Good afternoon, and welcome to M/A-COM Technology Solutions’ Fiscal Third Quarter 2015 Financial Results Conference Call. At this time all participants are in a listen-only mode. At the conclusion of today’s conference call instructions will be given for the question-and-answer session. As a reminder this conference call is being recorded today, Tuesday, July 28, 2015. I would now like to turn the call over to Leanne Sievers of Shelton Group, the Investor Relations agency for MACOM. Leanne, please go ahead.

Good afternoon, and welcome to M/A-COM Technology Solutions Third quarter 2015 earnings conference call. I’m Leanne Sievers, Executive Vice President of Shelton Group, MACOM’s Investor Relations firm. With us today are MACOM’s President and Chief Executive Officer, John Croteau; and Senior Vice President and Chief Financial Officer, Bob McMullan. If you’ve not yet received a copy of the press release, you can obtain a copy on MACOM’s website at www.macom.com under the Investor Relations section. Before I turn the call over to Mr. Croteau I’d like to remind our listeners that management’s prepared remarks and answers to your questions contain forward-looking statements which are subject to risks and uncertainties. Because actual results may differ materially from those discussed today MACOM claims the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and refers you to a more detailed discussion of risks and uncertainties that could result in those differences in MACOM’s filings with the Securities and Exchange Commission, including its current report on Form 8-K filed today and quarterly report on Form 10-Q filed on May 13, 2015. Any forward looking statements represent management views only has of today July 28, 2015, and MACOM assumes no obligation to update these statements in the future. The company’s press release and management’s statements during this conference call will include discussions of certain non-GAAP measures and financial information. These financial measures and a reconciliation of GAAP to non-GAAP results are provided in the company’s press release and related current report on Form 8-K, which was filed with the SEC today and can be found at the Investor Relations section of MACOM’s website. For those of you unable to listen to the entire call at this time a recording will be available via webcast for 30 days in the Investors Relations section of MACOM’s website. And now I’d like turn the call over to MACOM’s President and CEO, John Croteau. John, please go ahead.

Thank you Leanne and welcome everyone and thanks for joining us today. I will begin today’s call with an overview of our third quarter results for fiscal 2015 and then turn the call over to Bob McMullan, our CFO, who will review our financial performance in further detail. I’ll then conclude today’s prepared comments by providing a summary of our execution during the quarter followed by guidance for the fiscal fourth quarter of 2015. Straight to the results, I am pleased to report that for our fiscal third quarter we delivered record revenue and EPS. Revenue for the third quarter was $130.7 million; gross margin was 54% with net income coming in at $23.1 million or $0.42 earnings per diluted share based on 55.2 million shares outstanding. Looking at our end markets, networks grew quarter-on-quarter on the back of strong demand in 100G for long haul in metro networks as well as lasers in the access market. We successfully met our first goal following in the BinOptics acquisition doubling laser unit capacity in Ithaca by the end of June. During the quarter we saw none of the currency FX and headwinds that concerned us in a prior quarter that said we did see headwinds in mobile infrastructure. For the fiber and wireless backhaul that resulted from management restructuring at the top three carriers in China. In totaled growth in global 100G and share gains in access more than offset the weakness in China backhaul. Our laser business remains capacity constrain for the foreseeable future. We also saw weakness in multi market including industrial similar to what other have reported, once again in market demand across the full breadth of our catalog portfolio including networks in A&D more than offset this weakness and actually grew sequentially. Automotive was down slightly quarter-over-quarter within the normal fluctuations in demand that we see at Ford [ph]. In summary we are very pleased with another solid quarter of execution by the team. Let me now turn it over to Bob to review our fiscal third quarter financials in more detail.

