Entropic Communications Management Discusses Q4 2013 Results - Earnings Call Transcript

Entropic Communications (NASDAQ:ENTR)

Q4 2013 Earnings Call

February 05, 2014 4:30 pm ET

Executives

Debra Hart - Director of Investor Relations

Patrick C. Henry - Chief Executive Officer, President and Director

David Lyle - Chief Financial Officer

Analysts

Gary W. Mobley - The Benchmark Company, LLC, Research Division

Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division

Hamed Khorsand - BWS Financial Inc.

Saqib Jalil - JP Morgan Chase & Co, Research Division

Alex Gauna - JMP Securities LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Quarter Four 2013 Entropic Communications Incorporated Earnings Conference Call. My name is Jason, and I'll be your operator for today. [Operator Instructions]

I would now like to turn the conference over to Ms. Debbie Hart, Senior Director, Investor Relations. Please proceed, ma'am.

Debra Hart

Thank you, Jason, and good afternoon, everyone. Participating in today's call are Patrick Henry, President and CEO; and Dave Lyle, our Chief Financial Officer. During the call, Patrick and Dave will present our fourth quarter and 2013 year-end results and our short-term outlook, and then we'll open it up for questions.

Throughout this call, we will be discussing certain non-GAAP financial measures. Today's earnings release and the related report on Form 8-K describe the differences between our non-GAAP and GAAP reporting and present a reconciliation between the 2 for the periods reported in the release. We've also posted a schedule on the Investor section of our website, which includes our quarterly reconciliation of our GAAP to non-GAAP gross margins, operating expenses and taxes.

During this conference call, we will make forward-looking statements regarding future events and anticipated operating or financial results of the company. Actual events or results could differ materially from those projected in the forward-looking statements. Please refer to our SEC filings, including our most recent 10-Q, which contain important factors that could cause actual results to differ materially from the forward-looking statements.

We undertake no obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

Finally, please be aware that we are located in the flight path of the Marine Corps air station in Miramar and cannot predict the timing of flights. If we do have a flight coming overhead, we will just pause and then continue once the jet noise has passed.

And now, I'll turn the call over to Patrick Henry.

Patrick C. Henry

Thank you, Debbie, and thanks for everyone for joining the call today.

In Q4, revenue was $57.9 million, up 3% from Q3 and within the guidance range we provided in October. Our non-GAAP net loss was $0.06 per share, also consistent with our guidance.

For the full year, revenue was $259 million, and we recorded a non-GAAP net loss of $0.11 per share.

Dave will take us through the Q4 numbers and discuss guidance for the current quarter a little later in the call, but first, I'd like to provide a general update on our business and our long-term objectives.

From an industry perspective, the fundamental shift in home entertainment continues to gain momentum. As service providers move their home entertainment networks to IP, they need cost-effective consumer electronics equipment with a high level of security to provide advanced video experiences to their subscribers.

The transition to IP further validates the need for a robust wired backbone using MoCa and the need for a single-wire architecture for satellite broadcast.

And traffics portfolio products consist of System-on-a-Chip or SoC products, discrete MoCa, Channel Stacking Switch or CSS solutions and Ethernet-over-Coax or EoC broadband access solutions.

These products squarely meet the needs of the service provider roadmaps.

As the key supplier of platform semiconductor solutions focused on the connected home, we have a unique opportunity to capitalize on a market that is large and continuing to grow.

As we outlined at the beginning of last year, 2013 was a year of transition for Entropic. We invested in our product portfolio, including our integrated SoC plus MoCa products, as well as our best-in-class discrete product offering.

We also worked to secure design wins for our discrete and bundle SoC plus MoCa solutions and expanded our presence outside the U.S. across all our product offerings.

We remain focused on the successful execution of our strategy and are optimistic about the company's progress and future prospects.

Our initial investment to develop and commercialize an integrated product is culminating this quarter as we sample our first 28-nanometer integrated set-top box SoC with integrated MoCa 2, HEVC decoding and Full-Band Capture Front-end capabilities.

This first product will serve as a platform that will drive additional derivative products to address the growing market opportunities in both satellite and cable in North America and globally.

This roadmap consists of cost-effective and power efficient products, and we expect to be in production with our portfolio of HD integrated products and have initial ultra-HD or 4K p60 products and design wins by the end of 2014, all leveraged from this first 28-nanometer platform.

