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No. of Recommendations: 6
FARO's Q1 sales always drop in comparison to the Q4 results with the drops in the recession years being particularly steep.

4Q10-1Q11 -10.1%
4Q09-1Q10 - 8.2%
4Q08-1Q09 -44.2%
4Q07-1Q08 -22.2%
4Q06-1Q07 - 8.3%
4Q05-1Q06 - 7.0%
4Q04-1Q05 - 3.2%

4Q10 was a strong quarter, so a slightly higher percentage decrease this quarter than we're used to seeing in good years doesn't worry me.

I'm more concerned about the decrease in gross margin to 57.6% compared to an average of 59.1% in the previous four quarters. I can understand why a product shift to the lower-priced scanner might result in a decrease, but am puzzled why FARO would cite "... while the company ramps up to full-production efficiency ..." as an explanation when they reported better margins throughout 2010 with lower production rates. The conference call should be enlightening.
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