Brian Nugent - Finance and IR Manager Kishore Seendripu - CEO and President Adam Spice - CFO.

Ross Seymore - Deutsche Bank Gary Mobley - The Benchmark Company Anil Doradla - William Blair Tore Svanberg - Stifel Quinn Bolton - Needham & Company Jay Srivatsa - Chardan Capital Markets Alex Gauna - JMP Securities.

Good day, and welcome everyone to the MaxLinear Q1 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Brian Nugent. Please go ahead, sir..

Thank you, operator. Good afternoon, everyone, and thank you for joining us for today's conference call to discuss MaxLinear's First Quarter 2015 Financial Results. Today's call is being hosted by Dr. Kishore Seendripu, CEO; and Adam Spice, CFO.

During the course of this conference call, we will make projections or other statements regarding future conditions or events relating to our products and business.

Among these statements, we will provide information relating to our current expectations for second quarter 2015 revenue, including expectations for revenue trends in our cable, terrestrial, satellite and other target markets; gross profit percentage and operating expenses, the potential impacts of our pending acquisition of Entropic Communications and our current views regarding trends in our markets, including our current views of the potential for growth in our cable, terrestrial, satellite and infrastructure markets.

These statements are forward-looking statements within the meaning of Federal Securities Laws, and actual results may differ materially from results reflected in these forward-looking statements. We are subject to substantial risks and uncertainties that could adversely affect our future results.

Our business and future operating results could be adversely affected if our current target markets, including terrestrial, cable, satellite and infrastructure markets do not grow, or if we are not successful in expanding our target addressable markets through the acquisition of new products.

In addition, substantial competition in our industry, potential declines in average selling prices, risks related to our intellectual property protection and outstanding intellectual property litigation, integration risks associated with Entropic Communications and other acquisitions if any, and cyclicality in the semiconductor industry could adversely affect future operating results.

A more detailed discussion of these risk factors and other risk factors you should consider in evaluating MaxLinear and its prospects is included under the caption Risk Factors in our filings with the Securities and Exchange Commission, in particular, our most recently filed Form 10-K for the fiscal year ended December 31, 2014 and with respect to the pending acquisition of Entropic in the registration statement on Form F-4 and related proxy statements filed with the SEC in connection with the Special Meeting of stockholders that was held earlier today.

In addition, we expect to file soon our Form 10-Q for the first quarter of 2015 which will contain additional discussion of risks affecting MaxLinear’s business, including risks related to the acquisition of Entropic and integration of its business into that of MaxLinear.

These forward-looking statements are made as of today, and MaxLinear does not currently intend and has no obligation to update or revise any forward-looking statements. The first quarter 2015 earnings release is available on the Company’s website at maxlinear.com.

In addition, MaxLinear reports gross profit, income and loss from operations and net income and loss, and basic and diluted net income and loss per share in accordance with GAAP and, additionally, on a non-GAAP basis.

Our non-GAAP presentations exclude the effect of stock-based compensation expense and its related tax effects, accruals under our equity settled performance-based bonus plan, outstanding patent litigation matter with Cresta Tech, deferred merger proceeds, change in fair value of contingent considerations, severance charges, amortization of acquisition related intangibles and any non-recurring acquisition related expenses.

Management believes that this non-GAAP information is useful because it can enhances the understanding of the Company's ongoing economic performance and MaxLinear, therefore, uses non-GAAP reporting internally to evaluate and manage the Company's operations.

MaxLinear has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company internally analyzes its operating results. The full reconciliation of GAAP to non-GAAP financial data can be found in our earnings release issued earlier today.

The earnings release and reconciliation is available on our website, and we ask that you review them in conjunction with this call. And now, let me turn the call over to Dr. Kishore Seendripu, CEO of MaxLinear..

Thank you, Brian, and good afternoon, everyone. Thank you all for joining us today. Before jumping into the financial highlights, I would like to note that our revenue grew 9% both year-over-year and sequentially, it was above the high-end of our prior guidance.

These revenue strengths combined with the continued focus and controlling operating costs resulted in a strong quarter of operating cash flow generation of $3.8 million. Strong cable and satellite growth more than offset expected seasonal softness in our terrestrial set-top-box business.

We are particularly encouraged that a strong cable growth was not only driven by a pronounced shift in demand to higher-channel-count 24 channel DOCSIS 3.0 modems and gateways.

But it’s also due to notable strength across a range of cable video platforms that neared doubling of satellite revenues quarter-over-quarter combined with our expectations for the second quarter gives us confidence that our multi-year satellite investments across gateway and satellite outdoor unit platforms leave us well positioned to deliver meaningful returns for our shareholders.

We believe that our pending acquisition of Entropic Communications represents a strategic technology platform expansion that will solidify the MaxLinear as a true franchise player across and throughout the broadband ecosystem.

This acquisition will combine MaxLinear’s market-leading full spectrum capture receivers with Entropic’s pioneering MoCA connectivity and analog channel stacking solutions with the broadband markets.

We are also excited about the significant progress we have made recently in opening up large new addressable markets for our RF and analog mix signal technology platforms, primarily in the wireless and wired infrastructure markets.

In the first quarter, we aggressively augmented our recent Physpeed acquisition by expanding Physpeed’s product development roadmap.

We taped out solutions for the high speed interconnect datacenter metro and long-haul 100 gig and 400 gig data and telecommunications markets that we believe will uniquely enabled by the combination of our joint engineering capabilities.

We also announced some of the exciting new linear and limiting fiber amplifier and laser driver products at the recently held OFC Convention in Los Angeles.

Combined with our organic product development initiatives in wireless and cable infrastructure, we feel confident in our ability to execute on new profitable growth vectors which will further diversify our revenues across broadband cable, satellite, terrestrial, and new infrastructure markets.

