Broadcom Inc.

Welcome to Broadcom, Inc.' 's first quarter fiscal year 2020 financial results conference call. At this time, for opening remarks and introductions, I would like to turn the call over to Beatrice Rosado, Director of Investor Relations of Broadcom, Inc. Please go ahead, ma'am.

Thank you, Operator, and thanks, everyone, for dialing in today. Joining me on today's call are Hock Tan, President and CEO, and Tom Krause, Chief Financial Officer of Broadcom. After the market closed, Broadcom distributed a press release and financial tables describing our financial performance for the first quarter of fiscal year 2020. If you did not receive a copy, you may obtain the information from the investor section of Broadcom's website at broadcom.com. This conference call is being webcast live and a recording will be available via telephone playback for one week. It will also be archived in the investor section of our website at broadcom.com. During the prepared comments, Hawk and Tom will be providing details of our first quarter fiscal year 2020 results, guidance for our second quarter fiscal year 2020, and commentary regarding the business environment. We will take questions after the end of our prepared comments. Please refer to our press release today and our recent filings with the SEC for information on the specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. In addition to U.S. GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. A reconciliation between GAAP and non-GAAP measures is included in the tables attached to today's press release. Comments made during today's call will primarily refer to our non-GAAP financial results. I'll now turn the call over to Hawk.

Well, thank you, Bea, and thank you, everyone, for joining today. Well, it certainly was the best of times. It is now the worst of times, and we certainly live in very interesting times. So let me start by reviewing our first quarter results, after which I will provide an update on the current environment and outlook. Consolidated net revenue for first quarter was $5.9 billion, a 1% increase from a year ago. Semiconductor solutions revenue was $4.2 billion, declining 4% year over year. But collectively, Demand for our networking, broadband, and storage products continue to recover, growing 6% year-over-year. However, as expected, wireless products were down sharply year-on-year due to an architectural change in touch sensing, as we explained. Our infrastructure software segment performed largely as expected. Brocade recovered from the bottom of 2019 and continued to stabilize very well. CA had a record quarter under Broadcom, delivering approximately $880 million of revenue, all a 5% growth year over year. Finally, in this first quarter of integrating Symantec onto our platform and taking into account the impact of purchase accounting, we had revenue of approximately $400 million, which we expect will step up as the year progresses. Note, these first quarter results also exclude the managed security services business which we are divesting to Accenture. Now let me turn to our current thinking on the full year. Let me begin by putting into context how we initially came to our prior full year 2020 guidance. It was based on two primary drivers. On the infrastructure software side, we added Symantec, which in the first year we expect to do $1.8 billion. Combined with Brocade, which is on its way back to a normalized run rate, and CA, which is growing, we felt good about $7 billion from the software segment in 2020. Now, in semiconductors, 2018 was a strong year, up high single digits. However, with softening demand industry-wide, 2019 became challenging and was down high single digits, bottoming out in the second half of the year. So when we gave our 2020 guidance last quarter, it reflected a projected recovery from that bottom. We expected the recovery would be more gradual in the first half of 2020, which we have been seeing. and then accelerate in the second half of 2020. Our confidence in that acceleration was driven by the anticipated launch of 5G phones late in the year and expected strong data center spending from enterprise and hyper-cloud customers. So now let's talk about the impact of COVID-19 on that outlook. As I sit here today, I have not yet seen a meaningful impact on bookings and certainly the fundamentals of the business remain very much intact. However, there is no doubt COVID-19 has created a high level of uncertainty which we can't help but thing is going to have an impact on our semiconductor business, in particular, in the second half of the fiscal year. But frankly, visibility is bad, and confidence continues to erode. So as a result, we believe it is only prudent that we withdraw our annual guidance until such time that visibility returns to pre-COVID-19 levels. One more point, though, before I move on. Keep in mind, through all this cyclicality and uncertainty, given the high degree of recurring revenue based on multiyear contracts, any uncertainty around infrastructure software revenue is likely to be very much more muted. Also, in light of the unique environment we are in, We thought it makes sense at this time to provide more color on near-term expectations, which we have better visibility. We expect our second quarter revenue to be 5.7 billion, which reflects a typical sequential drop, slight drop in wireless seasonality. Importantly, on a year-on-year basis, we expect Our semiconductor business, this Q2 overall, to be virtually flat from a year ago. This after year-on-year reduction over the last four quarters. On infrastructure software revenues, we expect that to sustain on a sequential basis as we continue to focus on completing the Symantec integration process. So to put it in perspective, shipments today, in addition to orders on hand, give us the confidence in our ability to achieve this focus. So finally, before I turn the call over to Tom, let me address our wireless business, especially given all the speculation in the press following our last quarterly call. After careful consideration, we have come to the conclusion that continuing to invest in and operate our wireless assets will create the most value for our business and for our shareholders. We're now more closely and strategically aligned with our largest smartphone customer as a result of our recent multi-year supplying agreements. and look forward to the continued success of our wireless franchises. Now, let me turn the call over to Tom.

