Question-and-Answer Session
Operator
(Operator Instructions) We’ll take our first question from Amit Daryanani - RBC Capital Markets
Amit Daryanani - RBC Capital Markets
Just a question on the gross margin line, could you help us understand, is this a mix shift again that’s impacting it or is it pricing that’s driving the gross margins down a little?
Simon Biddiscombe
It’s kind of two-fold and pricing actually isn’t a big part of it. First and foremost it’s continuing to operate in an environment of very low volumes and we expect volumes to be down again. Even though revenues are increasing, we’re going to see a further work down of inventories in the current period by a few million dollars. So we’re continuing to be burdened at the gross margin level by manufacturing overhead that isn’t being absorbed across the same level of volume as we’ve experienced in the past. That’s the first part.
The second part is undoubtedly a small product mix that is impacting us as well. We were surprised or concerned by the ASP erosion, the pricing erosion that you alluded to. In fact, what we saw was very consistent with what we would expect and have historically seen as well.
Amit Daryanani - RBC Capital Markets
The cash flow number, it seems to be the softest we’ve seen in awhile and the crude expenses line seems to be the big driver over there. Could you help us understand what happened there and should that reverse in the next few quarters?
Simon Biddiscombe
It will. Don’t forget, during the most recent period, we actually saw somewhere around $15 million dollars leave the organization through the acquisition of NetXen. So that’s the first major cash outflow that is different than in previous periods.
The second one is associated with the payment of the annual incentives. So during the June quarter, we also paid the annual incentive. So on the cash flow, you’ll see a fairly significant change in the accrued compensation line and that’s the second major driver to the negative cash.
The third one would be the buyback. It was actually approximately $20 million dollars worth of buyback in the most recent period. So you add those up and you end up with roughly $60 million dollars just on the $60 million dollars across those very specific lines that left the organization.
Operator
Next we’ll hear from Paul Manskew - K. Adams
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