Question-and-Answer Session
Operator
Thank you. The question and answer session will be conducted electronically. (Operator Instructions) We’ll proceed in the order that you signal us and we’ll take as many questions as time permits. We’ll pause just one moment to give everyone an opportunity to signal for questions. We’ll take our first question from Satya Kumar with Credit Suisse.
Satya Kumar - Credit Suisse First Boston
Thanks for taking my question, Bob. Can you give us a sense of what the inventory levels of Brooks products that your customer is manufacturing [inaudible] at this time?
Robert J. Lepofsky
Actually fairly low and again, we have to look at that in two dimensions. First in our Critical Components area principally the CTI cryopump products, those have extremely short cycle times and therefore customers tend not to have virtually any inventory. In our Automation products, and again this was the reference I was making to year end, we act as truly an extended factory for our customers where the front ends, the [efroms], the robotic and automation systems, are literally configured very late in the cycle and are subject to literally last minute changes be that for designation to a particular customer by a given OEM or a stretch out or a pull in. So they don’t have inventory of product but we have work in process on the floor and that gives us this end of quarter uncertainty that we saw in the December ended quarter.
Satya Kumar - Credit Suisse First Boston
Okay, that’s helpful. Switching gears to margins a little bit, a couple of things there. Some of your OEM customers have talked a little bit more than normal about seeing pricing pressures in their business. Can you elaborate on how pricing trends are for you guys and is the margin declines that we have seen purely a function of mix and volume and not much to do with pricing, and the follow up to that also, if you can quantify, it appears that your breakeven right now is about $150 million. How much lower do you think you can take it to by the end of this year?
Robert J. Lepofsky
I’ll take the first part and let Martin take the second part. The pricing pressure issue, you’re absolutely right, our dynamic in the last quarter was mix and volume as opposed to pricing pressure. The overall pressure that remains on us particularly relative to the component level by OEMs is always substantial and we certainly do not see any loosening of that demand. In our Automation Systems group, there the pricing issues again are always intense but the metrics are very much about in-house, out-house decisions in terms of where automation takes place and it is about performance at given price points. So we actually in a portion of our Automation products, may be the higher priced alternative but that’s weighed heavily against performance. Martin, do you want to comment about break even point?
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