Maxlinear Inc

NASDAQ:MXL

Earnings Call Transcript 2018-Q3

[Operator]

Greetings, and welcome to the MaxLinear Third Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Brian Nugent. Please go ahead, sir.

[Brian Nugent, IR]

Thank you, Operator. Good afternoon everyone, and thank you for joining us on today's conference call to discuss MaxLinear's third quarter 2018 financial results. Today's call is being hosted by Dr. Kishore Seendripu, CEO; and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer.

After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements relating to our fourth quarter 2018 revenue, gross margin, operating expense, tax expense, tax rate, and interest and other expense guidance as well as statements relating to trends, opportunities, and uncertainties in various product and geographic markets, including, without limitation, statements concerning growth opportunities for our wireless, infrastructure, and connectivity markets, and improved revenues in our broadband markets.

These forward-looking statements involve substantial risks and uncertainties, including risks arising from competition, our dependence on a limited number of customers, average selling price trends, risks that our markets and growth opportunities may not develop as we currently expect, and that our assumptions concerning these opportunities may provide incorrect, and numerous other risks outlined in the Risk Factors section of our latest SEC filings, including our previously filed Form 10-K for the year ended December 31, 2017, our Form 10-Q for the quarter ended June 30, 2018, and in our Form 10-Q for the quarter ended September 30, 2018, which was filed today. Any forward-looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward-looking statements. The third quarter 2018 earnings release is available in the Investor Relations section of our Web site at maxlinear.com.

In addition, we report certain historical financial metrics, including net revenues, gross margins, operating expenses, income or loss from operations, income taxes, net income or loss and net income or loss per share on both GAAP and non-GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our Web site. We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock-based compensation and its associated tax effects.

Non-GAAP financial measures discussed today do not replace the presentation of MaxLinear's GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business. Lastly, this call is also being webcast, and a replay will be available on our Web site for two weeks.

And now, let me turn the call over to Kishore Seendripu, CEO of MaxLinear.

[Kishore Seendripu, CEO]

Thank you, Brian, and good afternoon everyone. Thank you all for joining us today. Our Q3 2018 revenue was $85 million, and comprised of connected home at 49%, infrastructure at 23%, and industrial and multi-market at 27% of overall revenue. Overall revenue was down 16% sequentially. Specifically, connected home was down 26%, infrastructure was up 1%, and industrial and multi-market was down 9%.

In Q3 2018, we delivered solid profitability with earnings modestly above target, along with strong operating cash flow of approximately $31 million. In cable broadband data, where DOCSIS 3.0 to 3.1 transition has proved challenging owing to customers drawing down inventories in conjunction with unanticipated new product ramp qualification delays at their customers, we are now witnessing improvement in customer order patterns. As a result, starting in Q4, we expect gradual improvement in cable revenues in line with our previous outlook. We intend to manage our expenses prudently, while preserving operating leverage even as we navigate through product transitions in our cable business and the timing uncertainty of new design win ramps in the infrastructure markets.

Through Q3, 2018, we continue to execute well on our ongoing multi-year revenue diversification investment strategy, specifically driving strong revenue growth in infrastructure and medium growth in industrial and multi-market, while sustaining our highly profitable, albeit slow growth revenues in connected home. We are gaining confidence in both the intermediate-term prospects of our wireless backhaul and datacenter interconnect initiatives, and the longer-term prospects of our broader wireless access and higher performance analog infrastructure initiatives. With the developing strength of our infrastructure business and the stabilization of our connected home business in Q4, we not only expect overall revenue to grow in Q4, but are also confident of driving more meaningful scale longer-term.

Moving on to some of the more exciting product and technology highlights in the large and networking infrastructure markets; based on our year-to-date results and our Q4 outlook, our wireless business is expected to post well over 20% growth in 2018. We are witnessing strong wireless backhaul modem share gains along with the initial ramp up of our backhaul RF transceiver product. Two of the top three wireless backhaul OEMs are entering production with their wireless backhaul RF solution this year. Our RF solution is the only one to support channel aggregation, which is quickly becoming a critical operator requirement to double data capacity in existing 4G and future 5G transport networks. We will be able to drive more modem share gains in 2019 with our fifth generation microwave modem, which we just started to sample.

