Greetings and welcome to the AudioCodes Third Quarter 2012 Earnings Conference Call. It is now my pleasure to introduce your host Mr. Erik Knettel, Investor Relations for AudioCodes. Thank you, Mr. Knettel you may begin.

Thank you, Jessie. I would like to welcome everyone to the AudioCodes' third quarter 2012 earnings conference call. Let me begin today with the Safe Harbor statement. Statements concerning AudioCodes' business outlook, future economic performance, product introductions and plans and objectives related thereto and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters are forward-looking statements as that term is defined under U.S. Federal Securities Law. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to the effect of current global economic conditions and conditions in general and in AudioCodes' industry and target markets in particular, shifts in supply and demand, market acceptance of new products and the demand for existing products. The impact of competitive products and pricing on AudioCodes and its customers, products, and markets, timely product and technology development, upgrades and the ability to manage changes in the market conditions as needed, possible disruption from acquisitions, the ability of AudioCodes to successfully integrate the products and operations of acquired companies into AudioCodes' business and other factors detailed in AudioCodes' filings with the U.S. Securities and Exchange Commission. AudioCodes assumes no obligation to update that information. In addition during the call, AudioCodes will refer to non-GAAP net income and net income per share. AudioCodes has provided a reconciliation of non-GAAP net income and net income per share to its net income and net income per share according to GAAP in its press release and on its website. Joining us today from AudioCodes we have Shabtai Adlersberg, Chairman, President and Chief Executive Officer and Guy Avidan, Vice President of Finance and Chief Financial Officer. I would now like to turn the call over to Shabtai Adlersberg. Mr. Adlersberg, please go ahead.

Thank you, Erik. Good morning and good afternoon, everybody. I would like to welcome all for third quarter 2012 conference call. With me this morning is Guy Avidan, Chief Financial Officer and Vice President for Finance. Guy will start off by presenting a financial overview of the quarter. I will then review the business highlights and summary for the third quarter. I will report on progress made in our restructuring plan and then discuss development in our business and industry. We will then turn it into the Q&A session. Guy, please go on.

Thank you, Shabtai and good morning everyone. Before beginning the financial overview of the quarter, I would like to note that the following discussion will include GAAP numbers as well as non-GAAP pro forma numbers. Our third quarter non-GAAP pro forma results reflect adjustment for the following two non-cash items, stock-based compensation expenses which totaled $407,000 and amortization expenses relating to the acquisition of Nuera, Netrake and CTI, which totaled $282,000. The full reconciliation of the non-GAAP pro forma results discussed on this call to GAAP results is currently available for review on our website and in the press release issued earlier today. Getting to the numbers, our third quarter results are in line with our previous revenue guidance discussed in our conference call dated July 24, 2012 and includes significant progress towards our plan to reduce annual operating expenses, that announcement issued on July 11. As announced in July, the restructuring plan is expected to generate estimated annualized savings of approximately 10% of company's operational expenses. At the end of the third quarter, we managed to reduce headcount by 7% compared to the end of the previous quarter. The implementation of the plan is expected to be completed in three to six months during the period of the plan, we will monitor closely our business trends even hire selectively in our growth areas. In addition to the cost saving components of the restructuring plan the company continues to focus its investments in innovations around AudioCodes' key strategic initiatives in the area where unified communication, enterprise communication, and business services. Third quarter revenue now $31.4 million, which represents 1.1% increase from the sequential second of 2012. Aside from some headwinds, we experienced during the quarter in our Technology Group and OEM business, we did see solid demand for our Core…

Thank you, Guy. Very pleased to report we've turned to sequential growth and improved financial performance for the third quarter of 2012. Key business performance improvement indicators for the third quarter include, among others the following: first, we are delighted to reverse the trend in the top line revenues from a series of declining revenues – this is the first quarter, which is increased in revenues, we believe that's not the only one coming from it. For the first time we have exhibited growth in revenues which changes even more attractive when we take into account that we're talking about the summer quarter which traditionally is weaker than the other quarters in the year. Second indicator is our ability to lower quarterly loss substantially, to $1.4 million in the previous quarter to around $400,000 in the third quarter. In fact, taking into account the impact of our restructuring plan, we have good reason to believe that even if plans for Q4 growing revenues will not materialize we will be able to show operational profitability in the quarter, as we plan for further growth, we believe that our return to profitability in Q4, is on the right track. Third indicator - our ability to reduce our OpEx, headcount and have better cost control all that with a post [figure] operational business improvement in Q4. Key driver to the success in delivering into the results during third quarter, are three key fundamental drivers. First, in [few owners] the company has enable to [plan it's] and focus and converge, our growing market segment. Focusing investments in recent years growing markets and applications such as the unified communication market, contact center market, and the move to IP based contact centers and business communications services, (inaudible) represents, all those segments represent sustained solid demand for…

Thank you. (Operator instructions) Thank you. And our first question comes from the Andrew Uerkwitz with Oppenheimer and Company. Please proceed with your question.

