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Executives

Shannon Pleasant - Director of Corporate Communications

Necip Sayiner - President and CEO

Bill Bock - CFO

Paul Walsh - CAO

Analysts

Tore Svanberg - Thomas Weisel Partners

Craig Ellis - Citigroup

Arnab Chanda - Deutsche Bank Securities

Romit Shah - Lehman Brothers

Sandy Harrison - Signal Hill Group

Suji De Silva - Kaufman Bros

Craig Berger - Friedman, Billings, Ramsey & Co.

Silicon Laboratories, Inc. (SLAB) Q3 2008 Earnings Call October 29, 2008 8:30 AM ET

Operator

Welcome to the Silicon Laboratories Third Quarter Earnings Call. All participants will be on listen-only mode until the question-and-answer session. Today's conference is being recorded. If you have any objections, please disconnect at this time.

Now, I will turn the call over to Ms. Shannon Pleasant. Ma'am, you may begin.

Shannon Pleasant

This is Shannon Pleasant, Director of Corporate Communications for Silicon Laboratories. Thank you for joining us today to discuss the company's quarterly financial results. The financial press release, reconciliation of GAAP to non-GAAP financial measures and other financial measurement tables are now available on the investor page of our website at www.silabs.com.

This call is being simulcast and will be archived on our website. There will also be a telephone replay available approximately one hour after the completion of the call at 800-294-9508.

I am joined today by Necip Sayiner, President and Chief Executive Officer, Bill Bock, Chief Financial Officer, and Paul Walsh, Chief Accounting Officer. We will discuss our financial results and review our business activities for the quarter. We will have a question-and-answer session following the presentation.

Before we begin, let me comment regarding the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. Our comments and presentation today will include forward-looking statements or projections that involve substantial risks and uncertainties. We base these forward-looking statements on information available to us, as of the day of this call. This information will likely change overtime.

By discussing our current perception of our market and the future performance of Silicon Laboratories and our products with you today, we are not undertaking an obligation to provide updates in the future. There are a variety of factors that we may not be able to accurately predict our control and could have a material, adverse effect on our business, operating results and conditions. We encourage you to review our SEC filings, including the Form 10-Q that we anticipate will be filed today that identify important factors that could cause actual results to differ materially from those contained in any forward-looking statements.

Also the non-GAAP financial measurements, which are discussed today, are not intended to replace the presentation of Silicon Labs GAAP financial results. We are providing this information because it may enable investors to perform meaningful comparisons of operating results, and more clearly highlight of results of core ongoing operations.

I would now like to turn the call over to Silicon Laboratories Chief Financial Officer, Bill Bock.

Bill Bock

Thanks, Shannon. I'm delighted to report another outstanding quarter. Our business continues to deliver very strong performance in the face of a deteriorating economic environment. Q3 revenue of $113.5 million is above the midpoint of our guidance range representing a sequential increase of 8.5%, and a 29% increase over the same period last year.

Pro forma earnings of $0.68 far exceeded our guidance, due in part to one-time favorable tax events but also due to better than projected operating performance.

Fully diluted GAAP earnings per share, which include acquisition-related charges was meaningfully better than expected at $0.02. The GAAP earnings of $0.02 per share include significant charges related to the acquisition of Integration Associates.

There is a $10 million write-off of in process R&D and a $1.4 million fair value markup of cost of sales for the quarter. In addition, we incurred a $12 million tax expense associated with incorporating the acquisition into our international operating structure.

Finally, and as is typical, the GAAP results included the impact of stock compensation expense of $10 million, which was flat to last quarter levels, despite the addition of more than 100 new employees during the quarter. GAAP gross margin decreased as expected to 61.1% of revenue, due primarily to the effects of the acquisition.

Operating expenses increased due mostly to the acquisition-related headcount increase. Research and development investment including in process R&D was $36 million and SG&A expense was $25.9 million. Other income, principally interest income on invested cash was approximately $2 million.

Turning to our pro forma results; on revenue of $113.5 million, non-GAAP gross margin was 62.4%, which is above our target range. This performance, particularly given the acquisition of product lines with current margins lower than our corporate average, highlights the strength of our diversified business and the potential for longer term margin expansion. For fourth quarter, we expect margins will remain near the high-end of our target range of 60% to 62%.

We continue to contain operating expenses, which ended the quarter lower than forecasted at 36.9% of revenue. R&D increased sequentially to $22.3 million and SG&A increased to $19.6 million. These increases were primarily related to the acquisitions that were less than originally projected, due to additional spending discipline applied during the quarter.

