are you seeing a little bit of a pickup after a drop off in Q1 on that -- from that business?

It's all based on the unified platform. So it's a new product that we introduced late last year. So the design win was happening in the last couple of quarters. And the initial shipments from the -- production from customers is happening now. And okay, then -- and as we said, expect every quarter, we're going to have more and more customers going to productions with that new products that we just introduced. That was the dual-core solutions. We don't, okay -- we pretty much do not talk much more about the dual-core solutions with our customers. Our customers are now working with, okay -- or the new designs, they're all quad-core solutions. And just -- and then starting this quarter, there'll be more engagements on the LTE side. Ruben Roy - Mizuho Securities USA Inc., Research Division: Okay. And Sehat, just to follow up on that, in terms of dual core shipments moving to quad core eventually, historically, you've played in the TD-SCDMA market at the higher end of the market. I would assume that, that remains true. Or are you seeing a wider use?

Yes. Again, what was that? There was a question about the TD -- or [indiscernible] what it is? Smartphones or tablets, okay, with different solutions. And my answer was that this is exact -- they came from exactly the same die, same chip to address the tablet. So -- and I said, okay, every chip [indiscernible] the tablet, by definition, the chip is powerful enough to address the higher-end parts of the TD markets, the smartphone markets. Ruben Roy - Mizuho Securities USA Inc., Research Division: Okay. And then just the last question on the hard disk drive side. In terms of the enterprise ramp, Brad, you talked about potentially seeing a slower ramp than -- I guess you expected a slower ramp, but it -- I'm just trying to understand, has the ramp started? Or do you expect that to start later this year? Or did it get pushed out? Brad D. Feller: No, no. So the ramp has started, Ruben. It's just -- as we expected, it's been a slow ramp. So the ramp has begun. We have been shipping enterprise devices to the customer. It's just it's a slow ramp.

And your next question comes from the line of Quinn Bolton with Needham. Quinn Bolton - Needham & Company, LLC, Research Division: I just wanted to come back to the SSD comments. Sukhi, you'd mentioned the -- sort of the 50% to 60% growth in the market. I'm assuming that, that's a unit figure. So just trying to get a sense with your unit -- with the market growth of 50% to 60%-plus share gains, is -- are you seeing enough pricing pressure? Or are you seeing pricing pressure in that market that we should be thinking about a lower revenue growth figure? Or is pricing holding up fairly steady?

Well, on SSDs, Quinn, pricing has been, in the past, been okay. But in the future, we always said as the unit volume increase, it will come down. Pricing will come down. For this year, at least, if you will expect -- if the market were to grow 50% to 60%, our unit volume will actually grow higher than that based on our design wins. It's a little too early for us to comment on how pricing will trend in the back half of this year though.

Well, many of the design wins that we have we already do forward pricings for the higher volume. So a lot of these things -- a lot of pricing pressure has already been baked into the modeling. Quinn Bolton - Needham & Company, LLC, Research Division: Okay, great. And then for Brad, just wanted to come back to the gross margin. I think you had mentioned that there was about a $0.01 effect from the sale of previously written down inventory in the first quarter. Is that -- do I have that right? So it's about a 70 basis point... Brad D. Feller: Yes, so it's between 1% and 2% in terms of the impact related to that. Quinn Bolton - Needham & Company, LLC, Research Division: Okay. So backing that out, the non-GAAP would have been somewhere around 53.5%, something like that? Brad D. Feller: Yes, it's about right. Quinn Bolton - Needham & Company, LLC, Research Division: Okay. And then is the drop from that sort of adjusted 53.5% to 52.5%, is that mostly the mix shift with Mobile and Wireless being up double digits? Or were there other things in the margin. Brad D. Feller: Yes, it's mainly mix.

