Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Katie Huberty – Morgan Stanley.
Katie Huberty – Morgan Stanley
First on margins, Tony can you help us break down the benefit from currency versus mix versus restructuring initiatives and particularly what the change was outside of the US versus the decline in margins within the US.
Tony Massetti
The impact of currency on gross margin was roughly in line with the revenue impact. So we talked about the revenue impact being approximately 6%, so for modeling purposes you can use that. The 100 basis point margin improvement was largely driven by operational improvements and efficiencies as part of the plan that we outlined for investors in our December analyst day. And we’ll give you more color on that on the Q2 call as we launch into the new initiative for 2008.
Katie Huberty – Morgan Stanley
So is it fair to take away from your comments that the decline in the US versus the expansion in margins outside the US is largely due to currency?
Tony Massetti
The decline in US was more customer mix Katie. The operational efficiency I’d say were across the company and not really in a particular geography.
Bill Nuti
I think in the US what you’re seeing is a product mix of more retail assisted point of sale in the mix of revenue which is of lower margin, large bank implementations of deposit versus more national bank which is a slightly higher margin for the company and a little bit less in the way of some of the new industries that drive good margins for us because they are generally software businesses. So in the US it was product mix that drove the margins down.
Katie Huberty – Morgan Stanley
On that point Bill, how many points of growth do you expect that non-retail, non-banking sectors can add in 2008?
Bill Nuti
I don’t think we’re going to see a huge impact in 2008 unfortunately. We’re working towards hopefully driving a greater impact this year, but right now the way I see it given the travel industry, is a large industry for us and what’s going on in that space, and that leaks over to hospitality.
And the general macroeconomic conditions in the US lead me to believe it’s going to be a slightly tougher year than we originally expected. Long term, however, these industries can have a huge impact on our growth and on our profits as long as we execute well.
- To read the full transcript on Seeking Alpha, click here »