On the 5G wireless access infrastructure side, we're on track to sample our 14 nanometer CMOS wireless access transceiver solution in early 2019. We expect to be in a strong position to intercept the wireless market transition to the large massive MIMO 5G wireless access infrastructure slated for 2020. Q2 2018 brought is closer to securing the second leg of our multiyear infrastructure initiative. We taped out our first 16 nanometer fiber optic 400-gig PAM4 production silicon addressing inside the datacenter applications. As a result, we are in a strong position to participate in the initial 400-gig PAM4 deployments supporting a large tier 1 hyperscale datacenter buildout, with mass production slated for the end of 2019.

In the meantime, our solution continues to draw strong engagement from the world's largest optical system suppliers gearing for subsequent next-generation datacenter deployments. At the European Conference on Optical Communication, in late September, we successfully demonstrated a key 400 gigabits per second breakout mode clocking requirement for 400-gigabit PAM4 datacenter applications. In the breakout mode, a 400-gigabits-per-second PAM4 DR4 module incorporating our Telluride system-on-chip platform processed the four incoming 100 gigabits per second fiber lanes as independent 100 gigabits per second ports, and connected them interchangeably to four independent 100 gigabit DR1 or FR1 modules on the other side.

We expect the initial 400-gigabit datacenter deployments to be dominated by DR4 modules using the breakout application. As the first and only solution to market with proven breakout mode clocking along with superior power and cost benefits derived from being the first one to integrate the CMOS EAEML laser drivers and PAM4 DSP in a single chip, we are well positioned to be a key enabler of the upcoming datacenter upgrade cycle. We also recently announced several important design wins for our connectivity solutions. TRIAX has selected MaxLinear's G.hn Power Line Wave-2 connectivity chipsets to enable an innovative new family of enterprise-grade Wi-Fi multi-gigabit networking products targeting hotels, housing associations, and small businesses leveraging existing coaxial cable infrastructure.

Additionally, InCoax Networks has developed the world's first multi-gigabit coaxial cable-based access solution using our MoCA Access 2.5 networking chip. And InCoax solution enables telcos and MSOs to quickly deliver data services to multi-dwelling units in a cost-efficient manner using its powerful multipoint networking capability. We are also witnessing encouraging early-stage multi-gigabit MoCA in-home connectivity deployments at a major tier 1 North American telco provider, which we referred to in earlier calls. We're increasingly optimistic about our near and intermediate-term for the connectivity business.

With that, let me turn the call over to Mr. Steve Litchfield, our Chief Financial Officer and Chief Corporate Strategy Officer, for a review of our Q3 business results and our forward guidance.

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

Thank you, Kishore. I will first review our Q3 2018 results, and then further discuss our outlook for Q4, 2018. On revenue of $85 million, we saw connected home decrease 26%, driven entirely by the step-down in DOCSIS 3.0 shipments, affecting both MoCA and cable products combined with the lack of meaningful ramp on the DOCSIS 3.1 side. Outside of cable and MoCA, each of our other connected home product categories were up quarter-over-quarter. Our infrastructure business was up 1% sequentially, led by double-digit sequential growth in our HPA business owing to a recovery at ZTE and improving demand across server and enterprise markets.

On the industrial multi-market side, sales were down 9% sequentially due to push-outs of a few smaller programs, along with the declines resulting from the end-of-life actions taken in previous quarters to clean up the portfolio. GAAP and non-GAAP gross margins for the third quarter were approximately 51.6% and 62.5% of revenue, respectively. This compares to GAAP gross margin guidance of 51.5%, and non-GAAP gross margin guidance of 62.5%. The gross margin decline from the prior quarter was due to lower revenue and unfavorable mix. The delta between GAAP and non-GAAP gross margins in the third quarter reflects the amortization of $9 million of purchased intangible assets from previous acquisitions, and $200,000 of stock-based compensation and stock-based bonus.

Third question GAAP operating expenses were approximately $56.4 million, which was $1.9 million above the GAAP guidance of $54.5 million. The overage to guidance was due to $200,000 of restructuring charges, and $2.2 million of impairment losses related to two product categories from our Exar acquisition. Rather than deploy additional resources to support these non-core products, we have chose to focus the efforts of our sales and R&D organizations on more sustainable, differentiated, and larger addressable markets.