Thank you John and good afternoon everyone. During the course of my comments as well as those made by John, all income statements, amounts and percentages will be discussed on a non-GAAP basis and are provided to enhance the understanding of our core operating performance. A reconciliation of each figure to the most comparable GAAP measure is included in today’s earnings press release. Revenue was a $130.7 million representing a sequential increase of 4.6%, compared to reported revenues of $124.9 million in the prior fiscal quarter, and an increase of 16.3% compared to the $112.4 million in the fiscal third quarter of 2014. The 2014 fiscal quarter included revenues for the CPE business sold in May 2014 of $5.3 million. Adjusting for the CPE business revenues grew 22% over the prior year’s fiscal quarter. Networks was $74.1 million and 56.7% of revenue, aerospace and defense was $20.3 million and 15.5%, automotive was $21.6 million and 16.5% and multi-market was $14.7 million and 11.3% of revenue. Gross profit in the fiscal quarter was $70.6 million or 54% of revenues, compared to $66.3 million or 53.1% of revenues in the prior fiscal quarter and $58.1 million or 51.7% in the fiscal third quarter of 2014. Gross margins increased by 90 basis points sequentially and benefited from selling a higher gross margin products mix than the fiscal second quarter including lower automotive revenue. Total operating expenses were $38.3 million compared to $36 million in the prior fiscal quarter and $34.2 million in the third quarter of the prior fiscal year's quarter. The increase in operating expenses in the fiscal third quarter included higher levels of variable compensation of almost 50%. Research and development expense for the fiscal third quarter was $20 million. This compares to R&D expense of $18.7 million in the prior…

Thanks Bob. I’d like to begin by providing an update on our laser capacity expansion efforts. As I mentioned earlier, we successfully achieved our goal doubling capacity in Ithaca, New York. To be specific good [indiscernible] improved from 12,000 to over 24,000 at the end of June. Nevertheless we remain capacity constrained to meet laser market demands through fiscal Q4. In parallel we're still on track to double unit capacity yet again in Lowell by the beginning of calendar 2016. This is key as we prepared to address the next circular growth driver in 100G in data centers. Diving in a bit deeper, trends [ph] reduction associated with debt capacity expansion resulted in gross margin improvement that more than offset what otherwise historically would have been an unfavorable mixture during the quarter. Due to the well-chronicled management restructuring in China demand for lasers and the ore lucrative fiber back hall segment experienced significant headwinds. In total through our market share gains and access more than made up for that shortfall in back hall. As mobile infrastructure recovers in future quarters we would expect to see substantial tailwinds further accelerating revenue growth in margin expansion. Perhaps more importantly our laser position continues to be a strategic differentiator notably across 100G long haul and metro networks that works which actually grew faster than access last quarter. Allow us to expand market share and share wallet across our entire optical portfolio. This positions us ideally to take advantage of the explosive growth opportunities as 100G enters data centers. For this reasons we remained bullish in terms of our laser and overall optical businesses ability to continue to outperform for the foreseeable future. Switching the airs, as I have mentioned previously disruption resulting from consolidation in our quarter of the industry continues to benefit…

[Operator Instructions]. And our first question comes from Gabriela Borges with Goldman Sachs.

Great, thanks so much for taking my question congratulation for this strong results. I want to ask a little more detail on the active antennas rate programs that you have ramping, maybe just relative to the call that you provided at the Analyst Day any more detail on the timing and the magnitude of the ramp of this programs. And is there any seasonality in the business that we should be aware of? Thank you.

Sure, great questions. First of all there is really two dimensions for the active antennas rate programs, one is an airborne defense program, which will be very predictable once it begins ramping with no seasonality with so ever. The second relates to the MPAR program for those who listened in or attended our Analyst Day last year. MPAR was a joint development, kind of an advanced development, with my team making at Lincoln Labs. And that is actually on the cusp of transitioning over to commercial programs. There are actually active bids that could be awarded within the next 30 to 60 days. We are hopeful that our lead customer will win those awards, if so those could begin ramping substantially -- quite substantially next year. If not there are still many other program that are adopting the MPAR architecture and that’s like the airborne defense program there will be no seasonality, very predictable long term programs.

Appreciate the color and a thought if I may on the competitive environment in a 100G lasers, can you give us sense of why you are hearing from the competition in terms of their willingness to being capacity on mind. Any change in the pricing environment that you are seeing and any tryout form optical module makers, potentially trying to use the laser technology in house? Thanks very much.

