Question-and-Answer Session
Operator
(Operator instructions) The first question comes from the line of Craig Hettenbach - Goldman Sachs.
Craig Hettenbach - Goldman Sachs
Gross margin line has been a drag on performance. You mentioned you see some signs of it abating. Can you give any color in terms of when you would expect to see actually an inflection in gross margin in terms of when it can come back up?
Paul Reilly
Sure. It is interesting because if you track past semiconductor cycles, we all recognize this is very different in the semiconductor cycle, there normally is a rebound that occurs probably 2-3 quarters as the sales reverse to trend. That is one driver. The other driver would be as lead times extend. So we see lead times in the normal range but as it gets more [heated] and extends, that is also when gross margins increase. It is something we watch very closely. As we said in our prepared remarks we feel there are data points out there that point to our expectation being the right one that margins will stabilize as the markets stabilize and eventually turn back upwards as the markets go back to more normal levels of activity.
Craig Hettenbach - Goldman Sachs
If I could follow-up with Mike on the systems side, as you talk to customers there what are you hearing in terms of pent up demand? You mentioned with servers that the pace of decline seems to be kind of leveling out. Anything by segment within systems where customers are the most optimistic and then maybe also where there are still some concerns on systems?
Mike Long
Sure. We did see a good performance in our ECS business this quarter and some of the recent GTDC summits the distribution industry experts noted they believe we are preparing to capitalize on some increasing sales opportunities in the U.S. and Europe as IT spending begins to rebound. While we believe the industry estimates are calling for a return to growth in 2010, over the near-term we are still seeing visibility limited and we do believe we are going to see the typical year-end budget increases we have seen in prior fourth quarters but we have been conservative on our projections for you going out because we can’t quite see all the way through December yet.
Operator
The next question comes from the line of Brian Alexander - Raymond James.
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