GAAP operating expenses including amortization of purchased and tangible assets of $8 million, stock-based compensation and accruals related to stock-based bonus plan of $7.8 million and $2.3 million respectively, $2.2 million in intangible asset impairment charges, $0.2 million in restructuring and $0.3 million in depreciation related to a step-up in acquired fixed assets; non-GAAP operating expenses worth $35.6 million, which was down $1.6 million sequentially and $0.4 million below our guidance of $36 million due to disciplined expense management.

Rounding out our commentary on operating expenses, with the new revenue levels, we are working diligently to moderate the spend during this transitional period. We expect the core operating expense run rate to come down in coming quarters as we tighten the spend and larger development efforts wind down, although seasonality and mask-related spending will cause quarter-to-quarter fluctuations within our total spend.

Moving to the balance sheet and cash flow statement, our cash flow generated from operating activities in the third quarter of 2018 was approximately $30.7 million versus $35.8 million generated in the second quarter of 2018. We made $35 million in debt prepayments during the quarter towards our term loan. In addition, we recently made another $7 million debt prepayment during Q4. This brings the total prepayments to $155 million and our loan balance down to approximately $270 million.

Our days sales outstanding for the quarter was approximately 63 days, which was below the prior quarter days sales outstanding of 75 days. Our inventory turns decreased slightly to 3.8 compared to 4.0 in the second quarter.

That leads me to our guidance. We currently expect revenue in the fourth quarter of 2018 to be approximately $85 million to $89 million. We expect connected home revenues to be approximately flat and account for roughly 48% of overall revenue with improvements in cable data and MoCA offset by declines in satellite after a strong Q3. We expect infrastructure and industrial multi-markets to each represent approximately 26% of overall revenues. Infrastructure continues to perform and we believe is on track to deliver strong double-digit growth for the year.

Within industrial and multi-market we expect revenue to be approximately flat. We expect fourth quarter GAAP gross profit margin to be approximately 52.5% of revenue and non-GAAP gross profit margin to be approximately 63% of revenue, up sequentially due to improved mix. As a reminder, our gross profit margin percentage forecast could vary, plus or minus 2%, depending on product mix and other factors.

We continue to fund strategic development programs targeted at delivering strong top line growth as we look forward into the first half of 2019 and beyond, with particular focus on infrastructure initiatives and our goal of increasing the operating leverage in the business. As such, we expect Q4 2018 GAAP operating expenses to decrease approximately $0.4 million quarter-on-quarter to approximately $56 million, with the largest decrease coming from the removal of IPR&D impairment charges incurred in Q3.

We expect Q4 2018 non-GAAP operating expenses to be up $1.7 million sequentially to $37.25 million, driven primarily by production tape-out expenses related to our datacenter initiative previously highlighted. We expect GAAP tax expense to be approximately $0.5 million and non-GAAP tax rate of 7%. We expect interest and other expenses in the quarter to be $3.3 million.

In closing, we navigated through a transitional environment in Q3 maintaining strong gross margins and earnings above plan while generating $31 million in operating cash flow. While our near-term revenues have been impacted by the DOCSIS market transition, we are encouraged by the gradual improvement in our cable revenues.

Our focus remains on accelerating our evolution to a multi-product cycle based growth company focused on large networking infrastructure markets. Our three verticals of multi-year investments spanning wireless, wireline, and access infrastructure remain on track for growth.

With that I'd like to open up the call for questions. Operator?

[Operator]

Thank you. Now, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Quinn Bolton from Needham & Company. Your line is now live.

[Quinn Bolton, Needham & Company]

Hey, guys, congratulations on the third quarter results and [LO] [ph] for the fourth quarter. I wanted to start on the cable side of the business, your biggest customer there obviously have gone through a transition from DOCSIS 3.0 to 3.1. It sounds like DOCSIS 3.1 shipments are starting to ramp up, I was hoping you could provide some more color on that DOCSIS 3.1 ramp. And then also that customer does seem to have a portion of its manufacturing in China, and I think it's publicly stated, their intent to try and move away from the China production location, wondering what potential -- yes, whether that creates lumpiness in the orders as they ramp down one location and try and ramp up manufacturing in another geography? Thanks.

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

Hey, Quinn, this is Steve. Yes, we are definitely cognizant of this transition that's taken place. I think we're making some really nice progress. When we spoke last quarter there was a lot of unknowns out there with regard to the transition, but the customer has clearly gotten the qualifications and we're staring to see some improvements in our shipment levels. The 3.1 transition is definitely improving from a MaxLinear perspective for sure. I think that's evidenced in the guidance, and we spoke about this previously that we weren't expecting a snapback. We thought it would go over multiple quarters and we continue to believe that's true today.

