Broadcom Inc.(AVGO) 首席执行官 Hock Tan 于 2019年 第二季度业绩 - 收益电话会议记录

[机器翻译] 电话会议 · 2019年06月14日 · 13 次阅读

Broadcom Inc. (NASDAQ:AVGO) Q2 2019 Results Earnings Conference Call June 13, 2019 5:00 PM ET

Broadcom Inc.(纳斯达克股票代码:[AVGO])2019年第二季度业绩收益电话会议2019年6月13日美国东部时间下午5:00


Beatrice Russotto - Director, IR
Hock Tan - CEO and President
Thomas Krause - CFO

  • Beatrice Russotto - IR主任
  • Hock Tan - 首席执行官兼总裁
  • Thomas Krause - 首席财务官


Vivek Arya - Bank of America Merrill Lynch
Blayne Curtis - Barclays
Harlan Sur - JPMorgan
Ross Seymore - Deutsche Bank
Timothy Arcuri - UBS
Toshiya Hari - Goldman Sachs
John Pitzer - Credit Suisse
Craig Hettenbach - Morgan Stanley
Christopher Danely - Citi
William Stein - SunTrust
Matthew Ramsay - Cowen
Chris Caso - Raymond James

  • Vivek Arya - 美国银行美林
  • Blayne Curtis - 巴克莱
  • Harlan Sur - 摩根大通
  • Ross Seymore - 德意志银行
  • 蒂莫西·阿库里 - 瑞银集团
  • Toshiya Hari - Goldman Sachs
  • John Pitzer - 瑞士信贷
  • Craig Hettenbach - 摩根士丹利
  • Christopher Danely - 花旗
  • William Stein - SunTrust
  • 马修拉姆齐 - 考恩
  • 克里斯卡索 - 雷蒙德詹姆斯


Good day ladies and gentlemen and welcome to the Q2 2019 Broadcom Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to introduce your host for today's call, Ms. Beatrice Russotto, Director, Investor Relations. Ms. Russotto, you may begin.

美好的一天女士们,先生们,欢迎参加2019年第二季度Broadcom收益电话会议。 此时,所有参与者都处于只听模式。 稍后我们将进行问答环节,届时会有说明。 [操作员说明]提醒一下,此会议正在录制中。

我现在想向您的主持人介绍今天的电话会议,投资者关系总监Beatrice Russotto女士。 Russotto女士,你可以开始。

Beatrice Russotto

Thank you, operator and good afternoon everyone. Joining me today are Hock Tan, President and CEO; and Tom Krause, Chief Financial Officer of Broadcom. After the market closed today, Broadcom distributed a press release and financial table describing our financial performance for the second quarter of fiscal year 2019. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom's website at
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 Investors section of our website at
During the prepared comments section of this call, Hock and Tom will be providing details of our second quarter fiscal year 2019 results, guidance for fiscal year 2019, 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.
So, with that, I'll turn the call over to Hock.

谢谢运营商,大家下午好。今天加入我的是总裁兼首席执行官Hock Tan;和Broadcom的首席财务官Tom Krause。今天市场收盘后,Broadcom发布了一份新闻稿和财务表,描述了我们2019财年第二季度的财务业绩。如果您没有收到副本,您可以从Broadcom网站的投资者部分获取信息。 COM。




除美国GAAP报告外,Broadcom还会根据非GAAP报告某些财务指标。 GAAP和非GAAP措施之间的对账包含在今天新闻稿附带的表格中。在今天的电话会议中发表的评论将主要涉及我们的非GAAP财务业绩。


