Greetings, and welcome to the MaxLinear Second Quarter 2019 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Nugent. Please go ahead sir..

Thank you, Operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's second quarter 2019 financial results. Today's call is being hosted by Dr. Kishore Seendripu, CEO and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer.

After our prepared comments, we will take questions.

Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements relating to our third quarter 2019 revenue, gross margin, operating expense, tax expense, tax rate, and interest and other expense guidance, as well as statements relating to trends, opportunities, and uncertainties in various product and geographic markets, including, without limitation, statements concerning growth opportunities for our wireless, infrastructure, and connectivity markets, and for improved revenues in our broadband markets.

These forward-looking statements involve substantial risks and uncertainties, including risks arising from competition - the outcome of global trade negotiations, export restrictions, potential supply constraints, our dependence on a limited number of customers, average selling price trends, risks that our markets and growth opportunities may not develop as we currently expect, and that our assumptions concerning these opportunities may prove incorrect, and numerous other risks outlined in the Risk Factors section of our SEC filings, including our previously filed Form 10-K for the year ended December 31, 2018, our Form 10-Q for the quarter ended March 31, 2019, and our Form 10-Q for the quarter ended June 30, 2019 which was filed today.

Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements. The second quarter 2019 earnings release is available in the Investor Relations section of our website at maxlinear.com.

In addition, we report certain historical financial metrics, including net revenues, gross margins, operating expenses, income or loss from operations, income taxes, net income or loss and net income or loss per share on both GAAP and non-GAAP basis.

We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website.

We do not provide a reconciliation of non-GAAP guidance for future periods, because of the inherent uncertainty associated with our ability to project certain future charges, including stock-based compensation and its associated tax effects.

Non-GAAP financial measures discussed today do not replace the presentation of MaxLinear GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business.

Lastly, this call is being webcast, and a replay will be available on our website for two weeks. And now, let me turn the call over to Kishore Seendripu, CEO of MaxLinear..

Thank you, Brian and good afternoon everyone. Thank you all for joining us today. Our Q2, 2019 revenue was $82.5 million consistent with the updated guidance. Despite the quarter headwinds from the Huawei shipment restrictions, our infrastructure business was up slightly.

Our connected home business stood at 47%, industrial and multimarket at 26%, and infrastructure at 27% of overall revenue.

We continue to execute well on our ongoing infrastructure designing and customer engagement activities in 5G wireless and fiber-optic data center interconnects which boost our confidence in our infrastructure revenue growth prospects in 2020.

Encouragingly our industrial multimarket revenues improved across a broad set of distributors and end customers which we expect to continue into Q3.

In the connected home market, we continue to navigate soft cable data and satellite end market demand, customers specific challenges related to technology transition and trade tariffs and weak operator spend.

In the second quarter, our 5G wireless customer designing activities of our industry-leading 40 nanometers CMOS 4x4 massive-MIMO code RF transceiver solution have accelerated and are generating strong customer traction.

As a reminder, our industry leading 5G RF transceiver delivers the highest performance and widest bandwidth along with superior system level integration and flexibility at up to 50% lower power consumption than competitor solutions. As a result base station engineers will be able to accelerate the development of 5G massive-MIMO radios.

At the same time, we are also growing our content on a per system basis enabled and expanding product offering and fee run strategic customer engagement. Our warless backhaul business was up double digits sequentially in Q2 despite the suspension of Huawei shipment.

At auction of our wireless backhaul RF transceiver is accelerating which is highlighted by an important design win in India by one of Tier 1 customers and slated for shipping in Q3. Our RF SoC is the only solution to support channel aggregation with double data capacity in existing available spectrum for our current and future 5G transport networks.

As a result, strong operating engagements are leading to a proliferation of our OEM engagements which we believe supports our expectation of stronger revenue streams in the second half of 2019.

Moving on to data center infrastructure products, our 400 gigabit PAM4 DSP SoC with integrated laser drivers and companion quad-TIA system solution has made significant progress with our lead optical module and lead Tier 1 hyperscale data center end customer in terms of interoperability testing.

This has strengthened our current expectations with respect to revenue growth, market share and the pace of the upgrade cycle. Our high performance analog business primarily in industrial and multimarket revenue is also gathering momentum.

Our universal PMIC or power management IC MxL7704 was selected to power the world's most popular single board computer namely the Raspberry Pi 4. It was the primary driver of our double-digit sequential growth industrial and multimarket revenue in Q2.

