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Executives

Brendan Lahiff

David B. Bell - Chief Executive Officer, President and Director

Jonathan A. Kennedy - Chief Financial Officer, Senior Vice President and Principal Accounting Officer

Analysts

Ross Seymore - Deutsche Bank AG, Research Division

Craig A. Ellis - Caris & Company, Inc., Research Division

Jason Rechel - Oppenheimer & Co. Inc., Research Division

JoAnne Feeney - Longbow Research LLC

Evan Wang - Stifel, Nicolaus & Co., Inc., Research Division

Terence R. Whalen - Citigroup Inc, Research Division

John W. Pitzer - Crédit Suisse AG, Research Division

Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division

Intersil (ISIL) Q3 2012 Earnings Call October 24, 2012 4:45 PM ET

Operator

Good day, ladies and gentlemen, and welcome to Intersil Corporation's Third Quarter 2012 Earnings Conference Call. I will your coordinator for today. I would now like to turn the presentation over to your host for today's call, Mr. Brendan Lahiff, Senior Investor Relations Manager of Intersil. Mr. Lahiff, please proceed.

Brendan Lahiff

Thank you, Derek. Good afternoon, and thank you for joining us today for Intersil's Third Quarter 2012 Earnings Results Conference Call. Today with me is Dave Bell, Intersil's President and Chief Executive Officer; and Jonathan Kennedy, Intersil's Senior Vice President and Chief Financial Officer.

Today, we will deliver remarks on the third quarter 2012 and provide a summary of our fourth quarter 2012 business outlook. After our prepared comments, we will open the line for questions.

We completed our third quarter on September 28, 2012. An earnings press release was issued today at approximately 1:05 PM Pacific Time. A copy of the press release and supplementary slides to accompany the earnings conference call are available on the Investor Relations section of our website at ir.intersil.com. A copy of the prepared remarks has also been made available on the Investor Relations website prior to the conference call.

As always, this call is being webcast live over the Internet and may be accessed via the Investor Relations section of our website. A telephonic replay of the conference call and webcast will be available for 2 weeks through November 7.

Please note that some comments made during this conference may contain forward-looking statements. I'd like to remind you, while these statements reflect our current best judgment, they are subject to risks and uncertainties that could cause our actual results to vary. These risk factors are discussed in detail on our filings with the Securities and Exchange Commission.

In addition, during this call, we may refer to financial measures that are not prepared according to Generally Accepted Accounting Principles. We sometimes use these measures, because we believe they provide useful information about the performance of our business and should be considered by investors in conjunction with the GAAP measures reported.

Our agenda for the call today is as follows: Dave Bell will discuss key highlights from the quarter, and Jonathan Kennedy will review the quarter from a financial perspective. and Dave will follow with additional commentary on our -- each of our 3 key markets, as well as forward-looking guidance. A Q&A session will follow.

I'd now like to turn the call over to Dave Bell, President and CEO of Intersil.

David B. Bell

Thanks, Brendan. Good afternoon, and thank you for joining us today for Intersil's Third Quarter 2012 Earnings Conference Call.

During the third quarter, we saw significantly softening business conditions in all markets and geographies, but the weakness was most pronounced in the PC market. From a top-level perspective, there appear to be haves and have nots in the semiconductor business. Those companies with significant sales into smartphones and tablets are probably experiencing growth. However, those that are reliant on a very weak PC market are seeing sales go backwards.

Today, Intersil still derives roughly 22% of its sales from PCs and very little from smartphones and tablets, however, that picture is already beginning to change with significant sales growth expected from handheld products in 2013.

Despite these near-term challenges, here is the question savvy investors should be asking, how will Intersil provide sustainable growth in the years to come in this hyper competitive environment? And how is Intersil adapting to changing market conditions and aligning resources with the most promising opportunities?

We are committed to building a great, enduring company, and despite the present challenges, we're making excellent progress in transforming our business. I'll explain later how our top 10 growth drivers are creating a very bright future.

I'd like to briefly address an issue that emerged during the last few weeks -- concern over Intersil's dividend. That issue was recently raised by a few analyst reports. Let me be clear, Intersil's strong balance sheet and cash flow can continue to support the current dividend policy, even through cyclical industry downturns. Even after paying our dividend, our cash and short-term investment balance increased during the third quarter, now sitting at $322 million. Intersil's dividend policy is to pay the dividend using excess free cash flow, with our strong cash balance acting as a backstop in the rare occasion that free cash flow doesn't cover the dividend payment.

Intersil's Board of Directors just authorized this quarter's dividend of $0.12 per share of common stock, marking the ninth consecutive year of paying quarterly dividend through numerous semiconductor cycles, returning a total of $432 million to shareholders. And at our present stock-price, Intersil's dividend yield is an extraordinary 7%.

Also during the third quarter, Intersil's Board of Directors authorized the repurchase of $50 million of Intersil stock over the next 12 months. We began purchasing shares in September, and to date, we have purchased over 1.5 million shares under the plan. We expect to continue purchasing shares over the next 3 quarters, which we believe will boost future EPS.

Recognizing the challenging business environment, we made the decision to significantly reduce operating expenses during the second quarter. This restructuring was performed to target a new operating model of non-GAAP operating profit margin of 24% at a $200 million per quarter revenue rate.

The third quarter non-GAAP operating expenses realized the full benefit of our restructuring, and our operating expense have fallen by over $11 million or 16% over the second quarter, significantly boosting our profitability despite lower revenue. This restructuring also focused nearly all of our development resources on our top 10 growth drivers. These are the carefully chosen product areas, where we're confident that Intersil has the technology, the talent and the customer relationships to beat much larger rivals.

I'd now like to talk briefly about the business conditions in the third quarter. Bookings were stable through most of the quarter, however, bookings weakened again during September. As a result, we closed the third quarter with a book-to-bill ratio of slightly less than 1.

We reported third quarter revenues of $151.4 million, an 18.9% decrease from $186.8 million in the third quarter of 2011 and a 7.1% decrease from $163 million in the second quarter of 2012. The revenue reduction was primarily driven by an unexpectedly weak PC market. Intersil also recorded one time income from an IP agreement resolving a dispute with another semiconductor company, which added another $13.4 million to operating income and boosted GAAP operating profit margin to 12.7%.

At this time, I'd like to turn the call over to Jonathan Kennedy for a financial summary of the third quarter. I'll then discuss results from each of our end markets in more detail, and finally, provide comments on our fourth quarter 2012 outlook. Jonathan?

