Question-and-Answer Session
Operator
(Operator instructions)
Our first question comes from the line of Sean Hannan with Needham & Company. Please go ahead.
Sean Hannan – Needham & Company
I guess my first question is, it does not seem like from a demand standpoint that you really had a problem, your comments in your release that backlogs remains at least generally at high levels. Is there a way to talk about the linearity of demands for the quarter for each of your four product groups?
Dan Bernstein
I think the major product, I think most of the major demand came from the magnetic product group and that is what we saw as the major increase in backlog and that is our largest product group and I think the other three products were stable over this period.
Sean Hannan – Needham & Company
So, if I interpret that correctly, it was when you say stable, it was just kind of similar levels throughout the quarter, whereas Magnetics actually ramped?
Dan Bernstein
Yes, to about 40% increase.
Sean Hannan – Needham & Company
Okay, but their demand’s flow actually increased as you progressed through the quarter.
Dan Bernstein
Yes and once again, what made it somewhat worse though is because the ramp up came in the backlog in October, November, and December. We really weren’t able to hire any people in January, February, and December because of Chinese New Year. We found it to be almost impossible to hire anybody in the later part of the year because they will not leave current job to work for us because they would loose Chinese bonus and other payments they receive from the other company. So we basically had a period of 10 weeks where we could not really work the backlog at all.
Sean Hannan – Needham & Company
So, you have been talking for some time about having labor shortages?
Dan Bernstein
Let me just disagree. Me and Colin are debating this issue. I do not think when you hire 3,500 people in Chinese New Year, I do not think you will have a labor shortage and when the process now lies in 1,500, I think the problem that we are facing is more of the rules and regulations and how to make sure that everything is in line that we can be competitive to attract people. So I do not believe that we have a labor shortage. There is no way we can hire 3,500.
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