We are still anticipating that R&D investment will increase going forward, as we continue to recruit new talent and tape out new products. We expect SG&A expenses will increase modestly, as we end the year, due to a full three month impact of the acquisition.

I believe that we will be in a position to continue to drive SG&A cost down as a percentage of revenue in 2009. In fact, SG&A has declined to 18% of revenue year-to-date, fully three points below 2007 levels and nearly six points favorable to 2006.

We can further slow our rate spending if we see signs that there will be sustained softness in customer demand.

Strong revenue, healthy gross margin and lower than anticipated expenses produced an outstanding above model operating income level of 25.5% or $29 million. With this result, we have now delivered above model operating income performance of 25.2% for the full trailing 12 month period. Other income in the quarter was $2 million and is expected to decline in Q4 to between $1 million to $1.5 million due to the lower cash balance.

We had a negative non-GAAP income tax rate in the quarter of 5.7%, resulting in $1.8 million credit. There were two significant tax benefits realized in the quarter. First, a nearly $8 million tax reserve position established in 2004 was released as the statute of limitations expired and we are no longer subject to IRS review of that year.

Secondly, the federal R&D tax credit was recently enacted into law with retroactive treatment for the full year. These two items had a $0.19 favorable impact on our non-GAAP earnings per share. We expect the tax rate to be approximately 20% in the fourth quarter.

Net income, therefore, increased significantly to $33 million or 28.8% of revenue. The earnings per share result was $0.68. Even without the tax benefits, EPS would have been $0.49 well above guidance due to the strong gross margin performance and lower spending. It was an excellent quarter.

Moving onto the balance sheet, accounts receivables increased to $61.6 million due to the growth in the business and the receivables acquired. Day sales outstanding ended at just under 49 days. Inventory increased by approximately the dollar value acquired in the acquisition.

The resulting turns for the quarter were 5.1. We expect year ending inventory to remain about flat. Both accounts are receivable and inventory metrics are consistent with our model and we believe working capital is in very good shape.

In Q3, we took advantage of market volatility and purchased more than two million shares totaling $69 million. We therefore, have only 13 million remaining of our current $400 million authorization that is scheduled to expire in July of 2009.

We also made a $75 million payment for the IA acquisition during the quarter. Partially offsetting these cash expenses was cash flow from operations of $36 million, resulting in a quarter ending cash balance of $336 million.

We continued to have one of the very best balance sheets among our analog peers when measured by cash flow, as a percent of revenue or in terms of total cash as a percent of revenue. The ability of our business to generate cash combined with conservative financial management gives us flexibility and reduces shareholder risk particularly in the current environment.

Given the strength of our balance sheet, strong cash flows from operations and a view that our shares are significantly undervalued in today's market, our Board of Directors last week approved an additional 12 month share repurchase authorization of $100 million. This action reflects the confidence we have in our business and the expectation that we will emerge from the current economic downturn stronger and in an even better competitive position.

Necip, I will now turn the discussion over to you.

Necip Sayiner

Thanks, Bill. I continue to believe that our diversification, sustainable differentiation, new products and customer penetration are the basis for our success in this market environment. When coupled with the strong financial management Bill described, we are uniquely positioned to outperform relative to our peers and to take advantage of competitor weakness to emerge in a leadership position when the market recovers.

We are looking at our expanded portfolio in three major categories to try and help simplify the business for investors. Our RF business includes our broadcast audio products, which are the large majority of the RF revenue today. The video products which are just beginning to contribute and the short range wireless products we recently acquired.

On a long-term basis, we believe the RF business can grow at 15% to 20%. Our asset business includes our voice and embedded modems products. This is a stable, profitable business we believe can achieve modest long-term growth.

Our broad based business includes our MCU, timing and power businesses today. MCU represents about 60% of the broad-based pie followed by timing and power. The long-term growth rate for the broad-based business is expected to be 40% to 50%.

There is a small portion of our business, which we categorize as mature products that are not the focus of current R&D investment. These products represent less than 10% of our revenue.

In Q3 our RF business had a stellar quarter. All of our Broadcast Audio Products, FM tuner, transmitters and AM/FM receivers were up double-digits sequentially, and both handset and non-handset revenue were also up double-digits. We continue to gain share with top handset OEMs and our blended ASP's help as we ramp new higher value products at large customers.

