Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of John Vinh with Collins Stewart. Please go ahead.
John Vinh – Collins Stewart
Good afternoon. Congratulations on the quarter. First question I had was, on the gross margin side why aren’t we seeing may be a little bit more gross margin upside there? If you look at your original guidance of top line 10% and 15% growth, your gross margin was 28% to 32% (inaudible) up-tick that in the quarter to a 13% revenue growth, maintain your gross margins, and then ultimately your top line revenues came in at the high end of that, actually slightly above that and you're kind of slightly above kind of the midpoint there. I would expect that that you would have had slightly higher gross margins, maybe coming in close to the higher-end, maybe slightly above that just given your original gross margin guidance. I was wondering if you could comment on that please.
Keh-Shew Lu
Well, our original guidance, if you look the midpoint is 30% and we now actually get 30.8% due to maybe a couple of the reasons. One is our back end is you know, loading up quite a bit and almost full now, and actually we reached to the full capacity utilization in September month. Okay. So it went up from now fully loaded in July to September. That is faster than what we expected and number two is due to our fab, okay. Our fab recover, you know, fab is not easy to recover at first at the back-end.
We are hiring the people, but the training took a little bit longer and to ramp up is a bit slow. And so our fab is basically (inaudible). They are not rented up – actually they went up a little bit better than what I expected and so our (inaudible) you know, is better at 80 basis points better than we expected. And some minor one is, you know, we originally (inaudible) declaration and it is a little bit better than what we expected, because due to the capacity shortage. So all those give us you know, 30.8% and look at our guidance for fourth-quarter. We actually guided, if we look at midpoint that would be above 32%, which is again we believe from the wafer fab loading helping us.
John Vinh – Collins Stewart
Okay, I appreciate that. And then on peak margins, you know, obviously you know peak margins historically, if you have been in the mid-30% range given that your front end utilization return are seeing some meaningful improvements over the next couple of quarters, you know how soon could we be back to kind of those kind of key gross margin run rates at this point?
- To read the full transcript on Seeking Alpha, click here »
