Patrick Van de Wille - IR Bill Merritt - President and Chief Executive Officer Rich Brezski - Chief Financial Officer

Nikhil Dixit - Barclays Capital Eric Wold - B. Riley Charlie Anderson - Dougherty & Company Matthew Galinko - Sidoti

Thank you very much, Chris. Good morning, everyone and welcome to InterDigital’s fourth quarter and full year 2016 earnings conference call.

With me this morning are Bill Merritt, our President and CEO; and Rich Brezski, our CFO. Consistent with last quarter's call, we will offer some highlights about the quarter and the company and then open the call up for questions.

Before we begin our remarks, I need to remind you that in this call we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those set forth in our earnings release published this morning, as well as those detailed in our Annual Report on Form 10-K for the year ended December 31, 2016 also filed this morning, and from time-to-time in our other filings with the Securities and Exchange Commission.

These forward-looking statements are made only as of the date hereof and except as required by law, we undertake no obligation to update or revise any of them whether as a result of new information, future events or otherwise. In addition, today's presentation contains references to non-GAAP financial measures, such as free cash flow and pro forma operating expense.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our fourth quarter 2016 financial metrics tracker, which can be accessed on our homepage, www.interdigital.com, by clicking on the link on the left side of the homepage that says, Financial Metrics Tracker for Q4 2016. With that, I will turn the call over to Bill.

Thanks, Patrick, and good morning everyone. It's certainly a pleasure to be speaking with you after the kind of year the company had in 2016.

So let me do a quick review of the year and then talk briefly about what we are looking to do in 2017. From every measure, 2016 was the best year the company ever had.

Financially, our revenue and profit were strongest ever and was our cash flow. Our stock obviously performed well.

So how did that happen? The answer is straight forward.

We executed on a few simple goals we set for ourselves in 2016. Goals that because of our experience in operating our business, we knew would drive substantial value.

Those were, one, to drive greater revenue but more importantly, drive greater certainty and stability around our cash flows. Two, seize the massive 5G innovation opportunity to allow us to grow our core business.

Three, drive the IoT opportunity as an additional growth factor. And, four, begin acquiring businesses that would make our core business even stronger.

Let me address each of these. On the revenue side, we came into 2015 with a good revenue level and great opportunity for growth.

What was missing was better long-term revenue stability and predictability. Yes, we had Samsung, the number one player in the market under a long-term license but Huawei was not yet paying and revenue derived from the sale of Apple products was through a supply arrangement that had some level of risk for us.

By end of the year, this had all changed. We signed Huawei to a license agreement that included a cooperation component.

We love agreements to have a cooperation component because experience has shown that these are the easiest to renew and because we are confident in our InterDigital's labs team's ability to drive or deliver great value. We also signed Apple to a comprehensive agreement.

That gives us a top three vendors in the world under agreement that provide us with superb revenue stability and visibility. In fact the recurring revenue from those agreements combined with the past sales collection and contribution from our other license fees, resulted in our finest financial year ever.

And it's from that incredibly solid foundation that we believe we can grow the business even further. A point of that growth is 5G.

As we have mentioned on numerous calls and in many interviews with mainstream and trade publication, 5G is a massive innovation opportunity. Our engineers along with others are being challenged to design a network that will take your mobile phone experience to new heights but also enable the IoT dream and drive incredible new services like self driving vehicles.

In my 21 years with the company and even comparing it to the first deployments of wireless systems, we have never been faced with such an innovation challenge. I liken it to when John F.

Kennedy instructed NASA to get us to the moon before the end of the decade. The challenge seemed insurmountable but when undertaken by the finest engineers, that dream became a reality.

The same is true for 5G as I am confident that wireless engineers around the world, InterDigital is among them, are similarly rising to the challenge and creating a wireless system that will be able to do all these things and more. And like the original Internet, that system will revolutionize so many things and create extraordinary opportunity for us not only to drive our core licensing business but also create and grow a new licensing business in the IoT realm.

