Question-and-Answer Session

Operator

(Operator Instructions) At this time if you’d like to ask a question press “*1” on your telephone keypad. To withdraw your question, press the pound key. Your first question comes from the line of Amit Daryanani with RBC Capital Markets.

Amit Daryanani - RBC Capital Markets

Thanks a lot. Good evening, guys. Forbes, just a question, you talked about 10% to 15% incremental dollar revenue flowing through the operating income line. If I kind of do my math, it looks like on a $3 billion revenue run-rate, you should be able to hit something around the 3% EBIT margin. Would that be the correct way to think about it in the long run as demand starts to come back?

Forbes I.J. Alexander

Absolutely, Amit, yes. It’s very much depending on the mix but for that type of range, if you look at the midpoint of the range to the guidance that we’ve given for the upcoming fourth fiscal quarter against that incremental revenue, that certainly gets us to that 3% and relatively comfortably, so yeah, we feel pretty good about that. The leverage that we have here, we’ve seen some of that on the way down with my prepared remarks, as we’ve seen on a year-over-year basis about $0.5 billion of revenue to come out of the top line and we certainly see that recovering on the way back. And we continue to take cost down and we are in really good shape for revenue recovery.

Amit Daryanani - RBC Capital Markets

Got it, and then just broadly speaking, I realize you don’t want to get into details on each of the end markets in terms of guidance but this generally would be a time when we should start to see some of the consumer centric markets start to see some up-tick in seasonality. Are you guys seeing that at all and is that getting offset by flat or softness in the enterprise and networking side?

Timothy L. Main

We generally would not see a big up-tick in the August quarter. I mean historically, Amit, this has been, this is kind of a challenging quarter. Consumer is really transitioning products into new products for the Christmas selling season and enterprise markets tend to be pretty sleepy. So this is a quarter where historically we’ve been happy to have consistent revenue and earnings historically. We are starting to see enterprise spending in some of the U.S. markets pick up a bit. That’s been good to see. And on the consumer side, more stabilization and we have decent exposure in the smartphone market now and that’s held in pretty well and we think we’ll be pretty robust as we move into the Christmas season. So I don’t think there’s anything anomalous about the quarter in terms of certain sectors being more robust or weaker than others. It’s pretty spotty. It’s a pretty spotty period. We are definitely not leaning into a recovery with this guidance. We are leaning into a bottoming of the market. There are some, a few green shoots out there but they could be mowed under and muddied up pretty quickly so really, we are not leaning into a robust recovery. We are really kind of planning on a bottoming, which is what we see in terms of our market sectors overall.

Amit Daryanani - RBC Capital Markets

Got it, that’s it for me. Thanks, guys.

Operator

Your next question comes from the line of Steven Fox with CLSA.

Steven Fox – CLSA

Thanks. Good afternoon. Tim, two questions, first of all, can you talk, you mentioned that you felt positive about new business opportunities. Can you sort of talk about the status of those and where you see the most opportunity near-term, or is it too soon to start thinking about new program wins? And then secondly, just details on the 10% customers, if you don’t mind.

Timothy L. Main

The first one is pretty easy. We’re not going to provide the 10% customer detail at this point. I think we’ll probably do that after the year-end, maybe. Our customer concentration has actually been in pretty decent shape this year, under 60% for the first time. Most of the year, it’s the first time in my memory that we’ve been able to have that level of diversity in the top end of our customer range. In terms of new business, when we look at the industrial instrumentation medical sector, that sector I think was down only 5% for the quarter and that’s indicative of a number of new business wins, and some strength in the smart grid clean tech area that is starting to blossom for us. We have some longstanding businesses and things like alternative energy with wind power and that type of thing but we are also building more products for smart grid applications in the power grid. So that’s been good, as well as new business wins in medical and we are starting to see some glimmers of hope in our semi-con business as well, so pleased to see that.

In the mobility area, the reason our revenue is only down 15% year over year is really the strength of new business wins in that area, which had been very significant and although our mobility sector was down sequentially a bit, we still expect that to be a very robust sector for us going forward. We’ll see some broad-based new business wins elsewhere. It’s not a heck of a lot to hang your hat on right now, just because overall demand has been so weak that it has really swamped the benefit of new business and I think we’ll be in a position to talk more about that when we get into Q1 and Q2 and maybe we start to see a little bit more robust economic environment. We can talk about which sectors we think will be really driving the growth going forward.