Hock Tan

Thank you, Bea and thank you everyone for joining in today. Let me touch on the second quarter results after which I will update you on the current environment and our outlook for the second half of the year.
Looking at the second quarter just passed, it really went as planned. Networking continued to perform very well, and our broadband business started to recover. This was offset by the anticipated sharp decline in wireless and the ongoing softness in storage.
On the other hand, the infrastructure software business delivered solid topline results, benefiting from sustained enterprise demand for our mainframe and distributed software as well as SAN switching products.
The integration of CA is progressing well. Just last week, we reached a major milestone with day two, which is the integration of the CA business processes onto Broadcom's IP platform.
We remain confident that we can meet, if not exceed, the long-term revenue and profitability targets that we laid out for CA to you last year. Renewals in our CA business are strong, and the dollar commitments from our core customers continue to grow.
Now, let me address the current business environment and our outlook for the remainder of the year. We have, as I indicated, performed very much to plan in the first half of fiscal 2019. And in the second half, we had expected a recovery. However, while enterprise and mainframe software demand remained stable, particularly in North America and Europe, with respect to semiconductors, it is clear that the U.S./China trade conflict, including the Huawei export ban, is creating economic and political uncertainty and reducing visibility for our global OEM customers.
As a result, demand volatility has increased and our customers are actively reducing inventory levels to manage risks. This leads us to believe the second half of 2019 will be more in line with the first half as opposed to the previously expected recovery. We now anticipate fiscal 2019 semiconductor solutions segment revenue of $17.5 billion, which translates into a year-over-year decline in the high single-digits.
CA software continues to perform above our original expectations while SAN switching is slowing down after a very strong first half. As a result, we are maintaining our fiscal 2019 infrastructure software outlook at $5 billion.
While this scenario has been playing out, I should emphasize the fundamentals of our business remains very much intact. We continue to execute on the very rich roadmap for next-generation network switching and routing in the cloud and enterprises, including the leading-edge Trident 4 software-defined network switch just recently announced this week. We've also secured the next two generations of RF front-end at a large North American OEM, which positions us very well for the transition into 5G.
We continue to win increasing numbers of compute off-load accelerators in the hyper cloud operators across AI, video transcoding, encryption, and networking. We are pleased with the ramp of our new-generation Wi-Fi 802.11ax, otherwise called Wi-Fi 6, in enterprise gateways and carrier access bonds. All this leaves us confident that we will able to continue to drive sustained long-term revenue growth and increasing free cash flow.









虽然这种情况一直在发挥作用,但我应该强调我们业务的基本面仍然非常完整。我们继续执行非常丰富的路线图,以便在云和企业中实现下一代网络交换和路由,包括本周刚刚公布的领先的Trident 4软件定义网络交换机。我们还在北美的一家大型OEM厂商中确保了接下来的两代RF前端,这使我们能够很好地过渡到5G。

我们继续通过AI,视频转码,加密和网络在超级云运营商中赢得越来越多的计算卸载加速器。我们对新一代Wi-Fi 802.11ax(称为Wi-Fi 6)在企业网关和运营商接入债券中的应用感到高兴。所有这些使我们充满信心,我们将能够继续推动持续的长期收入增长并增加自由现金流。

Let me now turn it over to Tom who will provide you with more color.


Thomas Krause

Thank you, Hock. Consolidated net revenue for the second quarter was $5.5 billion, a 10% increase from a year ago and EPS came in at $5.21, a 7% increase from a year ago off of a 448 million weighted average fully diluted character share count. In addition, we have record free cash flow of $2.54 billion or 46% of revenue. Free cash flow grew 20% year-over-year.
The semiconductor solutions segment revenue was $4.1 billion and represented 74% of our total revenue this quarter, which was down 10% as expected year-on-year on a comparable basis. Our infrastructure software segment revenue was $1.4 billion and represented 26% of revenue.
Let me now provide additional detail on our financial performance. Operating expenses were $1.02 billion. Operating income from continuing operations was $2.95 billion and represented 53.5% of net revenue. Adjusted EBITDA was $3.11 billion and represented 56.4% of net revenue. This figure excludes $142 million of depreciation.
Receivables in the quarter decreased $193 million, and inventory decreased $40 million from the prior quarter. I would also note that we accrued $136 million of restructuring and integration expenses and made $218 million of cash restructuring and integration payments in the quarter. Finally, we spent $125 million on capital expenditures.
In the second quarter, we returned $2.4 billion to stockholders consisting of $1.1 billion in the form of cash dividends and $1.3 billion for the repurchase and elimination of 4.7 million AVGO shares. We ended the quarter with $5.3 billion of cash, $37.5 billion of total debt, 399 million outstanding shares, and 447 million fully diluted shares outstanding.
We also refinanced our $18 billion of term loans that we put in place at the beginning of fiscal 2019 to finance the CA acquisition. Via a combination of $11 billion of investment grade bonds and a new term loan, we're able to extend our average debt maturity to approximately five years and substantially reduce the quantum of debt due in any one year. As of today, our average cost of borrowing stands at approximately 3.7%.
Turning to our fiscal year 2019 guidance, as Hock discussed, we are updating our full year revenue guidance to $22.5 billion, including approximately $17.5 billion from semiconductor solutions and approximately $5 billion from infrastructure software. IP licensing is not expected to generate a material amount of revenue.
On a non-GAAP basis, operating margins are expected to be approximately 52.5%, an increase of approximately 150 basis points from our prior guidance. Net interest expense and others are expected to be approximately $1.3 billion. We do not contemplate any debt pay down in fiscal year 2019.
The tax rate is forecast to be approximately 11%. Depreciation is expected to be approximately $600 million. CapEx is expected to be approximately $500 million. As a result, free cash flow is expected to be approximately $9 billion, which takes into account projected restructuring and integration charges of approximately $1.1 billion.










