Inphi Corp
Q2 2020 Earnings Call Transcript

Published: 4 Aug 2020

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Inphi Corp. Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to turn the conference to your speaker today Vern Essi. Please go ahead sir.

[Vern Essi:]

Thank you, Joelle. Good morning everyone and thank you for joining us today to discuss the financial results for the second quarter of 2020. A copy of today's press release can be found in the Investor Relations portion of Inphi's website at inphi.com/investors.

[Ford Tamer:]

Thanks Vern and thank you for joining us for Inphi's second quarter 2020 earnings update. Today, we'll be discussing our Q2 results, Q3 outlook, and the acquisitions of assets from Arrive Technologies. The second quarter of 2020 was a quarter unlike any other. On the one hand, we've all been following the challenges of COVID-19 as it continues to impact many regions. On the other hand, Inphi has continued strong demand across these product lines leading to strong financial performance and projections.

[John Edmunds:]

Thanks Ford. First allow me to clarify that we have recently reclass the some smaller older portions of the Cloud and Telco business to Legacy in Q2 and for the five preceding quarters of history. For instance, 11% and 2% of each area's respective Q1 revenues were reclassified. We know this type of change can be inconvenient, but we believe it will provide more transparency and better reporting over the long run. We have posted a spreadsheet and a PDF file on the website with the trend restated for the last five quarters to help facilitate the transition. The mix of business in Q2, '20 between Cloud, Telco and Legacy each as a percentage of total revenue are now very similar to the mix in Q2 2019, albeit at roughly twice the total revenue level in 2020 versus 2019. Also at Q2 levels the former eSilicon ASIC business in aggregate appears to be at a run rate threshold. So we plan to stop breaking that piece out from organic revenues for Q3 and going forward. Having made those provisors now let me recap the financial results. Our cloud products including PAM DSPs, and retimers, companion TiAs and drivers, COLORZ and new eSilicon, Data Center, ASICs comprised 44% of total revenues in Q2 as opposed to 46% one year ago. Q2 '20 cloud revenues represented growth of 10% sequentially and 92% year-over-year.

[Operator:]

Thank you. Our first question comes from Harlan Sur with JPMorgan. Your line is now open.

[Harlan Sur:]

Good morning guys and congratulations and the solid execution by the team and the strong results. So, you've just heard from most of your large cloud and hyperscale customers this turning season and by and large, very strong data center spending profile in the first half looks to be sustainable into the second half, driven by the significant step-up in data center traffic. 5G in China is firing looks to be strong through the second half of the year. All of this is clearly helping to drive a strong, but very diversified demand profile for the team. Ford, you guys had previously expected to grow sequentially every quarter this year, but off of a very strong Q2 and a very strong Q3 and you did talk about some normalization given competition. Pulling all of this together, how do you see the revenue trajectory in Q4? And can you just talk about the breadth of new customer ramps in Q4 and into 2021?

[Ford Tamer:]

Thank you, Harlan. Thank you for your question. The demand is very strong. And as you heard in my remarks, it's coming from all the different segments; inside data center, between data centers, in our cloud segment for both the Pam DSP inside and the cotter solution between, as well as telecom including PAM 4G, 5G, the coherent DSP and accompanying TiA driver; and finally the new the acquired eSilicon ASICs. We expect that strength to continue across the board into Q4 2020 and into 2021 at this point. But as we -- as you heard, we're not guiding for Q4 obviously.

[Harlan Sur:]

Great. Okay, and good to see COLORZ doing well. Your lead data center interconnect partner Microsoft continues its strong build-out of global data centers India, Poland, Italy, New Zealand, et cetera. These are all new build-outs. And then on top of that, Microsoft also won the $10 billion U.S. Department of Defense Jedi Cloud compute initiative which I assume is going to drive more demand for your DCI solutions at some point in the future. If you could just help us understand all of this impacts the second half outlook for the COLORZ business? And how is this potentially accelerating the move to your new 400ZR platform next year if you could just give us an update on the timing of your initial 400ZR production deployments?