The tariffs situation that you've raised, and as far as the shutdown with the Arris manufacturing in China, we are aware of that and we're watching -- as we're watching all of the tariff situation in general, with regard to China, we see a lot of customers that are moving manufacturing, and so, that's -- while we haven't seen huge impacts to date, we do anticipate that in Q1 and so we're watching closely.

[Kishore Seendripu, CEO]

And then also guides some level of caution in the guarded forecast on our side. So we are all in the same boat. We are not impacted on the products we purchase, because most of our material is really chips and packages, and we don't -- none of our customers for the most part import any chips of ours into the U.S. territory. However, our customers do their manufacturing and they have significant supply chains traversing the gold and the world. We don't know how much proportion goes through China versus non-China. So I think we just have to wait and watch how it plays out.

[Quinn Bolton, Needham & Company]

Okay. And then maybe Kishore, same question just on the PAM4 ramp, you mentioned large hyper-scale customer looking to ramp at sort of the end of 2019. I know it's sort of further out, but it sounds like that could be some meaningful volume for you in 2020. I just wondered if you might be able to size -- how large of an opportunity do you think that could be in 2020 as that customer starts to ramp, I mean, is that hundreds of thousands of modules, could that be a million plus modules in the 2020 timeframe?

[Kishore Seendripu, CEO]

So, Quinn, first let's just address what is the status and position in terms of when the ramp happens, right. So really like I told before, we have one hyper-scale data center player who is currently committed to start ramping 400-gigabit PAM4. They were the first ones who are committed on a path to some field trials, which is basically a pilot plan where they test out all the 400-gigabit PAM4 interconnections, and we are all in competition for that socket, right. And once you're selected, there's a [SoC] [ph] period and we expect the ramp to start at the end of the year.

So even on sample quantities, there is some expectation of some modest revenue in the first couple of quarters and maybe a snap up in revenue towards the end of 2019 heading into 2020. Regarding the volumes anticipated in 2020 for the hyper-scale datacenter and the number of millions of units you're asking about, I think that's harder. You cannot bank that on only on one hyper-scale datacenter, right. So if you assume that there are about 500,000 ports per hyper-scale datacenters just to be in the middle of the field here, that's quite substantial quantities. We are expecting and hoping that there'll be more than one datacenter that's coming up.

So I think when we showed our TAM slides in the investor decks in the not -- and it's on our Web site, I think we show about maybe two million ports of PAM4. And of that, even if you ignore two million ports, hopefully it's a million-plus in the range. And given our prime position and we having the most mature and advanced product in terms of production readiness, we hope to gain a significant share. We do believe there's one other competitor. And however the market is quite substantial for us to have a very meaningful share. Okay.

[Quinn Bolton, Needham & Company]

Great, thank you.

[Operator]

Thank you. Your next question is coming from Gary Mobley from Benchmark. Your line is now live.

[Gary Mobley, Benchmark]

Hi, guys. I had a question about the OpEx outlook for 2019. First, I'm wondering if you've had a chance to sit down and sort of outline what you're thinking in terms of OpEx spend throughout the year. I think you mentioned about a $1.7 million quarter-over-quarter increase in Q4 per your guidance, but most of that related to some tape-out expenses. Would you expect some moderation from that to start 2019? And how are you thinking about the overall trend in OpEx throughout 2019 relative to '18?

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

Yes, Gary, so we spoke about this previously. I mean we do expect we've got an increased spend going into Q4, but I would emphasize, and I know we said it in our prepared remarks. But I'd emphasize that we've done a lot of work just on the OpEx side. And we do expect a lot of our costs to come down in Q4, with the exception of this mask spend, so we do have an uptick there. I do expect 2019 to come down as a whole. We see overall spending moderating a bit, but I would say that we've really been disciplined on our just overall OpEx spends. So I think it could be down 3% to 4% next year. Not a huge number, but I think a very meaningful number.

Now, there's going to be some fluctuations from quarter-to-quarter. The only other thing I don't want to guide what OpEx is expected to be in Q1, but I would highlight you do have increased taxes coming in Q1, and we do still have some mask that'll be in that quarter, but for the year, I do expect it to come down.

