Full Transcript of Flextronics’ 2Q06 Conference Call — Q&A (FLEX)

Here’s the entire text of the Q&A from Flextronics’ (ticker: FLEX) Q2 2006 conference call. The prepared remarks are here. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.

Questions and Answers

Operator

OPERATOR INSTRUCTIONS Our first question comes from Lou Miscioscia from Lehman Brothers. You may ask your question, sir.

Lou Miscioscia

Okay, thank you. Could you perhaps go into a little more detail as to just the flattish revenue on a quarter-to-quarter basis? Obviously understand the things that you explained on the call that you sold some of your businesses and that Alcatel and Siemens cell phones had come off, but the cell phone numbers were actually not that bad quarter-to-quarter on the call. And it seems that a couple of the other areas seem to be off more, industrial, medical, obviously consumer comm infrastructure, and so on.

Michael Marks

Mike, want to do that?

Mike McNamara

Yes. We clearly have seen some softness pretty much across the board in the customer base. We were hoping some of the new programs we have coming on like Nortel and Kyocera would offset the down side of some of the big cell phone programs going away, and they continue to go away alternatively. We had strength in the cell phone business, which, per your comment. But at the same time, the rest of the business all, a lot of them kind of across the port seemed to get a little bit softer. So it's kind of what we said, as it came out of July and August and started getting visibility into September, October, we saw it getting a little bit softer over the last couple months. There's no doubt we're in the middle of trying to deal with a little bit of that softness.

Lou Miscioscia

And I guess that has continued now into October, hasn't turned around and started to kick in yet?

Mike McNamara

Well, it definitely had in September and it definitely did in October, when we looked at it. We'll take a another really big look at it in the first week of November, but for sure for September, October they were both disappointing months for us.

Lou Miscioscia

Okay. Thank you.

Operator

Bernie Mahon from Morgan Stanley. You may ask your question.

Bernie Mahon

Hi, good evening. Just following up on that briefly. You said that in the middle of September there was some softness. Could you specifically identify some of the end segments or was it really across the board in terms of consumer, printers, comm infrastructure or just provide a little bit more detail there?

Mike McNamara

Yes. I think some of the segments may have been customer product specific. It's hard to tell. But without question with us, it was across the board. It was reasonably linearly across the board. It was just, everything was just a little bit softer in September than we anticipated, and everything was a little bit softer even than that in October, with the exception of cell phones, which showed very good strength.

Bernie Mahon

And then just a question on the inventory. It looks like you built a couple hundred million dollars of inventory at the end of the quarter. Was that partly from taking on more Nortel assets or was it because lead times had stretched? Why, I guess I'm just trying to figure out why you built inventory going into when demand was kind of softening.

Mike McNamara

Yes, it's a combination of things. The Nortel block of inventory continues to increase for us. We took on the operation in Shutodun(ph) which is a substantial amount of inventory. And the other thing is we had a little bit of down side in some of our revenue expectations, as we just mentioned, a little bit of softness, which I think contributed to some of it. I think there was a third effect, which is some of the new programs, some of the cell phone programs are actually being constrained right now by some components. That created some inventory build for us, which had there not been any shortage problems, component shortage problems, we'd been able to ship those phones. So, I think it's really a combination of all three of those things.

Bernie Mahon

You think they're all about split evenly or was one of them maybe a little more dominant?

Mike McNamara

I think Nortel alone was a good 100 to 125 million, if I'm not mistaken.

Tom Smach

I'd say it's probably right, Mike. Probably half of it is Nortel related.

Mike McNamara

And then the rest is, it's hard to dissect it further than that.

Bernie Mahon

Oh, no, that's great. That's very helpful. Thanks a lot.

Operator

Alex Blanton from Ingalls & Snyder, you may ask your question.

Alex Blanton

Good afternoon. Could you give us an idea of the, if we take the revenue that you're now forecasting for the year, which looks like it's going to be, you take the bottom of the range at $15.4 million and the top of the range is 15.8 versus 15.9 last year. How much of that decline are the divested companies, roughly?

Mike McNamara

In round numbers, Alex, it's about $550 million to maybe $600 million, in that range.

Alex Blanton

550 to 600 for the rest of the year.

Mike McNamara

Well, total year-over-year.

Alex Blanton

How much of it was in the September quarter?

