Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Greg Mesniaeff - Needham & Company.
Analyst for Greg Mesniaeff - Needham & Company
Hey guys, this is Connor Irvine calling in for Greg. I just wanted to ask first off about the timing of the broadband stimulus funds. It seems like funding has been pushed out a little bit into next year and I guess I’m just trying to get a sense of when you think that might really start to benefit your business next year.
Morteza Ejabat
We believe the benefit will have started in January and we are going to continue to see that through Q1 and Q2.
Analyst for Greg Mesniaeff - Needham & Company
Okay, that’s Q1 into Q2, great. And then my next question is in regards to your gross margin. I know you said that in Q3 it was down lower as a result of lower inventory earn out. Was that the majority of the decline? Are you guys still seeing favorable pricing and just a little more color there would be great.
Morteza Ejabat
The decline was based on the inventory earn out but we don’t see any more price erosion any place with respect to our business. Actually when it comes to pricing I believe we are a leader in the price setting at this point including domestically and internationally.
Analyst for Greg Mesniaeff - Needham & Company
And do you still see cost reductions in the quarter?
Morteza Ejabat
We are continually looking at cost reduction. Of course we are going to see some more.
Analyst for Greg Mesniaeff - Needham & Company
My last question for you is in regards to sort of your long term operating targets. Again, you did a great job in the quarter. I was wondering how you expect that to trend into Q4 and if you have any insight yet into next year and basically how you see your sales and marketing activity tied to your new product cycle?
Morteza Ejabat
Our plan is to continue improving our profitability during every quarter. We haven’t set the major target about what we are going to see but if I look at the industry as a whole, the majority of them are said to have about 10% profitable to margin. So our goal is to continuously improve our profitability.
Analyst for Greg Mesniaeff - Needham & Company
Did you provide a dollar amount for OpEx in Q4? I might have missed that.
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