[Gary Mobley, Benchmark]

Okay.

[Kishore Seendripu, CEO]

And I think, Gary, one way to look at the number is if were to reverse out the typical 16-nanometer tape-out cost and you would get a sense of the run rate OpEx minus the mask is actually trending downwards.

[Gary Mobley, Benchmark]

Okay. Normally your connected home business sees some seasonality, I think in the first part of the year just given the situation with your largest connected home customer and potentially this transition -- the flipside of transition to DOCSIS 3.1. How would you call the direction of the connected home in Q1 considering those two issues?

[Kishore Seendripu, CEO]

Firstly, we're not providing guidance for Q1, but you called it right. We do have seasonality in Q4 and Q1, and it's just always been very hard for us as to how to measure Q4 and Q1. And on top of that you add these transitions from 3.0 to 3.1 and how our major customer and one major operator's ramp has played out; obviously the seasonal patterns are getting a little muddied up here. However it is not unwise to think that there will be seasonality, and then at the same time you have to be cautionary about the impact of tariffs. And I think you want to take consideration all those factors. Having said that, I mean we are actually internally quite excited because finally we are back on revenue growth. And I think that's an incredibly meaningful event for us.

Because every time you can guide as much as you want, but finally you have to that corner turn, and we are turning the corner in the revenue. And we're very happy about that. And I think moving onwards, we should be growing. And so I think Q1, whether it's flat or slightly down or not, I'm not being particularly bothered by it right now.

[Gary Mobley, Benchmark]

Okay. Steve, just a quick question on the tax rate, you still expecting that 7% non-GAAP tax rate in 2019?

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

So, I don't think that we provided that guidance before. I think we were still a little bit on the fence, but we are feeling much more comfortable that 2019 does look like 7%, that's correct.

[Gary Mobley, Benchmark]

All right. Thank you, guys.

[Operator]

Thank you. Your next question is coming from Ross Seymore from Deutsche Bank. Your line is now live.

[Ross Seymore, Deutsche Bank]

Hi, guys. Congrats on the stabilization here. Quick question, kind of macro, but specific to one of your segments in the industrial and multi-markets, you talked about some one-offs that weighed on the third quarter, but then you're guiding it flat for the fourth quarter. Given what's going on with some of the other kind of broad-based analog guys, can you talk about anything you're seeing with any weakness in that market?

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

Yes, I mean, look, Ross, you're right. I mean we're definitely cognizant of what's going on in the rest of the world. There were some kind of one-time, I guess, unique aspects of last quarter, and that was a big sequential decline, flatness this quarter. I mean we're optimistic. I think we've got a small enough business and we've got some unique product offerings with some bigger customers that are expected to ramp in 2019. So I feel really good about our multi-market segment. But your point that what others are seeing, look, we're aware of it, and we're watching it closely, but right now, we feel pretty good in the first-half that we start to see more of that pick up due to that unique product offerings.

[Ross Seymore, Deutsche Bank]

Thanks for that, Steve. And then I guess in general on your infrastructure business, when you talk about the moving parts, the HPA being up double-digit sequentially, et cetera. Can you just talk about some of the drivers you're seeing right now between the sub-segments? And I guess even more of a general question, as we're seeing some of the wireless coms guys outside of MaxLinear, seeing some early 5G ramps, just how are you feeling about the trajectory of that business as we exit this year heading into next year?

[Kishore Seendripu, CEO]

So, Ross, let me give you some qualitative color, and number-specific, I will see if Steve can chime in to the extent that we have the numbers. So, the first and foremost really are growth on the infrastructure is being driven by strong growth in wireless backhaul. I mean, this is the blessing in infrastructure. It takes a while, and when it ramped, it's ramping, and we're gaining more market share. So our really -- our growth in wireless is really dependant upon how well our microwave backhaul and millimeter way backhaul it growing. It is growing strongly, and we're adding more design wins into the ramp cycle. And the good news is that we're the only full end-to-end system, and we're adding more additional offerings or capabilities for 5G network, so we hope to have more share.

And really, I think we may be one, if not the only with such an offering, right, outside of an internal solution. SO that's what is driving our infrastructure. Regarding the 5G wireless access, like we have said, we are going to be sampling in Q1 -- early Q1 our 5G massive MIMO radio transceiver in 14-namometer CMOS. So we're not sampling our solution yet, so clearly we cannot expect to have revenue ramps that may be happening for some other players. But I want to assure you that any revenues people are seeing in 5G are really, really related somewhere very component-type implementation using older generation products, so they're really not cost effective or competitive.

