Question-and-Answer Session
Operator
(Operator Instructions).
Your first question is from Subu Subrahmanyan of Sanders Morris-Harris Group.
Subu Subrahmanyan - Sanders Morris-Harris Group
If you could walk us through the gross margin adjustments for the December quarter. Did I understand you right, was it 47%, and understand the level of impact that lower cost market had on the numbers and also the debt expense, what that number was.
Duston Williams
Sure. The Q4 margins were 36%. What I mentioned is that we booked significant lower cost to market adjustments in anticipation of Q1 shipments and that was several million dollars that we booked for those adjustments.
Subu Subrahmanyan - Sanders Morris-Harris Group
Impact on that 36%.
Duston Williams
Over five percentage points. On the bad debt, $1.7 million related to one specific Russian customer.
Subu Subrahmanyan - Sanders Morris-Harris Group
Is that typical for the lower cost of market to book it ahead of when even ship and recognizes revenues?
Duston Williams
Yes, in this case, we’re selling some common equipment below cost. That common equipment we currently have in inventory or purchase commitments on our suppliers, which require us to effectively book that inventory at lower cost of market.
Subu Subrahmanyan - Sanders Morris-Harris Group
Moving onto guidance, it sounds like there are several large customers that you ship stuff to in lower cost market expenses, but you expect relatively minimal revenues in 1Q, so given those factors, should the first quarter mark a bottom for revenues?
Duston Williams
Yeah, good question, all things being equal, Subu, with our existing customer base. I think that’s a logical assumption. From a revenue perspective, I think most of these customers will recognize if everything goes as expected, revenue in Q2, there’ll probably be one that might stretch out potentially into Q3.
Subu Subrahmanyan - Sanders Morris-Harris Group
You mentioned three. Are there more than three that are being impacted, this quarter, and will start in Q2 or later?
Duston Williams
Yeah.
Operator
The next question is from Ehud Gelblum of J.P. Morgan.
Ehud Gelblum - J.P. Morgan
Duston, doing a little math of what you reported versus what you gave guidance for. The mid point of guidance would have suggested that your cogs would have been about $43 million this quarter on $75 million in Op Ex. You did cogs of $55 million on $86 million Op Ex, but numbers aren’t that important, besides to say that you beat your revenue guidance by $11 million and your cogs guidance, your cogs ended up being $12 million higher. As we look into next quarter, how do I take that correlation between cogs being essentially the same as additional revenue. How do I take that and apply that to the next quarter in terms of how much does a new customer cost in terms of common equipment?
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