Question-and-Answer Session
Operator
(Operator instructions) your first question comes from the line of John Vinh with Collins Stewart. Please proceed
John Vinh – Collins Stewart
First, just housekeeping question Tom. The second 10% customer, I didn't catch the name of that, can you repeat who that was?
Tom Gay
Cowim, contract manufacturer in Asia.
John Vinh – Collins Stewart
Okay. And Cisco was not a 10% customer in the quarter?
Tom Gay
Not directly. They have no made the transition to outsourcing to multiple contract manufacturers and those folks represented a little over 15% for the quarter. Although we are not certain how much of that is actually Cisco.
John Vinh – Collins Stewart
Okay. On the – I guess really to do your gross margins, you know obviously as your larger customers seem to be having some very strong momentum and they seem to be kind of driving, kind of the more aggressive price mix, maybe can you talk about kind of how you get to kind of flat quarter to quarter on margins and then maybe talk about what sort of impact the ramp of the 8654 will have in terms of stabilizing your margins going forward?
Tom Gay
One of the issues is, even though we have brought inventory down we were selling during the quarter some purchases that have been made a couple of quarters ago and things were a little more expensive. And so we should be getting to a more current cost which are a little lower and we believe that is the reason for justifying a flat margin. And your second question ?
John Vinh – Collins Stewart
Yes, 8654.
Tom Gay
We have actually made our first revenues during the quarter, but it was extremely small and we believe in the second half that we will actually see something significant from that SOC and at that time I will have to assess where the pricing in margins are. We would like to hope for a little bit of left out of that, but it is too soon to guess.
John Vinh – Collins Stewart
Okay, can you give us a sense of where the ASPs stand today relative to the 8634?
Tom Gay
It is in the – towards the mid-teens maybe a little above that.
Ken Lowe
I guess the answer comparatively is, they are very similar to each other. It is really much more customer dependent than it chip dependent.
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