Entropic is sampling 4k upscale and HEVC capabilities on our SoC this quarter. These are highly competitive products that we expect to drive revenue growth in the years ahead.

At the Consumer Electronics Show earlier this year, we showcased this new integrated chipset and highlighted the performance of our chipsets by driving 4K TVs with both our connectivity and SoCs platforms. We demonstrated the latest in RDK solutions with RDK 2.0 being used by Comcast and other cable MSOs in the U.S. and internationally, and we're first in the industry to take advantage of the RDK embedded media framework.

Entropic also demonstrated advancements in remote user interface technology by showing RVU 2.0, which is used by DIRECTV and multiple HDTV manufacturers.

We were the first to announce official MoCA 2.0 Golden Node certification last year, and we continue to innovate and lead the industry with our discrete MoCa product line.

At CES, we also showcased the latest in MoCa 2.0 solutions, pioneering small and convenient form factors using advanced low-power modes, while assuring the most reliable video streaming throughout the home.

As we discussed previously, we have a number of important design wins with Tier 1 operators for our SoC and MoCA solutions, including multiple engagements with RDK-enabled devices supporting advanced services like the X1, X2 platform at Comcast.

We continue to see momentum with RDK with North American operators for IP video delivery.

We do, however, see that operators continue to evolve their deployment plans as they work through the specifics of their IP-enabled offering, which will continue to challenge our ability to predict the timing and magnitude of some of our design win deployments.

For example, the need for ultra-high-def support and HEVC are accelerating. This is forcing operators to make some changes to their in-home device type and mix that support rollouts, and has narrowed the window for deployment of some of our previously won designs that support HDTV but not ultra HD.

We do, however, continue to win designs at major service providers that we expect will launch in the second half of this year. Although we're not able to discuss specific details of these design wins yet, we do expect that it will contribute materially to revenue in the second half of 2014 and into 2015.

For the DBS ODU market, we introduced the world's first Digital Channels Stacking Switch solution, which we also showcased at CES. We're the market innovator and leader in analog CSS, as well as the new generation of digital CSS.

We're encouraged by the feedback we have received from customers, which confirms we are in a very strong position to continue our leadership in the overall satellite outdoor unit market for years to come.

As a case in point, earlier this year, we announced DIRECTV has started to deploy our digital CSS technology, making the world's first commercial implementation of a digital single-wire solution. Initially, DIRECTV is targeting multiple dwelling units and hospitality properties with our first generation of digital CSS silicon. The overall DBS ODU market is expected to transition from analog to digital CSS over the coming years. We believe the initial transition to digital will start later this year in a modest way, and we should see a more broad-based transition happening in late 2015 and into 2016.

Globally, we continue to see strategic design win activity with our analog CSS silicon, including wins we announced earlier this quarter with SKY in the U.K. and Ireland, and INVERTO digital labs for an India-based DBS operator. These design wins help build our presence in the international market. Entropic CSS solutions are now being deployed in 7 of the top 10 pay-TV satellite regions, including the U.S., Canada, India, Brazil, the U.K., South Africa and Italy.

And finally, our Ethernet-over-Coax broadband access solutions continue to gain momentum internationally. Our EoC solutions have been adopted by Chinese MSOs to bring next-generation broadband services to the Chinese multiple dwelling unit market, and we recently announced the availability of our broadband access solutions for the India market.

Our EoC solutions are ideally suited for India as they leverage our field proven access technologies on the existing coax infrastructure and enable Indian MSOs to cost-effectively distribute and scale their IP-based architectures for broadband service delivery.

In fact, our EoC broadband access silicon recently won the Fierce Innovation Award for Last Mile/Edge/Access solutions. It is a great accolade as the panel of judges consisted of Tier 1 pay-TV operator executives who recognized our product innovation with top honors.

We continue to drive innovation across our core business, while we transform the company. There's a lot more to do and we continue to have challenges presented by long design and deployment cycles intrinsic to this business.

We have, however, used 2013 to develop relevant and competitive products, and we believe the pipeline and design wins are in place to drive long-term growth.

We remain keenly focused on the successful execution of our plan to grow the company and enhance shareholder value.

Now Dave will read the fourth quarter and year-end results, provide our Q1 outlook and some 2014 commentary. I'll then finish the call with some closing remarks. Dave?

