Integrated Device's (IDTI) CEO Gregory Waters on Q4 2014 Results - Earnings Call Transcript

May. 5.14 | About: Integrated Device (IDTI)

Integrated Device Technology, Inc. (NASDAQ:IDTI)

Q4 2014 Results Earnings Conference Call

May 05, 2014, 04:30 PM ET

Executives

Brian C. White - VP and CFO

Gregory L. Waters - President and CEO

Analysts

Harsh N. Kumar - Stephens Inc.

Blayne Curtis - Barclays Capital

Christopher J. Longiaru - Sidoti & Company, LLC

Charles L. Anderson - Dougherty & Company LLC

Lena Zhang - Blaylock Robert Van

JoAnne Feeney - ABR Investment Strategy

Anthony J. Stoss - Craig-Hallum Capital Group LLC

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Integrated Device Technology Fourth Quarter and Fiscal Year-End 2014 Earnings Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions). This conference is also being recorded today Monday May 5, 2014.

I would now like to turn the conference over to Brian White, Chief Financial Officer. Please go ahead, sir.

Brian C. White

Thank you and welcome to our fiscal fourth quarter and year-end 2014 financial results conference call. I am Brian White, IDT’s Chief Financial Officer, and presenting with me on the call today is Greg Waters, our CEO.

Our call today will include remarks about future expectations, plans and prospects for IDT, which constitute forward-looking statements for purposes of the Safe Harbor provisions under applicable Federal Securities laws. Forward-looking statements in this call will include statements regarding demand for company products, anticipated trends in company sales, expenses and profits, and involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations.

The company urges investors to review in detail the risks and uncertainties in the company's SEC filings, including but not limited to, the annual report on Form 10-K for the fiscal year-ended March 31, 2013, and periodic reports filed from time-to-time with the SEC. All forward-looking statements are made as of the date of this call and IDT disclaims any duty to update such statements.

In addition, pursuant to Regulation G, any non-GAAP financial measures referenced during today's conference call can be found in our press release posted on our website at idt.com, including a complete reconciliation to the most directly comparable GAAP measures. All financial references will be non-GAAP on a continuing operations basis, unless otherwise indicated.

Also we have made selected financial information available on webcast slides, which can be found in the Investor Relations section of our website.

Now I’ll turn the call over to Greg, who will provide some fourth quarter highlights and then I'll return to give you more specifics on our results for the quarter. After that I'll elaborate on our outlook for the June quarter. Greg?

Gregory L. Waters

Thanks Brian and welcome to everybody in the call. I’ll now cover some company highlights and hand it back to Brian for more detailed financial commentary.

To begin with we are very pleased to announce results to support our transition to profitable growth in high performance analog market. In the fourth fiscal quarter revenue recorded $118.6 million which was better than our guidance. This was driven primarily by strength in our communications business, specifically our RapidIO and RF components for 4G base stations.

Our non-GAAP operating margin came in at 19.5% and non-GAAP EPS for the quarter was $0.14. We are very proud of these results. In communications end market revenue increased by 3% quarter-over-quarter and comprised approximately 65% of total sales, up from 61% in the prior quarter. Driving this improvement was another quarter of record sales of RapidIO switches, advance timing products and the strong growth of our new products RF for wireless base stations.

Regarding our RF products we achieved significant growth in this quarter with revenue more than doubling from the third fiscal quarter. We have an excellent team here and have been investing in this business for the past several years. RF revenue was over $2 million in Q4 which doubled from the prior quarter. While this is a small part of our business today we are now ramping against several major customer awards and expect this business to grow very robustly for the next couple of years at least.

In addition we continue to enjoy robust sales of our RapidIO switch business and are very well positioned to continue to benefit as the multi-year rollout of 4G and LTE in China and the rest of the world continuous.

Turning to the computing end market, we are largely complete with the transition away from lower margin PC-related products. Excluding the PC audio business that we sold last quarter we experienced an 11% sequential revenue decline. Non-audio related PC revenue was flat while server related sales were down 12% in the quarter. Overall computing represented 21% of revenue, down from the 27% of sales in the prior quarter.

In DDR3 memory registers IDT remains the clear leader with nearly 60% market share. We see early adopter sales of industry certified JEDEC 1.0-compliant DDR4 chipset pre-production orders ramping now and will reach approximately $4 million by the end of this quarter.

