Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jared Holz – Thomas Weisel Partners.
Jared Holz – Thomas Weisel Partners
Can you just talk about gross margins? If you back out the laser scope business, you’re looking at a base business that is 88% gross margins. Where can that go? Have you hit a peak there? Could this be a 90% gross margin business? It’s already among the highest in med techs, so where can that base business go?
Mark A. Heggestad
Jared, I agree with you. It is among the highest in med tech right now. I’m certainly not predicting we’re going to continue to go over the 87.6% margin we have in that business right now. With that said, we certainly continue to drive efficiencies in this business. If you take a look at where we’ve made improvements, we’ve made improvements in the laser margin, but we also have made improvements over the past three quarters in the implantable margins as well, not only as a result of mix but as a result of driving efficiencies. As we look forward, we’ll continue to do that, but at this stage in the game, we’re not predicting any sort of significant increases in those margins.
Jared Holz – Thomas Weisel Partners
Looking to 2010, the past one maybe even two years, the growth in your business overall has been just a little bit inconsistent, and that’s not dissimilar from what we’ve seen from other companies, but given that your overall business is pretty much procedure based and shouldn’t have a high degree of sensitivity to economics, where do you see this business kind of going over the longer term, in terms of not maybe a growth rate, but when do you get to the point growth is going to be a little bit more consistent quarter after quarter?
Mark A. Heggestad
I assume when you’re talking about growth, you’re talking about revenue growth as opposed to bottomline growth. At this stage in the game, it has been difficult. Certainly, there has been some volatility in the growth. Part of it is due to the economy. We’ve seen it around the world in terms of how some of the economies have been impacted versus others. At this stage in the game as we look out, we certainly anticipate that with the products we have in our product pipeline combined with as Tony and both referenced the intent to drive geographic expansion, in the long-term we certainly intend to see increased revenue growth; however, as we look out over the shorter term, certainly with the economy and the longer time period it takes for those investments to take hold, we’d anticipate that we’d continue to see revenue somewhere around where we see it right now.
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