NXP Semiconductors (NXPI) 7 Feb 192018 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 NXP Semiconductors Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to hand the call over to Mr. of President Vice Palmer, Investor Relations. Jeff

begin. may You

Clemmer, Welcome Thank Semiconductors NXP With Peter on is Kelly, everyone. President; Sievers, XXXX you, and good me Rick today call Amanda, our to the CEO; fourth and call. Kurt NXP's the earnings morning NXP's quarter CFO. full-year and

results section replay copy for call available being uncertainties statements NXP's end XXXX. and our sale our under our undertakes new limited are for statements. expectations site company materially and include press not from first include, operate, financial at any corporate This it statements publicly to which is that NXP our management's the products, be will reminded but regarding release, Relations differ risks cause call the specific forward-looking On macroeconomic nxp.com. current site. to, of from impact that you've If and markets on existing today, forward-looking of can obtained no in recorded Web the Web results or we the a update earnings to and be not could be for at Investor will of expectations. we quarter and that involve the found risks revise These uncertainties obligation our Please

a forward-looking on our statements, our full disclosure press For please refer release. to

the our of measures site on NXP financial Form and Web G, Regulation most to available to restructuring, related quarter purchase which furnished press charges non-GAAP accounting, make be X-K to does primarily NXP's the release, certain in other Relations consider earnings be financial directly non-GAAP to driven discrete section. price exclude NXP's be measures comparable will compensation, the Pursuant costs, has will impact core to to today, that reference by during on provided we of call directly management in SEC the are underlying Investor Additionally, performance. our measures, which impairment, not that reconciliations GAAP the events and stock-based fourth merger-related operating

business you Before we reporting January insight begin in from we historical end call would information like The the the Xst we will call Rick. post relative Web change current today, in our the to drivers over operate. remind the into to to believe shifted now an available market operating revenue of the And We the I which every have an historical Investor our time end model, markets enhance over view like that beginning which to turn from approach. financial segment and site market this is quarter. Relations we to I would our

market and welcome Jeff, major and of was the everyone I around then at quarter specifics On Thanks, financial three looking themes: market which XXXX, our call. conference full-year cover we would performance, call, our our to fourth the performance. business. like our increase the in to trends flattish an Overall, operate, X% view weaker billion, communication today's growth decline environment digital end offset our revenue XXXX, relating and infrastructure of in industrial The year-on-year. trends drivers full-year mobile, a to of by the our markets with automotive strong a in in $X.X following and other networking end the were

i.MX of applications and was full-year, auto cluster details ADAS X% display growth for processors radar applications. billion, Highlights revenue the in solutions Turning both processing $X.XX double-digit include to used and of the year-on-year. up transceivers growth the automotive of our

$X.XX other single-digit automatic including billion, year-on-year, products MCUs. braking of strong just and growth X% revenue, For revenue under safety for as the more up in overall the were and ADAS widely deployed automotive IoT general become mandated. high features is expectation and growth full-year, and Industrial continued XX% was purpose

portfolio, by of applications. growth in the and XX,XXX-plus and up base driven were customer industrial ARM partners our across power high-teens, IoT the optimized distribution products portfolio, MCU through served our our XX-bit the breadth Within of

second-half of also with XXXX. to announced sales last transaction processor RT products up of our In single-digits the total mobile we for year. to family year-on-year, the Mobile mid billion, crossover acceleration design was mobile wins on see in continue flat moving be $X.XX We attach transactions, down essentially continue more rates focused was increases revenue declines of in in and offset mobile $X.XX infrastructure digital adding year-on-year, by than with future down during the new and solutions. wallets other including from into XG phone the trials cases, billion, revenue Communication access X% transit of market, the XXXX, continued networking. used early and

views the would like offer environment. we demand to on QX, review current we our Before

was on believe call, communicated third best. we As cloudy we quarter environment our at the demand

suppliers. we the in to began China the into -- China industrial the accelerating to automotive, part see markets. progressed respect deterioration QX, clearly China impacting industrial and we automotive see tier later weakening With and market X and As domestic global demand in in OEMs of from demand we the

European We saw continues China point submarket emissions by market, demand. by customers, testing added is the increased created headwinds testing to trade reluctance causing have see place to In not we extremely is distribution this bottlenecks weak ongoing we clearing end of believe the QX. serviced specific did quarter our to to or the create In their an due the automotive last to from it is broad set industrial the market, difficult to the we uncertainty demands end of market partners, Within due orders the broad one which to reduced bottlenecks dispute. before that customers the demand. WLTP