Stock-based compensation expense is expected to be approximately $2.2 billion. And finally, we expect weighted average diluted share count to be 444 million for Q3 and 443 million for Q4 and this excludes any impacts from share buybacks and eliminations.
Now, on to capital allocation, our capital allocation strategy remains the same. We plan to maintain the current quarterly dividend payout of $2.65 per share throughout the year subject to quarterly Board approval, which means we plan to pay out over $4 billion in cash dividends in fiscal 2019.
In addition, we remain committed to buying back and eliminating a total $8 billion of stock in fiscal 2019. In the first half of the fiscal year, we have spent $4.8 billion for the repurchase and elimination of shares.
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.

股票补偿费用预计约为22亿美元。 最后,我们预计第三季度的加权平均稀释份额为4.44亿,第四季度为4.43亿,这不包括股票回购和抵销的任何影响。

现在,在资本配置方面,我们的资本配置策略保持不变。 我们计划在季度董事会批准的情况下维持全年每股2.65美元的季度派息,这意味着我们计划在2019财年支付超过40亿美元的现金股息。


我的准备结果就此结束。 在今天电话会议的问答部分,请各自限制一个问题,这样我们就可以容纳尽可能多的分析师。 接线员,请打开电话询问。


Thank you. [Operator Instructions]
Our first question comes from Vivek Arya with Bank of America.

谢谢。 [操作说明]

我们的第一个问题来自Vivek Arya和美国银行。

Vivek Arya

Thanks for taking my question. Hock, in the $2 billion or so reduction in the semiconductor outlook for the next two quarters, can you give us some sense how much of that is Huawei, how much is outside of Huawei and just any segment level impact so we can calibrate our models? Thank you.

谢谢你提出我的问题。 霍克,在未来两个季度的半导体展望减少约20亿美元的情况下,你能否给我们一些意义,华为,华为之外的多少以及任何细分市场的影响因此我们可以校准我们的模型? 谢谢。

Hock Tan

Well, it's an interesting way to figure that out because in terms of full disclosure, Huawei represented last year about $900 million of revenues for this company by itself. But the other part of the picture I should add is that guide down that we're providing, as you put it, of $2 billion obviously extends beyond just one particular customer.
We're talking about uncertainty in our marketplace, uncertainty because of the -- of demand in the form of order reduction as the supply chain out there constricts -- compressed, so to speak.
And because we do see, to some extent, end users in the U.S., particularly North America and Europe, continuing to be there. But what we do see in between is the uncertainty of the environment has put in place a concern about placing additional orders and actively a reduction of inventory out there. Basically, compression of supply chain is what's driving this reduction more than anything else and it's broad based.

嗯,这是一个有趣的方式来解决这个问题,因为在完全披露方面,华为去年代表了该公司约9亿美元的收入。 但是我应该添加的图片的另一部分是,我们提供的指导,如你所说,20亿美元显然超出了一个特定的客户。

我们谈论的是市场的不确定性,不确定性是因为随着供应链的缩减,订单减少形式的需求 - 可以说是压缩的。

而且因为我们确实在某种程度上看到美国,特别是北美和欧洲的最终用户继续留在那里。 但我们所看到的是,环境的不确定性已经引发了对增加订单和积极减少库存的担忧。 基本上,供应链的压缩是推动这种减少的最重要因素,它的基础广泛。


Thank you. Our next question comes from Blayne Curtis with Barclays.

