Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the SYNNEX 2012 Third Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Thank you. At this time, I would like to pass the call over to Lori Barker, Investor Relations at SYNNEX Corporation. Ms. Lori Barker, you may begin your conference.

Thank you, Sarah. Good afternoon, and welcome to the SYNNEX Corporation Fiscal 2012 Third Quarter Conference Call for the period ended August 31, 2012. Joining us on today's call are Kevin Murai, President and Chief Executive Officer; Dennis Polk, Chief Operating Officer; Thomas Alsborg, Chief Financial Officer; and Chris Caldwell, President of Concentrix Corporation. Before we begin, I would like to note that statements on today's call, which are not historical facts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements include, but are not limited to, statements regarding our strategy, including growth, market share, investments and in growth of our GBS business, profitability and returns, growth and shareholder value, our leadership position, expectations of our revenues, net income and diluted earnings per share for the fourth quarter of fiscal 2012, our expectations of our tax rate, our performance, general economic recovery, anticipated benefits of our Hyve Solutions business, CLOUDSolv, RenewSolv and other platforms and performance in our GBS segment, the transition of certain customer revenue through Fee-For-Service, the impact and integration of our recent acquisitions, benefits of our business model, our product mix, including the launch of new products and services, and relationships with new vendors, IT demand expectations and market conditions, operating expenses and operating margins, and expectations regarding any margin expansion. These are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. Please refer to today's press release and documents filed with the Securities and Exchange Commission, specifically our most recent Form 10-Q for information on risk factors that could cause actual results to differ materially from those discussed in these forward-looking statements. Additionally, this conference call is the property of SYNNEX Corporation and may not be recorded or rebroadcast without specific written permission from the company. Now I'd like to turn the call over to Thomas Alsborg for an update on our financial performance. Thomas?

Thank you, Lori. Good afternoon, everyone, and thank you for joining our call today. I'll begin with a few highlights and by summarizing our results of operations and key financial metrics. Then I'll conclude with guidance for the fourth quarter of fiscal 2012. Our third quarter of fiscal 2012 was a solid quarter in which we executed well and gained market share in a challenging macroeconomic environment marked by softer global demand as well as a bit more aggressive pricing by competitors around certain markets and end offerings. Despite the current operational environment, SYNNEX executed well, generating normal profit in our distribution segment and sequentially increasing our profit margin in GBS. Let me share some of the details behind our consolidated Q3 performance, starting with revenue. In our third quarter, total consolidated revenue was $2.58 billion, slightly higher than we reported in Q3 of 2011. Considering the transition of certain customers gross revenue business to a Fee-For-Service logistics relationship and our distribution business, starting in mid-Q4 of 2011, third quarter revenue would have been up by about 4.4% year-over-year. Looking exclusively at the segment level now, our third quarter revenue from the Distribution segment was $2.54 billion, essentially flat year-over-year due to the aforementioned transition of certain customer revenue to a fee-for-service basis. Adjusting for approximately $105 million related to this transition, year-over-year revenue growth would have been a positive 4.1%, which we believe is higher than industry IT growth rates and the overall channel growth. In our GBS segment revenue was $49.7 million, or up 22.8% year-over-year due in part to acquisitions, which is accounted for roughly 3 quarters of the year-over-year growth. Sequentially, revenue was up 4.2%. We are just beginning to see the top line impact of our prior quarter wins in our GBS Concentrix business and…

Thank you, Thomas. Good afternoon, everyone, and thank you for joining our call today. I'm proud of our third quarter performance, as we delivered another quarter of solid growth and profitability. Within our distribution segment, while our reported sales were flat year-over-year, they increased about 4.1% on an apples to apples gross revenue basis. We believe this to be better than market performance, particularly in light of the well-documented weak macroeconomic and consumer demand trends. We maintained our disciplined approach to price and margin management, while responsibly controlling our cost to deliver strong operating margin and a solid trailing 4 quarter ROIC of over 11%. In the United States, excellent execution and market share gains drove relatively strong sales in the commercial market, while the consumer market was soft. From a product perspective, storage peripherals, network and security were strong, while notebooks and software were relatively soft. In Canada, overall IT demand continued to be challenging. However, we delivered growth above market rates driven by good share gains within our commercial segment. In Japan, we incurred a non-repeatable charge that Tom spoke of and the overall market remains slow. However, despite the current market softness, we remain committed to continued operational improvements that we believe will result in increased profitability in the coming quarters. Turning to our GBS segment, we continued to invest in our sales process and additional platform development, which will enrich our business but will also temporarily mute our financial performance until we get to greater scale. These investments have driven great momentum in signing new business, which continued in Q3 with another record and the value of new contracts signed. We improved our operating margins sequentially even as we on-boarded parts of our recently signed business. As I stated previously, we remain committed to growing our…

Thanks. Sarah, we're ready to take the first question.

