Sukhi Nagesh - Vice President of Investor Relations Sehat Sutardja - Co-Founder, Executive Chairman, Chief Executive Officer, 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

Harlan Sur - JP Morgan Chase & Co, Research Division Doug Freedman - RBC Capital Markets, LLC, Research Division Hans C. Mosesmann - Raymond James & Associates, Inc., Research Division N. Quinn Bolton - Needham & Company, LLC, Research Division James Schneider - Goldman Sachs Group Inc., Research Division Ryan Carver - Crédit Suisse AG, Research Division Matt Diamond - Deutsche Bank AG, Research Division Michael A. Burton - Brean Capital LLC, Research Division Sidney Ho - Nomura Securities Co. Ltd., Research Division Dean Grumlose - Stifel, Nicolaus & Co., Inc., Research Division

Good day, ladies and gentlemen, welcome to the Third Quarter 2014 Marvell Technology Group Earnings Conference Call. My name is Sylvia, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Sukhi Nagesh, Vice President of Investor Relations. Please proceed.

Thank you, Sylvia, and good afternoon, everyone. Welcome to Marvell Technology Group's third quarter fiscal 2014 earnings call. With me on the call today are Sehat Sutardja, Marvel's Chairman and CEO; and Brad Feller, Marvell's 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 at our company 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 expectation. The risk 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 including future growth opportunities, statements about market share and statements regarding our financial outlook for the fourth quarter of fiscal 2014. To fully understand the risks and uncertainties that may cause results to differ from our expectations and outlook, please refer to today's earnings press release, our latest quarterly report on Form 10-Q 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 one-time 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 Regulation G, we have provided reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures in the third quarter earnings press release, which has been furnished to the SEC in Form 8-K, and is available on our website at 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 third quarter revenues of approximately $931 million, an increase of 15% from the prior quarter and about the high end of our guidance range. During the quarter, we experienced better-than-expected demand from our mobile, wireless and storage customers. We delivered the following non-GAAP results for Q3: Gross margin of 50%, operating margin of 17% and earnings per share of $0.32. In addition, we continue to return cash to our shareholders as we repurchase roughly 6 million shares totaling about $71 million and paid approximately $30 million in dividends during the quarter. Before I discuss each of our end markets, I would like to reiterate to all our investors a few important points about our overall business. First, we remain highly focused and continue to work hard to improve our execution. Second, our sustained investments in advanced technologies are now leading to new innovations which will drive our future growth. Third, our overall financial goals remain the same. We are targeting revenue growth that is greater than our competitors' and EPS growth that is faster than our revenue growth. After 2 years of customer and product transitions, the midpoint of our Q4 guidance clearly indicates the financial turnaround for the company. And we expect a continuation of these positive trends in our next fiscal year. Now I'd like to provide a brief update on each of our end markets. In storage, we continue to execute well despite a tepid year end -- tepid PC end market. For Q3, revenue from our storage and market was better than initially expected and grew 3% sequentially. Starting with HDDs, we continue to outperform due to share gains and increased demand from our customers. As many of our HDD customers have indicated publicly, the overall drive industry seems to have stabilized. We believe our customers are seeing good demand for non-PC applications, which is offsetting weakness in the traditional PC market. In the enterprise space, we continue to see steady share gains at a top-notch America-based HDD customer. In Q3, our enterprise drive shipments to this customer grew by over 20% sequentially. And we do expect continued traction and share gains in the enterprise device heading into calendar 2014. In addition, we are making some progress in gaining new design wins for traditional 3.5-inch desktop and nearline applications. Next in SSDs. Q3 was a record quarter for both units and revenue, and we delivered another quarter of strong double-digit sequential growth. Our PCI-E-based SSD solutions are now in mass production, and we have a significant lead in the market. We are also shipping our fourth generation SATA SSD products in production and multiple top-tier NAND OEMs. Furthermore, we are winning designs for our next-generation SSD solutions across a broad-based -- customer base and believe this will further increase our leadership position. As a result, we expect our SSD business to, once again, grow strongly in the next fiscal year. We are also well positioned for the hybrid market and should benefit when the market starts to grow. Specifically for hybrids, we are leveraging our technology leadership in HDDs and SSDs, we have a single-chip solution that should drive lower price points. This is an important driver for market adoption. For Q4, we expect our storage end market to seasonally decline low- to mid-single digit percentage points. Turning next to networking. Q3 