谢谢。 我们的下一个问题来自Blayne Curtis和Barclays。

Blayne Curtis

Hey guys, thanks for taking my question. Maybe I could just follow-up on to that question, Hock. Just kind of curious, as you look, I mean I think markets were soft and you saw a lot of revisions last quarter. You guys kind of maintained your forecast. I'm kind of just trying to figure out when you saw this slowdown, if you can give us any idea of that.
And then if there's just any more color you can add for end market, is there any end markets that you're not seeing this weakness? And if you can point to any particular product, that would be helpful.

嘿伙计们,谢谢你提出我的问题。 也许我可以跟进这个问题,霍克。 有点好奇,你看,我的意思是我觉得市场很软,上个季度你看到了很多修改。 你们有点保持你的预测。 我有点想弄清楚你何时看到这种放缓,如果你能给我们任何想法。

然后,如果您可以为终端市场添加更多颜色,那么您是否有任何终端市场没有看到这种弱点? 如果你能指出任何特定产品,那将会有所帮助。

Hock Tan

Well, we started seeing this softness as we -- basically, the beginning of this quarter, like Q3, very much so a dramatic reduction, and it particularly accelerated with the now order that was imposed on Huawei.

好吧,我们开始看到这种疲软,因为我们 - 基本上,这个季度的开始,就像第三季度一样,非常显着的减少,并且特别是加速了对华为强加的订单。


Thank you. Our next question comes from Harlan Sur with JPMorgan.

谢谢。 我们的下一个问题来自摩根大通的Harlan Sur。


Good afternoon. Thanks for taking my question. On the networking side specifically, that's been a strong area for the team, growing double digits year-over-year for the past few quarters. And it's an area where you guys actually do have some pretty strong product cycles like Tomahawk 3, Jericho 2, some of the compute offload ASICs.
In the revised outlook ex-Huawei, how does the macro uncertainty impacting this segment and some of these programs? And again, ex-Huawei, would you expect the networking business to grow second half over first half?

下午好。 谢谢你提出我的问题。 具体来说,在网络方面,这是该团队的一个强大领域,过去几个季度同比增长两位数。 在这个领域,你们确实拥有一些非常强大的产品周期,如Tomahawk 3,Jericho 2,一些计算卸载ASIC。

在华为之前的修订前景中,宏观不确定性如何影响这一细分市场及其中一些项目? 再说一次,前华为,你会期望网络业务在上半年增长到下半年吗?

Hock Tan

Harlan, very good question. Our networking business, which I think is what you're referring to, continues to be a very strong business. Year-on-year, we expect our networking -- total networking business, to grow double-digits year-on-year. It's strong, particularly with new product ramps and new product cycles that we've seen both in switching, routing related to that. It is one of the brightest areas in our portfolio in this environment and continuous to be strong notwithstanding the export ban on Huawei.

哈伦,非常好的问题。 我认为,我们所谓的网络业务仍然是一项非常强大的业务。 与去年同期相比,我们预计我们的网络 - 整体网络业务将同比增长两位数。 它非常强大,尤其是我们在切换,路由相关的新产品斜坡和新产品周期方面。 在这种环境下,它是我们投资组合中最亮的领域之一,尽管华为出口禁令,但仍然保持强势。


Thank you. Our next question comes from Ross Seymore with Deutsche Bank.

谢谢。 我们的下一个问题来自Ross Seymore与德意志银行。

Ross Seymore

Hi Hock, thanks for letting me ask the question. I wanted to go into the wireless side. I know you just signed a supply agreement with a large North American customer. They typically have positive second half seasonality. And most of us believe you actually were reaping in some share.
So, if I put that all into the mix, how are you getting -- especially given what you just said in networking growing double-digits, how are you getting the second half to be relatively flat with the first half? Is there some offsets in other areas or are some of our assumptions in wireless incorrect?

