Donald W. Palette - Chief Financial Officer, Principal Accounting Officer and Vice President Stephen Ferranti - Liam K. Griffin - Executive Vice President and General Manager of High Performance Analog David J. Aldrich - Chief Executive Officer, President and Director

Alex Gauna - JMP Securities LLC, Research Division Edward F. Snyder - Charter Equity Research Anthony J. Stoss - Craig-Hallum Capital Group LLC, Research Division Aalok K. Shah - D.A. Davidson & Co., Research Division Dale Pfau - Cantor Fitzgerald & Co., Research Division Ittai Kidron - Oppenheimer & Co. Inc., Research Division Nathan Johnsen - Pacific Crest Securities, Inc., Research Division Sanjay Devgan - Morgan Stanley, Research Division Parag Agarwal - UBS Investment Bank, Research Division Sujeeva De Silva - ThinkEquity LLC, Research Division Vivek Arya - BofA Merrill Lynch, Research Division Blayne Curtis - Barclays Capital, Research Division Todd K. Koffman - Raymond James & Associates, Inc., Research Division

Good afternoon, and welcome to the Skyworks Solutions First Quarter Fiscal Year 2012 Earnings Conference Call. This call is being recorded. At this time, I will turn the call over to Steve Ferranti, Investor Relations for Skyworks. Mr. Ferranti, please go ahead.

Thank you, Elizabeth. Good afternoon, everyone, and welcome to Skyworks' First Fiscal Quarter 2012 Conference Call. Joining me today are Dave Aldrich, Don Palette and Liam Griffin. Dave will begin today's call with a business overview, followed by Don's financial review and outlook. We will then open the lines for your questions. Please note that our comments today will include statements relating future results that are forward looking as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially and adversely from those projected as result of certain risks and uncertainties, including but not limited to, those noted in our earnings release and those detailed from time to time in our SEC filings. I would also like to remind everyone that the results and guidance we will discuss today are from our non-GAAP income statement, consistent with the format we have used in the past. Please refer to our press release within the Investor Relations section of our company website for complete reconciliation to GAAP. With that, I'll turn over the call to Dave for his comments on the quarter.

Thank you, Steve, and welcome, everyone. Well, I'm pleased to report that we're off to a strong start to our 2012 fiscal year. Despite a challenging macroeconomic backdrop, we have once again exceeded our prior guidance. Our first quarter financial performance demonstrates how our market diversification strategy and our focus on operational excellence continues to drive stronger financial returns for the company. And during the quarter, we delivered revenue of $394 million, that's ahead of our guidance of $390 million and up more than 17% year-over-year. We generated strong operating profits, producing first quarter operating income of $105 million and cash flow from operations of $77 million. We earned $0.51 in diluted earnings per share, and this is $0.01 better than our prior guidance. Also during the quarter, we repurchased approximately 750,000 shares of our stock, and we retired $9 million of our convertible debt. And following the close of the quarter, we further enhanced our balance sheet and eliminated dilution by retiring the remaining $17 million of our outstanding debt. This leaves us now completely debt free. And we successfully closed our acquisition of Advanced Analogic Technologies or AATI. But before delving into the specifics of the quarter, I'd like to first describe for you, in broad terms, some of the key dynamics we're seeing in our business environment today. And as I'm sure everyone is aware, the market backdrop remains challenging given the current global macroeconomic climate. But despite this, we have continued to generate strong profits and cash flow even while absorbing the impact of a product transition within one of our major customers. And furthermore, we believe that the trough of our business occurs in this quarter, in the March quarter. And there are 2 primary reasons that Skyworks has been able to navigate through these…

