Question-and-Answer Session
Operator
Certainly. (Operator Instructions). We will take our first question from the side of Daniel Amir of Lazard Capital. Go ahead please.
Daniel Amir
Thanks a lot. Thank you for taking my call. A couple of questions here related a bit of financial side. First of all, do you expect margins to increase back to the level that it was in the previous quarter or should it continue to be depressed a bit due to largely this issue with one of your customers?
Phillip Kagel
The issue relate to -- actually there is a couple of suppliers if that’s what you are referring to?
Daniel Amir
Yeah, excuse me, a couple of suppliers, yeah.
Phillip Kagel
Yeah. We had a about a $600,000 cost due to defective parts that we were using during the quarter. That issue is behind us. We are still going to work on catching up the sales and that will take a quarter or two to catch that up. But as far as that condition, it doesn't exist any longer.
Daniel Amir
So, is it fair to say that margins should be at the level that it was in the December quarter?
Phillip Kagel
Yeah, I think so. We expect improved medical ultrasound mix in our sales in the June quarter that will help. But there's a lot of various factors of course, it's utilization, it's other mix. So there's just a lot of factors going on here.
Henry Pao
I think in general, you are right that we should gain back the gross margin that we lost for the defective parts.
Daniel Amir
And with regards to your commentary on annual sales growth here for fiscal year '09. I mean, what type of sales growth should we be expecting? I mean is it something in the single digits range or is it higher than that?
Henry Pao
Well as I project it for the quarter, it's 5 to 10%. So it's between the single and double digit and that’s what we think the fiscal year will come out to be.
Daniel Amir
Okay. And my final question is what gives you kind of confidence in terms of your guidance here? The past few quarters have obviously been a bit tough for your business, but guidance seems to be pretty solid here at 5 to 10%. So what gives you kind of the confidence that businesses are turning around and overall demand is coming back in your end markets?
- To read the full transcript on Seeking Alpha, click here »
