Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from the line of Randall Stanicky from Goldman Sachs.
Randall Stanicky – Goldman Sachs
Joe, on the preclinical business, can you help us quantify how much of the near-term impact is a matter of getting projects that are already in backlog started versus the need to go out and win new business to fill that capacity?
Joseph L. Herring
It’s roughly 50:50 in terms of new projects. Again, we talked about this new small client issue. It’s roughly impacted by that equivalent to projects that were awarded but that were pushed out.
Randall Stanicky – Goldman Sachs
Have you adjusted your pricing or cost dynamics in terms of bringing in some of that new business to try to competitively bring some of that over?
Joseph L. Herring
As we’ve said in the past, a high percentage of the pricing for our preclinical services is under contract, and at the margin, we have been more aggressive, but it’s not really a change in pricing policy. Historically as we have brought on new capacity, usually it’s on the heels of turning away clients for 3 to 6 to 9 to 12 months, and we try to give them a reason to come back in now that we have available capacity, so again, there’s no change in the pricing philosophy that we’ve always had.
Randall Stanicky – Goldman Sachs
The question is when does the visibility come back? You have a 90- to 120-day visibility, and what are you hearing from your pharma customers in terms of some of the reason on the budgets? Is that a 1-month or 2-month dynamic, or is there a way to think about when visibility should pick up here?
Joseph L. Herring
It’s unclear, Randall. This is not the time of year that we historically hear very much from our pharmaceutical clients. The week before the Christmas holiday break, they tend to go silent. They don’t have necessarily their budgets for next year. They are not scheduling work, and in my 12 years in the business, usually January and the first two to three weeks of February, the clients are dead silent, and so I don’t know that this is going to clarify for us until the mid to late February timeframe if it stays in lock with historical standards.
Randall Stanicky – Goldman Sachs
Does the guidance implay anything in terms of buyback activity?
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