Sure I guess, series of great questions, so I don't think is there has been any meaningful change in the competitive environment we are still what I’d call severely capacity constrained that is our customers are still meeting us daily, weekly basis to get capacity allocation. We anticipate that will continue at least through this quarter, we anticipate that perhaps in the first fiscal quarter, forth calendar quarter, supply may catch up with demand. There is no indication that any of our -- the incumbent -- traditional incumbents have expanded capacity. We don't see any challenges of indigenous Chinese or otherwise programs -- suppliers coming online, so it's -- and I think what is happened is people see with our ability to expand their capacity, especially as we bring it Lowell on board, that there really isn't a necessity from both the cost structure and reliability -- continuative supply standpoint. My interpretation is customers see us as solid going to rock solid and last thing I’ll add is, there is kind of a time dimension to the demand portfolio right now, the prime market access is driving the overall market growth for at least part of the industry we operate in, that will transition beginning next year -- not transition but you will get the added benefit as data centers ramp in a 100G and data centers and we’re told that overall demand as turns on will at least in order of magnitude even greater than PONs. So it’s the reason why we’re so manically fixated on getting Lowell up in running, not just for the existing market, on expand market share but it's really for the next phase, as I said the next sector of the growth driver in data centers.

Great appreciate all color thanks very much.

Our next question comes from Blayne Curtis of Barclays.

May be just from a high level in term of your segments given your commentary I’m assuming networks is up again in September, is there any other segment that’s up and just drilling down on networks this is probably from the prior question, you talk about doubling of capacity and I think last quarter you said, don't think of revenue doubling, obviously the access would have lower ASP's. But clearly you’re booked out through another quarter here. How much Lowell add, what does that do to your cost structure and what is the trajectory of revenue here? Obviously if you doubling capacity sold out, you should have a quite a steep ramp with this BinOptics business.

Yes exactly series of great of question, nested great question. So yes networks for the next quarter -- so network was a strong driver on the back of optical. The backhaul stuff was very significant headwinds so that mixed effect in lasers that I had mentioned last quarter was actually even further aggregated because the higher ASP part of the market, the fiber backhaul was extraordinarily weak and we saw exactly the kind of softening that other people are reporting over in China there. Good news is we could sell every laser we made, so just skip the mix over to the access market. But again you get that less than linier ramp. As that turns back on -- by the way our guidance for next quarter is still no recovery in mobile infrastructures. So both wireless and fiber backhaul as well as no recovering in the industrial multi market side of our business. So slight growth in networks associated with further laser capacity expansion, but A&D actually starts contributing growth with the programs that I mentioned, the defense program and MPAR program. Did I address all questions?

Maybe just a follow up on the multi market business, obviously everybody across the board is seeing weakness, just curious your thoughts on the general trend in the industry. Obviously couple of quarters down here, what is your sense of inventory levels and customer behavior?

Well it’s interesting, we switch in the sell-in model and last quarter the POS actually held up very strong, the end market across our catalog business and what we’re told is that our leading [indiscernible] that June actually finished up pretty strong. So I don’t think things at least for us don’t look to be the unmitigated disaster that some of the other people are reporting. But again we’re very cautious in terms of guidance that it’s not going to turn back on and contribute to growth.

Our next question comes from Harlan Sur with JPMorgan.

On the [indiscernible] business which you’re selling to Autoliv, my understanding is that the segment generates sort of low 30% gross margins and low 20% operating margin, is that sort of the right way to think about this business as we try to model the core MACOM business ex-auto.

That’s correct Harlan. As I said we’ll be coming out with some information what will guide you very specifically post close, at the filings with the 8-K that gives the right information on the business and new business model going forward.

But am I in the ballpark?

Yes, definitely.

Okay, great. And then in multi markets obviously you guys witnessed in the June quarter, you mentioned industrial. Any other end markets you saw witnessing I know you’ve got good footprint [indiscernible] measurement in medical and any commentary on demand by the different geographies. And for the September quarter what’s your sense on the direction of your multi market segment for September?

