Question-and-Answer Session
(Operator Instructions) Our first question comes from the line of Vernon Essi with Needham & Company. Please go ahead.
Vernon Essi – Needham & Company
I wanted to just dive into the gross margin a little bit here in terms of your guidance sequentially you’re looking for a healthy improvement there. I was wondering if you would walk through, you had indicated mix was a big part of that, can you walk through the logic behind that just to give us an understanding there? Because the markets are obviously not very defensible these days, I would think and I was curious how that going to come together.
Robert V. Dickinson
I’ll just give you a high level comment and then let Kevin comment in more detail. Mix is certainly a factor in the improvement but also are the ongoing conversion of our cost reduction efforts into tangible results is also a significant piece of that. So both of them are at play in what we’re projecting here. Kevin you want to add to that?
Kevin J. Berry
That’s really the highlight there. The things that we have talked about including moving more production from six to eight inch wafers, additional low custom assemblies in our subcontractors, things that we had started in Q2 and continue in Q3 will also be more prevalent in Q4. So it’s really a combination of both.
Robert V. Dickinson
I think another key point, some of the things that Kevin was referring to we won’t even enjoy the full benefit of them in Q4 we’ll see additional incremental benefits beyond that. And, I might also mention that our mind set is that when we take a look at our product cost and our margins we’re continually saying, ?Okay here are products that are not doing what we want to do from a margin standpoint. What are the opportunities? Let’s brainstorm a little bit and see what opportunities we got to tackle those.? And, [inaudible] we come up with those. It’s an ongoing process it’s not a onetime event.
Vernon Essi – Needham & Company
Are we to assume in terms of your design wins numbers, I know we shouldn’t read much into these, but it is noticeable that your design win numbers are down year-over-year in handset and mobile. Are we to assume that these are more higher volume designs, that are more focused and less fragmented? Is there anything to read into that? Or is that just the way the numbers come together?
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