The MxL7704 is highly versatile PMIC that enables reprogramming of to accommodate new current settings and limits, power sequencing, power monitoring, telemetry and additional flexibility that are integrated to Raspberry Pi 4 computer.

They are also continuing to expand our data center power management presence with the recent design win at Alibaba, our Tier 1 Chinese hyperscale a provider.

Going forward, we are pleased with our deepening customer relationships and products in 5G wireless and optical data center infrastructure, our opening of new power management opportunities as a bundled operating.

In the connected home market our MoCA business was up significantly quarter-over-quarter, due to the ongoing ramp up of MoCA2.5 SoC at Horizon. Additionally, we announced that Cambridge Industry’s Group has deployed their MoCA 2.5 SoC in the next-generation 10 gigabit PON ONT device.

In this application, the MoCA based ran backbone delivers up to 3 gigabits per second high speed broadband from the ONT, which enables gigabit whole home Wi-Fi coverage for reliable and robust 4K video and data services for IP. With that, let me turn the call over to Mr.

Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer for a review of the Q2 business results and our forward guidance..

Thank you, Kishore. I'll first review our Q2 2019 results and then further discuss our outlook for Q3 2019. Our revenue of 82.5 million we saw in infrastructure business up 2% sequentially due to increase in demand for our wireless backhaul RF portfolio, which offset some weakness in our HPA business within this category.

Our connected home business decreased 11% with strong early stage deployments of our MoCA2.0 and 2.5 solutions offset by continued softness in cable and satellite markets.

Our Industrial Multimarket business was strong up by 12% sequentially with broadband with broad-based demand improvements particularly in China, which were aided by focus share gain initiatives. GAAP and non-GAAP gross margins for the second quarter were approximately 53.4% and 63.9% of revenue respectively.

Our non-GAAP gross margin improved 40 basis points sequentially due to improved mix within our reported product categories and operational improvements. This compares to GAAP gross margin guidance of 53% to 54% and non-GAAP gross margin guidance of 63.5% to 64.5%.

The delta between GAAP and non-GAAP gross margin in the second quarter reflects the amortization of 8.5 million of purchase intangible assets from previous acquisitions and 0.1 million of stock-based compensation.

Second quarter GAAP operating expenses were approximately 47 million, which was below our GAAP guidance of 49 million to 49.5 million, due mainly to lower than expected stock-based bonus accruals.

GAAP operating expenses included stock-based compensation of $8 million, amortization of purchased intangible assets of $5.8 million and $0.4 million in restructuring. Non-GAAP operating expenses were $32.8 million, which was down $2.9 million sequentially and below our non-GAAP of $33 million to $33.5 million, due to disciplined expense management.

We continued to diligently work to moderate the spend during this transitional period with good success. After sequential reductions in three of the last four quarters, our quarterly non-GAAP OpEx run rate was down 4% year-over-year. Moving to the balance sheet and cash flow statement.

Our cash flow generated from operating activities in the second quarter of 2019 was approximately $12.4 million versus $16 million generated in the first quarter of 2019.We made $15 million in debt prepayments during the quarter towards our term loan as we continue to focus on debt pay down with our cash generation.

In addition, we recently made another $5 million debt prepayment during Q3.This brings the total debt prepayments to $198 million and our loan balance down to $227 million. Our days sales outstanding for the second quarter was approximately 63 days, which was slightly below the prior quarter day sales outstanding of 64 days.

Our inventory turns decreased slightly to 3.6 compared to 3.7 in the first quarter. That leaves me to our guidance. We currently expect revenue in the third quarter of 2019 to be approximately $77 million to $83 million, down 3% sequentially at the midpoint of the guidance range.

As you recall from our June 4 press release, we shipped shipments to Huawei in accordance with the Bureau of Industry and Security Action. We continue to evaluate potential scenarios that would result in legal resumption of shipments to Huawei including license request.

However, our guidance excludes any potential revenue from Huawei and affiliates, which are sizable impact sequentially. MaxLinear will continue to comply with all government and legal requirements across our global operations.

We cannot predict whether additional government actions may further impact our ability ship to Huawei as the situation remains dynamic. We hope for resolution of these issues around trade actions is reached as quickly as possible so the market-driven trade can resume.

Additionally, one of our test houses in Indonesia [Unison Bottom,] going through an abrupt shut down, as a result of the shutdown and ensuing employees strike, we're facing potential supply constraints for roughly 80 products in Q3.We expect connected home revenues to be down 5% to 10% sequentially, driven primarily by reductions in satellite demand and subdued recovery on our connected home categories due to continued macro headwinds in the cable and satellite markets.

