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Executives

Steve Buhaly – CFO

Ralph Quinsey – President & CEO

Analysts

Edward Snyder – Charter Equity Research

Matt Ramsay – Canaccord Genuity

Anthony Stoss – Craig-Hallum

Anne Edelstein

David Duley – Steelhead

Alok Shah – DA Davidson

TriQuint Semiconductor, Inc. (TQNT) Q1 2013 Earnings Conference Call April 24, 2013 4:30 PM ET

Operator

Good afternoon. My name is Alley and I will be your conference operator today. At this time I would like to welcome everyone to the TriQuint Semiconductor First Quarter Earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions). Thank you.

I would now like to turn the conference over to your host Mr. Steve Buhaly. Sir, you may begin you call.

Steven Buhaly

Thank you, Alley. Good afternoon, everyone, and welcome to our first quarter 2013 conference call. With me today is Ralph Quinsey, our President and Chief Executive Officer. During the call, we will make forward-looking statements about TriQuint's business and projected financial results. Actual results could differ materially from our projections based on various risk factors, including those described in the press release we issued earlier today and our reports on Forms 10-K and 10-Q, and other filings with the Securities and Exchange Commission.

All numbers during the call will be presented on a non-GAAP basis. Non-GAAP financial measures report tax on a cash basis and exclude equity compensation charges, entries associated with acquisitions, restructuring charges and other specifically identified non-routine items. These non-GAAP measures are provided to enhance understanding of our core operating performance. A full reconciliation of these non-GAAP measures to our GAAP results is in our press release and in the Investors section of our website.

I will now turn the call over to Ralph to provide an overview of the quarter.

Ralph Quinsey

Thanks, Steve, and good afternoon to those on the call. I will start the call with an overview of our 2013 first quarter results and then follow-up with some products and market highlights for our major markets. Steve will then review financial performance for the quarter and provide guidance. I will wrap up with closing comments and open the call for questions.

TriQuint’s results for the first quarter were $184.2 million in revenue and $0.17 loss per share. In our last call we mentioned a potential of an incremental cost in the range of $5 million beyond the Q1 guidance due to a quality issue. We did end up incurring this cost. I’m happy to report the issue has been resolved with minimal impact to our customers. Excluding this one time cost, our results are inline with the guidance we discussed on the last call.

Q1 revenue for the mobile market was approximately $105.5 million, down 30% sequentially as expect through the seasonally low demand from our largest customer. Conversely, all but one of our top five mobile customer grew sequentially in Q1 including our second largest customer, locking (ph) (0:08:03) normal trends of software Q1 revenue. This growth in the broader market was due to design win success on key platforms from OEMs such as Samsung, Blackberry and various Chinese manufacturers. Looking forward, we expect to see revenue growth accelerate from the second half with improved financial performance as utilization increases.

We are enjoying broad customer interest as TriQuint fills the need for increasingly complex high performance RF solution in three key areas where I will provide more color.

RFC multi-mode multi-band power amplifiers also known as MMPA, high performance Wi-Fi solutions and premium filters to support a fast growing LTE market. Our TRIUMF MMPA momentum is accelerating as we win with multiple OEMs in multiple design slots. Our two newest MMPAs announced at World Mobile Congress are both shipping in high volume.

The 9050 MMPA developed to support World’s Leading Chipset Solutions bring quad band GSM/Edge and Penta-Band 3G/4G coverage with benchmark efficiency.

A higher efficiency solution like the 9050 has lower current drain allowing for longer end user battery life. Our 9058 MMPA is a sister device to 9050 that’s delivers the same functionality and cutting edge performance, but for alternate chipset supplier. These two devices give us broad exposure across multiple customers, platforms and reference designs.

Customers have told us they are migrating to our new TRIUMF MMPA because these modules deliver longer batter life and enables steady operating times versus competitive products.

Our second focus area is TriConnect Wi-Fi solutions. We continue to set the benchmark for high performance Wi-Fi connectivity in the mobile marketplace.

We have introduced two new 5 GHz modules that delivers superior performance in the 802.11ac applications. These new TriConnect modules are shipping at high volume today.

