Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Paul Bonenfant – Morgan, Keegan.
Paul Bonenfant – Morgan, Keegan
I think you said that at a run rate of $95 million and a 100 Yen exchange rate, you would be break even. Was that on a free cash flow or an operating cash flow basis?
Robert Nobile
Cash flow from operations.
Paul Bonenfant – Morgan, Keegan
Did you mention your 10% customers in the quarter on an individual basis?
Robert Nobile
No we did not. As I indicated, there's been some customer sensitivity related to that, so going forward, we will just aggregate the sum of our three major customers
Paul Bonenfant – Morgan, Keegan
Some competitors have suggested that the market bottomed in the first calendar quarter or the March quarter, yet you're citing continued market softness. Is this customer specific? Is it related to inventory adjustments versus improving your end user demand? Do you have a sense for the puts and takes here?
Gilles Bouchard
I think what we're seeing is the March quarter was very tough because you had a combination of lowering demand and some major inventory adjustments in the supply chain. What we're seeing right now is the supply chain effects are tapering off so from a demand point of view we're seeing some uptick, but we believe that is mostly due to supply chain effects and we're not sure yet that the actual end demand has changed all that much. So those are the assumptions that are built into our plan.
Paul Bonenfant – Morgan, Keegan
Regarding the margin trends, it seems there was a lot of one time items this quarter. I know you're not giving EPS guidance, but can we assume that we'll see some margin improvement in particular in gross margin in June and throughout the rest of the calendar year?
Robert Nobile
The point I made in the specific comments was that we don't expect the negative impacts from yield as well as from the discontinued products to re-occur.
Paul Bonenfant – Morgan, Keegan
So that would bring you back to these mid to low 20's in terms of gross margin.
Robert Nobile
Yes. If you do the math on those percentages, correct.
Operator
Your next question comes from Ehud Gelblum – J.P. Morgan.
Ehud Gelblum – J.P. Morgan
In your guidance of $80 million to $90 million revenue for next quarter, are you assuming StrataLight is roughly the same as it is this quarter or up or down?
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