[Operator Instructions] The first question comes from Matt Sheerin with Stifel, Nicolaus.

So just a question regarding the revenue, not so much of the revenue, but the EPS guidance. Backing into that, it sort of implies gross margin sort of flattish, and I'm just wondering how much of that has to do with mix? Are you seeing some pricing pressure on any volume deals? I know you also talked a little bit about Japan as a headwind. But could you just talk about the components of gross margin and how you see that playing out in the next quarter or 2?

Matt, this is Thomas. I'll start off with that. First of all, it's actually both. As we look at the margin profile here, without being specific as to what we forecast for gross profit, we do see that based on our guidance, as you have seen, and as we saw in Q3, our gross margin is at the lower end of our normal range. And as we commented in Q3, it is driven by 2 primary factors, and that is the mix of business that we're incurring currently and pricing pressure in the competitive marketplace. And I would tell you that both of them are, I wouldn't say equal, both of them are important aspects of the gross profit outlook.

Okay, and then and I know that the -- is that primarily on the commodity type of products? Because I know your margins in the enterprise data center related space tends to be higher. Is that true? Is it more on the commodity side? Are you seeing it on the enterprise side as well?

No. Certainly your comments and observations are correct. And that's partially where the mix play comes into being. But the pricing pressure is more pronounced on a more commoditized and more standardized side of our business.

Okay, and then it looks like the SG&A control, obviously, was very good in the quarter. Do you have -- do you expect SG&A to be up a little bit at sequentially given the higher volume revenue run rate? Or are you expecting to keep it in this area, at this range?

Sure. So there is a variable component of SG&A that does correspond to our revenue. And so as our revenue goes up by the upper single digits, we're going to see some level of SG&A spend related to that. But we remain very diligent around spending. And we look for opportunities to tighten our belt when the economy gets a little bit tougher as it -- in our view currently is. And so we'll do our best to try to keep that -- any increase in SG&A from being disproportionate.

Our next question comes from Robbie Wilkins with Goldman Sachs.

Just a follow-up on the competitive environment, you mentioned some certain markets and offerings are a bit more competitive. I was wondering if you could maybe drill down a bit more on that.

I'm not sure how much more we can drill down. I think, just talking about the more commoditized higher volume product area is really where we do see that kind of competition. So specifically, that would be in areas like notebook, in desktop. Also other higher volume peripheral devices.

Okay so it's not areas that you're gaining market share, it's more on the service side. So the comments made earlier on the call on -- to gains and market share, it's more of these white box offerings and service storage where you're gaining share.

You know we gained share pretty much across-the-board, across all product segments even in the commoditized space. But in the areas of focus that offer higher margin -- a higher margin for the products and services that we sell, we don't see the activity on pricing the same way that we do on the commoditized products side.

And secondly, I was wondering if you could give some color on the government vertical and if you've seen much volatility in that market.

Well -- I assume you're talking more Federal government?

Yes.

Yes. So on the Federal side, through our past quarter, actually our business was relatively stable. But I'm sure you've heard as many others have as well that the government spending, Federal government spending, seems to be a little more back end loaded this year than we typically see it in the past. Also, talk of perhaps overall spending to be a little bit softer. So we're kind of coming to the tail end of that big spending season. So we'll see. But I think the market commentary out there is that it's likely a bit softer.

Our next question comes from Ananda Baruah with Brean Capital.

Kevin, can you just talk about, I guess, inventory levels that you see for just sort of the different products? It seems like your inventory actually feels fine, but as you look across the industry and even in your business, if there's certain products that maybe a little higher, a little lower than you like them to be. Just like to get your comments there.

Sure. Actually, no story there. We've done a good job with managing inventory, and as you can see, our inventory is a bit lower, but certainly in line with where our sales are. Again, I know that I should remind you that given inventory just moves quite a bit back and forth on a day-to-day basis just depending on how much gets shipped out, how much we receive in. So it's a bit of a moving target on a point-in-time measure. But, yes, kind of getting to the second part of your question around any shortages or overages, there really is nothing to ride home about there.