Lastly and frequently underestimated is the rapidly expanding demand for premium filters. These filters are essential in resolving challenges brought on by more bands per phone in crowded RF spectrum. Our premium BAW and Advanced SAW filters are designed to meet the toughest filtering requirements for the new LTE bands being deployed.

Many of these bands require extremely wide bandwidth, high rejection at the edges of the pass bands and superior temperature stability. For example, as new LTE bands are added to the crowded spectrum around 2.4 GHz, Wi-Fi coexistence and interference issues are increasing. We solved these challenging problems with BAW filters that allow Wi-Fi signals to pass while rejecting adjacent LTE band.

TriQuint is one of a limited number of suppliers worldwide who can solve these tough filtering challenges effectively.

Top OEMs continue to seek our advice for next generation mobile device architectures. They recognize that the value we bring to higher levels of integration in premium performance. You’ll see us deliver many more products this year as we continue to push performance further and in a faster pace.

Switching to our networks infrastructure market, Q1 revenue grew 2% sequentially and was up 8% year-over-year, primarily due to increased optical revenue which was up 8% sequentially.

We have benefited from the 40 gigabit expansion over the last three years, but I expect 40 gigabit demand to peak in 2013 as we begin to ramp our 100 gigabit products.

Industry sources predict that shipments of 100 gigabit per second optical transceivers will double in 2013 as compared to 2012. In fact, strategy analytics recently released a report forecasting a 50% compound annual growth rate for 100 gigabit ports over the next 5 years.

Additionally, we have expanded our optical product portfolio with an announcement of five new Trans Impendence Amplifiers or TIAs. This is a new product category for TriQuint that enables the companies to now serve both transmit and receive portions of high performance optical networks.

New product family complements TriQuint’s industry leading modulated drive portfolio for 10, 40 and 100 gigabit applications. Base Station revenue increased 10% sequentially with revenue strength driven by TD LTE demands in China.

In addition, we have secured design wins that should drive solid demand over the next three years at most major OEMs such as Ericsson, Huawei and ZTE. We also see strong interest from customers in GaN, a key technology for the future.

Growth and data traffic in the form of streaming video, location services and social networking continues outpace the capabilities of the existing infrastructure worldwide. Billion of terabytes of data move around the globe today as traffic continues to expand at unprecedented ray. This creates demand for TriQuint products to support capacity expansion and equipment upgrades of the worldwide data networks.

Now let me address the Defense. Revenue in Q1 was up 32% year-over-year, but decreased 16% sequentially falling up very strong Q4. Revenue in this market in program dependent and can vary from quarter-to-quarter based on program timing. The primary driver for this market is radar applications with the largest portion of our revenue associated with airborne radar.

Additionally we were pleased to see the recent announcement of South Korea’s F-16 Radar Award. We believe this is the beginning of a long upgrade cycle for the many F-16s currently deployed around the world driving multi-year demand for TriQuent products.

With the current uncertainty over the Federal Defense spending we are seeing some customer in decision as companies wait to see the outcome of funding discussions. However, overall, we don’t anticipate this will impact the larger programs we support. As part of our broader strategy we continue accelerate the release of new products to support this market. This quarter, we released 80 and 100 lot GaN S-FAN (ph) power amplifiers with state-of-the-art power efficiency for pulse radar applications.

Lastly, for the third year in a row, we have received the Compound semiconductor award for research and development. We recognized under the DARPA near junction Thermal Transfer Program for GaN Diamond Achievements. Our GaN Diamond Technologies demonstrated breakthrough performance in thermal management.

Steve will now provide a detailed financial review of the quarter and outline our guidance for the second quarter.

Steven Buhaly 

Thank you, Ralph. For the first quarter of 2013, revenue was $184.2 million, down 15% from the first quarter of 2012 and down 21% sequentially. Mobile Devices declined 30% sequentially, while Networks grew slightly. Defense was down 16% from a very strong fourth quarter.

For the first quarter, our end market revenue split was 57% Mobile Devices, 28% Network Infrastructure and 15% Defense and Aerospace.

Please refer to the supplemental data posted on the Investors section of our website for a more detailed breakdown and the trend of our revenue by market.

