Sarah Friar: On the cost side, clearly it’s great to see the benefit of some of the cuts you have done in Asia for example. Coming through on the operating margin line, are there any other kind of bigger pieces that you still see to pick up out of your attention, or is it more incremental from here?
Nancy Cooper: We still have more phases on the existing cost reductions we have done, the first one we have cost reductions really enable you to do more on that. The simplest one as we are going to rollout SAP in Europe that next year. We are looking at additional facilities that may make sense. So there are still more things CA can do.
Michael Turits: You did bring the constant currency revenue growth down to 2% from 3% at the midpoint. Is that a function of what''s been going on in Asia Pac with the move to indirect or what''s that primarily a function of?
Nancy Cooper: We decided to have much greater discipline on our services business and our margin in services for the quarter is 11%, which is up 7 points from last year. We’ve gone very selective and we think that’s the right strategy, but it cuts back the revenue a little bit more than we thought. We decided to go to a different model in Asia. We thought the model we were on was inefficient and we feel the approach that we shifted to was a dramatic improvement in profitability and we decided to make that decision for the long term. Short term, it did impact revenue.
Michael Turits: How did the impact of currency flow through the EPS because you''re going to have it looks like 3 or 4 points flip in terms of the currency impact from what you expected? You expected 3 points of tail wind, now it looks like it''s going to be a headwind and yet you''ve raised your EPS.
Nancy Cooper: Currency this year is a tale of two stories. One is, first half we had a positive impact and we had a negative impact in the second half if I am using Monday’s exchange rates. To bridge this impact, if you think about through the first half we have $0.80 EPS and we''re talking about that $0.80, if you just duplicate it in the second half would be reduced by $0.08 strictly for currency and there are other expenses we have that occur in the second half we''ve mentioned before such as commissions and CA World, but sticking to currency, it has an 8 point impact.
On the operating margin, this translates into about a 2 point hit. We have incorporated this hit into the guidance we just gave, so the increase in EPS is presuming that impact on currency. If I turn over to the revenue, currency reduces the revenue to about 4.3 billion and that''s also at Monday''s rate and that''s a reported growth of 1% for the full year. This continues to be a 2% growth on a constant currency basis, which is at the low end of our original guidance.
Richard Sherman: What was the estimated impact of the offshore HCL savings this quarter?
Nancy Cooper: HCL allowed us to make our development spending as variable, which was very helpful. We also acquired a great partner to work with and that has helped us rejuvenate the business and we''re seeing good performance. So we feel very encouraged with the relationship.
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