IDT's DDR4 memory interface products deliver best-in-class power, performance and quality and are an integral part of next generation memory architectures for high-performance data centers, storage and networking applications. We believe that we are extremely well positioned with our chipset, registers, buffers and temp sensors and are working closely with all the key players in the ecosystem without exception. Not only is the expected market size for DDR4 LRDIMMs substantially larger than for DDR3, we'll also benefit from a better ASP mix with this transition.

Turning now to consumer end markets, revenue decline 17% sequentially and represented approximately 11% of fourth quarter revenue. This is in-line with normal seasonal trends. In wireless power we continue to launch new leadership products and are seeing strong design interaction. In particular this quarter we announced the new family of ultra-compact wireless power receivers that reduce board area footprint by 70% compared to competing solutions and the industry's first dual-mode wireless power receivers that are compatible with both WPC 1.1 Qi standards and the PMA 1.1 standard.

The wireless charging ecosystem is still in early adopter stages but our leverage of our programmable power technology into a first mover advantage in wireless charging has led the excellent design traction with customers. We are well positioned to benefit when the market roll-out of wireless charging develops.

Turning to our timing business, we continue to be recognized as the leader in this space, with numerous design wins and industry awards during the quarter. We redoubled our focus on growing this business and accomplished a great deal during the quarter. Communications timing remains a strong design win segment for IDT with accelerating designs in mobile backhaul and aggregation equipment.

Our third generation UFT or Universal Frequency Translator is gaining great industry traction with key design wins at numerous tier-1 base stations and high performance router OEMs. The new high performance Ethernet PLLs and IEEE 1588 synthesizers that we announced just this morning are already designed in to major OEMs for industrial automation and power systems and representative of how we are leveraging our communications system knowhow into new markets. This supports our strategy of future growth in highly deferential system-level solutions in our timing business.

Another key new device family are low power programmable VersaClock 5 launched this quarter and has been received extremely well. This has resulted in solid new design wins in both networking and consumer end markets. Our design funnel for this project is already one of the largest that we've seen for any new timing products in the past three years.

Three of our latest timing products were nominated for prestigious industry awards from EE Times and we have added two new key executives to lead our timing team. Dave Shepard joins us from Peregrine Semiconductor and will run our multimarket timing and RF business and Louise Gaulin has been promoted to run our Networks Communication division which focuses on timing for both wired and wireless networks. We're very excited to have these two leaders in place and expect to see consistent growth and market share gains in our timing business for the rest of this year.

Another key addition to our executive team is Sailesh Chittipeddi, IDT's Vice President of Global Operations and Chief Technology Officer. Many of you may know Sailesh from his former position as CEO of Conexant. I am very pleased to have Sailesh join our team. We believe there are significant gains to be had in our already strong operational capability and you can expect new elements of our technology strategy to be disclosed throughout the year.

And now let me turn to our Q1 guidance. For the first quarter of fiscal 2015 we expect revenue to come in at approximately $125 million plus or minus $3 million. We currently expect sales from the consumer-end market to increase by approximately 24%. We expect both our communications and computing end markets to be up 3% quarter-over-quarter. We believe that we are very well positioned to gain share in all of our target markets. Our strong balance sheet allows us to further invest in the business and deliver value to our shareholders.

And finally I'd like to acknowledge the accomplishments of IDT employees who have seen the company through a successful transition period and are now ready to grow. And I'll now turn it back over to Brian for further details on our company financials.

Brian C. White

Thanks, Greg. As Greg mentioned earlier revenue for fiscal Q4 was $118.6 million, up 10% from the prior-year period, and above the mid-point of the guidance range we provided in February. Bookings rebounded in the March quarter and have remained solid during the first month of fiscal Q1. Fiscal Q4 book-to-bill ratio was well above one and book-to-bill has remained above one into fiscal Q1.

Channel inventory declined again in the March quarter and is at healthy levels. Fiscal Q4 non-GAAP gross margin of 61.1% was below the mid-point of our prior guidance due to inventory reserves associated with our previous fab closure transition and product mix. Non-GAAP operating expense in Q4 was $49.3 million, a decrease of $1.1 million from the prior quarter. R&D expense was $28.4 million and SG&A was $20.9 million.

Fiscal Q4 operating expense benefited from the full quarter reduction associated with the sale of our Audio codecs business which occurred during the December quarter along with lower labor-related expenses.

Non-GAAP operating margin for the March quarter was 19.5% up from 5.2% in the year ago period. Q4 net interest and other income was approximately $600,000 and our effective tax rate was approximately 7%. For Q4 we reported non-GAAP net income of $22.1 million or $0.14 per diluted share.