David Lyle

Thanks, Patrick. Fourth quarter revenue was $57.9 million, a 3% sequential increase, which was consistent with the guidance we gave last quarter.

As expected, we saw a revenue improvement primarily on 2 fronts: Resolution of excess inventory issues at DIRECTV -- I'll take a 10-second break while the planes go over.

[Break]

David Lyle

So as expected, we saw a revenue improvement primarily on 2 fronts: Resolution of excess inventory issues at DIRECTV that primarily impacted our DBS ODU products in Q3; and a restart of our set-top box SoC revenue in HD-DTAs for one U.S. cable MSO, where we had previously seen delays due to capital expenditure budget constraints.

Offsetting some of this revenue growth is a continued erosion of revenue from legacy products we acquired from Trident, as well as market share erosion in MoCA discrete from the final conversion of traditional broadcast set-top boxes to next-generation hybrid and IP set-top boxes, which are now shifting to integrated SoC, plus MoCa solutions.

We had 2 customers who accounted for greater than 10% of our revenue during the quarter: WNC, a supplier into DIRECTV at 21%; and Foxconn, a subcontractor for Cisco and Movi at 14%.

Our non-GAAP gross margin in Q4 was 53%, a decline from 53.5% in Q3 due to a mixed shift toward our SoC business.

Excluded from Q4 non-GAAP gross margin was about $200,000 in stock-based compensation expense and $2.7 million of amortization of purchased intangibles.

Non-GAAP operating expense in Q4 was $36.3 million, about flat with Q3. Our Q4 non-GAAP operating expense excluded $4.8 million of stock-based compensation expense and $400,000 of amortization of purchased intangibles.

Other income was about $400,000 for the quarter. Our fourth quarter non-GAAP tax expense was $500,000. Our GAAP tax benefit was $1.3 million.

Q4 non-GAAP net loss was about $5.6 million, resulting in a net loss per share of $0.06 based on a basic share count of about 91 million shares.

GAAP net loss in the fourth quarter was about $12 million, and GAAP loss per share was $0.13.

With regard to our cash position, cash and investments as of year end were approximately $158 million, a net cash decline of about $3.5 million during Q4.

This includes $5.5 million used for share repurchases during the quarter, which equates to 1.2 million shares repurchased at an average share price of $4.71.

Purchases began under the share repurchase program on November 1, 2013, and the plan is authorized through the end of September 2014.

During the quarter, cash used in our business operations was $3.8 million. Net losses were partially offset by better-than-expected collections on accounts receivable and lower inventory.

DSOs for the fourth quarter came in at 48 days, and inventory turns remained strong at about 8.1x.

For the calendar year 2013, we posted annual revenue of $259 million, down 19% year-over-year due primarily to MoCa discrete market share loss, resulting from a market shift toward integrated SoC and MoCa products.

Non-GAAP loss per share for the year was $0.11.

Now I'd like to provide guidance for the first quarter of 2014. In Q1, we expect Entropic's top line revenue to be $54 million to $57 million, down 4% sequentially at the midpoint, primarily due to declines in legacy SoC and MoCa discrete business, as well as typical Q1 seasonal softness for some of our run rate products that are not yet being fully offset by new device deployments.

We are guiding a wider range -- revenue range than we typically do in Q1 as our OEM customers and their operator customers work through product transitions and new product launch timings.

Moving on to gross margin. We expect non-GAAP gross margin for Q1 to be approximately 52% to 53%. We will exclude from Q1 non-GAAP gross margin about $200,000 in stock-based compensation expense and $2.7 million in amortization of purchased intangibles.

We expect Q1 non-GAAP operating expense to be about $44 million, up about $8 million sequentially. This is primarily due to about $6 million in tapeout-related expense. These tapeouts represent a major milestone toward the introduction of new, leading-edge products that will drive revenue in years to come.

As a reminder, 28-nanometer tapeout costs over $2 million each, and 40-nanometer tapeouts cost over $1 million each. The remaining $2 million of the expected increase in operating expense is mainly due to FICA tax reset and bonus accrual reset.

Our non-GAAP operating expense will exclude $4.8 million of stock-based compensation expense and $400,000 of amortization of purchased intangibles.

We expect other income to be about $300,000. We expect our non-GAAP tax expense in Q1 to be about $250,000 due to foreign tax, and a GAAP tax benefit of about $1 million.

