Why SWKS Reverses, why SWKS and CRUS went the Opposite Directions
The key is profit or margins. Where as CRUS margin and tax got hit, SWKS got better, not only for the current Q but for the entire new 2013!
Donald W. Palette - Chief Financial Officer, Principal Accounting Officer and Vice President
Sure. I mean, well first of all, I think you have to look back to the track record. At various points in the last 3 or 4 years, we put together mid-term models and we've had a very high success rate at hitting those every time and, if you think about that 550, it is about 22% growth. But if you look at what we've been talking about, as far as the market opportunity, without even gaining any share, we see 2013 as a 15% kind of growth opportunity. So that kind of hangs with the 4 to 6 quarters that we've talked about. So we clearly see that opportunity in that 6-quarter horizon -- within that horizon. And the volume is critical to hitting the 30%. You do need revenue level to leverage the OpEx as well as to continue to enhance and generate margin improvements. So you do need that kind of level to hit 30%.
going into 2013, when we recommended modeling 45% to 46% kind of drop going -- and it's really -- and the guidance that we just gave on the 450, the 43% off of what we produced in the fourth quarter is a little over 44% drop. So it's pretty consistent with what we said. And the reason for that is, that we talked about, it's a higher mix of outsourced material with volumes ramping. We've made some CapEx investments, it takes 2 or 3 quarters, we're working through the payback on that. So some of that benefit isn't yet in the numbers. Some of the higher margin segments as we talked about on analyst day, like infrastructure, still a little sluggish. And we had a little higher in Q4 and Q1, a little higher 2G mix which is, again, has had the most ASP compression, little bit lower margin. So those are really the reasons. But again for modeling purposes, we would recommend using 45% to 46% going through the balance of the year, as far as contribution.
Ittai Kidron - Oppenheimer & Co. Inc., Research Division
Okay. But still leaves you comfortable that, with this increase, you can reach that 30% operating margin target at that specific revenue level?
David J. Aldrich - Chief Executive Officer, President and Director
Absolutely. Because again, we're going get there as a two-pronged approach, as we always do. So our goal is both margin expansion and leveraging at 550, whether the OpEx is $81 million, $81.5 million a quarter. That's well within the range of what we can do to deliver the 30%. So yes, we are totally confident with that.