嗨,霍克,谢谢你让我问这个问题。 我想进入无线方面。 我知道你刚刚与一位北美大客户签订了供应协议。 他们通常在下半场有正面的季节性。 我们大多数人都相信你实际上正在收获一些份额。

所以,如果我把这一切都融入到混音中,你是如何得到的 - 特别是考虑到你刚刚在网络中增长两位数所说的话,你如何让下半场与上半场相对平稳? 在其他领域是否有一些抵消或我们对无线的一些假设不正确?

Hock Tan

Well, I don't know what the assumptions are, Ross, on wireless. But networking is about really the -- is about the only area of strength in this current environment, and that's because it coincides with very strong product cycles we are seeing. In just about broadly any of the end market segments, we do not see, in terms of year-on-year, improvement from 2018.

嗯,我不知道假设是什么,罗斯,无线。 但网络实际上是关于 - 在当前环境中唯一的优势领域,那是因为它与我们看到的非常强大的产品周期相吻合。 在几乎所有的终端细分市场中,从2018年开始,我们没有看到同比增长。


Thank you. Our next question comes from Timothy Arcuri with UBS.

谢谢。 我们的下一个问题来自瑞银的Timothy Arcuri。

Timothy Arcuri

Hi. Hock, I actually just had a question about the competitive environment for your RF front-end business as we kind of move into 5G and particularly around a large modem maker now that's talking about having a complete RF package and sort of being able to sweep that in with their modem. So, can you kind of talk about the competitive environment and your position as you can get into 5G? Thanks.

你好。 霍克,我实际上只是对你的射频前端业务的竞争环境提出了一个问题,因为我们已经进入5G,尤其是围绕一个大型调制解调器制造商现在正在谈论拥有一个完整的射频包并且有点能够扫描 与他们的调制解调器。 那么,您可以谈谈竞争环境和您可以进入5G的位置吗? 谢谢。

Hock Tan

That's a very interesting question. We continue to believe we are very, very strongly positioned. And it's in many ways validated by some of the data points I just mentioned. We have, by far, the best technology and products out there in RF front-end components. They're typically the filters and the integrated front-end modules. We are, by far, the furthest ahead technology-wise and in terms of capabilities. And we continue to believe we are still very much in front.
And as I said, it's been validated and continues to be validated by the value we give to our very critical customers and the fact that they continue to be very supportive of our business.

这是一个非常有趣的问题。 我们仍然相信我们的定位非常非常强大。 它在很多方面都得到了我刚才提到的一些数据点的验证。 到目前为止,我们拥有射频前端组件中最好的技术和产品。 它们通常是过滤器和集成的前端模块。 到目前为止,我们在技术方面和能力方面都是最先进的。 我们仍然相信我们仍然处于领先地位。



Thank you. Our next question comes from Toshiya Hari with Goldman Sachs.

谢谢。 我们的下一个问题来自Toshiya Hari和Goldman Sachs。

Toshiya Hari

Hi guys. Thanks for taking the question. I had a question on RF as well. Hock, can you remind us what kind of content growth are you expecting or assuming into the back half, both on the RF side as well as the Wi-Fi side of your business within wireless?
And then you also talked about 5G or rather how the recent win positions you well into 5G. As of today, what you know base on what you heard from your customers, what kind of content growth on the RF side are you expecting as we transition to 5G over the next couple of years? thank you.

嗨,大家好。 谢谢你提出这个问题。 我也有关于RF的问题。 Hock,您能否提醒我们您在RF端以及无线网络中的Wi-Fi方面,您期望或假设进入后半部分的内容增长情况如何?

然后你还谈到了5G,或者说最近的胜利如何让你很好地融入5G。 截至今天,您所了解的基于您从客户那里听到的内容,在未来几年我们过渡到5G时,您对RF方面的内容增长有何期待? 谢谢。

Hock Tan

Thank you. Well, asking year-on-year is actually very difficult, so I appreciate you asking me what do I see over the next two, three years on content growth. And I mean the best way to describe content growth in RF, and we have seen that and we have empirical evidence of that for the last five years, even longer and not the same every year, is that, annually, we probably see in the 5% to 10% range content growth and with -- in terms of the products we ship.
Now, for the entire, I guess, our further available market, our -- yes, the further available market, it's probably a smaller growth percentage.