At the midpoint of guidance, we expect a non-GAAP loss per share of about $0.16 based on a basic share count of about 90 million shares.

Our GAAP loss per share is expected to be $0.24.

We expect our cash and investments balance at the end of the first quarter to decline sequentially based on an expected cash use from operations of about $12 million.

Further cash use in the quarter will be dependent on share repurchase activity.

We expect DSOs to increase slightly to about 55 days, and we expect inventory turns to be 7.5x in Q1.

In our last earnings call, in October, we said that Comcast's launch of RDK-based devices into its first large market will be a key milestone to watch for in 2014, as Entropic's products are in several of these devices.

As Patrick mentioned earlier, we believe changes to the in-home type -- device type and mix that support this rollout has narrowed the window for deployment and reduced our short-term revenue opportunity for some of our previously won designs.

We still see an opportunity for RDK-based rollouts at Comcast and other MSOs later this year. We will have better visibility into the size of this revenue opportunity once RDK devices, based on Entropic silicon, begin to deploy in volume.

During the last earnings call, we also mentioned that we had recently won designs and an additional Cable MSO and a satellite service provider. Based on these service provider launched targets, we said that we expected to see initial shipments of product into these devices in the second half of 2014.

We also said key milestones to watch for in the second half of 2014 are launches of these new devices into at least one big market. These anticipated milestones remain in place.

We see additional incremental revenue opportunities internationally in SoC, CSS and broadband access in the second half of the year.

Now I'll turn it back to Patrick for some closing remarks.

Patrick C. Henry

Thanks, Dave. I want to reiterate that our focus, as always, is on driving long-term growth and enhancing value for our shareholders. We're committed to successfully completing the transformation of Entropic, and we'll continue to report on our ongoing progress and the quarters ahead.

That concludes our prepared remarks. Now Dave and I will take any of your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Gary Mobley with Benchmark.

Gary W. Mobley - The Benchmark Company, LLC, Research Division

The first question I have relates to your additional swim business with the transition to digital swim at DIRECTV. I know one of your competitors has been talking about having won some business there and the business ramping in the second half of 2014, and I think you make similar comments. So I'm just curious to know how you see Entropic splitting the business with that competitor as DIRECTV switches to digital swim modules and, not only for the second half of 2014, but as well 2015.

Patrick C. Henry

Yes. Our understanding and from talking to our direct OEM customers and the end customers that the deployment of digital swim is going to be quite modest in 2014. We have a multi-switch opportunity there as one other competitor that has some small amount of volume that they'll probably deploy as well. The vast majority of what will be deployed in 2014 will continue to be analogue CSS as we understand it. As we get into second-generation digital CSS, we'll see that deploying in 2015, and we believe we're in a very strong position to have significant market share in that business. And really, the volume portion of that, we believe, is really second half of 2015.

Gary W. Mobley - The Benchmark Company, LLC, Research Division

Okay. I appreciate the comments you made regarding your 28-nanometer SoC. I didn't get quite all the details, so just wanted to ask a follow-up question regarding that. For the first platform, what is the intended pay-TV segment that you're targeting? And after that, how should we think about different iterations of the product as it relates to the timing?

Patrick C. Henry

Yes. The initial opportunities that we're pursuing are for HDTV, including HEVC decoding capability, so that would give you probably a 50% improvement in like a 4 ADP [ph] or call it a 10 ADP stream in terms of bandwidth usage, which has significant volume and some market opportunities. This will be used primarily in IP-based video deployments, but also in what we call satellite zapper opportunities, where Full-Band Capture of MoCA and satellite are important. Over time, we'll evolve that into the cable market for zappers. And then, also, we'll leverage this into our ultra-HD roadmap over time, which we'll see initial design wins based on ultra-HD happening late this year.

Operator

And your next question comes from the line of Tore Svanberg with Stifel.

Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division

I know you typically don't give guidance more than a quarter out, but just based in all the dynamics [indiscernible] that maybe there's going to be some continuous headwinds into Q2. But then, maybe, by midyear, we'll start to see stabilization in the revenue?

David Lyle

Yes, I'll take that. This is Dave. Yes, in Q1, we said we typically have -- actually, the first half, we typically have seasonal softness with our run rate products. Particularly in Q2, we have seasonal softness from the satellite side. So we think that will be one of your typical seasonality soft quarters. We're waiting for new deployments to offset the -- that pressure, so we expect to continue to see pressure in the -- throughout the first half.

Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division

Very good. And I was also hoping you could elaborate a little bit on the operating expenses. So obviously, you've got some big expenses in Q1. But the -- once we're through with that, what sort of OpEx run rate will we go back to by Q2?

David Lyle

Yes. Previously, we had talked about having some tapeout stack up in the first half in terms of the operating expense impact. That happened, in fact, a large portion of it happened -- is happening in Q1, hence the guidance showing $6 million in tapeouts, and our total OpEx being $44 million, which is a significant increase over Q4. Going into Q2 and beyond, we're not going to have that kind of stacked-up tapeout issue. If you actually take out, from the $44 million, that $6 million and back it at kind of a $38 million base, I think naturally, we're in the $38 million to $40 million per quarter range, which is also, by the way, highly dependent on non-nonrecurring engineering expense that can happen throughout the year, which includes tapeouts. But I don't think we're going to see this kind of volume in tapeouts for the rest of the year.

Tore Svanberg - Stifel, Nicolaus & Co., Inc., Research Division

Very good. Just one last question, and I don't know if you're prepared to comment on this. But if we look at the MoCa discrete legacy revenue that's been declining, and also the Trident revenue that's been declining, if we sort of combine those and call it legacy revenue, what percentage would that be as you exit Q1?

David Lyle

We don't break out our product revenue, so I can't give you that kind of detail. But clearly, we've seen a large majority through last year of legacy revenue declining. I think that's starting to bottom out now and give us a more solid base from which we can eventually grow if we get these new deployments happening.

Operator

And your next question comes from the line of Hamed Khorsand with BWS Financial.

Hamed Khorsand - BWS Financial Inc.

First, I want to start off with your comments about the Comcast RDK. Does this mean you have to requalify? And what are we talking about as far as timing of the whole rollout as far as you're concerned?

Patrick C. Henry

I think Comcast is continuing to roll out RDK based on their X1, X2 deployment plans. They have a more aggressive rollout of legacy hardware as the new hardware continues to be in development, and this includes both on the cloud-based part of the system, as well as the CPE base of the system. We're clearly being impacted by that. We have specific instructions from Comcast and from our OEM customers not to comment more specifically about platforms as it relates to that, but we continue to stay engaged with them. And there is no requalification of existing platforms. It's just continuing development on that, but there are new products in the pipeline at all times based on their roadmap. And as we have products that intersect that, we're working with the end customer, as well as our OEM partners, to support that.

Hamed Khorsand - BWS Financial Inc.

Okay. And in your earlier comments, it sounds like there's other -- service providers are also making such adjustments. Are you able to quantify that as well?

Patrick C. Henry

We're not seeing as much from a broad-based standpoint affecting what we've already developed from an RDK standpoint with other MSOs. But as we get into 2015, I think there is going to be a broader-based market shift to ultra high-def. So the development work that we have going on there is going to be important for next-generation products.

Hamed Khorsand - BWS Financial Inc.

Okay. And do you think you're still on time as far as integrated MoCa and retaining market share there?

Patrick C. Henry

Yes. So we're sampling our first product with integrated MoCa this quarter. I think we're very well positioned to win designs based on that, and then we'll have derivative products off of that throughout the year. Then we also will have ultra high-def products in the second half, and we expect to have ultra high-def design wins underway by the end of this year.

Hamed Khorsand - BWS Financial Inc.

Okay. My last question is, so, given everything that's going on, given the murky kind of state your outlook is on, where are you going to base your cash burnout? I mean, how do you preserve that? How do you generate some value from investors' standpoint, from that angle?

David Lyle

On the cash front, nothing has really changed for us. We still, in fact, have a share repurchase program going on, and we still have confidence in the long-term prospects of the company. And we think we're investing in the right places at the right levels.

Hamed Khorsand - BWS Financial Inc.

Yes. But if I'm looking at Q1 and now Q2 looks -- it's not going to look that great, right? And based on your commentary, how can I even have an optimistic viewpoint Q3 is going to be anywhere in excess of $60 million that your operating income could be close to breakeven? So I'm just trying to get to where do you guys stand as far as strategy of getting to breakeven if we don't see revenue climb out of this $50 million area?

