Question-and-Answer Session
Operator
Thank you and ladies and gentlemen, at this time we will begin the question/answer session. (Operator Instructions). Thank you. Our first question comes from the line of Bill Ong with American Technology Research.
Bill Ong - American Technology Research
Hi, good afternoon. Can you provide some sensitivity analysis on what type of break-even we can expect? I know there’s a lot of variables, but maybe just a general sense. And the rationale behind that is that Q1 is going to be probably seasonally down, just want to get a sense of whether or not you’ll go into losses and if you are, are you going to plan to take any action to reduce cost to prevent that from happening?
Joanne Solomon
Thanks, Bill. With respect to a break-even calculation, if you look at break-even on an operating income basis, we would estimate that our break-even point is between about 525 to 550 million in revenues, again, that?s on an operating income basis.
And as you said, there’s a lot of assumptions that go into that with respect to mix and pricing and the like. At those levels, we would see gross margins of about 16% to 17%, but again, that’s all subject to a lot of different estimates and that does vary from quarter to quarter.
And with respect to the outlook for next year other than saying it’s uncertain. I have no comments with respect to that.
Bill Ong - American Technology Research
Well, actually more if you think you’re going to the losses, are you going to take any action to be in front of that? That’s why I want more—to just behind that. Any type of discretionary costs that you can take out to minimize that from happening?
Kenneth Joyce
Bill, this is Ken Joyce. How are you today?
Bill Ong - American Technology Research
Yeah, I’m good, thank you.
Kenneth Joyce
Let me respond to that a little bit. I think we’re a little bit ahead in this area. We’ve been rationalizing our factories, as we’ve indicated in the call. We’ve downsized. We consolidated some of our factory operations.
We continue to look at our corporate expenses. We’ve been focusing on asset productivity measures and I think that’s been reflected in our improved performance.
That being said, should things continue to soften, there are additional measures to be taken and I think they would be much along the lines of what we’ve done so far.
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