Hey, great thanks guys for taking my question. Since that around Microsoft Lync. Are you seeing more from synergies - you're seen more enterprises adopting the voice feature for that or that's top pretty low percentage and then just from the general enterprise perspective how do you turn up or see the drivers got in the next years they are going to be clear this small businesses or either it's a mid size kind of driving the growth.

Okay. In terms of Microsoft Lync of opportunity, I would tell you that the growth we are planning for the level of voice project activity looks good enough and sufficient. We know from some of our work with the largest some of our working clients is that it's an integrating that a large project - these large enterprises will start to kick in next year. We have at least two to three such projects that we are working on the initial stages right [focused concepts] according to clients known to us we will see in 2013 deployment in large enterprises so it's a gradual process I would, basically also know that for us we care much whether it would be close voice in the initial stage or we will be close voice at a later on edition. But any company that has started to use Lync for a time I presence, is as such that, the functionality will be enhanced to include voice is high and that will happen in the course of next year. So all I all those are good opportunities for us. If I have heard correctly your second question related more to the larger enterprises right?

Sure, yes.

That's so, basically activity versus these large enterprises integral to our large system integrator partners and we're working with few of them we have to and been inactive, we now see in other one. We do believe that there's a much, there's really confidence level, that enterprises basically developed with type of solution and I think again our drive become with a complete end-to-end solution, meaning we take responsibility and charge for our voice parts makes up a sensitivity because it's allowed the customer to be much more confident that in that - in the Lync solutions for Microsoft and on the other end our ability is to provide directly to the mid-market or the large integrators to the larger enterprises at the end of the day, an end-to-end solution approach makes sense and we will have to move that further along.

Hey, great appreciate the color thanks guys.

Sure.

(Operator Instructions) Our next question comes from the line Rich Valera of Needham and Company. Please proceed with your question. Rich Valera - Needham & Company: Thank you, good morning. Question on operating expenses levels [audio gap] gross margin to be back up into that sort of 60 – 50ish percent range of 59 once you are back from normalize write-down level?

Generally, yes, we expect in Q4, we expect to be back on the Q2 level, which was 58.2% on a non-GAAP basis. Rich Valera - Needham & Company: Actually that's helpful. And then bigger picture looking at your networking business, granted you've had obviously with the technology business rolling off which you should have acknowledge its legacy, but networking has been down pretty significantly for rather few quarters, and just wanted to understand that other components of that, I know some things sound like they're still growing you mentioned SBC and few other noteworthy - high growth areas but what the different components of networking maybe what's been dragging it down recently and when do you think those components turnaround and actually start growing again? Thanks.

Right, so basically this quarter, we have not mentioned that specifically but networking related sales to grew 2.3% over Q2. Now in terms of the bigger picture, we have seen at the beginning of the year decline in some of our Media Gateway business in two key areas, one was specific one OEM collaboration with a large player in the carrier VoIP market, which after many years working together. We believe that their revenues went down and therefore our revenues went down. So high-density media gateways that is something that one specific customer we lost. Then we saw also in the beginning of the year, declining our Government business. Now when we go to the other side feature of we're – what has driven networking sales higher this quarter, basically it's mainly two types of areas, one is again the cooperation is will or - is upon us that increase the sales of gateways NBCs and Survivable Branch Appliances SBA in their solution, meaning Microsoft [Genecity] et cetera. Second is that three specific business plans, the SBC, the MSBR, and the IP phone, are witnessing growth. And therefore going forward into 2013, we will see some – we don't see much change in the media gateway business, which we roughly predict to be about flat. We will see definitely a substantial growth coming from SBC, MSBR and IP phones. Rich Valera - Needham & Company: Great, that's helpful. And then try and give any comments on the momentum in the business, sounds like in your prepared remarks that you had a strong finish to Q3, and a good start to Q4, which would certainly I think lead you to conclude – you're probably going to be up in Q4, so just wanted to get a sense of your confidence and the visibility towards being up in Q4, given that strong start to the quarter.

Actually, you've said it yourself. We had good September, similar good October, and we've have a size backlog that's been developing in the beginning of the quarter, we have high level of confidence that we should be able to growing revenues in Q4. Rich Valera - Needham & Company: Okay, that's helpful. Thanks Gentlemen.

Sure.

Thanks, Rich.

And at this time I would like to turn the floor back over to management for any closing remarks.

Okay, thank you operator.

In summary of our call, we look forward to continue to grow networking business in coming quarters and the years and follow-on the momentum in growing distinctly the markets and industry. I'd like to thank everybody that attended our conference call today and we look forward to have you on our next conference call. Thank you very much. Bye-bye.

Thank you. This concludes today's teleconference you may disconnect your lines at this time. Thank you for your participation.