We expect to mid-single-digit infrastructure revenue decline owing to Huawei shipment band and softness in our HPA business within this category, which also tends to be a little lumpy.

Within industrial and multimarket we've seen follow through on our improved distributor sell-through patterns, which coupled with the sequential improvement from a couple of key accounts is expected to yield high single-digit revenue growth.

We expect third quarter GAAP gross profit margin to be approximately 52% to 52.5% of revenue and non-GAAP gross profit margins to be approximately 63% to 63.5% of revenue, down sequentially due to a weaker mix owing mainly to the shifts between infrastructure and industrial and multimarket revenue.

As a reminder, our gross profit margin forecast can vary plus or minus 2% depending on product mix and other factors.

Even as we are focused on our reducing our run rate spend levels, we continue to fund strategic development programs targeted at delivering strong top line growth in 2019 and beyond with particular focus on infrastructure initiatives and our stated goal of increasing the operating leverage in the business.

As such, we expect Q3 2019 GAAP operating expenses to remain approximately flat quarter-on-quarter within a range of $46.5 million to $47.5 million, driven mainly by the expected increase in our stock-based bonus accrual and mask expenses, partly offset by reductions in professional fees and payroll.

We expect Q3 2019 non-GAAP operating expenses to be down approximately $1.5 million sequentially to a range of $31 million to $32 million. We expect GAAP tax expense to be approximately zero and non-GAAP tax rate of 5%.We expect interest and other expenses in the quarter to be $2.8 million to $2.9 million.

In closing, we're pleased to report progress in our infrastructure initiatives, highlighted by our expanding design engagements and 400 gig data center market, engineering milestones in our 5G massive-MIMO transceiver platform and expansion of our infrastructure of power management portfolio.

As we continued to navigate through a turbulent connected home environment in the near term, we will continue to maintain strong profitability and cash flow generation, as well as continue outpace of strategic investments.

These infrastructure investments and strong execution combined with upcoming upgrade cycles in the data center and wireless markets position us well to deliver strong leverage in our business as many of our new product initiatives start to generate revenue in the second half of 2019 and into 2020.

With that, I'd like to open up the call for questions.

Operator?.

[Operator Instructions] Our first question today is coming from Ross Seymore from Deutsche Bank. Your line is now live..

This is [Gene] for Ross Seymore. Thank you for letting me ask a question. I guess if you could just talk a little bit about the impact of the test house strike that you mentioned.

What category are those 80 products that are impacted by that supply constrain coming from and is that demand going to be pushed out into the fourth quarter?.

So thanks Gene for joining us. So that particular product, most of the product is from our HPA portfolio which falls into the industrial multi-market but there is - we call there is some of that business those rolls up under infrastructure. So probably those two categories.

We are working diligently and hopeful that things can get results sooner rather than later but we are also looking at all avenues as this is a short term risk and a definitely shorter in a time frame more than we would typically expect under circumstance..

And as a follow-up I guess regarding to Huawei, how much revenue from the third quarter I guess is being taken out because of the restriction that’s still in place and has the company already applied for exemptions to that restriction?.

So with regard to Huawei look in our pre-announced earnings report, we talked about the impact of Huawei reconnect to mid-point down about $3 million. So Huawei is not big enough customer for us to break out specifically but as a far as the impact in Q2, I mean you could expect that to be in that order..

Our next question today is coming from Gary Mobley from Wells Fargo Securities. Your line is now live..

Wanted to ask a question about the connected home business according to your guidance for the third quarter that business is probably about half of it where it was two years ago and there is new various reasons for that I am sure but maybe if you can just walk us through the different components to that connected home business what moving parts are with the intention to maybe give us a sense of where the bottom might be for that business?.

Look, so as you know we don’t break all of the different pieces of it but in general I mean there is the cable piece and connectivity piece. We talked a little bit about some of the improvements that are going on in the connectivity side. I mean Verizon finally ramping this platform so we are encouraged by the multi developments there.

But the rest of the business cable data specifically as everyone is aware has continued to drag. Service providers are spending not only the investment there, we’ve kind of gotten through the tariffs and yet spending seems to continue to push out. So we do see weakness there. I mean I’d like to tell we are at the bottom.

I have said this before, I feel like cable will kind of bounce along the bottom and it’s a little deeper than I think what we had originally anticipated but we do see right at the end of tunnel on the cable side. I think the satellite is probably the one that’s been worse than expected.