results were below our initial expectations and down approximately 3% sequentially. The weaker-than-expected networking results was due to softer-than-expected demand from some of our enterprise customers. On a positive note, during the quarter, we saw strength in our Ethernet PHY and PON product lines. In Q3, we were pleased to announce that our first 28-nanometer network processor and traffic management solutions, the Xelerated AX and HX family, targeting the infrastructure market. We're already engaged with Tier 1 OEMs customers on these new high-performance products for their next-generation networking equipment. With additional 28-nanometer products in the pipeline, we remain confident in our ability to provide long-term differentiated and cost-effective solutions to our networking customer base. To summarize, in networking, we are making steady progress in increasing our footprint in the infrastructure market, while continuing to take measures to improve our enterprise-related business. For Q4, we expect our networking end market to decline low-single digits sequentially. Next, moving to mobile and wireless. Our revenues in this end market increased over 60% sequentially and was significantly better than our expectations. Starting with mobile in Q3, we doubled the unit shipments of both our W-CDMA and TD-SCDMA 3G products and started initial shipments of our 4G LTE solution in Asia. During the quarter, we witnessed over 10 new smartphone and tablet product launches by more than 5 OEMs using our 3G platforms. Feedback from customers has been extremely positive and sell-through remained strong. In addition, China Mobile recently launched their first branded smartphone based on the Marvell 3G platform. In LTE, we have achieved data certification at a major North American carrier and are on track to complete voice certification shortly. Also in the quarter, the Chinese Ministry of Industry and Information Technology issued the first LTE network's access licenses for LTE smartphones, including those powered by the Marvell 4G LTE. To summarize in mobile, our 3G and 4G LTE platforms continue to gain strong design tractions with leading OEMs. We expect our 3G platform to continue steady growth through the remainder of this year and into the next year. We also expect to see a ramp of our 4G LTE platform in the first half of our next fiscal year. And next in the wireless connectivity, our revenue in Q3 grew over 50% sequentially. Recall that we have 100% attach rate for our wireless connectivity solutions with our new 3G and 4G mobile platforms. The increased tractions of Marvell connectivity in smartphones and tablets is leading to share gains in the mobile market. In addition, growth in the connectivity was helped by the ramp of multiple new products from our nonmobile customers. In particular, we are excited about the use of our wireless connectivity solutions in the upcoming new game consoles that are being launched for the holiday season. We expect wireless connectivity and other advanced features in this new game console to help drive growth for the industry in the coming years. In addition, our connectivity products are also gaining traction in SmartTV, set-top boxes and mobile computing devices. For Q4, we expect our mobile and wireless end market to decline low-single digits sequentially with growth in the mobile offset by a seasonal decline in our nonmobile connectivity business. I also like to highlight that in Q3, we saw strong demand for Marvell's platform solution that is designing to the Google Comcast. We're extremely pleased by the commercial success of the Comcast continues to enjoy. In Q3, our unit volumes increased significantly, compared to the prior quarter and demand continues to grow strongly. In summary, demand in Q3 for mobile, wireless and storage was better than originally anticipated, while networking was below expectations. We continue to make strong progress in mobile and with our 3G and 4G platforms at multiple customers for smartphones and tablets. Moreover, we are seeing new opportunities for our connectivity solutions across multiple market segments and we continue to gain share in HDD and SSDs. Finally, we remain committed to returning cash to shareholders through dividends and opportunistic buyback. And with that, I would now like to turn the call over to Brad to go over our third quarter financial results and fourth quarter outlook. Brad D. Feller: Thank you, Sehat, and good afternoon, everyone. As Sehat mentioned, we reported revenues of $931 million for the third quarter of fiscal 2014, a sequential increase of over 15% from the previous quarter and above the high end of our guidance. In storage, our overall revenue increased by 3% sequentially, which was better than our initial expectation of flat. The growth in storage is mainly due to a combination of steady share gains and increased demand in our customers in anticipation of the holiday season. Storage represented 46% of overall sales in the quarter. In networking, our revenue was down 3% sequentially and represented 17% of total sales. As you may recall, our networking business is currently strongest within the enterprise portion of the market. Recent results from many of our enterprise networking customers indicate an overall weak market, and our business is not immune to it. Despite this market weakness, we are seeing some pockets of strength, such as in Ethernet PHYs and a recovery in our PON product line. We remain cautious and expect the recovery of the market to take longer than previously expected. In addition, we continue to make strong