Question-and-Answer Session
Operator
(Operator Instructions) Your first question Adam Thalhimer – BB&T Capital Markets.
Adam Thalhimer – BB&T Capital Markets
Wondering if you could just first off give us some additional color on the decline in the backlog, what caused that?
Steven E. Nielsen
Adam, as we’ve talked about it before, a number of our services businesses the contracts are annual and in fact have automatic renewal provisions that usually trigger in the fourth calendar quarter of the year so we just saw a bleed off on those contracts. We also, as we’ve talked about before, are going to go through a renewal cycle with the Verizon [FTTP] project. We’ve been through that a number of times before but that comes up in the fourth calendar quarter. So, from our perspective it’s really just a natural bleed down on the backlog based on those technical factors.
Adam Thalhimer – BB&T Capital Markets
Seasonally in Q1 it should bump back up?
Steven E. Nielsen
Well actually the way it works because we’re a off year for the fiscal year, it’s actually in our second quarter which ends in January of ’10 where you’ll see the auto renewal cycle kick in and the resolution of what we worked out with Verizon.
Adam Thalhimer – BB&T Capital Markets
Can you give us an update on stimulus?
Steven E. Nielsen
Yes, as the deadline for applications came at the end of last month we had a number of inbound calls from rural service providers. We provided documentation to a number of those that supported their stimulus applications. I think at this point they had a little trouble accepting all the applications, they’re working through that administratively and I expect that we will get some feedback towards the later part of September.
Adam Thalhimer – BB&T Capital Markets
AT&T talked about ramping up their cap ex in the back half of the calendar year, are you feeling the effects of that at all yet?
Steven E. Nielsen
Adam, the way we think about AT&T is that they’re a big company. We don’t work for them everywhere and we don’t do much in the way of wireless for them. We’re taking a cautious view to the back half of the year. Part of that capital spend may also be on the equipment line which s really a good indicator of how next year is going to look as they may rebuild inventory. But, at this point, the business is solid but we’re not seeing indications, at least in our footprint, of a significant spike up at this point.
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