Satellite is been tough, subscribers have been down considerably but I would say at this point in time I mean the risk is definitely come out, I won’t say in 100% but we definitely got a lot of risk out of that business. So as I look into 2020, that particular piece feels a little bit better just because we are down at much lower levels..

And as you have been trying to find different growth paths in the infrastructure side of business, I think there is roughly 5 to 7 of those and you had multi-year investment in that effort.

Are there any of those different prongs that you feel less opportunistic about today than say three to six months ago?.

So Gary obviously based on our comments just before your questions, we are really excited about infrastructure initiatives and in the prepared remarks Steve refers to confidence increasing in share prospects that means that our designs are doing well.

We talked about content increases there is going to result from exciting portfolio, ability to offer bundling on that process and as a result of investment in Huawei management. So in general we are quite excited about where our investments are going and the prospects for the growth are.

On the cautionary side, the timing is the bigger risk in terms of quarterly kind of distributions. We talked about our 400 gig sample designing process and improved - and interoperability positive outcomes. So our expectation for growth this year from fiber optic is very, very modest and we are in the ballpark.

So really nothing to subdue our optimism, still these are infrastructure market they take time and we were in a nice ramp phase at Huawei which was part of the calculus and so there is some level of disappointment but the Huawei situation but outside of that we feel very positive..

Our next question today is coming from Bill Peterson from JPMorgan. Your line is now live..

It sounds like on the PAM4 side things are progressing, it's our understanding that some of the 400 gig ramps are really I guess coming on pretty strong in the second half of the year.

I'm wondering based off of I guess your design and interoperability testing going well should we think of upside to your prior view of single-digit millions?.

Bill, I think we have constantly reiterated that we don't expect a strong ramp of 400 gig in this year and our expectations have been modest we stick to it. I think the proof remains based on the milestone activity that we are more correct than otherwise.

So I would not change any expectations and in fact I think at this point the pace is not any faster on the way the SOC and the field trials are going on which is big hyper scale data center. So I would not change my view on it. In fact I would caution you against thinking there is a big ramp on setting right now on 400 gig.

If anything it will be towards the end of the year not at the state of the year..

I know that Huawei is I guess it’s not broken out its excluding a 10% customer.

But I guess my understanding is that you're not only you’re not shipping but are you able to engage or for example are some of your projects going to be postponed as a result of lack of engagement and I guess when should we think about that it just going to be [when the bandwidth] entirely or how should we think about that going forward?.

So Bill it’s a very, very difficult questions to answer on these matters especially given the various legal counsel we are taking and we want to make sure we abide by the laws of the country. And we are strictly following guidance for multiple advisory here.

So, but I would not conclude anything about our own inability if we were permitted to do so to be really actively engaged because the products we’re referring are very unique in attribute. There is no other provider for it.

The risk is some substandard some primitive platform being reinitiated, but I think that our offerings are so compelling and cost savings and performance that I think one thing is clear we should be able to be readily ramp because the design power done..

Our next question today is coming from Alessandra Vecchi from William Blair. Your line is now live..

Just a quick question or follow-up on Unison impact.

Can you quantify how much of an impact that was I am correct 80 products on your industrial multimarket is kind of, is like 10% of total products is that about right?.

Yes, so - I think look we’re not going breakout exactly the number, 80-product sounds like a lot of products, but these are HPA products so there's less revenue per line items. So I wouldn’t say it’s a huge number I mean very low single-digit. So pretty comfortable but it is the risk that we have in the quarter that we did highlight..

And you want to note that you are not the only ones I think in the press release is the preceding week from Unison at the [indiscernible] where a number of big suppliers or actually big purchasers of there is assembly and test services impacted and we are a minor player in that.

So I didn’t - and the governments there are working to resolve the employees strike as a result of their abrupt announcement. So we are really hopeful that will not be impactful on. But we have to put the cautionary note in the script..

No, I understand I guess I was just trying to back into the different sort of between guidance and expectation given that you had already removed the Huawei out when you preannounced?.

But I think you have a good metric 80 products out of 1,000 products that’s not a bad metric, think about it..

And then lastly you guys have been very, very diligent on the operating expense line, I mean how much is left there.

Do we think about Q4 operating expenses starting to we increase is this sort of the new baseline level until the infrastructure ramp start to contribute?.

So Alessa I’ll let Steve give a little bit more color after my comment here that look. I mean that is very, very difficult to say there is more left there right. It’s - as a result of - these are part of the tactical approach and part of these long-term strategic decision making process and that all is blending in.