Patrick C. Henry

Well we're -- on an ongoing basis, we're always looking at OpEx and looking at the pipeline of opportunities that we have. We believe we're investing at the right levels. We just got all these new products out. We now have to commercialize them, get all the enabling software built on top of them, get those products into production. So we're committed to doing that. But as we've always done, we'll look at OpEx on an ongoing basis, and if we see that we're leveling out at a different revenue level than where we think we can today and then continue to grow from there, then we'll have to adjust OpEx based on that. We're really not seeing that right now based on the pipeline and design wins that we have, but I think we've shown a history of being disciplined in that area, and we'll continue to be going forward. Right now, the feeling is that we have very good prospects of generating cash. That's why we're continuing to buy stock at what we consider a value low point.

Operator

[Operator Instructions] The next question comes from the line of Raji Gill with Needham & Company.

Unknown Analyst

This is Joe on for Raji. Wanted to just get a little bit of insight into what you see on the getaway side of things as far as design activity or customer engagement. Is it more on a headed or headless gateways? And to what extent is the transition from DOCSIS 3.0 to 3.1 change this dynamic at all?

Patrick C. Henry

Yes, I think, currently, it's a 2-part architecture on the gateways. There's a data voice gateway which is separate from the video gateway. Video gateway currently looks more like a server, and this is in the cable space. But even on the satellite side, the gateway looks more like a server. I think we'll see an evolution from a headed to a headless-based architecture kind of across the board over the next couple of years, but that will also allow you to combine the voice video data into a single gateway product. But I really wouldn't expect to see that being the major deployment model until probably like late 2015, maybe 2016, based on what we're seeing from our customers and the end customers. If you look at the transition from DOCSIS 3.0 to 3.1, there's definitely a desire to move in that direction, but there's a lot of work that needed to be done, not only on the CPE, but in the head end for that to happen. So just like the transition from 2.0 to 3.0, I think it's going to take a few years before that becomes the mainstream offering.

Unknown Analyst

Okay. Then, I guess, for the design activity surrounding the gateways, is it more domestic or international or kind of a mix? Or are you seeing it move more towards the India, China markets as they move to HD content versus standard?

Patrick C. Henry

The client-server architecture and kind of the move towards IP is driven much more aggressively within the North America market across telco, cable and satellite versus outside the U.S., where a traditional kind of DVR zapper model still exists. We are seeing client servers start to take off in portions of Europe with UPC and Liberty Global more broadly. But I think that's going to be slower than what we're seeing in the U.S. market. So most of the activity from a move to a client server IP architecture and gateway still driven by North America from a volume standpoint at least [ph] the next couple years.

Unknown Analyst

Is that predominantly because of the infrastructure not able to support it, or just demand?

Patrick C. Henry

Well, I think it's -- the U.S. market is a different type of market in terms of number of TVs per household, what the desire is to move to higher-speed broadband services, the competitive landscape versus over-the-top. So I think that there's a number of market factors that are driving that, that you don't see as much or as substantially in some of the international markets.

Operator

Your next question comes from the line of Harlan Sur with JPMorgan.

Saqib Jalil - JP Morgan Chase & Co, Research Division

This is Saqib Jalil for Harlan Sur. My first question is, you guys talked about meaningful revenue ramp in the second half of '14. Are you talking about like tens of millions of dollars or high-single digits? I'm basically trying to figure out if you are anticipating growth in 2014 versus 2013, then I have a follow-up.

David Lyle

Yes, this is Dave. So first of all, we only guide one quarter out, so I'll stick to qualitative commentary. In the second half, we have several design wins for our SoCs and MoCa, as well as some opportunities across our other product lines. So we feel like we have opportunities to grow in the second half. The size of that growth is highly dependent on the timing and the size of the deployments by these service providers. We can get a lot of leverage out of this business model though with only a few service providers because they shift quite a few boxes in general.

Patrick C. Henry

I mean, definitely, from a design win pipeline standpoint, the size and the quality of the things we have in the pipeline, those can be in the $5 million to $10 million a quarter a piece, and there's multiple of those that we have. So again, getting back to Dave's point, the order of magnitude definitely allows us to grow at a pretty significant clip, but it's the timing of the deployment and how quickly they ramp into kind of a run rate volume.

Saqib Jalil - JP Morgan Chase & Co, Research Division

Okay, great. And also, can you comment about the AC DTA ramp by your other customers? That would be a deployment on a whole in the second half of last year. Are they still expecting to grow in the second half of this year?

