Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of Matt Sheerin with Thomas Weisel. Please proceed.
Matt Sheerin - Thomas Weisel
Yes. Thank you and good afternoon, Martin, if you could just explain a little bit in terms of your guidance, it looks like your guiding to seasonality in most of your end markets, although, it sounds like industrial maybe a little bit better and seasonal due to some of the factors that you talked about. But could you talk about if you are seeing any signs of the worsened seasonality into the end markets particularly in handsets where you've seen a bounce-back where you have one of your customers obviously guiding down and some concerns there?
Martin Slark
Yeah, thanks Matt. And I think obviously that's the key area of concern that a lot of people have, particularly, if you are reading the press of late and there's a lot of doom and bloom about the economic environment. Our view at this point is that our bookings remained strong during the quarter. We've not seen a downturn in our incoming order rate. And unlike a year ago, we came out of the Christmas season, I think, seeing rapidly declining orders and significant inventory issues in the channels.
Our vendor managed inventory, which is always a good indication of what our major customers are looking at, is actually declined by a day. Our distribution inventories appear to be in good shape. And I think, across the board, we feel reasonably positive at this point in time. Simply, if you look at the total picture, I mean, it's clear that the North American automotive market is going to be slower. They are going to build less cars in this quarter.
We think that's going to be offset by increased electronic content and also of increased volumes in the Asian and European markets. And we think some of newer phones being launched in Asia in particular will offset new seasonal slowdown there. We expect to see the normal slowdown for Chinese New Year, but we don't have any overwriting concerns about the end sectors.
And I think, our diversity of customers, and our diversity in terms of end geographies, we are in, should perhaps shield us from what appears to be primarily U.S. centric concern about the economic.
Matt Sheerin - Thomas Weisel
Okay, thank you. And then my follow up is regarding your margin expansion plans. I know, your target eventually use to get to 15% operating margin. And given that you have seen, they return to more normal price erosion in your business. Should we do --what's the real lever there? Is it going to be on the SG&A side getting it much below 90% or will it be a combination of the gross margin and SG&A?
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