The market, from our understanding in working with the top OEMs, that we actually work and joint development agreements with, they're pointing to that you need much more integration configurations of four by four or eight by eight to really make this a very cost effective offering to really drive the market to larger volume. And we'll be very well positioned for in 2020.

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

Yes, I mean maybe with regard to any numbers, it has been growing nicely. I do anticipate us to see that continue in 2019, so we can see north of 20% in 2019, which we're really excited about. I mean, the two big drivers of this in the current quarters, as well as in our guided quarter is the HPA side, which we highlighted in the prepared remarks, and the backhaul. And backhaul continues to be probably the biggest growth driver within infrastructure for 2019.

[Ross Seymore, Deutsche Bank]

And just one final clarification, the 20% plus you guys talked about for growth, is that the entirety of that infrastructure segment or are you specifically just talking about the wireless backhaul side?

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

So, for 2019, it is for the entirety of the box, yes.

[Ross Seymore, Deutsche Bank]

Great, thank you.

[Operator]

[Operator Instructions] Our next question is coming from Tore Svanberg from Stifel. Your line is now live.

[Tore Svanberg, Stifel Nicolaus]

Yes, thank you. A few questions, let me start with connected home, do you have a sense already now where you stand on the DOCSIS 3 along with the 3.1 transition? Just trying to get a feel for where the inventories or how far the inventories have come down on 3.0, and if you're actually starting to see some revenue contribution from 3.1?

[Kishore Seendripu, CEO]

So, Tore, this is Kishore. It's a very good question, and I think I would like to answer it in two steps. Firstly, today, on a run rate basis you could say that our 3.0, 3.1 revenues, we are about 75% 3.0, and 25% 3.1. We have been shipping pretty strongly 3.1 for non-Comcast end customers. So actually things are going very strongly at another big operator. So we are doing very well there. It's really the ramp at the end customer in Comcast for the MaxLinear's platform has been slow to transition. And it really has faced multiple qualification delays that are nothing related to our chip performance. We've been waiting for three years for this to happen.

However, now, it's beginning to happen. We have some backlog that is showing some modest growth. And I think the reticence of the shyness to forecast how the ramp plays out is really because, as one of you pointed out, our major customer is doing some factory transitions potentially due to tariff reasons. And so we're just being careful about it. However, we are seeing some orders in growth in DOCSIS 3.1.

So how does 2019 play out? I think that by the end of the first-half of next year we should at normal patterns, where the world is sort of in some level of equilibrium where even in the new standard we are 50% plus/minus 5 with the MaxLinear Intel platform percent. So we don't see a longer-term impact after first-half of next year. But short-term, I think this is going to be a slower recovery into the market share at this particular operator and nowhere else. Having said that, outside of these two operators, one where things are going strongly, and the other one where we are suffering from a transition related to our particular platform. Those transitions, we are very, very well positioned, and even though those ramps are going slower because their ramps are much more delayed. And there we do not have the qualification issues that this particular platform suffered from.

[Tore Svanberg, Stifel Nicolaus]

That's very helpful, Kishore. And I think you mentioned you expect MoCA to actually grow in Q4. Should we conclude from that that you've already seen some secular declines there and now you're actually starting to grow again in MoCa or is this more of sort of a one-quarter-specific thing?

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

So, I think the answer, it's actually, yes. We've kind of gotten it down to a level that will start to see us grow from. Q4 is, in particular, it's pretty strong. I don't think that that specific level is sustainable forever, but we're seeing a nice uptick. And optimistic about 2019 as a couple of these guys start to see a ramp.

[Kishore Seendripu, CEO]

Yes, and I think that as this particular North America telco operator ramps up we hope for more upside than what we're currently expecting. So, let's cross our fingers and see the ramp settle in properly. And then hopefully we can do better.

[Tore Svanberg, Stifel Nicolaus]

Very good. And the last question, just to clarify. So you said that infrastructure is on track to grow more than 20% this year. But you're also expecting infrastructure to grow at least 20% in '19. Did I hear that correctly?