Thank you, Hawk. Consolidated net revenue for the first quarter was $5.9 billion, a 1% increase from a year ago. Semiconductor solutions revenue was $4.2 billion and represented 72% of our total revenue this quarter. This was down 4% year-on-year and down 8% quarter-over-quarter. Revenue for the infrastructure software segment was $1.7 billion and represented 28% of revenue. This was up 19% year-over-year and up 39% quarter-over-quarter. Let me now provide additional detail on our financial performance. Operating expenses were $1.19 billion and include approximately $80 million of Symantec related expenses that we expect to go away over the course of the year. Operating income from continuing operations was $3.08 billion and represented 52.6% of net revenue. Adjusted EBITDA was $3.27 billion and represented 55.7% of net revenue. This figure excludes $146 million of depreciation. I would also note that we accrued $248 million of restructuring and integration expenses and made $131 million of cash restructuring and integration payments in the quarter. We spent $108 million on capital expenditures, and free cash flow represented 37.8 percent of revenue. or $2.21 billion. In the quarter, we returned $1.5 billion to our common stockholders, including $1.3 billion of cash dividends. We paid $169 million in withholding taxes due on vesting of employment equity, resulting in the elimination of half a million APGO shares. Finally, we ended the quarter with $6.4 billion of cash, $44.7 billion of total debt, 399 million outstanding common shares and 451 million fully-valued shares for the quarter. Now let me turn to our non-GAAP guidance for the second quarter of fiscal year 2020. As Hawk discussed, we expect net revenue to be $5.7 billion, plus or minus $150 million. Adjusted EBITDA is expected to be approximately $3.135 billion, or 55 percent of net revenue. with the slight drop in revenue partially offset by the lower operating expense. As you would expect us to do, we run various downside recessionary scenarios with respect to our cash flow outlook and ability to maintain our liquidity, service our debt, and return capital to our shareholders. Given our high gross margin profile and our somewhat variable operating expense structure, we believe we are able to maintain EBITDA margins comfortably north of 50% even in these downside scenarios. With this as a backdrop, we are quite comfortable with the current dividend and our ability to generate excess cash beyond the dividend throughout the fiscal year. As a result, our capital allocation plan for the year remains unchanged. We plan to pay out approximately $5.5 billion in cash dividends to common and preferred shareholders and expect to pay down $4 billion Given the high level of uncertainty today, we are currently focused on maintaining higher than normal levels of liquidity and currently plan to do the debt pay down in the second half of the year or once visibility starts to improve. That concludes my prepared remarks. During the Q&A portion of today's call, please limit yourselves to one question each so we can accommodate as many analysts as possible. Operator, please open up the call for questions.

Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to do one on your telephone. Due to time restraints, we ask that you please limit yourself to one question. Our first question will come from Craig Hettenbach with Morgan Stanley.

Yes, thank you. Hop, just a question on the wireless business, if you can add some more context in terms of your commentary around further alignment with your largest customer and kind of the strategic nature of the business.

Well, we're pretty much under NDA, so I'm obviously very limited in how much I would disclose to you. But suffice it to say, and we put that out in a press release right after we signed the agreement with our customers, Basically, it's a long-term three-year, in fact, agreement that requires us to provide technology and roadmap alignment in essentially RF components for the next three years, next three generations of 5G phones. And, you know, it's a very close engagement, and it's It perpetuates the strong products and franchise we have in this space.

Thank you. Our next question will come from Ross Seymour with Deutsche Bank.

Hi, Huck. Thanks for all your color. I know times are very uncertain. Is there any either end market or geographic color you can give on kind of the supply versus demand disruptions you're seeing? I know you said that bookings haven't really changed yet, at all, but it's clearly the uncertainty levels are high. So any sort of color would be helpful.

