Welcome to the Applied Materials earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded. I'd now like to turn the conference over to Michael Sullivan, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Kyle. Today we'll discuss the results for our third quarter, which ended on July 26. Joining me are Gary Dickerson, our President and CEO, and Bob Halliday, our Chief Financial Officer. Before we begin, let me remind you that today's call contains forward-looking statements, including Applied's current view of its industries, performance, products, share positions, profitability, and business outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements and are not guarantees of future performance. Information concerning these risks and uncertainties is contained in Applied's most recent Form 10-Q and 8-K filings with SEC. All forward-looking statements are based on management's estimates, projections, and assumptions as of August 13, 2015, and Applied assumes no obligation to update them. Today's call also includes non-GAAP adjusted financial measures. Reconciliations to GAAP measures are contained in today's earnings press release and in our reconciliation slides, which are available on the Investors page of our website at appliedmaterials.com. Now I'd like to turn the call over to Gary Dickerson. Gary E. Dickerson - President, Chief Executive Officer & Director: Thanks, Mike, and good afternoon. At our recent analyst event at SEMICON West, we outlined how Applied Materials is focused on delivering profitable growth. Overall, the company is executing well, as seen in our third quarter results, where we delivered our highest quarterly earnings in the past four years, the highest service revenue in our history, and more than $2 billion of 300-millimeter semi equipment orders, which is also a record. While progress towards our strategic goals and financial model remains on track, changes in the business environment over the past few weeks have created some near-term headwinds. Looking at the market as a whole, we now see 2015…

Thanks, Bob. To help us reach as many of you as we can, please ask just one question and no more than one brief follow-up. Kyle, let's please begin.

Your first question comes from the line of Farhan Ahmad from Credit Suisse. Your line is open. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Thanks for taking my question. Just regarding the October quarter, I wanted to probe you on the order trends. It seems that the revenues are declining despite very strong orders that you had in the July quarter, so I'm thinking there is probably a 25%-ish decline in the October quarter. This is the orders, so I just wanted to probe you. What segments are you seeing the decline? And considering that you have very strong orders in NAND, I just wanted to understand how sustainable are the order trends. Do you think that they are peaking in July, or do you think just because we are now in the 3D era, we will just start to see much higher order run rate in NAND? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Sure, let me take a shot at it and Gary can join in. We had really strong orders in Q3, so you might say shouldn't your revenues be a little stronger in Q4? As you go look at our press release we put out today, we get a fair amount of orders in Japan, in fact. And in Japan, we recognize revenue usually a quarter after we ship. So some of the orders we booked this quarter will trail into the next several quarters in terms of shipments and revenue recognition. So that's a little bit of a disconnect between our strong orders this quarter and the revenues, which are a little less robust next quarter but give you higher than typical backlog from this quarter that we'll sustain into Q1. The second thing in terms of what's our…

Your next question comes from the line of Jim Covello. James V. Covello - Goldman Sachs & Co.: Thanks, guys, thanks, good afternoon. On the foundry issues, obviously I think the questions from the market are going to be are the foundry issues cyclical or secular, and obviously you addressed a little bit of that. And then the other question I think clients will have is how do we know it's not share loss because I think some other companies have reported and they haven't seen these declines to this extent. Maybe it's a calendar issue where you guys are a month later and you've seen it, but obviously those will be the questions. So could you help us on the secular versus cyclical versus the share loss question that I'm sure will come up tomorrow? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Sure. If you go look at secular versus cyclical, I think some of it's timing and some of it other people have talked about it. You see our customers talking about it. We're getting higher tool utilization. Samsung talked about it earlier in the year. TSMC has started to talk about that, higher tool utilization, more tool reuse. So that's across – and even inventory in the channel, you see some data on that. So I think what you have right now is a problem in fuller utilization, more efficient utilization of tools. Now I think they're getting through that. You might argue could we have seen some of this? Maybe, higher tool utilization, greater reuse of tools, it's hard for us to measure it because it factors in with yield and all that stuff, which we have no insight to. So I think there's a good part of this that is a…

Your next question comes from the line of C.J. Muse from Evercore ISI. Your line is open.