Which brings me to the third thing we focused on in 2016, the IoT opportunity for the company. In 2016, we focused the opportunity into distinct areas.

First, we joined the Avanci licensing platform as a means of pursuing the connection level IoT opportunity. In other words, the licensing of technologies in our existing licensing program to connect things like sensors, meters and other devices, IoT devices to the network.

Cooperating with Avanci, partners like Qualcomm, Ericsson and others represented the most effective and efficient means of pursuing the licensing of what will be a vast and diverse market. So far we are very happy with the progress being made by Avanci.

Second, we consolidated all of our upper layer software and patent licensing opportunity into a single group at the company. As those of you who follow us closely, that opportunity is based on the interoperability standards development we did and continue to do and our resulting standards-based software solution.

Interoperability is key in IoT. Once devices are connected to the network, they need to connect to each other in order for businesses to build meaningful capabilities.

Our IoT solutions group had a very good year in terms of building up our solution, getting it into hands of customers for trial and building an ecosystem of channel partners. That includes the partnership announced with CA Technologies just two days ago, which layers onto other great partnerships with companies like HARMAN and [indiscernible].

Our value proposition is very straightforward. With our cloud-based operating environment, powered by our standards-based connection platform, we offer the most rapidly scalable system for deploying a comprehensive IoT solution in basically any market vertical.

Whether it is industrial, smart city, automotive or commercial. We demonstrated that capability in the UK where we were part of a team that deployed the framework for a traffic management system in a matter of months.

And that capability has led to great recognition. Our IoT solutions have now won or have been shortlisted for nine prestigious global awards, a phenomenal achievement.

All in, it was a great year for our IoT business. Our fourth objective in 2016 was to begin to make acquisitions that would drive our core business even further.

We completed such an acquisition in December when we acquired Hillcrest Laboratories, a recognized leader in sensors and sensor fusion. Hillcrest fits perfectly into our M&A strategy where our goal was to acquire additional areas of deep competence that complement our very strong position in wireless, allowing us to deliver more technology to our current customer base.

Such an acquisition leverages our business model, our customer position and our historic strength in licensing. There is no better way to build value at the company.

In the case of Hillcrest, that new area of competence is made up not only of a strong technology offering and associated patent portfolio but also the R&D capability to allow those elements to grow. Indeed, that is the bedrock of our successful R&D backed licensing business.

It is not that we just have patents, it is that we have recognized core strength in an area of importance to mobile devices, a strength that is embodied in the extreme competence of our engineering teams, the accuracy of our forward vision, our leadership positions in a standards bodies, the size and quality of the patent portfolio, and how often people reference InterDigital as a thought leader in our space. For wireless, I cannot tell you how many interviews and calls we have had about 5G with people reaching out to us as a recognized thought leader.

Hillcrest has a similar position in the growing space of sensors and sensor fusion. We intend to build on that position and further develop that area of competence.

Which brings me to 2017 with our goals being largely the same as 2016. First, for our core licensing business we continue to work towards new license agreements to drive additional revenue.

We will deploy all of the tools that are at our disposal, including our portfolio of patents, our ability to partner on R&D, our IoT assets, and our newly acquired capability with Hillcrest. We will continue to drive innovation in 5G.

2017 will be a huge year in terms of the opportunity to influence the standards and we intend to bring our best innovation to the process. As an example of our leadership, next week at the Mobile World Congress in Barcelona, the GSMA, our industry's most important trade association has asked us to join Qualcomm, Ericsson and Intel in showcasing our 5G technology on the main stage.

Further, we will drive the IoT opportunity. We should expect to begin to see revenue from Avanci and also revenue from the deployment of our software.

While the amount of revenue may initially be small, what we will be looking for is a quality of customer and related revenue such that we can demonstrate the ability of the IoT business to grow quickly. Next, in addition to leveraging the strength of Hillcrest into our core licensing business, we will also seize the opportunity that Hillcrest has created in new markets of robotics and ARVR.