Moving to the financial specifics, net revenue in the first quarter of 2015 was $35.4 million, up approximately 9% relative to both the fourth quarter of 2014, and the year ago quarter and above the high end of prior guidance. GAAP and non-GAAP gross margins in the first quarter 61.2% and 61.3% respectively.

This compares to GAAP and non-GAAP gross margins of 60.8% and 60.9% respectively in the fourth quarter of 2014 and GAAP and non-GAAP gross margin of 61.7% and 6.18% respectively in the year ago quarter.

GAAP net loss in the first quarter was $0.12 per share which compares to a loss of $0.06 per share in the prior quarter and a loss of $0.02 per share in the year ago quarter.

The GAAP net loss in the first quarter of 2015 was exacerbated by significant Entropic related deal expenses, as well as severance and related expenses connected with the closing of our Shanghai R&D center.

Our non-GAAP earnings per share in Q1 were $0.09 on diluted shares of $14 million compared to $0.05 per share in Q4, 2014 and $0.10 per share in Q1 last year. I will now discuss some current trends in our business. In the first quarter of 2015, cable contributed 66% of our total revenue versus 63% in the prior quarter.

Cable grew 14% sequentially due to strong growth across a range of video applications, as well as a beneficial trend in our cable data business towards higher channel count 2014 channel DOCSIS 3.0 modems and gateways.

Within this higher channel cable mix, the demand was overwhelmingly stronger for 24 channel solutions relative to 16 channels driven primarily by shipments of advanced near gigabit per second data rate cable systems to operators in North America.

We are also excited that ongoing data gateway shipments at Comcast and Time Warner and upcoming platforms in Liberty Global and Vodafone, Kabel Deutschland are based on 24 channel systems for which MaxLinear is in a leading position as a supplier.

Total terrestrial revenue with in which we currently include our satellite revenues was roughly flat sequentially. A near doubling of satellite revenues was offset by seasonal softness primarily in terrestrial set-top-box products and flatness in hybrid television tuners.

Underpinning our growth in satellite our production ramp to multiple satellite gateway platform at two major operators in North America and Europe. We are also excited to note that we are experiencing a gradual ramp to production quantities of our satellite digital outdoor unit products at two major North American operators.

While Adam will provide overall revenue guidance for Q2 2015 a bit later, based on our current bookings and backlog, we believe that satellite revenues are on pace to contribute 10% or more to overall revenue in the second quarter.

We also recently announced that MaxLinear has joined the SAT IP alliance as a founding member along with SES Astra and HISPASAT, Panasonic and NAGRA.

The purpose of the alliance is to drive to the adoption of SAT IP technology into satellite broadcast industry and into consumer markets such as television by providing an open platform for distributing linear satellite free-to-air and secured pay-TV contents to multiple devices via IP throughout the home.

We also announced that MaxLinear’s ISDB-T digital TV standard SOC has received the industry-leading LT immunity performance certification based on new requirements of Brazil set by Mackenzie Labs which is the approval body based in Sao Paulo, Brazil. LTE performance is critical for the ISDB-T digital TV reception standard in Brazil.

The key factor in government selection of a receiver that will qualify for a set-top-box subsidy program leaded to start at the end of 2015. This analog to digital TV transition in Brazil will be a new terrestrial set of growth driver for MaxLinear.

As mentioned earlier, the first quarter of 2015 was an exciting one for our high speed interconnect initiative as we started to leverage the foundational technology acquired through the Physpeed acquisition in Q4 of last year.

Combining Physpeed with MaxLinear’s world-class engineering execution resulted in several new product depots that should be in a position to generate incremental revenue later this year.

Specifically, we introduced the following of the OSP Convention in LA in March, we launched a new family of 56 gigabit per second linear TIA amplifiers for PAM-4 and DMT based 100 gigabit per second and 400 gigabit per second solutions for fiber optic datacenter metro and long-haul data network that cut in half the number of optical channels needed in optical receiver and transmission modules.

This reduces the power consumption size and cost of implementing 100 and 400 gigabit per second networks for operators. We also announced the new 56 gigabit per second limiting trans-impedance amplifier, the MxL9108, and two new 56 gigabit per second modulated drivers, the MxL9204 and MxL9205.

The ultrawide bandwidths of the TIA in drivers enabled non-return to zero signaling at 56 gigabit per second. We also announced that FiberHome, a leading telecom equipment provider for optical networks in China has selected MaxLinear’s Mxl920, 32 gigabit per second Quad-Lane Modulator Driver IC, but it’s a 100 gigabit per second telecom application.

In conclusion, we are pleased to have delivered strong revenue growth of 9% which exceeded our guidance and was driven by a continued strengthening in our cable revenues.

Based on our current bookings and backlog, we believe that our investment in satellite TV consisting of full spectrum capture receivers with satellite gateways and digital outdoor units, are poised to contribute meaningfully in 2015. We expect that satellite revenues will be 10% or more of our overall revenue in Q2 2015.

More significantly, we are making great progress towards executing on our twin strategic objectives of diversifying our technology footprint in existing broadband markets and expanding aggressively into larger infrastructure target at visible markets.

Our strategic acquisitions of Entropic and Physpeed in combination with our organic development initiatives in microwave backhaul and cable infrastructure have resulted in the doubling of our serviceable addressable markets or SAM to approximately $3 billion plus by 2018.

We will share more details on the Entropic business outlook within a couple of weeks following the close of acquisitions which we expect to happen soon. Also we look forward to sharing more information throughout the year regarding our efforts and the important milestones related to our infrastructure roadmap.

With that, let me turn the call over to Mr. Adam Spice, our Chief Financial Officer for a review of the financials and our forward guidance. .

Thank you, Kishore. I will first review our results, and then briefly discuss our outlook. In summary, our Q1 revenue was $35.4 million, above the high-end of our prior guidance.