Demand from portable navigation device makers resumes in Q3. We also continue to make steady progress, growing revenue of our AM/FM products into consumer audio devices. For example, our radio is designed into the latest ihome docking stations that are expected to begin shipping in time for the Christmas season. We also believe that there is a solid foundation for future growth in the audio business.

In Q3, we secured 116 new design wins, about 50 of these were in handsets, an indication that we continue to win in the cell phone market. In fact, last month, we won every available handset design for radios and transformers. While the competitive environment is becoming increasingly crowded, radio penetration in handsets is growing, the low-end handset market is expanding and we continue to offer the highest performance, smallest footprint radio solutions by a wide margin.

We have also started cultivating design wins for our EZRadio short-range wireless transceivers. These products are designed for point-to-point data transmission in applications like remote keyless entry, home automation and automated meter reading.

The first products have been rolled out to our channel and development tools with EZRadio and our MCUs are now available. We have begun to secure wins with existing large customers and anticipate that while the business is relatively small on a percentage basis today, it will be a strong engine for growth in its own right and as pulled through for MCUs in 2009.

In combination, we expect our RF business to be down sequentially in Q4. The handset segment is expected to be roughly flat while the P&D and consumer audio segments are expected to be down due to weaker end user demand.

Our Access Business declined sequentially as expected of a record Q2. Business remains solid in the satellite set-top box market and we see share gain opportunities in multifunction printers, [pawn] equipment and residential gateways for voice-over broadband.

We are expecting the Access Business to be roughly flat in the fourth quarter. This business is outperforming our expectations from a growth standpoint and will likely end the year up over 10% compared to 2007. Our broad-based business was up in Q3 about 50% year-over-year led by strong momentum in our timing business.

We achieved several strategic milestones related to timing products in Q3. The record revenue was driven by demand for both our new oscillators and any-rate clock products. We also introduced a truly revolutionary family of Silicon Oscillator to address price sensitive, high volume, lower-end, consumer-oriented applications like disk drives and camcorders. The Si500 is the first silicon oscillator in the market, to match the performance and reliability of traditional oscillators.

We plan to also start introducing, new clock products this quarter that will expand our stand into higher volume segments of the communications and consumer markets. We believe, we can bring our expertise to bear to radically simplify the customer supply chains while reducing system costs.

The MCU business declined slightly [above] a strong Q2. We shipped about 4000 new development kits and added over 200 design wins during the quarter, so the funnel remains strong. We expanded the product line, introducing another family of MCUs or automotive body electronics and point-of-control applications.

We are also seeing design wins for our low power, low voltage products introduced earlier this year in a variety of applications, including set-top boxes and environmental monitoring and control.

We have seen softness in demand from several MCU customers in China and some instances of slower than expected ramps of new design wins.

Share gain has generally been offsetting the effects of economic weakness, allowing the MCU business to grow over 30% year-to-date. However, we are anticipating this growth rate will moderate in future quarters until we see some recovery in the macroeconomic environment.

Our emerging power business, which represents low single-digits of our total revenue today, had a nice step-up in Q3, due to a more than doubling of isolator revenue and additional revenue from newly acquired products. Green standards such as energy stocks to point out are driving demand for higher efficiency and we are seeing opportunities for our AC to DC converter products at several large customers. Customers are also qualifying our Power over Ethernet products for early 2009 ramps. In combination, we expect our broad-based business to be up slightly sequentially in Q4.

Looking to the fourth quarter, we are seeing the effects of the macroeconomic slowdown on what is typically a seasonally strong period. We are seeing softness in consumer demand and businesses such as broadcast audio and MCU are being affected. Nevertheless, we feel very positive about our company posture and expect to perform above the industry average through this difficult period. We are entering the quarter with a good handle on operating expenses and we are very well positioned with our customers.

Our business is right sized, we have controlled expense growth and we have excellent margin performance. We believe this enables us to whether the current volatility in the end markets better than most.

We expect Q4 revenue to be flat to down 5% sequentially. The diversification of our business and the numerous new product cycles we enjoy, are allowing us to offset a good deal of general market weakness.

We expect gross margin to hold at the upper-end of our range of 60% to 62%. We anticipate our R&D investment will be 21% to 22% of revenue. SG&A expense is expected to increase slightly from third quarter levels.

Fourth quarter net income per fully diluted share on a GAAP basis, is expected to be $0.21 to $0.26. Fourth quarter non-GAAP EPS, excluding non-cash charges, is expected to be in the range of $0.41 to $0.46.