Jonathan A. Kennedy

Thank you, Dave. I'd like to reiterate Dave's comments regarding our dividends. Our policy is based on free cash flow and is backstopped by cash on hand. Free cash flow for the quarter was $21.7 million, and our cash and short-term investments were $321.9 million. Our ongoing quarterly dividend payment is approximately $15 million.

Now on to the third quarter income statement. We reported $151.4 million of revenue for the third quarter, an 18.9% decrease from the third quarter last year and a 7.1% sequential decrease in the second quarter of 2012. Revenue increased sequentially in the consumer market, where new handset parts begin ramping, and seasonal strength in gaming provided much of the increase. And this was offset by weaker-than-expected conditions in the computing market where PC sales continued to be weak.

Our lead times remained normal throughout the quarter, with no significant supply constraints. Our internal utilization was approximately 79% as production continued just below consumption, and inventory levels were reduced. Third quarter turns were 35%, and we are expecting Q4 turns to be about the same at the midpoint of our guidance.

Gross margin was 54.1% in Q3, 40 basis points below the previous quarter, driven primarily by an increase in excess inventory reserves. Looking to Q4, we expect gross margin to decline slightly on lower utilization.

R&D expense was $38.7 million or 26% of revenue, and SG&A expense were $30.2 million or 20% of revenue. During Q4, we expect R&D expenses of about $38 million and SG&A expenses of approximately $30 million, as we realize the benefit of lower labor hours from year-end holidays in the fourth quarter.

Amortization of intangibles was $7.1 million during the quarter and Q4 amortization is expected to be lower at $6.7 million. Our Q3 GAAP operating margin was 12.7%. We incurred a gain on our deferred compensation investments of $0.7 million during this quarter, which was offset by a similar expense in SG&A.

Operating income included a $13.4 million benefit from the completion of a non-recurring onetime agreement, resolving a patent and trade secret dispute with another semiconductor company.

Interest income was $0.1 million for the third quarter, and interest expense was $2 million. And we expect Q4 interest income and expense to be approximately flat to Q3.

Our Q3 GAAP tax rate was 89% due to certain discrete tax expense items, as well as the effects of declining foreign income relative to our expectations earlier in the year. We expect our Q4 tax expense to be about $10 million, as we realize the effects of minimal foreign income and true up for the full year. This estimate does not include any benefit from the R&D tax credit. Our GAAP tax rates should revert back to a more normal level in 2013.

Equity compensation was $5.3 million for the third quarter. Q4 equity compensation is expected to be flat at about $5.3 million. And by classification, equity compensation is expected to be approximately $0.4 million in cost of sales, $2.3 million in R&D and about $2.6 million in SG&A. On a GAAP basis, we recorded net income of $2 million or $0.02 per diluted share.

Now on a non-GAAP basis. We present non-GAAP measures, because we believe they add additional analysis that when considered with GAAP information can help investors more thoroughly understand the results of our normal ongoing operations. Our Q3 non-GAAP results exclude equity compensation, intangible amortization, the related impact of income tax expense on these items, onetime items and certain discrete tax items.

Non-GAAP operating income was $18.9 million, and our non-GAAP operating margin was 12.5%. Our non-GAAP tax rate was 23%, and non-GAAP net income was $13.1 million or $0.10 per diluted share for the third quarter. We expect our non-GAAP tax rate to be approximately 25% for the fourth quarter. A reconciliation between GAAP and non-GAAP measures can be found on Page 8 in today's press release.

Now for the balance sheet and cash flow. Free cash flow during the quarter was $21.7 million. Dividend payments were $15.4 million. Long-term debt was unchanged in the third quarter at $150 million. As Dave mentioned, we repurchased 690,500 shares during the third quarter. And as of today, we repurchased approximately 1.5 million shares since we announced the repurchase program on August 6. Our balance sheet continued to be very strong with $321.9 million in cash and $150 million in long-term debt. More than half of our cash is now onshore and available with no further tax liabilities.

Days of sales outstanding increased slightly to 38 days for the quarter. Soft demand during the third quarter led us to continue our inventory reduction. Net inventory decreased $3.8 million or 4.7% from the second quarter to $81.6 million, and days of inventory increased by 1 day to 109. Looking ahead, we expect inventory dollars to be down another $4 million to $6 million, and inventory day to decrease to about 105 days. Our Q3 ending worldwide distributor inventory was flat in dollars compared to Q2, but up 6 days to 70.

Looking ahead to the fourth quarter, we expect to reduce channel inventory by $3 million to $5 million to align with the weaker demand. Our Q3 depreciation was $4.8 million, flat compared to the second quarter, and CapEx was sharply lower at $0.9 million.

We expect Q4 CapEx to increase to approximately $10 million to $12 million as we upgrade our internal production capability to achieve lower internal production costs. We expect capital expenditure rates to be at this level for the next 2 quarters as we complete the project.

Our weighted average diluted share count was 127.6 million shares in the third quarter. And we expect fourth quarter weighted average diluted shares to be slightly lower, as we continue to execute our stock repurchase program.

Now back to Dave.

David B. Bell

Thanks, Jonathan. I'll now address our business in each of our 3 end markets, beginning with industrial and infrastructure. During today's commentary, as well as in the coming quarters, I will be aligning the end market discussions around our top 10 growth drivers. As you all know by now, our top 10 growth drivers are the carefully chosen areas where we have what it takes to gain market share in this hyper-competitive environment.

At our Analyst Day on May 8, I claimed that several of our growth drivers would begin to contribute by the beginning of 2013. We're on track for that to happen, and several growth drivers are already beginning to move the needle in the fourth quarter. In the following commentary, my primary focus will be on those growth drivers that are expected to contribute significant revenue growth during 2013.

Revenue in the industrial and infrastructure market represented approximately 57% of third quarter revenue, an 11% decrease from the second quarter. While most product lines in our general-purpose product portfolios saw a slight-to-moderate decreases due to macro-economic conditions, we saw several positive developments in our I&I top 10 growth drivers.

In cloud infrastructure, our Zilker Labs digital power controllers continued to accumulate design wins both in controller and module configurations. During the third quarter, sales of Zilker Labs' digital controllers increased almost 30%, as customer shipments continued to accelerate. We're now sampling our new third-generation digital controller, which delivers transient response far better than any other digital controller. This new controller will be released to production in the second half of 2013 in both controller and module configurations.