Well, again I consider the best indicator the POS and POS in June ended up turning on kind of making a somewhat of the recovery. Now whether that ends up sustained through July and the summer months remains with the same. So again our working assumption is no recovery. In terms of color at kind of the sub-segment level, our business is just so defused. It’s impossible to draw any kind of trends between testing measurements versus industrial and other. So it’s just -- our business is very hard to predict that.

Our next question comes from Harsh Kumar with Stephens, Inc.

Hi guys. Congratulations, great results, great guide. Question on your radar upgrade program, could you maybe John give us some idea of the length of this program, are these just a couple of quarters once they start or is it just a multiyear program, global program? Anything will be helpful.

I think in all cases the airborne defense program as well as the ground based MPAR stuff, the time period is actually measured in decades rather than quarters or years. So once they turn on, it turns into a very stable predictable long-term business. I would describe airborne defense program as the first program at the particular customer that we would expect to [indiscernible]. But MAPR is even much more significant, that is profound shift in the way people build radar programs and we’ve actually got pulled from Department of Defense in U.S. government to be able to make the programs that are driving aggressive price targets to help customers -- to pull customers over to actually adapt the architecture. So that is something that will be step and repeat and we believe can scale -- I’ll best describe it as, It has the juice for growth and gross margin expansion equal to our optical business as well as our GaN business. It’s really that large and lucrative.

Great. That was actually very helpful. And the other question I had was, could you maybe just comment on the Chinese wireless backhaul or just globally the wireless backhaul market. I know that it’s been an area that didn’t work out for you. But based on what you’re hearing out there in the market place what would you speculate is the best time for recovery for this business?

No better or worse than anybody else. What we’ve heard is perhaps in the December quarter and most definitely in the subsequent quarter that the management restructuring among the three major carriers will be completed and then we would see a distinct recovery. In my experience however I mean that is a very unpredictable part of the world.

Our next question comes from Mark Lipacis with Jefferies.

First question John I had issue with my line so I didn’t hear this, could you repeat what you said about what you felt was going to be able to backfill the automotive business and timing on that?

I’ll over simplify and say its laser and optical, exactly what you would have predicted and as 100G as well as access.

And how many quarter?

We don’t give forward guidance, but let me just say given as mobile infrastructure recovers, that was a very substantial headwinds. So if that turns around and turns into a tailwind, I think within a couple of quarters we could be back to what people had been predicting our EPS to me.

And one more other question on the optic side of the business, it sounds like you are taking share and that was able to help you with some of the headwinds, could you just give us a sense of what you believe your share is in the market, did you just pick off the low hanging fruit or do you think you have more to go?

There is no question we have more to go. I would say picking up low hanging fruit is probably not a bad term when customers can’t get enough products and our biggest problem is that knowing the customers who are irate about how many, how much -- how many lasers we allocate them, not a bad problem to have, but a problem none the less. So definitely as supply catches up the demand, the dynamics change, we feel we have done such an outstanding job of actually meeting that upside demand in the short-term, we really were the guys coming in saving a lot of people’s businesses, that we have not just the good will but the long-term contracts that are being put in place through 2016 to progressively taking additional share. That is unquestionably part of the outperformance in our comments about back filling for the automotive business.

I could just sneak one more in again on silicon, where are you in the process of qualifying your foundries and could you discuss the competitive environment, there is some news that has been coming out recently about again becoming more popular in the market and even some gain on silicon players, if you could talk about that, that would be great? Thank you.