[Ford Tamer:]

Yes. Thank you, Harlan. So, two questions. First, the existing 100G ZR solution is benefiting from an increased demand for edge computing and metro access bandwidths that's mushrooming. And we are seeing that demand continue strongly throughout this year and into 2021. At that time, we expect the 400 ZR to kick in sort of first half of 2021. As I discussed on our prior earnings call, we're still consistently expecting our ZR solution to go production in the first half of 2021 and ramp into volume starting in the mid-2021. And so you should expect the second half of 2021 to be a significant revenue driver coming from the 400-gig ZR solution at multiple cloud data center as well as telecom operators.

[Harlan Sur:]

Great. Thank you. Good to see the diversification in the business. Thank you.

[Operator:]

Thank you. Our next question comes from Tom O'Malley with Barclays. Your line is now open.

[Tom O'Malley:]

Good morning, guys and thanks for taking my question and congrats on the nice results. My first one is on the PAM business. Obviously, Ford you mentioned that you had some better expected share for the data center this quarter but then mentioned some increasing competition later in the year. Can you update us on what the expected TAM for that business as you previously had said about $300 million, 65% of share. Is that headed higher given we're two-thirds of the way through the year here with no competition? And can you just update us on what you expect that TAM to look like in 2021?

[Ford Tamer:]

Yes. Thank you, Tom. So first question is the market for PAM in 2020 is still expected to be around the $300 million mark. So that has not changed. Number two question, our share of that market in 2020 is much higher than what we had initially discussed. And that's coming from the competition being delayed in qualification. We do expect the competitors to be qualified and to at some point take market share in the second half of 2020 but we're still very confident of our market position given the excellent road map. And the customer support and the firmware that we are working closely with customers on. As we look into 2021, we expect that market to grow to about the $500 million or so range. And Tom just to be clear, the numbers I'm quoting you here are for the PAM market that includes 5G. So it's not just data center. But that's both data center and 5G and that’s both DSP as well as TiA driver in that market.

[Tom O'Malley:]

Okay. That's helpful. And then I just wanted to dive into the strength you guys saw in the telecom business. Obviously, some strength with the M-200 and you had some early ZR strength as well. But can you talk about the contribution from eSilicon? John, you mentioned some real strength there in the telecom market. And you said run rate you're about the $25 million plus range for the year. Can you talk about where that eSilicon number is headed. You're not going to guide it anymore but where was it for the quarter? And why was there such a strong contribution in GE?

[John Edmunds:]

So the primary growth driver in Q2 was in the telco area as we pointed out in the 5G ASICs and also in the legacy area with the older ASICs from eSilicon. So all told, the revenue threshold is running around $40 million or so per quarter for the business.

[Tom O'Malley:]

Thanks a lot, guys.

[John Edmunds:]

Sure.

[Operator:]

Thank you. Our next question comes from Vivek Arya with Bank of America Securities. Your line is now open.

[Vivek Arya:]

Thanks for taking the question and congratulations on the strong growth. Ford, the results this year have been exceptionally strong. I'm wondering, how do you keep a track of the utilization of your products to make sure that there's no pull-ins. Because I think earlier in the year there was some talk of extended lead times and so forth. I'm just curious how are you making sure that the utilization of your products is staying on track and there are no extraordinary pull-ins from China or otherwise?

[Ford Tamer:]

Thank you for the question. Yes. So in the data center, we have still shortages, so we cannot make the parts fast enough. We've had tremendous support from our partners in the supply chain and very thankful to all our partners for supporting this incredible revenue ramp for us. So we don't see any inventory right now in the data center. On the other hand we have actually shortages in the data center and we're working hard to cut down the lead times in that market. And the 5G is where we were worried at some point about having some inventory. But again we're seeing the deployment be well ahead of expectation and our checks and the supply chain have indicated that there's actually not that much inventory. We're talking about six months of inventory, we think right now in 5G. So that's actually down from where we expected that inventory to be at their last earnings call.

[Vivek Arya:]

I see. And as a follow-up the reclassification you did, put a lot more in legacy. And I think you explained that through I believe some older esilicon ASICs and you expect that to sustain for the rest of the year. What is the right way to think about that segment over the next 2, 3 years? Is this revenue that stays? Is there an air pocket when it goes away? Obviously there's not focus business for you, but it is still a meaningful part of sales. So what is the right way to think about this for the next handful of years?

