Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bryan Lee - Citigroup.
Bryan Lee – Citigroup Smith Barney
First off, you’re essentially guiding revenues flat but it looks like gross margin will be down a smidge. Is this conservatism on your part or are there some moving parts here as you ramp into Malaysia over the next few months?
Mark J. Gallenberger
Well, no, there’s really no moving parts. We give the approximate gross margin basically at the midpoint, so if you look at the revenue range of $36 million-$40 million, the midpoint is $38 million. And so when you look at it from that perspective it’s consistent with the profit margin that we had, or the gross margin that we had for this quarter, for the April quarter. So there’s really nothing going on there.
Bryan Lee – Citigroup Smith Barney
So the mix assumption would be relatively similar to what you had in Q3?
Mark J. Gallenberger
That’s correct.
Bryan Lee – Citigroup Smith Barney
And looking at your guidance, I would have thought that revenue guidance would have been higher, given new bookings in Q2. Because if I just average the past two quarters of bookings, including this quarter, it’s about $45 million. Can you give some color as to why revenue guidance is well below this level at $38 million at the midpoint?
Mark J. Gallenberger
One of the things that happens, Brian, is in our Q2, which is the January quarter, it’s a significant quarter for service bookings as well. So the orders we reported last quarter had, I believe, about $15 million worth of service annual contract renewals. So even on product orders, we’re higher in the second quarter. It’s not as significant a drop quarter-over-quarter from a product standpoint. And that’s the reason why the revenue we’ve targeted for Q4 to be at about flat. So you’re not building it off the higher number. Its service orders that happened in Q2.
Operator
Your next question comes from Patrick Ho - Stifel Nicolaus.
Patrick Ho – Stifel Nicolaus & Company, Inc.
First off, in terms of your growth going forward over say, even next quarter and maybe the quarter after that, what do you see as the main drivers for, or what are the main catalysts for the growth? Is it going to be some of these new customers that you’ve garnered over the last few years or will it be back to your traditional lead customers that you’ve had in the past?
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