EU levels has In addition, market. in uncertainties exit to the auto the how of additional lack progress would of the U.K. created the

quarter, not chain the India backlog in leading supply see second-half XXXX. launch do of we due or cancellations. the of unusual market, in absorption of the by worse premium primarily trends weaker the anticipate trends after the historical continued fourth than strong market program smartphone seasonal and the into overheated Overall, indicators outright Reliance to we shipments mobile including the Within an cancellations in

the X.X with our good depth distribution channel consistently continues slowdown. be long-term the Our at of in we forecast line Unfortunately, targets. insights unique any in not to have channel duration inventory do months shape with our to

QX rates revenue However, and just have second-half will third-party the forecast order economist will markets. the you that most continuing would higher for the than to under to range believe a with X%, XXXX of our At be semiconductor QX would global first-half GDP. be than indicate stronger

I'd to Now of specifics Total was QX. year-over-year. of like X% billion, a to turn decline the $X.X revenue

From modestly year-on-year were $XXX was weaker as an revenue industrial with mobile second-half double-digits. for our China, million up was XXXX. the revenue due results IoT comparison perspective, previously i.MX up and mentioned. Our revenue $X.XX year-on-year in-market And X% than billion the both quarter. with QX automotive better to guidance million, reliance down primarily ramp reflecting the of tough down primarily the trends up in year-on-year, in And of with $XXX X% X% distribution ADAS a

products market. However, demand seasonally premium for mobile transaction we in smartphone the strong sequential see did

Finally, communications by RF and networking. infrastructure in million, a up digital with were strong $XXX other double-digit X% revenue offset year-on-year up declines power very solutions

like to I a Peter the call pass of performance. Now, for the review our financial

and Rick, today's morning you, call. Thank on everyone good to

as year-end quarter. better Rick want financial then the the all move QX the of revenue revenue was the our results and fourth than during modestly midpoint In the already the I'll guidance highlights. the As we financial covered review full-year it's overall of for drivers summary, to trends quarter, performance I'll has the and

investments full-year, revenue Non-GAAP basis of revenue. profit as the the was operating stepped X% up XX.X% flat essentially or billion XX.X% course $X.XX over was we gross year-on-year billion $X.X year-on-year. the of For on billion income Non-GAAP R&D was year. of of $X.XX or revenue, dollar

cash which of dividends While to our we we and termination out. a expenses $X.XX diluted cash fee included $X.XX we year account and flow, reduced combination billion a our the owners buybacks have and return one-time free SG&A period same share share versus by managed the We XX% from in that Qualcomm generated billion ago.

$XX total margin X% From expense down Stock-based was a XXX $XX than million. reduction Interest quarter. $XXX the total million, quarter, was above down the fourth down gross profit million, $XX points better mentioned cash a which items. million $X margin $X.X was modestly of basis compensation, in guidance. previously taxes million our revenue from our non-GAAP non-controlling profit of year-on-year gross million of included were XX.X% $XXX operations were operating down and guidance. year-on-year $XX midpoint details profit non-GAAP non-GAAP million. -- million expense This year-on-year. perspective, year-on-year interest was for the reported on was of $XX Total and not down $XX billion operating non-GAAP and non-GAAP generated $X.X operating non-GAAP midpoint earnings a We the XX in expenses the reflecting of basis points XX.X% million and is were billion Focusing ongoing was operating third

our in changes the to turn to and like I now I'd Now cash debt.

$X total with an a billion bonds, quarter exited debt $X and of loan repaid was end approximately issued facility. at and billion the debt investment-grade billion the $X.XX of X.X first net sequentially XX the $X.XX billion. adjusted we fourth as quarter was billion We bridge $X billion. billion, Our trailing simultaneously was of EBITDA Cash month of our X.XX increase

quarter debt at times non-GAAP of ratio the XX was net Our interest was to our EBITDA and X.XX coverage the times. trailing XX end of adjusted fourth months

excellent balance sheet is is liquidity and Our strong. very

paid as of cash for October, $XX During X month shareholders and bought million to million returned in we $XXX approximately million the dividends. we $XXX million

this payment tax dividend and does million go P&L. through of deemed reminder paid we quarter not the a $XXX as During the

metrics, days Turning though of of capital increase days receivable X were on inventory and quarter. XXX days prior days basis. payable were versus of absolute XX of the Days sequentially XX slightly working days and days down sequentially decrease increase to days two six dollar was and an

cash operations the days, conversion CapEx free prior flow of versus was XX million resulting Cash in improvement an quarter. days $XXX flow million million. $XXX XXX of our together from Taken was cash net six was our cycle

environment a this XX% the first anticipate our the same billion. currently a a we for the reflecting revenue we to sequentially decline quarter, approximately the Turning XX% XX% of or now in ago demand and range sequentially range discussed. At to $X.XX decline year expectations midpoint weaker of is X% period will of have total versus

X, a an revenue reporting market beginning end shift As total a we January approach. on made reminder towards our