During the first quarter, Foxconn Technology Group accounted for 25% of our total revenue. It was the only customer that exceeded 10% of revenue. Please note that Foxconn is a subcontract assembler and high volume electronics companies made as multiple subcontractors to build their products and that the mix of these firms may vary overtime.

Our book-to-bill was 1.08. Gross margin was 22.8% for the first quarter of 2013, down sequentially from 31.7%. Lower revenue and the previously discussed quality related costs of approximately $5 million were primarily responsible for the decrease.

Operating expenses were $68.0 million for the first quarter of 2013, a sequential increase of $1.4 million all in engineering expense.

Tax expense for the firs quarter was negligible. Net loss for the first quarter was $27.2 million or a loss of $0.17 per share. Total cash and investments increased about $2.2 million to $141.1 million during the first quarter due to a lower accounts receivable balance. Days sales outstanding decreased to 52 days. Inventory was flat and turns increased slightly to 4.2. Capital expenditures of 29.4 million were primarily related to capacity expansion or premium filters.

Moving to our financial outlook, we believe second quarter revenues will be between $185 million and $190 million. Gross margin is expected to be between 27% and 29%. Improved factory utilization as we build inventory an advance of an expected strong second half and the absence of the first quarter quality costs are driving the better margin guidance. Our operating expenses are expected to be about $69 million.

Second quarter net loss per share is expected to be between $0.10 and $0.12 per share. Looking at 2013 as a whole we expect revenue growth and profitability driven by strong second-half results. As of today the 92% booked to the midpoint of our revenue guidance.

Moving now to investor relations activities. On May 14th we will be holding Annual Shareholders Meeting at our headquarters in Oregon, I welcome your attendance. On May 23rd I will be presenting at the Barclays Global Technology Media and Telecommunication Conference in New York. On May 29th Ralph will be presenting at the D.A. Davidson Technology Forum in New York, while I will be presenting on the same day at the Craig-Hallum institutional investor conference in Minneapolis. On June 5th, Ralf will be presenting at the Bank of America Merrill Lynch Global Technology Conference in San Francisco. Finally, our Q2 2013 conference, scheduled for July 24, 2013.

I will now turn the call over to Ralph for closing comments after which will open the call to your questions.

Ralph G. Quinsey

Thanks Steve. I’m disappointed with the current results, but I’m excited and encouraged by the progress we have made in product development and execution over the last 6 to 9 months.

Investors have not yet recognized the value I believe TriQuent represents. We have a mobile product line built on a foundation of high-performance low current solutions that now includes premium filters during a time and filter demand is beginning to outpace the overall market growth rates.

Additionally, we have established solid growth and profitability in high-performance market such as optical, defense and base stations. Unfortunately, our value has been overshadowed by the loss of mobile revenue momentum in 2012 and the resulting low utilization in our factories. I remain confident we have taken the steps that will lead us back to growth and improved financial performance in 2013.

Our markets are capable of driving significant product ramps and I’m excited about our 2013 outlook. As Steve highlighted, we anticipate the full year to be profitable due to revenue growth and improved product mix. I expect success in mobile will help unlock the hidden value across all product lines within TriQuint as we carry that momentum into 2014.

In each of our markets we are focused on differentiated performance and improved execution. As a result, we expect to release more new mobile products in the first six months of 2013 then we did in total for the prior year.

Additionally, in 2012, we reorganized our infrastructure and defense teams and renewed our commitments to high performance products. For these markets, we are on track to double our new product output in 2013 as compared to 2011. These are great products that offer clear value and they are generating high customer interest and activity.

TriQuint is positioned as an RF technology leader in a world that is increasingly relying on radio frequency solution for a broad array of growing applications including communications, data transport and high performance radar. In many of our markets, our products often best and we are now focused on being both best and first. We remain committed to our RF innovations and the fundamental thesis that we are in the early innings of RF content expansion.

TriQuint strength is in creating the world’s most advanced high frequency, high performance solutions for both commercial and defense applications. The mobile device market has undergone significant change and during this time we have invested to support the large opportunities that are now upon us. Building on these investments, TriQuint expect to deliver revenue growth and improved financial performance in 2013.

Alley, we’d like to now open it up for questions. Ojperator?

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Edward Snyder with Charter Equity Research.

