Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Paul Coster – J.P. Morgan.
Paul Coster – J.P. Morgan
Perhaps you can help us a little bit on the gross margin outlook. It seems now it's starting to look current and should we expect more of these write offs moving forward. And secondly as we move up the megapixel curve which sounds like it should happen with these move to three and five and eight megapixel, does that increase ASP's and increase gross margins and have you got a target gross margin and operating margin in mind for the company for fiscal year 2010?
Anson Chan
You're right. Gross margin situation should improve as we bring in fresh inventory and as we sell them in Q1 fiscal 2010. Your comment about the mix should also help in general. We do command a higher premium for our high resolution products because they tend to incorporate some of our newer technologies.
Regarding inventory reserve, it's hard to pin down and I think I mentioned, it's really a point estimate as we close the quarter, but in general as the mix of our inventory on hand becomes more up to date you should expect a lower inventory reserve moving forward. That will be another favorable factor for our gross margin going out.
Paul Coster – J.P. Morgan
Do you have a target for fiscal year '10?
Anson Chan
We do have an internal target, but as mentioned in the call earlier the visibility is still fairly limited so I think we'll just follow our historical practice of not providing too much guidance in that respect.
Paul Coster – J.P. Morgan
What share of the mobile phone market does OmniVision currently command according to that research company?
Bruce Wyer
The share we command is in excess of 20%.
Paul Coster – J.P. Morgan
You're aware that there's been a lot of speculation about Intec, VisEra doing business with Apple. Can you confirm that from your perspective?
Ray Cisneros
Obviously we can't comment on any particular customer names or some kind of relationship that you're commenting there, so we'll leave it at that. That's really something beyond the scope of this kind of meeting.
Paul Coster – J.P. Morgan
As we move forward, do you think the sales into direct sales as you're going up the megapixel curve will increase and what bearing does that have on gross margins?
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