Your next question comes from the line of Chris Rolland with FBR. Christopher Rolland - FBR Capital Markets & Co., Research Division: Sehat, you had actually mentioned SDN, and I think you guys are a benefactor there, not only in merchant silicon, but also in white box switching. Some of the guys moving to SDN a little bit more quicker than some of the other players out there. So SDN adoption has been pretty controversial. So Sehat, are -- were your comments sort of implying that we might be at some sort of an inflection point there or -- how are you viewing that market?

Yes. I look at a lot of these things move, okay, at a slow pace. So there'll always be customers -- they are willing to pay higher prices. Then they will have-- they will use more programmable network processors. And then all these customers like, in the data centers, where they don't need any programmability, all just they need is just throughputs. That will -- probably, they will not move to any programmability for the next 5 to 10 years. So I will say, okay, TD SDN part will continue to be a bigger percentage of the market but slowly. Christopher Rolland - FBR Capital Markets & Co., Research Division: Okay. And what about white box switching and merchant silicon more generally, are you guys seeing an inflection there? Are you picking up...

Oh, no. Oh, no. I -- if it's a white box switching, they are mainly pure just switching, okay? Nothing -- no software-defined network [indiscernible] hardware-based, okay, switching technology. Christopher Rolland - FBR Capital Markets & Co., Research Division: Yes. You're -- would you say that we're seeing sort of an inflection there versus the Ciscos and Junipers of the world?

No. The white box market tends to address, okay, the lower price point segments and customer, they are less sophisticated. Some just want to have bandwidth. So I don't think you can expect those markets to move to programmable network processes any time soon so -- probably never. Christopher Rolland - FBR Capital Markets & Co., Research Division: Okay, okay. And also in terms of hard disk, also hybrids, pure SSDs, when we talk about the move to Haswell here, what do you see the sort of impacts there between all those different segments there? And how do you see that sort of play out in the back half of the year?

Yes. Okay, if you look at the very ultrathin notebooks, the ultrabooks, those are the ones that's going to adopt the SSD first. So a lot of this increase in SSD volume, actually, specifically targeted for this market. The hybrid portions, okay -- and then after that, there's a market for -- where this 5 millimeters segment is becoming -- will become important for the lower-cost ultrabooks. We have the support of -- a small amount of hybrid capability. Hybrid, meaning the SSD the capability. So some of the initial recommendation from Intel was running at around 24 gigabytes. I think Intel is trying to lower that number so that -- to make the cost to be more affordable. But we'll see. I think that will happen naturally over the next year or so, as these specifications of how much of these hybrids is enough or needed. But we don't really care. In our case, okay, we believe that at the end of the day, it's just a matter of whether the customer is willing to pay $20 or $15 or $10 more for the hybrid capability for very minimal flash capacity.

The next question comes from the line of Romit Shah with Nomura. Sanjay Chaurasia - Nomura Securities Co. Ltd., Research Division: This is Sanjay Chaurasia for Romit Shah. Sehat, one question on Mobile and Wireless. You indicated that you saw lower demand for older products from your North American customer. I was just wondering if you could talk about your traction within your platform and if you will see any upside from that in the back half of the year.

Yes, okay. I suppose you are referring to the new OS that they're building. Yes, we are working with a specific customer. We anticipate be able to have the product launch closer to some times early next year. At the very, very early, maybe late this year, but I will bet more closer to some times next year. Sanjay Chaurasia - Nomura Securities Co. Ltd., Research Division: And as a follow-up, it seems like Mobile and Wireless is growing 30-plus percent, actually 35-plus percent, is all this growth coming from the dual-core platform with the new OEM? Or could you break this down for us between connectivity and the chipset?

So Sanjay -- so the growth in Mobile and Wireless is across the board between Mobile and Connectivity, both double digit growth, right, is what we said. And in Mobile, it particularly come from mostly the dual-core device that we talked about and some initial shipments of our quad-core device.

And the Tier 1 OEM.

And the Tier 1 OEM.

And also new OEM, new customers.

New customers, yes. Okay. All right. Caris, I think we're done. With that, I'd like to thank everyone for their time today and continued interest in Marvell. We look forward to speaking with you in the coming months. Thank you and goodbye.

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