Hi, this is Ada calling in for C.J. Could you guys talk a little bit about how the economics for AMAT changed in memory in 2016 given that more of the DRAM CapEx will be spent on shrinks as opposed to new wafer starts, and in 3D NAND on new wafers and conversions as opposed to largely greenfield in 2015? Robert J. Halliday - Chief Financial Officer & Senior Vice President: What was your point? Say it again about 3D. What did you say about 3D?

In 3D, next year is going to be more new wafers and conversions and this year is more greenfield. What does that do to the economics for you guys? Gary E. Dickerson - President, Chief Executive Officer & Director: I think on 3D NAND, I'll start and then Bob can join in. Thanks for the question. So 3D NAND, as we have talked about before, is really more materials-enabled than litho-enabled scaling. So if you look at the CapEx that is necessary for them to ramp those devices, it's very heavily weighted toward CVD, etch. Also, we have epi there for the first time in memory where we have a very strong position. So as the customers are ramping those 3D NAND factories, the areas that are growing are the areas where we are gaining share. That's part of what Bob talked about earlier, where he said we're gaining several points of share in 3D NAND. And if we look at the products that we're introducing, the Sym3 Etch, the record CVD orders, again, a number of our products are very well positioned as the customers ramp 3D NAND spending. So we believe that 3D NAND is at about 15% of the total NAND capacity. We believe that that is going to continue to ramp in 2016 as a percentage of total spending, and we're in a very, very, very strong position there. I don't know, Bob, if you want to add anything. Robert J. Halliday - Chief Financial Officer & Senior Vice President: I think that's true. I think the big inflection that's going on in the industry right now is 3D NAND, and it's going to go on for years. There are about 1.3 billion wafers out there. There's about 150 million by the end of this year that are done. I think that's a bigger inflection than DRAM. Within DRAM, we're a little bit more bullish than somebody like Dataquest. We see that they didn't really add that much capacity this year. If you look at die sizes, they're bigger, if you look at more process steps, so they didn't really add that much capacity this year. So we're a little bit more bullish than some of the outside folks on total DRAM spending next year. And then as we mentioned earlier, our position in DRAM, in the last couple years we gained four points.

Great, thank you. And can you maybe just dive a little bit deeper into gross margin and how much of the headwind is coming from display versus how much is coming from SSG? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Display is a good size gross margin headwind now. It could be up to a point for the company. And what's going on there is historically for many years, 80% and even a few years ago 90% of our business in display was for TVs, equipment for making displays for TVs. We project that next year over 50% will be for small screens, so your cell phone and stuff. So the good news is, if you go back a few years ago, if TVs had turned down like this, we'd be losing a lot of money in display because there would be no revenues. In fact, we think revenues will be pretty strong next year in display because over 50% of our business will be small screen sizes and that we are growing the TAM there. This is the third year in a row we have grown display revenues, but next year with the TV downturn we're still pretty damn healthy. So the issue is gross margins there. So if you look at that, we're penetrating some new products in some new markets, and some of our new competition is Japanese yen based. So the display thing is bad probably through the first couple quarters of fiscal 2016, but it gets a little better each quarter and then we pick it up, and that's when our mix gets more normal. We start to get some TV business back and the product mix changes a little bit. It's about a point now. The other piece is SSG, where the big mix delta for us is foundry versus memory, and that's really just indicative of the tool mix. And the tool mix is stronger for us right now, things like etch and memory, whereas in foundry we're a little stronger in places like epi, PVD, inspection.

Great, thank you so much. Robert J. Halliday - Chief Financial Officer & Senior Vice President: You're welcome.

Your next question comes from the line of Krish Sankar from Bank of America. Your line is open.