Thanks, Dave, and thanks again for joining us, everyone. We appreciate that. I will first provide a summary of our first quarter results and then outline our business outlook for the second quarter of fiscal 2012. Revenue for the first fiscal quarter was $393.7 million, up more than 17% year-over-year. Gross profit was $174.4 million or 44.3% of revenue. Operating expenses were $69.3 million. That includes R&D the expense of $41.4 million and SG&A expense of $27.9 million, yielding $105.2 million of operating income and a 26.7% operating margin. Cash taxes were $8.9 million. That translates into an 8.5% tax rate, which is in line with our prior guidance. Net income was $96.2 million or $0.51 of diluted earnings per share, $0.01 better than our guidance. Turning to our first quarter balance sheet and cash flow statement. We generated $77.2 million in cash flow from operations. We also invested $6.4 million in capital expenditures with depreciation of $17.3 million. We expect our CapEx to remain below depreciation levels until the second half of fiscal 2012 as we increase volumes. We produced free cash flow of $70.8 million, which implies a 9% free cash flow yield based on our recent equity value in our calendar 2011 free cash flow. We repurchased 750,000 shares of our common stock and $9 million of our convertible debt and exited the quarter with $446.5 million in cash. Following the close of the first quarter, we completed the acquisition of AATI for roughly $200 million in net cash. It is worth pointing out that we elected to pursue an all-cash structure for this transaction in order to avoid issuing equity. In addition, we repurchased the remaining of our 2007 convertible notes. We are pleased to report that we are now completely debt-free. Now for our second quarter 2012 business outlook. We are guiding second quarter revenue to be approximately $360 million, including roughly a $14 million stub contribution from the acquisition of AATI. Excluding AATI, our second quarter guidance reflects slightly better-than-normal seasonality. At this revenue level, we suggest modeling gross margin in the 43% to 43.5% range, which factors in the impact of the seasonally lower revenue base. Looking ahead, we see gross margins improving in the third quarter as sequential revenue growth resumes and as we realize synergies associated with the AATI acquisition. We expect second quarter operating expense to be in the range of $74 million to $75 million, including AATI expenses for the period. Below the line, we expect no contribution from interest income and other expenses. We expect our cash tax rate for the remainder of fiscal 2012 to remain steady at around 8.5%. And as a result, we expect our non-GAAP diluted earnings per share to be $0.40 on a base of 189 million shares. That concludes our prepared remarks. So, operator, go ahead and open up the lines for questions.

[Operator Instructions] We'll take our first question from Alex Gauna from JMP Securities.

Dave, I was wondering if you could touch on some of the puts and takes during the quarter. What allowed you to exceed your guidance? And I was also wondering about linearity. And if you could touch on here visibility into Q1, I know you said it's a little bit better than seasonal. What are the puts and takes on that with regard to visibility on backlog, where we are in the uptick of LTE and also maybe where we are in wireless infrastructure spend?

Okay. Well, Alex, I would say that it was reasonably linear this quarter. It wasn't anything out of the ordinary in the December quarter. December has a slightly different profile than others as you can imagine, but nothing out of the ordinary. I think some of the puts and takes, our business, with, for example, Samsung was very strong with the launch of new products. Our HPA business in general was quite good. Our home automation and mobile connectivity business performed very well. Our standard catalog business went along strong, was sequentially up for the quarter. We saw some softness in pockets of 2G open market China, which was offset by the introduction of 3G and some of the momentum we're seeing with customers like Huawei and ZTE. So I would say those were kind of the puts and the take -- puts and takes. Infrastructure was a little soft as well. I think in Q2, we expect kind of more of the same. It's a seasonally low quarter. I don't see anything out of the ordinary in terms of overall inventory. I still see choppiness in the low end of the market in China. I still see a lot of launches -- new launches we're participating in for 3G that are penetrating the same market. Tremendous amount of design activity, which I think bodes pretty well for the second half of the year.

There was a large analog peer of yours that reported recently some more encouraging trends in terms of business picking up. Are you getting any glimmers of that would make you encouraged on the kind of broader semiconductor cycle?

Sure, Alex, this is Liam. Yes, we are seeing some signs of improvement across the broader landscape in HPA. The last -- the end of December seemed to get a little brighter. And as we get into the March quarter now, we feel like we have an ability here to perform very well against the to market. Our mobile connectivity, our wireless LAN portfolio looks very good. The Antenna Switch Module business, which is heavily weighted towards multiple modes and multiple bands across all RF applications is doing quite well. And then we are -- we believe that Infrastructure is going to start to pick back up. They had been soft, as Dave mentioned, in December. So we do see some encouragement there across the broader market.

We'll go to our next question from Parag Agarwal with UBS.

Dave, just wanted to get a feel for your design win pipeline. So if you look at your pipeline right now and compare it to your, say, 6 months back, do you see your design win momentum increasing? And do you think that you can grow faster than the market in the calendar 2012?

I do see it increasing because there have been a great deal -- there's been a great deal of emphasis on incorporating bands of LTE, creating more world-based ubiquitous products, more tablet design activity where the complexity is very high. So I think that the basic trend of increasing content and all that, that implies from design win standpoint is very much alive and well. It had been playing out, now, relative to 6 months ago. And I think that trend will continue, frankly. I think you'll see that throughout 2012, 2013.