We believe these are important future markets where the combined technologies of Hillcrest and InterDigital can create value for shareholders. Lastly, we will continue to look for the right type of acquisitions.

I think the company will benefit from greater scale. That said, the idea is not to change the fundamental nature of our business.

As mentioned before, our goal is to build more technology strength giving us significant depth in a number of different pervasive technologies related to current and future mobile devices. Our ability to effectively and efficiently deliver these new technologies to our customers will enhance our royalty platform and drive even greater profitability all the while keeping true to a business model that has served us very well.

In sum, we had a great year and we start 2017 at an incredibly strong position. We have the opportunity to drive even more success and fully intend to do so.

With that, let me turn the call over to Rich.

Thanks, Bill. There are any number of strong adjectives I could use to describe our fourth quarter and full year 2016 results.

But the numbers really do speak for themselves. In 2016, we generated record full year free cash flow of close to $400 million.

In addition to record full year revenue of $665.9 million, and EPS of $8.78 per share. What is most important is the significant progress reflected by our 2016 results.

During the year we entered into patent license agreements with the second and third largest handset vendors in the world, which together with Samsung accounted for approximately 40% of all 3G and 4G handsets sold in 2016. Having these top handset manufacturers under license to our portfolio of technology, is the latest validation of our long standing and continuing innovation within the wireless industry.

I want to provide a breakdown of the fourth quarter revenue related to Apple. Because we recognize revenue from Pegatron in the quarter that follows their shipments, our fourth quarter results include three components of revenue from the Apple ecosystem.

First, royalties Pegatron paid associated with their third quarter of 2016 shipments about the products. Second, amortization of fourth quarter 2016 revenue associated with our new license agreement directly with Apple, and third, revenue associated with past sales of Apple products that were not covered by another agreement.

Of these amounts, we recorded only the amortization of fourth quarter 2016 revenue from Apple within recurring revenue. The other two components of revenue were recorded within past sales, accounting for the vast majority of our fourth quarter past sales of $180 million.

Moving back to our overall results. We are able to achieve this record level of revenue with our lowest level of operating expense in the last five years.

Over that time period, our pro forma operating expense, which we believe provides a better metric for period to period comparisons, has a compound annual growth rate of 2%, and that includes the slight increase in expense since 2012 associated with our participation in the Convida joint venture. As you have heard me say before, expense management is a key area of focus for us.

That doesn’t mean we want to keep our expenses at the lowest possible level but rather that we want to invest at the optimal level. Our recent acquisition of Hillcrest Laboratories illustrates that point.

As things currently stand, we expect Hillcrest to contribute roughly $18 million to $20 million of annual operating expenses and cost with roughly one third of that offset in 2017 by expected revenue contributions. The operating expenses include approximately $4 million of amortization expense associated with acquisition intangibles, related to Hillcrest's very strong intellectual property portfolio.

We believe the resulting near-term increase in net operating expense is a very worthwhile investment to add both Hillcrest's fundamental position in sensor fusion technologies and the team that built that position. Over the long-term we see great opportunities to capitalize on the revenue potential from Hillcrest's existing business as well as to further enhance the value proposition we offer to customers of our wireless technologies.

We finished 2016 with an effective tax rate of 27.7%, in large part due to the amended tax returns we filed in the second quarter of 2016 to take domestic production activities to [indiscernible]. Excluding the impact of this deduction related to prior years, our effective tax rate would have been about 33.4%, which represents a 2.3% point reduction from the prior year.

I will close with an update on capital allocation. We have not repurchased any shares of our common stock since third quarter of 2016.

In fourth quarter, we paid $10 million in dividends, following our third quarter increase to our quarterly dividend to $0.30 per share. We also invested $48 million in the acquisition of Hillcrest.