Hi, thanks for taking my question, two of them. First one, Bob, to follow up on the gross margin side, so if your January revenues might come up because of the Japanese revenue recognition, should we assume gross margins will still be under pressure given the fact that display is going to continue, and so would SSG pressures? In other words, would revenues improve in January sequentially but margins be under pressure? And then I also had a follow-up. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Sure, so just to give you the economic model of Applied Materials, in some industries if volumes go up, gross margins naturally benefit because they get absorption issues in their factories. A company like Applied Materials and our peers, predominantly our product cost is materials, stuff we buy, so you don't get this big absorption boost or downtick either with volume. So our gross margins are predominantly a function of mix, mix between customers, mix between products. So I don't have a clear view on the Q1 yet. But given I've got pretty good backlog right now, I'm concerned that the mix issues we're seeing in Q4 will stay into Q1 and we'll have the same type of challenges in Q1. Now if you say, Bob, what have you been saying all along? I think last quarter and even maybe at Analyst Day, I was somewhat concerned about exactly this issue, frankly, in fiscal Q1 and Q2, the heavy volume of etch and the display mix with small screen sizes. What's been a little bit different for us is Q4 I thought would be a little bit heavier foundry mix than it turned out to be.

Got it, got it. That's very helpful. And then the follow-up is you guys had almost just shy of $800 million in NAND bookings in July. Is there any way to parse it to say how much of that was 3D NAND? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Yes, there is. NAND ramp is going up significantly towards 3D each quarter. I'd say – let me see if I have it here. We're looking for the data, but my guess is that in the quarter we just ended, the great majority of it was 3D.

Got it. Thank you, guys.

Your next question comes from the line of Timothy Arcuri from Cowen & Company. Your line is open. Timothy M. Arcuri - Cowen & Co. LLC: Thanks a lot. Bob, I guess my first question is again on gross margin. It really isn't different than it was a few years ago at this revenue level. And I certainly get the new product issue and the mix items and the flat panel issues. But people are going to say – they're going to say look, they're just buying market share or they're gaining unprofitable low-end share. So I just wanted to give you a chance to say hey, that's not what's actually happening here because that's what people are going to say. And I guess maybe just talk about where gross margin would be a year from today at this revenue level once you normalize all these factors out. Then I had a follow-up, thanks. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Yes, thanks for the question, Tim, a couple of things. I had tasked our internal people with the same question to make sure it's not happening, so let me see if I can go through the details because I've been through the details. As I was just asked, one full point of it in the short term is display. In display, you're not hearing that from display competitors of us. It's mostly mix. You can see we're selling a lot more into the small screen sizes, a little bit more in PVD, for instance, than CVD. So it's definitely mix in there. Does it make it a little worse that our competitors are Japanese? Maybe, but mix is the biggest single delta in there. The second issue is semi, where you hear more contrarian views…

Your next question comes from the line of Romit Shah from Nomura. Your line is open.

Yes, thank you. You guys have mentioned that WFE this year, your expectation now is that it's flat, but the risk is to the downside, and I wonder. How does the weakness this year change your view on spending for 2016? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I'll take a shot at that; Gary can jump in. We think some of the weakness we're seeing towards the end of this year is this tool reuse, increasing yields, and absorption of the capacity they have, as they go into foundries in particular because memory is pretty strong. DRAM was strong at the beginning of the year. We're more bullish than your average outside guy for next year DRAM. In NAND, I don't think anyone is too pessimistic right now. We're optimistic, actually. So it's a discussion on foundry spending and timing. So if you go look at it, we believe that in listening to our customers, 10-nanometer is going to be a pretty big spend year for them next year. So the rough mathematics is that if you look node to node, so the 32-nanometer to 28-nanometer versus 2016 14-nanometer versus 10-nanometer, wafer starts might be down a little bit, maybe 10% per launch, but capital intensity per node is up about 20%, so the volume versus capital intensity is still not bad. I think the problem we have right now is we get this reuse. Now the other thing you have to go look at is all the macro stuff, which is beyond my pay grade. What's going to happen in China in phones and the next Apple phone? I don't know that stuff. But in a reasonable demand environment, the increasing capital intensity and the importance of 10-nanometer to our customers and the fact they're absorbing the tools at this point means it's probably okay.