As Kishore noted, cable was the primary growth driver in the quarter, up 14% sequentially due to beneficial mix exchange in favor of full spectrum capture 16 and 2014 channel count DOCSIS 3.0 modems and gateway solutions versus legacy 8 channel solutions.

Cable revenues also benefited from strong HD DTA and video server gateway demand, while terrestrial revenues were flat, primarily after continued strong ramp in satellite solutions, being offset by expected weakness in terrestrial set-top-box demand and flattish hybrid TV contribution. Now, moving to the rest of the income statement.

GAAP and non-GAAP gross margin for the first quarter were approximately 61.2% and 61.3% of revenue respectively versus our prior guidance of 61% to 62% for both GAAP and non-GAAP gross margins.

This compares to GAAP and non-GAAP gross margin of 60.8% and 60.9% respectively in the fourth quarter of 2014, and GAAP and non-GAAP gross margin of 61.7% and 61.8% respectively in the year ago quarter.

Our Q1 GAAP operating expenses were $26.2 million which includes $3.7 million of stock-based compensation, $2.5 million in acquisition transaction related expenses including professional fees for Entropic and restricted merger proceeds, amortization of purchased intangible assets, and the change in fair value of contingent consideration for our Physpeed acquisition.

We also incurred $700,000 of severance and other non-recurring charges related to the termination of employees related to our exit of research and development activities in Shanghai, China as we reallocated design efforts to more optimize existing MaxLinear locations.

We also recorded $700,000 for an accrual related to our performance-based equity bonus plans for 2015 and $600,000 of net professional fees related to the Cresta Technology’s patent litigation. Consistent with 2014, payouts under our 2015 performance bonus plan are expected to be settled in shares of MaxLinear stock.

Net of these items, non-GAAP OpEx was $17.9 million, lower than our prior guidance of $18.5 million and $400,000 higher than in Q4, 2014 and up approximately $1.7 million from the year ago quarter.

First quarter GAAP OpEx attributable to R&D was up approximately $600,000 quarter-on-quarter and $2.2 million year-on-year at $15.3 million, which included stock-based compensation of $2.3 million, $300,000 related to the 2015 stock-based bonus plans, $700,000 of severance charges related to activities in Shanghai, China, as well as $208,000 and $116,000 of Physpeed deferred merger proceeds compensation and amortization of purchased intangible assets respectively.

Excluding these items, first quarter non-GAAP R&D was up approximately $500,000 on a quarter-on-quarter basis to $11.6 million. Within this R&D spending, we experienced a nearly $400,000 step-up in prototyping expenses and $200,000 in higher payroll related expenses, partially offset by small declines in other expenses.

The first quarter GAAP OpEx attributable to SG&A was up approximately $1.3 million quarter-on-quarter and up $3.2 million from the year ago quarter to $10.9 million, which included $2.5 million of transaction related expenses related to the Physpeed and Entropic acquisitions, $1.3 million in stock-based compensation, $600,000 in net professional fees related to Cresta Technologies patent litigation, $300,000 in stock-based bonus plan accruals and a $200,000 credit from the change in fair value of contingent consideration related to the Physpeed acquisition.

Excluding these items, first quarter non-GAAP SG&A was down $100,000 on a quarter-on-quarter basis to $6.3 million.

At the end of the first quarter 2015, our headcount was 351 as compared to 379 at the end of the fourth quarter 2014 and 344 at the end of the first quarter 2014, which did add R&D headcount globally to staff growth initiatives and are able to derive operating leverage in R&D by appropriately balancing hiring across our R&D design centers in the US, India, China and Taiwan.

GAAP loss from operations was $4.6 million in Q1, compared to loss from operations of $4.5 million in the prior quarter and a loss of $800,000 in Q1 of last year. GAAP net loss per share in the first quarter was $0.12 on basic shares outstanding of $38 million.

This compares to GAAP net loss per share of $0.06 in the prior quarter and a net loss of $0.02 in Q1 of last year. Net of these items, non-GAAP earnings per share in Q1 were $0.09 on fully diluted shares of $40 million, compared to $0.05 per share in Q4, 2014 and $0.10 per share in Q1 of last year. Moving to the balance sheet and cash flow statement.

Our cash, cash equivalents and investments balance increased $1.9 million at the end of the quarter from Q4 of 2014, to approximately $81.3 million and a decrease of $7.4 million as compared to the $88.7 million in Q1 of last year.

Our cash flow from operations in the first quarter 2015 was $3.8 million, versus cash consumed of $5.8 million in the fourth quarter of 2014 and $4.1 million generated in the year ago quarter.

Our days sales outstanding for the first quarter was approximately 53 days or one day more than the previous quarter and approximately seven days less than in the year ago quarter. As a reminder, we only recognize revenue on a sell-through basis and as such, we are not subject to revenue fluctuations caused by changes in distributor inventory levels.

Our inventory turns were 4.6 in the first quarter, compared to 5.0 in the fourth quarter and 4.7 turns in the year ago quarter. The decrease in turns relative to fourth quarter resulted from our decision to build additional inventory in support of new product launches discussed earlier. That leads me to our guidance.

Excluding any contribution from Entropic, we expect revenue in the second quarter of 2015 to be in the range of $37 million to $38 million. Built into this range, we expect cable revenues to be roughly flat to slightly up sequentially, and terrestrial revenues to be up approximately 15%.

More specifically, within cable, we expect growth in data modems and gateways to be offset by a normalization of cable video revenues after a strong Q1. Within terrestrial, we expect growth to be concentrated in satellite gateway and outdoor units, partially offset by declines in terrestrial set-top-boxes and hybrid TVs.