So we remain on track, we continue to progress with our qualifications of our production foundries. Again the critical path here is entirely reducing, we announced our Gen 4 GaN which was the spectacular hit at the MCTTIMS [ph] show which matched the performance of GaN on silicon carbide and with the cost structure that ends up below that of the incumbent LDMOS. So that was as you can imagine a big hit. But I don’t want to understate the task here of getting that ramps yielding and qualified in the high volume production foundries that can supply things like Bay Stations, supply chain is everything for the Bay Station guys. If you can see the directions that the industry has gone through from last year to know what’s happening supply chain flexibility is a big, big, big deal. I would say technically our big progress last quarter was with the disruption that’s going on in the marketplace there was access to some talent that previously never would have been available. We staffed the support teams in both China and U.S. to support Europe, the U.S. and in China. So all the major guys would know guys who are proven, who understand the customers and the applications which was a critical piece of the puzzle that had to be put in place. And I would say, I think the customers are very keenly aware that we’re really the only path to GaN in my opinion being capable of supporting that supply chain -- those supply chain demands. When we actually come out public with our supply chain partners it will be obvious why that is the case, but again there is a lot of work to get that supply chain qualified and yielding. We’re still on track as far as we’re concerned for the first quarter 2016 being in that position. But I think it's not done until it's done and I should say our assumptions where we talk about replacing the earnings of the automotive business that assumes zero revenue in 2016. Not that we believe zero revenue, but we are not counting those chickens until they hatch.

Our next question comes from Steve Smigie with Raymond James.

Just want to follow-up on the GaN, so it sounds like you said that on sil can match the GaN on silicon carbide performance. This seems pretty -- like a pretty big deal, I know they are barely close, but to match it at your cost structure seems like it should be a pretty big deal. So I am just curious in terms of customer reaction to that, if been able to get that far and I know you don’t probably don’t have your engineers there, but can you talk a little bit about what the performance metrics were that you are able to match?

Yes. The two metrics were efficiency, so we demonstrated we at LDMOS at NGTI amounts of 70% efficiency and power gain was I think it was 18 degree and 19 degree, was our power GaN spec, which is that's actually best in class for LDMOS. So we hit the power gate of LDMOS with the efficiency of GaN, I actually don’t consider GaN to the first approximation in those commercial applications on to be our natural target because it's just not that will penetrate it it's there is some good revenues that people have posted, but it's relatively Asiatic [ph] programs so that's really easy pickings, the real issue is being able to expand that penetration GaN against the incumbent LDMOS. And with that I mean our cost structure is now I think very well understood. The one thing that I failed to mention on the previous question was there was a reference for other people with GaN on silicon, the thing I can say equivocally is our patent base that we acquire from Nitronex is multi-dimensional and a mine field that people simply cannot navigate. Anybody who tries to put a GaN on silicon into our F applications will be met with a pretty firm and legal situation. So, we think this is a highly defensible market that as we drive and lead the conversion it will be very high barriers to entry all the time.

Okay, great. And when you spoke about getting the supply chain out here, it seems like you had originally been talking about Q1, some production shipments and then was the back half of the year more significant volumes, is this supply chain is part of making that happen or is this tracking it little bit ahead of schedule?

I wouldn’t say anything as ahead of schedule and I'm trying to very carefully avoid commitments of production volumes anytime in 2016 for the following the reason. What we hope to add is the process qualified and have production units and be able to begin production as early as the first quarter, with that said until we pass qualification and we’re yielding, we haven’t passed qualification and we are not yielding. That is like doing a cross word puzzle on a schedule you don’t really want to commit to that right. But once we have those production units, then customers start turning programs on and then it’s completely impossible to predict how many programs and how fast customers will award programs, how quickly they will ramp. I can tell you in general the Bay Station industry cycles programs and a pretty good churn, especially over with the Chinese manufactures, less so with the European's. Especially Ericson tends to be more diligent and taking longer, people like [Huawei] pretend to be as far more aggressive, but again cautious optimism is probably the best approach.

Just a follow up here on BinOptics. Can you talk about maybe six months out or call intermediate term, whatever, what you might see the mix being of the 100G stuff versus more the access point stuff? And at this point on the 100G for matter, et cetera, anyone customer, et cetera, emerging as sort of lead customer in that area?

I had said our success across the board. I mean if you take proportionate shares across the broad Huawei is a major players, so obviously they are a major customer. But I don’t think disproportionate to others and that regarding the first part of your question. Our Long Haul our 100G business in Long Haul and that measure networks grew actually at twice the rate of they even our access, our laser business and if you believe what they are saying about metro networks only beginning to deploy and being a very strong growth drivers starting in 2016 it's quite possible that 100G in a Long Haul metro stuff could be in excess of our laser business within a few quarters. So that there is a halo effect from a vendor stand point, the laser is unquestionably became a strategic differentiator, obviously there are different applications in markets. But both optical and then separately the laser stuff are poised to outperform.

