Tom Stanton: Let me just try to add some clarity there. Subscriber solutions, flattish is probably a good guess. It’s probably a little conservative, but it’s a good guess. You would expect access to be up just based off of the very specific customer thing I talked about. Optical is what we would expect to be down as I specifically mentioned. So I talked about inventory in optical, I really didn’t talk about inventory corrections impacting subscriber and our fiber to the prem business that much and that was on purpose. So we still think there’s inventory in the optical space. We think the other two are easing up. And if I had to look at the mix between optical and the other two, I would expect the other two to be up on a sequential basis and optical to be down.
Michael Genovese: And just for gross margins, does that mix make a difference for gross margins? I mean, I have a hard time thinking that gross margin will be quite as high in 1Q as in 4Q. Could you just help out with that?
Tom Stanton: The real shift there would be between is really what is the infrastructure piece of the fiber to the prem, which is actually pretty good gross margins versus the subscriber piece in app and prem. So yes, I mean, that’s just some variability we have to get through. I really don’t know where that will end up until we get to the end of the quarter. We also have some easement coming in our inventory costs, they’re trying — we’re continuing to do better than we expect to do on gross margin. So the trend itself kind of helps us along in that math.
Operator: Your next question comes from the line of Ryan Koontz from Needham & Company.
Ryan Koontz: I wanted to unpack gross margins in the fourth quarter a little bit there, really nice improvement along with a higher mix in CPE, which usually is a headwind on that line. So can you maybe unpack the kind of puts and takes there? You talked about transportation costs being down, and I haven’t heard that elsewhere too much. So any color there would be helpful.
Uli Dopfer: The transportation cost comment was mainly related to the comparison for Q4 2022 where transportation cost was still extremely high.
Ryan Koontz: But I talked about transportation cost specifically just kind of the positive. So any other color you want to give on Q4?
Tom Stanton: I’m thinking on the sequential improvement, Uli.
Uli Dopfer: The sequential improvement is mainly driven by customer and product mix.
Ryan Koontz: And that includes a higher mix of CPE. So I guess that implies stronger shipments to smaller customers that maybe have better margins [indiscernible] that?
Tom Stanton: Well, the CPE is made up of several different things, and some of it depends on the actual customer itself. 10 gig CPE versus 1 gig CPE, for instance, makes a difference. And I will tell you this, the infrastructure business, in general, has been tending upwards, I think, just because of the nature of the competitive environment right now. So I think that has actually benefited. And then we continue to work down kind of higher price bill of material parts into lower price bill of material parts without expedite fees, and those have all just been positive attributes coming into really over the last couple of quarters.
Ryan Koontz: And one kind of broader question, maybe stepping back from the European opportunity with Huawei displacements. How would you characterize Huawei’s position in the European continent today outside of your specific projects you’ve talked about winning? Like where are they still competing and how would you kind of characterize the competitive environment relative to the Chinese supply…
Tom Stanton: Honestly, they’re almost — you don’t see them that often. And when you do see them, it tends to be a pricing exercise versus a real award exercise. And I would say, if you look at it on a year-over-year basis, the number of carriers that are saying this is not just a near term problem but this is a longer term problem to the extent that they award business to kind of a high risk vendor then they have to worry about when does that equipment need to come out and when can I quit taking software drops from this company, and that momentum is doing nothing but getting stronger.
Ryan Koontz: And so in terms of new bids, they’re not competitive. But in kind of run rate business, they’re still seeing a fair amount, I would think, of sales into the legacy footprint?
Tom Stanton: What you’re seeing happen is in the legacy footprint if somebody has open slots in shelves then they are liable to fill those open slots right now until they get through an award process or get through — until they have an alternative. But open slots are still being filled in a large part of Europe, but new shelves coming in you just don’t see an awful lot of that. And we have some very specific opportunities where they’re literally talking about taking equipment out.
Operator: Your next question is Tim Savageaux from Northland Capital Markets.
Tim Savageaux: I had a question, I guess, about well the access and aggregation market in Q4, or segment was down pretty good sequentially. And you talked about Tier 3s being flat. It sounds like that’s a reference more to Q1, or could I get some clarification on that? And I know that Tier 3 also includes subscriber. So as you look at that decline in Q4, what would — would you attribute that more to a couple of large customers and is that flattish comment also hold in Q4 versus Q1?
