Mark Adams: Yes, I mean, just to further clarify that Brazil comment, I just didn’t add a lot of colors, as Ken mentioned. The consumer memory market and the demand for the end product phones and desktop notebooks, the global basis is down dramatically. And then we saw it down even more than initial forecast for the quarter, and that was a substantial change in the performance. And as Ken said, that changed and that impacted if you included them in our Q4 number, how we came in kind of around the bottom end of the guidance.
Brian Chin: Okay. And then in terms thank you and then in terms of physical 1Q and the outlook, it seems to suggest maybe memory, especially memory and IPS down somewhere kind of in the mid to upper teens, something like that, Q1Q, maybe one of those businesses is a little softer sequentially. Do you feel that those levels, revenue run rates for those two segments? Do you feel those are at bottom relative to sort of the commentary around inventory burn-off on the memory side of customers, and given the oscillations of projects in IPS?
Mark Adams: Let me take that first and I’ll let Ken add as needed. If I take the memory part first, as you can tell from the semiconductor players in the memory business, I’m not going to single out anyone, but across the board they’re still operating at a significant loss. And I’m hearing and we’re seeing initial signs of price stabilization. But I also know that this takes a little time to get through the market. Now, we haven’t seen as much of a price impact per se as we’ve seen demand soften a bit as we head into Q1, as you know, kind of as we’re in the quarter now, we’ve seen that really some of our key customers’ inventory levels are relatively high, and the indication is that – that’ll burn down, burn off in the next quarter or so.
And we just have to stay close to that to see how that plays out. But the other side of it also is, and we talked about this from the get-go back in early times in 2020, 21, this is not a revenue play only for us. And that’s why I’m really proud of the team for generating an operating income of 14% at a time that the innovators, the technology innovators in this category are operating a loss. We run the business pretty well. And I see, yes, I can’t really call the timing per se, but pricing seems to be stabilizing a little bit, so that’s early, and we think the inventory burn-off will be in the next quarter or two and should be back – in good shape. On the IPS side, for us it’s a little bit of a different story. It’s just more of the – it’s a combination of the customer concentration, and the lumpiness, and the timing of some of our engagements with a little bit of visibility challenge in the supply chain.
If you combine all that, it’s just where we ended up for the quarter in that business. We still are very enthused about the business, like our place in the ecosystem of offering differentiated value services, and being able to deploy complex systems.
Brian Chin: Okay, maybe if I can ask one more thing related to the comment of sort of a physical second half snapback or improvement on the IPS business. Obviously physical first half, this upcoming fiscal year versus last year, pretty difficult comparison given the timing and strength in some of the IPS deployments. But what kind of backlog or pretty firm indications do you have in hand or close to it to give you that confidence that you’ll see the snapback in fiscal second half, and probably for the year, IPS revenue can’t be up for the fiscal year, but do you see year-over-year growth in the fiscal second half in IPS?
Mark Adams: Brian, we’re not able to forecast per se at this point, and that’s something we haven’t done. We’re just going to keep forecasting for the quarter in advance. But let me just give you a couple things. We have visibility to a run rate business, and then we also have increased our efforts in bringing new resources to drive new customer acquisition. And I can say qualitatively speaking, the customer engagements are pretty exciting. And so converting that into revenue, and then also trying to predict when that’s going to land, it’ll get clearer as we go through Q2, Q3. But right now we’re going to stay away from forecasting out there. But as I said, you know, there’s a lot of enthusiasm around AI. What I would say is it seems like a lot of technologies, hardware is being sold, and a lot of people are now looking for capabilities and assistance in deploying it.
And that’s where I think you’re going to see us focus our efforts. And as we gain successes, we’ll be able to communicate them. Just a data point, I can’t get into really more specifics, but in this last quarter we added two significant logos in terms of the brand name, in one in aerospace and one in education, and a couple of others that are not signed, but looking very favorable that we can communicate on our next call in the quarter. But it’s still kind of in flux as far as when that timing will be. And that’s just what we’re dealing with, a little bit uncertain around recognizing the timing. But again, the customer engagements are ones that we’re really excited about helping these people – helping companies deploy AI in their own environment.
Brian Chin: Great. Sounds good. Any of those synergies with Stratus by any chance, customer synergies?
Mark Adams: Early stages in terms of being able to quantify that for you, what we are seeing is that the customer interest in some of Stratus’ products more around the edge twofold. There is a kind of a super early stage belief in AI at the edge. And when you think about some of these markets, oil and gas or financial services or even retail. The ability to have autonomous unmanned computing out in the field is something that plays a Stratus’ strength. And as more applications are able to be delivered generating potential AI applications at the edge, I think we’re going to be pretty well positioned.
Brian Chin: Okay. Thank you.
Operator: Thank you for your question. The next question comes from a line of Tom O’Malley with Barclay. Your line is now open.
Tom O’Malley: Hi, good afternoon guys. Thanks for taking my question. You gave the LED business up slightly in the November quarter. Could you just give a little more color between IPS and memory solutions sequentially on what gets you to your guidance? Thank you.
Ken Rizvi: Sure, yes, so you’re right, Tom. The LED business should be up a little bit, Q4 into Q1, and then, you know, we don’t specify by IPS or memory, but if you look at the guide, they’re down in that kind of mid-teens level, plus or minus combined, to get to that 275 midpoint of guidance. And there’s a little movement, and that’s part of the reason why we provide a range in terms of how projects can land for IPS or on the memory side, how things go through the rest of the quarter. But that gets you towards that midpoint.
Tom O’Malley: Okay. And then just a little clarification. So you mentioned a project move from Q4 to Q1 on timings in terms of booking, I would expect that Q1 would be a little higher on the IPS side just given the change in timing. Can you just talk about what’s going on in that business such that even X that deal moving that you’re seeing such weakness there both in August and November?
Mark Adams: Sure, I think it really goes back to my commentary, Tom, about the lumpiness and customer concentration that we’ve had in that business. If you take a step back, this is a business that was doing less than $50 million a quarter when I joined. And the team has done a fantastic job building up the business. And that doesn’t exclude us from the lumpiness and HPC and the customer concentration that we do have. And we’ve been pretty clear about that. And this is a time that the deployments are lining up as such and kind of all considered as part of our forecast. As I said to one of the earlier questions, we think this is a quarter where that’s occurring, but we’re still very bullish on the business long-term. And our recent interactions with – our existing customers, and new targeted customers lead us to be cautiously optimistic in the long-term.
