Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Monolithic Power Systems Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question and answer session and instructions will be follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to turn the floor over to Meera Rao. Ma’am, the floor is yours.

Thank you. Good afternoon and welcome to the Third Quarter 2013 Monolithic Power Systems Conference Call. Michael Hsing, CEO and Founder of MPS is with me on today’s call. In the course of today’s conference call, we will make forward-looking statements and projections that involve risk and uncertainty, which could cause results to differ materially from management’s current views and expectations. Risks, uncertainties and other factors that could cause actual results to differ are identified in the Safe Harbor statements contained in the Q3 earnings release and in our SEC filings, including our Form 10-K filed on March 5, 2013 and our Form 10-Q filed August 6, 2013, which is accessible through our website, www.monolithicpower.com. MPS assumes no obligation to update the information provided on today’s call. We will be discussing operating expense, operating margin, net income and earnings on both a GAAP and a non-GAAP basis. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our earnings release, which we have filed with the SEC. I would refer investors to the first, second and third quarter releases of 2012 and 2013, as well as to the reconciling tables that are posted on our website. I’d also like to remind you that today’s conference call is being webcast live over the internet and will be available for replay on our website for one year, along with the earnings release filed with the SEC earlier today. Let’s start with the highlights. MPS delivers again with another outstanding quarter. All key financial metrics revenue, gross margin, non-GAAP operating income and, in…

Thank you, ma’am. (Operator Instructions) And our first question in queue will come from the line of Patrick Wang with Evercore. Please go ahead, your line is open.

Hey, thanks so much. Congrats on the quarter end guide. And I think the 16% year-on-year organic growth you just posted is pretty impressive. On that note for my first question, analog figures have been fairly disappointing so far. I think the world seems to be slowing and you are typically down quite a bit seasonally in the fourth quarter. Can you talk about why you are not seeing such a huge decline this quarter?

As we said last quarter, we have several new product that are growing and we expect that revenue growth to offset some of seasonality, and that’s what you are seeing playing out in our Q4 guide.

Yes, Patrick. We -- Meera has spend a quite a bit amount of time in her script to talk about but in the last three years we built a really good fundamental of the company and we focused on the multiple growth market such as the cloud computing and also less growth in industrial and automotive side. But all of these market segments are new to MPS; it’s just for us the opportunity is enormous. We are executing our plan and we deliver the product and introduce to the market in the last 12 to 18 months and then we start to see the result. So this is one of the reasons we don’t see Q4 is down by – traditionally from a 5% to 10% and now we are almost as good as Q3.

Yes, great. Is there anything in particular you can highlight for us here that’s that you are seeing traction in the fourth quarter that you were working on in the past?

Yes, I think it's a pretty much evenly spread and Meera can give you some details. Meera?

So most of the places where we are seeing the softness in Q4 has been in consumer and consumer like markets out there. What’s happening for us is we are also seeing some areas where because we have design wins ramping we are seeing them being on par with the prior quarter and other markets where we are seeing some growth and you combine all this together, you’re seeing the guide that we just shared with you and the Street.

Okay. So, I guess fair to say your booking has been pretty good into fourth quarter.

We are happy with the bookings.

Yes, okay, great. And then just for a follow-up here. When we look into the first half of next year and I know you can’t talk about timing or you can’t give us too much detail, but can you walk us through some of the key growth drivers that you think are going to show up then that are going to help you continue to outperform the analog market? Thanks.

Well again in the industrial portions and -- well the white goods were classified in the industrial side. And Meera talk about it in the script and then we’ll have a two year in a next year especially start to ramp in the first half of 2004. Other ones in (inaudible) delayed, the Intel delayed the introductions and that we have a lot of design win activities and we thought to late first half or second half of the next year. And we have so many other project and we’re making about the lighting and also the battery chargers and these are all moving up -- by percentage evenly. So, this is really what we want. We want to grow evenly and consistently.

I would just add to that list. We also expect to see growth in SSD, we expect to see growth in various industrial markets including automotive. We expect to do well in networking and telecom would also be an area where we will see growth. So, the key for us is that we have multiple areas where we see growth against the backdrop of whatever the macro economic conditions are.