At this point I would not say that there is more left to come. On the other hand I do know that next year I think in two years we have roadmap items on infrastructure but they continue to invest. And we want to invest it’s not even because we were leaving too much opportunity on the table there.

So I do expect the OpEx to increase but Steve maybe able to give you a little bit more color here..

I think we’ve been pretty clear that the OpEx trends down throughout the year and then starts to grow again in 2020. So I don’t want to get into specifics on what Q4 guidance is at this point, but as we - I mean we’ve consistently said that it kind of trends down throughout the year and then starts to grow again kind of in Q1 of 2020..

Our next question is coming from Quinn Bolton from Needham & Company. Your line is now live..

Two quick questions first you guys seem to be a pretty enthusiastic about the design traction you're getting for the 5G cellular product. But I couldn't quite tell off you were saying that you actually now have design wins for that product or just sort of design in, sort of design engagements.

So wondering if you could clarify, do you have kind of confirm design wins to-date or are you still working towards those. And then the second question on the industrial multimarket it sounds like a lot of that strength recently has come from China.

I think most of your analog peers are talking about sort of uncertainty in China given the trade tensions. And so with 2Q and 3Q up nicely in that business are you worried about sustainability of that demand. Do you think there could be some inventory holding going on in that business given trade tensions? Thanks..

So Quinn firstly I want to address the 5G question that you raised. You have to keep the perspective our product investment initiatives. We always work with the product where we have a teaching joint development agreement with the major OEM. We do not take off the products even though we have such agreements in place.

We have to first deliver through product that works very well which we have done. Now they are in the process of evaluating in the designing support and activities ongoing. A design win is when the platform is selected and there is a timeline set for when that will start ramping. So yes, from that perspective we have a target timeline for the platform.

We have timeline for reevaluation of the designing process. And when our parts goes to production and so on, but how would I, I would not be to be a design in the sense where that something could go wrong and between I would not want to take you and run there. Having said that right we have got more than one OEM in the same timelines.

So we feel that whatever we have guided you in terms of expectation about when we expect the 5G revenues to start next year. There is no reason to modify that data at all in terms of eye or sac. So yes technically no, materially yes and its more than one OEM right now its two OEM that are in that same timeline.

Second the question is you asked about the high performance analog market primarily you can call it industrial and multi-market and there is a portion of new infrastructure revenues. We also figured that the weakness in demand on these kind of product that sell to distribution channel and these actually are soft as the demand.

And actually there is hello where there are some products that are very specific to MaxLinear that we’re in a process of sort of per cycle revenue ramp. And therefore coming this weakness or softness that are other peers are experiencing.

However, we seem to have for the most part I accept it however, we are seeing weakness in various other parts at a totally level we are not seeing that. And next what comes in the future we cannot predict right I mean that’s very in this sort of channel sales and non-direct sales and direct sales is hardened out.

So however we got a whole bunch of new products in launch by the end of the year.

So whatever it is, it should be the big crush over the last two years since our acquisition of Exar has been really to overall the product roadmap to bring the world’s best products in power management and subsequent to fees and whole bunch of power management products will be announced and released at a very strong cliff. So we feel that will grow.

So at this point I think that we are cautiously optimistic on our Industrial Multimarket revenues. It’s always been our infrastructure investments and the products are now sampling and to some extent we are not the gigs to perhaps to go to production, so our customers are going to the gates to the timelines on this.

So I hope that answers your question..

Yes, it does. Thank you very much for the color, Kishore..

Our next question is coming from Tore Svanberg from Stifel Nicolaus. Your line is now live.

This is Jeremy Kwan for Tore. I just wanted to touch again on the connected home business.

It sounds like I mean, you talked in the past about there’s been some long-term supply change challenges in terms of migrating certain facilities out of China and have those been largely resolved and is that impacting anything at this point in that business? And secondly, you talked and touched about DOCSIS 3.1 market share bouncing out over time, that’s the thing you are still seeing and anticipating this business..

So the first question was about the impact of supply chain transition at our OEM customers and the second question was about actually macro demand at the operator level and then how our share is being impacted by those decisions.

I think firstly, I do want to say that there’s been a sharp impact of the satellite side that Steve talked about and really because whatever, we want to keep in perspective it’s a good business, it’s a very profitable business for us and very, very low investments to support the business.

However, the macro demand situation in the satellite market has really weakened quite a bit and for the forecasted demand they are - they feel they are sitting on a quite a bit of inventory and supply while they figure out what their game plans are. So we’re really suffering the video business cost cutting impact.