Well, it's very interesting what you just said, because you're right. I mean, as we sit here right now, and, you know, obviously you're trying not to be disingenuous about how we answer this question, but we haven't seen any significant or meaningful impact, but that could reflect the fact that most of all our businesses are related to enterprises and infrastructure, as opposed to consumer base. And as we know, the pandemic of COVID-19 is obviously hitting the people, the individual, the consumer. So we have that level of buffer before we see it, and we recognize that. We also recognize the fact that, you know, probably some areas would behave differently from other areas in the sense that we see as part of social distancing that more and more people, a lot of people, work from home, which basically implies they not only work from home, they stay home and play from home, which means consumption of internet cloud increases, so hyper-cloud spending, I would see to probably not be pull back or scale back, possibly might even improve or surge. On the other side, over time as consumer spending drops, as we all expect to at least on a temporary basis, confidence level among businesses, enterprises might erode, as I indicated in my notes, which might basically delay or push out spending by enterprises. while cloud spending goes up. So there's puts and takes. But again, this is all pure speculation, and I want to put it down this way because we have not seen either thing, either scenarios happen this year.

Thank you. Our next question comes from Vivek Arya with Bank of America.

Thanks for taking my question. And how can I understand the visibility is limited But should we assume second half can still be better than the first half? Because when I go back to Tom's, I think, cash flow remarks, if I got them right, I think, Tom, you said $5.5 billion in dividend payment and $4 billion in debt pay down. So that's $9.5 billion of cash usage, which I think is higher than the $9 billion free cash flow that you had outlined in the last call for fiscal 2020. So that definitely suggests strong free cash flow generation for this year. So I'm just trying to look at those data points and see what are the assumptions you have for the second half of this year, both from a sales and a free cash flow generation perspective. Thank you.

Well, let's start with top line, as you said, right? Because then the bottom line falls through with us very, very easily. That is your question. As Tom indicated, as we look at a full year, we could draw up various possibilities, various scenarios. We could. In our current guidance, I'm not suggesting for a second, might even show up or close to show up. Problem is, frankly, as I indicated, we don't know. We don't know because we're trying to understand the impact of COVID-19 on our ecosystem. And this is still a very early stage in the whole process. But what we've seen so far is what happened in China, Asia, obviously. And that hit badly, big. but so it could come from two parts, demand and supply chain. What we saw in the supply chain was not much impact, partly because a lot of supply chain contract manufacturing and all that was not in China. Part of it was, but it was also inventory in the pipeline, pre-COVID-19. So that kept supply chain going. So our supply chain, this has not been impacted to any meaningful level. On the demand side, there was slowdown. There has also been some level of recovery since then in China as the pandemic in China starts to subside somewhat. Now, having said that, we're looking over at the U.S., Europe now, And we're seeing that going into its full-blown glory. Can we extrapolate what we see in China over here? To be honest, we don't know. And so if you want to look at one possible downside, and we've done plenty of it, you could say the revenues could drop, say, 5% to 10% from our $25 billion original forecast. And as Tom indicated, and I'll let Tom elaborate a bit more, What we're saying is because of our high margin products and revenues and to some extent our variable operating expense levels, we expect our EBITDA percentage of revenue to still be comfortably over 50%.

In fact, good to add on that. I think if you look at the Q2 levels, it's a seasonally down quarter traditionally. And if we work off of that as a baseline, you're right. We all would have expected revenues to seasonally be up in the second half. There's some one-time drivers associated with that, but there's also generally an uptick in the back half. We run a lot of different scenarios, as you would expect we would. Even if you assume depressed levels where we're flattish off of the Q2 number. I mean, keep in mind in Q2 we're going to generate, you know, on the order of $2.5 billion of free cash flow. Interest rates have come down dramatically. We have a lot of floating rate debt. That's helping us. We have a variable compensation structure here, as Hawk was articulating. That helps us. And so if you want to paint that kind of scenario, those are things we have to do, especially given our capital structure. we're still going to generate on order the amount of free cash flow that you were just describing. We haven't guided a specific number because I think the visibility continues to get worse, and we don't want to get out in front of what could be obviously a very challenging environment. But needless to say, we're paying $5.5 billion in the form of dividends, including the preferred. It gives us a tremendous amount of headroom. I think it's only prudent, as I said, to keep ample amount of liquidity as we sit here today. But, you know, it's at least our expectation, you know, especially if we're going to be, you know, running at these levels, let alone, you know, show any improvement that, you know, we would continue on and continue to, you know, pay down the debt we said we were going to in the second half. So we'll continue to watch it and as visibility improves, you know, we'll act accordingly.

Thank you. Our next question comes from Harlan Sir with J.P. Morgan.

