Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Nigel Coe - Deutsche Bank.
Nigel Coe - Deutsche Bank
You’ve got Carrier in the question mark column, yet. You called out growth in 4Q EBIT, which implies that you’re pretty confident in the first half growth at least in 2010. So I’m just wondering why that would be in that column rather than the plus.
Greg Hayes
I think Carrier, there’s a lot of pieces to Carrier. I think the long cycle part of Carrier, which is the HVAC and commercial HVAC pieces is a bit of question mark for next year. We actually would expect that to be down slightly. I think the real question on Carrier though goes to the nature of the economic recovery and when we’re going to see a rebound in housing and when we’re going to see a rebound in demand for the transport refrigeration products.
Again those are very economically sensitive businesses. They have been hurt the quickest and most I would say. So until we see some real signs of an economic recovery, I think Carrier remains in that kind of question mark column for next year.
Nigel Coe - Deutsche Bank
On the revenues of [Inaudible], that’s too much of a surprise, but at this point do you think revenues are becoming a bit more predictable for fiscal ?09? I mean is the rate of change in your projections from month-to-month starting to moderate?
Greg Hayes
It has Nigel. In fact if you think about it, the order rates have stabilized as we said. Really since March we’ve seen the order rates fairly stable, albeit at these low rates. So as we look at the back half here and we are sitting here in July, we’re fairly confident in this $53 billion.
Could it be a little better or a little worse, yes depending upon FX, but I think for the most part we’ve got pretty good visibility and I would say realistic revenue guidance here based upon what we see today in the markets.
Nigel Coe - Deutsche Bank
Then one more for me, a quick one; what’s the buffer right now protecting the low end range? What’s the buffer you’re continuing to see at the bottom in the range right now?
Greg Hayes
At the $4 level we have about $150 million of contingency left. You’ll recall back in March, at that time we talked about a $350 million contingency, that’s obviously been eaten up a little bit by the revenue reduction, as well as the lower gains on restructuring, but we’re offset by some good news on cost traction as well as FX. $150 million, it feels it’s like about like the right number as we sit here in July again, with half of the year behind us.
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