CEO and CFO on contra revenue:
Christopher Danely - JPMorgan
Great and for my follow-up I guess it's kind of on that question. So on the tablet strategy to get the 40 million youre saying it's going to be a 1.5 percentage hit. Lets say you guys get into the second half of the year and youre not quite to the 40 million if it's a pretty significant short fall. Would you consider canning that strategy I guess Im just wondering what the commitment is if the volumes arent there but the cost is there by the end of the year?
Brian Krzanich - Chief Executive Officer
Sure. This isn't a price reduction as normal price reduction would be; it's not where you are just simply reducing. It's truly a BOM cost equalizer and remember a lot of our 40 million tablets in 14 will be based on Bay Trail. Bay Trail was originally designed for Avoton-based PC segments and the upper end tablet. And so its what we are doing here is doing a BOM cast delta relative to the, what the mid and lower end tablets require. And so those are things like Bay Trail may require more layers of a printed circuit board for the board itself, more components on the board and tighter power management controls and things like that. We have a whole program to reduce those throughout the year. So that gives us confidence that as we go through the year, the BOM cast delta will shrink, but if the volume didnt show up for some reason and I am not going to say that, thats whats going to happen, but I am confident it will, but if it didnt its on a per unit basis. And so the spending on that contra would be reduced equivalently.
Stacy Smith - Chief Financial Officer
And I would just add as Brian said we are doing a lot of enabling across the industry to take the BOM cast out in equivalent. These are costs at the system level not at our chip level and it will vary a lot by SKU, but to give you a sense for a Bay Trail platform from the beginning of the year to the end of the year we think that, that BOM penalty drops by more than half. And so it kind of gets better out in time. And then when we get to the Broxton generation we think its de minimis.
Brian Krzanich - Chief Executive Officer
Yes, both Broxton and SoFIA are just specifically designed to eliminate that delta.
Christopher Danely - JPMorgan
Got it. Okay, thanks a lot guys. Thats very helpful.
Brian Krzanich - Chief Executive Officer
Sure.
Stacy Smith - Chief Financial Officer
Thanks Chris.
Edit; Source:
http://seekingalpha.com/article/195...sses-q4-2013-results-earnings-call-transcript