Edward Snyder – Charter Equity Research

Thank you very much. Ralph, the filter opportunity is predominately is going to involve almost exclusively LTE filter of high performance and will it include both BAW and SAW? And in terms of your capacity expansion, are you still investing in the BAW side of it or it’s better with the high performance SAW also?

Ralph G. Quinsey

Thanks for the question Ed. The filter opportunity covers premium filters that are both BAW and what we call Advanced SAW. The larger portion of the opportunity right now looks to be BAW. The expansion of LTE band is just driving a lot of crowded spectrum and be able to keep those signals separated with really sharp edges is where BAW has a lot of value. And then, the issues around 2.4 GHz that I mentioned in the prepared comments.

Edward Snyder – Charter Equity Research

And then in terms of supply, historically it’s been you and Avago. Have you seen any new suppliers who have gone in production in high performance either TD, temp comp SAW or high performance BAW or is it pretty much the same players you’ve always seen?

Ralph G. Quinsey

Pretty stable set of players. I agree that Avago and TriQuint served the largest portion of the premium side of the market. There are players that have BAW technology, but BAW technology is capable of serving very difficult sockets. It’s more focused around the two leading players.

Edward Snyder – Charter Equity Research

And then a final question on filters, with TriQuint, I know you have foundered gas in the past, not so much now. Would you ever consider the founder relationship in your filter technology of either technologies?

Ralph G. Quinsey

And so if you are asking if we would consider being a foundry for other players for our filter capabilities, if it was strategically good and financially good for the company and added value to the company we will be open to it for sure.

Edward Snyder – Charter Equity Research

Okay. And final question, obviously the plague, or the problem you are facing here is it’s just gas capacity. Other than the MMPA, first, can you give any color on the MMPA ramp? Will that starts filling the fab third quarter, fourth quarter, any color of that and besides that where do you see traction in the gas side of the business, will it help step up some of the excess capacity and when do you think that might happen.

Ralph G. Quinsey

Yeah, good questions. We are ramping the MMPAs and shipping those in fairly high volume as we speak. I think Wi-Fi will also be a gas driver in the second half of the year and then we’ll continue to see good demands for our more integrated products.

Edward Snyder – Charter Equity Research

Great. Thanks a lot.

Operator

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

Quinn Bolton – Needham & Company

Good afternoon. Ralph, just wanted to follow-up on that last question about the demand in the second half. While your competitors are RFND yesterday announced that they had a $10 million investment to secure filter capacity. As you look at the second half, it sounds like a better number of products that will be ramping to get you back to profitability. And I’m just kind of wondering are those discreet filter based primarily or they premium filter plus PA in a more integrated module. Can you give us some sense of how that filter products load you ramp in the second half.

Ralph G. Quinsey

Yes, it will be both. It will be both discreet products and it will be integrated products. For example, we are seeing a significant amount of demand right now and interest in the Wi-Fi coexist filters, those are typically going to be discreet solutions. And we had traditionally shipped in high volume the more integrated solutions. So I think the real transition or change an investor should be aware of is that we have now reached a point where we can really expand our investments in new products and really leverage the technology across a broad array of products for broad array of customers and we are just in the process of significantly increasing our capacity for both primarily the BAW products but for the Advanced SAW as well. So the last 6 to 9 months was all about really getting some good products out in the marketplace and we can leverage the capabilities of the company and drive some exciting growth in the second half of the year.

Quinn Bolton – Needham & Company

One more question on filters. Do you see demand for sort of multi-filter bank type products that is quad band or do you see PATs expanding to some of the European LTE bands as some of the opportunities you are going after for the second half.

Ralph G. Quinsey

Again the answer is all of the above, discreet, integrated and then multi-filter. For example, we are just launched, we announced it at the World Mobile Congress our band 2526, it’s a combination filter that really takes advantage of our unique capabilities being able to do Advanced SAW for a band 26 as the right technology for that solution and BAW for band 25 so that a very attractive filter bank if you will.

Quinn Bolton – Needham & Company

Okay. And then for Steve just it sounds like your full year outlook right now is for revenue growth and full year profitability. I just want to make sure that the metrics in terms of incremental margin haven’t changed. Does that sort of assume a roughly 50% fall through on gross margin on incremental dollars in the second half and can you give us any sense how do you OpEx trending in the second half, is it roughly flattish at the $69 million level just any framework you can provide if we get into that full year profitability target would be helpful. Thank you very.