progress with development and design activity for our product portfolio addressing the infrastructure portion of the market. Our mobile and wireless end market grew strongly, up 63% sequentially and representing 31% of overall revenue in the quarter. The growth in the quarter was due to the launch of new devices into the market for multiple customers. We are extremely pleased with our strong progress in the mobile and wireless end market as we continue to win new designs each quarter. Moving next to margins and expenses. Our non-GAAP gross margin for the third quarter was 50.3%, which is in line with our guidance range despite the stronger-than-expected growth of our consumer-oriented products. We continue to be very focused on initiatives to maintain our gross margin levels. What you are seeing is the case where the design wins and volume shipments within some of the consumer businesses have significantly exceeded our expectations. Many of the gross margin improvement initiatives take time to realize, which is leading to a temporary dip in gross margins until those initiatives are completed. Furthermore, we are also focused on accelerating the introduction of our next-generation products, which will command higher ASPs, as well as optimizing the pricing for existing products. To summarize, we are taking actions on both the cost side, as well as the pricing side to improve our gross margins in the future. Our non-GAAP operating expenses came in at $313 million, which is below the midpoint of our guidance as we continue our expense management efforts. Taken altogether, this resulted in non-GAAP operating margin of 17% for the quarter. These results demonstrate the strength of our business model. Despite a sequential drop in our gross margin, our operating margin expanded by more than 300 basis points in the quarter. We continue to believe that we can drive revenue growth and operating margin leverage as we execute on the multiple growth opportunities that are ahead of us. In Q3, our interest and other income was $1.5 million, and we recognized a tax benefit of $6 million for the quarter. The shares used to compute diluted non-GAAP EPS during the third quarter were $514 million as compared to $516 million reported in the prior quarter, as we continue to drive down our share count with share repurchases. In total, this resulted in non-GAAP net income for the third quarter of $163 million or $0.32 per diluted share. This is about $0.07 higher than the midpoint of our guidance. Now summarizing Q3 results on a GAAP basis. We generated GAAP net income of $103 million or $0.21 per diluted share compared to $62 million or $0.12 per diluted share in the prior quarter. The difference between our GAAP and non-GAAP results during the third quarter was mainly due to stock-based compensation expense of $43 million, $11 million related to amortization of intangible assets and acquisition-related costs and $6 million related to restructuring and exit-related costs. Now, turning to the balance sheet. Cash, cash equivalents and short-term investments as of the end of the third quarter were $1.8 billion, an increase of 5% from the previous quarter. We generated cash flow from operations during the third quarter of $177 million and free cash flow of $157 million or 17% of revenue. During the third quarter, we repurchased 6.1 million shares for a total of $71 million. We also paid dividends of $30 million in the quarter or equivalent to $0.06 per share. Accounts receivable was $467 million, an increase of $36 million from the prior quarter, driven by higher revenues. Our DSO was 44 days compared to 45 days for the prior quarter. Net inventory at the end of the third quarter was $380 million, an increase of roughly $45 million sequentially to meet the anticipated increased demand for some of our new products in the coming quarters. Moving next to our outlook for the fourth quarter of fiscal 2014, we currently project to be in the range of $880 million to $920 million. At the midpoint of this range, this represents a sequential decrease of roughly 3%, better than normal seasonality for our fiscal fourth quarter. By end market, we expect storage to be down low to mid-single digits as seasonality is partially offset by continued share gains. We expect our networking end market to decline by low-single digits. And finally, we expect our mobile and wireless end market to decline low-single digits with growth in mobile offset by seasonal declines in nonmobile connectivity. We currently project non-GAAP gross margin of 50%, plus or minus 100 basis points, and 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 $260 million and SG&A expenses of approximately $55 million. At the midpoint of our projected guidance, this should translate to a non-GAAP operating margin of approximately 15%, plus or minus 100 basis points. The combination of interest and other income should net out to approximately $1 million benefit, and tax expense should be approximately $5 million. We currently expect the diluted share count to be approximately 515 million shares. In total, we currently project non-GAAP EPS to be $0.25 per diluted share, plus or minus a couple of pennies. On the balance sheet, we currently expect to generate approximately $125 million in free cash flow during the quarter. We anticipate our cash balance to be about $1.9 billion, excluding any M&A activity, continued share buyback or other one-time items. We currently expect our GAAP EPS to be lower than our non-GAAP EPS by about $0.09 per share. About $0.08 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. Sylvia?

