Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Srini Pajjuri - Merrill Lynch.
Srini Pajjuri - Merrill Lynch
Just a clarification first on the OpEx. You said it’s going to be lower by about $25 million. I’m just wondering should I basically take out $25 million by Q2 of ’09? And then you also said that only half of that is permanent. I’m just trying to think how the model going forward after Q2.
Jerald G. Fishman
Well I think the after Q2 will be heavily dependent on the revenues we achieve after that. You know, I think those are good numbers until the revenues start to increase. But I think if you look out in time when the revenues start to increase, about half of that or about 5% is permanent reductions that will remain even after revenues increase.
Srini Pajjuri - Merrill Lynch
And then quickly on the turns, you said you’d probably need more turns to make the quarter. Can you talk about what the turns level was last quarter and what you’re expecting for the guidance?
Jerald G. Fishman
Well, I’ll talk generally and Joe can maybe give you a few of the statistics. I mean generally in this type of market, where nobody wants to hold any inventory and our customers don’t know exactly what they’re going to need and supply is readily available, I mean typically in this part of the cycle we’d receive most of our business with turns orders. Because the backlog is low and customers believe there’s no need for them to put backlog on us. So typically in this kind of environment, you’d find the predominant amount of our business coming from turns. So –
Joseph McDonough
I think to answer your question specifically, the turns business that we saw in the fourth quarter were a little bit higher than in the third quarter. Something in the 40 to 45% revenue is what you would call a turns business. Next quarter, that number will go up probably to 50%. But what can be confusing when you try to use backlog and bookings and changes in those from quarter to quarter in times like these, is that as Jerry mentioned the distributors are sitting with inventories that are at higher levels than they would like.
So their first reaction, and not a lot higher – maybe 5% higher than they were at the beginning of the quarter. So their first reaction is to stop ordering from us until they can bleed off their supply of inventory. So when we talk about backlogs, we’re talking about the backlog that we get from our distributors. But when we evaluate end market conditions, and as Jerry said the book-to-bill ratio and market level was about 0.92, we are looking at the backlog that our distributors have from their customers and ignoring the backlog that we have from our distributors.
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