Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Carter Shoop - Deutsche Bank Securities.
Carter Shoop - Deutsche Bank Securities
I wanted to better understand what you’re assuming for operating margins by division. If you look at each division and you assume a similar type of corporate expense in the December quarter, it looks like you need to see about 100 basis points of margin expansion in TS and you’d see EM be roughly flat. Can you help me understand what you’re expecting by division on the operating margin side and also what type of restructuring benefits you will realize in the December quarter?
Raymond Sadowski
The punch line is you’re pretty close. We might as well get this out early on the call. We have given a very strong effort into the top line revenue guidance for the quarter and we could explain in detail how we came about it but the punch line is that we really don’t know what the revenues are going to be. This is sort of unprecedented volatility for us.
But given the revenue ranges that we talked about, at the midpoint EM would probably be about 10 basis points down from the last quarter and TS would be up possibly at the low end of our long-term range, that 3.9% that we’ve been shooting for for the last couple of quarters. I think your model is actually very much right on the money.
Carter Shoop - Deutsche Bank Securities
What I don’t understand is how we’re going to see margins in EM hold pretty steady on about an 8.5% decline in overall sales in EM sequentially. Obviously we don’t have many quarters where we can look back to say what happens when sales in EM go down 8% but I’ve got to think that we’re going to see more margin pressure than what you guys are anticipating. Are there substantial benefits from restructuring that we need to know about here to get more comfortable with your estimates?
Raymond Sadowski
I’ll take the lead and then Harley can chime in. A couple of things. First of all, our gross margin has been holding actually quite nicely and typically in the December quarter we get a little bit of a benefit from some calendar year end supplier rebates mostly over in the European region. So that’s baked into the gross margin.
From a cost reduction point of view, there are some benefits there. There were some actions that were already taken in the September quarter that we should get full benefit of in the December quarter and that’s factored into the equation as well. When you roll it all together if we get to the midpoint of the revenue guidance, we think in round numbers we’re going to be within about 10 basis points from an operating margin point of view in EM.
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