Thank you, sir. Our next phone question will come from Tore Svanberg with Stifel. Please go ahead your line is open.

Hi, this is Evan Yewen Wang for Tore Svanberg. Thank you for taking my question. I just like to dwell into telecom or your communications end market a little bit. This quarter it didn’t – it grew slightly but I was wondering if you can talk about the opportunity that you see there and maybe the timing where the growth might resume?

In a telecom market, we see some -- the set-top box has been changed to a newer models. And so, the revenues stays about the same, I recon are little bit lower but the other newer business that start to rent but it’s not big enough to offset that areas the way before.

I see. I'd like to – I was also wondering about your new product the Power Modules, I think you didn’t touch on that quite as much this time around. I was wondering if you can give us some sense of how well that’s doing in ramping and whether it’s reaching new applications market.

Yes. We continue to introduce the modules and we want to complete it the product family which is a really a catalogue product. And, so then -- and then particularly in the telecoms with them the modules being shipped and also we have a multiple design wins and we expect the revenues come in in the next year.

Great. And I just I want to maybe change gear and ask you quickly about given that your growth, your accelerated growth and are you seeing that your current channels are adequate for that growth to handle that growth? And also if you can touch on whether you made any key new hires this past quarter?

We were expanding our channels in the new age of selling is the e-commerce and which will update our website wherein internally will establish our group for e-commerce and also get to particularly its aimed for our module business. And through e-commerce I can -- we can reach to a thousands of a millions of a smaller customers. And other ones, I mean, other business segments, our other channels sales channels will all reach to -- will be significant players now. And the large distributors and they start to looking at us, so start to negotiating with MPS. So, these are our still in development. We’ll expect to complete some agreement or contract in the next few months.

Thank you, sir. Our next phone question will come from the line of Ross Seymore with Deutsche Bank. Please go ahead. Your line is now open.

Hey, good afternoon guys. I’m sorry, this is actually Matt Diamond on Ross’s behalf here. I want to talk about the gross margin dynamic. I know it was highlighted last quarter that you have some better gross margin consumer products and I would imagine that contributed to the results here but what factor if any did industrial play into that? I’m trying to figure out if the gross margin came largely as a results of the better mix within consumer or the better mix of industrial versus consumer?

As industrial revenue grows, clearly that’s one of our better gross margin segments and that helps. But overall I think the story for us in Q3 is that our product mix has gotten better even in the various segments. Clearly, industrial is one of them.

Okay. And I want to ask Patrick's question, one of Patrick's questions just a little bit differently. Could you point out the linearity of bookings within the quarter? Is there anytime that really stood out when they hit an inflection point or weaken somewhat? If you could get just sets more line on that would be greatly appreciated.

Sure. In terms of timeline, I usually look at both bookings as well as resales in the channel. And resales in the channel all the way through the end of September look good. In terms of bookings, looking back the last two weeks in September was -- they were pretty good, maybe were a tad bit lighter in some areas like particularly the consumer and the consumer related market. And that’s something that we are seeing continue through right now in October.

Thank you, sir. Our next questioner in the queue comes from the line of Vernon Essi with Needham and Company. Please go ahead. Your line is open.

Thank you very much. Wondering if you could give us a little guidance on, Meera, on the OpEx. I mean, rarely does it tick down I think sequentially in the fourth quarter. And I just was wondering how we should look about which segments going to or which portion is going to be down more pronounced either in R&D and SG&A in the fourth quarter?

Our plan -- as we have done in the past is always to control our cost. And I’d expect that these you would see these cost reductions in both in R&D as well as SG&A.

So evenly spread between the two. And wanted to go back to a comment you made earlier on the industrial side, had a nice sequential growth there. And it sounds like you’re putting white goods into that mix. And I just was wondering if that was historically how it’s been handled, I assume that is and how do you --

Yes.

Okay, how do you define white goods necessarily? Is it more -- because I mean some -- most companies are lumping that in the consumer side but is it -- should the company you’re shipping it to is at the voltage or the power density of the product itself? I mean how is that definition taking place? And then by the way, the other question is that -- was that were the growth was sequentially or was it in a lot different areas.