We'd now like to take your questions.

Shannon Pleasant

Thank you, Necip. We will now open the call for the question-and-answer session, so that we can accommodate questions from as many people as possible before the market open, please limit your questions to one with one follow-up. Operator, please review the question-and-answer instructions for our call participants.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Tore Svanberg. Your line is open.

Tore Svanberg - Thomas Weisel Partners

Yes. Thank you. I was just wondering if you could add a little bit of comment on your visibility. Obviously, you're doing quite well here compared to your peers, but could you just talk a little bit about your visibility as far as backlog and maybe current booking from that business concerned?

Necip Sayiner

So in the guidance we provided for the business for 4Q follows the same principles we always have in terms of considering the amount of backlog and a bottoms up forecast from our sales team. We haven't applied any additional judgment to our guidance other than the usual conservatism that we usually attach to our revenue guidance fourth quarter.

Tore Svanberg - Thomas Weisel Partners

Sounds good and as a follow-up re the microcontroller business it seems like you are expecting that to be a little bit more moderate next couple of quarters. Is that really because of the economy or were there any key customers or key programs there that have already ramped and are now slowing down?

Necip Sayiner

In the third quarter we had a couple of specific events with some factory shutdowns in China and some inventories being worked out again in China with a couple of customers, and some of the design wins we have had ramping more slowly than we had anticipated. But beyond those specific events, I also believe that there is a softness in overall demand that we are seeing, which we are accounting with some of the new product cycles and new customers. But I believe for the next few quarters, until the macro environment improves, the growth rate for the MCU business will not be sustained at the 30 plus percent range we've enjoyed.

Tore Svanberg - Thomas Weisel Partners

Great, thank you and congratulations on the results.

Necip Sayiner

Thank you, Tore.

Operator

Next question comes from Craig Ellis. Your line is open.

Craig Ellis - Citigroup

I go by many names. Thanks for taking the question, guys. Bill, I'm wondering if you can clarify what the contribution was from Integration Associates in the current quarter and if you can just give us a glimpse into what it would be in the fourth quarter guidance?

Bill Bock

We had indicated that IA would contribute about $6 million to third quarter revenue over a two month time period and in fact they were slightly favorable to that outcome. For the fourth quarter, we will have full three months of the acquisition included in the consolidated results. So revenues will increase, although the IA business is being affected by the slowdown in the economy, essentially the same way everything else is, so perhaps a little bit less than our original expectations for Q4.

Craig Ellis - Citigroup

Okay. And then looking at the gross margin line over time you want to pool the Integration Associates business into your own manufacture. How should we think about the time line for doing that, Bill?

Bill Bock

It's going to take awhile because there are multiple different actions that we can take to improve margins within the IA product lines. I think that as a practical matter most of these efforts will be complete by the time we are exiting 2009, but various components will roll in, as we go throughout the year.

Craig Ellis - Citigroup

Okay. And then lastly for me, on the staffing side, you mentioned that you added a 100 people in the quarter. How should we think about the outlook for the fourth quarter in terms of employee additions and what about 2009?

Bill Bock

So the employee additions in the third quarter were dominated by the headcount that we obtained via the acquisition. So the reason that it's a number like 100 is strictly due to that transaction. In the fourth quarter, we will continue to add in our R&D organizations, as we have been recruiting for key technical talent, but we are very tight in terms of resource additions in SG&A and overhead categories. So I expect that the, headcount growth in Q4 will be quite modest.

Looking into 2009, we are certainly taking a cautious view until we see the macroeconomic environment improve and headcount growth as we go through the year will be relatively slow and really restricted to key engineering positions.

Craig Ellis - Citigroup

Thanks, Bill and good job, guys.

Operator

Our next question comes from Arnab Chanda. Your line is open.

Arnab Chanda - Deutsche Bank Securities

A couple of questions first of all, can you talk a little bit about your broad-based business, what are the areas that you are targeting in power and in timing, where are you seeing the strength both by product and markets? Thank you.

Necip Sayiner

Hi, Arnab. In power, we have three distinct product lines. One is in Isolators and ISO drivers utilizing our isolation technology that is ramping nicely for us. Second is Power over Ethernet, where we have products in both the power sourcing side as well as the client side and as I mentioned, several customers are qualifying us for early 2009 ramps for those products. Thirdly, we had the AC to DC converter product line that we've acquired from IA that we are seeing strong interest from both their existing customers as well as some of our existing customers in the Access Business.