Steven Buhaly

You bet. Ballpark 50% incremental fall through is the right number. The caveats are it depends on mix and yields and all the other specific facts and circumstances of the quarter. But as a modeling assumption 50% is good. I think we might see a little bit of additional benefit associated with growing our premium filter business to that metric. Operating expenses, I think will growth about $1 million a quarter sequentially.

Quinn Bolton – Needham & Company

Thank you.

Operator

Your next question comes from Mike Walkley with Canaccord Genuity.

Matt Ramsay – Canaccord Genuity

Yes, thank you. This is Matt Ramsay on for Mike. First one from me is I guess is your largest customer reported results last night with guidance that definitely implied its mobile products down pretty sharply again sequentially, I mean into the next quarter. But your guidance is for increase sales sequentially, so maybe you could, you know, walk through the dynamics there. Are those other business recovering outside of wireless, is it other wireless customers? And maybe, lastly, do you expect your mobile business to be up sequentially? Thanks.

Ralph G. Quinsey

Yeah, I will remind first Matt that our largest customers Foxconn and I don’t comment a lot in that area of the business for reasons of nondisclosure. But I will say I think that our mobile device business will be up sequentially in Q2. In Q1 we saw great strength in all of our customers with the exception of our largest customer which we knew would be seasonally down and so we think that momentum will continue to build in mobile device. I think mobile devices will be up sequentially in Q2.

Matt Ramsay – Canaccord Genuity

Hi. Great. And I guess as a follow-up, I was just looking through and looks like your connectivity revenue was down very sharply and even down year-over-year which was the surprising to me, despite the commentary that you gave about good traction with your 802.11ac solutions. Could you maybe walk-through a little bit of sequential and year-over-year dynamics and your prospects I guess for the future connectivity and Wi-Fi growth. Thanks.

Ralph G. Quinsey

I’m glad that you brought that up Matt because that does look concerning on the surface. Long story short, we are still well-positioned. I expect to have a fairly strong year in connectivity. I think we’re just seeing a rather exaggerated impact of seasonality in Q1, but I expect the connectivity business to be up nicely in Q2 and up quite nicely beyond that, so Q2 will be up year-over-year.

Matt Ramsay – Canaccord Genuity

All right. Thank you very much.

Ralph G. Quinsey

Thanks Matt.

Operator

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

Anthony Stoss – Craig-Hallum

Hi guys. Ralph, if you wouldn’t mind sharing more color on the second half snapback. If you could rank order, is it more on the BAW side, Wi-Fi, MMPA. Also, given, if it is on the BAW side, can you update us where you stand on BAW filter capacity? If you’ve got enough in place now to support that already or if you still need to continue to add throughout the year? Thanks.

Ralph G. Quinsey

Tony, the second-half revenue is going to be driven by both discrete BAW products, as well as integrated BAW products and it’ll be across multiple customers. We are in the process of approximately doubling our BAW capacity and so we are preparing for a significant ramp. Now as you now for an integrated product that BAW is embedded into a more complex module and that pulls through other technologies as well, whether it be CMRs or gas or other technologies. And so we have that balance of the mix but by and large if you look specifically at our BAW opportunities it looks quite attractive right now.

Anthony Stoss – Craig-Hallum

Okay. Great. Thank you.

Operator

Your next question comes from Aalok Shah with DA Davidson.

Unidentified Analyst

Hi Ralph, it’s Steve. Just a couple of quick questions. Can you just refresh again what that scrap issue was in this quarter?

Steven Buhaly

Which issue.

Ralph G. Quinsey

The scrap issue.

Steven Buhaly

Yeah, so we will had a reliability concerned with some products that we talked about on the last call, I differentiate that to point out that a reliability concern is a latency effect. So you can have a high yielding process and things could look great on the phone et cetera et cetera. Which is all long create suspect material out in the field, maybe a future problem. Is that an important problem? The root cause was tool difference, a very subtle to difference. As s ramped up capacity, the team responded very quickly, we discovered the problem, we contend the problem. We continue to support our customers with minimal impact because we have – it didn’t affect a complete guess capacity and unfortunately we took significant charge. We should have caused a problem, we’re not happy about that, but as I said it’s contained minimal impact to customers and we continue to move forward.