There has been a lot of -- it was in different areas. Security has been one of our big areas, power adaptors, some of the power tools, those are all the areas where we saw our growth.

Okay. And I assume that power tools that that’s a battery related products?

No, it’s not.

It’s not. Okay.

Vern, we always have classified that same way. And white goods I mean we can -- what the components that we’re selling to is IC, is a high voltage IC. And your refrigerators and your wash machine, dish washers and some of them even the coffee makers and I can -- they need AC to DC power supply and also DC to DC panel and some of the small white goods have a LCD panels or with a LED panels and a LCD display which they need a power tool and also the backlight, both of that. These are the areas that we shift product to. And we have other industrial area of growth and these are more the plant controlled in power stations or as well within the large production plant. And they need a 60 volts power supply lines and offer their communications. That’s where our point grows, really shine in that machine, in that area.

Okay. Thanks for helping out on that. And then I just -- one follow up question here. Just going back to inventory and I think there was some prior question along those lines. But Meera, you had the inventory levels running in sort of that’s 110 to 130 day range for the last year or so. Is this going to be kind of the new norm for you and is there -- it looks like you’ve got a newer distribution sort of partner set up that's stocking a lot of components. Is that what’s happening here or can you just guide sort of that list you’ve had over the last I guess five or six quarters?

No, we’ve had for two reasons. One, as we have thought this newer products has got these products designed in in some of the very large companies and they look to us to be able to support any upside that they may have and, so they are holding strategic inventories in those instances. Because, as you know, these are the first one or two products we are designed in but we see an opportunity to sell a lot more products to these customers and we want them to be very happy with us both on the product front and as a reliable supplier. So, second thing is we have trained the channels over the last few quarters to be fairly lean and let us hold the rest of the inventory because we have more flexibility and able to do that. And I want to repeat again what I said on the script that we have over the last five quarters we have held inventory in the channel at the same levels. And the reason we could do that is because we are holding the inventory.

No, I realize you’re holding the inventory, I was just wondering if you had new stocking partners but you answered the question I mean you’ve got it obviously with larger end customers.

Yes, yes.

Thank you very much, sir. (Operator Instructions) And it looks like our next questioner in queue will come from the line of Amit Chanda with Wells Fargo. Please go ahead. Your line is open.

Hi. Hi, Meera. Could you comment maybe on your design win activity in Shark Bay?

We have multiple design wins in Shark Bay. And we do have some of our revenue that you’re seeing in storage and computing segment is from Shark Bay. So, for us as you know this is just incremental revenue that we get. And for us it’s a new market, the incremental revenue but this is a way for us to monetize technology that we actually developed for the server market.

And that’s ramping in line with your expectation?

Yes.

Okay. Okay, great. And then, Meera, can you comment maybe on uses of cash and after you finish your share repurchase program whether you plan to entertain paying out a dividend?

Sure. I mean, we’ve discussed this before. We planned to have a balanced capital allocation program. We’ve already done the first phase of it or we've initiated the first phase of it which is $100 million buyback program. We’ve also having a lot of discussions with the board about initiating a dividend program. And the third a part of it is, is to acquire small technology companies out there and we are actively in the market looking at companies.

Thank you, sir. Our next question will come from the line of Anil Doradla with William Blair. Please go ahead. Your line is open.

Hey, guys congrats on the quarter. Meera, couple of questions. Can you talk a little bit about the slope of the gaming revenue? Was that weighted more towards Q3 or Q4? And I had a follow up.

Our gaming revenue started in Q3. So, Q3, Q4 are going to need a big gaming quarters.

So, does that mean it’s going to moderate in Q1 or if in this maintenance momentum beyond that?

I think that we don’t -- we really don’t know what that of the gaming market pattern or what the seasonality there. And we design it in the -- the good news here is we being in a several loss not many designs gaming consoles, we are mostly in all of them now. And we have a several products and they all start to ramp in the third and fourth quarter of this year. And Q1 I think that we’ll see more product that’s shipping in the market segments. We believe that Q1 still will be a growth quarter.

