Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments, as defined in ASC 280, Segment Reporting, are components of an enterprise for which separate financial information is available and is evaluated regularly by the Chief Operating Decision Maker, or CODM, in deciding how to allocate resources and in assessing performance.

The Company's CODM is the President and Chief Executive Officer. The CODM manages the Company's business as three reportable operating segments: Server OEM, Vertical Markets, and Corporate.

Server OEM - The Server OEM segment consists primarily of large OEMs who purchase products from us to sell along with their server products. Our products are typically sold in server led sales into their end-user customers' corporate information technology infrastructure. Server OEM customers include Customer A (refer to Note 1, Summary of Significant Accounting Policies - Concentration of Customers and Suppliers).

Vertical Markets - The Vertical Markets segment consists of strategically selected Vertical Markets, that have a propensity for high data growth. Some of our target Vertical Markets include Media and Entertainment, Telecommunications Infrastructure, Oil and Gas, Big Data Analytics and Digital Imaging, among others. These customers typically embed their products into their customer solutions, which quite often generate revenue for their end-user customers. We sell to these customers through both Vertical Markets OEM partners or embedded solutions integrators, as well as through channel partners. Vertical Markets customers include Customer B, Customer C and Customer D (refer to Note 1, Summary of Significant Accounting Policies - Concentration of Customers and Suppliers).

Corporate - The Corporate segment consists primarily of costs that support both the Server OEM and Vertical Markets segments.

Net revenues by segment are as follows (in thousands):

	Three Months Ended
	March 31,
	2014		2015
Net revenue:
Server OEM	$	25,854	$	25,178
Vertical Markets	22,353		35,943
Corporate	—		—
Total net revenue	$	48,207	$	61,121

Operating income (loss) by segment and a reconciliation to consolidated income (loss) before income taxes is as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2015
Operating income (loss):
Server OEM	$	5,122		$	5,394
Vertical Markets	7,407			12,486
Corporate	(12,932		)	(13,985		)
Total operating income (loss)	(403		)	3,895
Total other income (expense), net	(8		)	(14		)
Income (loss) before income taxes	$	(411	)	$	3,881

The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and therefore asset, depreciation and amortization, or capital expenditure by segment information is not provided to our CODM.