Okay. And Kevin, do you have, I guess, visibility into sort of what the broader industry inventory would look like?

We're not hearing anything of note that would say that there's any shortage out there across any specific line or category, certainly not on the opposite side either of any increased inventory level.

Okay, got it. And then, I guess, on your Consumer business, I didn't hear you guys talk about how you did on a year-over-year basis. Can you just give us some detail around how New Age did? And I'm assuming the sort of the PC business was one of the softer areas as well. But were any other parts of the business soft too?

Yes. So , I mean, specific to your question, we don't get into that level of detail category by category. But our consumer markets and the products contained within that were on the softer side, which means they were lower than what our overall company growth was.

Our next question comes from Osten Bernardez with Cross Research.

Would you be able to comment, Kevin, on the -- further on your comments regarding share gains, in particular, how you're able to gain market share during the quarter? Where is it? Were there any special initiatives on your part? Or would you -- I guess could it be misexecution by some competitors? Sort of what led to the market share gains during the quarter across-the-board, as you mentioned.

I guess to simplify really, probably, 3 categories. Number one is just day in and day out execution, just very reliable in terms of being in stock and getting product to the right place at the right time. Also, just having very strong relationships with our customers. The second category would be around some focus areas that we have. So where we really put focus on some key technology areas. And there are many that we've talked about in the past, say, network and the security as an example, or wide format print. We continue to gain share in those focus areas. And then the third category, I guess, is related to how execution really is, some challenges that some of our competitors have had recently in execution where we've been really the reliable partner for our customers to deal with.

Okay, that's helpful. And would you be able to comment also further on with respect to your Data Center business on linearity during the quarter, at any point, did you see any sort of push outs of orders or projects?

Yes. So from an enterprise data center, so I'm not talking about our white box server, just more traditional enterprise, we have been seeing some level of push out over the past few months. And in terms of the quarter itself, I wouldn't say that any 1 month was markedly different over what we've seen in the past. Just a little bit more in terms of stagnation of orders. And that partly, of course, makes up our commentary on what we're seeing in a stable commercial environment, but with puts and takes in certain segments.

And lastly for me, would you be able to give a number on the record signings for the quarter? Actually, you provided a number last -- this is for GBS. You've provided an analyzed number I can't get off the top of my head, I would want to say $24 million. But for this particular quarter, what was that?

Yes. So Osten, when we gave that number last quarter, we also said that we probably won't be giving that number on a regular basis. But suffice it to say that our traction and our momentum in winning new business in GBS does continue. In fact, that same metric in this past Q3 was higher than it was in Q2.

Our next question comes from Brian Alexander with Raymond James.

Sorry, if some of these were asked, juggling 2 calls. But Kevin, maybe just a follow-up on that. I know you're not providing the absolute dollar amount, but just qualitatively, were more of these signings skewed toward renewals like, I think, they were last quarter? Could you talk about whether these are competitive displacements or these more of greenfield outsourcing opportunities that you're winning from companies that might have been doing this in-house, but not necessarily with a competitor? And are most of these new logos for SYNNEX? And then I have a couple of follow-ups.

So Brian, I'll take that, it's Chris. First off, the majority of the deals were in the renewals and sales momentum opportunities. And again, the majority were in sort of new logos to both SYNNEX and Concentrix as a consolidated entity. And all of them were taken from competitors, and none of them were sort of in-sourced, and then we took over an in-sourced operation. So they're all, frankly, very good wins that we've been working through a pipeline for a period of time that we're able to show our value and win them from existing competitors.

And Chris, maybe while you have the floor, just walk us through that value proposition and talk about how maybe the benefit of the whole SYNNEX umbrellas may be leading to some opportunities and cross-selling that's allowing you to win this business. Maybe just remind us the value proposition that's unique to SYNNEX.

So I think, Brian, if you look at where we've been making investments and technology in building out our own of intellectual property, which has somewhat muted our operating income for a number of quarters since we started building out our technology, it's really being able to come to these customers and talk about enriching and driving the highest value they can have from every customer interaction that we perform for them, whether that be adding new product sales or software sales to engagement, whether it'd be up selling, cross-selling or whether it be renewing those relationships with their end customers. And we're doing that both with a mix of technology and people, and from a people perspective, we are able to offer global footprint where we can seamlessly and frankly consistently deliver globally for their customer base, which is unique and sort of a high-value offering to them since they don't have to deal with multiple partners or have to juggle between in-sourced and outsourced relationships.