And secondly, I mean, you hinted to your design win activity at LTE. How would you handicap your share in the LTE versus your competitors? And what do you think that you would be able to gain sockets in some of the upcoming Marquee [ph] LTE platforms?

Yes, our sky-high LTE is now demonstrating, and in real world environment is showing really, I'm quite -- our customers are quite impressed with the power-added efficiency and the low-current consumption. We're seeing PAEs north of 50% for this product line. They're quite rugged. We've been sampling them for some time. They're in production. We've been picking up reference design sockets. I would say, we probably are in the 40% overall market share range in terms of the total business. I think LTE is going to be a similar platform for us. I expect very high growth and an awful lot of design momentum right now as carriers are demanding this, even in networks that don't have that -- that are not enabled with LTE, they want these products to have LTE.

Yes. We're also seeing, in parallel, if you talk about infrastructure, the real driver right now in infrastructure is to put out that ecosystem and develop the carrier model to support high-frequency LTE. So you're starting to see a build-out with Ericsson, Nokia, Siemens, Huawei, names like that. So that's a little bit more back half of 2012, but that infrastructure is also rolling.

And I think probably as 2012 rolls out, we get into the late 2012, 2013, I think we will be by far the #1 producer of LTE. I think we will lead that space.

We'll take our next question from Nathan Johnsen with Pacific Crest Securities.

On the LTE side. I'm wondering if you could talk a little bit about, in your guys' expectations for the year, how many or what percentage of smartphones do you expect to be LTE enabled? And then when you look at how many LTE bands kind of the typical LTE smartphone would support, I was wondering if you can give an idea whether they will typically be dual band LTE or if there's other variations that you see kind of dominating? And then secondly, just in terms of looking at the competition, clearly you've got a couple of competitors that are in underutilized situation, just wondering what your strategy is for keeping ASP pressure from bleeding [ph] into the mix in the mid-part of the year?

Sure. With respect to LTE timing, you are starting to see the initial launches across some of our OEMs. We think that the real excitement around LTE in the consumers' hands will occur later in 2012. You'll see it in smartphones, potentially even tablets, which will be an ideal platform. So that's one part here. In the second question that you had related to content, we are absolutely amazed with the number frequencies and the RF addressable content that we see in a typical LTE device. You'll often have 2 or 3 bands of LTE, maybe 4 bands of LTE, backward compatibility to WCDMA, where there could be another 3 or 4 bands, and then even an EDGE device. So when we speak of content of $8 to $10, it's absolutely true. It's power amplifiers. We bring in our ASM. We could also add wireless connectivity to 5 gig and 2.4 gig modules. But we are looking at the $8 to $10 of content in these devices.

And, Nathan, as far as -- this is Don, on the pricing issue, there's been a lot of talk, you're right, from competitors in this space. And actually, we're not seeing anything unusual in the marketplace regarding pricing. Our current erosion and projected erosion is well within historical ranges. The ASP erosion is a market dynamic we're well accustomed to dealing with. And what's important is, now more than ever, this is not a commodity business, we're pricing along win share. I mean, customers are making decisions based on your product performance, technical capabilities and breadth. The baseband partnerships, you have scale and supplier reliability. Aggressive pricing really only works in the open market -- open China market, 2G. And as the low-cost producer in this space, we're in a much stronger position to manage this dynamic, and our financials consistently reflect that. So it's really that it's our ability to manage through that and our ability to have the products in place to take advantage of the requirements that the customers need. And it's just we don't see any different dynamic than we've been used to dealing with over the last [indiscernible].

And, Nathan, furthermore, to add what Don said, underutilization in this space is not a function of bad pricing decisions. It's a product issue. So if you -- there's plenty of market demand to fill capacity. We've been incrementally adding it. So I think if you look at where there are pockets of excess capacity, it's a product issue, it's not a pricing problem.

We'll hear next from Ittai Kidron with Oppenheimer. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: I had a few questions. Can you talk about your revenue concentration in your cellular business now that outside of Samsung and Apple it seems like every other vendor is stumbling. Sony Ericsson, bad numbers. Motorola, bad numbers. HTC, bad numbers. Can you tell us what -- how many 10% customers, how many 20% customers you have in your cellular business? And how do you expect that to change going forward?

