Mike Dastoor: And, Ruplu, if I can just add, if you look at our CapEx, historically, a few years ago, it was in the range of 3.5%. Over the years, we’ve taken it down to — we’ve always suggested 2.5%, 2.6% range. We will have the Mobility transaction going through. We are working on taking this CapEx number down quite a bit. I think the normalized range, if you look at what happened in FY ’23 is our CapEx went down to 2%, but that was a little bit of a timing difference. So, FY ’24, we expect CapEx to still be in the 2.3% to 2.5% range, but going forward, the 2% to 2.2% to 2.3% sounds highly doable. If you look at what we’ve done over the last few years, we’ve grown from $17 billion to $35 billion. So, we’ve doubled our revenues, and we’ve always managed our CapEx through that doubling phase.
It’ll be the same with automotive. It’ll be the same with all the other high-margin secular growth and markets. We will continue to manage CapEx with a lot of discipline. And I think the number has already reflected, all expansion is reflected when we give out CapEx percentages.
Ruplu Bhattacharya: Great, thank you so much.
Operator: Thank you. Next question is coming from Steven Fox from Fox Advisors. Your line is now live.
Steven Fox: Hi, good morning. A couple questions from me. First of all, I was wondering if you could dig in a little more into the cloud slide that you presented from the aspect of the growth. Mike, you mentioned 20% sort of like-for-like growth on the rack configurations, but it seems like the drivers are a couple of different areas. Like, can you explain what you meant by customer diversity? And then also, how investing in new technologies like liquid cooling is driving some of the growth? And along those lines, I noticed you mentioned OSAT packaging, which I think is new. Can you just sort of give us an explanation on that bullet point? And then I had a quick follow-up.
Kenny Wilson: Hi, Steve, good morning. Yeah, so we were talking about that just this morning actually, and I think it’s worth just reaffirming you on the cloud space. We really think the model we have is outstanding. So, it’s asset-like, it’s co-located with our customer. We also think that as our customers look to disaggregate a lot of the other parts of the data center that it plays to our strength, and I’ll get to the optics in OSAT in a second. So, what we find is that relationship drives effectively us sitting at the same side of the table, trying to solution how can we do things efficiently and how can we help them grow, because we view there’s going to be significant growth, especially underpinned by AI. So, what we see is we’ve got to — if you take our existing cloud business and what we see, that’s been augmented by a real pivot to AI.
From a consignment perspective, if you look at the GPUs, as Mike mentioned, that’s going to be a pass through for us because we don’t add any value there. But what you find in cloud is that really just the model we have is allowing us to really go deep with our customers and grow our business there. In terms of you mentioned about OSAT, let me talk about that. As we discuss with our customers, and Fred mentioned in liquid cooling, the power requirements for what we’re doing in data centers has become significant. Air cooling no longer works, so they’re looking for a liquid-cooled capability. You need to use photonics extensively, again, because of the power requirements. So, sitting with our customers means that they ask us, “Can you help us in liquid cooling?
Can you help us in photonics? Can you help us in pluggable transceivers, et cetera, et cetera?” So that helps us as we go into strategic planning to look at where should we be investing our dollars and capabilities to help our customers. The good thing for us, Steve, is that as we go more vertical and end markets, it simplifies our customers’ lives and it makes our solutions more robust and it effectively allows us to grow our business there. So that’s kind of how we see things in the cloud. And hopefully that answers your question.
Steven Fox: Yeah, no, that’s very helpful. And then just as a follow-up. Mike, it sounds like what you’re saying with the fiscal ’25 guidance is to assume that you sort of execute on $2.5 billion of buybacks by then. And if that’s the case, is there any way to sort of give us an idea of how much we should assume in buybacks, or how the share count conservatively comes down this year? I know there’s a lot of timing issues there, but it seems like that’s an important part of the EPS model to understand now for a little while.
Mike Dastoor: Absolutely, Steve. I think you’re absolutely right. The buyback scenario is dependent on the timing of the close. But regardless, let me just — I think this morning you saw the Board expanded our authorization — current authorization, $2.5 billion. I think, if you remember, Adam mentioned in his prepared remarks that, in Q4, we were unable to complete our Q4 share buybacks due to the restrictions that are associated with the Mobility transaction. So, in October, like starting next week, we will therefore, we will be executing an accelerated share repurchase program of $500 million, regardless of the timing of the close. So, think of that as almost like a catch-up and taking advantage of current market situation as well.
Post-close, we will execute a series. Obviously, it will depend when in Q2 it closes, but we will execute a series of accelerated share repurchases. We’ll start as soon as the Mobility transaction closes and we’ve received all the cash. We probably won’t do a full accelerated share buyback on day one itself for the entire amount. We’re going to do a series of buybacks. And the reason for that is we’re trying to balance the impact of interest costs along with the benefit of the WASO, like you suggested, on the calculations we’ve run as a balanced approach actually maximizes EPS. So that’s what we’re going to do, which means, by the end of FY ’24, we still won’t be completed fully with our buybacks. I think out of the $2.5 billion, I expect about $1.5 billion, $1.7 billion to be completed by FY ’24, and in FY ’25, we’ll complete the balance of that transaction.
I think from a WASO perspective, I’m looking at end of ’24 and the range of that 126 million, 128 million shares, while in ’24, again, depending on how we manage it through FY ’25, it’ll be in the 115 million, 118 million range.
Steven Fox: Great, that’s helpful. And one just quick question on all that. Should an acquisition come up, would that possibly change the goals you just laid out, or could you do M&A and still do this amount of buybacks? Thanks.