Mike McNamara

$79 million.

Alex Blanton

79. You gave us that. The rest of it's for the next two quarters?

Mike McNamara

Right.

Alex Blanton

Okay. So if we look at what you're forecasting now, how does that compare with what you were thinking, let's say, three months ago when you were, I think, telling us that the year would be $0.80 to $0.90? Based on your guidance now, it looks like the year's going to be $0.67 to $0.71.

Mike McNamara

Right. I mean, your math is correct.

Alex Blanton

So what were the sales expectations? I'm trying to get a sense of how much lower the sales are than what you expected three months ago.

Mike McNamara

Yes. So we expected three months ago sales excluding, reflecting that divestiture impact of 16.4 billion to around 17 billion.

Alex Blanton

Yes. 16.4. So, there's about a, 16.4 to 17?

Mike McNamara

Right.

Alex Blanton

So there's something like a billion dollars went away somewhere?

Mike McNamara

That's right.

Alex Blanton

Okay. In the last three months? Including some in the September quarter, I assume?

Mike McNamara

That's correct.

Alex Blanton

Okay. So where in your business is the biggest part of that? Can you discuss that? Where is the decline from your expectations taking place?

Michael Marks

I could try to answer that. It's hard to really pinpoint to one thing. I think the timing of the Nortel thing maybe slipped a little bit, some of the new program divestitures slipped a bit a little bit, kind of across the board. I think there's a little bit of softness. We mentioned some continuing softness coming in. We actually weren't sure about July and August, and when we get into those periods, we usually just kind of hold the current guidance from our customers flat. It came back in September, October a little bit lower. So I think it's a combination of all those things. We've seen, really, an across the board, for our kind of programs, we've seen an across the board kind of reduction, and I think it goes anywhere from everywhere from consumer all the way through to the industrial and the infrastructure, everything really. Even some of the automotive was affected, which we didn't anticipate. So I think it's, I mean, with us, it was a very broad base, it wasn't just one thing that we can go point to.

Alex Blanton

Well, you are,

Mike McNamara

Let me add one more thing, Alex, if I can.

Alex Blanton

Yes.

Mike McNamara

And also, the deterioration from Alcatel and Siemens was faster than we had expected to be honest. So, we really expected, when Siemens decided to divestiture, we thought we were going to see more revenue for a period of time, and that's come undone pretty quickly.

Alex Blanton

Well, but you're looking ahead six months from now, and you're looking at significantly lower sales than most the December quarter and the March quarter than you had been originally been anticipating, because the total's down by a billion or more from what you originally had been anticipating. So what you're, are you saying that you don't think there's going to be any pickup in these things? Between now and the end of March?

Michael Marks

I think we need to clear something up here, Tom. We're not saying a billion dollars less revenue in the last two quarters?

Alex Blanton

No, no. I'm saying that from three months ago your revenue expectation seemed to have slipped by something like a billion dollars.

Tom Smach

I actually agree with that, Michael.

Alex Blanton

But for the year.

Tom Smach

For the year, our old estimates were 16.4 to around 17. Now, reflecting the September results with the remaining forecast, it's 15.4 to 15.8.

Alex Blanton

That's about a billion dollars.

Tom Smach

Yes. Round numbers. That's right. But Alex I would

Alex Blanton

That's not all in the September or even the December quarter. There's a lot in the March quarter.

Tom Smach

Even in September, you could argue it was 300 million, because our September guidance was 3.8 to 4.2 and we came in around 3.8.

Alex Blanton

Oh, sure, but you were with

Tom Smach

So, you're taking ranges here, and I would also like to remind you, Alex, back in June, coming off the June quarter when we provided the guidance, June was actually stronger than expected, if you'll remember that.

Alex Blanton

Yes. But we're just looking from what you expect at the end of June going forward for the nine months.

Tom Smach

Right. So at the end of June, we had customers taking their forecasts up. Okay? And then it was somewhat stable in July and August. Then beginning in mid-September, we saw a pretty -broad based reduction in forecast demand from our customers.

Alex Blanton

Yes. Would you expect then to continue forward? Do you have a feeling this is the economy as a whole, the end markets, or you're losing some business to somebody else in the Far East or what is it?

