Question-and-Answer Session
Operator
(Operator Instructions) Your first question is coming from Shannon Cross with Cross Research. Please go ahead.
Shannon Cross - Cross Research
Could you just give us some clarity on exactly what went on with the Staples channel? I’m assuming that’s what you are indicating when you talk about an OEM. Just in terms of magnitude, you know, if any of it will carry over in the first quarter and any more clarity you can give us, Paul, on the increased usage you also talked about on the laser side. Thanks.
Paul J. Curlander
Relative to the OEM expansion, obviously we can’t talk about details, some of it which I think may be obvious out in the marketplace but it’s not appropriate for us to talk about it.
What I would say is that there were two pieces to the OEM expansion. One piece, from a supplies perspective, was around an increase in channel inventory, which is a one-time thing because whenever you go into additional supplies distribution, what happens is you get an increase in channel inventory and that is a fairly stable thing. It’s not to be confused with increases that may come out the next quarter, so it’s kind of a one-time build and the one-time benefits you get. And so that was there and that was in the fourth quarter and we’re not expecting that to be repeated in the first quarter, unless the OEM would do more channel expansion. But right now, we are expecting that not to be repeated.
The other piece is incremental sales out that you get from a channel expansion and we would expect that incremental sales out to continue as we go forward in time because when supplies are more available, you pick up additional business.
So in terms of rough magnitude, if we just focus on that one-time benefit, which was the channel expansion of inventory, which would be a kind of stable thing, that was really a couple of points on a year to year growth rate in supplies was roughly the magnitude of that.
Over on the laser supplies, what I would tell you is that we saw a very strong end user demand and what’s going on there is really the result of a strategy that we’ve been driving to focus on our workgroup laser units and as we continue to focus on that and grow our workgroup laser units, we’re seeing good growth in our laser supplies. Also, we have a lot of initiatives going on in supplies around large account win-backs to make sure that we are capturing the supplies and we actually sell hardware into enterprise accounts. We’re very focused on our laser cartridge collection program. Of course we are doing remanufacturing of laser supplies and we continue to expand our distribution of our remanufactured laser supplies.
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