Patrick C. Henry

I think, generally, within the AC DTA market, we're seeing an aggressive push using AC DTAs for analog reclamation across multiple service providers, and we're seeing the benefit of that. We don't think that's going to be a major growth engine for us. It's more of a run rate business. I mean, it might have some modest growth in -- throughout the year, but the bigger growth we're really anticipating is from some of these other design wins that we have going on with our discrete products, as well as with our integrated MoCa plus SoC products.

Saqib Jalil - JP Morgan Chase & Co, Research Division

Great. And then my last question is, can you talk a little bit about -- you mentioned that you have a limited window for design wins that you have captured at Comcast and others. Any progress -- any programs where you have had design wins, but you have gotten canceled or postponed?

Patrick C. Henry

Yes, we can't comment on specific platforms at the operators. Anything that we have going on in the cable industry, generally, around IP clients and gateways, we saw market opportunities with our OEMs for those products. What has happened is there's a narrower window with the pull-in of ultra high-def requirements. So there's going to be a shorter runway. There's been delays in the initial launch of some of these products and they continue to deploy legacy products as a result of that, so that gives us a narrower window and a smaller revenue opportunity over a shorter period of time, versus if they were to launch June or September of last year. But what we do see is we're aligned very well with our investment in RDK, our investment in HEVC and ultra high-def to capitalize on these things and what we have going on in MoCa, especially low power MoCa. We have some significant opportunities there as well, not only in RDK, but in the broader market.

Operator

And your last question will come from the line of Alex Gauna with JMP Securities.

Alex Gauna - JMP Securities LLC, Research Division

I know, Dave, you said that this is somewhat of a qualitative answer in terms of getting to growth in the second half of this year based on some of the design win pipeline. But can you maybe break out where you have the most confidence? Is it in the SoCs or a full headed set-top box? Is it in more of the headless gateways? Is it some of the dongles that are the chrome-cast type of conditional access? Where's really the meat of the opportunity that we should be looking to track?

David Lyle

No problem, this is Dave. Yes. The opportunities that we have are really about these new deployments, and they're more broadly across multiple service providers and across different types of devices. I don't want to break out which ones. In fact, the service providers have actually asked us to not to comment along those lines with that kind of detail, so I can't break that out, but I can tell you that there are multiple design wins that we're talking about across SoC and MoCa. And we also have opportunities in our other businesses with CSS and even broadband access.

Alex Gauna - JMP Securities LLC, Research Division

Okay. If I put CSS and broadband access aside as sort of next-gen new growth opportunities and just look at your core client-side subscription TV business, would it be safe to say, for growth, you're counting on a broadening unit volume opportunity? Considering all the different type of applications that are out there with maybe lower ASPs? Or do you think that based on some of the SoCs you're doing, you can actually with the same number of unit volume attached through ASP accretion get to growth that way?

Patrick C. Henry

I think it's a combination of all. We're definitely -- we -- a lot of the legacy Trident SoCs, they missed a couple of design cycles. So we're out in the number of different places, and we're reentering some of those markets and growing into new markets. Some of those are for non-MoCa-based SoCs, but a significant portion of it is with MoCa integrated. So we have first-generation design wins based on bundled solutions but then I think we can increase market share as we get to integrated solutions across a broad set of operators. So I think it's a combination of those things.

Alex Gauna - JMP Securities LLC, Research Division

Okay. And to give you a shot here to maybe take a shot at one of your competitors. Is there something specifically you're bringing to the table where maybe a Broadcom is vulnerable, they're trying to jam a one-size-fit-all kind of solution down the operators where you really stand out? Or no comment at this juncture?

Patrick C. Henry

I think, from a feature standpoint, it's hard to differentiate based on the features what you're designing to somebody's spec. But you can differentiate based on power and performance, and also, your willingness to drive open standard architectures. Since we don't have the incumbency position in many cases, we've been really the catalyst for driving open system architectures across multiple operators, and that's perceived as very valuable by the OEMs, as well as by the end customer.

Operator

Thank you for all your questions. And now we will turn it back over to Ms. Debbie Hart for closing remarks.

Debra Hart

Great. Well, I just wanted to thank you, all, for joining us today and if you have any follow-up questions, feel free to contact me. Thank you.

Operator

And ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!