[John Edmunds:]

Yes. So Vivek, this is John. What you're seeing right now is the newer 5G ASIC shipping into the telco space. Later this year and into next year we'll also see a new 5G -- I'm sorry a new ASIC that's going to be shipping into the data center space with a large customer. So we'll have those two new product ramps. We are seeing a surge in the older ASIC business which we think will sustain through the end of the year, at some stage, over several years that will probably peter out. But you have to remember these are all custom one-off ASICs that people design their systems around. And so they're only unlikely to fall out of the mix when those systems actually come out of service or unless the customer wants to buy out the ASIC production from us which in some cases we've been open to. So those -- that's kind of what we're working with. So right now we see the older ASICs sustaining through the end of the year. And we have an early surge in the Telco 5Gs, there's probably some channel fill and factory fill in there and that will be sort of compensated for by the data center ASIC ramping later this year and then into next year. So we do see some growth into next year, but it's ramped faster than we thought it might in Q1. I'm sorry in Q2 here and into 2020 which is good for us and then we'll see some growth into next year.

[Vivek Arya:]

Thank you.

[John Edmunds:]

Sure.

[Operator:]

Thank you. Our next question comes from Quinn Bolton with Needham. Your line is now open.

[Quinn Bolton:]

Hey guys, congratulations on the results and outlook. For just wanted to come back to the PAM4 in the data center business, wondering if you saw strength across the board across about 200 and 400 gig or whether the strength was driven by one or the other of those speeds.

[John Edmunds:]

Thank you, Quinn. So yes we saw strength across the board. The 400G was stronger in Q2 because of the ramp of a new cloud customer. We expect the strength to continue in Q3. And then we expect some new customer to come in the Q4 timeframe and have the 50-G PAM for 200-gig margin take over again. So -- but for the year we're seeing strengths across both segments.

[Quinn Bolton:]

Great. And then sort of a follow-on that Ford, you guys I think it -- OFC announced your speak 800 gig DSP. Can you give us a sense when that may enter volume production?

[Ford Tamer:]

Yes Quinn. We take about one year from the time we sample to the time we go to a full volume ramp at customers. We announced that product in March of last year -- of this year. And so you should expect that revenue to kick in a more significant type of revenue in the Q2 time frame of next year.

[Quinn Bolton:]

Great. And then just moving over to the ZR market, I think Inphi and Neophotonics had announced interoperability, but both modules based on the Inphi DSP. Have you guys conducted interoperability testing yet with an Acacia or NEO, DSP? And can you give us any update if you have?

[Ford Tamer:]

Yes, Quinn. First, the interop we have conducted with NeoPhotonics is very exciting, because it shows our vision of having a multi-source ecosystem for the ZR is here. And by the way, the NeoPhotonics solution is not only for data centers, also for telecom operator and they're being successful in fielding it there. We also are conducting and continue to conduct interop testing with other DSP solutions and we will announce that soon. But at this point, it's looking very good. And so, we are very excited about having a multi-source ecosystem for ZR, with three different DSP solution; Inphi, Acacia and NEL. We are – the three of us are exchanging interop test vectors, working closely on interop and very committed to interop between the three DSP solutions. At the same time, we're probably seeing a handful of module customers including ourselves, Acacia and NEL based solutions that are coming to market. So we've been committed to an open ecosystem all along and we're very positive that this is going to help the ZR business grow compared to captive solutions that are very proprietary and not open.

[Quinn Bolton:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Ross Seymore with Deutsche Bank. Your line is now open.

[Ross Seymore:]

Hi, guys. Thanks for letting me ask a question and congrats on the strong results. Ford, I want to go back to the China dynamic you talked about. I know there's a ton of uncertainty and things that are out of your control and it's prudent to take the Huawei business down to zero in the back half of the year. But I wanted to see the dynamics in a couple of different ways. One, in Greater China, are you seeing other people picking up demand from the Huawei side? And then, two, are you able to apply for a license to be able to ship to any of the Huawei side? So is the optionality still to the upside, or is it, in your opinion, a relatively permanent impairment of that customer and your ability to ship to it.

[Ford Tamer:]

Thank you, Ross. So in my prepared comment, I did not say we took Huawei out for the back end of the year. I said, we took it out for the balance of Q3. So that's the only statement we've made regarding Huawei. We, at this point, continuing to ship compliant with the U.S. EAR, so that's at a reduced rate to what we could ship otherwise. And I think, time will tell where this goes. We are hopeful that we get a win-win solution down the road. At this point, we're going to continue to stay cautious regarding that relationship.