We previously talked about a $15 million per year digital module design win at a major infrastructure customer, and that program is on track for a production ramp in Q4. In fact, orders are already booked in the backlog for that program. In addition, we continue to expand our family of digital power modules and released 3 additional modules to production in September.

In the dense power conversion arena, we're sampling our new ISL8225, a dual output module capable of delivering 100 watts of power from a 17-millimeter square PCB footprint. No other module today even comes close to that level of power density. We already have numerous customers that are anxious to ramp production with this module by the end of this year.

A couple of major hand-held power tool makers are designing in Intersil products for both battery charging and motor drive. Our lead customer in this new market is expected to drive several million dollars of sales in 2013 and is expected to grow further as other design wins go to production.

Security surveillance products continue to accumulate design wins because of our investment in SAM-expanding products, diversifying our business away from the price-challenged video coder market. We recently started delivering customers complete digital video recorder reference designs, including software development kits with Intersil's supplying every IC in the DVR except for memory. This drives the average DVR dollar content from around $4 today to approximately $40, obviously, creating huge potential for revenue growth in 2013 and beyond. In the 2.5 years since we acquired Techwell, this product line has been transformed from a business entirely dependent on video decoders to one where we can supply nearly every piece of silicon in the DVR.

Looking at the automotive market, we expect that in December, the National Transportation Safety Board will make a decision regarding the implementation of the Kids Transportation Safety Act. Once this issue has been resolved, we expect to see increased demand for our automotive LCD drivers for rear camera applications. In addition, the Pico projector product line has secured its first design win from a major auto manufacturer for heads-up display.

We expect continued softness in nearly all product lines and territories in the industrial and infrastructure market as the fourth quarter progresses. Consequently, we expect sales into the I&I market to be flat to slightly down in the fourth quarter.

Now let's look at the personal computing market. Revenue in the PC market represented 22% of third quarter revenue and decreased 17% sequentially from the prior quarter. The PC market was surprisingly weak during the third quarter, with forecast eroding as the quarter progressed. We believe this was due to a combination of 3 factors: a weak worldwide economy, competition from tablets and pent-up demand for Windows 8, since most ODMs want to enter the holiday season with the latest hardware and operating system.

But something more significant is happening here. I believe we're also seeing the beginning of the end for the traditional notebook computer. The spectrum of products from smartphones to tablets to Ultrabooks is the future of portable computing, and the traditional notebook will continue to decline. We share Intel's view on the dominant position that Ultrabooks will take in the notebook space in the coming years. A couple of years from now, anyone carrying a full-sized notebook computer will look like a dinosaur.

Because of this shift, we're investing heavily in new power management chipset for Ultrabooks. But at the same time, we're maintaining our leadership, market share and VCORE power for traditional notebooks. Unfortunately, that market leadership position did not translate into sales growth in the third quarter for the reasons mentioned earlier. Both notebook and desktop demand were lower, and the product mix was approximately 78% notebook and 22% desktop.

Design activity on the next-generation Haswell notebook and Ultrabook platforms remains strong. We're confident that we're maintaining a somewhat smaller, yet leading market share in the Ivy Bridge platform. We're also promoting an integrated power management chipset for the Haswell Ultrabook platform that drives a higher dollar content than an Ivy Bridge in previous notebook platforms. We believe our design ins will enter into production in early 2013, when Intel's Haswell platform is planned to begin production. Looking at the fourth quarter, we expect PC sales to continue declining due to worldwide economic headwinds and uncertainty about how much sales will be accelerated with the release of Windows 8.

Now let's look at the consumer market. Revenue in the consumer market represented approximately 21% of third quarter revenue and increased 20% from the second quarter. I'll start with gaming, which we're including in the handheld device's top 10 growth driver. Our tethered gaming business provided strong revenue growth in a seasonally strongest quarter. During the quarter, we landed a couple of new laser diode driver design wins that will result in significant sales beginning in the middle of next year. We're already supporting prototype builds for one of these customers, and we forecast these wins will add approximately $25 million per year of additional gaming revenue, beginning in the middle of 2013.

During last quarter's conference call, we discussed the ISL9110 buck-boost regulator design wins for accessory products related to a major smartphone watch. We said repeatedly that our emphasis on the handheld devices category will provide the nearest term evidence that our strategy was beginning to deliver.

Chip Works just released a tear down report showing its regulator inside Apple's new Lightning to 30-pin adapter. The ramp of that and other design wins is translating into revenue, and we shipped roughly $4 million of this product in the third quarter. This buck-boost regulator is also gaining traction with other customers and has now gained a win with a major tablet provider. Other design wins in the tablet space include LCD back light design wins, with 2 additional major suppliers in the tablet market.

Also, in the handheld devices category, we're pleased to report that we're on track with the industry-first all-in-one display IC. We discussed this device at our Analyst Day in May, and we're on schedule to deliver first samples during Q4, just as we said. This level of integration has not been achieved any other supplier. And numerous OEM and LCD panel customers are anxiously awaiting samples. We expect this new product to be designed into many tablets and Ultrabooks in 2013 with revenue beginning by the end of next year.

In optical sensors, we began to fill in the revenue hole created by a major smartphone customer earlier this year. We now have numerous new customers ramping smartphones and tablets incorporating our ambient Light and Proximity Sensors. We're also on track to sample our new long-range proximity sensor in this quarter. Many customers feel this unique, new sensor will allow them to embed innovative new features into future handheld and PC products.

Active cables is becoming a very exciting category, with the growth in Thunderbolt-enabled products. We've already received first production orders for our 40-nanometer Thunderbolt chipset, and we continue to sample to most major cable manufacturers. We expect to ship over 100,000 chipsets in Q4, and this is just the very beginning of what we're confident will become a major revenue driver in 2013.

And finally, I'd like to address Pico projectors. During the third quarter, we signed a partnership agreement with Microvision to develop Pico projectors designed specifically for handheld devices. We believe that within 2 years, major smartphone, tablet and Ultrabook makers will be shipping products that embed HD Pico projectors, and Intersil will be capable of supplying all of the silicon surrounding the projector light engine. And as previously mentioned, later this quarter, we will be shipping first prototypes of a heads-up display Pico projector system for a major automotive customer.

Looking ahead to the fourth quarter, we expect sales into the consumer market to be down slightly based on gaming seasonally ramping down, but somewhat offset by contributions from other growth drivers.

