STX
#I'll let <UNK> figure that out.
The MOFCOM thing, it's hard to answer the question.
For us, of course, if you just looked at it from a synergy perspective on, quote, OpEx, as you know, we were basically maintaining a separate go-to-market organization for that.
It wasn't a huge go-to-market organization so the synergies isn't so much immediately OpEx-related.
There will be some.
There may be some OpEx related in that we were moving a lot of units, over 10 million units, with a pretty lean organization.
We are actually kind of reverse engineering that to saying how can we take advantage of, quote, the Seagate operation to maybe look more like that.
So actually, the synergies may effectively come from reduction in Seagate OpEx, as opposed to the apparent reduction in the small single-digit millions of dollars that we were spending on the Samsung side.
I think the other big piece is revenue synergies.
Clearly, now that product line is the highest arial density product in the industry.
It has been for a couple of years and we can now broaden that to the broader Seagate sales force.
I think there's going to be some nice revenue synergies from that.
Then the other big synergy that's an OpEx synergy, but I can't tell you and it's going to save this many dollars, is that design center, which is a very competent design center, is now free to design products that don't have to be subject to the hold separate.
And so that allows us, basically, to start putting products into that design center or having products come out of that design center that aren't going to be limited to the Samsung sales force.
So in that sense, there's nice operating leverage because the design center is an expensive thing to keep.
So having a broader portfolio come out of that, we think, is beneficial.
So net-net, we think it basically drives better revenue opportunity, clearly better margin opportunity, as we mix across the portfolio and then better operating margin, because the more efficient dynamic on the design center, as well as the go-to-market side.
<UNK>, this is <UNK>.
Just a quick follow up, please use 304 million shares for your fully diluted EPS calculation.
If you go and compare to where we were running kind of under the averages, both between us and our competitor down south, it was just the higher activity in and around of how we manage our working capital.
There was nothing being done outside of anything with our normal terms.
It was just we got very, very critical, plus we also had a lot of strong linearity in and around the quarter, which suited us well versus the previous quarter.
So that's where we see those upticks.
Yes.
It's not the distraction that I think is the opportunity, it's the kind of the overall transaction, because when you kind of go through it, it's a $10 billion premium to the 90 day average.
35 times earnings for a Company that hasn't had earnings growth in five years, actually has earnings decline in five years, isn't a technical or cost leader, and you're going to finance it with $18 billion of debt, which means you have to somehow have big OpEx cuts, because there's not enough SG&A to pay for that.
There wouldn't appear to be enough revenue synergies because is not a competitive technology relative to the leaders, so it's going to come down to engineering cuts.
So I think that's the opportunity.
It's not so much the distraction, maybe there's a distraction, maybe there isn't.
But the reality is, in order to make that model work, there's going to have to be OpEx cuts to pay back that huge debt load or you're never building another fab.
And this is just an industry where, whether or not it's the flashlight or the HDD side, massive cuts in R&D doesn't seem smart, but for us, it's good.
So I think the opportunity is make sure, look, Seagate feels great about where we're at technically.
We don't, obviously, feel great about having the broadest portfolio that we need and we need to address that, but the good news is we have the technical leadership to do that.
So we'll keep pressing that case.
That's, I think, what's going to translate into the market opportunity, whether or not it's the enterprise level or the client level or the nearline level.
I do think that transaction gives us an opportunity, just because the OpEx side of their business is going to be challenged to pay back all that debt.
I think on the PC market, it feels, it's kind of always hard to tell where you're getting traction or not, especially when the gaming stuff comes in and out as much as it does.
But it feels like the PC market has kind of found its space and that there's probably a little bit of traction for some marginal growth.
I think with respect to Seagate, kind of gets back to the technical point, we are excited about the product portfolio that we're about to roll.
We do think when you transition to kind of one and two terrabyte products, that's compelling for those client-based systems that actually do need onboard storage.
Of course, we can do that in the form factors that fit into the new thin and light notebooks.
So I think we're kind of - - I think, look, I think Seagate's always been a little bit more bullish on clients than maybe others.
I think within that segment, we feel that we're particularly well-aligned and maybe again, that's a reflection of the fact that we're very OEM-concentrated and we feel good about lining up with what the OEMs need in the space.
So I feel okay about the client space going forward.
And as you know, I'm more encouraged, also, that there's some client that goes beyond what we're calling a client today.
And I still think those opportunities continue to open up and they're going to need one and two and four terrabytes of data.
By the way, the same could be said about the branded market.
We've got a nice four terrabyte market product out there right now and we're gaining traction with it and we continue to believe that the direct attached storage business will be quite good on the client side, especially as people skinny down on what they have on board.
And then in regards to the modeling question exiting an FY16, that's a $460 million non-GAAP run rate for OpEx, I think that's fair to continue on that trajectory.
Obviously, we continue to evaluate in how we monetize our OpEx investments and then around the specific workloads that we deliver to our customers.
All right.
Thanks, everyone.
We're going to work hard to gain back some credibility here.
We appreciate you being on the call today.
We look forward to talking to you next quarter.