Michael Marks

We, as broad based as we saw the decline, we can't help but think there's probably some economic impacts here, some overall economic impacts. We're not aware of any programs that we really lost. We can't put our finger on anything like that. We just think there's some general softness out there. I think some of the programs are, might be our customer specific competitiveness in their marketplace. There's probably a few programs like that that we don't necessarily see carry across to others. So I think it's a combination of those. There's really no event. There's no real loss of customer outside of the Alcatel, Siemens, which is all wrapped up this last quarter. But it's pretty much across the board.

Alex Blanton

One final thing then. Do you have any sense at all that the increase in energy costs in the economy, the increase for consumers and in that sector, transportation, is causing them to cut back on purchases of the kinds of things that you make? Any sense of that?

Mike McNamara

Well, Alex, just about an hour ago, the conference board came out with its consumer confidence index.

Alex Blanton

Yes.

Mike McNamara

And it fell to 85 in October, which is the lowest level since October of 2003.

Alex Blanton

Yes.

Mike McNamara

And it's the sharpest decline in 15 years.

Alex Blanton

Yes.

Mike McNamara

So it's hard for us to tell what all the drivers are. I mean, certainly energy prices, rising interest rate concerns, job markets, unprecedented level of natural disasters. At some level, it must have had an impact.

Alex Blanton

Yes.

Michael Marks

But the other thing is there is some evidence that some of our customers are not doing as well in the market place, potentially as well. I think they're both appropriate. Because there are elements of the economy that are actually pretty strong that we can see. So I think it's a combination of both, Alex. I think it's some of the economic slow down because it is as broad based as it is, and I think in some cases, maybe some of our customers didn't do it, but I'm sure you guys will go out and do channel checks. I mean, we can't think of anything we're losing or losing market share on or anything else.

Alex Blanton

Okay, thank you.

Mike McNamara

In fact I'm going to add something to that, which is, we don't like to talk about at Flextronics from a management perspective, we don't like to talk about broad, macroeconomics. That's for analysts. There's all kind of hoop-la for them to do that. It just always sounds like excuse making to us. We tell you what we see, which is there has clearly been some across the board declines. They're not huge. There are some. And it's our job to grow through that. As you can see from the numbers that we're giving guidance on, even with that we're still expecting some pretty good year-over-year growth starting again in the March quarter. We're comfortable we can do that with additional programs that we're winning and ramping up. That's our jobs as managers is to offset weakness in individual companies or individual sectors for the economy, as a whole, and find ways to grow our business. I think we're going to be able to do that after a relatively short flat period.

Alex Blanton

Okay, thank you.

Operator

Carter Shoop from Deutsche Bank, you may ask your question.

Carter Shoop

Great, thanks. Two questions here. First can you talk about the deterioration quarter-over-quarter for Siemens and Alcatel? How big of a decline are we talking about here?

Tom Smach

It was $250 million.

Carter Shoop

That's sequentially?

Tom Smach

No. That was year-over-year.

Carter Shoop

Sequentially what was it?

Tom Smach

I really don't have the sequential number.

Carter Shoop

Would it be like 25 million or something like that in?

Tom Smach

Somewhere at 25 million, maybe a little bit more, but obviously somewhere in that range. I don't know the exact number.

Carter Shoop

Can we talk a little bit about the current capacity realization for the firm? I know guys you announced a new facility in India, building a new facility in Mexico. I've heard recently that you're looking to expand in New Hampshire. Can we talk about real capacity realization right now and expectations for future construction?

Mike McNamara

We're not actually building any capacity in New Hampshire, that's for sure. We're expanding, and we'll continue to expand in virtually all locations in China. We'll expand printer circuit board capacity this year and probably next year flexor capacity we'll expand flexer capacity, we'll expand metals, both plastics and metals, in both north and south China and we'll be looking, we just brought on several hundred thousand square feet this year in China, which is almost all full and we'll probably expand another 700 or a million square feet in China this coming year. India, as you mentioned, is correct. Juarez, we're bringing out some capability and so, kind of virtually, all those markets are in need of capacity. A lot of it is, we just see what the future looks like, and it looks pretty robust for us.

