Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Steve Denault - Northland Securities.
Steve Denault - Northland Securities
You made reference to the R&D spend, be it the $2 million level, likely to continue at that level going forward. Is that a mis-statement or should we still expect an absolute increase in that R&D spending in ?09 and if so to what extent?
Barry Steele
What we’ve said in the third quarter was that we were going to raise our spending rate by about a half million dollars a quarter and the fourth quarter we expected to be in roughly that same range and that rate will carry forward in 2009. So it will result in a year-to-year increase, because the first two quarters are lower, but we are not anticipating an increase in the rate of travel from the third quarter forward. That’s what we’ve said before and that’s what I think I said just now.
Steve Denault - Northland Securities
The tellurium impact in this is directed towards Barry, the impact on the gross margins in the third quarter. Should we anticipate that that would have a lessening impact as we move forward considering that all commodities have come in substantially?
Barry Steele
No, we think that it will be pretty consistent in the fourth quarter. Keep in mind that the tellurium market hit its peak late in the first quarter this year, it’s taken the third quarter to catch up to us and as much as the tellurium market has decreased slightly, that will still take time to work its way through our system as well. So we expect the tellurium issue will be here in the fourth quarter about the same rate.
Steve Denault - Northland Securities
How about for next year?
Dan Coker
We’re not very good at prognosticating the future, but all we can say is that the market peak for tellurium is really in the early part of the second quarter and has been slowly sliding down to the current rates. The current rate is still above our normal purchase history and they seem to be very stable at this level right now and we are not certain as to which way they’re going to go, but we certainly hope they go down, but they haven’t fallen off like copper and steel and some of the other major commodities in the recent time.
- To read the full transcript on Seeking Alpha, click here »