Unidentified Analyst

Okay. And if I could Steve, maybe you could walk us through a little bit on the mix issue within the different product offerings. I know you are signaling MMPA Wi-Fi filters within handsets and I’m trying to get a sense of if we start to see Wi-Fi business picked up for you guys again, does that impact? I mean I know, with under your vision right now, it probably doesn’t make a difference. But if you look forward, does Wi-Fi have a positive or negative impact on your gross margins.

Steven Buhaly

I think Wi-Fi MMPA your mileage varies by the specific product and customer and circumstance and overall there are pretty neutral to margins or BAW filters or accretive and our big issue is underutilization that translates to a really good leverage when leveling gross sales and we expect to see that in the second half.

Unidentified Analyst

And then lastly Steve, can you just give us the utilization, maybe even if you could, maybe even between PA versus filters?

Steven Buhaly

What I don’t give plant level details but kind on weighted average in the mid-50s in terms of the utilization.

Unidentified Analyst

Okay. Great. Thank you very much

Operator

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

Anne Edelstein

Hi guys this is an Anne Edelstein calling in for Zach. Just two questions, the first on capacity. What level of sales would you guys say that you can support on your current capacity? And then after the filter capacity is added, what sort of sales level can you support there?

Steven Buhaly

So again it depends a lot on mix, particularly whether those BAW filters go out as discreets or packaged in a paid duplex or integrated form, but I would say as a sense today we’re probably looking at 325 million per quarter 350 and with that added BAW capacity I’ll push that up to about 400 million a quarter of capability.

Anne Edelstein

Great. Thanks. That’s helpful. A question on customer concentration, which definitely hurt this quarter, what is a status there, I mean, I know you guys mentioned some ransom back half at BlackBerry, Samsung you mentioned, can you give us a sense for how that diversification is coming along?

Ralph G. Quinsey

If I understand the question, I believe for us to grow in the second-half we have to grow at all of our customers including Foxconn, including Samsung, including the larger players in China et cetera and I anticipate that I think will have fairly good run here is an a lot of time in the last 6 to 9 months getting really good products out at a much faster pace. We are going to benefit from that in the second-half. We are releasing product than the first-half of this year than we have released in the full year prior for mobile devices and they are good reception. So fairly broad based how that mix is going to turn out is really going to depend upon who is success on the marketplace, but I’m very comfortable with our progress on penetration for all the customers.

Anne Edelstein

Okay. A quick follow-up on that, are those that diversification strategies, is that being driven by new products on your end or is that being driven more by new product ramps on the OEM end?

Ralph G. Quinsey

Well, and it’s all of the above, right. In the mobile device, you get to have fairly fast products cycle and big discontinuities in revenue or big ramps are always associated, not always but predominantly associated with new product launches from mobile device customers. We’re seeing some success right now at Samsung and its associated new product launches there. At the same time, we’re penetrating into virtually all of our customers, we’re just more products for platform. We made the investments in broadening our product line. We’ve got best-in-class MMPAs out there. We’ve got integrated products with our advanced premium filters as well as our discrete products. So we think we are able to get more penetration, we just want more products to sell.

Operator

Your next question is a follow-up from Anthony Stoss with Craig Hallum.

Anthony Stoss – Craig Hallum

Ralph, if you won’t mind dig a little deeper on your expectations on the second-half. How much do you assume for either military networks in terms of growth may be year over year. Just be get a sense of how incremental that maybe to gross margins or expectations are.

Ralph G. Quinsey

Yeah. So I do want to guide specifically for the year for a particular business but I will remind you to need that I often said that when you step back and look at Feds business it should grow in that made singledigit type of range higher networks business is very fragmented it go up and down. We have some business that that have grown very quickly and some business where the market is contracting somewhat, but most of the revenue dollar wise, most of the revenue growth will come from a mobile device business. And underneath that and am really happy with the performance of our other markets, collective other markets. When you look at in aggregate it’s probably going faster than what I talked about in the first-half of the year and then slowing down a little bit in the second half but on average those other markets the networks and defence market have gone in that range.