[Operator Instructions] The first question comes from the line of Harlan Sur, JPMorgan. Harlan Sur - JP Morgan Chase & Co, Research Division: Obviously, connectivity was a solid driver of the upside here in the third quarter. Based on the teardowns, it seems like your content in at least some of the first new game consoles has increased significantly. My question was more about your efforts in mobile, specifically on LTE. I know the team has said that you'd be shipping 4G TD or FDD-LTE chipsets to a Tier 1 OEM in the second half of the year. Question is, is this taking place now? And if you could give us a bit more color on who those OEMs are going to be. And is mobile growth in Q4, and as you look into the first half of next year, is that more 3G TD or 3G WCDMA? And then I just have a quick follow-up.

Harlan, it's Sehat here. So as you know, we have been saying that we are pushing LTE really, really hard. So my expectations, it would continue to -- it's the same, consistent with our prior expectations. We are moving -- progressing very well in the LTE and our LTE solutions should ramp up during the course of next year. So I feel pretty comfortable there. The goal again, our goal is to -- as well in the 3G, we will lag behind in terms of ramping up with the rest of the customers in LTE. Okay. We are quite well ahead. We are basically just second behind Qualcomm in this area, so we feel confident and excited that as the carriers are demanding -- more and more carriers are demanding LTE. It is possible that by second half next year, the LTE could outstrip the 3G demand at least from our side point of view -- from our customer base point of view is what I meant. So while today, most of the shipments are still in 3G and by the end of next year, maybe it could be -- more would be in the LTE. Brad D. Feller: Yes. So, Harlan, you should expect, as we talked about before, handsets actually in the market before the end of this year with our LTE solutions, with at least one and potentially an additional customer. And in terms of your question about 3G between TD and WCDMA, it's a combination of both. Both of them are growing strongly. And as you recall, our quad core solution has both so it can go into either market. We're seeing strong growth in both. Harlan Sur - JP Morgan Chase & Co, Research Division: And then within your storage business, the performance in your HDD segment is, I think, is a really good example of the proliferation of HDDs into other markets like gaming. But within compute, I know in their last earnings call, one of your competitors claimed that they had won a 3.5-inch desktop HDD platform with one of your customers. Any color on that and the potential impact to Marvell in calendar year 2014? And maybe if the team could share with us some of the share opportunities that you're capturing in HDD that would be a positive offset to any 3.5-inch potential share shifts as we look into next year.

Yes, in the HDDs, this is an area that out of all the businesses that we have, this is the one that we feel the most comfortable because this is the business where we started 18 years ago, and consistently every single year for the last 18 years we've been investing, we've been -- we have out-invested our competition in the rechannel technology, and the result is that, consistently over the years, we've been gaining market share. Over the 18 years, all our competitors always took shot at us that they are getting certain market share from us. And if we look at the last 18 years, the net result is we gained market share every single year. So we do not expect, okay, any noise from the competitions going to impact us, one way or the other. We -- our -- as I mentioned about the prepared remarks where we continue to gain design wins. And including in new markets for 3.5-inch desktops and nearline applications from customers that we don't have yet. So we feel comfortable here, and we're investing the -- we are several years ahead in the HDD rechannel technology in this space. Some of this technology will not -- our customers don't have to go to production for another couple of years. And we already are working as, in some cases, often we have samples already in-house. So I think the short answer is that we don't see -- nothing change.

Harlan, one other thing. If you look at our storage business, given where we're guiding to for Q4, if you include that, we're going to significantly outgrow the market itself. That should tell you that we gained share this year and like what Sehat was alluding to and what we alluded to in the prepared remarks, we will continue to gain share in the enterprise side as we head into next year. So we feel pretty comfortable about our share position.

The next question comes from the line of Doug Freedman, RBC Capital. Doug Freedman - RBC Capital Markets, LLC, Research Division: If I could just follow up to the last line of questioning, focusing on your biggest piece of business, the hard drive market. Your competitor talks about gaining share actually on the client side. I think the market understands that you are gaining share on the enterprise. Do you have a strategy to maybe keep them out of the client side where you have been traditionally quite strong? And if you could touch on that a little bit.

Sure. In this business actually, our solutions have no difference whether it's a client or the enterprise. Our strategy always is single strategy, build the best rechannel technology on the planet. And whether the same technology actually are integrated, whether it's an enterprise side or the desktop or in the mobile space, same exact technology. So, I mean, with different -- obviously different types of SOCs with different customers. So this is -- the strategy is always the same. Build something -- build things that our customers will need a few years from now. Our customers differentiation they did today is to build higher capacity drive. Every years, they have to compete against their competitions to build a high-capacity drive, and they have to build drives at higher yield, takes lower-cost so that they can get lower cost. 1% increase in yield translate -- in the entry-level hard drive translates about $0.50 saving to them, a 1% increase in yield. Imagine, often we have -- often and especially in the early stage of productions, often our customer will have 10% or more of yield increase against our competition. So this is the reason -- this one area that's, okay, it's hard to explain why, okay, we command such a high percentage in this business despite the fact that, okay, we've been only in this business for 18 years and our competition has been in this business for 30, 40 years. So, okay, I feel good that this is an area that anybody who use our competition's solutions will find out that they will get our solutions and they'll come back to us, okay. That was proven in the enterprise a few years ago, okay. And it's proven many, many times in many other customers several years ago in Japan, and every single time, okay, if there is any one program coming to our competitions, they all went back to us. Doug Freedman - RBC Capital Markets, LLC, Research Division: If I could follow-up with a question looking at the Mobile and Wireless business, your present platform has a dual use purpose to it, I believe you explained that customers could design for 1 standard and build -- build 1 phone for many standards. Is that feature playing out and can you give us some color on how broad a base of customer you're building out in your Wireless business? Brad D. Feller: Yes. So we talked about it a little bit in the prepared remarks, Doug, that it is a compelling solution for customers, and we're seeing customers continue to design additional models with our quad core platform that has both the TD and WCDMA modems. And as Sehat mentioned, just this quarter, we had 5 OEMs designing product based on our -- 5 top-tier OEMs designing product based on that solution. So it is a compelling solution and we're getting strong traction at multiple different OEMs, and also multiple models within those OEMs.