We continue to consider share buybacks and dividends along with both organic and inorganic investment opportunities. Deployment of cash is always a matter of particular attention at InterDigital, as is always the case, the primary criterion for balancing the mix of these options is value to our shareholders.

With that, I will turn it back over to Patrick.

Thank you very much, Rich. Chris, if we could open the call for questions.

This is actually Nikhil Dixit on for Darrin. Congrats on the strong quarter.

So when you think about the transition towards newer generations, if we could take a step back for a moment, how do we think about the timeline for some of the earlier 2G, 3G contracts potentially winding down? And do you have any concerns about consolidation of those 2G and 3G legacy industry players?

I mean are you seeing any signs of that in the market and if we could get a sense of how your exposure to 2G and 3G compares to 4G. Thanks.

This is Bill. I really see the wind up or roll down of 2G networks is affecting us at all.

We don’t have any revenue that comes in to really associate it with 2G. The fact that devices are multilayer in terms that they have all the layers, is what really protects us against the expiration of any, either technology because operators turn it off, or because patents in that particular area may eventually roll off.

If you think about our 3G portfolio, it actually still has a tremendous amount of life left to it. Our 4G portfolio obviously is very strong and will continue to be strong for a long time and when we are building our 5G position.

So we really don’t have exposure with respect to anyone layer of the stack. We really just benefit from -- the thing that happens is when a new layer gets launched, what we benefit from is sort of customer excitement around that new technology and it drives sales of new things.

But again, we don’t really have exposure to legacy equipment as it rolls off.

I would just add that -- I am sorry, I was just going to add that every year end in our 10-K, we disclose in the MD&A section, expiration of patent license agreements, including the pending expiration of any agreements absent renewal or so forth would terminate during the next year. Which in this case is 2017, of which there is two agreements scheduled to expire in whole or in part.

Again, not saying they will or will not be renewed, but we noted that collectively those agreements accounted for $17.7 million or about 3% of our total revenue in 2016. So really not all that significant an issue.

Again, as we have disclosed all along, Samsung has the ability to terminate certain rights and obligations for the period after 2017 but we view and account that as a ten year agreement.

Okay. Great.

Thanks. That’s encouraging.

And then with regards to the potential incremental partnerships or opportunities for IoT outside of the Avanci platform. Obviously, the publicity has been great.

Do you have any visibility into any other revenue guidance you can provide there besides the $75 to $100 million opportunity or any color with regards to how you intend on monetizing the IoT opportunity in 2017 and beyond on the strategy there, would be helpful. Thanks.

Sure. As we mentioned, there is two components of revenue, high level, right.

There is the connection level revenue which we will get through Avanci, and then separately there is the upper layer revenue that will come from the software and patent licensing with respect to those upper layers. When we put out the goal on IoT revenue, we did say that we were also going to help people along the way because that was a five year goal and we would need to give you milestones along the way to show that we are marching towards that objectives.

So during the course of the year, the things that we will do our best to get visibility into would be things like customer wins on the software side and the related revenue there, related to those wins. And as I mentioned in my script, particularly how we see that as opportunity scaling.

So we do have customer opportunities, for example, in the U.K. We have opportunities through our partners, Harman, for example, and we will provide color around those opportunities as appropriate to show that we are marching towards that goal.

I think the same would be true for how we will look at the Avanci revenue as it starts to come in at the appropriate time, giving color as to what's coming in and how we can see that growing. So, again, our intention is to give you as much granularity here as we can so that you could see that we are achieving the goals that we have laid out.

As you think about, I guess, now that you have the direct royalty agreements with Apple, Samsung and Huawei in hand, out of the revenue platform guidance that you just updated in December after the Apple agreement, what portion of that revenue would now be considered fixed versus per unit? And as you think about going forward in the future, if those three companies continue to gain share away from other manufacturers that are on per unit deals with InterDigital, how do you think about insulating yourself from that risk?

