Question-and-Answer Session
Operator
Your first question comes from Yun Kim - Broadpoint AmTech.
Yun Kim - Broadpoint AmTech
I just wanted to ask you guys about the overall state of your channel business. Obviously that's probably the one area where there continues to be some weakness. Is it bad enough that we have to start worrying about some vendor viability issue within the channels, if the weakness persists for a while?
And then also, if you could just talk about the overall state of your channel business today and then in terms of your margin guidance for fiscal year ‘10 does that assume no meaningful rebound in the channel business?
Cornelius Moses III
Yun, that was a three-part question. This is Neil. First of all, the channel business was challenging for us in the fourth quarter and it was probably down about 25% year-over-year.
The channel business actually performed better than the direct business for the first half of the year, and then worse than the direct business in the second half of the year. Overall during the course of the year they performed pretty comparably.
As far as your question about whether we're worried about viability of channel partners, the answer is no. I think that we've got some pretty good relationships there.
We haven't seen any bad debt issues arise with channel partners around the world of any significance this year, despite the fact it's been very challenging from a macro economic perspective.
I would say that probably the channel is going to recover is evident by our fourth quarter, a little bit more slowly than we're seeing on the direct side. We would expect that that recovery would be in the second half of our next fiscal year.
Yun Kim - Broadpoint AmTech
Okay and then for second half of fiscal year '10 right?
Cornelius Moses III
That's correct.
Yun Kim - Broadpoint AmTech
And then quick question on consulting business. is Barry there?
Barry Cohen
Yes.
Yun Kim - Broadpoint AmTech
If I try to reconcile the guidance for Q1 and for the year on the consulting side of the business, it implies that there will be pretty significant acceleration in that business in second half.
Is this something that is already planned and in the pipeline or is it something that is driven by improving environment and in a more deal closures in the first half of the year?
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