Industrial to in will on down our the At expected definitions. basis. mobile down we guidance on is We follow midpoint the in have be mid-single-digit business. in range. upper trends low be about the the sequential Automotive and be following posted single-digit communication the Web end to the market range. the finally, be site the And anticipate range. infrastructure historic XX% to is data expected our today the in and down in to double-digit low expected a range down IoT is expected And percentage is

about interest would are about about be million like $XX or minus million related We share or and XXX plus million be we our points. to to Non-controlling cash $X an be quarter. our expense of basis or about about plus partners expect venture non-GAAP be a down and expenses update operations $X Operating to minus points. $XX million number the plus will to XX be XX% XX together so non-GAAP because XX.X% reduce to reflecting at We to million usual additional joint million gross ongoing about about margin loadings expected last debt and below be I interest basis are program. anticipate operating tax taken on minus we $XXX repurchase estimate provide see our we to margin or SSMC.

so count XXX we XXXX an As million. first of XX-BX million $XXX of of X.X for purposes October cost shares XXXX we quarter X that we program. shares. in back previously for bought have XX, repurchased million million additional cost We at an about suggest use mentioned the share under modeling XXX at million shares of Since average December in a

address. have I Finally, like to comments, several I'd housekeeping

in QX Given would in reporting all and is our to but manufacturing revenue services our will as a you we standard new the from products the forward not recommend data -- we related such which include you which what going posted, market divestment of agreements, end I about review beginning example, assets an to zero, in quarter creates, revenue years the now product of as see QX the growth. was obviously, first basis guidance is revenue our our 'XX points $XX million. ago. of will And XXX And of couple headwind NSA

As economists to Rick global most GDP out, in X% predict continue pointed XXXX. growing

million. are growth And annually reason market business still Interest anticipated compound same margins believe be three $XXX exit years, to quarter would So, X% grow point this but debt. to to and in would XXXX see Clearly, can't over the we compound not our period. next that X% no about to this that X% are gross challenged QX, well over grow XXXX plan the we for to new costs our reflecting at at X% reflects fourth XX%. the

rate CapEx to to for to related We turn cash tax should I'd and ongoing the the operations to about Kurt. believe of for our I, be for operator of expect and X% continue XXXX like in questions now to range we to Rick it course for X%. and X%, XXXX back be

Thank line John first of Suisse. you. Pitzer Credit is [Operator Our from Instructions] the question of

open. Your line is

on as good is by demand? distribution. QX for going Thanks me I think own more the inventory When question guide the do importantly that can morning any letting what's March guys. kind through ask you go meaningful on under-shipping guess Rick, And my you difference bit you both represents the expected end I question. talk just look first geo? for little Yes, is but with in that sheet, balance inventory trends rev you a your there guess quarter, on at about your of

we John, think, a customer it business, when to case in bulk as look we've our quite In shipments do of inventory, talked the production. distribution not they're only so of actually the actually vendor-managed it's partners. have if through actually is about, refined most go of I we yet, market China, of at as using you on our automotive in China so China that's Well, for the the it ship outside the automotive that

or to minus our inventory that two-and-a-half talked X.X around plus distribution we at target half. about, As months is months, total a our at is and maintain

the clearly POS with associate with have would anticipation reduced would the we we be upon dependent believe to the that be of our for guidance So, QX what inventories that. go

just quagmire. okay. where basically U.S. I as think okay, we're is of it's in Europe environment it kind but unusual a China a QX, the is not in locked down, very was maybe robust quite is as in

the and partners' going to what's placing customers not happen inventory trade of because are Our distribution taking in orders about uncertainty not their war.

we long and orders war place this by as so to take And the inventory. trade on to reluctance continue be uncertainty see there'll them

if Now, GDP to or the is that then you just growth believe can't be going under, clearly that full-year's continue. X%

the that's of be we'll rebound right said, a in orders the significant second-half we the year. indicate then QX if higher will our case now see So, QX. that as would And than

in still the QX, reduced going see we have shipments improved those environment, would shipments the I we'll with QX. So, an but that say inventory we're associated in through and distribution reduced

lot to And the to difficult I I on internal is dollar that. our quarter, days. I John, QX tends And confidence to we'll our grow think said do I putting organization inventory, certainly not last time, want of pressure a on a get it do on a inventory XX a to because be to we're but to it we're to lot of Clearly going there. a have basis. low quarter allow get down

year outperforming your the 'XX, reflect That's in of throughout calendar view, you my the helpful. of are the overall you that, QX that in, you in keeping or auto kind see autos the clear midpoint there just trend then calendar company-specific overall And does and Does on the 'XX? guidance. up as And are in kicking how just trends the follow-up, QX, market company-specific drivers stuff helping market? that throughout outperform year is with

year, a just think in second, I'll ramp in and specifically to so the ramp see And than believe Well, will But automotive of to for we've specifically it's it on through more let that that under the year. we the that automotive will ADAS, market. just revenue on been through of the we'll but automotive. -- comment I continue rest in the QX, full-year company-specific to think that continue Kurt the shipping, XX% I 'XX, radar, continue robust

don't the on Yes, that environment, as strong Rick, below disturbing see we we order current earlier is so ADAS it's XX% I had the just the the of being -- story. that content -- absolutely, total And this trend. now cost revenue a