Yes. So, I guess, the first thing I would direct you to Eric, is we disclose in our MD&A the breakout -- and as well as in our financial metrics -- the breakout between fixed and per unit.

And that’s the recurring components of that because the past sales is broken out separately. So you will see the shift that occurred in the fourth quarter as compared to the prior quarter, and even more so as compared to earlier in the year, in the mix going more heavily weighted towards fixed.

So that would I think address the first part of your question.

Real quick, I know, I understand that because I can see it in the breakdown. I understand that last year there were some shifts that happened in Q4, obviously you had some different things with Pegatron.

I was -- just [indiscernible], I guess, if you are looking at the guidance of the, I think it was the $360 million to $380 million, I might be wrong, of your platform revenue guidance. Can you just quickly kind of give what percentage of that would be fixed versus per unit?

Yes. I think rather than give you the percentage, I think you can pretty much get there by looking at the breakout on our financial metrics because we will have within the fourth quarter those components broken out.

Because they are the recurring components, they are at levels at which from existing agreements. More or less carry forward into the next year.

If you focus on the fourth quarter, I'm saying.

Okay. And then the second part of the question in terms of, if there is a continued industry shift away from the smaller per unit guys to the larger fixed fee?

Yes. Well, that’s the sense, the trade off you make, right.

There is always that risk that the high fliers in the market will continue to do so. But obviously for all these customers, the top customers.

We have locked in deals at a time when they were doing very well. And so I think that, is there a risk that they could even do better and we would lose a little money?

That’s possible. They could go the other way and then we benefit from that.

But we obviously benefit immediately from the stability and strength of the revenue streams. And I am not sure that the movement of market share as a value creator is as important as signing new agreements.

Okay. So what the signing of Huawei and Apple and Samsung does is, is gives us a lot of strength in going after the LG's, the Lenovos, ZTE's of the world, where there is far more value creation then Samsung getting an additional 1% market share on handsets.

So it's the balance we strike all the time. We are not fortune tellers, we don’t know exactly where the market is going to go but the fact that we signed these agreements at times when these folks, all three are flying pretty high.

That’s a good time to do the more stable agreements.

Okay. That makes sense.

And then, I guess if you take that a step further and think about expansion in the coming years further into IoT, maybe some of the areas that Hillcrest is getting you into. Does that create a sense within InterDigital that, or I guess do you want to look for more of these fixed fee agreements that provide a little bit of stability or that always depends upon the market growth dynamics, who you're dealing with?

I mean is there a preference one way or another, there is a lot of underlying variables beneath that?

There is not a strong preference. I think for every customer there is a number of factors that we look at.

One of the factors is going to be, what's the customers wants to do. So sometimes they only want to do a fixed price deal and we are not going to fight to try to do something different.

So ultimately, we just look at things on just kind of a cash flow basis and as long as they are structured right, we are almost indifferent between the per unit agreements and the fixed price agreements. So I think we are just going to take each customer as they come.

Be the flexible licensor that we have been all along and create the value that we have been doing consistently for the last number of years.

And then last question, if I may around Hillcrest. So you gave comments around $18 million to $20 million of OpEx with a third of that offset by revenues, so still in a loss position.

Maybe give a sense of how fast that revenue has grown combined with, if you think about your ability to get additional royalty agreements from the Hillcrest IP, add that IP into your existing deals or even pump up those deals. When would you expect Hillcrest to positively benefit EBITDA or earnings?

I think the way to look at Hillcrest, I mean I appreciate you even look at the revenue that they bring to the table and the market that they participate in and the cost that they apply to our income statement. And there are certainly opportunity for growth in the markets in which they are participating in.

The more immediate near-term value of Hillcrest is impact on our core business, it's not their independent revenue. And so if you think about customers that Hillcrest has had or has, I mean they have LG as a customers, they have other vendors in China that have been customers.