If the PC and the smartphone TAMs remain under some pressure, Gary, are you more inclined to pursue growth via acquisitions? Gary E. Dickerson - President, Chief Executive Officer & Director: I think that from a top-level standpoint, we are improving our position in memory, so that's the good news. If you look at the point, the share gain that we have in both DRAM and flash, that's helping us offset some of the near-term weakness in foundry. So for us to hit the financial model, you have to believe that the mix comes back to some normal relationship between the foundry and the memory, and we think that's going to happen. But certainly, if you look at our position in epi, PVD, implant, thermal products, CMP, you have to have a more normal mix than we've seen over the last few years for that part of our product portfolio to work. So mix certainly plays a big role in the overall financials.

So I just want to be clear on this point. Is it fair to say that M&A is no longer part of the company's growth strategy? Gary E. Dickerson - President, Chief Executive Officer & Director: So M&A, basically what we've said is there are three things that drive our M&A strategy. Number one, can we get a good ROI? Number two, is it an opportunity for a leadership business? Because in most areas, the number one guy makes a lot of money, number two breaks even, everybody else loses money. And then the third area for us is synergy with our core businesses. So good ROI, opportunity for a leadership business, and synergy with the rest of our products. We look across semi today; there aren't many of those types of opportunities. So now around our core competencies in materials engineering, those are areas that we will continue to look at. But today, I would say there aren't that many attractive opportunities that we see that fit those three criteria. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Romit, I think Gary is – that's the essence of the feedback. I'll give you a little bit more color. One is the TEL deal had the big tax leverage. So that was extra benefit, and that made everything easier, but we still have some tax leverage that if we were ever interested in a foreign company and use our foreign cash, you get about a 50% discount if you think about it. So I'm not saying we're doing it. I'm just saying that's another consideration, all the financial and tax leverage that's sometimes there.

Okay, helpful. Thank you very much.

Your next question comes from the line of Harlan Sur from JPMorgan. Your line is open.

Hi, thanks for taking my question. At Analyst Day at SEMICON, you guys articulated a view of $2.2 billion of OpEx in fiscal year 2016. I think July quarter run rate was about $2.3 billion. The October quarter guidance takes you guys down to that $2.2 billion annualized. So given the weaker fundamental environment, should we expect OpEx to trend even lower beyond the October quarter, and you do guys have a new view on OpEx for fiscal year 2016? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I'll give you some color without being too specific. The model we put up in July of 2013 was at $2.2 billion – $2.8 billion actually in fiscal 2016. We trended up over that a little bit in the last year or so, so that our run rate last quarter was $579 million. So it was about $2.3 billion or something like that. So we were a little bit above that because we had one more year of inflation. And what we've done is we've – and part of the reason we're a little bit above those companies, one, we were tied up in the merger. There were certain things we couldn't address, and we have a lot of products coming out of the pipeline right now. But we've engaged more, a brighter microscope on OpEx, so next quarter we're at $555 million. And we're working to get down our OpEx back to the original number we guided for 2016, which was the $2.2 billion – $2.8 billion. We said we'd have a number in 2018 of $2.4 billion, so we're optimistic we'll hit that. And we've got renewed vigor to be opportunistic on OpEx.

Okay, got it. And then on the display side, a lot of discussion on the gross margin front. But at the operating margin level, your display margins declined by over 700 basis points. Is the operating margin pressure more the revenue decline? Is it the yen? Is it the mix? And then on your commentary on margins being bad for the next few quarters in display, do you expect operating margins here to trend in this sub-20% range going forward? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I think the next couple quarters through Q2 are a little challenging because we've got so much of this new product, new market stuff. But I think longer term, those guys are going to do well. It's unprecedented for us to have over 50% of our revenues in display next year. The good news is, think about it. If you didn't have that, you'd have another $400 million revenue hole or whatever. So it's not where we want to be. It will get better. But for the next couple quarters, it's going to be around there. Gary E. Dickerson - President, Chief Executive Officer & Director: I think as Bob said, the biggest headwind there for us is mix of mobility versus TV. And if you look at the normal mix that we've seen over the last few years, the operating profit there has been continuing to improve. The revenue is up. And we're in this situation where we believe it will come back to a more normal mix. And actually, we're bullish about the operating profit and revenue increasing as we've seen over the last few years. But this near-term mix is certainly working against us.