谢谢。 好吧,问同比实际上非常困难,所以我很感谢你问我在未来两年,三年的内容增长情况。 我指的是描述RF内容增长的最佳方式,我们已经看到了这一点,并且我们有经验证据表明,在过去五年中,每年甚至更长,而且每年都不一样,每年,我们可能会看到 5%至10%的范围内容增长和 - 根据我们发运的产品。

现在,对于整个,我猜,我们的进一步可用市场,我们 - 是的,进一步可用的市场,它可能是一个较小的增长百分比。


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

谢谢。 我们的下一个问题来自瑞士信贷的John Pitzer。

John Pitzer

Yes, good afternoon guys. Hock, I just want to go back to Ross' question about the wireless guide for the balance of the year. I'm just curious, relative to 90 days ago when you guys were kind of guiding the overall semi business well above normal seasonality for the balance of the year, now you're talking about a flat half-to-half.
To what extent did your content expectations come down to the back half of the year versus just this really being a unit issue on the wireless side of the business?

是的,大家下午好。 霍克,我只想回到罗斯关于今年余额无线指南的问题。 我只是很好奇,相对于90天前,当你们在一年中平衡时,你们有点指导整体半成品高于正常的季节性,现在你说的是半平半。


Hock Tan

Well, that's an interesting question that lays out that -- keep in mind; we're taking a very conservative stance here. And very frankly, even as we see the ramp-up and we do see the ramp-up, we are -- we've also been forecasting a fairly dramatic set of numbers before. And when you -- and that is more than offset by the fact that for the rest of the broader markets, we're just seeing a demand environment that is extremely uncertain.

嗯,这是一个有趣的问题,表明 - 记住; 我们在这里采取非常保守的立场。 而且非常坦率地说,即使我们看到了上升趋势,我们确实看到了上升趋势,我们也是 - 我们之前也预测过一组相当大的数字。 而且,当你 - 而且对于其他大市场而言,我们只是看到一个非常不确定的需求环境。


Thank you. Our next question comes from Craig Hettenbach with Morgan Stanley.

谢谢。 我们的下一个问题来自摩根士丹利的Craig Hettenbach。

Craig Hettenbach

Yes, thanks. Hock, just coming back to the compute offload you talked about at hyperscale. I know a little while back, you guys talked about some initial traction in ASICs. Just wanted to get an update in terms of the breadth of that particular hyperscale is and how -- to the extent that you're extending that to multiple customers as we look forward.

确实如此。 不,它可以包括。...

Hock Tan

Well, I have mentioned before in previous calls -- earnings calls about our focus in increasing traction in what we call compute offload engines or I call it, compute offload accelerators in multiple areas, including AI, of course, and virtualization, orchestration from the compute servers, and expanding that now to video transcoding and encryption. And we continue to see that and it is an emerging space from our perspective.
But nonetheless, it's a space that seems to be growing very steadily and continuing to trend up very significantly. And this is a space we believe at the end -- in a matter of three to five years could be a significant percentage of the total compute spend within any large scale data center.
And we're talking about potentially getting to perhaps even as high as 25% or more of total spend in the computing environment of a large scale cloud data center.

好吧,我之前曾在之前的电话中提到过 - 盈利呼吁我们关注增加牵引力,我们称之为计算卸载引擎或我称之为,计算多个领域的卸载加速器,包括AI,当然还有虚拟化,编排来自 计算服务器,并将其扩展到视频转码和加密。 我们继续看到这一点,从我们的角度来看,这是一个新兴的空间。

但尽管如此,这个空间似乎正在稳步增长并且继续呈现出非常显着的趋势。 这是我们最终相信的一个空间 - 在三到五年内,任何大型数据中心的计算总支出都可能占很大比例。



Thank you. Our next question comes from Chris Danely with Citi.

谢谢。 我们的下一个问题来自花旗的Chris Danely。

Christopher Danely

Hey thanks guys. Just looking at the overall environment, Hock, do you think your guidance incorporates the proposed next round of $300 billion in tariffs, i.e., if that thing does go through, do you still feel good about your guidance? Or do you think there could be more downside if that does go through?

嘿谢谢你们 只是看看整体环境,Hock,你认为你的指导纳入了下一轮3000亿美元的关税,即如果确实如此,你还是对你的指导感觉良好吗? 或者你认为如果确实会有更多的缺点吗?