It's the ability to work with those strong customer positions and drive core licensing business deals, that’s the value. And so as an example, as a result of the relationship with Hillcrest, we were to be able to drive a strong deal with ZTE.

The Hillcrest acquisition at that point is proves itself to be the valuable transaction we believe it is, right. And then the incremental revenue growth, they have their own business, is really gravy on top of that.

So we are going to focus in both the areas, as I said in my script. We are going to focus on leveraging their very strong position in sensor an sensor fusion in the mobile market.

Devices today, handsets today, have sensor fusion in them, and so we can elaborate that position. And at the same time, drive their position that needs new markets.

But the first of those two is where we will get the more near-term big value from that transaction.

Yes. The only thing I would add to that, when you look at the Hillcrest revenue stream, as a result of the acquisition accounting, we do take a haircut on some of the acquired revenue stream.

So we wind up reporting less than Hillcrest would, if they continued as an independent entity.

I wanted to start with Hillcrest, just following up on this. So I wonder if you can maybe describe the bet that you're making here on the features you think smartphones are going to have in the future that's going to generate higher royalties from Hillcrest?

Is it, are you basically following what is already in smartphones today in terms of motion, that is on gyros, accelerometers? Is that a bet on a 3-D sensing type capability in the future?

Any additional color on the features we need to see for that to pay off royalty wise long-term.

Sure. So it's exactly what you said.

One, there is already sensor fusion that goes on within devices around motion and other things, right. Because you have to kind of compensate for a variety of things and they already have a position with respect to that and actually they have product solutions for that as well.

They have a software solution that they have delivered for handsets. And that is the technology and the capability within handsets is pervasive today.

So we already, so you start out with the position that’s already meaningful on handsets related to motion. You are right there, but then as you move forward, one of the things that handsets will become is it's basically there is vacuum for information, right.

And that can be in a variety of ways. So think about security.

So on your device is a wide range of capability for sensing who you are, where you are, what you are doing, what's your fingerprint, what's your iris, what's your temperature, what's your jitter, what's your speech, as a way of authenticating who you are. That all will be pulled together through the sensor fusion capability, right.

And then if you think about all the other capabilities, just beyond the authentication that your device is going to be capable of doing, right. So really if you look, one of the things we did earlier and we do on a consistent basis, is we look at what technologies do we believe will be pervasive in handsets.

And this was right on our list of top ten. And that’s why we have said it fits so perfectly in to what we want to do.

And so our opportunity now with them is to take their leadership position and their capability, that is one really strong team at Hillcrest. And now drive them further with respect to that capability both in handsets, so that we can leverage it into the core business but as I mentioned, they also have a nice position in ARVR, where head tracking is very important for that user experience.

In other robotics, things like remote controlled vacuums, which may not seem like a huge market but you think about who produces those products, they happen to be our customers for handset licensing and gives us an opportunity to leverage across those businesses. So for a relatively modest acquisition, I think one that gave us a lot of new capability that we could leverage in many ways.

And then a few housekeeping ones from me. The $4 million amortization of intangibles, are you guys going to ex that out on a non-GAAP basis of your non-GAAP earnings?

Yes. We will be taking a fresh look at how we report our non-GAAP earnings, Charlie, and we will provide some more details on that heading into the first quarter.

Okay. And then if I just look at the quarter, one of the things that sort of stood out to me was technology solutions revenue bumped up quite a bit sequentially, and I did notice sort of ex-Pegatron, and I guess by definition of ex-Pegatron, the per unit royalties seem to be on a downward plane.

We know some of the challenges some of the people in that bucket have, but I wonder if there was any roll off in Q4 also of some of the module guys that you guys talked about before, or was that all captured in '17?

Yes. That’s really more of the end of '16 and to the extent they are on per unit agreements, it can bleed into the first quarter of '17 in terms of what we recognize.

Okay. And then tech solutions, what explains the big jump in the last couple of quarters?

