Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Matt Sheerin – Thomas Weisel Partners
Matt Sheerin – Thomas Weisel Partners
On the gross margin the design win revenue is up 19% year-over-year which is very strong, but obviously the margin was down because of some of these end-of-life products and the mix shift towards Asia, can you quantify the amount of end-of-life products that were sold in the quarter and the approximate gross margin just to get a sense of what the core business was actually doing because it seems like that’s not really a recurring source of revenue?
David Bowers
Correct its not. The end-of-life purchases in total were in the $10 to $15 million range and the margin on those was substantially lower then our typical systems margin so it’s low to mid single-digit margins.
Matt Sheerin – Thomas Weisel Partners
That business, the systems business should be probably down sequentially because these products are going to be going away next quarter.
Richard Schuster
That’s correct, the customers, they were accelerated purchases so the customers that procured those won’t be buying those same servers over the next few quarters at least.
Matt Sheerin – Thomas Weisel Partners
Looking bigger picture on the core distribution business can you talk about the book-to-bill maybe regionally, what the order patterns have been? I know you mentioned some softening in July and August in the Americas and Europe, maybe discuss a little bit of the demand trends there.
David Bowers
Generally speaking, book-to-bill within all the regions was approximately one to one for the quarter. Really nothing much above or nothing much below through the regions. We dipped slightly below one to one in August but it was very nominally below one to one. It was still effectively the same.
Matt Sheerin – Thomas Weisel Partners
Quarter to date, can you maybe discuss a little about if its changed significantly since then or is it moving along at that same rate?
David Bowers
We don’t give guidance of course, the only thing we can say quarter to date is September was a reasonable month so we did not see a strong decline in order activity during the month of September and book-to-bill was slightly under one.
Matt Sheerin – Thomas Weisel Partners
In Europe specifically it seems to be down year-over-year and I think maybe currency had something to do with that but can you talk about some of the organic trends in that market and what we should expect to see based on some of the currency trends as well and will you see some benefit on the SG&A line as well from the currency going down, I know you’re going to see sales probably fall organically, but will you see some benefit on the SG&A line?
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