Okay, thanks a lot.

Your next question comes from the line of Stephen Chin from UBS. Your line is open.

Thank you. Hi, Bob and Gary, just another follow-up question on NAND. I just wanted to know if you could share your early view on 3D NAND wafer builds for next year. I just want to get a sense how comfortable you were that this year is not the peak year for 3D NAND spend for Applied. Robert J. Halliday - Chief Financial Officer & Senior Vice President: I'll take a shot at it. We believe the installed capacity exit 2014 was about 60,000 – 65,000 wafer starts per month. We think this year exit is about 150,000 wafer starts per month. We think exit 2016 is about 300,000 wafer starts per month, so we think it's doubling every year. This year they had about 85,000 – 90,000 wafer starts per month. The year before they were 40,000 wafer starts per month. So we're going like 40,000 wafer starts per month, 90,000 wafer starts per month, and next year is maybe 150,000 wafer starts per month. It's going up.

Okay, thanks a lot. Robert J. Halliday - Chief Financial Officer & Senior Vice President: A lot of that booking stuff we got is next year NAND, 3D NAND.

Great, that helps. Thanks, Bob. My follow-up question was on foundry being the swing factor next year. I was just wondering what you think happens when foundry 10-nanometer pilot orders are eventually placed. Do you think it's a steady ramp with this foundry 10-nanometer, or could it be a hockey stick type of spend given some of the complexity of 10-nanometer? Thanks. Robert J. Halliday - Chief Financial Officer & Senior Vice President: I'll give you my best wrong answer. Typically what happens is that customers will buy X amount of capacity pretty early on so they have it, and then they'll see how well it yields and demand for it. So it's not unusual that they might do – committed to 30,000 wafer starts say roughly. And then we get the vigorish or the extras if it's yielding well, and then a lot of tape-outs and extra sales. So I think you've got a baseline in the next year that you can count on. And getting to the higher numbers, which we all believe in, is how does 10-nanometer yield, how many customers buy it, what's the tape-outs, all that stuff. So you've got a baseline that you're probably okay on, and then the rest we don't know yet.

Great, thanks for sharing the color, Bob. Robert J. Halliday - Chief Financial Officer & Senior Vice President: You're welcome.

Your next question comes from the line Sundeep Bajikar from Jefferies. Your line is open.

Hi, thanks for taking my question, a question on foundry again. Can we attribute the majority of the foundry weakness you described primarily to one of your large customer's public commentary about CapEx reduction and tool reuse from 20-nanometer to 16-nanometer, or are you describing much more broad-based weakness across multiple customers here? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I think the general notion is that customers have improved yields, that customers are getting more effective tool utilization this year versus the last year or two where they bought a little heavier, because some of them shared the same concerns about ramping FinFETs and ramping for big customers. Those are common, more efficient utilization yield from a number of customers. The cancellations we had in Q3 out of our backlog was one specific customer. The softness we see in our Q4 forecast versus what we expect is a couple customers.

Thanks so much, that's helpful. And just as a follow-up on the 10-nanometer opportunity, how much of the size of the opportunity growth you're looking at would be driven by capacity expansion compared to a higher process complexity next year? Robert J. Halliday - Chief Financial Officer & Senior Vice President: On 3D NAND?

No, 10-nanometer foundry. Robert J. Halliday - Chief Financial Officer & Senior Vice President: 10-nanometer foundry, we think that from 2016 – 2014 when you go to TAM, it's about 20% to 30%. It's higher process complexity, more layers, stuff like that, so the back end they're going to redo at 10-nanometer, and there are other things they're going to do. So it's 20% to 30% for the same number of wafer starts capital intensity, so that's complexity. Then you've got to get the volume stuff, which I talked about earlier. And we think the reuse thing has been largely wrung out of the system we hope this year. And then finally, the last thing you've got to put in your polynomial equation is what's the end user consumption of those devices.

Great, very helpful. Thank you. Robert J. Halliday - Chief Financial Officer & Senior Vice President: You're welcome.