Good afternoon. I just want to start off with a quick housekeeping item. You know, just given the strong design wind pipeline that's unfolding in your compute offload or cloud ASIC business, is that now annualizing greater than $500 million per year? Because we're just hearing that the demand pull here is strong. And then for my main question, uncertainty is on the prior four-year outlook. Your infrastructure business is all mission critical. Your large customers will spend here typically in good times and in bad, and just as important, I believe that your infrastructure software business is 80% to 85% ratable revenue, so fairly predictable annuity-like revenues over multiple quarters. Is that what is driving the confidence on the sustainability on the software business in the second half?

Absolutely. Absolutely. As I indicated earlier, this infrastructure software is all largely, as you say correctly, mission-critical applications running the processes, running the transactions of the largest 500 companies in the world who have to keep doing business. And these are multi-year contracts with fixed committed payment revenue structures. So Yahoo! In a way, that's a very nice thing about having this slug of infrastructure software within our product portfolio.

Thank you. Our next question comes from John Pitzer with Credit Suisse.

Thank you.

Yeah, good afternoon, guys. Thanks for letting me ask the question. Hawk, appreciate the uncertainty from COVID-19 being the rationale for pulling the full fiscal year guide. It sounds like for fiscal 2Q, though, you're characterizing that as a somewhat normal seasonal quarter, so I'm just kind of curious if you're putting any cushion in for the fiscal 2Q guide, and are you at all worried that your customers are perhaps not pulling orders from you because they're concerned about your ability to supply and that we end up having some excess inventory in 90 days?

Interesting question. As I indicated in my remarks, we're pretty much for Q2, and we are just about almost halfway through Q2 fiscal 20, as you know. Q2 will end end of April for us. We pretty much have line of sight. In others, we have backlog. And we have clear visibility on how we're going to produce those parts and who are going to take those parts. So that's pretty much the basis of our forecast and, as you call it, our confidence.

Thank you. Our next question comes from Stacy Rescon with Bernstein Research.

Hi, guys. Thanks for taking my questions. I wanted to know what kind of leverage level you need to maintain your investment grade rating, potentially ZBITDA maybe coming down, and how are you thinking about the dividend next year if free cash flow is, say, down year over year in 2020, given it's a 12-month free cash flow formula that goes into it?

I think on the leverage levels, what we had, gone into the year looking at was maintaining, you know, roughly three to three and a half times levels on a pro forma basis with Symantec. That included the pro forma contribution from an EBITDA perspective of over a billion dollars from Symantec as well as some by the end of the year. So that largely is intact, frankly. I think we also know we came off of a cyclical downturn in semis last year and at least through the first half you know, as we discussed, we're, you know, we're frankly, we're flat to, you know, if anything on the semi side and CA actually is up. So, you know, from an EBITDA standpoint, it would take quite a bit of a drop in the organic business, very meaningful drop actually, where EBITDA would actually be down year over year, especially given the semantic contribution. So I think from a leverage level standpoint and as it relates to our, you know, our rating profile, we feel pretty comfortable. On the dividend end, I think it's premature. Obviously, we talked about the cash flows. We've discussed sort of where cash flows are in the first half. They're running near $5 billion. Second half, even in some downside scenarios, we think are going to hold up reasonably well. And so when you look at the cash flow performance, even on a relative basis to last year, when you include restructuring costs, we're actually going to be up as well in that downside scenario. So things would have to get a lot worse where we'd be looking at changing our dividend policy. In fact, I think what I would tell you is, you know, we usually look at the fundamentals of the business and, you know, are any of these businesses changing meaningfully relative to their fundamentals? We don't see that, of course. And so, you know, we're pretty committed to the dividend, as you can expect, and the cash flows are there to support that.

Another way of putting that, Stacy, is to sum it up simply. In a way, we've got two tailwinds here. One is we're 2020, we are integrating and improving contribution of Symantec to our EBITDA. And that's adding on for sure. On revenue, of course, 1.8 billion, EBITDA is adding on. And the second thing, you know, semiconductors, we begin 2020 with low set of numbers anyway in terms of a downturn in the cycle that we're emerging from. So that too helps the fact that we will have an opportunity to offset any impact from COVID-19.

Thank you. Our next question will come from Blaine Curtis with Barclays.

Hey, guys. Thanks for that question. I'm just curious by end market if you could maybe comment on. Obviously, enterprise went through some inventory correction. It seems like it's getting a bit better from a supply chain perspective. The data center is quite strong, so I was wondering if you could just comment what you're seeing in those two end markets across your business.

