Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of Craig Hettenbach with Goldman Sachs.
Craig Hettenbach – Goldman Sachs
Yes. Thank you. Can you give us any update on the transition revenues in terms of the next couple of quarters, what that run rate might look like?
Oleg Khaykin
Well, clearly I do not know what Vishay demand is going to be but our expectation is that it will be not too far off from where the revenue was in Q1 but probably somewhat down. So it’s difficult for us to forecast as we do not see -- have a very good visibility into the Vishay internal business. But clearly it will continue in meaningful volumes. I would imagine they are preparing some inventories as they will transition business to other locations at the end of the current transition services agreement period.
Craig Hettenbach – Goldman Sachs
And then a follow up if I could, you mentioned controlling OpEx, are there any areas within R&D that you’re looking to – that you think you need to spend or you want to spend more even through the downturn or as we come out of the downturn here?
Oleg Khaykin
Let me just tell you that obviously all areas are up for reexamination including R&D, but I’m not going to go into any specific areas where we’re planning to make reductions.
Craig Hettenbach – Goldman Sachs
Okay. Thank you.
Operator
Your next question comes from the line of Craig Berger with FBR Capital Markets.
Craig Berger – FBR Capital Markets
Hey guys. Thanks for taking my questions. What do you think the gross margins look like next quarter given the expected drop in revenues?
Oleg Khaykin
Hello Craig. Well, I think at this point in time, I don’t want to speculate on the gross margins. Clearly, if we do nothing, the gross margins are going to decrease, but we are fully obviously undertaking a number of cost reduction measures among things like shutting down fabs for periods of time. So clearly, to the extent we’re going to be able to reduce our manufacturing costs, that would give the positive improvement on gross margin. So I think at this point in time, before we clearly define all the measures we’re going to execute in the next two months, it’s somewhat difficult for us to predict.
Craig Berger – FBR Capital Markets
- To read the full transcript on Seeking Alpha, click here »
