Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Ashwyn Shabekar with Citigroup. Please go ahead.
Ashwyn Shabekar – Citigroup
Congratulations, nice quarter. My first question is you mentioned you’re spending some R&D dollars on modularization, componentization, things like that. Is that in response to a specific client request?
Peter E. Kalan
No, Ashwyn. It’s not just specifically a request of a client. As we’ve watched our clients evolve their businesses and how we think also the best way to build products, we’re trying to be responsive to both aspects. We believe long-term that by componentizing we can build more flexibility into our own operations and into our own development methodologies as well as we believe it can broaden the market in which we can sell our products.
Ashwyn Shabekar – Citigroup
As I look forward to the back half of this year and into 2009, given that you’ve signed Comcast and hopefully you’ll sign DISH, after that, should I expect, because you don’t have any native contracts coming up for a couple of years, do I expect the SG&A dollars to taper off? Should I see any particular trend in that or R&D?
Peter E. Kalan
Ashwyn, with respect to SG&A, I think over the last several quarters, it’s been in the 11% or so of revenues. I wouldn’t expect any significant change in that going forward.
With respect to R&D, you saw it jump up a little bit this quarter as a percentage of revenue, I think it’s about 14.6% of revenues for the quarter compared to about 14% for the first quarter. I think in the near-term, you should probably expect it to stay in that general range.
Ashwyn Shabekar – Citigroup
Lower ranger or higher range?
Peter E. Kalan
The range of 14%-14.6% is probably a good range to look at in the near-term.
Ashwyn Shabekar – Citigroup
Last question. You have signed this Brinks Home Security contract. That’s an interesting plant on the print-mail side. As you grow that part of your business that’s not related to cable, generally speaking, what’s the margin and cash flow profile of those clients? Is there sort of a conversion of those clients or do you just take on a contract? How does it work?
Peter E. Kalan
Randy and I will tag-team this. One is, we bring in new clients such as Brinks. They’re building upon existing product that we have as well as in these relationships, we’ll be looking to cross-sell them and bring additional products to them on top of what we additionally sell as the initial contract. From margin perspective, I think Randy, it’s safe to say that they’re all fairly comparable.
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