Q €“ Michael Genovese: Well, I appreciate all that color. And I had a couple of follow-ups in there, and then you would get to the questions. So, I’m going to pass it on here. And again, thanks for the helpful answer.
Oleg Khaykin: We’ll get back to you. All right. Sure.
Operator: Your next question comes from the line of Meta Marshall with Morgan Stanley. Please go ahead.
Karan Juvekar: This is Karan Juvekar on from Morgan Stanley. Thank you for the question — or for Meta Marshall. Thank you for the question. I guess just have you seen any changes to behavior from European customers? And there’s been times since there seems to be some caution around overbuilding or maybe some rationalization over there. Any sort of geographic trends that you want to call out?
Oleg Khaykin: So, I’ll start and I’ll turn it over to Henk. I think the — in the last quarter, there’s been a lot of volatility regarding the exchange rate. So, the European — I mean, there’s been some slowdown in deployment, but the problem is more driven they still spend the same budget, but they were getting fewer — less equipment, right? So, actually, all things considered, we see actually EMEA doing pretty well. And there’s a lot of structural problems. I mean, there’s a lot of volatility of foreign exchange. But now we’re kind of back to where we were in September in terms of euro and pound. And actually, Europe is holding up relatively well, I would say, for us, all things considered.
Henk Derksen: Okay. That makes sense. And I guess just a quick follow-up just on the strategic activity in the space. I mean just given sort of the National Instruments announcement, I guess, and maybe more industrial players wanted to get into maybe T&M or the broader industry. I guess, does that change how you think about M&A opportunities, or any update to sort of your thoughts around M&A opportunities?
Henk Derksen: Well, I mean, it’s — I mean, even though, I mean, generally National Instruments is in general category, their business model is very different. They’re very much focused on lab and some of the industrial deployments. And I’m not surprised that, for the longest time, test and measurement has been kind of the ride the danger field for those who are old enough to remember. And he wasn’t getting respect. So I think these guys are realizing that it’s a very attractive business model. And — but also SE is always greener on the other side. And when I see electrical industrial, electrical power industrial companies picking their nodes in our business, they really don’t know what they are in for, because it’s a very different business model.
It’s not a — you have to keep spending money and a lot of them are used to relatively low margins and they get enamored by high margins, but they forget that it continues to — they need to continue to reinvest non-stop in this business. So I think I mean they are doing what they are doing. I mean we are running our business to — with the eye on the longer-term growth. And I think our test and measurement is a bit different from a lot of what they call industrial or lab-based business. But it’s nice to see that our sector is getting the respect that for the longest time, it was not getting.
Karan Juvekar: Got it. Okay. Thank you. That’s helpful. I’ll pass on to the next.
Henk Derksen: Thank you.
Operator: Our next question will come from the line of Ruben Roy with Stifel. Please go ahead.
Ruben Roy: Hi. Thank you for taking my question. I had a quick follow-up on the discussion around Mike Genovese’s question and the sort of service provider linearity that you’re looking at, when you went into the downtick late September quarter, you had characterized that as being sort of broad-based. And I guess, the question is the stabilization you’re seeing, which I guess is a little bit of a surprise in the December quarter, given that you thought that this would be a two to three quarter phenomena. Was that broad-based, or was that sort of specific to one or a few customers?
Henk Derksen: Well, so I mean, if you think our first quarter impact was September quarter, because we just shut down. And during the December quarter, there was a lot of rebalancing our customers looking at headcount cuts, the CapEx costs like the OpEx redistribution. And I would say we are now entering the third quarter of that. So it’s very much in kind of what I said two, three quarters. And what is happening now, usually in the first calendar quarter, many service providers are setting their budgets for the calendar year, and they are starting to send smoke signals and engage with us some conversations and the momentum of these conversations, I would say, is a positive one. And they’ve now taken down some of their OpEx spend reductions, they’ve reduced their CapEx and now they’re getting back to business as usual.
And when you’re spending less money, generally, you want to get the most of what you already have. So you invest in optimization of your network. And since a lot of equipment has been delivered in September, December quarter, now all that equipment needs to be put into production, so to say, and you need equipment to install it, turn it up and release it into operations, which also requires you to start buying new instrumentation and software to deploy your network. So that’s why I’m saying that this quarter, we have seen things really stabilized and the discussions are now no longer how much can I push out the orders, but let’s discuss the timelines and deliveries and what I will be requiring during this calendar year. So the tone is very different from what I would say we saw at the end of September and a bit of a panic in the early October.
Ruben Roy: Okay. Thanks for that detail. And I guess just a quick follow-up then. When you talked about field instruments picking up mid 2023 is a combination of what you just talked about, plus sort of the view that the cable guys start to pick up as well. So that should help us
Oleg Khaykin: Well, and that’s a big deal because in the past — yeah in the past two years, cable — most of the DOCSIS 3.0 was already done about three years ago, four years ago. So it’s been — cable was kind of running at de minimis. So the mere fact there is going to be this — and it’s not one, it’s actually several major cable companies are looking to do an upgrade where they bring up — they’re still going to give you 1 gigabit on the line, but they’re trying to make it more metric up and down. And that requires an upgrade. And it looks like they’re moving forward during this calendar year and the expectations of the DOCSIS 4.0 probably will be two years from now because the chipsets have not been developed yet. And so — and in many ways, it’s a response to the aggressive fiber deployment that’s happening out there. So in a way, it’s part of the response to the competitive pressure from the fiber operators.
Ruben Roy: Got it. Thank you so much.
Operator: I will now hand the conference back over for any closing remarks.
Sagar Hebbar: Thank you, Regina. This concludes our earnings call for today. Thank you, everyone.
Operator: Thank you all for joining today’s meeting. You may now disconnect.