Your next question comes from the line of Hans Mosesmann, Raymond James. Hans C. Mosesmann - Raymond James & Associates, Inc., Research Division: Can you give us more detail on what may be happening on the hybrid side of the hard disk drive and solid-state drive for your business and the trend going into 2014 in terms of market share?

Sure. So let's go back to how we started this business. About 6, 7 or maybe even 8 years ago, we realized that there's going to be a market for SSDs, so we invested new technology to develop advanced SSD solutions. So over the last year or so, finally, the market, or I mean, the price of flash becomes cheap enough, although still very expensive compared to hard drives, to allow a small percentage of the market to move to SSDs. Now, despite having said that, despite the success that we have in SSD and also well in line with our projections from day 1, that the market for hard drives primarily still determined by cost sensitive applications. And such, it will be quite a miracle for the hard drive industry to move to SSDs completely, and it's highly unlikely, it's not fundamentally possible from the physics point of view for that to happen. So a compromise needs to be made where we will integrate the best of both sides, okay, in the low cost of the hard drive and the performance instant on capability of the SSDs. So that's where hybrids plays into place in this segment on the market. So what we're doing is okay, I've been working on it for the last several years is to develop new technology to leverage the SSD technology, control technology that we have developed that you're seeing already success today in the market, to be integrated with our HD Controller. So we have introduced the technology and we believe that this is the technology that will allow our customers to be able to build a hybrid drive at extremely cost competitive solution in the market. So hopefully, maybe sometime in the next year or so where the customers have completed their software development effort, this thing will be able to go to production and with very minimal cost increase compared to the standard hard drive. Hans C. Mosesmann - Raymond James & Associates, Inc., Research Division: Okay. And if you don't mind, a follow-up, a quick one. What is the status of 3D NAND and the controller technology that you will have to implement to support these types of new memories?

Yes, that's a good question. On 3D NAND, is the next evolution of flash. Flash is approaching the end -- planner technology is approaching the end of life. So practically, before the end of next year or so, you cannot expect flash chips to shrink any further, and the only way to increase or level the cost of NAND flash chips is to go to the vertical directions with the 3D NANDs. So this is a huge -- there's a lot of huge -- there's a huge activity in the supply chain of the flash chips to both the 3D NAND. And some of the biggest challenge that people are facing are the long-term reliability of moving to these advanced devices. So on our side, from the controller side, primarily on the controller side, there are 2 parts. One is the general control functions, which is the same, whether they are vertical or horizontal, but there is the error correction technology that we call the LDPC technology that we have been developing, again, for the last 6, 7 years for the SSD, and that will be, okay, that will be extremely important to address these the reliability issues that we expect to encounter moving forward. So we are well-prepared for that. I guess, we can shorten, we're prepared.

The next question comes from the line of Quinn Bolton, Needham & Company. N. Quinn Bolton - Needham & Company, LLC, Research Division: Sehat, I just wanted to come back to your prepared comments on the 3.5-inch drive where you're seeing some opportunity to gain share in desktop in nearline. Are those opportunities scheduled to ramp in calendar '14 or are those longer-term kind of platform wins that may take some time to ramp?

It's early to make any comments on that.

We'll talk about that in appropriate time. We're not going to disclose particulars on those design wins yet. N. Quinn Bolton - Needham & Company, LLC, Research Division: Okay. Well, maybe I can just then just sort of stepping back your biggest competitors are talking about share gains in 2014. And if you look at next year, do you guys think you also gain share on a net basis? I mean, you're around 70%, do you think it's more stable next year?