[Kishore Seendripu, CEO]

So, the correction, Tore, is that in 2018 wireless infrastructure grew well north of 20%. However, Steve added color that in 2019 it'll grow above 20% for the infrastructure as a whole category. So hopefully we do much better than that, but yes, infrastructure as a full category should grow more than 20% in 2019. And we feel really good about it. Now, if you get some luck on the 400-gig PAM4 fiber optic stuff that'd be very nice if some ramps happen earlier. But we like our position where we are, and we're quite excited that the big investments are behind us on the infrastructure side.

[Tore Svanberg, Stifel Nicolaus]

Sounds good. Thank you very much.

[Kishore Seendripu, CEO]

Thank you, Tore.

[Operator]

Thank you. Our next question is coming from Christopher Rolland from Susquehanna. Your line is now live.

[Christopher Rolland, Susquehanna]

Hey, guys. There was a story out from Bloomberg, I think it was last week, talking about your largest competitor out there in cable and satellite, and them being examined for, call it, aggressive business practices by the E.U. Have you guys seen any of these tactics, stuff like bundling or like aggressive tactics from their side? And do you think this is weighing on your business at all?

[Kishore Seendripu, CEO]

So, obviously, if there's an ongoing investigation in the E.U. we would not know what's going on inside the E.U., right. However, regarding competition, I think we don't rely on governments to make us competitive. We have always come this far and this size by being best at what we do. And we differentiate with our technology platform, and I think nobody can tell that MaxLinear has not won its battles purely on a competition basis in the markets we have chosen. So yes, if there are competitive dynamic that are related to bad behavior from competitors, we hope the governments look into it, and hopefully it's a net positive for us. But I cannot comment on speculative tactics on any competitors.

[Steven Litchfield, CFO and Chief Corporate Strategy Officer]

But, Chris, I mean just to be clear though, we've competed here for years and years amidst this environment. So, if anything, this ends up being a net positive. But there's really no concern about competing in these markets where we are today.

[Christopher Rolland, Susquehanna]

Yes, I was just wondering if you had seen in increase in intensity in terms of their aggressive practices. But it sounds like you haven't seen much.

[Kishore Seendripu, CEO]

We cannot comment much, for sure.

[Christopher Rolland, Susquehanna]

Okay. And then I guess one for you, Kishore. So on the new product front here, how would you describe in what you have coming, call it, 2019 or 2020. Is it just really to kind of focus on stabilizing home right now, and growing infrastructure? Or do you guys have some new product launches that you guys are working on, and maybe we could expect something next year?

[Kishore Seendripu, CEO]

Absolutely. Stabilizing our connected home revenues, of course, is the first and foremost we're going to focus on, and we feel we're back on a path of growth. And to a large part we attribute to that to a stable base from which we can start growing our connected home revenues, right, things reverting back. But our focus for the last two years and maybe earlier and looking forward is absolutely the infrastructure space. And we have new products that are at the brink of going to production or ramp. One is the 400-gigabit PAM4 fiber optic product. We are in the process of early 2019 sampling of our 5G wireless access RF transceivers. And then we are also on track to sampling our new generation of microwave backhaul modem as well.

So, I think those are the new products. But if you look beyond that, our focus would be expanding our footprint in those markets in the infrastructure we have a strong foothold as a result of these path-breaking technology products that we're launching. And I think that's where you should expect some focus on. And regarding the connected home, obviously as cable with go through its transition from DOCSIS 3.1 to full-duplex DOCSIS 3.1 for 10 gigabit services to home. And once again, there we are again leading the charge in the front. And I'm generally refraining from talking about it until we get through the 3.0-3.1 transition, and getting some sense of credibility in how we're predicting that future to play out. So yes, there will be investments in the full-duplex DOCSIS markets as well.

[Christopher Rolland, Susquehanna]

Awesome. Thanks, guys.

[Operator]

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

[Kishore Seendripu, CEO]

Well, thank you, Operator. Thank you all for attending this call. I just want to give you a reminder here that we'll be participating in the Needham Networking & Security Conference, on November 13th, in New York, The Benchmark Discovery One-on-One Conference, on November 29th, in Chicago, Illinois, and BMO Boston Growth Conference, on December 4th, in Boston, and the Wells Fargo Technology Summit, on December 5th, in Park City, Utah. And we hope to see many of you there.

With that being said, we look forward to reporting on our progress to you next quarter. Thanks a lot.

[Operator]

Thank you. That does conclude today's teleconference. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today.