Your next question comes from the line of Sidney Ho from Deutsche Bank. Your line is open.

Hi thanks for taking my questions. I guess similar to a question asked earlier but looking a little longer term, if you look at the demand side, PC is declining year over year. Smartphones are peaking out, and now Moore's Law seems to be pushing out, which I'm curious about your view there. How should we think about the WFE spending growth going forward over the next few years rather than just next year? And is it just the spending being spread over a longer period of time? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I'll take a shot at it again. Let's segment the market. WFE – 3D NAND we're pretty bullish on actually because this is a technology transition which is more akin to a wafer size transition because when they have to switch from 2D to 3D for both device performance. And you can't keep shrinking; electrons in a cell, you can't get any smaller, and so you can't effectively. So they're going to go to 3D. It's like 300-millimeter, you knew customers were going to go; it's just timing. So they waited a year or two, but it's happening. You can see the numbers going up rapidly, and everybody says it. So I think if anything, you've got a solid baseline of predictable spending that's pretty healthy in 3D NAND for a number of years. On DRAM, we're a little bit more optimistic than some of our other folks because the things that are helping you there is the number of layers, capital intensity is picking up for greenfield, number one. Number two, the die sizes on average are getting bigger, particularly on mobile dies. And DRAM bit growth is pretty good, so I think DRAM is okay. And the other thing…

Okay. My follow-up question is a little more near term. You talk about gaining four points of share in DRAM, which is great. And you also mentioned you expect DRAM orders will come to be lower in the second half versus first half, which we are seeing. What are your thoughts right now as it relates to when DRAM orders will start to grow again, especially in light of an oversupply situation this year? And related to that, do you see any downside risk for DRAM CapEx this year? Robert J. Halliday - Chief Financial Officer & Senior Vice President: DRAM was more heavily weighted to the first half. I've got a fancy PowerPoint around here that shows me that. And so if you look at DRAM this year, it was like 55:45 in the calendar year for us, so it was more heavily weighted to the first half. We think DRAM next year we're not as pessimistic as others. We think it's probably down but not down a lot. Maybe it's down 10%. Who the hell knows, but that's where I'm leaning. In terms of timing next year, I have a little less visibility on that.

Great, thank you.

You your next question comes from the line of Weston Twigg from Pacific Crest. Your line is open.

Hi, thanks for taking my question. Just first, global services op margin trended down a bit despite record revenue. I'm just wondering if you could help us understand that discrepancy. Robert J. Halliday - Chief Financial Officer & Senior Vice President: I think it was the mix of what they sold. In other words, if you go look at those guys, they have 200-millimeter tools, spares, services. And as I remember it, the mix was a little bit different between those. Let me see if I can look at this. Yes, I think it was a mix change within their revenues more than anything else. Gary E. Dickerson - President, Chief Executive Officer & Director: I think long term...

Okay. And then... Gary E. Dickerson - President, Chief Executive Officer & Director: Just one other thing on that one. Longer term, we've seen tremendous growth in terms of revenue in the service business. We think that's sustainable, that the growth is sustainable. And we think margin growth will also improve there as we're bringing more valuable services and then focused on the key inflections for our customers.

Okay, that's helpful. And then just on the margin side, this would be gross margin. You mentioned that you need to get cost out of products, particularly in etch, when you were answering a question earlier. Can you just give us an idea of what some of the levers you actually have for that would be? Robert J. Halliday - Chief Financial Officer & Senior Vice President: It's mostly material costs. There are also some opportunities in installation, warranty, and burden, overhead cost. So if you go look it with a new tool, I'll do the last one first. Inflation warranty cost tends to run higher, so we can reduce that, number one. The second thing is the chamber, which we've ramped really aggressively. Even at Analyst Day, we said we were going from a year ago five chambers a quarter or something to hundreds of chambers. And we said by the end of this calendar year at Analyst Day we'd be to 300 chambers. I don't know if you picked up on the script. I think Gary said by the end of fiscal Q1, which is one month later, January, it was 450 chambers or something like that. So that chamber is ramping super aggressively. So that's an opportunity to reduce costs. And many times you have six chambers on a tool, so there are six of those. So we'll work on that. And the other thing, even the wafer handling equipment is probably an opportunity with the platform there. So it's installation, warranty, it's burden and absorption with volume, which some of it will come relatively naturally, and then it's material cost reduction around both the chamber and the handling systems. And then also the other thing is configuration management. Can we have a little less heavily configured tools?