Ittai, this is Don. The 10%, which is a number that we talk about on a quarterly basis, it was Foxconn, Samsung and Nokia, consistent with what it's been over the last multiple quarters. So that did not change in the quarter. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: And have any of them been above 20% at least without calling who?

No. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: And with regards to your guidance, so $14 million is coming from AATI. A, can you give us a little bit more color why such a low number? This is a company that typically does in the mid-20s. And since the deal closed on January 10 are you just being overly conservative here, just feel that, that number should be higher? And also on the gross margin, AATI gross margins in the upper 40s, why should we see a decline in gross margin in your second quarter. Why should not we actually see flat if not up?

Well, the AATI in the December quarter was around $15 million and change, it was around $16 million. Our $14 million, remember there was a stub period here, so our $14 million is only part of the quarter. So if you really go back in time, it's been some time since they were in the mid-20s. They've been running at sub-20. And I think if you look at the analog peers in the power management space, they've seen some pretty significant downturns, and AATI has not been immune to that. So I think that our guidance is pretty consistent with how they've been running since the market for these products sort of corrected a little bit. The other thing that we're doing is we are looking very, very hard at the product portfolio and making sure that we launch this business where we have the most competitive advantages. So we are doing some product line pruning and expect AATI to be emerging much stronger as we go through that process, which began when we closed last week.

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

My question is, I think on the pricing issue, you addressed the competitive pressures before. But I'm curious, Dave, what role is technology integration playing in pricing where multiple bands are being integrated? You have these multimode amplifiers, you have the conversion amplifiers. So what role is that integration playing in the pricing dynamic?

That's a great question, Vivek. So the way we look at that is that our customers today are, as you can imagine, really struggling with all the shielding and interference and filtering problems created by so many bands. And really, it's quite impressive to see this level of complexity given the current consumption requirements, the battery voltage issue, size, real physical size. And so what our customers are jumping to as quickly as we can provide it, as the industry can provide it, is some way to preserve performance as measured by battery talk time, among others, while at the same time just enabling the number of bands. So we see a steady march where each successive generation, for the most part, in general, has higher dollar content. That doesn't mean higher content per band. So the way to play this is we're able to integrate where we have some relatively modest incremental cost as we add more functionality, but our customer gets the value of not having to replicate the cost for each discrete band. So we get more dollar content. They get a more affordable band. They get a more integrated device, which takes up less size, and most importantly, consumes no more current or less current, hopefully. So the game is very much thinking of microprocessor business, right? We're adding functionality, which is keeping us ahead of the overall ASP curve, while adding value, enabling them to have more complexity that they can afford, that the market can afford. Now the fact is, as we said in the prepared comments, the ability to do that is limited to a very small handful of suppliers, which is very, very good for us, stable for pricing. And as Liam mentioned, we're adding a great deal of more content. We really love the fact that now when we go to an engagement, it's not just a multimode PA with discrete bands of LTE bolted on, it's an Antenna Switch Module, it's a 5-gig PA module incorporating backward compatibility to 2.4 on WiFi, it's a GPS product. And this is not a dream of ours. We're doing that right now. You're going to see products today that you can buy on the shelf that have all that content of Skyworks, unheard of a year ago.

And one follow-up, Dave. So one of your competitors, Avago, has very -- I have to say, very differentiated FBAR and voltage technology that they have been able to leverage and they have had a very good relationship with Qualcomm and on CDMA in the past. Just to conceptually, does a lack of an FBAR filter hurt you from a long-term perspective? And I know that you're looking at partnerships, but how do you look at that competitive threat long term?

Well, we've talked about this before, and it's playing out pretty quickly. First of all, FBAR technology is a great technology. The problem is that these filters are becoming increasingly multiband and low, medium and high band. And so SAW filter from a price performance is absolutely a requirement. So what we're finding is FBAR is great for certain high-frequency applications. But more and more on our customers' roadmap and our roadmap is the combination of these bands that are making a single technology not sufficient. So what we've been doing is we have been partnering with companies who view us the -- remember, we're the best in the PA space. We're the biggest in PA space. We're also -- I think, we're the best, we're the biggest by far. And so the filter providers in the world view as a wonderful partner to them and an entree to the market. So we are not -- these are not our roadmap. We are in high-volume production and we are winning PAD sockets of single band, multiband and their low, medium and high frequencies. So while we think FBAR is a great technology, so is SAW. It has a different performance characteristic, and we intend to play across the entire suite. And you'll increasingly see that if you crack open smartphones in 2012.