So fully the XX% of we in environment. to of the say, current that intact is rate XX% clearly part the, that also growth business see

are closer to SAAR, business, the While obviously, much environment. tied other then the the suffering which is parts QX from more of

which we, content process Rick a which goes speaking outgrow one it about clearly was perspective digital the of business earlier, from and is applications our Another does clusters. i.MX which into

of So solutions, there digital-to-cluster is leading a where strong continued strong of we adoption i.MX trend applications a have very processes. with our solution

So, driven, those market weaker two, environment. would through a say I content clearly are also

you. Thank

you. Thank

Rasgon Bernstein from Stacy comes question next Research. Our of of the line

open. is line Your

guys. questions. guide. Hi, my to for gross the I taking ask wanted Thanks about margin

give year. And required of drive margin QX the the that? to that You're holding QX hit end us can some for year level drivers from the is revenue your What you trajectory there? get XX% the through exiting of the idea gross to still the point

that sure, this. a Stacy. anticipated of questions we'd get I Yes, around lot obviously

'XX, QX get from XX.X% there's I think from things. go if you so To QX to 'XX several to XX% flat revenue.

First of our points. got all, right performance about a Mix an in input has point XX little annual got basis about identified, XXX get basis have got headwind. efficiency price benefit bit which in a XX I've reductions, and about which we're factory probably Operationally, we've that basis us in to gives so now, we of basis about so points XXX planning XX%, about in of that's we've points points identified. basis XX the pricing locked what to

time, of can actually. honest, but to efficiencies, or I particular, XX%. increase offset get off the see. to don't said be last better And we to if improve right feeling I volume need that well have do see But I'm that And I of we revenue a to on we've factory I'd better, 'XX to think pretty pretty goodies it think in last QX potential some always like one things comfortable could do the Now, about And it potential other that still. there's I got it the identified a now. I'll

you. thank it, Got

I about For been buying back to more amounts incremental ask know wanted my you've lately. follow-up, buybacks. I

to the said hold large I repurchase going remains? on Is how it seen much authorization to meeting of and needed happen amount. think soon, meeting? shareholder Why the to a you shareholder buyback a like we you further had not that have authorize existing that

to it. yes, Netherlands reason for XX% about authorization -- of Well, buy thing we're But can not stock. And The technical I which stock. in still an your XX% million there's to think up to yet well, close -- a least, the back asked getting can you about billion meeting still kind or so. of their I of buyback people we've $X.X where current typically our basically don't is of buyback XX that it's is shares, I prices at one get

I probably soon as currently go is meeting an our so on the of the got I But I $X.X capacity use up topped don't billion, additional right XX% to approval to that, the annual we've request simple May the and June, So or still a as I'll that. if need either now. meeting, it in have and record but buy all general way, answer next is is,

Thank Got much. it. you so

Thank you.

you. Thank

is William Stein of line Our the SunTrust. next question from of

is Your now open. line

my Great. question. Thanks for taking

said you 'XX, the one Day either buyback, one plan? the Just is billion that through call on full-year from QX quick think spending 'XX more the $X said at approximately Peter, last anticipated or the still Analyst you the that you've I

cash years Yes, we excess to shareholders. we all said would for many we said this return and

roughly the but we So our yes we now yes, math dividend obviously, include number. do that and

quarter. to like Rick, Okay. And I to guess I'd last turn then, XG.

be in expressed to demand. us the that accelerate 'XX? and of customer's there market skepticism the in some market owing you. would quarter I that about as through think on progress Can you expectation near-term view expressed some change update your in sort that an that and you Thank in we might your approach design strength

still Yes, right XG so now. thanks, Will is so, I think pretty fluid

last bit of were because they for major going A we like of deployment earnings that mile the actually little one architecture think to our on carriers the on last delay primetime. I call. about was talked didn't their some the announced the with they CPE believe U.S. ready

So that, the until our view XG by in not not I confirmed associated architecture we 'XX. of anticipate that's think that. kind driven cost reasonable We really FPGA going a there's availability with of late

CPE not or late 'XX. would ramp we that, until huge last see So XG mile a of for

XG in fulfill more increasing I look a to solid The see mobility. the in think that'll the infrastructure the and we're but side in to you when be demand significant at the tale last be a get we very position able infrastructure ongoing kind so really think requirements, really support be to we a of deployment a the are solid when is investments demand, cost-effective the it to meantime, bit little year preparation before that we a in very architecture ramp. all see struggling pieces that to mile of for do two for beginning frankly ramp of we will later be see able now the to that

business In amps. that you're that and the last to? your Is talking MIMO comment referring you're massive about power

what actually the that's for MIMO deployment XG we the stations for prepared orders as beginning receive see today the as for for deployment we see massive to get base the rollout Yes, to be today. well infrastructure is

Thank you.

sorry. Will, Thanks.

Operator, $XX shares before for $XX million, back million the go will so that's it? billion, some to need have to I do. an the But I Should left something. $X.X before it's Stacy, question. question. take an to the issue correct not billion we capacity shareholders. $X.X have only I we think next need buyback don't I Just and next again, thing to I easy could

you. Thank

next Vivek Bank America line Merrill Arya from the of of Our of Lynch. question comes

Your line open. is

part exposed Thanks better to So a perhaps a that's perhaps do and think NXP versus this somewhat of resolution see downturn you for question. if taking great also China is more seeing and more are from my there peers? you high-level your that. perspective, recovery you Rick, of is

to are I and was week know stabilize pretty I which I us think, limited. you data it's hoping better. you mentioned markets on being starting early is and give QX some and some around color optimism main could

China think, represents to So relative to see, end for that if area. we the kind or the side I be market of China view business you guess significant what portion on of our industrial from at point gray that distribution see somewhat I a hold is continuing look China we

think do order is what we confidence QX right us see larger actually the I for the access coming us somewhat I QX QX. with that the but contributor, for we also I be customers reset last China gives that will gives is hard customers about few think the to confidence weeks obviously really the in think specifically in the than in or novelty that talked by automotive there in of our was hardship China. our a number a industrial but

As taking and to say call, I Then very give be It confident orders able really way to second-half the belief out long the of to on ability to the healthy. we continues the increased seen so think all year. relative to see to work that we'll have last down this that, as we're on be is world's that but your the weeks confidence world's GDP few place GDP. we've relatively then our that the gets what over that the

close the better the you second-half going it's on to believe than then to will first-half. X%, XXXX believe clearly be we as long be that As of

China certainly the the is exposure our you or in in opaque western is to than the know more chain that I US. in think and and we what the complicating we seen Europe sense things slightly supply what shipping China

in going of we there, global like, all industrial get of we domestic, [indiscernible] chain moved do some it us where into some assembled shipped will to don't supply in world. it be shipped we over feels in it it the out, on you like comes for products we of So it the or but once what's devices about over terms know

Europe actually. even ends ship works some up Yes, end the to U.S. China. both of in it of in and the the ways It market

in some of have we China really don't which end shipments China, could shipments of the XXX% in outside could a of shipments to China. market that So into to outside up market be itself Both are tied down traceability end China. China

do shipping it's was why a XXXX it number? -- to Is exposure our say our exactly Jeff, is. what So that really hard that's have bit you XX…

Just at percent XX into odd China. some

XX, Yes, XX. high

No, XX%.

XX%. was It

XX%, XX% of I shipping terms XXXX. think in for XX% to

back it. follow on automotive And Got my up, for the business.

unit you phase characterize market would market? are full-year. higher So units in It a your where down going until traditional Do has X% environment it we How the And grew about in or let's was share growing mentioned X% the QX. industry say at situation obviously negative you automotive X%? automotive Management you mentioned you new and that the do a and the business better content grow that in Rick some that perspective in still help environment think your initiatives, of from enough areas. Systems Battle grow can they to Thank than radar environment? to other you. you Can

and capture of your me, question. let So let the try this is Kurt, me pieces let me

between we XXXX, forecasting X% So do firstly environment external somewhere minus for plus sources X%. and see the on

like some look big plus minus but are this particularly data which XXXX about rose actually a So X% HIS people at SAAR point, which also for negative talks X%. a more

SAAR was range. a at So be negative going to that however reported somewhere minus X%. we think in it's actually XXXX

did contributor for it but environment the theme so, out ideal talked way helping I that a that earlier pretty large that the mix applications in were as that about grow being ADAS the respect. we is independent also that in said the obviously cluster of think as also intact, story earlier. we XXXX did you So X% regard, play do we yes, grow And speaking content about in SAAR

to around help the growth us environment is we SAAR outgrow SAAR maybe do our zero a in growth continuously. in story unit So which 'XX, does the think content indeed that

looked I just to clarify also Hey, wrong like Vivek, Jeff. this is number. I'd at the

for two is apologies. ship range, China high Our XX%

Thanks much. very worries. no Okay,

you. Thank

next Our is Ross Deutsche from of the Seymore of Bank. question line

is line open. Your

that's if back guide you're first maybe revenue maybe guys, versus your go way. or Can the disty about the define? disty disty your Hi the the visibility to in different quarter down worse the really the you and is a that the to or is is side? markets industrial versus specifically of sequentially, segments market in just how any localized new given of XX% end what commentary talk want side And side the your that things OEM in in I OEM aggregate on differs to either China, side seeing side disty various

about chunk combined when X/Xs industrial, somewhere Ross, significant through the that area of marketing really of a significant and with distribution is channel served see of XX% the or talk that weakness automotive. channel clearly around the we the in Well, that that's is we

probably it's through automotive, our of business vendor somewhere the rest pulled into for it shipments a goes third case inventory. of the in So China. channel between total is from a The primarily managed and of fourth

have declines, QX. mean about we for in in We in the auto QX, we Europe that COX see seen I our talked in testing we QX QX that production a call for through and seen continued had decline results it

really that's see has I China. the to going know of you vice Brexit on moving clarification that So then really the and uncertainty the there think there's continues versa, do of and be as the weakness the of impact areas but a of U.K. of the lot industry so a is lack what's also Brexit concern happen auto that and Europe and with some to we to created parts well, key from

for and that's for automotive. the China distribution think your as in then for indeed in industrial I China Ross, versus well direct, clearly weakness both was itself question and Yes, channel us as expresses that disty

detail. a a the did question, the I us on side. with side OpEx lot job on for specifically over follow-up to helpful walking and your the want to switch Peter, full-year margins great you of margin operating gross through my expectations As the side of

trend revenue revenues spend plan investing you tightening any the as the far what's that given Are weaker more throughout time how OpEx Given last in directionally year? level, strategy might expected, for as are you of sort things the spoke? than from we down changes are your growth, your

can QX at We're guide. see are a our lid keeping you the moment. QX Well, things on actuals definitely

replacing we're to not So various managing all we're out out attrition trying taking any not travel, push away, expenses. programs, straight

we'd we want R&D and we our over kind run so to of basis revenue, you about of years normally X%. run the getting next XX% X.X% and into more going long-term to to On go forward see So little down XXXX, about of bit things back so round to ultimately revenue, R&D a like I SG&A so X percent XX% and about do. SG&A XXXX

we taking near-term say, cost. significantly that. actions We're people to levels adjusting Ross, are the It's our definitely relative important in control to to

As Peter but any said, we're replacing not programs clearly some really cases… and attrition stopping in are we not

we out strengthen so this the to improvement, low company use move work of organization. Performance eventually performers to the to actually

a our that of in think us -- you've QX, the that cost it that. clear OpEx I seen do indication and historically know and and think will all we So was levels QX I how has manage QX from we to

it, guys. Got thanks,

Thanks, Ross.

Thank you.

Cowen. Ramsay comes of next Matt of from the Our question line

line is open. Your

us you're there an to to about the you've the then I you see demand is can could very I networking guys. the one run talk smaller relative side and we is sort us sort guys update the did mentioned on you give manage very if sort two bit where much. models level. about you going and mix directionally now segments aggregate teens growing so guess an decline of of Thank the business, sort guess of XX the been rating of clear overall wanted trends in how strongly of how And business. about other you going of But Thanks ask maybe distribution calibrate flip of that digital of just to I forward? on you about business MCU that programs to that in on order the up high the big think were the I really decline, one

but on Yes and of don't about our biggest IoT industrial with the XX-bit specific we it's the it, business. ARM associated chunk talk the sure

from like gives our really of that our really that product so called visual a area processing the Family, new benefits seeing a at us looking audio. specific applications growth. that that detection, so error And really year about of announced on RT ago family takes is of our The we the cost design to wins strong which a or one we're crossover micros the i.MX capability on down

really continue significant that that design and driving win. with to that's us factor for a accelerate in So see growth we

space, same versa outlook micros there's of of uniquely the a we're vice our that most not in for in XXXX and and participate in positive macros. with i.MX us in of positioned position puts really thing and competition kind lot that competitors the So where the a don't unique

So gives sweet really spot participate drive that to in it where of we're ability kind in the the us it.

it On was the and for There is opportunities some in last legacy finally digital the see of ramp growth to over $XXX so. networking PowerPC decline won we that not kind kind those we and past. as of or just over a as so million business wins as business year with stabilized, much has declined begin the to it's continuing XXXX stabilized business quarter design through

a see applications with we think in how growth level year the XXXX I are opportunities the in that there later some and more stable materialize. we've of for they we'll that got some there So of see

very Thanks much.

Thanks Matt.

Thank you.

of from is Barclays. of question Blayne next Our line Curtis the

Your line is open.

thanks for taking guys, question. Hey

you the So called just order obviously trends an growth. you to in won double-digit understand try there segments better two

it things surprise seems of pause year? it are there first-half just obviously above is the to wanted environment. understand that kind a the I like saying slower business we're take just you to any end of wanted beyond I boost headwind that but are Just people the may are your curious a of And and of kind big what's of what curious bit XXXX, kind was from XG, RF the segments understand little expectations for orders a then providing in just and are seeing overall are

the Yes, take automotive. let personal, RF me and comment business Kurt let on

from and near-term ramp frankly requirements the for here able are RF all on struggling being meet we're we infrastructure MIMO the basis XG customers. massive our So and demand to and seeing

a being environmental we and seeing versus in positive businesses. a are significant see we So issues that's that ramp contributor, overall contributor the other

So to going they can then position to originally have for feedback had about them build me near-term. very be with and then to we we done anticipated see Kurt product let from what and requirement auto. think And a let we're really massive customers actually in more able MIMO our the talk are positive unique our as we

the is to Yes, very really associated what SAAR I what it's differentiated auto the think content story between versus tightly in growth growth. is

or holding swinging anymore, share high a itself isn't segments quarter. are with the where So by more quarter growing we product application but obviously the those we SAAR penetration are

environment you call same WLTP time largely with the content So independent where I in before, ADAS the China of again could especially the at and this and the Europe this. mentioned is growth radar a headwind,

we And about mix number. growth under roughly of XX% which overall that another the XX%-ish our growth. the just ADAS, is rate. two the of are largest with benefiting total total which business SAAR XX% speaking And drives it's run that XX% in close our those of really strong think pretty So obviously content is associated the from where is

to of in late began automotive all where Yes, talk market channel actually in you to our about last COX QX a in Blayne, -- weakness weakness in mid Europe, kind basically of China time. in to probably worthwhile in the the the distribution It testing that that it's not case know, talked didn't until see partner. and in automotive, in the at as really of China quarter's weakness through in call we'd seen QX, about automotive served of was we we lot see really we some

we at that really materialize So to point… saw that weakness began

indeed. Kurt, is This

companies while was the production. that also our in one-one I kind hitting our that revenue. it But nor already, Tier early to that talked So a product, of with But many of the only like this car again, in we late relates November, we us. didn't relation about orders QX in December X saw late see which it is that think

Thank you.

Thank you, Blayne.

next the our Evercore of is line you, question C.J. from of Thank Muse ISI.

open. is line Your

on is Hey for C.J. [Ph] guys, Fresco Matt this

factors recent deadline? conversations recovery in or you you of giving So related to do are ahead order Chinese think the uptick, outside of GDP forecasts, of confidence tariff regarding year the any new and are second-half that this other there any customer that's

No, The things felt pretty do through would don't again, Europe, chunk primarily we And believe isolated full in, it we see even get about U.S. after down performing see from there like by year testing automotive. I tariffs. economy the customers demand you say work reasonable, We U.S. still is was okay. it's biggest of was somewhat but again, COX the and see we we how general none we'll that, comes In new demand Chinese quite that our is pockets, well. see with concern of the out of driven lot that. in is know. Once a the It really though the

we associated that the the effects of Brexit with then talked Some about. Brexit, and

the murky So as more what's of [indiscernible] in more the as in China, that's cloudy, case determining much happening far year. much

I on that the happen going trade current some to kind does issues discussed. out think confidence in depend it are resolution or of of what's being

that able GDP under as be close to in very And the the then China different then second-half believe you not has GDP to with resolution growth continue, just issues trade is world's the the if know, believe of there But is we we'll think then the probably be So so with were a to world's be see trade going you a be X%, going to so long accomplish to that a that. strong year. that year. And for going the to you X% that's factor. to

I then forecast there? additional item, And color just XXXX, housekeeping thanks. cash enough, deferred XXXX increased a as and follow-up, Fair some tax you incidental for could give a your think us

about Right, Qualcomm so and talking you tax for taxes are businesses the off, we the also the the sold on that transaction.

look to have actually You Excel. QX the at

through the were deal we'd long-winded were Dutch and spend we authorities tax to the because $XX negotiation negotiate went Qualcomm innovation the we in with million QX particular only a saying into we $XXX So box. able previously went that that and spent transaction, million quite

managed the we because we want guess I it into QX QX. to a reduce little to of to So bit, go that time, from slipped and

Qualcomm fact is we the that the move fee big really January. breakup just the from of on December early end payment the the So move to

lower math guided you we've and do amount a the and 'XX. QX flow I what on actual for is and item. actually XXXX The it's think, cash actually very specific if

So that's out separately. one we why that pulled

Operator, we will take the next caller, please.

the Craig of from comes line of with Morgan question next Stanley. Hettenbach The

is line open. Your

you. thank Yes,

approach kind get you're opportunity curious about existing you're in the how for of type customers to kind some from and versus more question side what given BMS? pipeline players feel of complete of on just the of a hearing of a of Kurt BMS feedback the you system Just taking just

actually electric pushed stronger has which really whole one sub is Craig. we Thanks, environment, Yes, increasingly cars. feel in because segment, the the

there in starts strong you if a pretty of the finally which design the be once car really timeliness of have cannot unfortunately on from time cars. which to firmly all car they you think depends about prominent into cars to the and 'XX, nice perspective pretty I you which to so revenue it's it in, on launched we really So we launches, 'XX my of is launches do will tell turn are couple it is a are XXs the track those on but win that drive millions is designed for out, tell company a short-term, and

capability. the solution On as talked the the yes, mail much more which play, strategic hitting earlier, we side, ASIL-D the absolutely is about as

from is things, whole it's between really continues I and which to settle capability say the play of and solution So competition. front-end want two the to solution that the analog apart ASIL-D the micros

soft follow-up the if passes, is overall right of in see near-term there alignment, And do wouldn't kind you you think on a Europe? any, to or up then just the rebound market because should once that catch of amount kind issue, it. now be WLTP on of Got will, you the

start again is to wave that but how environment very can detail one. careful overall this There in hearing of emissions. COX figure have the they how of they the go for because second to the the somehow hard plant, we I'm don't OEMs that -- a Craig, say, and that limits out is that with course also Really to so end related I'm there I type latest hearing test of with now WLTP I'm ahead another demand

say end one bit current the there say going not rebound this to I'm careful here is that QX, that at a to we is what in sure. can this strong before is QX the this, to a So happen not point there going is do is from of be I that -- if

you. thank Okay,

you. Thank

from Our next Lipacis is question Mark of Jefferies.

Your line open is

note in and dividend, a then, the for Rick that kind have taking question. and accounting about environment variance pricing as think for Peter through a of talked a a bips of when side. analog just Hi, marches repurchased? of just and And One Peter, statement mechanics companies on walked benign Rick; deem the of we go my this headwind the Peter thanks progress the shares one there's cash is through microcontroller for just XX under companies embedded flow I year, on for number pricing

but will of that, your and of Thank in appreciated? the was some I be color helping on like doesn't microcontroller you with companies thoughts with be benefiting other seem could analog to or have greatly be guys industry consolidation that share how any you. you kind that bigger on you us on if So picture the to so just thoughts yes, wondering a if what's seems going

Hi, cash and look you so flow, thing, goes the the if first table through on through not three. P&L it

the can of their paid behalf for at right on an tax of million, see on repurchase shareholders You $XXX flow. item shares the bottom cash cash

I on on market. margin price comments just annual that's, pretty the then, kind other the that's thing going reductions. gross And in not made of pricing, say the that's anything our on So, specific. just It's related on to

it's that, at the pricing we poor that environment think say say that us general would I Yes, I on don't is okay. all. would for

think with we said to annual Kurt? a down negotiations in I place with a but that those it under we And takes to we wins. think whittle I'm don't try through OEMs you with contractually, design that the if get the price reduction to significant changing more, have an try to it's we the and industrial built-in little we're the most that place a wrestling and that with associated there's try reduce you see honor and the and -- slightly I that get get trying contract arm slightly that's of that and go then takes environment you associated Tier-X, IoT, down, and they when anything to price

I see done a important also year. for there it's that in then note Yes, is that the in QX you of year element, the once reduction, ASP lot it's a and mean happens the to

I repeats prize it's actually what played time. annual all was this not But like And meaning are saying, we a of So let's the on think years. I past gave support average because it clearly the this, away tougher the it's year, it then that it's, contracts. bit Rick we those directionally

Thank That's you. helpful.

family has customer and on family depends so characteristics based the Yes, and the everything. product it product different really and it on

the hard very pricing to really draw any now. but right that conclusion it's problematic, I healthy wouldn't is So environment it's say

Great. you. Thank

question-and-answer Mr. session. the conference Thank that you. turn like And our over to I'd Palmer. concludes Jeff to

very you everyone. Thank Great. much,

to I Rick, pass if last over any make. we I'll has to go, call comments the like Before he'd think, he

confidence to GDP our the that last second-half we control. sign down on to costs QX for for thank to few the actions and see improved taking guess comes cost go ensure thing weeks focus than continue year, appropriate point we are can are us. being outlook then the important of will belief under a as that that to or that whether a of somewhat it's Yes, of we but the resolved, with out around return economist the under the think it projecting we forward. the with we encouraging sure trade in the that are we the our on really is remain be larger it that shareholder joining you deliver point orders I as cloudy financial to on that out improves that that, so I be will QX healthy we -- the not, environment. value growth we have again, issues X% to performance to and And But for just increased and over our most your

much support. your you thank We appreciate very it. for So

concludes everyone. Thank you This the call.

Ladies participation the in program. and today's does for conference. your you This conclude gentlemen, thank

a You may day. have disconnect. great Everyone, now