Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Analyst for Ziv Tal – Oscar Gruss.
Analyst for Ziv Tal – Oscar Gruss
First I have a couple of housekeeping questions, product sales slightly recovered from the first quarter, do you feel that the first quarter is the bottom of this [inaudible].
Hugo Goldman
Right now we are around the bottom in terms of the level, there can still be some changes here and there but we believe that is pretty much the bottom.
Analyst for Ziv Tal – Oscar Gruss
Can you provide some insight on gross margin? The margin for the product segments has decreased significantly compared to the last quarter, I was wondering how we should think about the second half of the year in terms of gross margins? Do you expect gross margins to remain at current levels?
Hugo Goldman
It will be similar to the Q2 levels for the margin.
Analyst for Ziv Tal – Oscar Gruss
Across all segments? I mean product margins should as low as it has been this quarter?
Hugo Goldman
Levels of the Q2 – the overall was 44.5%, product margin were 47%, services margin 47% so it will be roughly similar levels, maybe a little bit better but a small change.
Analyst for Ziv Tal – Oscar Gruss
What is the tax rate expected for next quarter?
Hugo Goldman
The tax rate basically we are doing are annual analysis of our taxes and right now we’re looking at 25%.
Analyst for Ziv Tal – Oscar Gruss
Giving the hedging expenses and currency differences, do you expect the same levels of financial income during the second half of the year?
Hugo Goldman
No. Actually, this is something that is very erratic, it depends on the currency fluctuation. It is something that is difficult to predict. We did some hedging on the dollar versus the Shekel and this is something, we did forward contracts at the beginning of the year. The more we get in to the end of the year, these differences will be smaller. On the other hand, as the dollar continues weakening we will see additional positive financial income on the non-dollar assets translation gains. It’s difficult to predict though.
Analyst for Ziv Tal – Oscar Gruss
Now, regarding cash you generated approximately $30 million of cash from operation during the first half, can you tell us what are your expectations for the remainder of the year?
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