Having said that on the cable data side, the cost cutting should work in our favor. However the cable operators themselves are not spending as much to deploy or to rollout the new platform. So they don’t spend, levels are down. In fact, we suspect the time has own as much as 20% to 30%.Right now in the - on a run rate basis right now.

And we think that we had the supply chain related transition issues and a major OEM our parts got acquired by Concorde and that’s more or less getting results but I think we get impact right now is the macro demand softness that we are facing and I think at the beginning of the year we talked about maybe this year 2019 they’ll be down about maybe 15% related to last year but it looks like we are quite deeper than that maybe 25% to 30% the range.

And really from a share perspective, I would just give you one color is that the share loss has really happened.

There’s a new product platform qualification growth going on and the shipments really happening not from our OEM but from the other competitor OEM to whom we don’t share which is the other platform and I think that’s where the share loss has happened, but you do know that we always talked about market shares in this space being 50% plus minus 5% or so and I think they are on the minus side right now and that will get corrective itself in course of time as we enter the first half of next year..

And Steve, just a quick question in terms of the CapEx this quarter was very low, is that something should we think about you know, a longer-term shift or is it just one quarter type thing? Thank you..

I think it's little more one quarter. I don’t see anything changing dramatically on that front. I mean, we’ve said that it’s typically about, they’re about $10 million a year and I don't see it changing dramatically from that..

Our next question is coming from Christopher Rolland from Susquehanna. Your line is now live.

This is David Haberle on behalf of Chris. Just a follow-up on the massive-MIMO opportunity. In the past you guys have talked about that opportunity really being between you and the two big analog players and that the revenue for that opportunity is split two ways that's really significant revenue for you guys.

When you look at across the competitive landscape there, what gives you confidence in your product that you can come in and take significant share and then maybe take up a third of the share in 2020 or 2021?.

So I mean, you’re absolutely right, we are not been convinced revenue entered into these market space and our competitive position comes from our product and that we have built the product not just without any feedback to OEM like we talked about with Tier 1 teaching OEM customers, they build the product that they want that they can use and that’s a real next-generation product when those customers move from FPGA based back end platform through ASIC based deployments and that’s really one of the more integrated cost on solution.

You have to keep in mind that the 5G will not ramp because the massive cost down for us is because if you look at the proliferation of radio transceivers inside the remote radio unit, cost is incredibly important for us and what did we do for that, we integrated a 4x4 configuration in 40-nanometer CMOS not for competitors of any that kind of solution.

We have dramatically reduced our by less more than half - by almost half and so for a competitors react that will take another 18 to 24 months that’s the minimum, that’s like a world class execution which will give them credit cost, but right now we are the product, we are the ones that can show the performance and the level of integration and that's what matters.

So we feel very, very good that this is going to be a sort of cyclical process, right. You are getting, you get the software, the other guys have to catch up then shares will shift overtime but all-in-all on an average the normal scenarios have third of the market. Our best case scenarios will be substantially more than that.

So, right now let’s go with the third of the market share..

And then just following up there again on massive-MIMO. When we think about massive-MIMO there’s also have pushed a newer 4G base stations to add massive-MIMO capability.

Do you guys benefit from that at all as your solution specific to 5G?.

Firstly, I think 5G is a catch all, right. Anything that owns 4G doesn’t called 5G,so I don't want to go to the semantics of what is 5G is right now, but you just think of the 4G the demand exceed more massive-MIMO transceivers is really 4G plus and that’s the way the initial deployment of 5G are. They are really not 5G, they are 4G plus.

And that means more MIMO configuration instead of doing 2x2 or 3x3, they are going to 16x16 or 32x32 in those platforms sort of a refurbishment of those platform and we should benefit from that when that will happen. But right now we are not in those platforms. Those are part of just out of sampling about three, four months ago and its doing well.

But as that fix momentum, we would be in a place to participating that. So it should benefit us but honestly we talk of CAM and FEM in the 5G space. That part is already included in the mathematics. So I don't think - it’s sort of a zero-sum game between 4G and 5G at that level..

Thank you. We reached end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments..

Thank you, Operator. We would like the - it will be easier to know that we will be participating in the Jefferies Semis and Communications Infrastructure Conference in Chicago on the August 27, and the Deutsche Bank Technology Conference at September 10 in Las Vegas. We hope to see many of you there.

With that being said, we thank you all for joining us today and we will look forward to reporting on our progress to you in the next quarter. Thank you..

Thank you. It does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today..