Arnab Chanda - Deutsche Bank Securities

How about timing?

Necip Sayiner

In timing what we are doing is we are continuing to expand our served markets. We have announced the Crystallized Oscillator 500 in recent weeks. We have another coming up shortly as we round out the portfolio. What we are doing, is we're moving down to higher volume segments of the consumer and communications market that still values the type of performance our products provide. Ultimately, what we'll be able to do in a short timeframe is to offer everything the customer needs to build their clock tree for their entire designs with our oscillators and clocks.

Arnab Chanda - Deutsche Bank Securities

One question for Bill. Your operating performance has been stronger than your historical goals, I think, so has been gross margin. Do you think you're still trying to get to that 25, now that revenues will be coming down or do you think, there is a potential exceeding that or about sort of a long-term goal?

Bill Bock

Arnab, I think the 25% objective has served us very well. We came out of the divesture of the cellular business, running at only about 11% of operating income and have really worked hard to improve that metric over the last two years. It's with a lot of pleasure that I see we've achieved 25% for a full trailing 12 month period.

Looking into the fourth quarter on a potentially lower revenue level, operating incomes are going to have to moderate slightly, and I suspect that we will stay below 25% as long as the macroeconomic environment remains this weak. But I think we've now clearly demonstrated that the business is capable of running at that level. And as demand begins to return to more normal levels, we would expect to return to this kind of performance.

Arnab Chanda - Deutsche Bank Securities

Thanks, Bill. Thanks, Necip.

Necip Sayiner

Thank you.

Operator

Our next question comes from Romit Shah. Your line is open.

Romit Shah - Lehman Brothers

Hi, good morning. Bill, just on gross margins, I wouldn't thought you were not raising the gross margin target and especially in this environment, but it does seem conservative given your execution so far and the perceived cost savings from IA next year. Could you just help me think about some of the forces that could bring the gross margins back to the midpoint of your longer-term target?

Bill Bock

Yeah, Romit. I think that your point is well taken. We have been above our model, I think in three of the last four quarters now, but we are reluctant to raise our target range. In the fourth quarter I must remind everyone we'll have three full months of the IA acquisition, which does have a drag on margins, so there will be a slight reduction in our margins in 4Q exclusively to that effect.

I do think the principal caution that we are dealing with at the moment is the overall state of the industry in the macro environment. So we would not want to raise our target range, you know, as we are facing this relatively uncertain period. But on a longer-term basis, I think all the trends that you've been seeing do argue to a possible margin expansion for us and certainly the mix shift towards broad based businesses over the long run are in our favor as well. It's just that in the short run we are not prepared to make a change right now.

Romit Shah - Lehman Brothers

Okay. Necip, just on the broadcast it's on the Broadcast Business you commented that ASPs are holding up okay. Is that just due to a higher mix of transmitter and AM/FM?

Necip Sayiner

Primarily with our handset customers, we've been trying to transition them to higher value devices and that's gaining good reception and we are successful in doing that. So on a blended basis across the customer base our ASP's held in the quarter and I expect that trend to be intact for the fourth quarter as well.

Romit Shah - Lehman Brothers

Thank you.

Operator

Next question comes from Sandy Harrison. Your line is open.

Sandy Harrison - Signal Hill Group

Thanks for taking my call, everyone. Just a quick clarification on some of your guidance, you talked about the forecasts from the RF DRF, you'd expect that the more consumer or the personal navigation devices business to be down. Are you guys seeing cancellations or is this just your forecast based upon sort of trends you've seen and if in fact it turns out to turn out all right, is that a one area that you think one of the bigger points of upside or toward the higher-end of your range could be come from?

Necip Sayiner

To date, we haven't seen any abnormal behavior, if you will, from our customers in terms of cancellations or push-outs beyond what we normally see in a quarter. I think the macroeconomic condition argues for taking a cautionary stance in terms of the consumer end-markets where we serve, through our broadcast and MCU product lines to some degree. So, clearly there are some error bars around the guidance that we have provided.

Essentially, we are looking at a relatively healthy quarter for our handset business, where we are gaining share with our top OEM customers as the attach rate for FM tuners continues to go up. The growth is coming from the lower end, low-cost handsets where we participate with our stand alone solutions so those dynamics certainly favor our handset business.

Sandy Harrison - Signal Hill Group

Got you. My follow-up, you talked a little bit about the power products. What's the typical product cycle there? Is it shorter, longer than your typical product cycle and how is that usually involve you in the design process? Is it the front end, the middle or the backend?