Great. And then maybe back to the distribution business. Kevin, can you just talk about PC demand in general ahead of Windows 8, consumer versus commercial? And how much of a catalyst are you thinking Windows 8 could potentially be to SYNNEX in 2013? I think the launch date is October 26. And then just longer-term thoughts on tablet encroachment on notebooks in the nonconsumer markets and whether you think that you're seeing much of that cannibalization occurring today.

Sure. So I'll try to segment my answer. So first starting with Windows 8 and any current impact on the commercial market, we really haven't seen any. And I think Windows 8 is going to follow the same kind of uptake pattern that we've seen with previous Windows releases, which is the commercial market is going to do a wait-and-see and then slowly transition and likely coordinate that with a normal hardware refresh anyway. On the consumer side of the business, there's a lot of excitement out there. I think Microsoft has done a good job in articulating why the interconnectivity between devices is a huge value-add and ease of use. But what that has had is a bit of a dampening effect on current notebook and ultrabook sales. So -- and that's part of the reason why the back-to-school season was somewhat muted this year as well. So as we start moving into the launch of Windows 8, I expect that we're going to continue to operate in that kind of environment with what we all both expect and hope to be in a very successful launch that's going to include a lot of hardware that goes with that too, primarily in the ultrabook segment. As I had noted earlier though, because of our fiscal quarter end, actually fiscal year end being November, we're only going to have a limited number of selling days from the launch to the end of our quarter. So we do expect that a lot of the success that will come out of the Windows 8 launch is going to be reflected partly in our Q4, but perhaps to a larger extent, in our first quarter of next year. Longer-term, when we take a look at different mobile devices, tablet included, on the overall…

So just a follow-up on that, at the end of the day, how do you think SYNNEX is positioned in the context of this transition in the blurring of the lines between these devices, given that you have very strong relationships with most of the traditional laptop players, ultrabook, et cetera. But with the stronger tablet vendors to the extent that they are more successful in cannibalizing these products, those are vendors that historically, you haven't been have tied to. So I was wondering, do you view this as a net neutral, and net opportunity? And just help me understand that.

Yes. I do view it as a net opportunity for SYNNEX. On the commercial side of the business, we do sell a lot of mobile devices and tablet devices. As you know, in the United States, we are not an Apple distributor. We are, in other parts of the world, so we are able to leverage the huge success that Apple had there. However, with a much lower cost, Tier 2 tablets marked with the consumer market, we've actually had excellent success in being able to identify, sign on those vendors and sell a heck of a lot of volume to the retail channels that we have. And that's been the case over the past 18 months. As we look at the commercial space, I do believe that from an enterprise hardware perspective, we do have a very good assortment of the OEMs that are bringing these new mobile devices to market. And as I said, it's not just going to be about the device itself. I think some of the higher value pools that we want to attack and take advantage of are those in the services, around mobile device management and around security.

Your next question comes from Lou Miscioscia with CLSA.

Kevin, if we could just go back to one of the comments that you had about that commercial was stable, but then you also talked about stagnation and things getting pushed out. I guess, if you look at it from a revenue standpoint though, it seems like you came in where expected. So was it just a little bit sloppy as it ran through the quarter or would -- are you sort of suggesting that it's actually maybe getting weaker into August or into September here?

Sure. So yes, I mean, in our Q3, we did come in where exactly where we thought we would be. But of course, you can fill in your dots on a paper and draw your lines on where you think you're going to end up and you still end up in the same place, but you get there in a slightly different way. Just another way of saying that there's always going to be different puts and takes in any given market. So there were good pockets of strength, both by market, as well as by product category, and there were certain pockets there were a little bit softer than anticipated to. My comments on some projects being pushed out was one specific market that I was asked about, which was more of the data center -- the enterprise data center market. But as I said, there are other pockets of relative strength as well that did offset that. But looking forward, we actually expect in the commercial market that, that's actually going to continue. We do see a stable outlook for commercial where, again, we're going to see some markets that are going to continue to grow and we're going to see others having -- probably are going to be a little bit softer.

Okay. And did you just say putting a good category peripherals?

Yes.

And maybe can you just maybe slice that? Was that maybe inkjet, lasers or something else?

