Question-and-Answer Session
Operator
(Operator instructions) Your first question from Ed Wolfe with Wolfe Research.
Ed Wolfe ? Wolfe Research
Hey, guys, just a quick -- I had trouble hearing what you said, Steve, and congratulations on your new position. What you said about the Menlo guidance, did you say mid-teen revenue growth and what did you say about operating income?
Steve Bruffett
Said that it would improve over the same period of 2007, over the fourth quarter of 2007.
Ed Wolfe ? Wolfe Research
So, off year-over-year operating income for Menlo on that basis by $49 million?
Steve Bruffett
Correct.
Ed Wolfe ? Wolfe Research
What's going to change so much from the 3.7 this quarter to the 5.9, is it just China again effect or is there more beyond that?
Doug Stotlar
I will ask Bob to answer that question.
Bob Bianco
Yes, primarily, Ed, it's going to be China. We are seeing improvement in China. We brought on a lot of new business, not only in China but throughout the whole company of Menlo in the first and second quarter, that was in start-up mode in the third quarter. And so, we are going to see that, those full run rates drive the performance that we expect in the fourth quarter.
Ed Wolfe ? Wolfe Research
Is the Menlo issue in the third quarter related to I mean just based on how big the revenue is and how weak the EBIT is, fallout of the DoD stuff, and is that going to catch up at some point, is that part of this too, or am I looking --?
Steve Bruffett
No, it has nothing to do with the DoD. It's really the increase in that revenue. A lot it has been driven by the acquisitions in China we had a negative EBIT, and so that's (inaudible).
Ed Wolfe ? Wolfe Research
Doug, by sticking with the guidance and the implication that you're going to go from, let's call it, $0.75 ongoing this quarter down to $0.40 or so, $0.45 next quarter at the mid range, that 40% sequential decline is very unusual, probably never happened before for you compared to fourth. Besides from what you said which is weaker tonnage and weaker pricing, is there some aspect of you're expecting that the fuel benefit kind of wears down a little bit as you go out? Is that (inaudible) too?
Doug Stotlar
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