Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Edwin Mok - Needham & Company
Edwin Mok - Needham & Company
First off just a question related to the financial statement—
Ralph Marimon
You’re cutting out on us try it again.
Edwin Mok - Needham & Company
So regarding your operating expense, it appears that it came in pretty good operating expense, I was just wondering if there was additional cost cutting that you took during the quarter.
Ralph Marimon
That certainly helped it, absolutely, so that was part of it. In general our expense levels are down just by cost control but the cash savings program we instituted certainly helped that.
Edwin Mok - Needham & Company
And do you anticipate, assuming the new product continue to ramp, do you anticipate that OpEx might go back up in the, beyond the fourth quarter into 2010 timeframe.
Ralph Marimon
I think the biggest impact on OpEx will be the third party chip design activity that we do and I think that the potential is there in the first half of the year for OpEx to go up but it depends on the timing of the chip designs that we do.
Edwin Mok - Needham & Company
And then on gross margin, it came in a little bit lighter then how [inaudible] was that just the [mix] or any other reason why it came in a little light.
Ralph Marimon
No the biggest factor on gross margin was the fact we took an inventory reserve on an older CSSP platform where the demand is much lower now. Its an older platform. Without that reserve gross margin would have been about 48%.
Edwin Mok - Needham & Company
And then lastly on this later financial statement, you basically have minimal tax so far, do you anticipate it to stay that way or do you think you might have more write-off given that you have quite a bit of loss.
Thomas Hart
I hope our taxes don’t stay that low. That’s a reference to the fact that I expect us to make money and therefore we’ll be [inaudible] on taxes.
Ralph Marimon
Right now because of the loss position we pay tax only in our international subs but the, and we have NOL going forward so hopefully we’ll make money but it will be a little while before we pay tax because of the NOLs.
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