[Ross Seymore:]

And then, one for John, on the OpEx side of things. You explained in detail why it was a little higher in the June quarter. Can you just talk about the philosophy on that? And the Arrive side of things, that acquisition, I assume, it sounds like it adds a lot more on the OpEx side of things than it does on the revenue side. But can you just talk about kind of what the normalized growth rate going forward, how much the Arrive acquisition contributes to that? And then, generally, how you should think about OpEx relative to revenue growth as the revenue side is growing so impressively?

[John Edmunds:]

Yeah, Ross. Thanks for the question. Arrive, we closed in the middle of the second quarter. It was a small transaction and we just went ahead and closed it and we're talking about it here on the earnings call. Although, we picked up a little over 100 engineers in Vietnam, the monthly operating cost for that is relatively low. And so, you’re – what you're looking at is probably something on the order of to $0.5 million to $1 million a quarter in spending that might come in. And they have some revenue and customer engagements that actually cover most of that cost. So on the whole we're picking it up with not much impact to the P&L. In another sense, I think, you're going to see operating expense expand to some degree. We're experiencing a lot of good growth right now, but we're also wanting to invest back in the business for the next-generation of growth moving forward. And so, you will see us investing as we move forward, to some degree here in Q3, but also in Q4 and into next year. So, from our point of view, we've had good growth, but we're just -- we feel like we're just getting started and we want to move on and invest to propel that growth on into the future.

[Ross Seymore:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Joe Moore with Morgan Stanley. Your line is now open.

[Joe Moore:]

Great. Thank you. In terms of Q2 can you help us size the Huawei and fiber home exposure if they kind of were at a material level. And I guess with Huawei you keep kind of taking it out of forecast and then they keep coming in with reasonable revenue. Do you think that will continue to -- I mean it seems conservative to take them out. But do you think that will continue to be a dynamic or just what's going to happen there?

[John Edmunds:]

Yes, Joe, this is John. Good question. We have booked some revenue already in Q3 and we don't want to imply that we were at risk for hitting the revenue target in Q3 with respect to Huawei. So, I think I understand that. Right now we're still able to ship products that are made outside of the U.S. or substantially outside of the U.S. under the current rules as they exist. We don't know that that will change moving forward. We also don't know what will happen with the federal leadership past the fall season here. So, if things change, they hopefully will change to the better and we'll have more freedom -- degrees of freedom to provide service. Huawei this year will be less than a 10% customer. So, I think overall it's -- this whole situation is hurt the market and hurt our business. But they're a good customer. They develop good technology and we'd like to continue to do business with them. So, you will see us trying to support them at some level as we move forward here to certainly to the degree we're able to.

[Joe Moore:]

Okay. Thank you. And then going back to the next question. I mean I feel like three months ago, there was a little bit more of a sense of we need to make sure we're shipping to end demand and things like that. Now, three months later, it sounds like you're still pretty tight on supply for data center. But it doesn't seem like you have the same kind of question. It seems like you're pretty confident you're shipping directly to in demand. Is that a fair read? And where would that -- I mean obviously the revenues have been great, but like it seems like the better the revenues are sometimes the more those and guides persist. Like what gives you the confidence that you're shipping to end demand rather than inventory accumulation?

[John Edmunds:]

Well, for particularly for the data center, they tend to move quickly in small windows. And so we're pretty confident that that's all going in and being used. We don't see that as stockpiling particularly for the U.S. data centers. And they do need more capacity, more bandwidth so all of that makes sense to us. We are, however, cautious as we move forward here and we try to be conservative as you know with our forecasting just to make sure that we can continue to deliver good results even if the macro around us is deteriorating to some degree. At some level, we're not immune, right? We'll succumb as well. But so far so good and we just keep looking forward to continuing to try to grow the company keep our heads down and grow the company's business.

[Joe Moore:]

Great. Thank you very much.

[Operator:]

Thank you. Our next question comes from Tore Svanberg from Stifel. Your line is now open.

