Question-and-Answer Session
Operator
(Operator instructions) Our first question comes from Scot Ciccarelli with RBC Capital Markets.
Scot Ciccarelli – RBC Capital Markets
Hi, guys, Scot Ciccarelli.
Paul Arling
Hi, Scot.
Bryan Hackworth
Hi, Scot.
Scot Ciccarelli – RBC Capital Markets
How are you? Couple of questions, what is the primary difference in your guidance between last quarter till now? Looks like revenues are roughly the same, the top end was shaved just a bit. Is it really on the gross margin side?
Bryan Hackworth
Yes, Scot, it's primarily on the gross margin side. As we've said several times before that the gross margin is always difficult for us to predict because there are so many factors that play a key role. This year we got some positives and in Q2 we've had low air freights. In Q2, we also had a Consumer versus Business mix is favorable. While we've also had some negatives in that mix within the line where we've had a number of say large orders from significant customers who because are large and high volume get favorable pricing. We've also had some cost pressures and higher oil prices affects freight cost as well as certain components of our finished goods and this is actually put a little bit of downward pressure on the gross margins.
Scot Ciccarelli – RBC Capital Markets
Okay. This is primarily is always showing through in the third quarter so that the business mix from business towards consumers are enough to alter [ph] Bryan?
Bryan Hackworth
No. Actually for the full year based on our original guidance, Consumer actually was going to make up about 25% of our total sales and we now expect to be about 23%.
Scot Ciccarelli – RBC Capital Markets
Okay. Sorry about that – I guess I was focusing on the quarter.
Bryan Hackworth
Okay.
Scot Ciccarelli – RBC Capital Markets
And then the Consumer segment, what is your assessment of the risk to that, obviously you've shaved it a little bit but what is the risk just given the economy and how much of a boost is the Audiovox where you are fully baking in Audiovox, I'm assuming that's in the Consumer segment?
Bryan Hackworth
Yes. You are right. Audiovox is in the Consumer segment. Just to give you a little background on how we do the budgeting and forecasting. At the beginning of the year, we put together a number of potential wins and then what we do is acquire probability to it. So, we are naturally not going to buy every potential win because that's just not realistic. So, I would say that the Audiovox is included in the budget but in indirect manner, we do apply a probability to it. In terms of the risk of the Consumer segment for the rest of the year, but I think it all comes down to the (inaudible) and how well the products will be received in the market. I think the one thing that keep into consideration is just like the overall consumer market being down, I think if you look at the home entertainment market, there actually have been some positive recourse in terms of consumer spending. If you look at flat panel TV sales have done actually pretty well. And if you look at out numbers in Q2 of '08, we had $13.9 million in consumer versus $11 million last year for the same quarter. So, we've actually had some pretty good growth and we think with the new product launches that are coming out in the back half of the year that we are very positive and confident that we'll do well.
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