Hock Tan

I think at this point, we try to capture everything including that proposed next round into the picture. We have the belief that things are -- environment is very, very nervous. And that's why we see a very, very sharp and rapid contraction of supply chain and orders out there from our customers, especially our global OEM customers even as we believe, as I mentioned in North America and Europe, end demand hasn't reflected that. So, we are seeing a very reactive mood here. And so I got to believe that includes the sense that this $300 billion of next round of potential tariffs could be in place.
Also keep in mind, something I should add is that even as we see some -- there are two parts to this. One part is what's the impact of the Huawei ban on a company like us selling components and technology?
Well, short-term, keep in mind, we'll see a very sharp impact simply because there are no purchases allowed, and there's no obvious substitution in place from other OEMs replace -- taking over end demand, which may exist, which may continue to exist.
Give it a few months, give it six months, if those end demand still remains out there, mostly other OEMs qualified to take over those, to replace Huawei on those demand and other OEMs will come in, and those OEMs will continue to buy our products. And so we have a rebalancing and readjustment in demand from our side. But short-term, we do not expect to see that.

我想在这一点上,我们试图捕捉包括下一轮提议的所有内容。我们相信事物是 - 环境非常非常紧张。这就是为什么我们看到供应链的非常,非常急剧和快速的收缩以及我们的客户,特别是我们的全球OEM客户的订单,即使我们认为,正如我在北美和欧洲所提到的,最终需求并未反映出。所以,我们在这里看到一种非常反应的情绪。所以我相信这包括下一轮3000亿美元的潜在关税可能到位的感觉。

还要记住,我应该补充的是,即使我们看到一些 - 这有两个部分。一部分是华为禁止像我们这样销售组件和技术的公司的影响?

嗯,短期,请记住,我们会看到一个非常尖锐的影响,因为没有允许购买,并且没有明显的替代来自其他OEM替代 - 接管可能存在的最终需求,这可能继续存在。



Thank you. Our next question comes from William Stein with SunTrust.

谢谢。 我们的下一个问题来自William Stein和SunTrust。


Great. Thanks for taking my question. On a brighter note, I'd like to ask about CA a little bit. Last quarter, Hock, I think you talked about at least one proof point with regard to sort of deeper engagements with CIOs around a deal that might involve both sides of the business. Anything similar to that? Were you seeing more proof points around traction in sort of the strategic approach in that acquisition? Thank you.

非常好。 谢谢你提出我的问题。 更明亮的是,我想问一下CA。 上个季度,Hock,我认为你谈到了至少有一个关于与CIO就可能涉及双方业务的交易进行更深入交易的证据。 有什么相似的吗? 您是否在该收购的战略方法中看到更多关于牵引力的证据? 谢谢。

Hock Tan

Well, yes. One of the things we are doing is -- as we said last time, is as we focus on core accounts -- as I said, these are the largest enterprises in the world who buys a lot of software infrastructure and infrastructure software.
And given the broad portfolio of products CA has that we bring to bear between mainframes, and these largest companies mostly runs a lot of mainframe capacity and distributed software infrastructure, and our ability to offer this as an enterprise and portfolio-wide transaction, we have been very, very successful in securing such enterprise-wide contracts with significant uplift in booking dollars in the form of larger amount of renewals with, right now, over 20 large accounts in the six months since we've taken over and closed on this transaction.
And we foresee that rate being even higher over the next six months. So, that's working. And that's working very well, which allows us to give you a fairly positive tone to how the CA business has been trending as far as we are concerned.
In a nutshell, and I said that earlier, the amount of dollar commitments we've been able to achieve compared to what expires has increased quite significantly.

嗯,是。我们正在做的事情之一就是 - 正如我们上次所说的那样,正如我们关注核心账户 - 正如我所说,这些是世界上购买大量软件基础设施和基础设施软件的最大型企业。





Thank you. Our next question comes from Matt Ramsay with Cowen.

谢谢。 我们的下一个问题来自Matt Ramsay和Cowen。


Thank you very much. Good afternoon. Hock, wanted to ask a little bit about -- obviously, we talked about the demand environment and the trade environment a bit, but I wanted to ask a little bit about the M&A environment as you see it.
Obviously, CA took the company in a little bit of a different direction, but we've seen some semiconductor mergers announced here very recently. I wonder if you might give us a little bit of a view on the M&A environment as you see it right now on the semiconductor side. Thank you.