Now let's turn to our outlook for the fourth quarter. As mentioned during my introduction, demand was soft in the third quarter, and the PC market grew weaker as the quarter progressed. The quarterly book-to-bill ratio ended at slightly less than one. However, inventories throughout the channel remain at reasonably low levels, and any uptick in demand will click the result in growing short lead time orders.

Because of the continued softness, we are forecasting fourth quarter revenue to be in the range of $135 million to $141 million. Gross margin is expected to be flat to slightly down. On a GAAP basis, we expect fourth quarter earnings per share to be approximately minus $0.09. We expect non-GAAP earnings per share to be approximately $0.06.

This has been a frustrating quarter for both Intersil and our investors, with concerns over the macro economy, the PC market and even Intersil's dividend. It's going to continue being a bumpy ride for those investors that are shortsighted in gambling at where stocks will be during the next quarter. Fortunately, our sights are set a bit further out. We are passionate about building a great and enduring company that will provide outstanding return to our investors, but accomplishing this goal has required a complete transformation of our business, and executing such a transformation during these economic conditions is not for the faint of heart.

We've been tirelessly working on this transformation, focusing on our top 10 growth drivers, and we're just beginning to see the results of these investments. Based on my earlier commentary, you should now understand how several of these growth divers will create significant growth in 2013, decoupling Intersil from the stagnant semiconductor market.

Right now, investors have the unique opportunity to invest in Intersil at a ridiculously low valuation and earn a 7% dividend yield, while they watch our top 10 growth drivers begin to deliver. But they won't need to wait much longer since nearly all of our expected growth in 2013 is based on design wins that have already been secured.

With that, I would now like to open the call to questions for either Jonathan or me. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is coming from the line of Ross Seymore from Deutsche Bank.

Ross Seymore - Deutsche Bank AG, Research Division

Two questions. The first one, on the cash side of the equation. Can you talk about -- in the fourth quarter, on the tax -- GAAP tax of $10 million. One, is that all cash? And then generally speaking, how do you prioritize CapEx going up? Lowering cost is great, but at time when cash is tight, how do you prioritize using CapEx -- dollars for CapEx versus keeping cash flow enough to cover the dividend?

Jonathan A. Kennedy

Sure, Ross. It's on the GAAP tax now, if you look at the rules on accounting for income taxes, that is not a cash tax item. We have tax attributes that we will use to cover our taxes for the next couple of quarters, so that's a no on the cash. In terms of investing, I mean, we're trying to operate a business over the long-term. We have some investments we need to make in our facility in Palm Bay to bring it up to speed to lower cost over long term, but then also ensure a supply of our products that we make there. While cash flow may be tight relative to the dividend, our cash balance and absolute cash resources are far from tight. Intersil is generally a cash-flow-positive enterprise, and we expect that to be over the long term. So we don't generally move around large projects that have long-term effects quarter-to-quarter.

David B. Bell

Yes. Ross, let me just add to what Jonathan said. Clearly, we do expect to derive some gross margin benefits from the facility enhancements in Palm Bay, Florida. But as he alluded to, that's not the primary reason. Many of our products are designed into industrial products, where we need to supply those products for decades. And when you're reliant on foundries, often times you can't guarantee that you're going to be able to procure some of those products over that long run. So that is one of the key reasons that we're adding some capability in Palm Bay, so that when we're dealing with customers that aren't necessarily consumer or PC customers, we have the longevity to continue supplying those products for decades.

Jonathan A. Kennedy

And the other thing, Ross, in the cash. Some of you are aware, we have a unused credit line of $175 million, so when you tack that on to the cash we already have on hand, there's just not a near-term scenario where cash is tight.

Ross Seymore - Deutsche Bank AG, Research Division

Great. And I guess as my follow-up question, shifting gears to the revenue side. It was great to see in this last quarter and then in your guide that some of the top 10 drivers are taking hold, specifically to the ISL9110. You mentioned that you have a design win in the tablet as well. I guess, can you just talk, Dave, about is that design win with the same customer that the smartphone design win is with? And if you can just walk us through at how you think the next few quarters will be impacted by these new top 10 drivers folding into the mix?

David B. Bell

Well, you probably have figured out who one of the big companies is already. In fact, I mentioned them by name, so I'm not going to give you any more details about that. But let me give you a little bit of color nevertheless, Ross, on that. The 9110, I think, is just one example of a new part that is clearly best in class and meets the needs of a broad range of handheld customers, customers designing smartphones, tablets and eventually, even Ultrabooks. So as a result, obviously, I pointed to one design win in an Apple adapter, but many other large competitors of Apple are also embracing this part, not just for adapters but designing into their base smartphones and tablets as well. So I think that part is going to see some really nice growth in the coming year. It's not just based on a -- the Apple design win, but on other products as well. But I think even more importantly, Ross, I think it's just indicative of the kind of products we're investing in now. That happens to be a very low level of integration. It's a single buck-boost regulator, but the performance of that product is the reason that we're getting those design ins. And future more integrated products, we expect are going to be equally differentiated in the marketplace, and allow us to continue gaining share with customers like Apple and others.

Operator

Your next question is coming from the line of Craig Ellis from Caris & Company.

Craig A. Ellis - Caris & Company, Inc., Research Division

Just following up on Ross' question, Dave, can you identify what percent of total revenues the top 10 drivers currently comprise? And as we look ahead and think about more of your messaging really focusing on the top 10 drivers, do you plan to specify with your quarterly releases the amounts of revenue that the top 10 would produce?

David B. Bell

Well, in answer your first question, we don't have a precise number there, but the revenues that we have today basically break in 2 categories. We have ones that are covered by the top 10 growth drivers, and then we have all other. And the other are for the most part, the horizontal marketplace, tens of thousands of customers. I would say at this point, we're probably a little bit more than 50% in our top 10 growth drivers, but I would expect that percentage to grow as our top 10 growth drivers really get traction.

Craig A. Ellis - Caris & Company, Inc., Research Division

Okay. And then second question, if the model's working right, and sometimes it does and sometimes it doesn't, it looks like the guidance implies that PC revenues would be back to about fourth quarter 2008 levels. How much of that is just an inventory dynamic that's taking place, with inventory being reduced in the supply chain? And how much of it is really, maybe more aligned with your view that there's an evolution in the PC marketplace and there's going to be bifurcation with the uptake of Ultrabooks, with traditional notebooks probably falling victim to tablets and smartphones?

David B. Bell

Well, I'm not going to try and be evasive here. It may sound evasive but I think it's a bunch of different things, Craig, that are entering in there. Clearly, one of them right now is inventories being reduced so I think that the parts we are shipping are even below an already low consumption rate. We've also narrowed our product focus a little bit in recent years as we focus more on the real high performance sockets, in VCORE and battery charging, and walked away from some of the system power and peripheral power sockets which are really commoditized. But on top of that, you've got potential delays through Windows 8, you got tablet competition. And I think over time, I do expect the PC market to bounce back, by the way, because I think we do have an inventory correction going on, explaining part of what's happening here, but over time, as I said in my prepared remarks, I think you'll continue to see tablets and eventually, as we get into 2013, with the true Ultrabook products, those are really going to eat away at the traditional notebook market. So as I said there, I think we're very well positioned to take advantage of that trend, and we plan to have products that can cover that whole spectrum, from smartphones to tablets to Ultrabooks, and there's a lot of similarities between those different product types as the conventional full-sized notebook just continues to erode.

Craig A. Ellis - Caris & Company, Inc., Research Division

So do you think you'll be growing off of fourth quarter levels as you work to the year, next year, Dave? Or is there a transition period that we're entering into before the business starts to grow again?

David B. Bell

Well what's old Yogi bear quote? "Predictions are difficult to make, especially about the future." We're only giving you guidance for Q4 and that's tough enough as you might imagine. That said, yes, I do expect that we're going to see PC bounce back to some degree. I can't give you any kind of specifics there, but I do believe that we're in an unusually depressed time right now, economically, and from an inventory standpoint, perhaps a little bit from Windows 8 thrown in there as well. So yes, I don't think that the overall PC market stays quite as low as it is, but beyond that, I can't give you any specifics.

Operator

Your next question is from the line of Rick Shafer, Oppenheimer and Company.

Jason Rechel - Oppenheimer & Co. Inc., Research Division

It's Jason Rechel calling in for Rick. I guess just first, to kind of continue down the PC path here, you guys talked about the investments that you're making for PC power management, in Ultrabook, with Haswell next year. And it just feels like there's a lot of people out there, Intel included, kind of talking about reducing the wattage in the core and the need for power management, the need for VCORE as we kind of get into Haswell. So I'm just wondering, if you guys could kind of talk about your strategy to navigate that? And what your confidence level is in those investments that you're making in PC power management?

David B. Bell

Well, Jason, I think it really plays to our strengths, because we have a great process technology and an enormous treasure trove of intellectual property. We're already leveraging that, and making some small PMIC's that are aimed at the handheld market. We can't tell you much specifics about those, but that's some of the stuff that we think is going to drive growth in 2013. So I think we've got the talent to do that stuff. We're power supply experts. We've got the process technology to do it. And we've got an enormous treasure trove of intellectual property of these building blocks that are tried and tested already. So I think that becomes more valuable because if you start looking what a true Ultrabook is -- by the way you can go down to Best Buy or Fry's or whatever and you can find products that are called Ultrabooks today, but by the truest definition of what Intel is talking about, they really are not Ultrabooks. Because when we're talking about the kind of Ultrabooks that I think start emerging in the middle of 2013, they really start looking like tablets with keyboards. By that I mean, you're getting 12, 14 hour run times, you've got instant on operation, you've got standby battery life where you can leave your Ultrabook off for a month, come back in standby and it still turns on. So it's a dramatically different level of power and power efficiency that needs to be performed here. And that's where I think we have the ability not to use discrete decks and power stages anymore that are required in full-sized notebooks, but we get to bring all of the power devices on chip, that gives us a huge advantage. So we're pretty excited about this. Today, there really are no true Ultrabooks in the sense that Intel's talking about, but I think you're going to see those emerge in the middle of next year, we're going to be prepared, we're going to be designing a lot of those products and confident and I think that once those emerged, it's just going to quickly take over the notebook market, and like I said, a couple years from now, I think if you're carrying a full-size notebook, you're going to look like your pretty out of touch.

Jason Rechel - Oppenheimer & Co. Inc., Research Division

Okay. That's helpful. And then you kind of talked about VCORE not translating into growth for you guys in the third quarter. And you had done a good job earlier this year kind of articulating your share on Sandy Bridge and then your share on Ivy Bridge. And are we still correcting, kind of assuming that your share normalized closer to 60% on Ivy Bridge? And if that's true, could you kind of help us think about how to think about share as we get into Haswell next year?

David B. Bell

Well, you're right. We had a fairly high share on Sandy Bridge. We think probably around 70%. On Ivy Bridge, I think we're probably closer to the 50% to 60% range, although it's really hard to be precise about it at this point. Really too early to tell on Haswell. I think we're going to have -- we've already been getting some design winds there and -- but there's a lot more to be decided, so too early to count our chickens on Haswell.

Operator

Your next question is coming from the line of JoAnne Feeney from Longbow Research.

JoAnne Feeney - Longbow Research LLC

Let's talking about the computing topic, and this is on the issue of share and the nature of what we experienced in the third quarter, it just look like you saw more of the decline in revenues than say, Intel did and some of the other PC-related players. So I'm wondering how much of the business is going through inventory reduction? Or are you starting to see some players from Asia, from lower cost providers, are we starting to see more commoditization in that -- in our area of VCORE than we have in the past? And perhaps that's pressing on prices as well?

David B. Bell

Sure. Well, it's kind of interesting every conference call seems to have its own character and clearly this one is focused on, PC as It's looks like. Maybe not surprisingly. But I think that there is a few things going on here. You compare us to Intel, well, keep in mind, I think servers are exhibiting a lot more stability than the PC market and a lot of what is driving growth for Intel appears to be the server business. So that's a little bit different picture. We don't have nearly as much processors or -- of our products going into the server business right now. So I think that's one difference. The other difference, I think, too, is that when you look at processors versus power management products, I think there tends to be a lot less inventory held on to very expensive processors, and I think probably it's a lot smoother delivery of those products. Whereas with other components like power management ICs, I think you probably see a lot more fluctuation just based on inventory going up and down. So not surprisingly, I think we see a lot more fluctuation for that reason. There's also things, like you mentioned earlier about, I believe some suppliers may be kind of trying to keep their finished goods inventory and their whip down, so that they can builds products on Windows 8, so forth. And I think that as I mentioned earlier, we do have a little bit of share loss going from Ivy Bridge or from Sandy Bridge to Ivy Bridge so that could be a little bit of the picture, but of course not a huge one.

JoAnne Feeney - Longbow Research LLC

Let's get of computers and over to industrial. And one of the things I'm wondering if you're seeing a decline in some of your legacy products when you are seeing some commoditization and is that decline in the legacy products occurring ahead of your wins that you know you have in place, and once those wins start to ramp do you remain comfortable with your cash flow situation that you have enough to support an expansion of working capital to support those new programs over the next few quarters?

David B. Bell

Sure. Well, I think in the industrial market, we've seen some of the bellwethers in that market in the semiconductor industry guiding down similar to what we are. So I don't think it's really a market share shift. And in fact, when we come out with new products for the industrial market that we think are really killer products, it's just painstakingly slow to gain share because most of these Industrial Products have design and lifetimes that can be measured in decades. So it's very, very difficult to steal market share in the industrial space, even when you have a better product. It's also very, very slow moving when you have erosion in market share in industrial. So I'm fairly confident we're not seeing much of that going on. I think we're just seeing an overall slowdown in the industrial market. And again, if you look at some of the other semiconductor companies that have a broad-base in industrial, you're seeing very similar decline forecasted for Q4. When you look at our major distributors, we're seeing book-to-bill ratios less than 0.9 there as well, and they are pretty good bellwether for the industrial market as well. Now as far as our ability to ramp with some of these vertical products, I have no concern or whatsoever. We have supplied very high-volume products in the past, the PC market for instance, the notebook market is one that consumes hundreds of millions of units per year. Smartphones are capable of consuming even more, but the die size just tend to be much smaller. So from a capability standpoint, no concern either at the wafer level or at the back-end level. And in terms of additional capital needed to do that, because we're asset light, there really is not any significant additional capital that needs to be expended there. Probably the only things we would need to do, JoAnn, we'd be purchasing some additional back-end test equipment.

JoAnne Feeney - Longbow Research LLC

And then just a quick follow-on, in terms of the cash on the balance sheet, and again, the ramp of these programs and working capital, what's the minimum level of cash that you feel like you need to have on the balance sheet going forward?

Jonathan A. Kennedy

Yes. I mean in terms of -- it's a question once in a while. I think operationally, we can operate with $25 million, $30 million worth of cash on the balance sheet, that will be kind of lower and practically, we would have more than that, probably something in the $150 million range in terms of cash in the balance sheet. But keep in mind, JoAnn, with the Intersil, I think we had, even in 2009, one of the worst years we had, we still had positive cash flow after the dividend. What we're looking at here is a cycle. That's a cycle that pulls down cash flow and we're in that today. We still have plenty of cash in the balance sheet. We still have liquidity, like I said, we have $175 million credit line, that's got a five-year life to it. So we aren't looking at this as if there's a cash issue, certainly not restrictions on funding normal operations even if we had to pick up the working capital. Inventory is actually one of the highest points, relatively speaking, we usually don't go above $100 million in inventory and we ended this quarter to about $10 million less than that. So we aren't looking at this as there's a cash issue. Most of our cash is on shore and we have operations that typically generates cash. And for those of you that model out there, look at it this way, even at a GAAP breakeven, when you add back the GAAP taxes, you add back depreciation, you have add back in the amortization and stock comp, which I think everybody does that in their model, you get enough cash flow to the pay the dividend even at the levels we're talking about in Q4.

David B. Bell

So you add up the total cash resources again, it's just a nonissue, JoAnn. As Jonathan mentioned earlier, $175 million undrawn on our credit line and $322 million in cash. We've got almost $0.5 billion in cash resources at the company. There should be no concern whatsoever about the company having sufficient cash to grow its operations or whatever we need cash for.

Operator

[Operator Instructions] Our next question is coming from the line of Tore Svanberg with Stifel, Nicolaus.

Evan Wang - Stifel, Nicolaus & Co., Inc., Research Division

This is Evan Wang calling in for Tore Svanberg. When you talked about your tablet opportunities there, could you, up to now, only a couple of players have been -- have had significant market share, does your incremental revenue depend on a broader participation from other tablet OEMs?

David B. Bell

Well, the simple answer is yes. As we expand our business in handheld products, and tablets would be included there along with smartphones for instance, we plan to both expand our portfolio in terms of the types of products we offer and we plan to expand our customer base with those products. Today, if you look right now, we have a fairly small dollar amount that are going into tablets and smartphones, but that's beginning to change. There's a little bit of discussion earlier on about the ISL9110, our Buck-Boost Regulator that was in a tear down report that just came out, that is just one example of a product that is now starting to get traction at a number of major manufacturers of smartphones and tablets. But there are others, there are other products we've alluded to. We have some products in the PMIC category that we are developing, we can't give you a lot of details on that at this point. We have products like our all-in-one display product that we did refer to at our Analyst Day back in May 8. And as I mentioned earlier in my prepared remarks, we are planning to sample that product before the end of Q4, just as we said back in May. We've got backlight parts that are in development, many of them released already and starting to get designed in. In fact I referred to one of those as well in my prepared remarks. We've got battery charging products. We've got light sensor products, proximity sensor products. So there is many, many different areas where we are expanding our portfolio. And at the same time, as these big customers find out the differentiation of those products, they're designing them in. So I think that there's enormous potential. Now we may be more conservative than some of our competitors in naming names and naming products and so forth, I think that's our nature. I did mention Apple by name only because this Chip Works tear down report came along, but rest assured, there are many other design wins very similar to that we expect to turn into revenue in 2013.

Evan Wang - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Great. And my follow-up question is about your content in the new tablet as you look down at the line and when you are at where you like to be, what would be the, say, the composition of your ICs in such a tablet, would it be dominated by power management or will it still be sensors or what kind of mix would you [indiscernible]?

David B. Bell

Well, I would say broadly, it will probably be mostly power management. In power management, I guess you might also throw some things like our all-in-one display product. But that's a combination power programmable gamma buffers level shifters. So that's really a hybrid product so maybe you could put that either place. But there's also sensors, too. We are gaining traction right now with a number of smartphone makers with our new 3-in-1 light sensor product. It's a light sensor, proximity sensor and IR LED in one package. We have some new RGB products out there for measuring color. We also talked about our long-range proximity sensor product, and that's something that again, we said that we are going to be sampling by the end of this year. And that is something that a lot of big customers are very interested in. That's a new product that, frankly, has no match. There's nothing like it out there the market place today. So I think that it will be primarily power, but clearly, it's not limited to power with these sensor products.

Operator

Your next question is coming from the line of Terence Whalen from Citi.

Terence R. Whalen - Citigroup Inc, Research Division

Two questions, one on PC and the other on handset. On PC, what sort of decision matrix are you looking at in terms of what -- under what circumstances would you actually begin to consider vastly a different approach toward the PC business, potentially to begin exiting PC like others, like Edimax and Linear have done. What needs to happen in that market to get to the point where you actually might consider an alternative approach to the PC business?

David B. Bell

Well, Terence, I think we think broadly about all kinds of strategic options. But right now, we've clearly laid out our strategy, we talked about that at our Analyst Day back in May 8. PC is one of our top 10 growth drivers, and we expect it to remain that way. That said, I think that we're going to see a very big transformation in the PC business. As I talked about earlier, I think we're going to see the gradual death of the traditional notebook, being replaced by Ultrabooks. I think that creates huge opportunities for us. One of the great things about it, too, is that unlike the current Notebook PC market where there is very little flexibility to innovate because all the architectures are so identical right now, in the Ultrabook market, there is a lot more opportunity to differentiate and come up with unique solutions there. Some are going to be x86 based, some are going to be ARM based, there's going to be different operating systems. So I am very excited about the opportunity to leverage our expertise that's been developed in the PC market but take that into Ultrabooks. We also talked about servers as well, and we're leveraging some of the technology that we developed in the desktop PC market, we're now applying that to the server market, and eventually, utilizing our Zilker Labs digital technology to go after server products as well. So there is no question that the PC market as it is today is a frustrating market, but we were very clear at our Analyst Day about the fact that it remains an essential part of our strategy. And I think in the coming years, it's going to be a much more attractive area to be in as we start leveraging some of our technology in both Ultrabooks and in servers.

Terence R. Whalen - Citigroup Inc, Research Division

Okay. Dave, my follow-up question is on handset. I believe at the Analyst Day you showed a slide indicating handset revenue might improve from about the $25 million level this year toward $100 million next year. Can you tell us whether you feel like you're on track for that $100 million bogey for '13? And more qualitatively, can you describe how internally you're reallocating resources so that you are able to capitalize on some of the strengths that you have in the handset power management arena?

David B. Bell

Well, the first question, are we on track to do $100 million in handsets next year? I believe, the answer is yes. Again, it's very difficult to predict much of anything with accuracy in this environment. But when you look at the opportunities that we have in power management that are already being designed in, again I apologize I am not going to tell you specific customers and products, but we have a number of design wins there. We've got things in the LED backlighting area. We've got things in the ambient light and proximity sensing area, in the LCD area as well. So do I believe we could have that end up being $100 million in handsets next year? Absolutely. So I feel pretty comfortable about that. Your second part of your question about allocating resources, that's something that we agonize over all the time. In fact, our top 10 growth drivers is something that we carefully selected and have focused resources on those top 10, and in order to do that, we had to make the tough decision to stop doing some things. As Steve Jobs once said, "The hard decisions are not what to do, but what not to do." And when we have finite resources and OpEx limits, every day, we are talking about where do we place our investments to maximize the return.

Operator

Your next question is coming from the line of John Pitzer from Credit Suisse.

John W. Pitzer - Crédit Suisse AG, Research Division

I guess, first, on the near-term, I just want to get a better understanding of how the linearity played out in the September quarter. I think you said in your prepared remarks that the month of September was the worst, and yet your guide for December just assumes turns are being flat, so do you think we've seen kind of a bottom in the linearity and the December quarter gets better each month? Can you just help me, Dave, understand how you guys are kind of thinking about the next couple months relative to the guide?

David B. Bell

Well, it is really hard to predict, John. What we tend to see in a typical quarter is not perfect linearity. So it's kind of hard to predict. In fact, if you look at our book-to-bill ratio earlier in the quarter, it tends to look a little bit better than the book-to-bill ratio later on, and that's due to linearity or nonlinearity both in shipments and in bookings. So we know what a typical quarter might look like. Unfortunately, I don't think I've seen a typical quarter in quite some time. So kind of hard to make much of any prediction there. Jonathan, I don't know if you want to add onto that.

Jonathan A. Kennedy

Yes. John, we're not in any sort of supply constraints so -- especially in the PC space where customers are not booking very far out, and to go into the third quarter bookings, in order to see the kind of a negative linearity with this kind of PC booking, which we've never really saw but we never saw a lot of heavy bookings coming on, or turns business in the PC. So we ended up basically shipping what was booked earlier on and not really taking any turns. There are other pieces of business too that can be back-end loaded that would offset that, but going into the fourth quarter, turns being about the same as they were in the third quarter, it seems reasonable given the low supply constraints and the low demand that's out there today.

John W. Pitzer - Crédit Suisse AG, Research Division

And then, Dave, as my follow-on, I'll preface it by saying, I clearly from this side of the phone, not in position to appreciate what you guys have been going through over the last couple of years trying to change the strategic thrust and revenue growth of the company, and clearly, there's been a lot of talk on this call about the weakness in the PC market, but when I go back to kind of peak quarters by end markets, back in 2010, and look at where you are today, it actually surprised me that most of the buckets of revenue you talked about are down about the same, that infrastructure and industrial and consumer, from their peak levels in 2010 are down as much as PCs, and I guess I'm just trying to get a better understanding of when you look at that dynamic, how much of that was business you were walking away from and will never come back to because of margin profile? How much of that do you think is cyclical? And I guess, at what point, given the 10 growth initiatives do you think you're in a position to either start growing faster than the industry or kind of faster than normal seasonal?

David B. Bell

Well, I guess there are a couple of question intertwined there, but I think there are a number of product families, frankly, John, that have been dying away. And some of those are just things that nothing could be done about. Certainly, the PC business were the big, big driver if you go back say, 4 or 5 years ago, the composition of that business has changed quite a bit, and it's much more competitive now. We had DSL line driver business, that is a small fraction of where it was, a lot of that is just ASP erosion with pricing being less than 1/3 of what it was. We had secure military business that has been replaced by other technology. We had red laser diode drivers going into DVD writers, that business has been integrated and commoditized in Japan. So there's a bunch of stuff. We even had a linear battery chargers and cell phones that was a big business 5 years ago, and frankly, it just wasn't replaced well with switch mode chargers. So, yes, can find a lot of those things in different markets, different stories for each one of those. But I think one of the real fundamental changes that's happening here is that whereas Intersil was developing primarily single function products, very simple single function products back 4 or 5 years ago, and many of them, frankly, are now leading-edge products, what you're seeing the investment in now are system level products for the most part. I mentioned an example of that where for a digital video recorder, for security surveillance applications, we're now in a position where we can supply every piece of silicon in that DVR, along with a software development kit. The only exception being the memory which of course we have no interest in supplying. When you look at Pico projectors, likewise, every piece of silicon surrounding a Pico projector. When you look at Thunderbolt, we supply every piece of silicon in there with the exception of the small memory chip again. So the kinds of solutions that we're developing now are vastly different, and they've taken a long time, these are big complex developments. So to -- probably the most important part of your question is when do we actually start seeing some of the returns on that stuff? And the answer to the that is the same one that I gave back in May 8, and that is right around the beginning of 2013, we think you're going to start seeing some of these top 10 growth drivers delivering. You saw some evidence of that with one part we talked about earlier, the ISO9110, that's just the tip of the iceberg. I said we're going to ship over 100,000, or approximately 100,000 units in Thunderbolt at this quarter. We're starting to ramp on our dense power modules beginning this quarter. So I think you're just beginning to see that. Right now, it's not evident because we're in a serious downturn. But I think as we start getting into 2013, you're going to start seeing these growth drivers allow us to decouple ourselves from just going up and down in the waves of the economic cycles.

John W. Pitzer - Crédit Suisse AG, Research Division

Maybe just a follow-on, quickly -- I mean, if you look back over multiple years, 5 to 10 years, you've had a remarkably stable gross margin profile, mid 55 to high 50-type range, but the revenue growth through the cycle really has been not there and I guess my question to you is, is there a point in time where you think about maybe structurally dropping the gross margin profile of business you go after to really drive that revenue growth? And is that, longer-term, a better return for the investors to drive that revenue growth with a lower gross margin and try to get enough margin, cash flow story growth reaccelerating?

David B. Bell

Well, I don't believe so. I don't think there's one magic number for gross margin. But what I do believe is that there is a range, which is probably optimal for driving EPS growth. If you're too high in gross margin you can't participate in many high-growth markets. If you're too low in gross market, sure, you can participate in all those high-growth markets but you just don't make much money for all your effort. So I think somewhere in the mid to high 50% gross margin range, in my opinion, is the right place to be, to maximize EPS return. We have high-margin products that contribute lots of products -- or profit. And we can participate in high-growth markets. Now right now, everybody's gross margins are down a little bit due to the economic conditions but I, again, expect when our revenues recover, that we're going to be back up near our target model of being around 57% gross margin, not that there is a magic number again, but I think that's the right ballpark to be in. But simply to pursue growing revenue and sacrifice gross margins, I don't believe is the best business strategy to maximize EPS growth.

Operator

The next question is coming from the line of Steve McPhee [ph] from Raymond James.

Unknown Analyst

Just quickly, on your discussion on Thunderbolt, you mentioned 100,000 units, I know you guys have been working on trying to get formal approval or whatever the right phrasing is for that. And so it sounds like -- I just want to confirm if you actually have that formal approval and then can you talk a little bit about the near-term opportunity in terms of how many cable providers can you potentially get on? And are you on what I assume is the largest guy I think is a Foxconn, can you just talk about that? That would be great.

David B. Bell

Okay. Well, I'm going to quickly run out of my knowledge here on the details of the approval process, but what I can tell you is that the approval process is an amazingly complicated process right now. And one where at these kind of data rates, even the equipment and the methods used to measure the characteristics of the cable are debated daily. So I do not believe that we actually have formal approval nor does anyone at this point right now. I think that we're in the best position to obtain that when some of these specification measurement and spec details are nailed down. But right now, I think those are still being debated. That said, the market is continuing to proceed without the final spec and those details is being nailed down. You're seeing Thunderbolt ports being put on most of Apple's new products, I think you'll see at CES, you're going to see an abundance of Thunderbolt parts, certainly, on Ultrabook products but also a lot of other peripherals as well. So I don't think that's really slowing us down. We believe that there is a very small number of companies, probably 3, us included, that are right now developing Thunderbolt chipsets. And as best as we can tell, we believe we're in a technology leadership position. So as I mentioned in my prepared remarks, we are dealing with most of the leading cable makers, I'm not going to mention any of them by name, but suffice it to say that the guys that are out there making Thunderbolt cables today and have plans to start shipping Thunderbolt cables, I believe we're engaged with all of those guys.

Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division

Okay. Great. And just as for my follow-up, as you mentioned, at the very least, Apple Computing is shipping with Thunderbolt on and some of the other guys. But if you look at, say, the iPhone, I believe and the new iPad that's using Lightning. Now my understanding is that, and looking at that from analysis on Lightning, that it may be possible to also put Thunderbolt functionality onto that Lightning port. And so I think you're part on Lightning is more of a power management solution. Could you potentially, in the future, put the Thunderbolt transceiver technology on in addition to the power management you have?

David B. Bell

Well, this is just complete speculation but I believe as time goes on, you're going to see Thunderbolt being used with smaller and smaller products. Today, it's on Ultrabook's and full-size notebooks. I think that eventually, it's going to be on tablets. And further down the road, a little bit more, I think that it probably is something that will be usable with smartphone products as well. Whether they actually eventually put a Thunderbolt connector on a smartphone or have some sort of an adapter would be up in the air. So it's just me speculating here, by the way Steve, but I think that you're going to see it become more and more ubiquitous and move from notebooks to tablets and eventually to smartphones.

Operator

At this time, we have no further questions. I would like to turn the call back over to Mr. David Bell for any closing remarks.

David B. Bell

Well, thank you for joining us today for Intersil's third quarter Earnings Conference Call.

Despite the softness in the semiconductor market right now, I hope that each of you is as excited as we are about the upcoming growth that's about to result from our top 10 growth drivers. Intersil is executing a major transformation that focuses most of our resources on high-growth markets. Our new products are increasingly highly integrated, system-level solutions that are dramatically different than the mostly single-function products that drove Intersil's revenue in past years. This is a long process and difficult to execute, especially under the present economic conditions, but we remain intensely focused on executing the key programs that we're confident will drive growth in 2013.

We look forward to updating many of you on our progress at our presentation at the Credit Suisse Tech Conference in Scottsdale, Arizona on November 28. Thank you, and I wish you all a good evening.

Operator

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.

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