Question-and-Answer Session
Operator
(Operator Instructions) We’ll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brett Hodess with Merrill Lynch.
Brett Hodess – Merrill Lynch
A couple of questions on the 1Q outlook first. The TURNS business that you need to make this quarter happen, have you already got the orders for it and is it a question of executing those orders in the quarter or are you still working on the orders as well? And the second question on the first quarter, the dip in gross margin since it still sounds like it’s an AP driven quarter, can you talk about what the mix issue is that’s hurting the margin?
Bruce R. Wright
On the first question we are right on the verge of those two orders in the AP area so we fully expect those to come in and even one like tomorrow, on a kind of a time frame. But we don’t have them yet, that’s why they’re TURNS business. It doesn’t look like there’s any problem as far as getting the orders. It doesn’t look like there’s any problem as far as making the systems, shipping them and getting them installed, but we don’t have them yet. So that’s why it’s TURNS business so we wanted to put that out there for you. On the second question regarding margins it is AP related and what we’re seeing in the first quarter is a shift to AP200s from AP300s. As you’re aware those are for the smaller wafer sizes and lower ASPs but similar manufacturing costs and so slightly lower margins. But as we indicated we think what we’re seeing going out in further quarters that that will ship back to a higher concentration of the AP300s and higher margin laser processing systems and so we’re comfortable in what the margins will be for the year.
Brett Hodess – Merrill Lynch
My follow on question is the deferred revenues on the balance sheet went up quite a bit sequentially. Is that just waiting for payments on some of the LSAs that have shipped? Do you think that deferred will come back down and provide us with a little bit more predictable revenue up tick in one of the future quarters?
Bruce R. Wright
The answer to all of those is yes and what happened on the deferred revenue is that two AP300s and an LSA were shipped in the fourth quarter but not taken into revenue and those should be coming into revenue very shortly in 08.
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