Now let me summarize our results on a GAAP basis. We reported GAAP net income from continuing operations of approximately $5.4 million, or $0.04 per diluted share in the March quarter. The difference between our GAAP and non-GAAP results nets out to about $16.7 million, or $0.10 per diluted share. Fiscal fourth quarter GAAP results include $15.6 million in acquisition and restructuring-related charges, $2.4 million in stock-based compensation expense and a $1.3 million benefit from related tax effects.

Further information, including a detailed reconciliation of GAAP to non-GAAP results, is provided in the financial tables of today's press release and can also be found on our website at idt.com.

Now I'll turn to the balance sheet. Cash and investments totaled approximately $454 million at the end of the March quarter. Cash from operations and free cash flow continued to be very strong. We generated approximately $27 million in cash from operations while utilizing approximately $3 million for capital expenditures. We received about $15 million from employee stock transactions and spent approximately $24 million to repurchase about 2.1 million shares. Fully diluted shares per EPS declined by 1.2 million from 157.1 million to 155.9 million.

Net inventory was approximately $50 million down almost $4 million from the prior quarter. Days of inventory declined by five to approximately 98 days. Our trade accounts receivable increased $3 million to about $69 million and our DSO was 53 days.

Now let me expand on our forecast for the June quarter. We entered the first quarter of fiscal 2015 with a strong direct customer backlog. The direct [turns] that were required to achieve our revenue guidance is lower and thus more favorable than in recent historical periods. That said the proportion of our revenue sold to customers on a consignment basis has been increasing which carries with it reduced visibility to the timing of shipments from backlog versus the timing of revenue recognitions.

Greg noted earlier that we currently project revenue for our first fiscal quarter to be approximately $125 million plus or minus $3 million which would represent our third consecutive quarter of year-over-year revenue growth. We project gross margin to be 61.5% plus or minus 50 basis points on a non-GAAP basis. The actual gross margin should be primarily dependent on the ultimate revenue range and product mix for the quarter.

We project non-GAAP operating expense to be approximately $51.5 million plus or minus $1 million. R&D is expected to be approximately $29.5 million and SG&A spending approximately $22 million. Non-GAAP operating margin is estimated to be 20.3% at the midpoint of our guidance range. This level of operating expense and margins is consistent with the target range we provided previously above to approximately $52 million per quarter of OpEx and 20% or better operating margins.

We currently anticipate interest and other income will be about $600,000 and we estimate the effective cash rate for the quarter will be approximately 5%. We estimate Q1 share count will be about 157 million shares on a fully diluted basis before the impact of share repurchases.

Based on our revenue guidance range we project non-GAAP EPS for the June quarter to be between $0.15 and $0.17 per share. On the balance sheet we expect cash flow from operations to be approximately $20 million. June quarter cash from operations is impacted by the payout of employee variable compensation for the fiscal 2014 performance period which amounts to approximately $10 million.

Cash and short term investment balances are expected to be approximately $478 million at the end of June excluding the impact of share repurchases. We begin fiscal 2015 in a strong position. We’ve created structure that is delivering compelling profitability and cash flow generation by providing leverage for our revenue growth. We will continue to drive operational efficiencies for additional value creation and look forward to sharing the results of those actions with you over the course of this next year.

With that summary I’ll turn the call over to the operator for the Q&A portion of the call.

Question-and-Answer Session

Operator

(Operator Instructions). And our first question comes from the line of Harsh Kumar with Stephens Research. Please go ahead.

Harsh N. Kumar - Stephens Inc.

Congratulations, another solid quarter Greg, Brian and the team. I had a couple of questions. First of all there was a lot of positive commentary about China wireless infrastructure and just wireless infrastructure in general. I am curious you know there have been bunch of false starts in the past, I am curious as to what you are seeing which gives you the level of confidence that this is going to sustain and how much visibility you have there.

Gregory L. Waters

Hey, Harsh, it's Greg. Thank you. With respect to the visibility into the China market we have exceptionally high visibility given our [surreal] design position which I believe you are familiar with. It's in all of the 4G base stations. Demand outlook remains robust. I think there is the usual scramble for supply going on just to meet that robust demand. But we see no reasons for concern in the demand profile in China right now.

Harsh N. Kumar - Stephens Inc.

Okay, great. And if I can ask another one, maybe I want to make sure I heard this correctly. Consumer business up 24% is sort of out of line with seasonal June trends. I am curious what's driving that?