Our next question comes from Vivek Arya with Bank of America Merrill Lynch.

Few quick questions, first John I was wondering if there is a way to quantify how much impact you are having from the slow wireless activity in China and whenever it turns back up will there be some benefit from pent up demand?

Yes. A great question I mean we try to avoid reporting down at a product line levels and that's actually sub product line, let me put it this way in our fiber backhaul the drop sequentially was over 66%. It was a very substantial headwind in our laser business that said we took advantage and just shipped more on. But the ASPs are substantially higher for the higher rate backhaul such that when that turns back on -- I mean if that turns on in the December quarter in a meaningful way, than we’re going to have a quarter that we’re probably going to surprise even ourselves. But it’s just unpredictable if it comes back quickly or if it comes back slowly again, its backhaul not access meaning Bay Stations. So it’s again I am close to predict the behavior of that market and recoveries. Things always come upon you from both directions far faster than you could ever imagine, both in the upside and the down side.

Got it. And then the second question sort of related to that, maybe if you could give us some puts and takes of the gross margin guidance for Q4. I think you’re expecting trends to be somewhat flattish even though sales are expected to be up, I would imagine it has to do with the mix more access versus backhaul, any color around gross margins?

The mix is an important driver to overall gross margins and to confirm the prediction, the guidance is inclusive of the auto business which is quite low as we talked about earlier in this call. But overall we’re still trending up I think we had a good quarter to 54% and even with the puts and takes in the laser business and I think even our guidance shows that we have more confidence in stepping that up here over the next quarter.

Got it. And then lastly I know you’ll provided more information when the autos business is divested, but if I just take the numbers that have been given on the call, is it fair to assume that it’s about five, six penny in the quarter type hit and the assumption is that let’s say towards the end of fiscal ‘16 that the growth in your core businesses is able to get your back on to the quarterly EPS trajectory?

So, I’m going to differ until we close the business to answer the first question. With the general statement it’s certainly in the range, but to reiterate John’s commentary we’re poised to accelerate the top-line growth to recover from the sale of that business.

I’d say, there is what a short term dip. It will be very interesting when we come out with the restated financials, when you look at the intrinsic growth rate of our business excluding automotive and you look at what with the larger proportion of optical and laser and other contribution of even the A&D programs. Within a few quarters I think we’ll be back to what people were expecting. For the most part people hadn’t clipped in that upside. So we’re arguably taking down some of the upside and replacing the automotive business. Again we’re confident with similar expectation for EPS for next year compared to what people’s models are at the stage.

Got it. Very helpful. Thank you.

Our next question comes from Quinn Bolton with Needham & Company.

Just want to come back to the laser business you talked a lot about trying both in optical backhaul and access. Just wondering if you can give us some sense how much is the laser business today is derived from OEMs or customers in China. And then if you look forward to the datacenter opportunity I assume that’s probably going to be more geographically diverse and probably helps reduce some of your current exposure to China, but wondering if you could shed some light on that.

Yes, so the access point market global demand is serviced out in China. The Chinese ODM supply everybody, not just the local indigenous demand, which is very strong growth this year in China there is a strategic program in China for fibers to the home deployment. But that’s actually global. But yes, as we talk about some of the other segments, the fiber backhaul absolutely not just the Chinese business and then secondly datacenters is a very highly diversified business. I’d be putting my money that when that stuff is in volume it’s going manufactured in China. So, where the transaction sale is one thing far more important to me is where the design decisions and the architecture and technology and vendor selections are and that there is no question datacenters is driven by cloud service providers and system OEMs rather than an ODM driven segment like [indiscernible].

Yes, I’d just add the point that in this allocation situation direction to shift to the contract manufacturers that are coming from the system manufacture which is very critical to have real clear visibility moving forward here.

