Question-and-Answer Session
Operator
(Operator Instructions) Your first call comes from Joanne Wuensch – BMO Capital Markets.
Joanne Wuensch – BMO Capital Markets
Could we get into some fabulous gross margin expansion and pick through almost 300 basis points of expansion year over year, the sources of that. And you're guidance has been to reach at least 70% gross margins in 2009. It looks like you're well on your way there, maybe next quarter?
Robert Palmisano
I think the gross margin increase, what happened there is actually we got there a little bit quicker than we thought we were going to get there. We knew that we were well on our way. The elements that make that up really are about four things. One is the consolidation of our Redwood City facility into our Irvine facility and we had previously said that we expect that to be somewhere about $8 million to $10 million on an annualized basis. That's well on our way and we're getting the benefits of that.
Secondly is that the manufacturing of our own line of balloons rather than the previous distribution agreement we had with Invitech added to that. And thirdly, we've had a real good run in efficiencies in our manufacturing facility. And fourthly, I think some favorable product mix and geographical mix. Both played into that.
So we had said that, I remember saying a year ago when our margins were in the mid 60's that we anticipated getting to 70% and I think people thought we were a little bit crazy, but we think that we can get there and I would think that certainly by the end of the year, we should be hopefully slightly above the 70% level. So I think things are going well in that area.
Joanne Wuensch – BMO Capital Markets
My second question has to do with your neurovascular market share. You're clearly taking share. Can you give us an update on where you think those share gains are coming from and sort of the dynamics that will continue that momentum?
Robert Palmisano
It's hard to say. I think if you look at the market, by far Boston Scientific is the largest of the players and I think that when they reported, they actually said they lost some, so I think that we're probably getting some of that, but I think what's happened there is that the market dynamics are such that the axiom coil has really started to grab hold.
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