Question-and-Answer Session
Operator
Your first question comes from Harsh Kumar from Morgan Keegan.
Harsh Kumar - Morgan, Keegan & Company
Chuck, your cell phone business as it relates to your LED business. Could you talk about if you’re starting to see a bottom there and how much is it as a percent of revenue?
Charles Swoboda
If you look at the application mix for our LED business today, mobile is a pretty small percentage. I think lighting is by far the biggest. It’s probably half the business today and then when you add in video screens, you know, that’s probably three quarters of the business. So mobile is a relatively small percentage. We continue to have some success on the high end of the market, but I’m not sure that we have enough business to really give you the overall trends. I can you that where you have high end, high value products, we continue to have some new design win success, but it’s a relatively small percentage of the totals. I’m not sure I can give you an overall trend of what goes on in that market. Our business has become much more lighting centric.
Harsh Kumar - Morgan, Keegan & Company
Chuck, now that you sort of hit bottom and starting to grow again, can I throw the question out to you again about your target financial model? Can you remind us if anything has changed? Would this be some blip in the industry and the economy?
Charles Swoboda
Our long-term model as we’ve been talking about for probably the last year or so has been to get into the 40-plus percent gross margin range and then over time build to what we target is a 20% operating margin. With that being said, I think you can see the progress we’ve made in the last four quarters on the gross margin and some of that’s dropped through on the operating margin line.
I would tell you that where we sit today, the focus is really continuing to do things to drive down the cost and find areas where we can drive more value, which helps on the margin obviously. Then over time, we should see some of that leverage as we get more top line growth. The focus right now is how do we take advantage of this emerging LED lighting market? So you’re actually seeing in our targets that we’re actually making some pretty significant near term investments in both R&D and sales and marketing to really drive that growth and so I think the operating margin goal is a little further out than what we think we can achieve on the gross margin side.
- To read the full transcript on Seeking Alpha, click here »