You know, I would love to answer that question, actually, before COVID-19. At this point now, it might seem fairly, I call it delusional. But let me tell you, but since you asked, I'll answer before COVID-19. The impact of what we're seeing today from COVID-19, you're right. The semiconductor business, as I pointed out, has been nicely recovering. Still, in some ways, if you look at numbers Q1 and Q2, as we say, it reflects that. It is recovering. In fact, Q4 last year, if you take the semiconductor solution segment, Year-on-year was down 7%, Q4-19. Q1 just passed, or 20, was down 4%. And our guidance now for Q2-20 is virtually flat from a year ago. You see that recovery now. It's still gradual, and we had hoped the second half to be accelerated for the reasons you mentioned about, which is data center spending which had been more muted before starting to accelerate. And you would say that that should have limited, should be impacted on a more limited indirect basis by COVID-19. The only thing I'll turn to you is we don't know for sure. Hence, I would say we put in a very prudent position. We don't know. But you think it's the consumer that gets hit less the infrastructure data centers. But You know, the things that are going on were still very unclear. Visibility on how people behave or enterprises or cloud guys would change their spending behavior, still not very clear. But pre-COVID-19, you're right. There is a clear, distinct recovery from the bottom of 2019.

Thank you. Our next question comes from Toshi Yahari with Consac.

Hi, guys. Thank you so much for taking the question. Hawk, you mentioned that after careful consideration, you guys decided to keep the RF business and invest in the business long-term. I was hoping you could provide a little more color in terms of what went into the thought process. Was it basically that long-term agreement with your largest customer that sort of pinned down your decision, or were there any other changes in terms of how you think about the market long-term in or your competitive position long-term, the profitability of that business, or did it have more to do with evaluation, the price that others were perhaps willing to pay? Thank you.

Very good point. You hit on most of the reasons, except the last couple, which is not the case. But, yeah, don't forget, we may have called it in the last earnings call as financial assets. We didn't say non-call. We call them financial assets. It doesn't change the fact these have been, continues to be franchises. These are product franchises the way we define them. It's strong technology. We are by far in the lead, and we have a good position. And we continue to be in that position. And the market, especially with 5G phones coming in, with the plethora of difficult... spectral bands that require our filters, our unique filters, that all drives towards sustainability of the franchise. And what really, I guess, comes to terms with changing our mind to a large extent is the fact that there is now clarity and certainty of a long-term roadmap and very strong market positions. with respect to high-end next-generation 5G phones. So all that relates to it, but it has less or nothing to do with the fact what value we can achieve out of it. I can't say more, but it definitely was not the last part.

Thank you. Our next question will come from Edward Snyder with Charter Equity.

Thanks a lot. Between your move from annual to quarterly guidance and your comments about the larger impact of the coronavirus on retail and infrastructure, does that imply that most of your uncertainty in the second half of the year has more to do with wireless than, say, with your networking, because certainly not infrastructure software, and mostly about maybe timing, given that it's got such a big impact on your wireless business? And then, Tom, given the steep decline in valuations, especially in the software sector here, do Have you studied the accretive tradeoff between shifting more of your resources maybe to acquisitions sooner than you might have expected, given that you could see a bigger boost on the other side, or is it just steady as you go until you build a big enough cash pile to feel more comfortable with it? Thanks.

Let me take the first part, which is, hey, in this environment, Given where everything is, we're focused on running the business. We're focused on liquidity. We're focused on our capital returns. I think, you know, at least for the time being, you know, M&A is off the table until visibility improves. That's all I'll say there.

And on the second, you know the answer as well as I do. So I don't need to expand or comment on it.

Okay. Our next question will come from Aaron Rekers with Wells Fargo.

Yeah, thanks for taking the question. I guess I wanted to ask on the semantic contribution and your expectations going forward. You know, you mentioned that you would expect to see the revenue kind of trajectory ramp, you know, through the course of this year. Can you help us understand how that ramp might look from here relative to the $400 million? And where do you stand on kind of just the integration efforts? What What's been done, or more importantly, what's still in front of us, and how do we think about that from an operating expense perspective?

Sure, Tom. Things are progressing well. It's a unique deal. It's an asset purchase. We took the decision to drive integration quickly. We're well ahead from an operating expense standpoint. I think, by and large, we're off to a decent start. On the revenue side, relative to CA, Symantec had a bit more in the form of perpetual licenses. When we brought the business over, we did take a purchase accounting haircut, which is reflected in the numbers. We also successfully sold the managed services business. We're getting set to close that with Accenture, so that's a good thing. And so what I think you'll see is as bookings continue to come online and we move into not only the second quarter, but in the second half, that we'll continue to progress toward the 1.8 run rate that we articulated last quarter.

