Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Brad Reback – Oppenheimer & Co.
Brad Reback – Oppenheimer & Co.
Hamish, did I hear earlier in the call that you expect the attrition rates or maintenance for the year to be 93% to 93.5%?
Hamish N. J. Brewer
That’s correct.
Brad Reback – Oppenheimer & Co.
So, would the implication there be that we should expect quarterly maintenance revenue to trail off here a little bit from the $43 million reported in the current quarter?
David Alberty
I believe that we’re looking for maintenance revenue to be about $43 million in the second quarter. So, I don’t think it’s going to trail off.
Brad Reback – Oppenheimer & Co.
On the strategic initiative Hamish, looking forward what type of expenses should we think about associated with that as you build up those capabilities?
Hamish N. J. Brewer
We’re still putting together our detailed plans. The first step that we really took was to bring in some outside expertise to help us really build this business correctly. Obviously, a lot of other software companies have gone down this path, historically we’re not breaking any ground here and so we wanted to hire some of that expertise and we’ve done that. We’re really just detailing out our plans at this point.
I don’t really have any firm numbers I can give you in terms of expectations around costs or revenue expectations. But, as we start to build that out during the course of the next few months [inaudible].
Brad Reback – Oppenheimer & Co.
On the consulting business as I look through my model, this looks like the lowest number on a gross margin basis that you’ve put up since March of 2003. I understand what you’re saying about getting the Indian center of excellence up and running but thus far the investment there doesn’t seem to be generating the returns that we would have expected.
Hamish N. J. Brewer
From a consulting services perspective, you’re right we’ve got people in place and we’ve got them trained but what we have not been able to successfully do is to get the level of attach rate in to our consulting business that we were hoping for in our center of excellence. So, we’ve still go quite a bit of work to do in that area and margins as we pointed out are pretty low for this quarter.
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