Okay, great. And on the TV side today Silicon (inaudible) also talked about weakness in TV for Q4. Now, is this softness limited to TVs or is it beyond TVs? At least from your perspective, did you witness the greater softness from TVs? And can you give us some color on that?

The way -- when I look at it I see softness across the board and consumer; TV is one of the markets that I see it. But I also have to say that -- I've said this before as well that I don’t have as granular vision when I’m looking at it at this stage in the game as I have when I get to the end of the quarter. Well so, I can just look at it in broad brush stroke. So when I look at it I can see that consumers is largely softer than we’d have expected it to be. And TV is one of the markets that I do see that.

So your guidance is based on the current environment continuing on, you’re not assuming any improvement on that front?

I have no basis to assume an improvement. I mean, we’d be happy to have an improvement.

Great. And finally on the battery management, can you give us a sense how big is that today, is it from a large customer or is it more broad based?

Very broad based. And if it’s probably a -- if we have as a number, its probably 10 plus customers.

Yes, we have multiple customers in the segment.

Thank you, sir. Our next phone question will come from Rick Schafer with Oppenheimer. Please go ahead.

Yes, thanks guys. Congratulations on the nice quarter and I apologize that some of these questions have been asked I got dropped off the call here a couple of minutes ago. Just I guess the first question I had, if -- I know you discussed Michael, the Grantley ramp beginning sort of mid year next year I believe. Can you just may be put some numbers around that how big that revenue opportunity could be for you guys? And I guess the second part of that question would be talking about the sort of what you share you think on Grantley it will be and did that primarily -- did those wins primarily come from one customer that was your competitor, excuse me, that was recently acquired?

All right, let me -- let me break you down into even more detail. In server business, we have intelligent fuse and also we have a point of a low -- those products we're working, these are very large -- these are dominant server players and in the past two quarters. And so next year we’ll see lot more revenue from a point of low and also our smart fuse and these are product line that will ramp.

Okay.

The Grantley is a really on the memory side -- on the storage side and also the CPU side, those are more in Intel’s and that called VR12.5. That product okay that product family in for a chipset will accepted now accepted by a few companies and some Japanese companies and Taiwan there as well the U.S., and but we are not in the front -- in the top tier server makers because usually it takes a few just a few generation to get in but we will see a significant revenue growth in the market. And in the one beyond Grantley was that we are -- we after -- we also the king of I forgot what was the name but I think we will be ready for primetime.

Great. Okay, so I guess my second question is in automotive I know you highlighted that as a growth factor for you guys next year, can you talk about what’s your content is per car today? Does that make sense do you have metric ready? Can you talk about what that trend is like sort of what the potential for you guys is per car or how fast that content is growing or just kind of give some color around the auto opportunity?

Yes, auto business is a very, very slow one way stall designing to -- designing to revenue it takes about three years and well we expect a pretty meaningful revenue ramp up and in from Europe in 2014; we talk about it in many quarters ago. And as you know these are -- these design wins okay these are products -- these are socket is not easily to change, they don’t cancel, they don’t drop introduce the models and like a consumer product. So it is three years earlier designed it in, they're pretty much set and it won’t generate some revenue. And so what’s the dollar content is we are in headlight, dull light, in consoles of the dashboards and ignition switches and entertainment units and we’ll have a more products -- we have more products will be introduced that like a model drivers and these all suitable for auto industry, okay auto -- for car. So what current serve the -- a product we can sell it to a car marker I don't have exactly a number but somewhat between probably $10 to $15 now.

Okay. Great. Thanks Michael. And then just a last question was just on could you give some color on what percent of REVs BCD 3 and 4 are now respectively? And maybe -- I know this is looking way out but maybe when do we start talking about BCD 5? I know a lot of the others starting to model 2015 numbers. I mean, is it 2016, 2017 before we really start talking about BCD 5 contributing to the top line?

Yes. So I think a couple of quarters ago we got this question and we had said that we expect to exit 2013 with about 60% or 70% of our revenue coming from BCD 3. And this quarter exiting Q3 we are already at 60 plus percent. So, as that -- and that’s for BCD 3. And then you know we will expect to be subsequently be shipping BCD 4 products which we’re not talking about currently for competitive reason.

Well, we -- I can -- I can talk about it.

