AMLJ Communications (fka AMLJ)

[MikeDDKing]

GM has ranged from 49.3-50.6% for quarters Q2'10 through Q1'11. prior to that the GM was around 41-42%. Over a year ago they implemented some automation that improved margins to the 50% range. However, there was a little bit of a GM hit this quarter (Q2'11) due to manufacturing activities to ramp two programs. That is not surprising because the first few manufacturing runs of a new product tend to be lower quantity and have higher costs as they implement and tweak the manufacturing process. I look at the GM this quarter as an anomaly and expect margins going forward to be closer to 50% and possibly higher. I think there is a good chance that margins improve beyond 50% because of operational efficiencies due to higher revenue and due to further manufacturing cost reductions. However, for now, I'll stick with my expectation of roughly 50% GM to be conservative.