Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from John Ma - Roth Capital Partners
John Ma - Roth Capital Partners
Can you give us details on gross margin by your product line, how much gross margin you had in Q4 for linear motors and auto micro motors?
Christy Shue
By product line?
John Ma - Roth Capital Partners
Yes.
Christy Shue
Our gross profit margin for our linear motors held stable. For linear motors it remained around the 60%. I do not have exact number but it hasn’t changed much from previously. The gross profit margin for the automobile segment also stayed around 40%. Our rotary motor business gross profit margin is about 11% for the whole year that’s what I’m talking for the whole year 2008.
John Ma - Roth Capital Partners
Looking to 2009 how the gross margin will trend in each of your business sectors?
Christy Shue
We expect the gross margins for the linear motors and for automobile specialty micro motors will stay stable going forward. For industrial rotary motor business we expect some improvement because in the past, particularly in the third quarter and fourth quarter the gross margins were mainly impacted by the higher raw material costs. However, in the later half of the year the raw material price has been declining. However, for the quarter we’re pretty much running the inventory. In 2009 we expect after we finish the inventory and we expect the gross margin will have some improvements.
John Ma - Roth Capital Partners
A question on your oil pump, can you tell us a bit more of your new customer development, and did you develop any new customers?
Christy Shue
At this stage we are in the process of working with different customers. We still do not know when the commercial production for those customers will begin. One major reason this is a very new product and also because it’s specially developed and designed for specific customers. For example, if we work for a customer in Northwest China then you would have to design differently according to their geographic conditions so it takes some time for development.
Mainly while we are developing new customers we are focusing particularly on working with Daqing oil field because Daqing is one of the largest oil field in China and their demand is huge right now. We’re feeling a very small fraction of their demand in terms of oil pumps so we believe this is a huge demand and the customer will have a huge market potential for us so we’re focusing on working with them currently.
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