Samik Chatterjee: And for my follow up, I — the question that we are getting most from investors on margins today is you mentioned the push out in terms of investment. When you think about margin guidance for next year, is the assumption that some of those investments don’t need to sort of be put back into the model next year as you’re pushing them out of fiscal ‘24, or is the margin guidance maintained despite assuming those investments come back next year? Thank you.
Mike Dastoor: No. So, I think the way to think of this is the revenue comes out, the cost comes out. When the revenue comes back, as we expect it to be sometime in FY ‘25, those costs will come back, but there will be an offset. So, net-net, the impact on margin will be neutral. I think, we’ve said 5.3% to 5.5%. I think, we’ve got to remember we’ve changed the construct of our business completely. The four end markets do not underestimate that those continue to grow. It’s not by chance that we happen to be in those four end markets. Over the last few years, we’ve intentionally focused on those end markets, because we always thought those were the long-term secular end markets. I think, overall, the way to think about cost push outs, it’s completely dependent on whether that revenue is there.
If the revenue suddenly comes back, those costs will come back. So, I’m not saying a 5.3% to 5.5% will suddenly jump up if those revenues come back. We have other plans on making margin continue to go up as we continue to change the mix, as we continue to add new operational efficiencies, the automation side, AI/ML, robotics, all of that will continue to provide on an annualized basis, in my view, at least 10 to 20 basis points by itself. And the mix of the business, the revenue piece will provide the balance. So, yes, I think the push outs is completely revenue driven.
Samik Chatterjee: All right. That’s clear. Thank you. Thanks.
Operator: Thank you. Your next question is coming from George Wang from Barclays. Your line is now live.
George Wang: Oh, hey, guys. Yes. Just kind of want to double click on the connected devices. You guys didn’t elaborate too much in the prepared remark. Just you guys took down now expecting down 25% versus 15% last time, and kind of on the heels of down 15% last year, FY 2023. Just curious, kind of any mostly broad-based slowdown within the connected devices, or kind of one of the few customers, kind of, driving the weakness. Maybe you can kind of double click there?
Kenny Wilson: Yes. Hey, George, thanks for the question. So, we always talk about connected devices as effectively what we do for consumer. We view that as being an area where we can incubate capabilities that can support us across the rest of our business. What we do find is that we got to be quite selective there, because, A, it’s consumer short life cycles you’re dependent sometimes and if products are successful or not. Sometimes there’s an expectation in margins that the margins will be pretty tight for us. So, it’s not a case of us defocusing in that side of our business, but it’s a case of us being selective in terms of the margin profile for some specific programs. So, I think, you’ll see, and you should see it across our network.
And I think to the previous question on margins. Look, we [Technical Difficulty] and that support our capabilities and that support our cash flows and margins. So, I think, in this instance, it’s a case of — it’s really maybe one or two other areas of our business where we’re just choosing not to engage, because we think that we can add more value for our customers with the capabilities in different end markets.
George Wang: Okay. That makes sense. I just have a quick follow-up. Just kind of in terms of the AI data center, kind of, in terms of the consignment model shift. How much additional margin you guys can extract from this consignment shift? Obviously, it’s additive to the bottom line and the kind of margin profile. And, also, maybe you can talk about kind of slightly more just on the projects ramping within the AI. That’s being a pretty popular topic with investors nowadays.
Mike Dastoor: I think, there’s multiple ways of looking at the AI piece. AI and the new GPUs that drive our requirements, that drive space requirements, it’s going to exponentially continue to sort of grow on an annual basis. The margin stack on what we do today will be relatively stable. It’s the new services that we provide, the new value-add that we’ll be looking at in terms of liquid cooling, photonics, those are the pieces that we think will be highly margin accretive. I’m not suggesting that will happen immediately, but over time I do expect the AI cloud data centers the margin to go up, that entire stack to be more value-add based.
George Wang: Okay. Great. Thank you.
Operator: Thank you. Next question is coming from David Vogt from UBS. Your line is now live.
David Vogt: Great. Thanks, guys, for squeezing me in. So, maybe, Kenny, one for you first. Obviously, since the pre-release, you’ve had a couple of weeks to kind of go back and do, sort of, I would imagine, a deeper dive in terms of the categories and what your customers are saying. How do you frame sort of the inventory digestion? I know, at the time, you said, maybe one to two quarters, and I think I heard you say two quarters. Is that kind of the latest feedback that you’re hearing from your partners today? And then one for Mike on capital allocation. I think, I heard you say you’re going to do the entire $2.5 billion buyback in fiscal 2024. So, I know you normally don’t talk about the following year, but what do you think that means for fiscal 2025 in the context of your $10.65 EPS guidance reiteration? Thanks.
Kenny Wilson: Hey, David, thank you. So, on inventory correction, David, as I mentioned, that subsequent to meeting you in Phoenix, our folks have been out meeting our customers, as I have. I would say that the sentiment certainly hasn’t got worse, and, if anything, marginally better, but it’s still in some areas a quarter, and a lot of areas a couple of quarters. So, it’s relatively consistent with what we discussed in Phoenix. So, no change to the negative, maybe just slightly more positive. But just to reemphasize that, the discussions we’re having — what we see is, we are seeing opportunities to — our customers are looking to consolidate their supply chains with fewer suppliers and that’s positive for us — long-term positive for us.
