Question-and-Answer Session
Operator
(Operator instructions) Your first question will come from the line of Shawn Milne of Oppenheimer. Please proceed.
Shawn Milne – Oppenheimer
Yes, good morning, Patrick, couple of questions for you. Can you describe a little bit more what marketing programs you were working on in the June quarter and why you decided to step up by about $4 million higher, and what gives you confidence that you will be able to dial that back, going forward?
Secondly, we have done some work on the fuel surcharge issue, which is, as you know, generally on a lagged basis. How are you expecting to work through that? I see your direct gross margins went down. Does that have anything to do with it? But your partner margins were very strong.
And then lastly, I am having a hard time reconciling your comment about GAAP net income, a positive 10. I am not sure how you, I know you generally have some optimistic bounds, but that seems to be a little bit overly optimistic. How would that imply a very strong fourth quarter. If you can give any more color on that. Thank you.
Patrick Byrne
Thank you. Okay, marketing program, well we are confident we can dial – we are developing new areas in marketing, things we have never done. And since anyone who is on the Internet can see it, I will mention, for example, we are doing banners. We left banners seven or eight years ago thinking that they – and barely done banner advertising since then thinking that it was over-priced and they didn’t give you you’re the return for expense. Well, the technology has gotten much better, and it’s possible to target better and do smarter things, and we are –we have gotten that program to positive level anyway. I mean we knew that starting off it was going to lose money as we start of figured it out. It’s taking four or five months, but we have at least gotten into a nice positive contribution.
There was another program, I don’t want to mention actually, which we have developed a new chimney. I don’t want to mention exactly what it was, but we decided Gee, it’s going to ultimately take $5 million or $6 million of spending across this area to sort out where the opportunities were. And then we could do that over two or three years, or we actually did it over the first two quarters we have found some areas within it that work, and we have cut everything back until it’s now 40 grand a week, but it’s a nice 40 grand a week expense. So it was worth that much to figure out and it’s actually =a nice new channel for us. So I am confident we can cut that back as we’ve already trimmed that out.
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