Yes, we say we get the share gains 2014. So we feel good about it. Our technology has been -- we've been working on this area for, I have to say, for so long that we are -- in every single year, we are well ahead of the competition by at least a year or so in the signal processing segment, so we -- our solutions easily beat the competition in terms of yield and cost of our cost structure. So I don't see any changes one way or the other, except okay, we'll continue to increase the market share gain in this segment. N. Quinn Bolton - Needham & Company, LLC, Research Division: Okay, and then just as a follow-up, as you guys gained share on the mobile platforms, you pulled through the connectivity with 100% attach rate, can you share with us on that Connectivity business, is mobile now a meaningful percentage of the overall revenue or game consoles, printers, set-tops, is that still the vast majority of the Connectivity business? Brad D. Feller: Yes, so our Connectivity business is much more diversified today than it has been in the past. Obviously, as you alluded to, it was historically a lot of game consoles, printers. But with the traction we've gotten in mobile, that has become a much more meaningful piece to the Connectivity business, as well as at the high-end wireless access points, as well as connectivity for tablets, Ultrabooks, that kind of thing. So much more broad across multiple areas of connectivity, which has led to overall solid growth.

The next question comes from the line of Jim Schneider, Goldman Sachs. James Schneider - Goldman Sachs Group Inc., Research Division: Sehat, I was wondering if you could maybe -- I can maybe just dial down into one the previous lines of questioning on the wireless design wins for next year. Based on the pipeline of design wins you see right now, within the LTE segment of the market, do you currently expect your FDD solutions or your TDD solutions to be a bigger contributor for calendar '14?

The question is for the LTE. So, yes, for the LTE, clearly, we are working both TDD and FDD-LTE. So we're already starting to productions in China, and China, of course, is TDD-LTE, but the FDD-LTE will soon come after that for markets outside the China market. And we are well in -- first of all, the technology side, okay TDD-LTE is actually a superset of FDD-LTE, so for those people that do not know the difference between the 2, okay, let me -- okay, assure you that, okay, a TD-LTE is a superset of FDD-LTE. So what works in TDD will work in FDD by practically, almost by default, just a software -- a slightly different software side. So we expect, okay, as I said earlier, by the end of next year, okay, the LTE parts of our business is going to be probably, in my expectation, is will be bigger than our 3G business. James Schneider - Goldman Sachs Group Inc., Research Division: Okay, fair enough. And then, I was just wondering about whether FDD or TDD will be bigger. But maybe there is a question for Brad...

[indiscernible] James Schneider - Goldman Sachs Group Inc., Research Division: Okay, I understand.

Both market -- it was hard to say because the market is -- both markets are quite large. James Schneider - Goldman Sachs Group Inc., Research Division: Okay, that's fair. And then, Brad, on the gross margin side, obviously, you're working on a lot of cost reduction measures as you pointed out, and the mobile Wireless business is going very strongly. What's your confidence in there [ph] that you'll be able to keep gross margins at the 50% level throughout calendar '14, even if the Wireless business grows substantially? Brad D. Feller: Yes, so we remain confident that we can maintain that, Jim. As I mentioned in my prepared remarks, it's really just a temporary phenomenon that's driving us to the real low end of the target range, and it's really just the ramp up of those designs, which were significantly faster than we thought. But we have multiple efforts, both on the cost side and the pricing side that will allow us to recover. In addition, as the next generation of products come to market, more mid-next year, that will also help the margin. So we still feel very good and are confident this is a temporary dip in the margin profile.

The next question comes from the line of Glen Yeung, Citi.

This is actually Sam Omey [ph] on behalf of Glen. Just kind of a blanket question, I was wondering if you can provide any details on the health of the channel inventory, particularly in mobile and wireless, and then expectations going into year end? Brad D. Feller: Yes, I don't think there's anything unique related to it. I think for us in the mobile and wireless side, our products going into the devices and devices are getting out into the market very timely. So we're not seeing any real channel buildup of any of our products or the devices that they go into.

The next question comes from the line of John Pitzer, Credit Suisse. Ryan Carver - Crédit Suisse AG, Research Division: This is Ryan Carver in for John. Just if I go back to fiscal third quarter of '11, Marvell has done a great job of returning a lot of free cash flow in terms of share buybacks and dividends by 123%, it looks like. And even with the last couple of quarters was sort of the more depressed level of free cash flow, you guys have been at sort of a 400% plus and 180 plus percent of free cash flow. Third quarter, 64% return, looks like the lowest level in sort of a couple of years. I guess, is that just a matter of timing in terms of sort of buybacks or are you guys being more conservative given the CMU litigation overhang or maybe just kind of walk us through your thoughts on sort of the shareholder returns going forward. Brad D. Feller: Sure, no problem, Ryan. There's obviously multiple elements to it. If you take the buybacks we did plus the dividends, we did do a fair amount of our free cash flow this quarter. And we remain very committed to doing that. Obviously, the stock price ran up towards the tail end of the quarter. And when that happens, we're in the quiet period, it's difficult for us to react to that. Obviously, we are a little bit -- being a little bit more opportunistic, given the status in the CMU case, but we remain very committed to returning cash to shareholders and being very active on the buyback.

