Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Ralph Schackart - William Blair & Company, L.L.C.
Ralph Schackart - William Blair & Company, L.L.C.
Doug, if you sort of just gin out everything that's going on in the ad market - I know it's tough to be an economist at this point - if you look into 2009 knowing what you know today and given your conversations with your customers and end markets, do you still think that the top line grows in 2009 over 2008?
Douglas Shaw
Knowing what we know today, yes, but the qualifier of what we know today. When we talk to our OEM customers and, of course, we're spending more and more time with them now just given all the uncertainty out there, they are still talking about growth in their units going forward.
We're not sharing our OEM customers telling us that they expect dramatic falloffs. We're expecting it, frankly, because we read the same things in the paper that everybody else reads, but to date it really is business as usual when we look at our printer OEM business and look at our mobile phone or digital camera business. We think there's a dose of reality to come, but it hasn't come yet. So one reason we're not giving more substantive guidance for 2009 is we feel that maybe the industry analysts are a little optimistic talking about 5% to 7% unit growth next year.
So we're going to spend this quarter working closer with our customers and try to get people like IDC to update their forecast and use those.
Ralph Schackart - William Blair & Company, L.L.C.
And let's say the scenario at the end of '09 was that unit volumes were actually down 5% to 7%, how would your business weather that storm on the top line?
Douglas Shaw
So what's happened before - and I don't want to get too confident - but the nice thing about laser printers is the business model for those folks is in the consumable part of their business, so they have a big incentive to ship units. And what that usually means is they drop their price to a certain level to get the units out.
And as you know, Ralph, our pricing is based on unit shipped; it's not a percentage of what they sell it for, so if history repeats itself - we saw this in 2000-2001 - we think that the overall, let's say, printer market will potentially drop from a dollar standpoint, but from a unit standpoint it could be, you know, flat or up marginally or down marginally. So we don't expect a significant revenue drop from our standpoint.
- To read the full transcript on Seeking Alpha, click here »
