Question-and-Answer Session
Operator
(Operator Instructions) We’ll go first to Christian Schwab with Craig-Hallum Capital.
Christian Schwab - Craig-Hallum Capital
I just want to make sure I understood that correctly, Art, the GAAP operating expenses are going to go from $14.2 million in Q2 to $12 million in Q3. So a sequential decline of $2.2 million, correct?
Arthur O. Whipple
No. So non-GAAP and non-GAAP is from $12.9 to $12. So the GAAP also comes down but the non-GAAP comes from $12.9 to $12. Obviously we haven’t done the detailed planning yet on the third quarter but that’s our target.
Christian Schwab - Craig-Hallum Capital
We talked about really strict operating expense controls this year as a way of operating leverage, it still seems maybe a little bit high or do we really think we can keep op ex steady stated around $12 million give or take non-recurring product development costs and how high can that quarterly revenue grow with that type of headcount without sales increasing and commissions and bonuses, etcetera, etcetera?
Arthur O. Whipple
I think we’re still committed to the $12 million as the base run rate with this other stuff causing lumpiness. We have not increased headcount, most of the other expenditures are being very steadily maintained and Q1 is always an unusual quarter with audit fees and seasonally higher employer taxes and things of that sort. So I think we’re still committed to the $12 million run rate.
Christian Schwab - Craig-Hallum Capital
And then for management bonuses this year for 2008, can you just remind us how you’re going to be bonused? Is it going to be on a revenue goal, is it on operating income?
Arthur O. Whipple
You can take a look at our proxy that was filed on Friday and you’ll see that the goals are really around revenue and operating income.
Christian Schwab - Craig-Hallum Capital
Do you want to elaborate on that some, those goals?
Arthur O. Whipple
Not too much because I think there’s some competitive information in there.
Christian Schwab - Craig-Hallum Capital
And then the 17% effective tax rate, that is on a GAAP basis?
Arthur O. Whipple
That’s a GAAP basis, yes. So it’ll be lower on a non-GAAP basis.
Christian Schwab - Craig-Hallum Capital
And then the PCI Express, when do you think Gen 2 makes a material impact?
Michael J. Salameh
We’ll start to see revenues later this year but if you remember that the typical design cycle from the time we sample to volume production is nine months on the inside, two years on the outside. So, the biggest impact will be, where we start to see a big dent will be next year in 09.
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