Some of these programs take a little bit longer. And one of the things we've said in the past is we're starting to get a longer look at what our future bookings look like, our future revenue look like because we're so early engaged in the processes now, much earlier than ever before. What that means is a longer period for start-up costs, and we might be working on programs for nine months, even 15 months, before they really mature. This is kind of new for us and kind of a result of us bringing on all our components and our vertical technologies, as well as the design capability that we have. As far as restructurings, we've done bits and pieces. This is also a reason some of the revenue has come out. We've actually sold a couple operations in Sweden in the last quarter, which we did in June. We sold an operation in Italy. At the end of June, we are in process of closing an operation in France. We closed an operation in Finland just about two months ago. A lot of this stuff is actually nickel and dining some of the revenue out of our business, as well. So, we'll continue to tweak things here and there, but most of the restructuring that we have underway is contemplating a lot of that, and the risk that we have, which has particularly been in Europe in terms of overcapacity, is actually falling away very quickly and very nicely.

Carter Shoop

So when we look out into calendar year '06, what do you expect for restructuring charges? In the $50 to $100 million range, do you think that's accurate?

Mike McNamara

It's hard to tell. It sounds like a lot to me. I don't know what's left in the restructuring. Maybe Tom can

Tom Smach

Carter, you asked in calendar '06?

Carter Shoop

Correct.

Tom Smach

Yes. I think that does sound high, as well. We really don't forecast what level of future restructuring, if anything, we have that far in advance. So we'll certainly let you know when we know.

Carter Shoop

Okay. Great. Maybe a last question here. Do you have the percentage of sales for Sony, Erickson and HP in the September quarter?

Tom Smach

Yes. So, we're going, starting last quarter, we just started identifying them as greater than 10%. And that's because our sales increases or decreases for those customers, they'll correlate directly to their revenue activity because there's changes in inventory. We've gotten too many questions with people trying to reconcile our change in the revenues to that particular customer, to their revenue performance. So both were in excess of 10% of revenues, and we're just going to leave it at that.

Carter Shoop

Thanks.

Mike McNamara

Let me add one thing, one other thing. You have to keep in mind the depreciation in the quarter was 85 million and capital expenditures were 54 million. So in fact we are less than replacing the equipment. And so the 54 million shows up as we're going to build a place in Juarez and we're going to do stuff in India and all that kind of stuff, but you have to remember that depreciation's coming out at even a higher rate. Net, net, we are reducing plant and equipment, not increasing it.

Michael Marks

Next question.

Operator

Terry White from Kaufman Brothers. You may ask your question.

Brian White

Two quick question you had mentioned business slowing a little bit from developing a model here, even excluding the divestiture, this is rather sequential growth, whether the company has problems, can you comment on that, I am just curious if anywhere about five years what if the business slows?

Mike McNamara

We're sorry. We actually, we couldn't understand that question.

Brian White

Just looking at the sequential growth in the quarter, adding back the divestitures, this is the slowest sequential growth you guys have had in almost 20 decades. You mentioned business slowing could you meaningfully recently. When was the last time you saw business slowing to this degree? Was it 2001? 2002?

Mike McNamara

Hey, Brian, there is a lot of static on your phone. We cannot understand you, so we're going to ask you to go out of the queue and come back in.

Michael Marks

We're sorry. Operator, why don't we go to the next question.

Operator

OPERATOR INSTRUCTIONS We have Michael Walker from First Boston. You may ask your question.

Michael Walker

Thanks. I want to talk about margins a little bit, if I could. First just some clarity on why they were down 40 basis, why the gross margin was down 40 basis points sequentially, despite revenues being relatively flat from June to September, was that all mix related? And, secondarily, you had talked about some targets previously, gross margin being over 7.2 by the end of the year, operating over 3.6. Is that still doable? And just kind of a larger question here. You've talked a lot about ramping programs, which hurt margins. You talked about ramping factories, which hurt margins. What happened to ODM? What happened to printed circuit boards? Is there a reason for us to really assume, realistically, that margins are going to be increasing in the next six quarters?

Tom Smach

Okay. A lot of questions there, Mike. So the sequential decline in gross margin, 30 basis points of that decline can be attributable to the divestiture activity, and the remaining would be attributable to the start-up costs that Mike has outlined. Operating margins, gross, divestitures are adversely impacting the operating margins. We're getting a benefit on SG&A reductions from the divestitures, so there's very little operating margin impact from the divestitures. As we said on the call, in the future quarters, Mike, on a full quarter basis, not for the September quarter but going forward, future quarters gross profit will be impacted by 100 basis points from the divestitures. We'll pick up 65 basis points of SG&A and operating margins on a full quarter basis will only go down 35 basis points, as a result of the divestitures. Of course, then we would pick up additional earnings from either reductions in interest expense from debt buybacks or a reduction in shares outstanding through stock repurchases.