We don't break down peripherals beyond that. But let's just call it peripherals was a strong category for us last quarter.

And then maybe just following up on Japan, I'm not sure if I heard a comment, I think you said something that there was a charge there and was that in your GAAP and non-GAAP -- or non-GAAP numbers?

So what Thomas had referred to was there was a charge in Q3 that we took to honor a legacy relationship. I do want to point out though that we're comfortable. We've addressed that issue. And it's not a challenge that we're going to have to face anymore. I'll just talk a little bit more about Japan because my comments, I think, on Japan were quite limited in the prepared remarks. But the overall market in Japan kind of like what we're seeing in the U.S. and Canada has some headwinds, in particular, in consumer, but also commercial is a bit soft. Overall though, we're very happy with our Japanese business. And we're happy with the progress that we've made in installing our own ERP and improving profits within that business. So the outlook that we have internally on Japan is that very committed to that business, committed to that market. And we do see that business as a net opportunity for the company as we improve margins to take our margins as a company to a higher level.

And Lou, with regards to your question about GAAP and non-GAAP, that was a GAAP charge. We did not carve it out. We absorbed it in the operating results of the company.

Okay. And did you mention how much -- how big it was?

No, we did not.

And can you or...

I knew that was coming. We typically -- as you know, we don't break out our profitability by geography. So I prefer not to. I would tell you this, I would tell you that for the growing business that we have in Japan, it was certainly significant enough that we felt disclosing it. Surely that -- it was the right thing to do, but from an overall consolidated standpoint, it was just another put or take that we deal with on a day-to-day business in the business. And again, as Kevin said, the particular circumstance that we're dealing with is now changed in terms of change, and we do not anticipate dealing with that again.

Our next question comes from Rich Kugele with Needham & Company.

Just 2 follow-up questions, one is HP did increase sequentially as a customer. And I'm just wondering if there's a level where you start to start to get uncomfortable tied to one particular guy even if it is a broad solution provider like in HP?

Yes. And actually, when you take a look at our -- the share of our business with HP, it does move up and down. In fact, the longer-term trend lines, I think, remain to be down a little bit. But we have a very strong relationship with HP. They have, as you said, the most complete portfolio of IT products and services. And during the quarter, we also gained share within the HP channel business as well. I think part of that is reflected in the slight increase that we had in our overall business with HP. All of that being said, though, we've also had very good success in growing business with our vendors beyond HP. And many of those vendors are highlighted in some of the technical solutions areas that we have a key focus around. And in addition to that, we've had a lot of success over the past 2 years in signing on new vendors, again, related to the technical solutions division space. And as we continue to grow those over time, we want to continue to grow HP, but as we grow other vendors more quickly and grow our line card, we should start to see that overall mix perhaps, soften a bit.

Okay. And then just lastly on Windows 8, in terms of the notebook inventory that's out there today, is there enough Windows 8-loaded product out there, or is it all Windows 7-based today? I mean, I just -- there's some investor concern that the mix that's out there in the market today because of the timing of Windows 8 may be screwed up relative to demand.

From a consumer perspective, there is a sufficient amount, more than a sufficient amount, I'd say, of Windows 8 products already available today. My comments earlier on commercial adoption of Windows 8 because it's probably going to take a little bit longer, is probably a little bit less relevant in terms of what is preloaded on the system.

Okay. And would you expect that -- should Windows 8 start to be adopted or see Windows 8-based tablets be adopted in the commercial segment, do you expect to be involved in any of the configurations of those machines share images or security around that? Is that what you were referring to by the security element?

Really it's is as a multi-faceted thing, starting off, I guess, at the highest level of having the right vendors on board that do have software and other appliances that do mobile device management. But then second to that, we do have a number of services that our legacy within our distribution business where we do things like imaging. And over the past 2 years, we've also invested in development capability as well where we do custom coding for enterprise with the focus area being in integrating mobile devices.

Our next question comes from Shaw Wu with Sterne Agee.

I also have a Windows 8 question as well. Just tied in, you turn -- you talked about excitement around Windows 8. In terms of -- what do you see as -- what's the early feedback that's -- what's going to do better? Is it kind of the convertibles, kind of in terms of hybrid, tablet PCs or are they more pure tablets? Just any color you can share there. And also, I don't know if there's any margin implications from your end.

