Question-and-Answer Session
Operator
Thank you. (Operator Instructions). Our first question will come from Craig Ellis.
Craig Ellis - Citigroup Smith Barney
Thanks and good morning, guys. The first question is on the segment gross margin performance. As I look at analog and functional power and standard product, it's counterintuitive given the industry on communication's revenue strength for the quarter. Was there something that was surprising on the analog business that developed intra-quarter, and can you quantify the inventory adjustment that impacted gross margins?
Mark Frey
I can't quantify the inventory adjustment. I will say that in the March quarter, Craig, we had very high operating leverage and growing to 40%, it was pretty much most of the stars aligned together. In Q2, our power conversion business became a much bigger part of the total mix and it has a lower than average gross margin profile and that -- [for that] watered down the total.
Craig Ellis - Citigroup Smith Barney
And did you see anything on the pricing side in Q2 in that business, or was pricing essentially flat quarter-to-quarter?
Mark Frey
I believe pricing --
Bob Conrad
There was not really a pricing driven impact there.
Craig Ellis - Citigroup Smith Barney
Okay. And then as a follow-up. Inventories were up on-hand about 8% in the quarter. How should we look at what you want to do with on-hand inventories over the course of the third quarter, Mark?
Mark Thompson
We're targeting inventories to be roughly flat in terms of weeks. So, we're targeting that for both, internal inventories and channel inventories.
Craig Ellis - Citigroup Smith Barney
Okay, thanks guys.
Operator
Thanks very much, sir. We'll now take our next question from Romit Shah. Please go ahead, sir, with Lehman Brothers.
Romit Shah - Lehman Brothers
Thanks. Guys, there is a lot of evidence recently that demand in the marketplace has slowed and historically Fairchild has been one of the first companies to see the weakness. Can you help us understand why Fairchild's business has proven to be more resilient this year, is it attributable largely to better lead times, content gains, and larger [SAM]? Thanks.
Mark Thompson
Well, I think it’s a piece of all of the above and, of course, you never really get to conduct a controlled experiment to know. But I think lead times is very key. We have managed to keep lead times in good control throughout this. And so, I think that creates better integrity in terms of what your backlog is. I think our dialog with all of our customers is much more active than I believe it's probably been in the past, so we have been able to see early when customers were making adjustments in demand levels and we are able to react in a timely way. So, when a certain piece of business got rescheduled, we have been able to go find somebody else who could use it. A lot of this tie to the supply chain changes that we have made in really having kind of cradle-to-grave view of the supply chain now. And so, I think all of those things have contributed to our improved stability of performance at this point in the cycle.
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