Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jason - Morgan Stanley.
Jason - Morgan Stanley
First of all, at this stage in the company’s development cycle and given the proprietary nature of your technology, isn’t it too early to be cutting price?
Fred Moll
We’re not cutting price, we are in an environment that has required, last quarter some discounting based on the pricing pressure we’ve seen, as I said because of the environment that we are in, but we’re not cutting price of the system.
Steven Van Dick
I mean, I think there are several factors that you need to look at, and as you compare for example our average ASP in Q1 versus Q4 of 2008, there is only about a little over 2% decrease in our average ASP, but internationally, not only we have a mix between end user sales and distributor sales and in the first quarter of 2009 all our systems sold internationally with distributors, and since the first quarter of ?08, we’ve seen almost a 20% drop in the currency exchange rate because we sell in local currency which is in euros or pounds.
From Q4 to Q1, we saw almost a 13% drop in the average ASP just internationally and even a larger percent drop if you look at like Q1 of ?08 versus that. So, we’re kind of seeing a convolution of a lot of different factors going on.
One being the foreign currency exchange rate really working against us if you’re in the last few quarters, as well as economic environment where customers know that they can use the economic pressures of the day and the recession in the U.S. as an excuse to extract lower pricing on systems in futures that we sell. So, kind of an environment that kind of is tough to deal with even with new technology.
Jason - Morgan Stanley
Thanks, very helpful. So, what do we expect for ASPs going forward for the rest of the year, roughly flat from here or continued downward currency?
Steven Van Dick
No, I would hope, if I could project foreign currency market that would be in a different line of business. We are hoping that we’ve seen kind of a bottom out of at least the exchange rate differences, but I would beg off to economists who spend their lives tracking these kinds of things. We would hope to see the ASPs begin to trend upward as the economy begins to get more attraction.
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