Okay.

I'm going to talk about and okay, and BCD 3 is a -- BCD 4, okay really is for higher performance product that made us the product with 6 millimeter by 6 millimeter the ADM current. These are definitely the only application in the server market. And then these are the one of a kind the best efficiency in the industry. And we are talking about BCD 5s and they will really move to a 12-inch and we are in the 12-inch now and we are even pushing it to 60 nanometers and those are the fab would be the leading supply in the analog world. Rick Schafer – Oppenheimer: But it sounds like Michael it sounds like that’s a few years away before we start talking about 5 correct?

No, well, we’re talking about probably end of next year. Rick Schafer – Oppenheimer: Okay, great. Thanks a lot.

Thank you, sir. Our next question will come from the line of Tore Svanberg with Stifel. Please go ahead. Your line is now open. Tore Svanberg – Stifel: Yes, thank you. First question actually the sort of a follow up to the last question so BCD 4, I know at your Analyst Day you talked about working on some cost enhancement, so wondering if you get update us on those how far you’re getting along on optimizing the actual process and its cost?

And I think it’s continuing the same trend for BCD 2, BCD 3 where every generation we think about improve the cost of about 30%, 40% [indiscernible] this much. And, BCD 5 announced and of course we don’t expect that these are 60 nanometers and a 12-inch fab still very expensive but I will see -- I will foresee in the two to three years and the cost will be same as now and per silicon per unit -- per unit area what will be same cost as of now. So the product we really aiming for is for BCD 4 now. It’s – these are lot of high current product and high speed, high speed also apply for modules we delivered all the teeny tiny modules it’s because we know our product switch faster than everybody else and we can use a smaller inductors in a capacitor and that’s why our modules are in a very lower cost and a very small and so these are -- silicon cost is relatively not relevant. Tore Svanberg – Stifel: That’s very helpful. Also you talked about the fast charging product just to clarify, is this basically tied to the rapid charge market, the chips that were going through the smartphone adaptors?

It is aiming for the fast charger like rapid chargers market but we are not in adaptor area we are in the phone. Tore Svanberg – Stifel: Okay.

Because all the smartphone want fast chargers and they had to increase the current now we have a product to the chargers -- battery chargers that up to 3 to 4 amp current and those chargers cannot be integrated into one of this – this power management into the [indiscernible]. So it will be a standalone chargers that we – we would have a lot of demand for this product. Tore Svanberg – Stifel: Very good, thanks for clarifying that. I also had a question on your SSD power management business, is SSD now basically hasn’t surpassed HDD in your revenue mix?

No I would say that HDD is still the bigger portion of the revenue, but SSD is growing fast and we have the two additional things that we introduced that we talked about last year which is going to be adding to our revenue mix next year. So next year is a year that I expect SSD to may be take over HDD. We also got to remember HDD programs tend to be fairly large so is one single program could actually change that equation again. Tore Svanberg – Stifel: Okay, very good. Just one last question, I don't think you really comment on backlog or bookings I think you talked a little bit about early in the call, but can you give us anything specifically sort of where you stand right now as far as coverage is concerned and how you feel about your guidance?

Sure, as you know when we give our guidance we look at both the backlog, our churns business where it’s coming from and how comfortable we are about it. And so right now, I can say that we’re very comfortable with our guidance we have got good bookings comfortable about the churns to come.

In the history of MPS, I think only 2008 in a middle of the quarter we changed our previous guidance we guided low. And we updated the guidance and that was external or extraordinary macro conditions – macroeconomic condition change. And so other than I don't remember we ever missed the quarters. Tore Svanberg – Stifel: Very good, that’s all from me, congratulations on a solid execution here.

Thank you.

Thank you Tore.

Thank you. (Operator Instructions) Presenters, I'm showing no additional phone line questions in the queue. I’d like to turn the program back over to Ms. Rao for any additional or closing remarks.

Thank you.

Thank you.

Thank you for joining us on this call and we look forward to talking with you on the next call. Have a nice day.

Thank you presenters and thank you ladies and gentlemen. Again this does conclude today’s conference. Thank you for your participation. And have a wonderful day. Attendees, you may now all disconnect.