Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Brian Alexander - Raymond James.
Brian Peterson - Raymond James & Associates
This is Brian Peterson for Brian Alexander. If I look at the MME gross margins, I would have expected them to be a little higher with sales up about 9% sequentially and I know you mentioned a lot of headwinds. Can you maybe break that down into product pricing versus software pricing versus mix in services, maybe in, what gives you confidence that that may tick up in this area?
Kristin Rogers
Bryan, it is Kris Rogers. There were three things that in fact affected the gross margins for MME. Let me take them one at a time. So, you talked specifically about software and we mentioned vendor consideration and there was an absolute impact in Q2 of 2009 as a result of some changes that were made by one of the large publishers in terms of both the fees and then the backend dollars that we have the potential to earn and that had an effect on MME gross margin. I cannot quantify it off the top of my head but that was one of the three contributors.
The second thing was on service margins were depressed during the corner from prior period as a result of a couple of pretty specific things. We actually had some larger transactions with a tier one service provider where were to sub. We had a little bit of a shift at are mix for this particular period in conjunction with a very specific project that we executed during this quarter that was consistent to this margin. So from our perspective, while I do not know that from the software perspective we can expect that that trend will change. What I cannot tell is in terms of the service margins themselves and the next we had in Q2, we do expect that to improve going forward because that was some of adventure events.
And then the third component is just the general product margins and again a reasonable amount or maybe unreasonable amount of pricing pressure on normal product margins but similar to that that is certainly about we work hard during the quarter to address the product margins and do expect that we turn to normal see in the product margins. So, I do not know if that answers your question or not.
- To read the full transcript on Seeking Alpha, click here »
