Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bob Evans - Craig-Hallum Capital.
Bob Evans - Craig-Hallum Capital
Can you comment a little bit further as it relates to your 2009 goals and help me get there in terms of profitability and maybe a little bit more clarity as it relates, in terms of I think you said $12 million annualized by the end of the year in terms of product development versus $18 now. I just want to make sure I am looking at it the same way you are?
Robert J. Rueckl
I’m not going to give you real detailed guidance for 2009, Bob, at this point, but we do have a goal as we said of being profitable in 2009.
Bob Evans - Craig-Hallum Capital
Are you saying on a GAAP basis?
Robert J. Rueckl
That is correct. And so we will obviously we are seeing the momentum in our subscription revenue growth. That will continue, and we have cut out the costs that we talked about. Now the spending that we cut is a mix of capital spending. So, if you take the development cost of $12 million exiting the year. So, that’s the fourth quarter run rate if you took our fourth quarter multiplied by four, you’d come up around $12 million. About 75% of that is capital, and about 25% of that is expense.
Bob Evans - Craig-Hallum Capital
So that would hit the P&L also.
Robert J. Rueckl
Yes, right, right.
Bob Evans - Craig-Hallum Capital
So from a cash standpoint the reduction would be say 18% to 12%, but from a P&L standpoint, it might be 25% of that.
Robert J. Rueckl
That’s right.
Bob Evans - Craig-Hallum Capital
Will there be any meaningful change in depreciation and amortization next year?
Robert J. Rueckl
It will start to come down a little bit it. You’re going to have a couple competing things there. That number is still increasing as we’re amortizing the investment through the first half of ?08. But as our investment comes down on the second half of ?08, that amortization will come down as well.
Bob Evans - Craig-Hallum Capital
And you said these, from a cost standpoint, these changes from a headcount standpoint have already occurred or they will occur?
Robert J. Rueckl
They have occurred.
Bob Evans - Craig-Hallum Capital
And you said there was going to be a 50% increase in subscription revenue is that correct?
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