Mike McNamara

I think what we need to stay focused on is that while the gross margins are going to go down as a result of these divestitures, alternatively the net profit is going to hold relatively steady once we redeploy the cash in the way we decide to redeploy it. These businesses carry very, very high SG&A rates with them. We have to make sure we don't get too focused on the gross margin and stay more focused on the operating profit, which is more applicable. The second part of your question is do we realistically anticipate these to go up time and the answer is, yes, you should. We are right in the middle of a very substantial restructuring. The amount of business, if you take a billion dollars of cell phones out that's already running, the learning curves already paid for, and to take it out and replace it by a bunch of smaller, more complex programs is very different and new programs is very difficult. And this is all effecting, and we're still able to achieve the 3.4% operating profit for this quarter, but it would be better.

And do we anticipate it get can better next year? We think so. A lot of these programs that we've run have already been underway for some period of time, which includes Nortel and Kyocera will be at full learning curve by January. But we won't be fully invested in the vertical integration activities until we get to the next cycle of their products. So to go get the component technology, such as plastics and camera modules and those kind of things designed into the next generation phones is what's really required to go achieve a maximum profitability in these programs. A lot of that work's going on now. I think that work will carry on until the first half of next year. I still think we'll earn very respectable margins like we are today. Without doubt, going forward, we actually do anticipate, we're making a lot of investments in technology that we've mentioned, the duplex circuits and printed circuit boards, all of which have higher profit margins than the regular business. We actually do expect the margins to be going up and, without doubt, the investment profile is built around those margins going up.

The other thing I might want to add, you know Michael mentioned about doing $54 million of capital this quarter and taking $85 million of depreciation amortization. A lot of those investments are investments in higher-margin technology kind of programs that take a little bit longer to mature, but they're building us a competitive position for the future. When we think about what it takes to go compete long-term in the marketplace, these things are absolutely required. And we're still able to take all these investments, and still be able to generate a delta between delta between depreciation and amortization, and then CapEx the net, and then number's still generating $30 million a quarter of cash flow. So we actually think it's nicely in balance.

Carter Shoop

Okay, thanks.

Operator

Scott Craig from Banc of America, you may ask your question.

Scott Craig

Thanks, good afternoon. From the debt buy-back side of things, you guys bought back it looks like around $200 million this quarter. I'm sorry if I missed this. Do you expect to buy back some more debt in the near term, given that you have not been able to buy back stock or probably won't be able to buy back stock until next year? Would you use up most of the proceeds on debt, most of the proceeds from the divestiture on debt? And then secondly, within the comm business, the Telco business, Nortel was ramping this quarter, and I think Mike McNamara outlined at our conference recently that it was running around a $1.2 billion runrate roughly, if I strip out that ramp, it looks like the comm infrastructure business was down 20% quarter-over-quarter. Can you provide more flavor maybe geographically on where we saw most of the weakness or any kind of flavor around that business? Thanks.

Mike McNamara

Scott, I'll take that. The last question first. The comm infrastructure was down primarily as a result of the divestiture of the network services business, which was all comm infrastructure type revenue. Okay? With regard to future debt and stock buybacks, we're going to be very opportunistic and very patient around this stuff, so I do think it's reasonable to assume that we're going to be in the market during the quarter buying some debt back, but that is conditioned on what the prices and the, of what the prices of both the stock and the debt. So, we, this Singapore law was scheduled to change in September and got delayed three months, so we think we'll be able to buy stock back beginning in January. If that means our stock is at such a level, we'll just sit on the cash and wait till January to start buying stock back, that is something certainly we're going to evaluate.

So I think it's reasonable to assume that we'll be buying back debt, depending on what the market value is. And I hate to say that because that will probably drive the pricing a little bit higher, make it a little less attractive, people knowing that we're in the marketplace doing that. We are going to be keeping an eye on the stock price and the date upon which we could go in the market and start buying stock back. So we're patient, we are opportunistic. And we are going to deploy the excess cash in the manner that best increases the return for our shareholders.

Scott Craig

Just to follow-up on that comm business, excluding the Nortel ramp and the impact of the divestitures, what did the comm business do in the quarter, Tom, roughly? I'm not getting too specific here.

Tom Smach

I don't think I have that data available at my fingertips, Scott, but you could attribute around $80 million of the sequential decline. Actually maybe more on a sequential basis, maybe a little more than $80 million associated with the divestiture of network services. There's also a little bit of semiconductor revenue in the comm infrastructure space, as well. The rest would just be attributable to some of the broad-based demand fluctuations that Mike spoke about earlier.

Scott Craig

Alright, thanks.

Mike McNamara

Thank you.

Operator

Tim Lane from North Star, you may ask your question.

Tim Lane

Yes. I have a little bit of a lead-in to it. Which is I'm just wondering if maybe executive management's fairly consistent overestimation of the near-term momentum of the Company's business, is sort of filtering through the culture of the Company and is resulting in this consistent misforecast of the outlook. I have a few examples. Quarter revenue missing by 5%, EPS by 10% and then characterizing Flextronics as a winner within the industry. And I'm just wondering what executive management is going to do in the near term to try to correct this cultural issue. For example, is executive management willing to suspend its own variable bonus compensation to, until it forecasts and accurately hits its forecast for financial metrics? Thank you.

Tom Smach

So I think we'll let Michael talk about the culture, but I'll talk a little bit about the numbers that you referred to. So our revenue, reported revenue in the September quarter was $3.88 billion, and our guidance was $3.8 billion to $4.2 billion, so that is in the middle, toward the lower end but certainly in the middle of our guidance expectations. In June, the high end of our revenue guidance was $3.9 billion, and we did $3.9 billion of revenue in the June quarter. So I guess I would dispute a little bit the fact that we've overestimated the expected revenue in the near term. Obviously, the further you go out in time, the more difficult it is, and we can only give you the best information we get from our customers at the time that things change and we try to let you know when things change. But I think in June and September, our revenue estimates were inside our range of expectations. Michael, do you have any comments about this?

Michael Marks

Yes, I do. I'll add a couple of things. First of all, cash flow was way above forecast. It's interesting that when you have periods of time like this and you get inappropriate questions like we just got, the market tends to, many investors tend to focus on it's great when earnings are going up and cash is going down and now earnings are flat, cash is going way up, and I would suggest to the listeners that you follow the cash because, if you look at how much cash is being generated by the companies out there, I think you're going to find that we're clearly one of the winners. Flextronics has a long history of compensating executives based on performance. When we don't grow earnings, we don't get bonuses. If anybody wants to go and check, there was a period of time a few years back when the Flextronics executives all gave up all of their salary in exchange for stock options, and today the stock is below that stock price, so everybody gave up a year of salary to show our respect for the need to provide performance and so there won't be any bonuses this quarter and depends how the future is. We will do that appropriately, and I actually think that question was inappropriate. We'll take one more question and then call it a day for today.

Operator

Tod Coupland from CIBC, you may ask your question.

Todd Coupland

Good evening. Are you guys, with respect to the Nortel ramping, are you guys in a position to give us an idea how much incremental revenue is expected from Nortel in the December and March quarters?

Mike McNamara

Well, what we've said, Todd, is we expect total Nortel revenue for the year to be in excess of a billion dollars, and we continue to believe that estimate's appropriate and that really hasn't changed. So we picked up a facility in late August, kind of. There's one month of revenue from the facility we picked up in the September quarter, and then we have one more facility in Canada that we expect to pick up sometime in the March quarter. And, therefore, we think by the end of the fiscal year, all of the factory transfers will be complete at that time. So for the year, it's a little bit more than a billion dollars incremental revenue, and I don't think we really want to split it out by quarter.

Todd Coupland

Okay. And I know you gave only two quarters of outlook. I guess we should assume that September and December quarters should, you know what? I'll pass on that question. Thanks very much.

Michael Marks

Okay. Thanks very much. We understand that we've suggested that growth is going to start again after the December quarter. That's obviously something we're going to have to show you. We're going to continue to generate cash and we're going to deploy that in effective way that Tom talked about. We appreciate your calling in. We hope to see many of you on November 8 in New York and we'll look forward to talking to you again. Thanks for calling in. Bye now.

Related:

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