非常感谢你。 下午好。 霍克,想问一点 - 显然,我们谈到了需求环境和交易环境,但我想问一下你所看到的并购环境。

显然,CA在一个不同的方向上占据了公司,但我们看到最近在这里宣布了一些半导体合并。 我想知道你是否可以给我们一点关于并购环境的看法,正如你现在在半导体方面看到的那样。 谢谢。

Hock Tan

You are saying the M&A environment in the semiconductor space? Yes. I see what you see there, which is some level of activity that seems to go on. And it's quite interesting, in a way quite encouraging, for us to see that the direction we have taken, a large part of this industry seems to be making sense to a lot of our peers, too. And from our point of view, we welcome it.
And as I've indicated before in previous earnings call, for us, it's what's makes sense, what's actionable in terms of businesses that are franchises that we see as very sustainable and that are -- that we are able to acquire.
And -- but right now, we see a lot of movements, but we -- and we continue to be very interested in opportunities that may present themselves and we continue to be very active in assessing those opportunities.

您是在谈论半导体领域的并购环境? 是。 我看到你在那里看到的东西,这似乎是一些活动水平。 而且非常有趣,在某种程度上令人鼓舞,让我们看到我们所采取的方向,这个行业的很大一部分似乎对我们很多同行也有意义。 从我们的角度来看,我们欢迎它。


而且 - 但是现在,我们看到很多动作,但我们 - 我们仍然对可能出现的机会非常感兴趣,我们继续积极评估这些机会。


Thank you. And our final question will come from Chris Caso with Raymond James.

谢谢。 我们的最后一个问题将来自Chris Caso和Raymond James。


Yes, thank you. Hock, I just wanted to return to some of your questions -- some of your comments rather regarding inventory, and you talked about the customers reducing inventory. Do you think that the inventory levels at the customers were elevated coming into the quarter or is this just a situation where the customers are reducing inventory proactively because of the uncertainty? I guess the question is how much of the weakness you see here is driven by inventory reduction as opposed to demand.

是的,谢谢。 霍克,我只是想回到你的一些问题 - 你的一些评论而不是关于库存,你谈到了客户减少库存。 您是否认为客户的库存水平在本季度有所提升,或者这是因为客户因不确定性而主动减少库存? 我想问题是你在这里看到的多少弱点是由库存减少而不是需求驱动的。

Hock Tan

I think what we are seeing a lot here -- because overall demand weakness or uncertainty probably started even before this quarter began, but the sharpness in terms of demand contraction -- demand reduction, I should say, is coming from the fact that customers are even more aggressively now trying to reduce inventory out there and a lot of it is customer inventory that we're talking about directly.
As you noticed, on our balance sheet, our inventory has been very well-managed, tightly managed and we continue to be very, very consistent through all this, in the range of 65 days of inventory.
So, this reduction is very much the action of the supply chain of the end user, which really reflects on our direct customers where there's been a sharp reduction of inventory out there. And are we talking significant? Yes. We believe it is -- what we've seen is very significant and we anticipate that to continue, which reflects in our revised guidance for the rest of this year, which is the next less than six months out there. Beyond that, who knows?

我认为我们在这里看到了很多 - 因为总体需求疲软或不确定性可能在本季度开始之前就开始了,但是需求萎缩的急剧程度 - 我应该说,减少需求来自客户是现在更加积极地尝试减少库存,其中很多是我们直接谈论的客户库存。


因此,这种减少很大程度上取决于最终用户的供应链,这真实地反映了我们的直接客户,那里的库存大幅减少。我们说的很重要吗?是。我们相信它是 - 我们所看到的是非常重要的,我们预计这将继续下去,这反映在我们今年剩余时间的修订指导中,这是下一个不到六个月。除此之外,谁知道呢?


Thank you. Ladies and gentlemen, thank you for participating in today's Q&A session as well as today's conference call. This concludes the program. You may all disconnect and have a wonderful day.

谢谢。 女士们,先生们,感谢您参加今天的问答环节以及今天的电话会议。 该计划到此结束。 你们可能都会断绝关系并度过美好的一天。

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