We'll go next to Todd Koffman with Raymond James. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: Can I just ask a follow-on to the comments you made on AATI? I think you said they did around $15 million in December, $14 million for March. They were doing comfortably north of 20 for many, many quarters. Is there something about their business that you've changed or you've gotten out of or is permanently impaired? Or do you expect to get their business back to what they were doing in 1 or 2 quarters?

Well, first of all, December -- Don, December was $15.7 million, just under $16 million. This quarter is $14 million for part of the quarter, we didn't own it for the whole quarter. And what was the September quarter, Don, do you your recall?

About $20 million.

About $20 million. So they really have been a 20 or sub-20 for now going on 9 months. And as I mentioned earlier, we think that's a function of the power management space in which they compete. You've seen other -- you've seen their competitors do pretty much the same thing. But we're also tuning up that product line, very much like we did with SiGe, we really expect to be able to put them on the right trajectory because we're adding our scale, our cost structure and our ability to bundle and integrate. And we feel very, very good about that acquisition. But it's not correct that they've been in the mid-20s. They've been 20 to sub-20. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: I thought the September quarter was $22 million, and the June quarter was $24 million, but maybe I have numbers wrong. Just an unrelated question, if you look at the margins of your business in the last, I don't know 3 or 4, 5 quarters, the gross margins, operating margins, they have now flattened out at a very attractive level. But you're continuing to put up fairly, very healthy growth rates. And I was wondering as we go forward, you signaled that you thought the gross margins might lean higher through the year. Are we now at a point where the margins are likely capped and the business can grow with the top line or that's not the case?

Todd, this is Don. That's absolutely not the case. We're going to be -- our expectation is to continue to deliver the margin expansion. It will be in step with revenue growth. It is volume- and revenue-dependent, but we've got the opportunities to drive the expansion clearly defined and they include the increasing dollar content as the migration of more complex architectures continues, we're going to leverage a hybrid manufacturing model with engineering focused on low-cost designs. We're making targeted productivity improvement CapEx investments, and we're going to grow the HPA business. All those things are going to continue to move the margins forward. And I do want to point out, I mean, if you look at the incremental changes that we've built the model off, if you look at the margin change from the December to the March quarter, we guided, that's about a 50% drop, which is what you would expect. Now there is some short-term pressure that you've seen with the 2 acquisitions. We have said they were a little bit, SiGe was a little bit below corporate average. We're moving that forward. We said the target is by the end of this year that they're going to be at or above Skyworks' averages. So when you've added some of this incremental revenue, it just put a little bit of pressure on it. But there's really nothing inherently different in the model. That's the takeaway.

Our next question comes from Blayne Curtis, Barclays Capital.

A couple of questions. When you mentioned the Galaxy Note, obviously there's 2 parts in there, the MMPA, you've addressed a little bit and then the Antenna Switch Modules. Just on the MMPA or the converged market, clearly that's with Infineon. I think Qualcomm is clearly moving to this. Just any perspective as to what percentage of the market is going to move these architectures then kind of the competitive view. I think everybody, at this point, has kind of some multimode PAs. And then just any comments on your switch business, kind of any relative, how big that is for you today and what your pipeline is?

Yes, the switch business is small for us today because only entered the ASM business in 2011. That's where the action is. As I say, we've had a lot of discrete switches -- our market discrete switches has been very high for us, multiband discrete switches. We've moved that portfolio over to a great deal of SOI incorporated -- silicon-on-insulator -- incorporated filter technology and we've now been producing ASMs, and we're getting really good traction for those products. They're very important on the receive side, insertion loss and how they impact current consumption. And again, the challenge is multibands, and we're quite good at that. So in fact some of these devices have 10-throw switches in them, unheard of a couple of years ago. I think Multimode is continuing to have its play. But remember these are -- these MMMB devices are really hybrids that will have bands of LTE bolted on to them. So picture this device and others like it, could have MMMB, could have bands of discrete or PADs and ASM. This product has a GPS LNA, has a 2.4- and a 5-gig WiFi module. So I think, in general, converged is going to continue or multimode will continue, but it will be part of a hybrid front-end architecture because the performance requirements are so high.

