Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Spencer Wang – Credit Suisse.
Spencer Wang – Credit Suisse
I guess the first question is for Carol. I just wanted to get a better understanding about the performance in guaranteed versus non-guaranteed advertising. I think you cited that in guaranteed there was some pressure on pricing in the non-guaranteed side I guess volume is up strongly. What gives you the confidence this is just a cyclical phenomenon as opposed to something that will continue even at the close of the recession? One housekeeping question for Blake. CapEx was down about 50% year-over-year. Is that just a timing issue or is that the new run rate?
Carol Bartz
Your first question, first of all we don’t break out the difference between Class I and Class II. However, I will say a couple of things. The vast majority of our display revenue is Class I. However, Class II is growing a lot faster, in fact almost double, because people right now are looking for things as economically as possible. Back to what I said in my closing remarks, brand advertising is not going to go away. You are clearly not going to define your brand by letting it sort of float down the tail. You have to be able to have a location that you are proud of. You have to be able to have event-driven branding and you have to be able to have control of what your company stands for. So, I am very, very confident it is not cyclical.
Now, I have spent a lot of time with CMO’s both in the States and last week in Europe and they absolutely confirm it. They are just frantic because to be honest, CFO’s are controlling the marketing budgets in companies now. Not ever a good time. They really understand the importance of brand. They have confirmed that and so I feel very confident with this.
Blake Jorgensen
On the CapEx question, I would not use the first quarter as a run rate proxy for CapEx. Our CapEx is very lumpy, primarily associated with building out data centers and putting servers in data centers. While we are overall trying to minimize our CapEx in a tough economic environment we are also aggressively continuing to build the business to support our search and display capacity.
Operator
The next question comes from Christa Quarles - Thomas Weisel Partners.
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