[Tore Svanberg:]

Yes. Thank you. Congratulations and thank you for the disclosure. My first question is on the mix between PAM and Coherent as 400ZR starts ramping. Could you talk about PAM perhaps going after 400ZR mainstream? So, I'm just trying to understand where do you draw the line between PAM and Coherent? And maybe you could talk about it in terms of distances I guess?

[Ford Tamer:]

Yes. Thanks Tore. So, I think we think about it in two separate segments, cloud and 5G. So, first in the cloud, we really have one large customer driving the demand for 100G ZR between data center and for cloud. And that customer is going to remain very solid throughout 2020 into mid-2021. All the new installation in cloud will be 400-gig ZR. So, as we move forward beyond mid-2021 most of the revenue in the second half 2021 and going forward for the next few years are going to be 400-gig ZR and the cloud data segment. As we go into 5G, the limiting factor there is 40 kilometers. So, under 40 kilometer, PAM is winning and we've had some very significant shipment of PAM 4G, 5G. And as we go above 40-kilometer is where Coherent is winning and this is where we've seen the growth of both our own internal DSP as well as these 5G ASICs that we've been discussing on the call. So, the good news I think for us is that we are supporting both PAM and coherent for both cloud and 5G and that gives us diversification and strength. Thank you.

[Tore Svanberg:]

Thank you. And as my follow-up, just looking at COLORZ and I do obviously understand that up until now it's been one large customer. But as we see acceleration in this edge computing or distributed server architecture, are you starting to see more demand for even COLORZ I outside of your large customer?

[Ford Tamer:]

Yes Tore. We are seeing demand outside of one large customer, but it's a small number. It's less than 10%. So we don't speak about it as much, but what's relevant about it is that it's being adopted actually by Internet service provider, as well as telecom operators, obviously, the numbers are small but it bodes very well for the demand for 400-gig ZR as we go to 400-gig ZR. So all of these smaller accounts are actually teaching us and getting the customer base to learn. And as we migrate to 400-gig ZR those would be great opportunities for us to expand the market beyond just the major cloud providers.

[Tore Svanberg:]

Great. Congratulations again.

[Operator:]

Thank you. Our next question comes from Paul Silverstein with Cowen. Your line is now open.

[Paul Silverstein:]

Thanks for taking the question. Guys I'm a little bit confused. China as -- based on where products are shipped into was 50% of your 1Q revenue, it was $67 million, $68 million of $139 million. How much was thing of 2Q if Huawei was less than 10% where is your China revenue coming from?

[Ford Tamer:]

Paul, I'll let John give you some of the details. But at a high level, you should think of the China revenue, a large part of the China revenue comes from cloud data center in the U.S. So we have some very significant shipment to our module partners in China who are doing quite well and that represents a pretty large percent of the revenue. What you also should think about is this 5G ASIC that has now started to ramp for mid-haul and backhaul they were doing with another telecom OEM operator and that is also growing. So just don't think of China as Huawei. There is multiple customers outside of Huawei in the telecom space. There are some strong 5G on both PAM and coherent. There is some cloud module, U.S. cloud module makers that are -- margin being made for U.S. cloud. And all of this is coming from China.

[John Edmunds:]

Paul this is John. When you see the 10-Q file, I think we're going to be filing either late this week or early next. The number for China and Hong Kong will be up between 50% and 60% in the overall revenue. So it is up as a percentage of revenue. And as Ford pointed out it's not based on Huawei per se.

[Paul Silverstein:]

I appreciate the explanation. And then John I think I heard you say that telco inventory was down sequentially and it was around six months. The question is what is normal? What do you feel comfortable with?

[John Edmunds:]

If you ask me, I don't get my way around here very often, but it's -- I'd like to have somewhere in the range of 60 to 80 days. So we're up at around 128 days I think if I remember correctly. And we include that partly to have flexibility and be able to shift if customers' demands are shifting or the timing of the demand is shifting. But we have a pretty broad customer base at this stage both in products and customers. So that flexibility gives us the ability to react and keep them happy. So that's really why we carry more inventory at this stage, especially when we're ramping with a new product we're trying to support people as they're coming into production. They like to know that we're a good business partner and that we're there for them.

[Paul Silverstein:]

But just to be clear that's a choice you all have made as opposed to this long-standing concern about over ordering going throughout the industry. That's a choice you've made as opposed to force disclosure.