Okay. Thanks Ralph.

Operator

Your next question is a follow-up from David Duley with Steelhead.

David Duley – Steelhead

Yes thanks for taking my question. I was just wondering why you’re so confident about the second-half ramp. Do you have the design wins in hand now to match that second-half ramp or have to still collect them.

Steven Buhaly

So by and large they are caveats, right. Things could happen that are outside of our control, people could stop buying smartphones, I’m not anticipating any of those caveats to be material and so with those aside I believe that I design when pipeline sufficiently progressed to gimme high confidence in the second half ramp.

David Duley – Steelhead

Okay Steve. I think you mentioned earlier that even to be building inventories in this quarter in anticipation of the ramp, in not quite sure can you have a target on terms, it seems like you had enough inventories perhaps for moderate ramp but this kind of wondering why we’re building inventory, you have the long inventory on hand, maybe you could just talk about that.

Steven Buhaly

PS I think we’re probably going to build in the range of $ 20-$ 30 million of additional inventory this quarter and led straight to provide some level loading in the fabs and take advantage of the relatively low utilization starting point that we have right now.

David Duley – Steelhead

And a have a target on turns?

Steven Buhaly

On long-term we had about 5, usually fairly contempt between 4 and 5 and 4.2 in Q1 that was okay. I’d rather see them the midpoint but that’s typically where we want operate.

David Duley – Steelhead

Okay around the customer diversification, maybe we ask in a different way would we expect to see another 10% customer sometime in the second half the year in this revenue ramp.

I would say that it’s possible to say 10% customer between now and the end of the year it’s really going to depend upon the customer success the end customer success and you have a good handle on that.

Steven Buhaly

Okay. And if final question from me with many located increasing content per phone 4 to 5 quad is more of increasing content going to be coming from the filter side from the power amplifier side.

Ralph Quinsey

Boy it’s a hard one to say. I would say probably increase content it depends on how you measure it is a wonder come more from, probably pretty balance. I was one to I was going to say from the integrated side.

David Duley – Steelhead

And of course answer is in the agreegrate.

Steven Buhaly

Yes, it looks good across the spectrum is the best way to look at it.

David Duley – Steelhead

I don’t understand is it going to be 50 or what.

Steven Buhaly

Yes I think 50:50 is a good balance. I mean we got a good success with our integrated solutions, we got a good success with our industry standard MMPAs, higher efficiency but insufficient pin out, like I said we just starting to ramp up I just create opportunities. So how you measure it percentage wise or absolute value wise changes the story but it’s pretty exciting across of those platforms.

David Duley – Steelhead

Okay, I just had one more and that is if you going to achieve profitability for the year I guess then in the fourth quarter you going to have what sort of utilization ratio, we will be assuming for the Q4?

Steven Buhaly

Significantly better.

David Duley – Steelhead

Thank you. [laughs]

Operator

Your next question is a follow-up from Alok Shah, from DA Davidson.

Alok Shah – DA Davidson

Hi guys, this really quickly on the Apex. I know you got taught about last quarter about apex your apex is at a ties for least several years now and looks like it can go higher. I am curious to start on the apex and increase and what you think we should be looking at longer term from here.

Steven Buhaly

So I acknowledge the fact that we continue investment business I think that we have growth expectation that will allow us to accommodate that investment comfortably and get us back down into the low 20s side of percentage of revenue for apex. And that’s what we like to get.

Alok Shah – DA Davidson

And do you expect with other season igniting your businesses is that something you can control from given quarter to quarter or so we just kind of expect the fluctuations and maybe keep out (inaudible) as we awkward?

Unidentified Analyst

Now for the most part I think it’s pretty controllable. Our expectation is a million bucks increase sequentially per quarter right now. Obviously you going to have some jitters as you have programs are going through more material intensive phase but if you draw a line through that I think it’s quite controllable and that you should expect.

Steven Buhaly

Okay, thank you.

Operator

Your next question comes from (inaudible).

Unidentified Analyst

Hi guys, thanks taking the questions. I have couple quick ones. On the expectations growth overall this year was there an expectation for growth in mobile devices year over year or was that more for TriQuint overall?

