Question-and-Answer Session
Operator
(Operator instructions) And we’ll go first Paul Bonenfant with Morgan Keegan.
Paul Bonenfant – Morgan Keegan
Thank you. Couple of questions, first your revenue going down sequentially. Can you tell us how much of that reflects the lower sales versus the pricing pressure that you’re experiencing?
Giovanni Barbarossa
Hi, Paul this is Giovanni. What I think is a combination of that, I what exactly split in percentages; there is no doubt that we’ve been overly optimistic about the production of new product and from our side as well as the, I would say the adaptation from our customers for some of our new products. So it’s a combination of the two.
Paul Bonenfant – Morgan Keegan
Okay and some of the pressure on the gross margin, on past calls you’ve talked about the mix of products and some product categories being above and below gross margin modules, for example being grater than subsystems transmission being below other areas, and I’m wondering if you can talk to how you see the mix changing in the quarter, just to give us some inside to may what’s providing the drag?
Mark Weinswig
Paul, this is Mark Weinswig. Just real quickly, if you looking at between Q3 and Q4 we saw significant increase on sales to Asia, actually of a 30% and a significant increase in transmission product, as a result of that we did see some margin pressure in Q4. Moving to Q1 really the major driver for our reduction gross margins in Q1, is really the reduction in revenue. So that’s one of the big items. In addition, we are continuing to see the mix shift towards more transmission product, which typically had some lower margins.
Paul Bonenfant – Morgan Keegan
Okay and last question if I may, you talked about slowing in Asia and pricing pressure and also reducing sales of lower margin and legacy products. These things don’t some like there temporary items, so should we not expect to snap back in sales any time soon?
Giovanni Barbarossa
Well, as we said, we expected solid growth over the fiscal year 2009. So we are still committed to revenue growth strategy and what we’re doing, we will be executing as we said on the new product introduction and focus the company on product development and sales to market and we’ll increase the relationship, the partnerships with our customers, the customer intimacy, but most fundamentally the new product introduction will be our focus to achieve that goal of solid growth through fiscal 2009.
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