Question-and-Answer Session
Thank you. [Operator Instructions] Our first question today comes from Ross Seymore from Deutsche Bank.
Ross Seymore - Deutsche Bank
Hi, guys, and congrats on the strong results. Just wondering in the outlook, if you could give us a little bit of granularity by the three product segments you have and then maybe a little bit of end market color looking forward as opposed to the color you gave so far that was about the second quarter looking back?
Mark S. Thompson - Chairman, Chief Executive Officer and President
Okay, Ross. So, in terms of the granularity, the strength anticipated for the second half as reflected in our guidance for the third quarter is really pretty broadly based. If you look at the big chunks of things that are really driving the results, one is notebook computing, which is strong and we have a very good set of products, both power conversion products for adaptors, as well as regulations... board-level regulation for those. If you look at the SPM space, which goes into a wide variety of appliances, there is enormous conversions going on out there from standard AC solutions to DC motor solutions, and efficiency standards are flowing through those that's really driving SPM. And our content and penetration of handset has also been a big part of that. So, those would be the sort of the big three legs of the progress.
Ross Seymore - Deutsche Bank
Then I guess switching over to the gross margin side of things, it appears like there's a lot that's under your control with mix and cost cutting, how do those keep or slowdown in their impact as we head into the fourth quarter? Do we have the similar sort of benefits that are under your control or how should we generally think about gross margin there?
Mark S. Thompson - Chairman, Chief Executive Officer and President
Well, Ross, you are not going to trick me into guiding the fourth quarter. You're good but not that good. So we have a... there is really obviously two sets of things that work; a steady improvement in the quality of our mix and we have plans that prove [ph] that quality through this year and across 2009. Obviously, counterbalancing that... and we see those things as inside our ability to control. Clearly, everyone in the industry has been absorbing big costs in energy, it takes a lot of electricity to run a fab. We had big shipping surcharges. Gold has been very high. Metals and plastics in general have gotten very expensive. We are able to offset those. So, if they stay within some reasonable range, then we will more than be able to offset those going forward. But again, if you look at gold, it's been incredibly volatile, we buy a lot of it. And so that can either be a positive or a negative and will, for everyone, create a certain amount of extra challenge in predicting the out space because if gold goes to $1500 an ounce then it's going to be a different look than if it falls back to the $750.
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