We'll go next to Dale Pfau with Cantor Fitzgerald. Dale Pfau - Cantor Fitzgerald & Co., Research Division: Could you give us a rough breakdown of your HPA business compared to your wireless business? And then my follow-up is on operating margin of the SiGe and the AATI business, I know you said on SiGe, you thought that the margins would come up. Could you talk about operating margins and where you think those are going to be relative to your overall business by the end of the year, Don?

Yes, the breakout is 30% HPA this quarter and 70% handset smartphones, which is consistent with where it was last quarter. And the follow-up on the SiGe operating margins. We don't -- it's a business segment for us. It's rolled into our mobile connectivity business, and it's clearly important part of the business going forward, but it is in a business that we report separate margins on. The only point I was making is we were cleared in the acquisition and if you've followed them in some of their filings, you saw that their product margins and operating margins were partly [ph] below corporate average. And we said we have a specific target in place, which we're well on track or for those to be at or above Skyworks' averages by 2012. Dale Pfau - Cantor Fitzgerald & Co., Research Division: And how about on AATI, same thing?

Yes, it's a similar story. They have a little higher product margins. But when you add in at the revenue level, their operating expenses that they had, it was a little bit below the overall Skyworks return. But again, the plan in place to drive margins forward, we've made some targeted OpEx reductions, and all that combined, we think again is within 3 quarters or so after the acquisition, we're going to be very close, if not, at the Skyworks' operating margins.

Next we'll hear from Aalok Shah, D.A. Davidson. Aalok K. Shah - D.A. Davidson & Co., Research Division: Don, just a couple quick housekeeping questions. in terms of AATI, I think you guys said revenues in the September quarter were, I think, what, fixed in the teens. In the 10-Q that I just pulled up, it looks it's $22 million. Can you tell me what happened between September and December to see a 27% dropoff in revenue?

I said that we're talking about December quarter, they were $16 million. Aalok K. Shah - D.A. Davidson & Co., Research Division: Okay.

September, I believe, they were around $21 million.

Yes, still $20 million to $21 million. Yes, so that's the number you're referring to. No, the $16 million was what we we're saying is they were $16 million in December and basically flat sequentially. And the difference between the $16 million and $14 million is the $2 million stub period, what we own them. That's... Aalok K. Shah - D.A. Davidson & Co., Research Division: And do you guys believe this is a trough level for them as well? I mean, how -- because that's a pretty big dropoff between September and December for them.

Yes, I mean, the September to December decline, a lot of that was market-driven. It was a pretty challenging quarter for the analog group in general. If you looked at some of the power management players, I think AATI endured the same headwind. As we bring that portfolio into Skyworks, we certainly think that we can expand the addressable customer set dramatically, alright? We have tremendous position across all the Tier 1 OEMs. We like the technology. We think power management is a very core expertise and competency to have and the IP there is significant. So we absolutely believe we're going to be able to grow the business. We've rightsized the OpEx. We can leverage a great sales channel. I think our operational team here at Skyworks is world-class. They'll be a part of the story. And we'll be, hopefully, reporting more good news to you as we go forward.

And Sujeeva De Silva with Think Equity has the next question.

What was the percent of 2G versus WWE this quarter?

It was 25% 2G and 75% EDGE/WCDMA.

And then also perhaps for Dave, it seems like you have a lot of products that go along with the power amplifiers for the handset. Do you get a benefit from your power amplifier being in the design when the sockets or are the wins relatively independent from each other?

Well, no. It's absolutely a bundling benefit. If I take the SiGe as an example, not only we're able to sort of tune-up, if you will, the product portfolio but by presenting it to those individuals sourcing and engineering within our customers where we have a long history, they went from sort of a small company where customers will work about engaging in these high-volume sockets to one of which they had confidence. So there's an immediate bundling and I think -- supply-chain reputation advantage that then becomes a product advantage in some cases. So we were able to take our mobile connectivity business and theirs, our experience with SLI, their experience with SLI, our packaging experience. We were able to drive some pretty compelling multiband WiFi devices an example. I think the -- if you look at AATI, if you look at what they're doing with camera flash drivers, for example, in smartphones. They're doing it with LG and Samsung and HTC. We think we have an opportunity to take those to other customers where they were kind of boxed out based upon scale.

We also have -- as you know, Sujee, we come from a deep experience, systems-level experience at Skyworks. So our engineering teams, our applications folks, coupled with the sales guys are able to really go in and architect optimal solutions. We understand the current budget for our customers. We know where we can apply some of that budget to 5-gig WiFi, some of that to multimode PA. And I think our ability to kind of work collaboratively with the customer has been really helpful.