So it's really hard to call right now. If you just take a snapshot of the products that are available on the market today and that are already announced to be launching at the time of the launch of Windows 8, all of the hype is around the ultrabook. There's -- and then there's a couple of, I guess, options around that too, number one being if it has a removal screen, that becomes a tablet, the other being around touch. So what we're hearing right now though, is because of the relative cost of some of those features, the sweet spot still likely is going to be in the ultrabook with nontouch. But I do believe that touch is really going to be the game-changer going forward. And as new products rollout, probably shortly after the launch, that's when we'll likely see touch and some of these other new features like removable screen really start to take off.

Okay. And any -- I guess, any -- in terms of that margin profile for you, is there any difference with these different platforms, or is it going to be similar to your, I guess, traditional PC business?

Our expectation is that the margin profiles are going to be similar to the same types of products that we've sold in the past, difference being that for a lot of this product, the average selling price, the price point is higher. So we're able to earn more absolute gross profit dollars on the products that we sell.

And our last question comes from Ananda Baruah with Brean Capital.

Maybe for both Thomas and for Kevin, I just wanted to get a sense about how we should think about, I guess, the levers on gross margins going into next year, and this kind of gets, Kevin, to your comments about mix. I mean, if consumers are going to stay soft and if Windows 8 kind of, and let's call kind of Windows 8 consumer part of consumer and if commercial isn't going to really get adopted, it's going to sort of follow a typical adoption curve, it feels like maybe the mix will stay about what it is or has the opportunity to stay where it is not really meaningfully changed for the next couple of quarters? And if that's the case, are there other leverage you can pull on the gross margin? I guess, I just want to make sure they were thinking about what -- sort of what's going to influence gross margin appropriately as we move forward here in a software side.

Okay. I'll take that initially from a higher level. And, Ananda, I know you're asking specifically about gross margin. I'm going to answer first from an operating margin perspective, which is really what our focus is and always has been. To start off with, before we've been getting the product mix, there are 2 key opportunities within SYNNEX that we're already on the improvement path of it. As we continue to see traction in margin improvement in our GBS business, as well as margin improvement in our Japanese business, everything else staying the same and how we run core distribution, we're going to see nice improvement in our overall results. But that, I think, is one of the most important levers that we have. Number two is we manage our distribution -- our core distribution business, day in and day out, in my opinion, better than anybody. And with the focus that we have on the higher-margin technology segment, as that mix continues to shift, and even though we saw a slight change in our product mix this past quarter, the overall trend over a longer term has been more towards this higher-margin product categories. As we continue to see that shift, this provides yet another longer-term backdrop to the higher operating margin. And that one, in particular, does also impact higher gross margin too.

That's helpful, so I got you. So near-term PCs will do what PCs will do, but the mix shift in business is a tailwind, longer-term. And then aside from that, you have -- we have this -- you have the operating margin expansion opportunities in size in those businesses like Japan and GBS as well.

That's correct.

And Ananda, this is Thomas. I just like to add a couple comments to that too. First of all, we did not talk about the current environment where, as we showed in our introductory remarks, there is some pricing pressure. So assuming that in 2013, we see some more stabilization or regular -- returning to the norm in terms of the pricing environment, that certainly represents an upside opportunity. The other thing back on Kevin's comments, which, I think, are very, very important when you think about the opportunity in Japan and the opportunity in GBS, 2 things: Number one, the segment in which GBS operates particularly the Concentrix market, is actually growing at a very nice rate. So from a very macro mix perspective, that segment stands to outgrow the distribution segment and obviously, be one of the several drivers that we have for continuing to drive both gross margin improvement and operating margin improvement. And then also, I would just point out for the benefit of the listeners just to kind of put a very, very rough handle on this, if you were -- and we've shared that our expectations, again, that will be back up into the double-digit operating margin profile with GBS over time, and we've shared also that we expect that in Japan, that our operating margins will continue to rise to levels that are similar to the same kind of business that we have in North America. Without getting into the specific details, if you just factor what that could look like into our operating margin on a go-forward basis, assuming, for example, current types of mix today, we're talking about a consolidated operating margin that is in that 2.5% to 3% range for this company. So I think Kevin is right in pointing out that we have 2 very big upside opportunities here, putting aside all the other development of some of the special investments we're making on the value-add side of the business.

So in closing, I just want to say I'm very pleased with our third quarter execution and market share gains, and I do look forward to speaking with all of you in upcoming investor conferences. Thank you.

Thank you. That does conclude today's conference. Thank you all for participating. You may disconnect.