Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from John Harmon - Needham & Company.
John Harmon - Needham & Company
I’ll just start off with kind of a philosophical question. EMCORE’s core strength is in semiconductors and semiconductor materials, making solar cells and there are startups in other companies that emerged that are really focusing on making the best concentrators they can. It seems like you probably developed your own concentrators to demonstrate the performance of your solar cells, so what’s the long-term outlook for making concentrator systems which probably seems like a noncore business for you?
Hong Q. Hou
Things like the fiber optics business, you have the vertically integrated infrastructure and capability that will ultimately give you the advantage for cost. Our core competency is compound semiconductors. The solar cell side will continue to be our core competency but at the system side that’s addressed a bigger market opportunity. Plus with the solar cell technology and the understanding on the performance we are able to optimize the performance of the system level. So we’ll continue to push forward for both sides of the business, mainly the component side and system side.
John Harmon - Needham & Company
Secondly, you talked about a very aggressive pricing on optical modules. Was that in transponders or what types of products was that? And in optical do you think demand has stabilized after it fell off a cliff as you said or how do things look in the December quarter?
Hong Q. Hou
The demand seems to be stabilized. As I said our guidance or visibility at this point for the December quarter is to be flat with respect to the September quarter. It actually is not too bad considering this quarter the situation that’s been very challenging from the broader market point of view.
The pricer is mostly we have seen in the telecom areas, the 10 gigabit tunable lasers and transponders.
John Harmon - Needham & Company
I guess the drop off in demand was really late in the quarter but it was so severe and you certainly didn’t hit your target of break-even in the quarter. I’m just curious why you didn’t pre-announce since you really came up so short?
Hong Q. Hou
It came on pretty sudden. As I said earlier in the quarter we were trending to our plan pretty nicely and there’s so much uncertainty especially with our VMI, vendor managed inventory. We produce a product according to the forecast to the plan and we expect them to pull from that so that we can recognize it as revenue. In our financial systems typical has a delay in terms of getting the quarter closed and also in this time with the economic situation we were looking into the inventory, into the accounts receivable and all of that. So there are so many moving parts in there that would not allow us to close the quarter sooner to announce it.
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