Ralph Quinsey

I haven’t guided specifically for a market on growth comment was TriQuint overall.

Interviewer: Okay, and then within the mobile devices a business is it possible to breakout or to maybe ballpark force. What percent revenue is related to discrete by this point or is it you can’t do that?

You see it’s up against rapping as I mentioned we are just starting to penetrate the market with discrete ball products. We had some success with discrete saw offering and saw products. I talked about it on previous calls and so you can hope premium filter play or organ that been to multi-millions of dollars, but for example there just a lot of customer interest on growth out of customers for this Wi-Fi co-exist around the 2.4 gigahertz space as LTE RAMs and as you probably know Mike it is adjacent to band 7 and band 38 and in that range of band. Forty overlap and so there is just lot of demand for those type of filters and it turns up the markets type of buildups. So I think those are going to drive a lot of revenue for us in 2013 as well.

Okay, and then last just on theme thread is just the aim is can we have an idea of that percent of the overall business that’s related to buy already or a relatively discrete as just ramping?

Unidentified Analyst

Yeah, we try to stay away from that number because we have to arbitrary your side of value to buy within complex margin and I just don’t want to go down that path.

Okay, fair enough. So the last one for is are you guys I need just update are you seeing [inaudible 09:09] out there at all with there all up to 60 products and is that something give you as strictly competitive at this point or something your partner want?

Ralph Quinsey

So we view that as a product that welcome that case is competitive there also a partner. I haven’t seen a lot of the device in the market place. I personally got off a lot of knowledge about the device other than what I saw when I was in Barcelona and what I talked about in Barcelona. As far as product out in the market place I haven’t seen lot of it.

Unidentified Analyst

Okay, thanks again guys.

Operator

Your next question is a follow-up from Bill Dazzlem with Titan Capital Management.

All right thank you. Relative to your four year guidance of being profitable, like to to make sure that we are understanding the base that you are talking about. You are assuming 17 cents loss in the first quarter as your reported and in additional 10 to 12% loss in the second quarter which means that in the second half just a break even you would need to earn 27 to 29 cents non-GAAP which you were talking about the unprofitable so we need to do restart the penny and make that 28 to 30 cents of the profitability in the second half. We are doing that maths correctly?

Ralph Quinsey

Yes.

Unidentified Analyst

Thank you.

Operator

And your final question comes from (inaudible) with Barclay’s Capital.

Unidentified Analyst

Go on, thanks for keeping me on the calls here. Just want to ask you real quick two questions one is what’s your geographic region easy driving the demands above and as far region else worth that filtering you guys are providing being driven primarily by North America, Europe, 3D, LE and China. Just want to get your sense that how those different geographies paired to one another?

Ralph Quinsey

Yeah tough questions to answer Frank for mobile devices which we everything gets shift to Asia. Asia is region to drive. Outside there is a little more color if you are asking what region are bad or asking for both for example BEN41 it’s Asia, its follow N7 at Europe, its followup N25 in North America and BEN3 at (inaudible) co-existence is the big issues with the Asian brands and 2.4 GHz when call that one to Asia.

Unidentified Analyst

Just one final question though we’ve seen in the 20 years so far your peer being an (inaudible) space that the prior question what time they are 360 product. I just don’t want to get your senses how you see you know this products competing with traditional gas version how your filters still are involved in this type of technology, and just want to get the thoughts on your competitors strategies?

Ralph Quinsey

Sure, regarding CMOS space we watch those products with great interest to date. They typically are lower performance solutions and targets low performance very cost sensitive lower end phone which is where we just don’t play. We don’t really want to play that. But we continue to be aware of what’s going on there as far as some of the recent acquisition and coalition of the market that’s probably going to be fairly good for the industry. I don’t think some stability in this industry.

Unidentified Analyst

Okay.

Operator

I am sorry there are no further questions at this time.

Ralph Quinsey

Right, I want to thank you everyone for participation of the call. I look forward to seeing you at one of the conferences that you’ve highlighted over the next several months and I am eager to update you on our performance on the next call. Thank you.

Operator

Ladies and gentleman, thank you participating in today’s conference call. You may now disconnect.

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