Cypress Semiconductor Corporation (NASDAQ:CY) Q3 2016 Earnings Conference Call - Final Transcript

Oct 27, 2016 • 04:30 pm ET

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Cypress Semiconductor Corporation (NASDAQ:CY) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good afternoon, and welcome to Cypress Semiconductor Third Quarter 2016 Earnings Release Conference Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to hand the call over to your host, Ms. Melanie Solomon, Investor Relations. Ma'am, you may begin.

Executive
Melanie Solomon

Thank you, Vince. Good afternoon, and thank you everyone for joining our Q3 conference call. With me today are Hassane El-Khoury, CEO; Thad Trent, CFO; and Mike Balow, EVP of Sales and Applications. Hassane will make some introductory remarks, Thad will provide a financial overview and then we'll take your questions. All information discussed in our press release and on this call is based on preliminary unaudited results, and we encourage you to review our 10-Q once filed.

(Forward-Looking Cautionary Statements)

Please note that the financial measures to be discussed by management today are non-GAAP measures, unless they are specifically identified as GAAP measures. Reconciliations of all non-GAAP measures to their most comparable GAAP measures are included in the earnings press release issued today.

I'll now turn the call over to Hassane.

Executive
Hassane El-Khoury

Thank you, Melanie, and thank you all for joining us. I'm pleased to be here on my first call as CEO with these results marking our [first] consecutive quarter of meeting or exceeding our guidance. Before Thad goes into detail on our financial performance, I want to share my vision for Cypress with you, particularly in terms of what you might have heard us described recently as Cypress 3.0 to align our technology and capabilities, and most importantly, our investments with opportunities in high-growth markets.

Cypress 1.0, the Company we founded in 1982, was Cypress as a supplier of commodity products, including SRAM, and we remained the market leader to this date. With the introduction of our PSoC, programmable system-on-chip in 2000, we began Cypress 2.0, a major shift from commodity products to proprietary and programmable products.

Cypress 3.0 represents our shift to complete embedded solutions in markets that are growing faster than the general semiconductor industry. We defined embedded solutions as combinations of MCUs, memories, analog products, USB solutions, and now wireless connectivity, along with the software that enables them to work together to provide our embedded systems customers with differentiated system-level solutions. In a few weeks, we will be at Electronica to announce an important milestone on this transition, which will highlight the importance of software and how we go to market in Cypress 3.0.

Piece by piece, we've been transforming Cypress into the preferred solution supplier for automotive, industrial, and Internet of Things or IoT customers. We've done this with the Spansion merger, with the acquisition of the IoT business unit from Broadcom, and most recently with the restructuring we started a few weeks back.

We're reallocating resources to where they matter most, with future capital investments focused on our growth in core businesses. We have made efforts to monetize our investments in our Emerging Technologies Division. We now consider DecaTech to be sufficiently funded,