Gregory L. Waters

It's slightly higher, Harsh. I mean we -- again, we have been down about 17% in this sector just that, so it is rebound, past seasonality which is most of that and I would say that the rest of that strength is in very incremental increases we are seeing from older designs in wireless charging.

Harsh N. Kumar - Stephens Inc.

Got it and then my last question and I'll get back in line. Greg Intel has some very interesting commentary the expanded scope of the Atom chipset and the Bay Trail chipset that goes with it. I am curious -- I know you have some designs wins if I am not mistaken on that platform, I am curious if you can talk about that particular prospect?

Gregory L. Waters

I can talk about it, Harsh briefly. As you know we are references on partner of Intel fill, that public domain knowledge was announced a couple of quarters ago for an advanced programmable PMIC that goes into the Bay Trail series of processors. The roll-out for that particular PMIC device or family of devices will correspond with -- obviously will be driven by Intel but coming off a very, very small base that we have in that business we do look for that to contribute to grow towards the tail of this calendar year.

Harsh N. Kumar - Stephens Inc.

Thanks guys and congratulations.

Gregory L. Waters

Thanks, Harsh.

Operator

Thank you. And our next question comes from the line of Blayne Curtis with Barclays Capital. Please go ahead.

Blayne Curtis - Barclays Capital

Hey, good afternoon and congrats, nice results. Maybe just going back on the COM end market, you mentioned record RapidIO. I was wondering if you can parse out, I mean clearly all -- most companies have seen strong wireless trends through earnings. You have three, you are guiding three again. You know outside of wireless are you what kind of growth are you seeing in the other business, I guess I mean if you could maybe quantify how big the RapidIO business has gotten at this point or any sort of rough parameters, that will be helpful. Thanks.

Gregory L. Waters

And we haven't -- thanks Blayne. We haven’t broken out wireless, the [SVO] business in the past, so we don’t really break that out specially. But if you look at the guide we just put forward in our major end markets we called up both communications as well compute to be up 3% quarter-on-quarter sequentially, in the next question and higher than that in consumer space which was the question we just answered. So we continue to see steady robust growth for our business in both those segments.

Blayne Curtis - Barclays Capital

Okay, then maybe a question for Brian the gross margin came a little weaker in the current quarter, you are guiding it sequentially up but the mix with the comp I guess should help you in March if you can just talk about the moving pieces, Brian?

Brian C. White

Yes so Blayne, in last quarter we just completed gross margin came in a little bit lighter than the midpoint of our guidance and as we said in the prepared remarks it was driven by a couple of factors, one mix and you put out the fact of increasing comp revenue and the impact that, that could have on gross margin.

One thing that changed that in regard to our margin profile and how it relates to our end markets is that there is less difference in gross margin between the revenue in our various end markets than there have been in the past and that's really the result of all the portfolio management actions that we have taken and divestitures and downsizing of low margin businesses. So -- whereas in the past you can look increasing comp revenue and generally associate that with increasing gross margins.

That's not necessarily the case anymore. There is not a lot of differentiation between the end markets. So today mix is really driven much more by very specific product differences within those end markets, customer mix et cetera and so that came in a little worse than forecast for the fiscal Q4 period. And then we also had a little bit higher impact associated with inventory reserves than we had been expecting.

As you remember we closed out our last fab approximately two years ago. And when we did that we did not transition all products to foundry and certain products didn’t warrant the cost of transfers, so we built out inventory to support the remaining demand for those products. And so in the fourth quarter as we evaluate demand for those products which have some incremental reserves on that still to head inventories which we would not expect to recur again in fiscal Q1.

And just to give you a little bit of perspective on the net book value of that build ahead inventory today is approximately $1 million. So we believe that demand to cover that supply going forward in a total magnitude of about, that number in average is significant going forward.

Blayne Curtis - Barclays Capital

Thanks, then just finally the tax rate for Q1 should that continue through the rest of the year 5%?

Brian C. White

Yes I would use the 5% to model out the full fiscal year and that's really driven by our view of the source of income geographically as we move forward, we see more of our processing towards the offshore at zero or low tax rates.

Blayne Curtis - Barclays Capital

Thanks, guys.

Operator

Thank you and our next question comes from the line of Christopher Longiaru with Sidoti & Company. Please go ahead.

Christopher J. Longiaru - Sidoti & Company, LLC

Hey guys, I echo my congratulations good quarter.

Gregory L. Waters

Thank you.

Christopher J. Longiaru - Sidoti & Company, LLC

I guess I've got a couple of questions. First just kind of specifically I mean on the DDR you expect to do $4 million of revenue by the end of June is that the right number?

Gregory L. Waters

Yeah.

Christopher J. Longiaru - Sidoti & Company, LLC

And so how does that ramp after that? Can you give relevant commentary, I mean that’s pretty quick and it seems like -- I mean how is this going to look as we move out over the next couple of quarters?

Gregory L. Waters

It's a great question now and I’ll answer you as clearly as I can. The ramp of DDR4 is driven by our ecosystems partners not by us and not by anybody else, and that’s really a set of commentary that said we would differ to them. Right now what we were excited about, as we’ve been talking about DDR4 and how we think that is a real breakpoint for us to increase our market share and deliver some incremental growth to that whole business.

And while we don’t expect the real inflection point of DDR4 to be for a little while, let’s say, I would say that that’s more it's not something that's immediate and it's not a big part of our growth guide in to this quarter for instance. We did think it was very meaningful and we are pretty proud that we’ve got that initial wave of DDR shipment out there right now.

So I would keep tuned to the people really driving that eco-system for the commentary, but we do expect it to ramp in the next several quarters and we do expect to have a major beneficiary of that ramp.

Christopher J. Longiaru - Sidoti & Company, LLC

Hey great that’s helpful, thank you. And then just moving on to just on the consumer side, how much of this, I think you said legacy wireless charging product, how long do you think that last for you and that with kind of new products in the mix, now those products materially different from our margins perspective?

Gregory L. Waters

We think that the current round of waterless charging -- here let me put it in perspective. We think that those designs exist in the revenues in for a long time, right. So those are not designs that get obsoleted any time soon. But if you look at the revenue that we’ve got in the current quarter and in the guide for wireless charging, these are design wins that we put down say nine months or even more ago. So they are the initial wave of products. We are glad to have that business that they represent the growth opportunity that we think we have in wireless powers.

So they hang in there. Consistent with our last conference call and what we have been public on we think that the next waves of new wireless designs in the industry goes right along with the industry cycle of new accessories and new phone.

Christopher J. Longiaru - Sidoti & Company, LLC

Okay, and then just the last. I don’t know if you mentioned how many shares you brought back in at what price and how much is left on your purchase plan?

Brian C. White

Yeah there is a $106 million left on the repurchase. In fiscal Q4 we bought back 2.1 million shares, an average price of bout $11.29 per share, so we spent $24 million to do that.

Christopher J. Longiaru - Sidoti & Company, LLC

Right. Well that’s all I have for now, thank you guys.

Operator

Thank you. And our next question comes from the line of Charlie Anderson with Dougherty & Company. Please go ahead.

Charles L. Anderson - Dougherty & Company LLC

Yeah, thanks for taking my questions and congrats from me as well. As it relates to wireless charging, thanks got briefly covered about the back half for the year, I wondered if you could maybe expand on that in terms of where are we seeing a maybe attach rates on the flagship devices or are we reaching any sort of a knee in the curve from your perspective, are there a lot of backhaul server just some just any color there would be helpful?

Gregory L. Waters

Yeah. Sure, Charlie. Thank you. Listen we see a lot of activity in wireless charging and to give you some more color we've been very consistent I think with we're not going to guide to a wireless charging ramp until we actually see it. We think that the industry ramp and the next big opportunity ramp in the fall. So all consistent with what I think we've been putting forward previously.

What's different and what's interesting is that you can see a real shift in the attitude of Tier 1 – wireless OEMs out there where wireless charging is moving at different rates at different OEMs but it is moving from where I'd call an experimental really [adoptable] mode to more of a main stream serious product mode.

So we see a lot more activity from the major Tier 1s with respect to the seriousness and the types of products that they are designing wireless charging into first. The second thing is if you look at certain classes of devices such as really small form factor wireless devices, wearables et cetera. Wireless charging is really the only practical way we think to power some of those devices.

You just don't have room or don't want to make room for a connector and for that category of device people miss this point a lot. You really want those to be rugged and waterproof for instance, the minute you put a physical connector on the side of one of these things they are no longer waterproof. So there is a whole category of devices where we think it's not just a transition from a wire charging the wireless charging. We think wireless is really an enabler for getting that category of equipment going.

Listen we remain bullish on this market. We if anything are feeling even better about our position with respect to products and design activity than we have in the past, the announcements that we mentioned earlier in the call are really cool products and we're getting a lot of attention and pick up in the industry. But we will continue to be transparent with how that translates into our own business as we get closer to those launch dates.

Charles L. Anderson - Dougherty & Company LLC

Good. And then as it relates to the competitive environment there, for a while you guys had this advantage just in terms of pitching the product and there is a bit dual mode, now we've seen other competitor talk about dual mode I think even intermediate tri- mode, just hoping you kind of levels at where you are on competitive versus what's out there?

Gregory L. Waters

I think we feel very good about our competitive position. I guess the way I would think about it Charlie is we're always paranoid about our competitive position. The right way to drive products and technologies and customer engagements forward is to always here in the paranoid side. But if you take a look at those projects that leverage the initial dual mode they were extremely well received.

We have a very programmable, flexible and potent solution so we can often do in software what our competitors are trying to do in hardware. In short we feel very good about our competitive position in these products and I think customers build with their fleet.

Charles L. Anderson - Dougherty & Company LLC

Thanks so much.

Gregory L. Waters

Thanks, Charlie.

Operator

Thank you. And our next question Lena Zhang with Blaylock Robert Van. Please go ahead.

Lena Zhang - Blaylock Robert Van

Hi. Congratulations on solid results and guidance. I have a follow-up question on what Brian mentioned about gross margin. So you mentioned that now product mix weigh more on the gross margins. So can you give us some idea about which product lines above the corporate average and which are below corporate average for us to better understand?

Brian C. White

I think the key point there and we're not – in response to the earlier question is there is not as much differentiation in gross margin between our pipelines as there have been in the past. So again as we talk about our mix of sales between end markets you won't see that driving substantial swings in the gross margin at least at this point in time.

Gregory L. Waters

Yeah. Lena it's Greg. To give you a little more color on this. We think as a precision analog company that anything that we put our time and energy and R&D into should be a superior product that carries great gross margins. So even the things that we are designing for future products into the consumer space for instance they carry much higher margins they have in the past.

So it's not all created equal. There is obviously some product lines are better than others. But if you look at the products that were really dragging down gross margins in the past we got rid of those business and that was done some time ago. So, PC audio was one of those businesses that we now had a substantially lower gross margin than the rest of the company average. So, you see a lot of our new products expect a great majority of our new products somewhat normalize on company average.

Lena Zhang - Blaylock Robert Van

Thanks. And then my question is for your June quarter consumables and -- you mentioned that you 24% sequential growth is it a normal seasonality and maybe I have no record if you can give us your historical sequential change like wide range for consumers in for the June quarter that would be very helpful. Thank you.

Gregory L. Waters

Yeah, we will do that, Lena back what Brian mixed it up -- what we mean to say is that 24% growth is a little better than seasonal rebalance, but for instance that same end market was down 17% in the quarter for us. So some, a good part of that is just the rebound from the seasonably low quarter and yes 24% on quarters is a little better than seasonality yes.

Lena Zhang - Blaylock Robert Van

Okay, thanks, that's all I have.

Gregory L. Waters

Okay.

Operator

Thank you. And our next question comes from the line of JoAnne Feeney with ABR Investment Strategy. Please go ahead.

JoAnne Feeney - ABR Investment Strategy

Thank you and congrats on a solid quarter and guidance. I had a follow-up question on communication equipment market and first I am wondering if you can tell us what percentage of the business is currently being driven by the timing products?

Gregory L. Waters

What percent of the overall IDT business or what percent of the communications business JoAnne?

JoAnne Feeney - ABR Investment Strategy

Well both, if you know those numbers, that would be really helpful.

Gregory L. Waters

Yeah, we don't break our timing as part of the segments. As per the overall IDT business you know timing represents you know depending in the quarter about 40% of our overall business that you have, roughly for timing.

JoAnne Feeney - ABR Investment Strategy

Thanks, that's really helpful. And if I can go back a question about your visibility into wireless base stations ramping, other companies have remarked that demand for this current quarter is looking very solid very strong but I think also remarked their visibility beyond this quarter is really limited and there has been some concerns always that the China consumers are particular tend to order in first.

And you said you have very good visibility is that just because you are the owner of that has [Surreal] partner so, therefore you know it's going to have to grow the base station or do you actually have good solid visibility on specific orders for September and December quarters as well?

Gregory L. Waters

Definitely not December. We probably have better visibility than most but JoAnne I think all of these questions are legitimate. I think that do we have perfect visibility into the back half of the calendar year, certainly not, nobody does. What I would say is that I think the concerns about the 4G build out particularly with China Mobile of them spiking high we are less concerned about that today than we were even a quarter ago.

It's not that it's a no risk situation, I mean we are not in control of those buying patterns but I also think there have been some components supply shortages in other parts of the food chains that it's tempered that ramp a little bit, it's just smoothing out a little bit. So as best we can see current quarter plus one and maybe current quarter plus two we think that we can send -- we, our position today is that we continue to see healthy and robust demand.

On the back half of the year the other thing which is an unknown by anybody is that the demand in the first-half of the year is predominantly driven on the TDD technical standards in China with the other big operators like Unicom, and Telecom in China or the frequency division or FDD standard and we don't know but it's also possible that there is could be some unforecast strength in those sectors in the back half of the year.

JoAnne Feeney - ABR Investment Strategy

Okay.

Gregory L. Waters

If we were to net it out JoAnne we think that the industry including us has had at worst a good year in this market and right now it looks quite strong.

JoAnne Feeney - ABR Investment Strategy

Okay, that's really helpful thanks. And then if I could on a wireless charging side. So you have, it sounds like you have got some revenue in the legacy products at a continuing number one I guess, loss at the same level you have experienced in the last couple of quarters. And number two, on the design winds from your newer products I am just trying to get some understanding of the nature of your uncertainty is it you have firm design wins in specific products that you know we are ramping, during a win ramp or is that you are on a reference design and others are on the reference design so you don't know if you are going to adopted versus the others, is this a timing or is it will the product be built and will it be IDTI in those products.

Gregory L. Waters

You know I’ll answer both questions. First with respect to the first question and the revenue trend of the older design wins that we’ve got, they are steady they have grown slightly I mean that’s part of what helps the better than seasonal recovery of consumer obviously. But none of those classic designs which we have been shipping for a while, as you know, our designs that are going -- we expect to spike up and go crazy in volume in the future, it's really coming from new designs.

And with respect to our visibility and new designs it is considerably clear and with a clear line of sight on what customers those are, what design wins they are, the expected brand times et cetera, but what we are going to do JoAnne is we want to earn a reputation as a very predictable transparent incredible company in the way that we put forward future business states. And we will put that in the forecast when it's that those things appear, for instance in some of these sockets which are pretty exciting ones the end sell-through from the end customer themselves is not completely clear yet to anybody.

So I understand the desire to get through a much a clear set of numbers and guide on this, but we think it's quite big. When it becomes very apparent and very credible that those ramps are either happening or near happening we will be very transparent about the way we communicate that.

JoAnne Feeney - ABR Investment Strategy

Okay. That’s helpful thank you. And then just one last question back to the consumer lift that you are seeing this quarter, so last quarter down 17% and this quarter up 24%, clearly those fluctuations aren’t coming from the wireless charging side, in fact so that sounds like it's more of a general consumer electronics in which you have a big role in one particular piece of equipment. Is it that large component of your consumer that’s fluctuating quite a bit here, is that’s a seasonal decline last quarter and a recovery then this quarter?

Brian C. White

We are seeing some broad space in the consumer space in timing and in particular we are seeing quarter-over-quarter increase in gaming.

JoAnne Feeney - ABR Investment Strategy

Okay. Thanks, that’s helpful.

Brian C. White

I think that’s your question.

JoAnne Feeney - ABR Investment Strategy

That was the question.

Gregory L. Waters

Just to be complete JoAnne wireless charging is stronger in the guidance.

JoAnne Feeney - ABR Investment Strategy

Got that, thank you.

Operator

Thank you and our next question comes from the line of Anthony Stoss with Craig-Hallum Capital Group. Please go ahead.

Anthony J. Stoss - Craig-Hallum Capital Group LLC

Hi guys, my congrats as well. Greg in terms of inductive versus resonance can you give us a sense of the conversations you are having with perspective customers what they are most interested in at this point? And secondly related to DDR4 you talked about increase in share and ASP increases. Can you give us a sense in terms of percentages may be what that ASP increase is? And also when you think you will see the crossover where it’s more DDR4 than 3 thanks?

Gregory L. Waters

So the first question thanks Anthony. To the first question inductions versus resonance, we are smack in the middle of both of them so we are actively developing and shipping both. The standard that exists today is inductance. So if you are a customer OEM and you want to ship in production volumes this year you are in inductance by default. It's what exists, it's where the ratified standards are, so inductance will be the great, great majority of all-in suite volume this year and likely be next year as well. And it continues after that.

Now with respect to resonance we also like resonance. We think that the spatial diversity that you can get out of that technology is really interesting. We're really good at it? It leverages our tower semi-conductor competencies really well. And there are some creative things that we can do with our programmable embedded control on our wireless charging that really enhance that standard and the user experience of that.

So we do like them both but they are just different in time. And I often say this but the wireless charging whole industry today reminds me of Bluetooth and in the early 2000s where there are multiple different set groups with competing standards operating. Then overtime these things will be likely to converge and you are seeing since time of that out of the wireless groups already, that they are coming together and how they can make new standards that are back compatible with the old ones? So that’s the first question.

With respect to the second question with ASP increase on DDR4, here is a rule of thumb to keep in mind is that we have set out the DDR3 LRDIMM market. Now it's not a product we’ve had, there has been some decent growth in that market. This year we continue to do extremely well with the register-based business et cetera. But if you take a look at the LRDIMM attach rate which today might be something like between 3% to 5% for LRDIMM we think that, that will increase in the future.

The relative difference for us in ASP between the DDR chipset solutions which might be above $2 for instance today to an LRDIMM solution in DDR4, I mean a good number to use there might be $16 to $19.

Now again LRDIMM does not, as I mentioned it's only about 3% to 5% of the market today but all of the enthusiasts for cloud computing just want the maximum compute and memory interface technology are also going to be those early adopters running towards DDR4. So how that mix plays out we will see in time but it's a significant ASP pick up opportunity for us.

Anthony J. Stoss - Craig-Hallum Capital Group LLC

Well one other quick question on ASP for line while it's charging on inductive side, what was the typical ASP might we see on the transmit side and also on the receive side nowadays?

Gregory L. Waters

If you used a buck in the receive and two bucks in the transmit, you'd be safe at that.

Anthony J. Stoss - Craig-Hallum Capital Group LLC

Great, thanks guys.

Gregory L. Waters

Thanks, Anthony.

Operator

(Operator Instructions). And we have a follow-up question from the line of Harsh Kumar with Stephens Research. Please go ahead, sir.

Harsh N. Kumar - Stephens Inc.

Yeah. Hey guys, couple of questions again. Greg and Brian you had set out a goal of 20% op margins and it's fair to say you are in a seasonally weak quarter. I am curious how you are thinking about your operating or gross margin goal for the next 12 to 18 months?

Brian C. White

Yeah. I'd say this Harsh we are very proud to have entered the club of 60% or above gross margins and 20% or slightly above op margins and I appreciate your pointing that out that we have achieved those or at least 19.5% last quarter. And one of the cool things about the company is that if you look at last quarter at only a $118 million and some change of revenue the op margins were just barely below 20%. So we think we've got the cost structure and the leverage points of the company in a very attractive place right now.

Now as we go forward obviously just easy answer we will give you that as we grow the company there will be leverage and we going to manage the company to make sure that there is. But right now we've not put forward a new operating goal for the company. We encourage people to model us going forward at say a 60%ish gross margin and certainly a 20% operating income. If you look at what we are putting in the energy and the business model of the company it's very much towards generating attractive margin top line growth.

Harsh N. Kumar - Stephens Inc.

That's fair. And then Brian I think you had talked about maybe an absolute dollar goal for OpEx. I can't remember if it was 51.5 or 52.5 you were kind of knocking on that door with the June quarter guidance. I am curious should we think that as top line grows you are going to blow by that OpEx goal or is that sort of a goal we should think about in absolute dollars?

Brian C. White

No, Harsh I think that's still a good way to look at it. So previously we talked about OpEx picking up to a range of $52 million a quarter while supporting 20% operating margin. And as you point out in our June guide we're guiding to $51.5 million, so we're getting close to that one and we're delivering 20%. So we are operating right within the model that was put out there and at this point in time we're not anticipating that model to change in the near future.

Harsh N. Kumar - Stephens Inc.

Great, guys. Thank you very much. Congrats again.

Gregory L. Waters

Thank you, Harsh.

Brian C. White

Thank you, Harsh.

Operator

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back over to Greg Waters for closing remarks.

Gregory L. Waters

Okay. We would just like to conclude that we are very proud to finish another quarter. Again I tip my hat to the IDT employees that have got us here. I would just remind everybody that we will be at the Jefferies Conference in Miami this coming Wednesday and look forward to further communication. Thank you.

Operator

Ladies and gentlemen, this concludes the Integrated Device Technology's fourth quarter and fiscal year-end 2014 conference call. Thank you for your participation. You may now disconnect.

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