And Ryan, if you notice, for the year-to-date, we have returned in excess of our free cash flow generation, over 100%, right? So you can just be looking at this one quarter at that time. Ryan Carver - Crédit Suisse AG, Research Division: Got it, and I guess, as a follow-up question, there's been a couple questions around the profitability and the mix shift within mobile and wireless. It looks like mobile and wireless for the fiscal fourth quarter is going to be a bit weaker or a bit less as a percentage of revenue, but gross margins are going to be coming down. And, I guess, if I do some back of the envelope math, it looks like incremental gross margins for the fiscal third quarter were up quite a bit for mobile and wireless versus what they were in the second quarter. So I guess, how should we think about sort of the mix between connectivity and cellular and that impact on sort of the overall gross margin level? And, I guess, the second -- the follow up question is how should we think about R&D investments over the next couple of quarters as you guys invest in developing these new lower-cost products that are sort of -- that will hit the markets sort of middle next year. Brad D. Feller: Yes. So, Ryan, as we've talked about in the past, our gross margin is largely mix-dependent and we don't break out mobile versus connectivity. As we've talked about in the past and I mentioned on my remarks is mobile and wireless will have somewhat of a downward impact on our margins, but we have multiple initiatives underway that will recover those. And so we still feel very confident on a gross margin perspective. As I mentioned, given the controls around OpEx, we still increased our operating margins over 300 basis points this quarter, which shows you the leverage in the model. In terms of your question around R&D, we've obviously -- we committed at the start of the year to keep OpEx relatively flat. I think we've done an excellent job of adhering to that commitment, and we will continue to be very disciplined on what we invest in from an R&D perspective, making sure that we're investing in the right opportunities. And you should see next year, the growth in revenue to significantly exceed any increase in OpEx spending.

I want to add something on the comments about doing R&Ds for lower-cost products. Well, it's true that we continue to build devices to be lower cost, we also then do not lose sight of the fact that in a lot of this -- in this business, at the end of the day, technology, building advanced technology, better feature, higher performance and lower power, longer battery life and better user interface are the one they are going to -- the customers are going to demand. So vis-à-vis -- so in terms of how to achieve that, okay, we are accelerating our investment in advance architecture, as well as in the geometries that these devices will go into. So that will be some of the increase in the R&D costs that -- I meant not increase, some of the R&D that we are focusing on. So building fewer things that matters to the customers.

The next question comes from the line of Ross Seymore, Deutsche Bank. Matt Diamond - Deutsche Bank AG, Research Division: This is actually Matt Diamond on Ross' behalf. A real quick question on my end, it was floated earlier this month that there was potential for Marvell to be taken private, I'd just like to get your thoughts there.

I can only laugh for that only but I think, okay, we have investors coming in and out, okay, buying Marvell shares. So as a general policy, we always welcome, okay, any investors that believe in Marvell and, okay, understands, okay about our strategy, agree with our principles and okay, we're driving for growth for the future. So, we welcome that particular investors. Other than that, okay, we have no any -- we cannot make any comments and again, that policy is a matter of there's nothing to talk about. Matt Diamond - Deutsche Bank AG, Research Division: Understood. And, I guess, in a somewhat similar vein, any comments on the CMU litigation? Brad D. Feller: Yes. So there's not a whole lot of new news around CMU. We are still in the post-trial phase, so we're waiting for the judge in Pennsylvania to come down on her -- the post-trial motions. We're obviously, setting up the surety bond in advance to make sure that we can accelerate quickly into the appeals process once her rulings do come down.

The next question is from the line of Mike Burton, Brean Capital. Michael A. Burton - Brean Capital LLC, Research Division: Within storage, just looking ahead to next year, would you expect the HDD opportunity to be up or down, considering the console cycle and SSD adoption increasing? And then within SSD, do you continue to see higher ASPs there and what is the impact to margins? Brad D. Feller: Yes. So we expect our overall storage business to grow next year. We've talked about the opportunity on the HDD side, both in the enterprise side of things, and just in the core business. Our SSD business continues to grow very nicely. Our PCIe solutions are best-in-class in the market and we're seeing a very strong traction from an SSD side of things. There is still a the premium to an SSD device versus an HDD, and those tend to drive a higher margin profile. Michael A. Burton - Brean Capital LLC, Research Division: Okay. And then, I know it's a little early, but can you give us a sense for how we should be thinking about the April quarter this year relative to maybe, just relative to historical trends and your guidance for better than a seasonal January? Brad D. Feller: Yes, sure. So we only guide one quarter at a time, but traditionally, our Q1 is seasonally down from Q4. I don't expect that to be significantly different this year.

