Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from John Bright - Avondale Partners.
John Bright - Avondale Partners
Bluetooth sales in the quarter, very strong, I do think that’s the story. I think the gross margin improvements where you were able to keep the gross margins on the ACG group in line, impressive. Is that sustainable? And what’s going into that really strong performance this quarter?
Barbara Scherer
So actually, in each of our product lines, we are improving profitability. So the profitability on Bluetooth is getting better. So even as it’s increasing in the mix, the fact that its profitability is increasing is helping us keep our gross margins up where they are. In total, we’re basically in the range that we’ve indicated the 45% to 48%. We are expecting to be down a little bit sequentially in Q1 with a further mix shift with we’re estimating the B2B business will probably be down a little bit further and the Bluetooth business we expect to be up again.
But in general, as we work through all our opportunities and work through the module, it’s improving the product line profitability and then improving all the things that are between standard and gross margin, excess and obsolete inventory as manufacturing variances. It’s warranty. And each and every one of those areas has multiple teams, dedicated to reducing those costs and improving the effectiveness. So yes, in general, we very much believe that we can operate in the target model for gross margins for ACG.
John Bright - Avondale Partners
Do you think, Barbara, you saw any benefit, it’s probably early, but any benefit from the California Hands-Free Law expected in July?
Ken Kannappan
We don’t think we’ve had significant benefit to this point in time. I will say that we did do a study and were slightly surprised to find the degree to which people did not know when the law was going into effect. Some of the people actually already thought the law was in effect. Many people did not actually know about the law, surprisingly.
So we may have had a small pick up, but I do want to put into context that in reality California and Washington are a fairly small percentage of our global markets. We don’t think that it was a big lift effect from that. We think that the principal factors related to the very good acceptance of some of our critical products, and particularly within the retail channels, where we saw very good sell-through.
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