Yes. So for a number of years we have collected some royalties associated with a protocol stack solution that we developed some time ago.

And there has been some success there with one of our customers.

Okay. Got it.

And then last one for me. Obviously the big news in your industry the past month or so has been the Apple Qualcomm dispute.

I wonder, Bill, if you might offer any views on how you think that impacts just the general climate for licensing? Does it help you, hurt you?

Just any impact from that big dispute. Thanks.

Yes. Well, look it's not a surprise in terms of that particular dispute.

I think what we always try to do is, that we will get asked about what do you think about x, y, zs licensing practices and things like that. And I would rather just talk about what we do.

And I think to some extent what we do actually gets brought out in some of these litigations as the right thing to do. I will go back years and years ago but it's still relevant to the Broadcom and Qualcomm dispute and where Broadcom actually showcased InterDigital licensing practices as the correct way to do it.

And we have had a number of situations where, either at the ITC or in front of other regulators where our practices have been validated. So I think, my sense on that, Charlie, even though it's a big dispute.

It's not one that particularly relates to us because obviously what Qualcomm's licensing business to a degree is much different than ours and there is unique factors in that. And those are the factors that I think are going to get looked at in that thing and they are not factors that exist in our practice.

So they are always interesting to watch but I don’t think ultimately it has a big impact on what we are doing. In fact, the one thing, the only thing I would say is the timing is interesting as once we settled with those, that dispute began, whether -- and I don’t know this for a fact but just guessing, is whether one of the things that Apple will point to is its agreements with us as a comparison to what it has with Qualcomm.

And that actually would be a very positive thing, if that would happen.

My question, pipeline for M&A, I think you hit it on the prepared remarks about wanting to add scale in the business and it's something you have talked about on prior calls as well. So can you maybe drill into that a little bit more and just how active your pipeline is for deals, how willing you are to add another after Hillcrest?

Is it something that you could see happening imminently? Is it something that you think about over the next several quarters?

Sure. So look I would say that it continues to be a very important activity at the company.

I think that the strategy is a pretty well understood strategy at the company in terms of what we are going after, which is good because you got to really aligned up with the company with exactly what we need to look for and exactly what a good fit would be and not worrying about things that would be bad fit. In terms of the opportunities, we actually have sort of two different kinds of opportunities.

One is, as a result of Hillcrest, there is certainly an opportunity to go deeper on sensors and sensor fusion. So that’s one choice we have and certainly our radar there and capability there in terms of an acquisition would be much enhanced based upon the Hillcrest team because they are going to know that space really well.

And there is certainly opportunity to go after other areas of deep competence and we can do those in two ways. You can either acquire something where it is already an established position.

Obviously pay a little bit more for that. Or you go after areas that you believe will become pervasive.

And that’s a little bit more of a bet but the benefit of that path is that it tends not to be as expensive because there is still a little bit of value on the come there. So the thing I like about the M&A strategy and the reason we are very excited about it, is it leverages the customer base, it leverages our business model, it leverages our sort of historic practices which have been very very valuable.

So we are not trying to use M&A to turn this into a different company. I like this company a lot.

I think we are in a really good position and I think we do a really good job. I just want to do more of it.

So in terms of timeframe, I would say, look, it's like anything less. I mean we are doing a good job on the Hillcrest integration.

We certainly have the capacity and capability to do if something were to come across our desk today, we could to it. There is nothing that prevents us from doing that.

The key is in finding the right one and I would say we are pretty active in that search.

Thank you very much, Chris, thanks to everyone for joining us. Just a reminder, next week is Mobile World Congress in Barcelona.

If you go to our webpage today and you click on blog, you will be able to get an update on all the things we will be showing in Barcelona. There will be a live stream as well from our booth to show you the demos live.

So I would encourage you to keep an eye on our blog for some updates as far as that goes. Thanks everybody for joining us today.