Okay. And just along those lines, have you run into any unexpected issues with installations or reliability as you've been installing these chambers that might be weighing down the gross margin? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Not too bad, it's getting better. Gary E. Dickerson - President, Chief Executive Officer & Director: I think if anything, the ramp is way more aggressive than we've seen in Applied for any product in the past, and so that's the good news. It makes it harder for us to drive these improvements and then have them in the bottom line as quickly. But the good news is the product is ramping, if anything, much, much faster than we had anticipated. Robert J. Halliday - Chief Financial Officer & Senior Vice President: The other thing that's tactical in nature is to get some of the material cost through the P&L, you've got to ship the tool and revenue it. So any inventory you have, in order to cost reduce it, you have to ship that inventory first.

All right, thank you very much.

Thanks, Wes. And, Kyle, we've got time for two more questions, please.

Your next question comes from the line of Tom Diffely from D.A. Davidson. Your line is open. Thomas Robert Diffely - D.A. Davidson & Co.: Yes, good afternoon. So I haven't heard you mention advanced packaging recently. Is that still a focus to the company? And if so what's your outlook there? Gary E. Dickerson - President, Chief Executive Officer & Director: We definitely have a focus on packaging. We have a pretty good position with our plating business. MDP is also a strong one for us. We don't see that being – as you look at real needle-movers on EPS, it's not a really big opportunity for us in the next year. Longer term we look at it as a growth opportunity. But relative to the other things that we're talking about, it's not in the same category. Thomas Robert Diffely - D.A. Davidson & Co.: Okay, that's helpful. And then back on the bookings, you said that the foundries got weaker through the quarter. Is there a risk to any of the bookings you had for foundries earlier in the quarter of debooking over the next quarter or two? Robert J. Halliday - Chief Financial Officer & Senior Vice President: There's some risk, but a lot of that stuff in those type of customers is book-and-ship. The stuff in other customers are more backlog-weighted. Thomas Robert Diffely - D.A. Davidson & Co.: Okay, thank you. Robert J. Halliday - Chief Financial Officer & Senior Vice President: You're welcome.

Your next question comes from the line of Patrick Ho from Stifel, Nicolaus. Your line is open. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Thank you very much. Maybe as a follow-up to some of the foundry questions you've answered today, I understand with the push-outs of some of the 16-nanometer/14-nanometer capacity related to end-user demand and the higher tools utilization, is there any change in their (1:07:33) given the better tool utilization (1:07:38)? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Patrick, you were fading out on us. I think you said is there any change in their what? Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Their 10-nanometer plans, given the better tool utilization and yields at 16-nanometer and 14-nanometer? Robert J. Halliday - Chief Financial Officer & Senior Vice President: No, I don't think so. 10-nanometer, they're still pushing aggressively. 10-nanometer, they'll probably change the back end. That will contribute to higher capital intensity. The tool utilization now, some of that high tool utilization was getting better yields on their first FinFET because that was a tricky one. The second one is not quite as worrisome. And then the third thing is some of that higher tool reuse is a natural progression from 20-nanometer, to 16-nanometer, or 20-nanometer to 14-nanometer. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Okay, great. And, Bob, maybe as a specific question on the operating model for you, I think I've known you long enough or well enough that the gross margin is a big focus for you guys, and you're not just going to sit idly by to let the product mix shift. Are there specific things you can do, particularly on the flat panel display side, given you mentioned the smaller mobile display…

All right, Patrick, thank you for your question. And we'd like to thank everyone for joining us this afternoon. A replay of the call will be available on our website beginning at 5:00 PM Pacific Time today. Thank you for your continued interest in Applied Materials.

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