Question-and-Answer Session
Operator
(Operator Instructions) We’ll go first to Raj Seth - Cowen and Company.
Raj Seth – Cowen and Company
Roy, can you help me look through this model transition and think about what it is that’s happening to bookings here? You guys have pretty consistently said starting from when Cadence started describing issues in the environment that it’s not that bad, some have over played how bad the environment is etc., etc., and then recently Rajeev I think I spoke with you after Cadence’s last reset and you suggested you weren’t seeing – while you couldn’t comment on the quarter, any material change or big change in the environment yet. You’ve talked about seeing deals come in smaller than expected on a broad scale basis, you’re making this very shift in your model, etc., one, how do I reconcile these comments about the environment weakening because it certainly sounds like it has and two, what’s happening with bookings here because it’s very hard to model this thing given the shift.
Roy E. Jewell
The first thing I’ll say is we have talked a number of times, most of our customers remain relatively healthy. But, we’ve also talked about they’ve also become much more deliberate in placing orders and I think that was also the position that Synopsis had when they had their recent call. What that actually does is it puts more risk in to the current period revenues that you recognize as a company and I think that’s why everybody in this segment besides one large vendor is looking to go back to a 90/10 model so that the predictability of the revenues is much higher, it’s de-risking from current period bookings and we don’t end up having to depend as much on near term deals to get our revenue numbers. I think that’s what we’re doing, I think it’s consistent with what other people have done either four years ago at Synopsis or more recently with Cadence.
Raj Seth - Cowen and Company
And how should I think about Pete sort of what’s going on with bookings? How should we think about this? Is there anything incremental you can give us about the model what’s happening there through this transition?
Peter S. Teshima
Yes, I’ll bring up a couple points. First, though we stated that we had this goal of 85% to 90% out of the backlog model, I’d save over last year our natural split is closer to 80% out of backlog and I’d say 20% up front so we’re not there and the quarter one results are the exception rather than the normal. If you couple that with bookings that haven’t been what we expected and that has put pressure on our model. So, with the deal delay comes a drop off in backlog and on top of that the backlog can and is lumpy given the composition, the makeup of it in terms of [rateable], cash receipts and [inaudible] type transactions.
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