The next question comes from the line of Romit Shah, Nomura. Sidney Ho - Nomura Securities Co. Ltd., Research Division: This is Sidney Ho for Romit. Just on the SSD controller side, can you help us in terms of how big your SSD controller business is as part of your storage business? And I may have missed it, did you expect that business to grow in Q4? Brad D. Feller: Yes, so we don't break out the SSD portion of the storage business, but the SSD business in Q4 will likely be seasonally down a bit. Sidney Ho - Nomura Securities Co. Ltd., Research Division: And then my follow-up to that is, do you expect continued share gain next year, especially given your competitor has recently launched a new solution? And on top of that, what's your plan to [indiscernible] decline bit[ph] ? Brad D. Feller: Yes. So the question, I think, was around SSDs. So I think we will continue to grow on the SSD side of the business. We have gotten great traction with many OEMs, and we've largely been focused on the client-side of the market, which we will continue but we are also looking at opportunities on the enterprise side of the SSD market as well, and we'll look at those opportunities as well. So we think overall, the SSD business has a great growth profile for us in all aspects of the market.

I wanted to give some color on the SSD side. A lot of our competitors are making a lot of noises in the SSD as well. The track record is now is clear. Our SSD solutions are the most reliable in the market versus our competition. Our competition is going to take a lot of problems. So you might want to check it out yourself.

The next question comes from the line of Kevin Cassidy, Stifel, Nicolaus. Dean Grumlose - Stifel, Nicolaus & Co., Inc., Research Division: This is Dean Grumlose calling in for Kevin. There's a lot of discussion in recent times about the outlook for transistor costs to rise as the industry moves to denser nodes. I was wondering if you concur with this outlook and if so, what strategies you may adopt in your mobile process area?

Sure. I heard of -- actually we -- every one of us has heard about this over the last 4, 5 years about that. As we go to the next process nodes, the transistor cost increases. We actually believe this several years ago when we decided to delay the transitions in our smartphone solutions from 55 to 40, and we've made a mistake. And I don't want to repeat the same mistakes. So even though I'm hearing that transistor cost is going to go up, I have decided that the customer, the end users don't have to wait, the competition is going to create lower prices. So then transistors will always give lower prices eventually. Now, it is always true. Unfortunately, it's true that -- it's always been true, that we used to -- as we go to smaller advanced technology, the R&D cost is going up to the roof. So that part is an area that they are continue to happen and continue to accelerate. So as we go to the FinFET, the market cost is going up to the roof. However, we do not expect the cost of the silicon to be -- for transistors to be higher, it will continue to drop.

The next question comes from the line of Alex Gauna, JMP Securities.

This is Michael Wu [ph] calling for Alex. We know that Marvell has a number of design wins, within the Samsung Galaxy family. I was wondering if you can give us a little more color on what is your current exposure to Samsung and then are they now your largest customer in mobile or also that are there certain other Samsung platforms that you have won or have aspirations in? Brad D. Feller: Yes. Unfortunately, we can't get into the details of the design activity at any given customer. You need to talk to them about what designs we have and that kind of stuff. It's an area that we can't get into, unfortunately.

Okay. Fair enough. And for my follow up, Intel at Analyst Day today mentioned that it believes the PC market is stabilizing and that there might be some pent-up customer upgrades in them for PCs. I was curious, what is your visibility and your take on the secular trend happening for PC, finishing out this year and heading into calendar 2014?

Well, I think, that's an area that is kind of presumptuous for us to be the expert in this area. The only thing I can say, okay, for as long as Intel continue to build more advanced processors for the PCs, for as long as Microsoft continue to build better software for the PCs, I think that the business, okay, will be just doing fine, okay, in the long run. But again, you need to ask them for that, okay? So we're only suppliers in -- we happen to be a supplier in certain parts of the PC supply chain, let's say, like the storage area. So other than that, it's hard for us to -- hard for me to make any guess what's going to happen, especially quarter-to-quarter. Brad D. Feller: We're a couple levels removed from you as the consumer buying a PC. So obviously, if that trend happens, that will be a good thing for us.

My kids are all still buying PCs, they keep buying new PCs. But my kids are probably different than other kids.

So if there's -- do you have a follow up or I think that was your follow up, okay. Sylvia, if there's no other questions in the queue, we'll take one last question or if there's no other questions, we'll probably end. Can you -- are there any more questions left?

At this time, there are no other questions in queue at this time.

Okay, then in that case, I would like to thank everyone for their time today, and your continued interest in Marvell. We look forward to speaking with you in the coming months. Thank you, and goodbye. Brad D. Feller: All right, thank you.

Thank you.

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