I'll give you an example. When we introduced a family of ASM products, quite recently, one thing we were able to do was we're able to put the hands onto design benches and into platforms for them to test immediately across all our top customers. They didn't all buy it, some did, but I think that's a tremendous advantage that these smaller companies lack.

Our next question comes from Anthony Stoss with Craig-Hallum.

AATI had, call it, 3 customers in the wireless side. Given your scale, Liam, how quickly do you think you could add significantly more customers? Also, Liam, if you wouldn't mind talking about 2x2 and 3x3 MIMO, the kind of content jump that you expect to see in 2012 and how you think that plays out?

Sure. Well, with respect to AATI, I mean one of the things you said is exactly attracts us. As you probably observed, they have really done well with a small set of customers, and they've done real well. Their share has been high. We think we can replicate that model across all of our Tier 1 accounts. We like -- in general, I think the market for LED drivers backlighting more screens in one's hand, right? From TVs to smartphones to tablets, there's a TAM opportunity across-the-board and their customer set has been very narrow. Their camera flash technology, we think, is outstanding, yet it's only playing in a few accounts. I think they lack the scale. They lack the sales channel to really penetrate some of the other big drivers out there from a customer perspective. We think we can turn that around. With respect to MIMO technology. If you look at what's happening in wireless LAN, that is an area where it's been explosive growth for us. It's been a performance-driven market as Dave articulated. We see the same thing in cellular. And basically, a 2x2 MIMO is 2x the content of a 1x1. It's linear. A 3x3 is 3x the content. So you get multiple inputs, multiple outputs, multiple radios and multiple bands. And we see that trend moving forward as video becomes more important to the user.

One last quick the question. Can you talk about reference design activity on the LTE side?

Sure. We're engaged with all the significant players that would be porting LTE, of course, Qualcomm, Infineon Mobile and others. We have a great portfolio. We have OEM relationships. As Dave mentioned before, we have the R&D horsepower and the application savvy to make sure the best-in-class products are appropriately positioned with the leading baseband providers, and that ultimately will flow through to the OEMs.

We'll take the next question from Edward Snyder with Charter Equity research.

A couple of questions. You pointed to the proliferation of bands and modes in these phones getting to some very high-teen rates for the largest ones. I think just about every OEM is looking at deploying some form of MMPA in 2012. But the pricing for most of these devices seems to be less than the sum of the parts. I know, for example, the Avago part that went into Apple, which is the 3-Di [ph] part, is less than the sum of that part. And some of the pricing we're hearing from Samsung is a similar trend. So the question is, as we move to these converged and hybrid devices, won't we expect to see a significant increase in overall TAM compression? And if so, are you going to make that up through some of the other parts like the Antenna Switch Modules you spoke of in the SiGe acquisition and maybe some of the stuff out of AATI?

Ed, I will say that on average, it's absolutely the case. On average. That as more bands are being added, the TAM is up. So there are couple of examples, where that hasn't been the case. But on average, that -- overall, that's not the case. As more bands have been added, as the transition from feature phones to smartphones, the TAM is up, and not up a little bit, up substantially. There aren't that many smartphones today that aren't engaging in not only multimodes, multiband for 3G but also 4G and all the content it implies it bolts around it. I mean, yes, there's a PA. You can integrate bands in the PA, but you've got to figure out the filtering, the switching, the receive side and it's very complicated, the ASM is higher. So I think there will be more multimode. We welcome multimode because we think that by moving from a discrete implementation to more higher levels of integration, the competitive landscape gets much narrower. Much narrower. And you see that as we're now competing typically in our larger sockets with our customers. If we're competing with -- we're competing with one other company usually. And that company differs from standard to standard, and we like that a lot. We like to see the nature of the competition getting a little bit more niche-y as we become more broad.

Yes. Let me add, Ed, to that. And if you look at what's happening in the China, we talk about the China market contracting and being a difficult base for pricing. But while we see that $1 ASP market go down, we see more plays with Huawei and ZTE and HTC now bringing on 2 smartphones that are $3, $4, $5 in content. So in addition to the net unit-to-unit TAM increase that we see in a given smartphone portfolio, we're seeing the subscriber base gravitate towards smartphones at a much faster rate. And there's still a big upside there in emerging markets.