I think we mentioned it before, provided a little color, what happened when we made the -- when we announced the acquisition of BinOptics the behavior switched almost over in China. The system OEMs stepped up to negotiate their own capacity allocation, kind of bypassing the intermediary transceivers guys, the ODMs because they were simply not getting the allocation that they want their fair share. So the supply agreements that we have are with the power brokers over there and not just the ODM partners. Which is still nice customers supplying the global world, but the dynamic was it was almost literally overnight that China time, next day we came in and there were meeting set up and negotiations began in earnest.

Okay. Than just looking at the combination of BinOptics, the core optima or your core Long Haul metro optical business and then the portion the mind speed business that services as the PON [ph] Modules, is it fair to say that the optical business in aggregate is probably now more than half of your total networks division?

I’d have to add it up, I think its likely close -- likely to be the case.

Great.

Then a big chump to the high performance analog business the previous mind speed business was already strong on PON and already strong in optical. So add that to the growth that we have in long haul metro, 100G stuff and now lasers, I think you are right, that's a significant chunk.

Got it. Great, thank you. Any updates on the CFP-2 design win position you had I think you had mentioned you thought you might be inside to 70% share in CFP-2 and it certainly it sounds like CFP-2 models really start to ramp for metro applications next year, can you just talk about that competitive landscape, if there have been any changes.

No changes. What tends to happen in those type of programs is, once you’re established -- I mean both good and bad, once a competitors gets entrenched or once we get entrenched it takes almost of act of god to finish the transition until CFP-4 for instance. So if you -- we’ve actually had a situation where competitors have actually probably admitted our position which is minimally 70% design win share. So I think we are very well positioned to benefit from that growth in metro networks next year qualifying that is difficult but there is no question it is a significant contributor to that those -- you replacing the earnings to the automotive sale.

Our next question comes from Tore Svanberg with Stifel.

Just to clarify the guidance you gave, would that assume you had another [ph] business to stay at the same level of works in Q2?

Exactly.

Okay. Very good. And just the follow up on Quinn's question on CFP-2, the design wins you have are those for TIAs and drivers or is there other things going on there?

The strongest position we have is in drivers and that ends up about 80% of the relevant analog bond content. So we do not have the same strength in the position of TIAs, where we’re the challenge rather than the leader. But again the ASP difference between the TIA and the much later drivers is very substantial.

Very good. Another the BinOptics business as it ramps into datacenter next year is there a chance that datacenter could be as much as half of the revenue or is that perhaps a bit aggressive?

Well depends on the crystal ball you use for predicting the ramp in data centers. I tend to find that markets turn on a little more slowly than people predicts and when they turn on, they turn on in big way. But I would describe it that our assumption about datacenter business is extremely modest for next year we want to be position with the right products and the right solutions and the right channels and sales and support structure to position ourselves in datacenters like we have done in metro networks but counting on that revenue ramp, being anything substantial anywhere close to half is a dangerous prediction.

Okay.

And we don’t -- even though we have aspirational goals for next year it's not about datacenters and it's not about Bay Station GaN, it's not things that our high risk in terms of early ramp.

That's helpful. Just one last for Bob there is a lot of sort of things moving around right now obviously with divestitures and acquisitions and so on your inventory has given 128 this quarter is that the level that we should expect going forward or would you say that's probably bit at the lower end that where you want to be?

It's so without the ford business that we do have some inventory to meet their demand. I think it's at the from a day's perspective at a high level and I think it may come down slightly but again if you look at the details over our inventory we’re substantially almost 50% in finished goods that are staged for shipment in the next quarter and another 45% is in raw materials, we have very little in work in process, it's a major driver to our manufacturing objectives here.

That's good helpful. Thank you, guys.

You are welcome.

Thank you. Great, question.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Mr. Croteau for closing remarks.

Very good. Thank you, operator. Before closing out today's call please note that will be attending the Jefferies semiconductor hardware and communications infrastructure at summit in Chicago on August 25th, The Barrington Research Conference also in Chicago on September 1st and The Drexel Hamilton Conference in New York, September 10th. We welcome the opportunities make with investors planning to attend these events. To request the meeting with management at a future event, or be notified of the next time that we plan to be in your area please, email us at ir@macom.com. Very good, we may now close the call.

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.