Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Adam Holt of Morgan Stanley.
Adam Holt – Morgan Stanley
Good afternoon. Two questions on the license revenue line. If you look at the fourth quarter, could you walk through a little bit more detail, I know you talked about large deals being difficult, but maybe a contrast the direct business versus the indirect business, talk a little bit about the pricing environment and did you see deals shrink because seats are going down or the configuration of the product portfolio is getting a little bit smaller? And then just looking into the first quarter, it looks like the guidance and price license revenue down as much as 30% year-on-year. Is that right, and if so, why should it be so much worse than normal seasonality, obviously difficult environment notwithstanding?
David Henshall
Sure, Adam, this is David. Let me take the first part of that question and then ask Mark to add as well. Couple of things going on in Q4, if you look across the geography, one thing that was very evident is, especially in the last couple of weeks, people were really focused on preservation of capital, a number of transactions that were down to last signature were just not approved through the finance organization. There were some instances where people simply reduced the size of an overall purchase. I can think of one in particular that was a seven-figure transaction and ended up closing less than $200K. And then I’d say just the increased volatility that was going on at the end of the period as people were trying to anticipate what their budgets were going to look like into 2009, so a lot of different things impacting the actual results for Q4. As far as the Q1 guidance, the implication on product license revenue would actually be down about 20% instead of 30%, as you mentioned.
Mark Templeton
Adam, the only thing that I would add is, just a couple of things. First of all, there are no structural changes in what customers are doing in terms of how they're implementing the product configuration or anything in that area. And having spent a fair amount of time in Europe in the past six months, I can just tell you that it’s clear that Europe is lagging the U.S. by six months. So the things that we saw in Q4 out of Europe in terms of what the sales organization thought, what customers did, et cetera, was really almost identical to what happened in the U.S. in Q2. And so what happens is as we've learned in the U.S. market that customers adjust, everyone adjusts their outlook, their expectations so the data that you get from the market gets better, but until it gets better and until we get to that part, we're being pretty cautious as you can tell.
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