We expect GAAP and non-GAAP gross profit percentage to be approximately 61% to 62% in the second quarter. Our gross profit percentage forecast could vary plus or minus 2% depending on product mix and other factors, in particular, the relative contribution of cable, terrestrial, and satellite applications.

We continue to fund strategic development programs targeted at delivering attractive top-line growth in 2015 and beyond with a particular focus on infrastructure initiatives and our goals of increasing the operating leverage in the business.

We expect Q2 2015 GAAP operating expenses to decline approximately $2 million relative to the Q1 2015 quarter to around $24.4 million with the largest reductions coming from the removal of severance costs tied mainly to our Shanghai operations and lower pre-closing Entropic deal-related expenses.

Partially offsetting these step-downs, we forecast an $800,000 step-up in prototyping and design tools expenses related to Q2 tape out activities and smaller increases in payroll related expenses that will reflect the full quarter effect of our incremental Q1 hires and the impact of our annual merit process.

We expect that Q2, 2015 non-GAAP operating expenses will increase sequentially to approximately $18.8 million with the increases driven by the previously referenced prototyping activities and payroll related items.

In closing, we are pleased to report Q1 revenues that were above our prior guidance and delivered a strong quarter of operating cash flow generation. In cable, we benefited not only from strong demand for cable video in Q1, but we are incrementally encouraged with the cable data market is migrating strongly to higher channel count solutions.

We are encouraged by our satellite order trends which give us confidence that we’ll be able to deliver strong returns on our multi-year satellite pay TV investments and remain optimistic about the investments we are currently making in infrastructure markets to expand our total addressable market.

And last but certainly not least, we look forward to the closing our pending acquisition of Entropic Communications and the enhanced platform relevancy and scale benefits that this acquisition can deliver and look forward to providing combined company guidance and outlook in the near future as appropriate. .

Before we go into the Q&A session, I would like to share some breaking news. I am pleased to announce that MaxLinear Entropic shareholder votes were concluded today and they are overwhelmingly supportive of the acquisition and therefore the acquisition is now formally closed. With that, we can now open the call to questions.

Operator?.

[Operator Instructions] We’ll take our first question from Ross Seymore of Deutsche Bank. .

Hi guys, congrats on the solid quarter and guide. I guess, the exciting news you just broke, Kishore, puts the ball right back in Adam’s court.

Adam, is today the appropriate time to give us an update on what the two companies look like combined?.

A nice try, Ross. No, we are not quite ready for that obviously. We need more than about two minutes to figure out that, how we want to point to guys. But, again, we are obviously, we are going to be in a position to give you guys a much better view of what the combined company looks like, a little bit more in the future.

So, stay tuned for that, but not today. .

Okay, then, probably a less exciting question to follow. So it sounds like you are going to have the satellite business, it roughly doubled again sequentially.

Can you talk a little bit about how that puts it on track for that $20 million number? Do you think you are ahead or behind? Is it more outdoor unit or the gateway side? And the cable side, the traditional side, that being flat, talk a little bit about how that’s staying flat versus the 14% rise in the first quarter if you could?.

So, I’ll take the first piece which is the satellite piece. So, on the satellite piece, actually it’s on – see that’s actually more than double, again quarter-on-quarter. So the strength is looking very, very good there. It really doesn’t change our overall view for the size of the opportunity for the year.

We’ve been kind of bounding it around between $15 million and $25 million of contribution for 2015. And we don’t see any reason to move that range at this point. I think, hopefully that addresses the question on satellite.

And again, I think we’ve also given a little bit of color in the past as far as we expected that most of the contribution or the majority of the contribution from satellite in 2015 was going to come from the gateway side and that has not changed.

So again, we are getting contribution from the outdoor unit and that will continue to build as we move through 2015. But the majority of the revenue contribution is going to come from the gateway which was experienced in earlier ramp.

Now, on the cable question, can you repeat that portion?.

Yes, just looking at it, it was much better than expected in the March quarter and you are guiding it flat to slightly up. Is there some inherent conservatism, because it was so much better than expected or basically, what are the puts and takes beyond what you said in your prepared comments on why it’s flat..

So, I think, hey Ross, this is Kishore. If you look at in the prepared comments, we are talking of cable being flattish to slightly up, the reason being primarily because there will be growth in the broadband side, but we expect the video part of the cable to be slightly down. So because we had a strong Q1 for video.

So, the cable is just another offsetting contribution within the broadband, strong between what the strengthening broadband situation and the cable versus a video revenue that would come down a little bit from a strong Q1. So, I think that’s I would characterize it. So the cable as a whole therefore is kind of flattish to slightly up. .

Yes, and I think a little bit more on that Ross, I think within cable video, we saw a significant strength in the quarter on the HD DTA side of the business, as you know, that’s probably the most volatile piece of the cable video business.

So are we being guarded that you can’t predict the HD DTA volumes as well as you can maybe other cable video platforms, I think that’s true. So there could perhaps is some conservancy built into our model because of that volatility we’ve experienced in the past in that sub-section of the cable video market. .

And also I want to take that in a view, if you look at one of our major customers, that is on earnings call, they do quite clearly say in their transcript that they are seeing the broadband demand remains very robust and as operators continue to rollout the latest devices, enabling consumers to leverage increasing that with speeds with Wi-Fi attach inside these boxes.

So therefore, the broadband demand that we continue to see strengthening in that consistent with one of our major OEMs. So we have no reason to be concerned about that part of it. But, the overall cable is flat because we are being conservative on the video side of it because little bit volatile. .

Then I guess just one potentially quick follow-up and then I’ll go away. Since you mentioned there as the M&A in the space, not you and Entropic, but some of your customers getting together, talk a little bit about how you see that happening and I guess, even two of your true end-market customers not getting together.

All of those moving pieces, what sort of impact do you think that has on MaxLinear?.