[Ford Tamer:]

Yes, absolutely Paul. I mean this is part of having to ramp with these large mega-cloud data center is an expectation to be able to deliver within relatively short lead times. And same actually on some of the other large customers we have on both the ASIC front and the telecom front. So we see this as strength and a choice that we've made to be able to be a strong partner in a world where supply chain is not always solid. So we've actually made an investment to be a very strong partner for our customers.

[Paul Silverstein:]

I appreciate that Ford. I'm hoping you some with one other quick question. I trust from the magnitude of the strength in your comments about the breadth that your non-China Telco business, 5G and beyond was strong from a breadth perspective not just from the magnitude?

[Ford Tamer:]

Our Telco business is strong across the world. Yes, thank you Paul.

[Paul Silverstein:]

All right. Thank you.

[Operator:]

And our final question comes from Srinivas Pajjuri with SMBC Nikko Securities. Your line is now open.

[Srinivas Pajjuri:]

Thank you and good morning guys. First, Ford in terms of the visibility into second half, can you compare in contrast with last quarter? Has the visibility improved, or has it relatively been stable, or is it because some of your larger peers have talked about a digestion period within the cloud data centers. So I'm just curious as to what you're seeing out there, or maybe your 200 400-gig ramp is offsetting that? Just want to hear your thoughts on that?

[Ford Tamer:]

Good morning Shri and thank you for the question. Yes the visibility is still the same, quite strong, driven by new customers coming on board and starting to ramp in the second half. So what you haven't seen in the numbers yet is, really the numbers so far in the cloud have been driven by two large mega cloud U.S.-based as we get into the second half of the year, we expect other U.S. and worldwide cloud to jump on the PAM bandwagon. We also expect as John discussed having an ASIC that is it a cloud customer to ramp in the second half of the year. That's not in numbers yet. And as we go into 2021, we do expect ZR to be a significant and meaningful new ramp again. We expect continued adoption of PAM inside the data center, as well as significant new adoption of PAM in 5G operators around the world. We've got quite a few different growth vectors that were very positive are going to allow us to inflect in a very good way in the second half of this year and 2021.

[Srinivas Pajjuri:]

That's great. And then just to follow-up on that. The 200, 400-gig transition you talked about two customers and maybe more coming. Just curious what sort of I guess you get some ASP benefit from that how should we think about the overall opportunity, the ASP improvement as you ramp through the next few quarters? Just trying to understand in terms of is it going to be similar to what we saw within the 100-gig is going to be different? So any color you could provide. I think would be helpful. Thank you.

[Ford Tamer:]

Yes. Thank you. So, on the ASP, we try not to take sides here so we try not to have a difference. We have customers building 400-gig modules with our PRIMA chip, as well as customers building 400-gig as 2x 200-gig was our Polaris chip. So the expectation from these large customers is that they shouldn't be a disadvantage and so that sort of solution price if you wish is kind of equivalent between the two segments. And you had a second question Srini can you…

[Srinivas Pajjuri:]

I was just trying to compare the ASP with the 100 GIG PAM, I mean PAM for that, you historically thought. Just what sort of -- because when you say 200, 400 is beneficial to you trying to kind of put that into some numbers as the units were.

[Ford Tamer:]

Right. So we really have a 50-gig PAM solution. That allows our customer to build 200-gig module. And what they're doing actually they're building two by 200-gig module to get to 400. And we've got 100-gig PAM solution where they build a 400-gig chipset solution. So what I'm saying is, we are -- do not -- we try to help the customer get to price parity whether it's 2 by 200 or 1 by 400 with either one of our chipsets. Hopefully that answers the question.

[Srinivas Pajjuri:]

Yes, thank you.

[Operator:]

Thank you. This conclude question and answer session. I would now like to turn the call back over to John Edmunds for closing remarks.

[John Edmunds:]

Thank you, Joel. Ford and Vern and I would like to thank everybody for joining us today. We plan to appear at the following virtual conferences in Q3. And we plan to appear at Oppenheimer on August 11 Bank of America the best ideas on August 12 JPMorgan Virtual Bus Tour on August 26; Jefferies Midwest Conference on September 1st and Deutsche Bank Annual Conference on September 14. Again we'd like to thank you for joining us today and we look forward to speaking with you again in the future.

[Operator:]

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect.