Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from George Notter - Jefferies & Co.
George Notter - Jefferies & Co.
Clarification on Zynetix, what is the top line and net income impact there? I guess if I look at your financials I can see the business lost $4.3 million on a net income basis, although I think that’s GAAP. What would be the non-GAAP net income impact and then how about on revenue?
Richard J. Gaynor
I would say it’s relatively immaterial for the company overall. Zynetix, as you know, the object when we acquired Zynetix was to actually import over the intellectual property that we acquired, which we did into the mobilEdge product set primarily. And what was left in Zynetix was really a niche business that serviced things like cruise ship operators. And the revenue and cost implications are relatively immaterial to the company. So I would say you should just consider it immaterial.
George Notter - Jefferies & Co.
And I wanted to ask about the long-term operating margin for Sonus. Historically the business has been fairly operating-expense-intensive, custom software development, lots of network inoperability work for customers. You talked a little about pushing that cost out on to the customers. How do you think that transition would work and where do you think the long-term operating margin structure of the company should go? Can this still be a 17% operating margin business longer term? What’s the thought now?
Richard N. Nottenburg
I’m not going to really answer your question on long-term operating margins right now but what I can say, as far as pushing work onto customers, actually one of the things we are trying to do here is we are trying to transition to really being much more aligned with the market than just with specific customers. So if there are things that are really very, very customer specific, I just want to ensure that we get paid to do that work and that we want to maintain a very solid process for our product road map in bringing out products ahead of market demand.
Really, it’s a balance. It’s a transition and I think we started that transition with Shaylan coming to my table with product marketing. I feel really comfortable with that.
I think Rick wanted to comment on margins.
Richard J. Gaynor
I would point out that Rich has made several executive management changes here and reorganized several business units and those new managers’ new responsibilities have been cast to go out and put operational efficiencies into their businesses and they’re working through that process right now.
- To read the full transcript on Seeking Alpha, click here »