Okay, I think it’s too early to talk about it, but from our perspective, we have seen the effect of getting more certainty on the cable end-market customers basically, Comcast, Timer Warner, being a bit of a old pattern for forecast and revenues in the second half of last year and then we started to seeing that, they started ordering in more consistency in the – at the end of the year and the beginning of the quarter.

So I think that from our perspective, we don’t see any major impact with what’s going on right now.

It could actually turn out to be a net positive for us in a strange way because, the – when the board of those operators go to combine the video platform for the HD DTA was going to be unified under one umbrella and now we see that, I believe the Time Warner or the Comcast, the platforms are independent.

And we should see an uptick on the video and the HD DTA even though we are not clear as to when we will see a more clearly when that pick up is going to happen. So I think we feel it’s going to be a net positive for us on the cable side.

On the satellite side, the AT&T Direct TV merger and the – acquisitions of Sky Italia and Sky Deutschland, I think, we already taken the uncertainty of that acquisition in Europe and we took the hit in the second half of last year and now are seeing resumption of orders and much of the gateway revenues are what the doubling that we spoke about is driven by more clarity from the European side.

In the United States, there is a ramp started now. However it’s the early innings of the gateway ramp and we are hoping that when the two entities combined that the end-demand would actually increase because of rolling out new potentially new quad play services between the AT&T and direct TV merger.

So we don’t know that yet, but I think these are all positive vectors for us right now. .

Perfect. Thank you. .

Our next question comes from Gary Mobley of Benchmark..

Hi guys. Let me extend my congratulations as well. Your target Entropic reported results just over a week ago and if it not mistaken we saw their expected revenue out of Entropic operating – an operating margin on a non-GAAP basis maybe 200, 300 basis points above what you have included in your slide when you announce the acquisition.

And so I know you are not prepared to tell specifics with respect to Entropic’s Q2 sales trends.

But could you at least qualitatively say whether or not the acquisition at this point looking to be more accretive than you originally anticipated?.

Hi, Gary. It’s Adam. I think it’s too early to say that. I would say that the – what’s been comforting from going through the process between announce and close is that, we haven’t come across anything on the revenue or synergy side that has been required as the kind of reassess our models or we look at how we value the transaction.

If anything there has been some incrementally positive developments that have happened, I think we are incrementally positive about the synergy model that we’ve developed and we’ve gotten much better visibility into the platform opportunities that are going to generate the revenue that we were building into our model.

So, again, I think – I can’t talk about specifics as we’ll provide that guidance. I will say that, the one thing that we have to think about for Q2 when we give you the right guidance is, linearity of shipments, can we say right now, whether or not with the linearity for Entropic would be relative to the Q2.

We are not ready to speak to that quite yet, but overall, we are very, very positive about what we’ve seen and I think we are very bullish about the deal now having closed and that we can get involved and really kind of drive the integration and the roadmap and hove a much clear picture to provide to our customers and partners. .

All right, as an extension to that, based on what you know today, do you think Entropic’s Q2 sales will grow sequentially?.

Again, it’s too early to kind of give that level of color. .

So, Gary, the color I would give you that, heading into the conversations on the Entropic acquisition, there are two scenarios that could have played out, revenues be being worse than what we thought and that the OpEx being less amenable than we had planned for, but I think I am happy to share that as we closed the deal, the revenue situation seems to be better healthier than our conservative estimates and the OpEx situation seems to be more amenable to driving the synergies than we had hoped for.

So I think, as we look forward, we hope to do provide you guidance, but hopefully, it’s all will be in the positive direction. .

Okay. Just had one follow-up question. In the past, Kishore, you talked about how you have longer production lead times with the 40 nanometer which I think describes to me the satellite gateway products.

Does that give you more visibility into your future guide, maybe not only in the satellite side, but perhaps as an extension that shouldn’t go to product as well?.

Yes, I think that, I would not attribute that to the 40-nanometer node per se, I think that the lead times that the foundries have increased right now. But the 40-nanometer at the most at maybe two weeks or so to the production lead times. So that’s really in the noise.

But I think what you are asking in the question is, that because coming into the call we always answer what is the bookings entering the quarter at this point in time and I would like to tell you that, we have booked more than 90% of the nominal forecast at the mid-point of our guidance. So, I think we got strong bookings in place.

As usual, we are conservative. And so, I think the answer to your question is, it’s got to the 40-nanometer they have good lead time because we have good visibility on based on the lead times that we are required now from our customers it’s about, I think somewhere within 12 and 16 weeks lead time is what we need to have.

So in our direct sales, we got turned business in our consumer side in the terrestrial TV. If you were to just exclude that even without excluding that, we are more than 90% booked on the forecast right now. .

Okay. All right. Thanks guys. .

We’ll go next to Anil Doradla of William Blair. .

Hey guys. Good results and congratulations. Couple of questions. I remember last quarter when you were giving out your March quarter guidance you basically laid out a scenario where you are not expecting a unit volume increase it was largely going to be driven by content increase more towards higher channel count.

Obviously, the cable came in very strong. It has to be more than just channel content increase, right, it has to be unit volumes and I have a follow-up..

Yes, so I think, on that one, really on the data side of the house it really is driven by the conversion over the higher channel count in modem. So we did had volume increases on the video side. We had a very strong quarter for video.

So certainly their volumes were up, but on the data side of the business for us, it really was much more a story of converting from the 8 channel to the 2014 channel. And it really was very pronounced on 2014, in a lot of ways – in a big bypassing the 16 channel. .

That’s very interesting. So – sorry, go ahead, Kishore. .

In fact, if you look at the outage transpired, they talk with the 24 channel applications really getting traction to the operators and they also talk about really focusing and working towards 32 channel and DOCSIS 3.1 solutions now that they are promoting and they are very, very bullish about that.

So, I think, you can trace that trends to our chips and so we feel that the – in fact, if I am not mistaken on at least on a monthly rate, exiting rate at this point in time, we could be just converting to more than 50% of 24 channel content in the broadband gateway. .

So, kind of building upon that, if that is what we were seeing, we haven’t even seen volumes picking up.

Your kind of flattish outlook, is that just conservativeness or I mean, it should work its way through over the next couple of quarters and if we are going to have a very strong, obviously Q4 was tough, so, I suppose Q1 comps are a little trickier, but, how do we – how does 2015 play out in the course of the year in terms of maybe seasonality and some of these trends?.

Yes, so, I would say that, you are right, Anil, we are being conservative and I think that we should see a volume pick up as well.

And at this point in time, like I said, based on the bookings, we are more than 90% booked while we entered this call and I am more so, even more so on the cable side of the business, specifically in the broadband data gateways.

So you are absolutely right, but we are being careful because we want to bound the volatility and the video side, like Adam said, that’s the reason we are guiding slightly flattish to up on cable right now. So, I think everything is going very well right now.

Across all our revenue that would be except for the softness on the terrestrial revenues and you may have seen some of our peers say the same thing in their earnings call. .

Great and if you don’t mind me squeezing in one last one, last year, you had a certain assumption on content, you were talking about high single-digits to low double-digits between the gateway and the audio.

Have you changed your mindset based on what you are seeing now? Do you think the content is going to be somewhere what you thought it was or is it going to be lower or is it going to be higher? And thanks a lot..

I think that scenario has not changed currently. So I think, definitely, I cannot speak for the end of 2015, because that’s when some pricing negotiations happened, but as we stand today, we have no reason to update that viewpoint. .

Great guys and congrats. .

Yes, thank you. .

We’ll go next to Tore Svanberg of Stifel. .

Yes, thank you. Great quarter.

First of all, just a clarification question, Kishore, the $23 million that’s cable, did you say that, almost half of that is now 2014 channel or is half of that multi-channel meaning 16 and 24?.

It’s – the half of the volume is 24 channels. .

Got it, got it. .

16 is negligible. So, I think we should forget 16 channel, which is good for us. .

Okay, good. So on that topic, I know in the past you’ve talked about MaxLinear really being one of the only suppliers for full spectrum capture 24 channel.

Is that still the case today? And can you maybe update us a bit on the competitive landscape there?.

Nothing has changed the scenario, today, whenever you look at 24 channel solution, or even 32 channel solution, MaxLinear Intel platform is the only one that is prevalent on the data gateways.

So, I think that we are really, really happy that the strategic bets we have taken on our development roadmap are panning out and I think our portion of design wins and shipments on the data gateways is really in the positive direction relative to competition right now. .

Very good and will the DOCSIS 3.1 designing cycle start this year or maybe in the second half?.

You are absolutely right. Right now, despite claims, nobody has adopted 3.1 working solution that is product sizable and I really think the designing of true solution or any solution will not – will be starting sometime in the end of first half, but really start in the – and get to production readiness maybe in the end of the year.

Now that remains to be seen from a different perspective is that, we also need cable apps to be ready to be able to certify DOCSIS 3.1 product. So, it could even delay one more quarter from that perspective. So, we don’t expect any activity in the first half of this year and I think that’s all include right now. .

Very good. Last question, I know communications infrastructure is not going to be a revenue driver until next year although, I think you did mentioned, maybe some earlier revenue later on this year.

Could you just talk a little bit about how your products have been received so far? Obviously, you have a 56 ATI for PAM-4 you had several samples going on at OFC this year and just wondering what customers’ responses have been so far as far as the competitiveness of your products for that market. .

Very good question, I think the product that we announced at OFC are very unique. Actually, if you look at our 56 gig, our 32 gig Quad Modulator Drivers nobody has that in the world, that the performance either. It’s very hard to do without getting the technical details the drivers are much tougher than to do the TIAs.

On the TIA side, for the linear PAM and the PAM-4 and DMT performance are the far superior to anybody that is showcasing parts or revenues today and I think that you should really count on us dealing share and gathering revenue momentum and I told while we acquire by speed that we have collaboration and joint development for those products with module makers PMD manufacturers and that remains true.

And what we announced at FiberHome is just starting example of where this is headed. So I think, I can safely claim on the TIAs and on the drivers on the product that given out, we have by far the best-in-class performance. There is no doubt about it. And the reception is great. I would say that the – we have some revenue right now.

We have already started shipping. But it’s nothing meaningful, hopefully at the end of the year, there will be some incremental revenue on the optical side. And, hopefully next year is a good double-digit sort of number for revenues. .

Very helpful. Great quarter, guys. Thank you. .

Thank you, Tore. .

Next we’ll go to Quinn Bolton of Needham & Company. .

Hey guys, just wanted to follow-up on that, Tore’s question on the 56 Gig, TIAs and drivers, it looks like those are for sort of 56 Gig optics and my understanding of 56 gig optics, so fairly early in terms of the life cycle and in production readiness.

When do you think you’ll see the 56 gig lasers come into market to enable some of these solutions?.

Very, very good question, aren’t we all looking for position right now in the marketplace, that’s how I would present it. However, there are some preliminary preparations going on with certain key manufacturers. I think they will be really high-end applications in the long-haul type.

So, in the datacenter side, I don’t see them to be ready as quickly as people want them to be. So, I would say that really, it’s a middle of next year or is when you should start seeing some meaningful volumes on the 56 gig side.

Today, our amplifiers are being used in creating some, what I’d call 200 odd gig module products or some deployments into 400 gig modules. .

Got it, and then just wanted to also to come back on a clarification on that 24 channel modem and half of the market now being 24 channel modems with 16 channel being negligible.

I thought ex your or the ex three box from Comcast, the 16 channel data modem that shipped through the X1 gateways was a 16 channel box and thought that that was still some decent volumes.

Is that converted over to 24 can you just give an update there?.

Yes, you are absolutely right. Now all the big, big shipments are going with 24 channels inside them. .

Got it, great, and then you are talking about strength in the HD DTA segment of the market, I thought that’s been a relatively smaller part of the cable business.

Can you give us some sense how – what percent of overall cable revs come from the HD DTAs versus say videos set-tops versus cable data?.

Hey, Quinn, we don’t want to provide that level of detail, down kind of sub-areas within cable video versus cable data. I think, overall if you want to think about video versus cable, video versus data in cable, it’s probably safe to say it’s kind of the two-thirds to one-third and skewed toward the favor of data. .

I’d probably get to that answer this, but DTA sort of the biggest part of cable video or do you have some pretty good video set-top-box wins?.

It really is so volatile. It changes pretty drastically from quarter-to-quarter. I would say for example, within that grouping, the biggest grower in the quarter in video on the video side of cable was the immediate server gateway side, it wasn’t even the HD DTA.

And so the largest dollar contributor within cable video was the video server gateway category this quarter. .

Okay. Just wanted to obviously, looking back to 2014, just sort of felt like 2014 and 2015 started fairly similarly with very strong growth in orders for 24 channel or higher channel count modems. We all know what happened in the third quarter with kind of the OEMs stopping taking deliveries.

Having gone through that experience last year, and seen the initial strength here in 2015, do you have now more experience or you been able to put in place, perhaps a better way to track in shipments or to track inventory levels through the supply chain hoping not to repeat in 2015 what we saw last year?.

So, I think, Quinn, I know you always learn from what happened, yes, we do much more channel checks. But even having said that, it’s so much after the fact when they decide to – when the operators decide to push orders out.

So, I would say that currently, I would say currently, we don’t have any concerns of an inventory in the channel and I think in fact, we are being informed now by everyone that don’t – that we got to look forward to not – to reduce our quantities of eight channel manufacturing itself.

So it’s really transitioning over to 24 channels and I don’t know of any platform now that is not 24 channels in the major player that I talked about in the call about Comcast, I talked about Time Warner, I talked about Kabel Deutschland, Vodafone and Liberty Global.

So you are sure worrying that they will revert back to eight channel at this point in time. However on the channel check side, we have put more checks in place. However that does not mean they can push out orders at their own decision.

However we don’t see that repeating anymore because it has tremendous need by the operators to be able to upgrade to higher and higher data bandwidth and they have never seen more earnest as they are now. .

Okay. Great, thank you. .

Next question comes from Jay Srivatsa of Chardan Capital Markets. .

Thanks for taking my question.

Kishore, what do make of ARRIS’s announcement by pace, does that help in the long run for you in the satellite side or is that still, is this still driven heavily by the operators? What do you make of it?.

Hi, Jay. I think, historically, on the satellite side, the operators drive the business and the OEMs are selected by the – companies with the OEMs that’s the satellite operators function that way. Pace of an existing customer for one of our satellite products, so that’s good for us.

On the other hand, ARRIS is a very, very big customer for us and has been a partner for us for such a long time. They have great relationships.

They have very, very strong relationships because of the most amount of time we have had with them and we really feel that it’s a good chance, our collaboration across the various platforms at ARRIS we will become a very valuable supplier to them. So we feel it’s a positive for us right now.

And – but that remains to be seen how these whole things settles. So I don’t think until it happens we can make the claim really. .

All right, speaking of ARRIS, in the call yesterday, they were little cautious on CapEx spending and just the overall broadband CPE market, but, your guidance seems to suggest otherwise, so, help us understand, is it just a mix from 16 to 24 channel that’s helping you or it’s just – are you seeing the market demand to be different from what ARRIS is looking at?.

So, Jay, I have the transcript in front of me. I naturally have – I have to have it in front of me and they have clearly mentioned that the broadband demand is what is driving their CPEs in a positive direction. However, the AT&T Direct TV merger has put a stalling on their revenue in the CPE relative to that market.

And also they further talk about slowing down in video gateways shipments for themselves. So, they clearly talk about their softness related to video gateways and strength related to the broadband gateways, the data gateways, but as it’s combined, it’s still soft.

So I think, in the front print, they are very clear that the broadband DOCSIS platform is going strong. So, there is some disconnect between what I am reading the transcript and your question. .

Okay.

Then focusing on the satellite side, there has been some delays on that business ramping up, but it looks like it’s all coming together, how do you see that business tracking as you look at the rest of the year?.

I think, like Adam mentioned, we have bound the business between $15 million and $25 million contribution for this year.

Whether it’s 15 or maybe in 15 and 25 it depends on the how the satellite unit ramps as well, because, remember that we told that the satellite outdoor unit would be the smaller fraction of the ramp this year and it picks up the second half of the year and the gateway is going to be the majority of the ramp.

So the gateway is ramping right now and it’s based on luck and OD ramping. We should be somewhere between that $15 million and $25 million range. If I were a betting man, the $25 million would be a astounding success, $15 million would be kind of a little bit disappointing. So the answer is somewhere in between. .

Thank you very much. Congrats on a good quarter and guidance. .

Thank you, Jay..

We’ll go next to Alex Gauna of JMP Securities. .

Good afternoon guys. Let me echo my congratulations on the quarter and also getting Entropic close so expediently. I am curious, Kishore, to follow-up you just talked about the little bit of slowing that ARRIS talked about with the AT&T Direct TV.

Can you confirm me, are you exposed to those platforms? And therefore, should we expect at some point when the dust settles that would be a tailwind for you, maybe later on this year? Thanks. .

Hey, Alex. Currently, we are not exposed to the AT&T Direct TV platform that are being referenced as video platforms in the conversation with ARRIS, but just speak about.

So we wish we have more exposure to the AT&T Direct TV platform as well, because if we have a wonderful opportunity for us to grow our revenues on the gateway side, so currently we do not have that as an exposure.

So, when the softness in video is being talked about, it’s not related to the broadband data gateways or the HD DTA markets that we are exposed to on the cable side. .

Okay. And then if I understand your positioning correctly on the satellite side, you do have some potential so enjoy next gen systems ramps and Adam, you talked about that on the satellite side a little bit earlier in the call.

Is that still in place, is that the expected ramp>? I know you are going to incorporate everything you know in our guidance , but is there some pause on sort of the expected ramp with some your next-gen design wins that do go into what Direct TV has in the pipeline?.

Firstly, we have never confirmed the Direct TV, we have just said that it’s two operators in North America. And secondly, yes, we have a number design wins in the North American operators and they are going through – some are in ramp now and some are in pilot ramps, in multiple designs.

So, we should get good exposure to them and we are not seeing any – we are currently not seeing anything that’s interrupting that ramp right now. .

Okay.

And then, one more question about something Adam said earlier, I talked about, I know you are not giving color around Entropic, but said something about we’ll have to see what the linearity is, what was the linearity for Entropic in the first quarter? Because they didn’t have a conference call to share that with us and also your linearity and was there any discrepancies between the two? Thanks.

.

So, actually, I said I don’t have visibility into Entropic’s Q1 linearity.

My comment was more talking about, of course when we look to provide combine guidance for the companies, we’ll only be providing the post-closing revenue contribution from them which is the last two months of the quarter and of course we’ll have our full three months of the quarter and so I can’t say, right now what the linearity for kind of the April 1 through April 30 shipments were and how that impacts the overall guidance for the quarter.

So, again, in due time we’ll get those details out to you. But, so hopefully that helps to answer your question. .

I got it. That does help and also just curious also to reiterate part of that question, your linearity, was it fairly linear quarter? And if I am hearing you right, your confidence seems to have improved as we look forward in the earning this quarter is visibility indeed improving right now? Thank you. .

Alex, we can’t – obviously, the confidence is improving. Last year, were very, very confident in entering the second quarter and then we saw the Q3 on the horizon. So, you should assume that to the extent that the astounding confident and not exuberant is because of cautioning from last year. So, things are going quite well.

We got very good visibility and across the satellite gateway platform, cable platforms and even on the satellite or the new platforms we are seeing good visibility right now.

So, all in all, things are going well and it’s kind of a good situation for us that the Entropic acquisition is also gone very smoothly in a time period when we are also doing very well on our outlook. .

And I would say, Alex, to little more color on that, I would ay the linearity for us in Q1 was – I would say, maybe a little bit stronger in the middle month of the quarter. So, February was a very strong month for us. But not that, I am not disproportionately so relative to the January and March, but it was a bit stronger.

What I would say to it kind of going back to the comment on the satellite gateway side of things, I also want to make it clear that the strength that we are seeing in Q2, is not limited to North America.

We are seeing strength across gateways across Europe and North America and actually, at all the major design targets that we’ve been talking about, talking over the last couple of years. So, I think we are getting a nice kind of broader coverage on design wins for gateways and satellite coming to fruition. .

Okay, great. Thanks guys. Nice execution. .

Thank you. .

We’ll take a follow-up from Tore Svanberg of Stifel..

Yes, I just had a follow-up on the outdoor business as it relates to satellite. I think you mentioned this year, most of the satellite business, and most of the satellite revenue is going to be from gateway, they also sound like you have some good visibility in ODU.

So, will we get some strong contribution in the second half of this year, or is it going to be sort of more of a linear ramp from now through 2016?.

I think, it’s looking – let me say it clearly, I think it’s looking like a linear ramp through the next two quarters. We could have a very strong quarter in fourth quarter of 2015. And there is also in that statement of conservatism built into our model that it won’t happen in - but it happens in Q4.

So, I think the – it looks like a linear ramp right now with a jump up in Q4, but that could happen earlier. .

Yes, and Tore..

Very helpful. Yes, go ahead. .

Tore, we’ll have to actually – giving any guidance on the Entropic piece of things that one of the nice aspects of that acquisition is, Kishore was answering your question with regards to Digital ODU, of course now, as a combined company, we have a very broad ODU footprint.

So that’s one of the advantages of having, I would say a technology or platform hedge with this acquisition now. Our ODU business is not all conditioned upon kind of the ramp timing of the digital ODU.

So, we are actually feeling pretty good about the timing of the Digital ODU ramp and if it ends up pushing out a little bit, it really doesn’t end up being a bad thing for us necessarily. .

To add a little bit more color on that, while that hedging as Adam called it between the analog ODU and digital ODU tension in North America, it would not affect us however all the design win activity we are having by expanding the TAM footprint in Latin America, Europe other countries that are going for digital channel stacking on the tier-1 and tier-2 operators, we got major design wins going on.

So overall, I think the ODU will be a very, very nice growing business for us. .

Great, very helpful. Thank you. .

Thank you. .

And with no further questions in queue, I’d like to turn the conference back over to management for closing remarks. .

Yes, thank you very much, operator. As a reminder, we will be participating the Deutsche Bank One-On-One Conference on May 12 in San Francisco, at the B.

Riley Conference on May 13 in Los Angeles, The Benchmark One-On-One Conference on May 28 in Milwaukee and the William Blair Growth Stock Conference on June 10 in Chicago where we hope to see many of you there. We thank you all for joining us today, and we look forward to reporting on the progress to you in the next quarter. .

This does conclude today’s conference. Again we appreciate everyone’s participation today..