Necip Sayiner

For networking applications where we sell our PSE products to Ethernet switch suppliers for example, the design cycles and the qualification cycles tend to be on the longer side, I would say 12 months to 18 months. So, some of the ramps I'm alluding to for early 2009, we have been working with these customers for nearly 12 months now. There are other applications for Isolators or AC to DC converters where the design cycles could be within a nine-month period.

Sandy Harrison - Signal Hill Group

Great. Thanks for taking my questions.

Operator

The next question comes from Suji De Silva. Your line is open.

Suji De Silva - Kaufman Bros

Hi, guys, good morning. Could you talk about the FM tuner business, what do you think the year-over-year growth opportunities in that segment?

Necip Sayiner

I'm sorry. Could you repeat the question, Suji?

Suji De Silva - Kaufman Bros

Sure. For the FM tuner broadcast business, what do you think the year-over-year growth opportunity is for? You've talked about 20% to 30% this year looking forward, where do you think the business can grow?

Necip Sayiner

Well, this year we have increased our growth rate target for the business and everything we are seeing year-to-date supports this higher growth rate for the broadcast business. I think given the type of environment we are operating under, it wouldn't be prudent for me to provide any expectation for 2009 at this point, but, we continue to believe that that business overall, the RF business that consists of broadcast and short-range wireless will continue to grow at the rate of 15% to 20% over the long-term.

Suji De Silva - Kaufman Bros

Okay, great. And then also with some of the newer opportunities looking into '09, can you help maybe rank or give us some size, things like video broadcast, power and the EZRadio opportunity?

Necip Sayiner

Surely, I see a five growth engines for us into 2009. These are on the broad-based side, MCU, power and timing, and on the RF side, broadcast and short-range wireless. Many of those are driven by new product cycles, so they will represent a significant growth opportunities in dollar basis for us in 2009. Obviously, the rate of growth for any of these businesses and our business as a total, that has to be modulated within the constraints of the end user demand and the macro concerns, but, I believe all of these growth engines, five growth engines are intact for us moving into '09.

Suji De Silva - Kaufman Bros

That's fair. Thanks. Nice job on the quarter, guys.

Necip Sayiner

Thank you.

Operator

The next question comes from Craig Berger. Your line is open.

Craig Berger - Friedman, Billings, Ramsey & Co.

On the FM tuner business, you had 116 new design wins this quarter. That trend has been flattish over the last [two] quarters, so what should that tell us about the kind of the future slope of your revenue growth there?

Necip Sayiner

Well, the mix of that design wins changes from quarter-to-quarter depending on the model plans for the large customers in particular. What I can tell you qualitatively is that we are increasing the number of design wins that we are getting with our broader-based customers, particularly for AM/FM products where we've been focusing quite a bit recently.

We are satisfied with the level of design win activity today. In the handset side, we look to see what share of the available FM sockets we're able to win against other stand alone solutions as well as combo solutions and the trend continues to be pretty solid there for us with our product and we are adding more and more customers on the AM/FM side with consumer audio, so that's also satisfying.

Craig Berger - Friedman, Billings, Ramsey & Co.

Can you remind us who your large handset customers are in that business? What is the outlook with those guys and also same for automotive on the tuner?

Necip Sayiner

Okay. We are doing business with all the top five handset OEMs today. We are doing particularly well in Korea and Samsung, for example, who continues to expand their share and is targeting more of the low-end segment of the market really appreciates the products that we are bringing on and they are designing us in.

With Nokia, we have been shipping transmitters and we continue to add additional design wins there. We have good share with the likes of LG, Sony Ericsson, and Motorola and across multiple platforms, but multiple types of products whether it's plain vanilla FM tuner or embedded antenna tuner or AM/FM or transmitter.

Craig Berger - Friedman, Billings, Ramsey & Co.

Automotive?

Necip Sayiner

On the automotive side, we have just announced a couple of days ago, another product from our broadcast portfolio into automotive, AM/FM. There is good pull from the customer base there. We are recognizing the design win cycles tend to be on the longer side on the automotive. So, those design wins that we would get will likely not turn into revenue for a couple years from now.

Craig Berger - Friedman, Billings, Ramsey & Co.

Thank you.

Operator

(Operator instructions) And at this time we're showing no further questions.

Shannon Pleasant

All right. Thank you very much for joining us this morning. This now concludes today's call.

Operator

This will conclude today's conference call.

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