Semtech Earnings Call INSIGHTS: SerDes Business, Comms Guidance
On Wednesday, Semtech Corporation (NASDAQ:SMTC) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Jason Rego – Oppenheimer & Company: This is (Jason Rego) calling in for Rick. If I can just dig into the SerDes business a little bit, first could you maybe talk about what the split is there between your 40-gig and 100-gig business and just kind of talk about order rates in each of those and what you’re seeing competitively both in 40-gig and 100-gig?
Mohan Maheswaran – President and CEO: The majority of the business is still 40-gig. We don’t break out the numbers, but the majority of the business is still – the revenue is 40-gig, 100-gig is starting to ramp up quite nicely so the growth is in the 100-gig side. But I think the deployments are both in 40-g and 100-g, when we see really it’s regional dependent there is more 40-gig, I think, in Asia, 100-gigs some of the newer deployments are more global and the green field sides tend to be more 100-gig from what we see. Competitive dynamics we really don’t have a lot of competition in the long-haul market other than captive suppliers and where we don’t really see an opportunity to win that business. So, there is obviously more competition down the shorter reach side and more on client side, but on the long haul side we really don’t see a lot of new competitors there.
Jason Rego – Oppenheimer & Company: Have you guys seen anyone sampling apart or anyone out there in 100-gig or are you guys the only ones out there today?
Mohan Maheswaran – President and CEO: At this point in time we are only ones really with the 100-gig settings, we know that Broadcom and other guys are talking about products that we haven’t had, I don’t believe we’ve lost any sockets to any competitors in the long haul, ultra long haul markets.
Jason Rego – Oppenheimer & Company: Just moving into timing in sync, I mean could you maybe talk about what that business looks like now? We are kind of a year we moved from a couple of acquisitions in that space, have you guys seen any change over the last couple of months or just kind of – have your expectation changed at all?
Mohan Maheswaran – President and CEO: Which business did you…?
Jason Rego – Oppenheimer & Company: Timing in sync, excuse me.
Mohan Maheswaran – President and CEO: Timing sync stuff continues to do quite well, I would say that it’s slightly different space, it’s more on the access side, more base stations and at this point in time I would say it’s not as (growth) as the high bandwidth infrastructure side, it’s somewhat lumpy, but at this point of time I think it’s still promising when we think that there is generally a need for more timing synchronization as new sites – new networks with packet based infrastructure gets deployed. So both the voice video data kind of side needs synchronization across the network and so we are quite positive about the growth in the market, but I would say that the more or the stronger segment is really the infrastructure, the high bandwidth infrastructure on the long-haul side for us.
Jason Rego – Oppenheimer & Company: Just lastly and maybe I missed it, but could you just talk about lead times have they changed over the last couple of months and what are lead times today?
Mohan Maheswaran – President and CEO: Order lead times, roughly the same as last quarter. We haven’t seen a huge change, there is a little bit less visibility in some areas like in consumer side. But, I would say they are roughly in line in the last quarter.
Steve Smigie – Raymond James: With regard to the guidance for the – your Comms business there. I think, you indicated you might be down so much – flat to down slightly. We heard some good news out of JDSU as well as folks in 40 and 100-gigs. I’m just curious, if you could talk a little bit about, is there some lumpiness there or is it something else than 40 and 100 gig that’s going to be little bit softer in the coming quarter?
Mohan Maheswaran – President and CEO: I think it’s just timing, Steve. I think that what we know is that the 40-gig, 100-gig ports are increasing. We know that most of that customers are talking about increasing their demand, but the timing is more kind of Q4 issue, I think then Q3 issue that’s why we are guiding modestly down, I don’t think there is going to be significant down in the common business.
Steve Smigie – Raymond James: If you look at some third party data bases or data sources out there, talk about 100% compound annual growth over the next several quarters, if you may, next several years on port count for 40and 100-gig. I’m just curious, how closely would you guys tie to that port count growth?
Mohan Maheswaran – President and CEO: That sounds a big aggressive. I would say on the long-haul side we will do very well. On the client side and the short reach side that’s going to be more competitive, I think, and it depends where those ports are being deployed. But we see pretty good growth just on the infrastructure side, on both 40-gig and 100-gig deployments at least the next few years. So, we should see quite good growth.
Steve Smigie – Raymond James: Then I the just one more in. With regard to your Gennum business focused on the 1 to 25 gigabit per second business, can you talk about where you’re winning in the datacenter there has been some good news out of that market and just curious how you are levered to that, like what specific platforms are you getting on and what you’ll be tracking to see your potential success there?
Mohan Maheswaran – President and CEO: The areas to look for are the fiber-to-the-home PON space, GPON and EPON. We only have PMD devices, so these are physical layer devices going into these segments, but the gigabit 2.5-gig and 10-gig PON segment. So, we’re very much tied to those. We are getting good design win traction and good momentum there. Also on the CDR side, specifically the 10-gig, 16-gig fiber channel, 25-gig CDR space I think we are doing quite well there. On the back plane side which is more server back planes, base stations and those kind of datacenter applications driven by cloud computing, it’s more of the 10-gig back plane CDRs that we have done well and are continuing to do quite well.