That was my follow-on question there. Indeed, like you [ph] -- we've seen the massive increase in content just on bands alone with those additional modes. But we only have maybe 3 models out there that are converged now. You've got Link Co [ph]. You got the Galaxy parts out there. Apple's got a part out there. So we've only got maybe 2 or 3 models that have been using hybrids, much less converged. So I guess the question is, as, let's just pretend overnight that every handset OEM puts half of their phones on the block for converged or MMPAs, I guess what you're saying is, that wouldn't be enough to offset this 1 to 2 bands going 2 to 3 bands in the massive phones. There are still...

Yes, that's right. The upgrade cycle from feature phones to 3Gs and smartphones is always an increase in content that's rather significant. And even among the company -- we talked about in our prepared comments what's going on at Samsung today. In those products there's a lot more RF content in those products than one they replaced. A lot more. And we have the advantage of sitting here and designing products that are late 2012, 2013, and I will tell you, the average content is substantially higher.

We'll hear next from Sanjay Devgan on with Morgan Stanley.

First question, just kind of dove-tailing off the question on MIMO and wireless LAN, you talked about the content uplift for going 2x2 to 3x3. I wanted to get your thoughts on 802.11ac. I know it's kind of nascent, but we've heard some folks in the ecosystem talk about ac and potentially rolling out ac solutions to access points and I'm guessing eventually to handsets. I was wondering how that plays into you guys in terms of a content adder? And then second question is, just on AATI, now that you've done the SiGe acquisition, you've done AATI, was wondering how difficult -- it's obviously there's a revenue synergy opportunity in terms of leveraging the customer bases for each company, but on an R&D basis, how difficult is it to leverage engineering resources across different process technologies, i.e. gallium arsenide, CMOS, silicon germanium. If you can talk about that and what kind of R&D synergies can we expect to get from that?

Okay, okay. Let me start with wireless LAN. Yes, you absolutely nailed it. A very key move for us in technology. The 802.11ac space is really the next upgrade cycle in wireless LAN. It would be what LTE is to cellular, 802.11ac is to WiFi. We have an outstanding position in that category. We are partnered up very closely with Broadcom, one of the leaders in the chipset space. This technology is really made perfectly for video distribution and video communication, higher data rates, higher performance. We think it's going to be a great new category and an extension of WiFi. It will raise the TAM. It will raise the performance requirements, be deployed in access points. I think on the receive side, you're going to see this technology in tablets and TDs. We feel real good about it. You'll see more releases from Skyworks this year. And with respect to AATI and R&D, one of the advantages that we have at Skyworks in that we are a technology leader, we're also a manufacturer. We have fabs in-house, we have partners outside and we have a team is here that is well-equipped to manage the most complex engineering tasks. So as we bring this company in, and we make some changes to OpEx and work on portfolio management, there'll be a lot of leverage from the talent pool within Skyworks today to lean into this technology to support ongoing R&D efforts. So you're going to actually see an increase in the ability to deliver complex products as this company comes inside.

We'll take a follow-up question from Ittai Kidron. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: Don, I wanted to ask about your CapEx comments. I think you mentioned, if I got that right, that in the second half of the year, your CapEx is going to start rising above your depreciation. Can you give us a little bit more color on that? And for how long should we assume CapEx would be above depreciation and by how much?

Just to frame that. With what we spent in Q1 and where we're projecting Q2, we're going to be in roughly $20 million, maybe a little over $20 million in CapEx. And Q2 is the trough, and as the market continues to rebound, and we think we continue to gain share and strengthen our position, that's going to mean some incremental CapEx investment, but it's not a significant amount above those levels. Ittai Kidron - Oppenheimer & Co. Inc., Research Division: And as far as your OpEx is concerned, clearly your OpEx now includes AATI. But under the assumption that working quite aggressively right now to reduce that headcount, should we expect OpEx to be flat for the next 2, 3 quarters, down potentially for the next 2, 3 quarters?

No, that forecast does include the AATI operating expenses that will move forward with post-synergies after the acquisition. But there will be -- we're adding some targeted headcount for opportunities in the second half and there's some other expense drivers where you really take the Q2 forecast. You need to model some increase into that in the second half of the year. But it won't be material, but you do need to add some increases to that.

And, ladies and gentlemen, that does conclude today's question-and-answer session. I'll turn the call back over to Mr. Aldrich for any closing comments.

Okay. Well, thank you very much for participating, and we look forward to seeing you all at the upcoming conferences.

Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation.