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Atmel (NASDAQ:ATML)

Q1 2011 Earnings Call

May 04, 2011 5:00 pm ET

Executives

Steve Laub - Chief Executive Officer, President and Executive Director

Stephen Cumming - Chief Financial Officer and Vice President of Finance

Peter Schuman - Director of IR

Analysts

Rajvindra Gill - Needham & Company, LLC

Craig Berger - FBR Capital Markets & Co.

Ian Ing - Gleacher & Company, Inc.

Jeffrey Schreiner - Capstone Investments

Sujeeva De Silva - ThinkEquity LLC

James Schneider - Goldman Sachs Group Inc.

Steven Eliscu - UBS Investment Bank

Hans Mosesmann - Raymond James & Associates, Inc.

Anthony Stoss - Craig-Hallum Capital Group LLC

Betsy Van Hees - Wedbush Securities Inc.

John Vinh - Collins Stewart LLC

Operator

Good afternoon. My name is Bonnie, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Peter Schuman, Director of Investor Relations. Please go ahead, sir.

Peter Schuman

Thank you, Bonnie. Good afternoon, and thank you for joining us for Atmel's First Quarter 2011 Earnings Conference Call. A copy of the press release issued today is available on our Investor Relations website. A 48-hour telephone replay of this call will be available after 5 p.m. Pacific, today, and the webcast will be archived on the company’s website for one year. Access information is provided in today’s press release.

Joining us for the call today are Steve Laub, Atmel’s President and CEO; and Stephen Cumming, Vice President of Finance and Chief Financial Officer. Stephen will begin the call with a review of our first quarter financial results, and Steve will then provide additional information on the business. At the conclusion of Steve's remarks, Stephen will discuss our financial guidance for the second quarter of 2011, and then open the call up for questions.

During the course of this call, we may make forward-looking statements about business -- Atmel's business outlook, including statements regarding our expectations for market growth, revenues, target gross and operating margins, product introductions and cost savings for the remainder of 2011 and beyond. Our forward-looking statements and all other statements that are not historical facts reflect our expectations and beliefs as of today, and therefore, are subject to risks and uncertainties as described in the Safe Harbor discussion found in today's press release.

During the call, we will also discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures, to the most directly comparable GAAP measures, can be found in today’s press release.

I would now like to turn the call over to Stephen Cumming for a discussion of our first quarter financial results. Stephen?

Stephen Cumming

Thank you, Peter. Let me provide some details of our statement of operations. Revenues for the first quarter increased 1% sequentially and 32% as compared to the same quarter in 2010 to $461.4 million at the high-end of our guidance, a downfall to up 1% sequentially. And our quarterly revenues reached the highest level in 10 years and is Atmel's 8th consecutive quarter of sequential revenue growth. Excluding the Smart Card business sold at the end of the third quarter of 2010, revenues increased 43% when compared to the first quarter of 2010.

Record first quarter 2011 gross margin of 51% is the highest level achieved since the company went public in 1991. The first quarter's gross margin of 51% was 150 basis points improvement from the 49.5% for we reported last quarter and ahead of our guidance range of 48.5% to 49.5%. And the sequential gross margin improvement was due primarily to increased volume, improved mix of higher-margin products and continued cost-reduction activities. Our operating expenses of $133 million were in line with our guidance of $133 million plus or minus $2 million. This compares to operating expenses of $130 million in Q4 2010 and $120 million in the first quarter of 2010.

In Q1 2011, operating expenses increased sequentially but the first quarter doesn't have the benefit from the seasonal holiday shutdowns, and as expected, we moderately increased our Q1 spending in sales and R&D. Operating expenses, overall, represent 28.9% of revenues in the first quarter, up from 28.4% in the fourth quarter of 2010. We continue to invest to support the growth of our focus markets. R&D expense of $62 million in the first quarter was approximately $2 million higher than the prior quarter and $4 million higher than the $58 million reported in the year-ago period. The increase, as compared to last quarter, was primarily due to increasing headcount and investments in new products, primarily in our Microcontroller business. SG&A expense was $71 million for the first quarter of 2011, compared with $70 million in the prior quarter and $61 million in the same period last year, primarily due to increased stock-based compensation expense, low vacation and higher sales-related spending.

Stock compensation for Q1 was $19 million and is broken out in the following areas: $2 million was relating to manufacturing; $6 million to R&D; and $11 million to SG&A. Stock compensation was $3 million higher than the fourth quarter of 2010.

Income from operations was $82 million in the first quarter of 2011. This compares with income from operations of $94 million in the prior quarter and $15 million in same period last year. Excluding acquisition-related charges, gain on the sale of assets and restructuring charges, first quarter 2011 income from operations would have totaled $102 million compared to $97 million in the fourth quarter of 2010 and $14 million in the first quarter of 2010.

Income-tax provision totaled $9.8 million in the first quarter of 2011, resulting in an effective tax rate of 11.6%. This was lower than our guidance of 18% as a result of one-time discrete items.

This compares to an income-tax benefit of $133.1 million in the fourth quarter of 2010 and an income-tax provision of $2.6 million for the first quarter of 2010. The fourth quarter income-tax benefit of $133.1 million included $118 million or $0.25 per diluted share, primarily from releasing reserves to certain deferred tax assets.

GAAP net income for the first quarter of 2011 was $74.6 million or $0.16 per diluted share. This compares with fourth quarter 2010 net income of $223.1 million or $0.47 per diluted share and a net income of $16.6 million or $0.04 per diluted share in the same period last year.

On a non-GAAP basis, for the first quarter 2011, we had non-GAAP net income of $122.2 million or $0.26 per diluted share. This compares with non-GAAP net income of $119.2 million or $0.25 per diluted share in the fourth quarter and non-GAAP net income of $25.2 million or $0.05 per diluted share in the first quarter of 2010. This is a 5x increase over our first quarter results from the prior year.

As to our stock repurchase program, during the first quarter, Atmel repurchased 5.7 million shares of our common stock in the open market at an average price of $14.93 per share. Since the plan's inception, we have spent approximately $174 million to repurchase 17.4 million shares of stock in the open market at an average price of $9.99 per share.

Turning to the balance sheet. Cash flow from operations totaled approximately $74 million in the first quarter, down approximately $10 million from the $85 million in the fourth quarter of 2010. Combined cash balances, cash and cash equivalents, plus short-term investments totaled $497 million for the first quarter, a decrease of $24 million from the fourth quarter.

During the first quarter of 2011, the company used approximately $85 million to repurchase our shares.

Capital expenditures were approximately $31 million in the first quarter, down from the fourth quarter's $44 million and slightly above the guidance range of $25 million to $30 million as we further increased investments in back-end test capacity for our rapidly expanding Microcontroller business.

Depreciation and amortization in the first quarter 2011 was approximately $20 million, compared to $18 million last quarter and $15 million in the first quarter a year ago.

Accounts receivable totaled $225 million at the end of the first quarter, down by approximately $7 million from the fourth quarter due to improved collections during the quarter.

The quality of our receivables continues to improve as we see a further 2-day reduction in DSOs. Our days sales outstanding in Q1 was 44 days, a decrease from the prior quarter's 46 days. Inventories of $319 million increased by $42 million in the first quarter compared to the prior quarter. The increase was primarily in our Microcontroller business. As we have previously mentioned, we are increasing inventory levels to improve lead times with customers and support the continued growth of our microcontroller and touch products. Days of total inventory increased in the first quarter to 128 days from 109 in the last quarter.

Now let me provide an update on the impact of the Japanese earthquake and tsunami to our business.

Atmel would, again, like to extend its sincerest sympathies and condolences to the victims of the earthquake and to those suffering from the subsequent events, still evolving in Japan. Fortunately, the effect on Atmel has been minimal. We are pleased to confirm, there had been no report of injury to Atmel personnel or any of their close family members from this catastrophe. All of Atmel's worldwide offices and operations continue to function as normal.

As to our business, Atmel generates less than 5% of our overall revenues from Japan. From a supply standpoint, neither Atmel nor its direct manufacturing partners have manufacturing facilities in Japan. At this time, Atmel has not experienced any disruptions to our supply chain and does not currently foresee any adverse impact to our product supplies resulting from this disaster. Nonetheless, as part of Atmel's business continuity plan, we have been taking and will continue to take steps to ensure that any potential supply-chain interruptions are minimized or eliminated, if they arise.

We are receiving inquiries from some customers who are having difficulty obtaining products from other suppliers who have been impacted by the events in Japan. To support the requirements of all our customers, including prospective customers, who are seeking Atmel's solutions as an alternative to their existing suppliers, we have taken actions to ensure ample product supplies. Atmel will continue to monitor our supplies and will provide any update as appropriate.

And now a recap of the recent litigation with Infineon. Infineon filed a patent infringement suit against us on April 12 in Delaware. As we noted in our press release in response to the suit, our recent financial and market success unfortunately brings with it, other costs of doing business. And this litigation appears to be an example of just that. In its suit, Infineon has asserted 11 patents against us. None of them goes directly to any of our fundamental touch technologies, but rather to things like power management, chip debugging and metallization processes.

During our discussions with Infineon, we also inserted -- alerted them to the fact that we believe they are fringing our patents unidentified free initially. Since we put them on notice of the possible infringement, they are now seeking a declaration in this case that Atmel's patents we identified are either invalid or not infringed, which is part of the typical procedure or exercise. We think Infineon's allegations are baseless, and we will defend ourselves aggressively. While we have not been required to response to the suit, you should expect that we will do so in a timely fashion, and that we will continue to assess appropriate responses.

In the near term, we do not see any significant effects on our cost or expenses in connection with this litigation. Now let me turn the call over to Steve for a commentary on our business. Steve?

Steve Laub

Thank you, Stephen. We delivered another quarter of excellent results as we continue to build a microcontroller-centered company, focused on high-growth, high-margin businesses, while enjoying the benefits of our recently established fab-lite manufacturing model. The remarkable growth from our Microcontroller business was recently confirmed by iSuppli, which released information showing the ranking of the leading microcontroller companies during 2010. I'm proud to announce that Atmel jumped to the number 4 position in overall microcontroller market share, up from number 9 in iSuppli's rankings from 2009. These rankings exclude the industry's Smart Card shipments.

Over the last several years, Atmel has been the fastest-growing major supplier of microcontrollers in the industry. For the first quarter of 2011, our Microcontroller business record high 64% of company revenues, up from just 24% in 2006. This past quarter, our gross margin of 51% was the highest level achieved since the company went public in March 1991. It was above our guidance for Q1 and exceeds our target of 50% by the fourth quarter of this year. This gross margin performance had a very positive impact on overall profitability as our first quarter 2011 non-GAAP operating profit exceeded 26% of sales.

Turning to a discussion of our business segments. For our Microcontroller business unit, the first quarter 2011 performance was better than seasonal, as our microcontroller revenues set another record at $294 million, up 2% sequentially and up 95%, as compared to the first quarter of 2010.

It is noteworthy that both our touch and non-touch microcontroller revenues grew in Q1 sequentially, after finishing 2010 with a very strong fourth quarter. Our 8-bit microcontrollers were down 2% sequentially after a well-above-seasonal Q4 and up 93% year-over-year, while 32-bit microcontrollers were up 20% sequentially and increased over 95% year-over-year.

Industrial applications continue to be our largest end market, followed by smartphones, which have been growing very rapidly, and then the consumer market. The security, energy, lighting and medical markets also continue to perform well during the first quarter.

In the 32-bit space, we experienced another record quarter of growth in both our ARM and AVR32 product families. In addition, we had an excellent quarter for our 32-bit AVR solutions for tablets. We also released an automotive-qualified 32-bit AVR microcontroller for in-vehicle networking, infotainment and advanced electrical motor applications such as HVAC, power windows, doors and seats. As a committed supplier to the automotive industry, Atmel continues to bring new automotive-qualified microcontroller solutions to the market.

In March at the Embedded World Nuremberg Conference, Atmel released its AVR Studio 5, our flagship development tool for the community of over 100,000 users of our 8- and 32-bit AVR-embedded microcontrollers. The new development platform reduced the development time and simplifies the design with full integration of the development environment, source code library, code compilers and third-party software plug-ins.

We also made 2 significant product announcements this week. The first regards the launch of Atmel's AVR sensor evaluation kits to support applications in the industrial, consumer, automotive and computing markets. The sensor series features partnerships with best-in-class suppliers with accelerometers, gyroscopes, magnetometers and pressure sensors, with supporting driver software to enable a seamless implementation. The kits offer our customers a hardware platform to easily benchmark Atmel AVR microcontrollers and other Atmel devices without having to build their own hardware. This can save significant time and money.

The second announcement is the availability of 2 new ZigBee Wireless evaluation kits, designed for application development and prototyping. The kit supports ZigBee application profiles such as smart energy, home and building automation, remote controls, as well as IEEE 802.15.4 and proprietary wireless applications. The ZigBee compliant software stacks are now available.

Regarding our touch microcontroller products, during the past quarter, maXTouch continue its substantial market momentum with additional design wins in both existing and new high-profile touch customers. In the smartphone area of these include Samsung's new Galaxy S 4G, Nokia's recently introduced E7 smartphone, Motorola's ATRIX 4G, HTC's ThunderBolt, 7 Pro, EVO 3D, EVO Shift 4G, Desire S, Incredible S and Desire Z. A new customer, Kyocera introduced their Echo smartphone, which utilizes 2 maXTouch controllers and is the industry's first smartphone with dual touchscreens, enabling better user touch experience on two screens. PCWorld periodically publishes their list of the top 10 best smartphones. In their most recent selection of their top 10, dated March 29, 2011, Atmel's powering the touch in 8 of them. We are proud that our technology is providing the touch performance in so many of the world's best smartphones. We are optimistic regarding maXTouch growth in smartphones during 2011 as our design activity continues to be very strong and many of our larger customers are forecasting a substantial increases in smartphone unit shipments this year.

In April, Gartner Research forecasted smartphone sales to increase from 297 million units in 2010 to 468 million in 2011, a 58% increase. They are forecasting smartphone shipments to exceed 1.1 billion units in 2015 as more consumers and enterprise users turn in their feature phones for smartphones with more advanced features. This is a very positive trend for Atmel as we participate only in the smartphone segment of the cell phone market.

Turning the discussion to tablets. Contrary to popular belief, the rumors of the demise of non-Apple tablets have been greatly exaggerated. Motorola, one of our major customers, introduced the first Honeycomb-based tablet, the XOOM in mid-February. Other major tablet customers include Acer with the Iconia Tab A500/A501, the 10.1 inch Android tablets, Dell with their Streak 7 and ASUS with the Eee Pad Transformer, which is selling well in Europe, but is not yet available in the U.S.

LG, a new maXTouch customer for Atmel launched their 8.9-inch G-Slate Android tablet. As the leader in touch solutions for tablets, with continued strong design wins, we feel very good about our competitive position in this marketplace, and we will provide further updates once our customers' products are formally released and available in the market.

Regarding our new maXTouch E Series products, customer acceptance of our recently released E Series product family has also been very strong. We already have numerous qualified design wins and are pleased to announce that end customers are moving to productions faster than we anticipated, with volume shipments expected during the middle of this year.

The E Series extends our leadership position, by offering enhanced analog sensing for faster response times, higher accuracy, improved noise immunity, reduced system power and lower system cost. The E Series includes the industry's only 32-bit touchscreen controller, which is the industry's most advanced single-chip solution for any touchscreen size and application.

Atmel continues to advance not only on leading edge maXTouch solutions for touchscreens, but also now offers a variety of capacitive touch interfaces for the broader market. On April 20, Atmel announced integration of haptics capability into our 2 test capacitive touch controllers to support buttons, sliders and wheels. This integration allows our customers to have a richer experience with touch and haptics feedback when using Atmel QTouch capacitor touch controllers. In addition, Atmel recently released a new proximity controller as a new member of our QTouch family. This technology enables the user to utilize capacitive touch technology without actually touching the screen directly for the system to register a response. Proximity sensing will further expand the market, by enhancing usability of capacitive touch solutions for existing and new applications such as lighting, gaming and automotive.

Turning next to our Non-Volatile Memory segment, total revenues were $63 million in the first quarter, up 6% sequentially and down 18%, as compared to the first quarter of last year. Our Serial E2 Memory business improved 20% sequentially and was down 34% as compared to first quarter of 2010. Our Serial Flash business decreased by 4% sequentially, while increasing 9% from the first quarter of the prior year.

The sequential improvement in our Memory business was primarily the result of increased capacity allocation. As you may recall, we reduced the capacity -- wafer capacity to the memory business last year due to very strong growth we're experiencing in our microcontrollers. As our capacities continue to expand this year, we are in the process of increasing supply for memory products during 2011. And as we do this, we'll be focusing more on proprietary serial flash products, which have a better margin profile.

For the RF and Automotive segment, revenues were $51 million in the first quarter of 2011, essentially flat as compared to Q4 and up 9% as compared to the first quarter of 2010. The Automotive business performed better than seasonal and we attained significant design wins with our LIN product portfolio and RF platforms. Our Sigma RF transceiver and Omega RF receiver were selected by leading European car manufacturers for use in remote-keyless entry and passive-entry systems and we had numerous LIN automotive networking and motor driver design wins with Asian customers. The impact of the tragedy in Japan on the Atmel supply chain, its effect on car production in the second half of 2011 are still unclear. However, we are optimistic about our long-term prospects in this market.

Turning to the ASIC business segment. Revenues were $53 million in the first quarter, down 9% sequentially and down 28%, as compared to the first quarter of 2010. As a reminder, Atmel sold its Smart Card business at the end of Q3 2010, which was included in the ASIC business and contributed approximately $25 million in revenues in the first quarter of last year. Excluding Q1 2010 Smart Card revenues, the ASIC business segment's revenues were up 10% year-over-year.

Noteworthy this past quarter was the continued expansion of our Aerospace business due to our ability to substantially increase product supply. In mid-February, we divested our Dream Sound Synthesis product line based in France. During the past several years, Atmel has taken numerous actions to streamline and focus the ASIC business segment. Today's ASIC business is aimed primarily at the security and medical markets, which leverage our proprietary AVR and ARM microcontroller technologies, as well as on the aerospace marketplace.

Looking at the first quarter revenues by geography, Asia, once again, was our largest ship-to location, representing 58% of revenues, compared with 59% in the prior quarter. Europe increased 2 percentage points sequentially to 26% of revenues. While the Americas were down slightly at 16%, as compared to 17% of total revenues in Q4.

Let me provide an update in capacity and lead times. As we mentioned last quarter, in anticipation of significant growth in our Microcontroller business for 2011 and beyond, we have taken action to procure substantial additional wafer and back-end capacity to support our customers' requirements and to move forward in building inventories to meet forecasted customer demand for later this year. In addition, to provide assurance of supply, this has a lot successfully reduced lead times for our microcontroller products which today are running at approximately 6 to 8 weeks.

In summary, we began 2011 with a solid start after a remarkable 2010 for Atmel. The strategic realignment of Atmel and our ongoing transformation to a high-growth and higher-margin company continues to very positively impact our financial results. In the first quarter, our quarterly revenues reached the highest level in 10 years. And we are proud to be one of the few companies in the semiconductor industry that has generated sequential quarterly revenue growth throughout 2010 and into the first quarter of 2011.

Gross margin of 51% was the highest in the company's history, and our strong operating income reflects the earnings power inherent in the new Atmel. Our maXTouch products continue to be the industry gold standard for capacitive touchscreens. We have tremendous new customer acceptance in tablets and smartphones and continue to increase design wins in new areas, such as gaming, personal navigation devices and digital still cameras. We also have strong design activity in automotive and eBooks. Touch represents enormous multi-year, secular growth opportunity for Atmel. With the first of our E Series maXTouch controllers now qualified and our pace of innovation accelerating for both maXTouch and QTouch products, we intend to extend our market-leading position.

Last quarter, we stated that we expect maXTouch revenues for calendar year 2011 to more than double from the overall $140 million generated in 2010. Based on the robust design activity and customer forecast, we now expect maXTouch revenues to easily surpass $300 million during 2011.

In addition to the growth of touch, we are optimistic regarding Atmel's opportunities for substantial growth in other application segments served by microcontrollers. We will discuss these in further detail during our upcoming Analyst Day on June 6.

We are proud Atmel achieved the position as the industry's fourth largest microcontroller supplier during 2010, having moved up from number 9 the prior year. With microcontroller revenues at $294 million this past quarter, Atmel's microcontroller business is now running at just under $1.2 billion on an annualized basis.

In summary, the company revenue is the highest in 10 years, record gross margin, robust design activity and substantial manufacturing capacity available to Atmel, we are well-positioned for continued success in 2011. Now let me turn the call back to Stephen for our Q2 financial guidance. Stephen?

Stephen Cumming

Thank you, Steve. For the second quarter of 2011, the company expects revenues to be up 1% to 4% on a sequential basis. We expect gross margin to be approximately 51% in the second quarter of 2011. Second quarter operating expenses are expected to be approximately $137 million plus or minus $2 million. Depreciation and amortization is expected to be approximately $20 million in the second quarter. We expect that second quarter capital additions to be in the range of $30 million to $35 million. Other income and expense is expected to be $2 million expense and Quantum-acquisition related costs are expected to be approximately $1 million for the quarter.

We expect our forward-looking effective tax rate to be approximately 18% and for modeling purposes, assumed fully diluted share count remain essentially flat. Now let me provide an update regarding our 2011 gross margin.

Given our previous goal of reaching a 50% gross-margin target at the end of 2011 and a 51% result in today's release, we are now raising our near-term gross margin target for exiting 2011 to be between 51% to 52%. I'd also like to add that today Atmel announced that our Board of Directors has authorized an additional $300 million to its existing common stock repurchase program. The program authorizes the purchase of Atmel common stock in the open market depending upon market conditions and other factors. The program does not have an expiration date. The number of shares repurchased and the timing of the repurchases will be based on the level of cash balances, general business and market conditions, regulatory requirements and other factors, including alternative investment opportunities.

This concludes our prepared remarks. We'll now open the call for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Anthony Stoss with Craig-Hallum.

Anthony Stoss - Craig-Hallum Capital Group LLC

Given your guide of up 1% to 4%, and I know, Steve, you mentioned, you're still on track to be in excess of $300 million in touch. Can you talk about design activity perhaps in that gives you the confidence kind of Q3 Q4? Also if you wouldn't mind, talking about kind of ASPs or the pricing environment on the touch side?

Steve Laub

Sure. With respect to design activity, I think, during the prepared remarks, we talked about a lot of the programs that we have recently announced that we are in, such as a lot of the programs with HTC, Motorola, Samsung, Nokia, new phone with Kyocera and so forth. There's a lot of smartphone programs, that way we expect there'd be a lot of 4G announcements and releases during the middle part of this year in addition to the ones that have already occurred. So we actually expect there's going to be quite strong growth in the smartphone part of touch, really, as you get into sort of the second half of the year. Also, with the area in tablets, we've also again, indicated a lot of designs that have been very recently introduced, tablets whether those be with Motorola, LG, ASUS, Acer and Samsung previously to that. So a lot of that activity also has already been announced. There's a lot more of those coming, by the way. Our design activity is very strong. And our expectation is you're going to see a very good ramp in our Touch business in mid and second half of 2011. With respect to the ASPs, our overall ASPs for touch are actually rising for us, because our mix is getting richer, both through the fact that the tablet products have a higher ASP than the smartphones. And also, we're seeing that we expect the E Series products, given that they're newer products, high-performance products and a lot of them are certainly more geared toward the higher end of the marketplace. We'll also have -- they have a higher ASP and they will also offer, therefore, a richer mix for the company. Within any given particular product, as we do with any semiconductor product, you do see, for existing products, ASPs do decline over time. We are seeing that in our touch products. We see that in all of our products, frankly, in an orderly way. And there's nothing there that has any indication of anything unusual.

Anthony Stoss - Craig-Hallum Capital Group LLC

Can you give us a sense on your Q2 guidance in term of your MCU business, with touch, what you expect out of that? Is there any other division that's kind of dragging down Q2?

Steve Laub

So with respect to our businesses, I expect Q2, that the MCU business will be up in Q2. We expect our Memory business to be up in Q2. The ASIC business, we expect to be down in Q2 and the RFA, our Automotive business to be essentially flat.

Operator

Our next question comes from Hans Mosesmann of Raymond James.

Hans Mosesmann - Raymond James & Associates, Inc.

A couple of questions. Can you share with us on the maXTouch side of things, the touch in general, what the mix is between smartphones and tablets?

Steve Laub

We're not going to break out the exact numbers on that. But I can tell you that the mix today, and the revenues on that, I would say, is extremely high on the smartphone side. Tablets, as you know, are just really being introduced this year. The ramp of those has just really -- just begun. One of the reasons that we wanted to put out some more definitive guidance for people with respect to the maXTouch numbers for this year is there has been a lot of speculation in conjuncture and concern, frankly, on some of the non-Apple tablets. And we wanted to reassure our investors that our touch numbers are very strong, and that our confidence level is quite strong to exceed the $300 million number in light of what we see today and in light of the robust design activity. And that's assuming a reasonably conservative ramp on the tablet side.

Hans Mosesmann - Raymond James & Associates, Inc.

And as a follow-up, speaking of tablets, there's been speculation that there are inventory issues of tablets, or the uptake has not been very good. Can you comment regarding your experience with customers that -- where you have design wins, have there been changes regarding their forecast or their production ramps? Anything there could be helpful.

Steve Laub

Well, I can tell you, that with any of our products, any new products, smartphones initially ramped last year. And with tablets now, they're oftentimes very much some very substantial changes with respect to people's forecasts and ordering patterns, because they're completely new products and completely new areas. So that's not unexpected. I think that you -- asking those customers, what their business is saying and what's happening is probably the best indication of that. From our standpoint, what we're seeing is actually a nice orderly increase in our Tablet business, and our expectations are that this will continue to grow throughout the year.

Operator

Our next question comes from Steven Eliscu of UBS.

Steven Eliscu - UBS Investment Bank

First question on gross margin. We had such a nice lift in Q1. How much of that was related to the inventory build? And then if we look through the rest of the year, the dynamics, other than inventory driving Q1, why are they so muted in subsequent quarters? And if you give us a sense how mix is affecting that guidance?

Stephen Cumming

Steve, this is Stephen here. So with regard to gross margins, we, from an internal manufacturing perspective, we were pretty much operating our own Colorado facility at optimal capacity. So from sort of increasing inventory, that wasn't really materializing in improved gross margins for us. I should say, there were other cost reductions in manufacturing that contributed to the overall gross margin improvement. But I think the key driver is certainly we see ongoing favorable mix, as microcontrollers continue to become a larger piece of the overall business, 64% in Q1. And also, we see some favorable mixes in some other areas. Aerospace grew very nicely for us in Q1 and that's really niche rich margin business. And some of the other areas that had historically have been fat sellers for us like memory, we're also getting after selectively rich margin business. So they are certainly areas of contribution to the overall gross margin improvements, coupled with some of the cost-reduction efforts that we're focusing on now. With regard to gross-margin outlook for Q2 , sort of hovering around the 51% level. Again, there's not really any more leverage in our own internal manufacturing facilities. And you're actually starting to see a slightly different mix as we expect memory to grow a little bit more in Q2, which is a slight de-tracked on the gross margins overall as the other lower-gross margin profile.

Steven Eliscu - UBS Investment Bank

If we look at OpEx, you talked about 30% of sales. It looks like -- I haven't done the calculation in Q2, but it looks like you're remaining below that. Assuming you have a nice growth curve in the back half of the year, it just seems like you are experiencing some operating leverage at least, it seems like on a year-over-year basis, you should realize that as -- or am I thinking about that correctly that you are gaining operating leverage? Or are you going to continue to invest in a way that we see limited leverage this year?

Stephen Cumming

Yes. So Steve, certainly, you've seen our overall OpEx percentage actually have increased, certainly haven't gotten to our 30% threshold. I think we're about 28.4% in Q4. We closed out Q1 at 28.9%. I think if you do the math on the midpoint of our guidance, we're probably around 29% in Q2. So you can see, it's creeping up towards that 30%. Certainly, there is, as you indicated, a little bit more leverage that's coming through, given the strong top line growth. But we'll be working our way up toward that 30% threshold.

Steven Eliscu - UBS Investment Bank

And switching to the touch market, a couple of questions. First of all, you talked about the microcontrollers for sensors at the Embedded Systems Conference. I saw that you had display and it sounds like you have an opportunity to gain bit of material share in smartphones, servicing both the sensor applications and the touchscreen controller. Can you give us some color, if I'm reading that right, and the opportunity for smartphones to drive growth outside of touch for your Microcontroller business?

Steve Laub

So I guess, we'll make this an engineering-product-planning discussion. But actually, what you raised is one thing we are seeing specifically the smartphone area, that with all the sensors now being added, because of the complexity and sophistication of smartphones, that the ability to control a lot of that has become very important for our customers. And so we are finding that there is an opportunity for us to provide that capability and technology for our customers in our Microcontroller business. So that is an opportunity for us. It is separate from a touch opportunity for us. We've not, at this point -- we're not quantifying that and so forth, but it is one of the opportunities that we certainly are exploring, certainly are -- and as you saw at the conference, something that we can offer solutions for today.

Steven Eliscu - UBS Investment Bank

And just one last question here on tablets. Some people speculate that the non-Apple tablet market will become commoditized fairly quickly with 10-inch tablets getting, let's say, for $299. That implies a touchscreen controller that's a lot less expensive than it is today. How do you feel you'll be able to service that market, let's say with economics, where we're talking about sub-$5 touchscreen controllers to be able to both maintain your strong market share position as well as margins?

Steve Laub

Well, from a standpoint of what's happening in the marketplace, it's like any market. There's segmentation that will occur. There'll be the high-end of the market, where performance is the critical deciding factor for the customers, who are very willing to pay for that performance. And for that, clearly, we can try -- we provide that best-performance in the market today, and we get paid for that performance today. There will be other segments in the marketplace, where the performance will be less of a differentiator, nevertheless, important, but where price becomes, also, very important for the customer base. As you know, with our E Series of products, we announced a single-chip, 32-bit product, which can support tablet, tablet performance, certainly at the 7-inch level, and also as good -- very good performance at the 10-inch level, just not quite the same level as our multi-chip solution does. As you can imagine, within this marketplace, and with the niche we have in the marketplace, over time, you continue to integrate, drive higher performance and drive down the cost. So we believe that, again, with our single-chip solution today, we're already beginning to provide very effective, cost-effective solutions for customers in the tablet space. And we'll continue to develop new products in our roadmap, which continue to drive our performance up, screen size up and reducing the chip count. So we're very comfortable with our ability to compete as the market goes through its change in growth and so forth.

Operator

Our next question comes from John Vinh of Collins Stewart.

John Vinh - Collins Stewart LLC

Steve, I think last quarter, you had mentioned that tablets could contribute, I think, 10% to 20% of your maXTouch revenues this year. Based on your $300 million plus guidance, does that assertion still hold in terms of expectations?

Steve Laub

You're right. I think we did sort of an 80%, 20% was our expectation for the year. And I think with respect to that, we could probably do even a little bit less than 20% and still achieve the $300 million number that we just spoke about, the more than $300 million we spoke about. So again, one thing you should understand about us, that we do a very thoughtful and methodical look at the marketplace, and we are generally are more on the conservative side, because we do realize that it takes time for things to ramp. So if, in fact, the market was what we're seeing is we're seeing our smartphone numbers probably be bigger than we had anticipated, perhaps, a quarter ago, which allows us that comfort level, and so if tablets turn out to be even stronger than our conservative forecasting, then, obviously, our number would be even bigger than the just over $700 million -- or more than $300 million number we just raised in the discussion today.

John Vinh - Collins Stewart LLC

Great. And just a follow-up on the E Series, just to clarify, you're indicating that you're expecting to ramp your single-chip 32-bit E Series solution mid-year. And I guess, my question regarding that is how do we think about kind of your ASPs for the year on tablets with the lower-cost single-chip solutions impacting them?

Steve Laub

Yes, what we're finding is, the 32-bit family is actually across 3 different products. It's across our 768 product, the 540 and 384 product. The 768 is really the one for the single-chip tablet solution that we have, which will be, as I said, beginning volume shipments in the mid part this year, as will the other products as well. My expectation is that you'll see a pretty minimal impact this year, because it takes time for the volumes to ramp to a level, which are really going to impact the overall level in any material fashion. So the impacts will be greater, I think, in 2012 with respect to that. But the other thing we look at is as these products ramp up, the overall ASP for our business actually goes up.

John Vinh - Collins Stewart LLC

Got it. Okay. And then last question, if I may, and I'll jump back in the queue is, can you remind us what typical normal seasonality for MCU is just going into Q2?

Steve Laub

So what we typically have had in history -- and again, 2010, would not be indicative of normal history, is that, usually, an up single-digit quarter for Q2. Typically what we're finding now with respect to the fact that more and more of our end markets, our consumers, Q3 has actually historically, had been a stronger quarter for us, in the calendar year seasonality.

Operator

Our next question comes from Betsy Van Hees of Wedbush Securities.

Betsy Van Hees - Wedbush Securities Inc.

I was wondering if we could talk a little bit more about the growth, when we're looking at the specific businesses, if we could dive a little deeper into what's driving the Memory business, microcontroller. And then as we look at the Automotive business, is there a potential for what you're guiding that to be? I think, you said that was going to be flat. Is there potential that we could see a down in the back of the year, given the issues that are occurring in Japan right now?

Steve Laub

So with respect to the businesses, Memory business for us, we're actually -- one of the reasons we're anticipating those solid growth this quarter, and I think, you probably anticipate continued growth throughout the year is that we constrained that business last year, primarily due to wafer-allocation decisions that we made to assure that we can satisfy the Microcontroller business and the explosive growth that we were experiencing. And so we -- we didn't participate in a large part, which are going to be parts of the Memory business last year. What we're doing this year, is reengaging with some of the customers that we said, it was important for them to get a supply from other sources last year. We are reengaging with some who have come back and say, we really would prefer to work with you guys and so forth. And so we're doing that. We do not have plans to take the business up to the kind of numbers that we had prior to, I would say, 2009, because 2009 was a down year. 2010 was a big year for the industry, but not for our Memory business. But if you go back to the historical Memory business for us, we're not planning a ramp into those kind of numbers again. What we are doing is transition the business to more of a specialty Memory business such as some sort of analog products, temperature sensors, things like that, which are more proprietary and have higher margin. So we do expect that our Memory business will have a significantly higher margin profile in 2011 than it had prior to say, 2009, which was much more of a Commodity business. In the growth side, we restored a lot of the wafer capacity, and so over to that business, we're seeing growth with our traditional customer base throughout the world on that, whether it be in the consumer, industrial and so forth. With respect to end markets, for say, what's happening in the Automotive business, there's probably a little bit of uncertainty with respect to what's going to happen to Automotive business, primarily because of the events in Japan. However, most of our business, the vast majority of it goes to European automotive customers of ours, who are probably very minimally impacted by the events in Japan. We don't really sell automotive products into the Japan marketplace, and I think they're going to be supplies for those most impacted by the events that occurred. So we actually expect very minimal impact to the Automotive business because of that. And I would say, that with respect obviously the Micro business, we talked, I think, in significant detail about that. But again, we expect growth throughout this year, both the industrial markets, smartphone markets, consumer markets and so forth.

Betsy Van Hees - Wedbush Securities Inc.

Even the MCU business, are you expecting both 8-bit and 32-bit to kind of grow sequentially? And can we expect that in the back half of the year?

Steve Laub

I do expect them both to grow sequentially. And I do expect significant growth in both 8- and 32-bit throughout this year.

Betsy Van Hees - Wedbush Securities Inc.

Okay. And then can we talk a little bit more about the gross margin profile. So that's great that you guys have increased the gross margin to 51% to 52% and even though you are increasing your memory, which has a lower gross margin, how are you going to be able to -- if you could help us understand what the dynamics are behind enabling you to have that higher gross margin profile, even though you're going to have low gross margin products shipping? What's the offset of that?

Stephen Cumming

So Betsy, this is Stephen. So I mentioned in terms of memory becoming a slightly different higher part of the mix as we go into Q2, and that does have a lower gross margin profile that creates a little bit of a headwind over when you look at the total mix. Although, Steve said memory for us is coming a little bit more of a specialty Memory business. So in itself, it becomes a little bit richer mix as a product line, but it's lower mix in the overall company average. I think what you're going to see as we go into the second half is you're going to see a strong outlook, strong growth for microcontrollers. They will become a bigger element of the overall company, that will more than offset. And they are richer mix of the company's gross margins. And certainly, within that touch with what you heard on our prepared remarks and the design-win momentum we have within the tablets and smartphones, will help accelerate that. And that's a very rich margin product for us as well. So it's really going to be the mix of those products, that 's really helping us get nearer to that 51%, 52% level towards the end of the year.

Operator

Our next question comes from Craig Berger of FBR Capital Markets.

Craig Berger - FBR Capital Markets & Co.

I guess, my question is around sort of capacity and design activity. And so the first part of the question is, can you -- I believe, you basically said your internal fabs are mostly tapped out. Can you talk about what you can do to de-bottleneck that? And also, how many of your products or what portion of your products are able to be produced in your own facilities and your foundry facilities? And then just the second part of the question is, any additional detail you can give us on the number of design wins or design win growth in both the touch and the traditional MCU business?

Steve Laub

Steve here. With respect to capacity, yes, our internal fab currently is running at pretty much full capacity. We don't have plans to expand that. And I think as we've indicated earlier, our plans are to grow capacity by our relations with our foundry partners. And that is our commitment for our growth going forward on that capacity, which, of course, gives us -- we think it actually gives us better flexibility on both up and down markets with respect to that. To the extent that what if we now outsource or have multiple source with respect to our products, a lot of the energy has been put into our microcontroller products with respect to the multiple sourcing. And so on those products, within our 8-bit product lines, we have all of our high-volume products are now -- are multiple sourced being one sourced at least Atmel at Colorado, and then one with our foundry, at least, with one foundry partner for those products as well. Our 32-bit products, our ARM products and AVR32, are multiple sourced. Our primary foundries, by the way, for these products are UMC and SMIC with respect to those. Our maXTouch products are multiple sourced today, actually in 3 different locations, including our own. And so we actually feel very good about the -- what we've done with respect to providing, I'd say, assurance of supply for both ourselves and for our customers with pretty much all of our high running microcontroller products. Within respect to our memory products, we've also now multiple sourced to our flash products. So those are actually being taken care of, also, by two different fabs. One being our own, and one being -- it should be one being a foundry, which used to be our own and the one being UMC. So if you go to the product line, we're actually multiple sourced, done a very nice job of that over the past year to take care of us. What was your other question, Craig?

Craig Berger - FBR Capital Markets & Co.

So you can just make that my follow-up. Can you talk about design-win growth in both your traditional and touch business or a number of models in touch or growth in number of models? Some type of metrics to help us understand what the real potential of that is. And then as part of the touch, can you just talk about the competitive landscape? I know Maxon's been making more noise about getting into that market. Can you just assess the competition?

Steve Laub

Sure. We don't typically share specific numbers on that, but I can tell you that our design wins in both our touch -- they're not only in our business this past quarter, were a record high points. And so that would be, what's happening right now is our Smartphone business is very strong. Our design-win activity is very strong. The tablet activity, I think, that you guys have seen, clearly, we are the leader -- we're the leader in actually both smartphones and in tablets today. And we're also now beginning to win designs in things outside of those marketplaces, whether it be personal navigation devices, e-books. We're beginning to win designs in also gaming consoles and so. That movement outside of that -- outside of the traditional smartphone and tablet markets has begun for us and the design activity is very strong for us. As I mentioned, an all-time high. We're also saw a very significant increase in our design wins in our general microcontroller, or non-touch [indiscernible], this past quarter as well. So I'm not going to give you specific numbers, but the design activity has been very robust, which, for us, supports a very nice growth we expect in our micros during the second half of this year and into 2012.

Operator

Our next question comes from Raji Gill of Needham & Company.

Rajvindra Gill - Needham & Company, LLC

Just a follow-up on the competitive landscape. As you kind of look at your nearest competitor, they had talked around 40% sequential growth in their first quarter, and kind of based on your metrics in the specific segments of the Microcontroller business, it seems like maXTouch maybe grew around 5% to 10% sequentially. And then also, going into the second quarter, there's a -- maybe not as steep as a ramp as what initial -- some people are initially expecting. So maybe, if we can maybe talk a little bit about the growth rates on maXTouch on a sequential basis.

Steve Laub

MaXTouch grew nicely on a sequential basis. We don't break out the specific numbers on that. The reason we gave you specifically numbers for the year is to give you guys some comfort, especially when we're hearing about, as I said, they're spreading a lot of speculation on tablets that came out during this past quarter. With respect to the competitive landscape, the design activity and so forth, we feel very good about the business that we're at, the ramp that we're on and the ramp that we expect for the remainder of this year, with respect to our maXTouch business. There's obviously traditional competitors that we've had, and there's a lot of the sort of new people who have announced certain products. With respect to that, I think we surprised a lot of people last year by going from what was a distant that number 3 position in 2009 to a clear number 1 position in 2010. We have every expectation of maintaining and expect to actually extend our position this year in our maXTouch revenues. So I feel very good and very comfortable of our competitive situation, of the design wins that we have and so forth. And if I were you guys, I wouldn't focus on each quarter's sequential number, but rather, what's happening dynamically overall in the marketplace, because you can go back and compare Q4's growth. And I think that the kind of growth that we experienced was nothing short of astounding.

Rajvindra Gill - Needham & Company, LLC

If you look at the mix, microcontrollers about 64% of sales in the most recent quarter, kind of -- what's your thought process about how much you can get that mix up as a percent of your business, because that's kind of a key driver to your longer-term gross margins trajectory.

Steve Laub

Yes, I don't -- if we give certain number, you guys will backtrack and figure out what we think the micro forecast is going to be. Our expectation is that, that number will continue to grow. My expectation is it will continue to grow significantly each year as a percentage of our total sales. I'm not going to give you a specific forecast, because it's pretty easy to figure out then in micro forecast, which we don't typically break out annual forecasts for each of our businesses. I actually did something unusual in giving you the touch number for the year.

Operator

Our next question comes from James Schneider of Goldman Sachs.

James Schneider - Goldman Sachs Group Inc.

First of all, on the inventory side, your inventory increased again in the quarter in anticipation of better demand in the back half, and you talked about reducing lead times. Can you talk about -- do you expect to manage at that absolute number of inventory from here on out? Or do you expect that to come down some or increase?

Stephen Cumming

Jim, this is Stephen. So yes, our inventory went up about $42 million, from a days perspective, 109 to 128 days. We had said previously on earning calls that we were running light in inventory, and wanted to get back more toward our target range of 120-plus. All of that $42 million primarily -- all of that $42 million came from micro growth, both micros and touch. We did manage to grow a little bit more inventory for memory as well, which had been running light. And hence, that's why you're starting to see, two of that business starting to grow a little bit more. And then also, due to the disaster in Japan, we did build a little bit more inventory to support existing customer, new prospective customers as well. I mean, as you look into Q2, we'll see that increase a little bit more in terms of days. And then you'll start to see that burn off as we go out into the second half of 2011.

James Schneider - Goldman Sachs Group Inc.

Great. That's very helpful. And then as a follow-up on the end markets, certainly, the Non-Touch business has been very, very strong over the past year for you, almost as strong as the Touch business. Can you talk about some of the maybe the top 3 applications, where you're selling those into, that's really driving such a very strong growth right there?

Steve Laub

Sure. I'd say, in the end markets, that would be -- outside of touch, the industrial markets have been quite strong for us, smart energy markets, the grid metering. Those applications have been very good. We can expect continued growth in that area. We're also seeing very significant growth in the home and building automation marketplaces as well. And over the past year, very strong growth in what I'd call sort of security point-of-sale terminals, those types of marketplaces. We're also seeing some good growth in the consumer markets, again, outside of -- this would be in the sort of more classic micro business, handheld equipment, appliances, those types of applications.

Operator

Our next question comes from Sujee De Silva of ThinkEquity.

Sujeeva De Silva - ThinkEquity LLC

Can you talk about in the $300 million assumption for maXTouch, what your pricing assumption is year-over-year? If not the actual number, just stable or up or down?

Steve Laub

First of all, the number we expect is over $300 million, make that clear. Our pricing assumption is that probably expect that pricing will be going up for the overall products during the year with some individual products will probably be declining, some of the older ones and so forth. But the overall ASP is probably a little bit up.

Sujeeva De Silva - ThinkEquity LLC

Okay. Great. And then in the guidance here, can you talk about what the backlog coverage is there?

Steve Laub

Sure. Backlog coverage at this point is approximately 86% to our guidance.

Sujeeva De Silva - ThinkEquity LLC

Great. And then last question, do you have a sense of where your share is in touch, if you can you give us kind of indication there? Or maybe by customer, is it playing out to be -- do you get 30%, 50%, 70%? Just a sense of how that's playing out for you.

Steve Laub

I don't want to give you the specific share count -- share number in touch. We're very comfortable that we are the number 1 market share leader in touch and number 1 by a significant amount. But I think, people are beginning to know how to measure those things based on units instead of dollars and the things like that. But with respect to that business, very comfortable in the number 1 position. With respect to what happens in certain customers, we believe that while customers have begun to diversify their supplier base more in this year, at the same time, we're finding that on the important high volume models that matter to them, we are the preferred supplier, and we are getting the majority of the business at our primary customers.

Sujeeva De Silva - ThinkEquity LLC

Very good.

Operator

Our next question comes from Jeff Schreiner of Capstone Investments.

Jeffrey Schreiner - Capstone Investments

Steve, the first question, I want to just make sure I get my hands around it, you talked about bringing forward inventory now and increasing your capacity, so you can meet demand in the future. Are we supposed to assume that the commentary's leading us to believe that Atmel is currently building only to demand currently?

Steve Laub

I'm trying to understand that question, we're building only to demand? No, we typically actually build to a forecast.

Jeffrey Schreiner - Capstone Investments

Okay. So you're building to a forecast, and that's why the inventory increase we see is built for a specific forecast that's already kind of got a place to go somewhat?

Steve Laub

That's correct. I mean, we're building to -- we have certain forecast for each quarter this year, because the lead time from actually, wafers start to ship, we got product out the door is typically over 4 months. You obviously, have to have your forecast way in advance of that to be able to discern what you're going to need. So right now, for example, what we start is something that we're going to be shipping in Q3. And what we’re doing is we want to actually achieve a little more linearity to our supply as well. And given our expectation of the ramp in our micro and touch business in the second half of this year, we decided to make inventories more abundant, build a little bit ahead of that down.

Jeffrey Schreiner - Capstone Investments

Okay. And just my follow-up, I want to I understand as well, I believe I understood that you guys are being able to take some orders where maybe customers are not getting the supply from maybe a competitor. And just wondering how are you handling that? Are you looking to maybe give a little extra ASP for that product? Are you looking for more share down the road by stepping in and being the Good Samaritan today? Any color you could give us there?

Steve Laub

We typically behave in a manner, which is to build a relationship long term with our customers. And so, what we're finding is a number of our customers -- number of our existing customers are coming to us and saying, I was sourcing this from somebody else, who I'm now having a difficulty being able to get that supply. I'd like to move this business over to you guys, and we're supporting them, and we're not trying to take advantage of the situation with them on that with the hope that we're continuing, and strengthening our relationship long term with them. And then we're getting some new customers, obviously, as well, who are contacting us and we're taking the same approach.

Operator

Our next question comes from Ian Ing of Gleacher.

Ian Ing - Gleacher & Company, Inc.

You mentioned because of Japan, you have some OEMs looking at Atmel as an alternative supplier. Could you talk a little bit about the potential product mix there, given you've got some proprietary parts like MCUs, how much design conversion or FAA support will be involved?

Steve Laub

Typically, the kind of product we're talking about are MCU. That's where we will put the energy to help on design conversion. Otherwise, if it's for something outside of that, say for, memory product, we expect the customer to do that work themselves. There's actually a lot less work to do that with respect to memories. Obviously, it depends on the customer. It depends on the opportunity. But for major customers, we are providing assistance to that. Often times, there are products that a lot are proprietary. Doing that design conversion, our software and so forth can make that transition relatively straightforward for the customer. We do provide a little bit of assistance for them, however, on that.

Ian Ing - Gleacher & Company, Inc.

Great. And my last question is, you've been playing very well at the high-end for smartphones and tablets. Can you address or respond some of these emerging low-cost android smartphones that's coming out of China? They're talking about like $150 ASPs. I think that's an area you historically are not in as much.

Steve Laub

That's correct. I mean, we target a market to really capture, I would say, the mid and the high-end of the marketplace. And I think, based on the success we've had, I think people will generally agree that was exactly the right thing to do. We're finding so many opportunities with our first family and now with the E family, whether it be for more smartphones and now tablets and other things, that we feel that capturing those designs is actually more important than going after, in a sense, the low end of marketplace. Nevertheless, we do recognize the opportunity the low-end provides, how big that is, and that, that will be growing this year and throughout next year. It's a market that we have no -- certainly have the capability to produce favorably, knowing, we should be able to participate in that marketplace. And I would assume, at some point, you will see us participate in that market. But right now, there's just so many great opportunities for us where we're at. We'd rather use our resources for capturing those.

Operator

At this time, there are no further questions. I would now like to turn the call back over to Mr. Schuman.

Peter Schuman

Thank you, Bonnie. During the second quarter, we'll be holding our Analyst Day in California on Monday June 6, from 2:00 to 5:00 p.m. We will also be presenting at the Barclays Capital, America Select Conference on Monday, May 23, in London and the Craig-Hallum Investor Conference on Wednesday, June 1 in Minneapolis. Webcast information for these events will be available on the company's Investor Relations website. In the meantime, you're always welcome to contact our Investor Relation's department at (408) 518-8426 with any questions that arise. Thank you for joining us and this concludes today's call.

Operator

Ladies and gentlemen, that concludes today's quarterly all-hands meeting. Thank you for your presentation. You may now log off.

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