Question-and-Answer Session
Operator
(Operator Instructions) The first question is from Ehud Eisenstein - Oscar Gruss.
Ehud Eisenstein – Oscar Gruss
Hugo can you please go and repeat for us the ’08 model for the gross margin breakdown. It looks like you’re starting from a lower base on the product side and then you said 20% decline in R&D. Can you repeat it for us?
Hugo Goldman
Your last question is R&D so we expect R&D to be below 20% of revenues for the year, the gross margins for the year together to be 51%, product margin to be about 54%, services margin around 49%.
Ehud Eisenstein – Oscar Gruss
And, then sales and marketing and G&A?
Hugo Goldman
Sales and marketing around 15%, G&A around 11% of total revenue.
Ehud Eisenstein – Oscar Gruss
How quickly do we expect the cost to the client to decline on the sales and marketing, G&A, R&D?
Hugo Goldman
Well, basically sales and marketing we said that we expect this to be similar to 2007 and G&A to be similar to 2007. So the numbers I said earlier were $7.6 for sales and marketing and $6.5 for G&A per quarter.
Ehud Eisenstein – Oscar Gruss
Right and that’s significantly lower than 2007.
Hugo Goldman
Well, it depends. Not all the quarters were the same. So, in some cases G&A was higher later in the year. Sales and marketing was lower later in the year. So to level it out is to adjust to [inaudible] leverages in the quarter.
Ehud Eisenstein – Oscar Gruss
And the strong shekel is not helping you here obviously.
Hugo Goldman
We are looking into different options to address that issue. We are looking closely.
Ehud Eisenstein – Oscar Gruss
You feel a significant decline in working capital and I understand that some of it is related to the factoring. Can you breakdown the interests in account receivable versus the non-factoring portion of it?
Hugo Goldman
Yes. Just to give you very simple numbers that in Q4 we just did not bring in $28 million in factoring of receivables. Nevertheless, if you look at the total cash and the cash equivalent went from about $44 to $27, which is just $17 million decline.
So, just when you look at that you see we had a good quarter in terms of collections. We still need to wait over the quarters to see this to the very end. Right now the only remaining factoring we will not renew is $10 million for about the next quarter.
- To read the full transcript on Seeking Alpha, click here »
