Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Aaron Rakers – Wachovia Capital Markets, LLC.
Aaron Rakers – Wachovia Capital Markets, LLC
Can you help us understand what the contribution was from the SCS acquisition during the quarter? Just to kind of understand the organic growth?
Richard Deranleau
The impact from Q2 to Q3, the incremental was a little over $3 million. So when you look at the organic growth implications, that would have still put us well over $360 million and still in double-digit growth range.
Aaron Rakers – Wachovia Capital Markets, LLC
And then a follow-up to that, one of the comments mentioned was that the mainframe, maybe the McData install base is starting to turn over a little bit. You know, maybe you can help us understand what that install base looks like, maybe where you’re at in terms of seeing that as being a driver. Is that something that continues over the next several quarters? And then I do have one final question after that.
Mike Klayko
I think it continues over the next several years not quarters because customers are at various stages in implementation in their infrastructure. And there’s, as you know, in some of the largest accounts in the world, McData had a very large install base. And so as those customers re-architect and they start to deploy the DCF architecture that we’ve laid out, you’ll see that they now have a very logical plan with our DCX product set as well as our expanded line of switch products sets to transition at their pace. And we think it’s going to be there for quite a while.
Aaron Rakers – Wachovia Capital Markets, LLC
And final question from me on the gross margin front, very positive given the mix shift even in the quarter. Can you talk a little bit about product costs and specifically maybe also dovetail into, you know, the opportunities that still may exist as you’re supporting a couple of different director class platforms, when you might see, you know, opportunities to consolidate that into one platform over the next couple quarters?
Richard Deranleau
The improvements, we’re really taking a look at product costs and some of the components which are major parts of our product. For example, the optics, we’ve had some benefits there. And also the leverage in our supply chain, when you start getting to these levels of revenue. In terms of moving to the one platform, you know, really DCX and 48K away from the legacy McData directors, a lot of that benefit, frankly, has been realized. So we’re now getting up to the point of pretty high gross margins for a hardware company.
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