Thank you. Our next question will come from Harsh Kumar with Piper Sandler.

Yeah, so question on your software business, Hawk. You're building this software complex of companies that are targeting top enterprise customers. These businesses under previous managements didn't grow very much. They were flat, you know, maybe 1% growth at best. How fast do you think these businesses can grow under your umbrella? You know, outside of being better managers, what are you guys bringing to the table to enable this better growth?

Well, yeah, we have some limited data that we have been able to achieve. That, of course, doesn't mean – This is something we'll go to forever, but it's pretty in line with what we set out to achieve. We have over one year of operation of CA under our belt today. CA comprises, as you know, the mainframe software and various distributed software, and distributed software as it relates to DevOps automation and business operation together. And we reported Q1, this past Q1, CA hitting revenues of $880 million in that one quarter, revenues for that. And this is rateable revenues. That's how we measure those revenues. None of this perpetual 606 acceleration, flat revenues, 880. And that's a 5% increase from a year ago. And to us, that the kind of level we hope to sustain going forward. That we grow this very, very embedded infrastructure software business at a rate in the mid single digits. And we're very pleased that we're able to do that for CA now. We expect to be able to put the same business model, financial model into the Symantec and do that same. And where we see is that this $7 billion a year of infrastructure software, that includes Brocade, of course, will over a long term grow in the mid-single digits and be extremely profitable for us.

Thank you. Our next question will come from William Stein with SunTrust.

Great. Thank you for taking my question. Huck, you said earlier in the call, in your prepared remarks, that there has been no change to bookings. You said orders. I think they're essentially the same thing. But in years, certainly in decades past, that would have been quite a meaningful statement given what's been going on, you know, with COVID in the last couple weeks. I wonder if something has changed in the way your customers manage the supply chain that would make this maybe not as meaningful. In other words, how much optimism should we as analysts or investors draw from that comment as it relates to sort of beyond just the next few weeks, but like medium-term outlook?

Don't forget, there's just a limited horizon on the way those bookings are. So you're looking at a very limited horizon and limited visibility because bookings are only of a certain period of time. We're not talking of bookings that run out to the end of this calendar year. We don't book that far ahead. So on that limited horizon of bookings, we're seeing what is not discernible, another way of my phrasing it, is any significant change in the pattern of booking we've been seeing over the past couple months or so. That has not changed. Neither have we seen any cancellations, if that's what I mean, on any of the backlog that's been placed on us, on our books today. That's as much as I will put it at this point. Beyond that horizon, we're not making any guesses or giving you any direct information as to what might happen. But what we have on our books, we have not seen cancellations. Whatever we've seen on the level of bookings and the pattern of bookings, we have not seen any dramatic change.

Thank you. Our next question will come from Mitch Steeves with RBC Capital Markets.

Hey, guys. Thanks for taking my question. I hate to circle back to kind of the COVID-19 impact, but you guys kind of mentioned they're talking about maybe a 5% to 10% decline. I don't expect a number from this, but How do we think about the business lines and in terms of what business lines do you guys think will be most impacted if this doesn't get solved quickly? And maybe some sort of view, I guess, on the handset shipments you guys expected for the full year and how you're thinking about that changing given what we know now.

Yeah, I meant this, Tom. I think, you know, in order of, you know, most impacted to least impacted, it's probably pretty self-explanatory, but, you know, the consumer – And consumer discretionary related end markets like phones, I think, are going to be the most impacted potentially. And certainly with the expected 5G ramp, as Hawk was talking about, any pushouts there would have some meaningful impact on the second half of the year, particularly Q4. Less so, you know, on the infrastructure side, we've talked a lot about the cloud and how spending likely, you know, should hang in there. In fact, you could paint a picture that, you know, some of the COVID-19 impacts you know, activity in terms of social distancing would actually suggest that could improve. Broadband certainly could improve as well for that matter. And then, of course, on the software side, it's a high level of recurring revenue. You know, these companies, you know, whether it be CA or now Symantec, it's 100% recurring. It's three-year readable contracts almost exclusively. And so we have a lot of visibility on that front. And so, you know, we'll see how it plays out. But I would say the only area where you could probably be most concerned would be more on the consumer-related items at this point.

Well, ladies and gentlemen, that concludes today's question and answer session as well as today's conference call. Thank you for your participation. You may now disconnect and have a wonderful day.