Good afternoon ladies and gentlemen, and welcome to the Extreme Networks 2010 first quarter conference call. At this time, all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question-and-answer session. (Operator instructions) On the call today from Extreme Networks are Bob Corey, CFO and Acting President and CEO; and Paul Hooper, Chief Marketing Officer. As a reminder, this conference is being recorded today October 26, 2009. This afternoon Extreme Networks issued a press release announcing the company’s financial results for the first fiscal quarter of 2010. The conference release is available at the company’s website at www.extremenetworks.com. This call is being recorded and broadcasted live over the Internet and will be posted on Extreme Network’s website for replay shortly after the conclusion of this call. The company has asked me to remind you that this conference call contains forward-looking statements that involve risks and uncertainties including statements regarding the company’s expectations regarding the financial performance, strategy, growth of customer bandwidth demand, development of new products, customer acceptance of the company’s products, customer spending and economic positions in the company’s market. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors including but not limited to fluctuations in demand for the company’s products and services, supply chain constraints and availability of third parties to manufacture the company’s products and components bear up of a highly competitive business, environment for the network switching equipment, the effectiveness in controlling expenses, the possibility that the company might experience delays in the development of new technology and products, customer response to its new technology and products, the timing of the new recovery in the global economy, and risks related to pending or potential future litigation. This company undertakes no obligation to update the information on this conference call. More information about potential factors that affect our business and financial results is included in the company’s filings with the Securities & Exchange Commission. Throughout the conference call, the company will reference to both GAAP and non-GAAP financial results. The company has provided a reconciliation table of GAAP to non-GAAP information in the tables that accompany the press release on its website. Please go to the investor relations section of the company’s website at www.extremenetworks.com. In addition, all announced results are preliminary and may be subject to change when the review of the fiscal quarter is concluded and/or the 10-Q is filed. I will now turn the conference over to Mr. Bob Corey, CFO and Acting President and CEO of Extreme Networks. Please go ahead, sir.

Thank you, operator, and thank you all for joining us today. We have Gordon Stitt, our Chairman of the Board here. And I would like to turn it over to Gordon for some opening comments. Gordon?

Thanks, Bob, and thank you all for joining us today. I wanted to comment on the recent leadership change that we announced last week. Mark Canepa who has been our CEO since August 2006 has decided to resign to pursue other interests. Board has appointed Bob Corey, our Chief Financial Officer as Interim President and CEO. Board has initiated a search for a permanent CEO. Bob has been our Chief Financial Officer for about three months, but he’s been involved with Extreme for almost six years as a Member of our Board of Directors, and Head of our Audit Committee, so he knows the company very well. We are both pleased and excited that Bob has agreed to assume the role of Interim President and CEO. His leadership and experience will be essential as we continue to drive change within Extreme Networks to position us for continued success and to ensure that we remain focused on delivering innovative solutions to our customers. With that, I am very pleased to turn the call over to Bob.

Thank you very much, Gordon. As Gordon just outlined, we’ve had some significant changes last week with the execution of our reorganization. We believe the reorganization will streamline operations and accelerate decision making. I will comment more on the reorganization later in the call. Regarding Q1, we did not execute according to our expectations this quarter, and are taking a number of important steps to address the issues that impacted us. In particular, our results were hampered by the combination of a reduction inventory in Q4 and constraints on our supply chain, which kept us from closing transactions and recognizing revenue. While there is some positive news such as an increase in backlog going into Q2 as well as a $3 million increase in total cash and investments, our performance this quarter is unacceptable. We do not believe our performance this quarter is an indication of marketplace demand for our products or our ability to win deals. I have asked Paul Hooper, our Chief Marketing Officer to comment on demand drivers we see in the market, discuss some of our recent product releases and customer wins, and our upcoming launch regarding the datacenter opportunity. So I would like to turn the call over to Paul. Paul?

Thank you, Bob. I will start by saying that our confidence remains high. The demand for more bandwidth, more services and more cost effective communications infrastructure continues to grow. We also remain convinced along with the growing percentage of metro carriers and enterprises that Ethernet is the right choice to meet these demands. As the economy shows signs of stabilization and early indicators of recovery, it is our belief that there is a pent-up demand for infrastructure upgrade to support new and enhanced services for delivery to a broader cross-section of residences and enterprises. We further believe that our investment in our portfolio of Ethernet choices and our single edge-to-core switch operating system ExtremeXOS has positioned us well to take advantage of this demand. Across our three core markets, enterprise, carrier and datacenter, the pressure of the economic downturn has driven additional considerations into the list of infrastructure investment criteria. Firstly, a deeper and more vigorous scrutiny of acquisition and ownership costs; secondly, closer attention to energy advance and the associated costs of running the infrastructure; and finally, the need to simplify and reduce operational complexity, and as a result benefit from improved simplicity through open and standard based infrastructure. These new evaluation and selection criteria play well to our strength in these markets. We can and do demonstrate that the total cost of an Extreme Network solution is lower. Our Ethernet switches are some of the most power efficient in the industry, and our uniform approach to software across our complete switch portfolio remains a core differentiator. I will now discuss our three target markets and cover recent exciting product announcements targeted at those markets. In the carrier market, the drive towards convergence on Ethernet-based infrastructure continues with carriers around the globe and Ethernet holds the price of greater…

Thank you so much, Paul. As a reminder, with the exception of revenue and the number of shares outstanding, all of my comments will refer to non-GAAP operating results unless I state otherwise. Non-GAAP operating results exclude the effective restructuring charges and stock-based compensation. Turning to Q1 results, I wanted to first comment on the change in revenue from Q4. In Q1, we reported $66 million of total revenue, representing a decrease of around $15 million. Roughly $14 million of the decrease was related to a decline in product revenue. I want to be clear, we don’t believe the decrease resulted from a drop in demand for our products. Approximately $9 million of the decrease resulted from our inability to deliver products. Of this, about $5 million was for orders we booked and couldn’t ship and about $4 million was from orders we lost, because we couldn’t commit to a ship date within the quarter. An additional $3 million of decrease resulted from delays in booking orders that have slipped into Q2. Of this amount, we have booked $2 million this quarter so far. Beyond this, it is difficult for us to quantify the impact of our inability to ship product, because we can’t know how many orders were presented to us as it became widely understood in our channel that we were having difficulty in delivering products. As noted in our pre-release, our inability to ship product during the quarter was related to a change in delivery lead times in our supply chain. During Q4, in an effort to gauge the effect of the global economic recession, we made decisions to manage inventory down and to closely monitor cash flow. We overcorrected in Q4 an inventory decline by about $10 million or by 45%. Our supply chain has been…

We will now begin the question-and-answer session. (Operator instructions) Our first question comes from the line of Steve Salberta with Boenning & Scattergood. Please go ahead. Steve Salberta – Boenning & Scattergood: Hi guys.

Hi there. Steve Salberta – Boenning & Scattergood: Can you talk about the mix of revenue of product relative to what you were thinking going into the quarter? Was this situation where you expected to sell a lot more of the new products and the older what was in demand?

Yes, this is Bob. I will go and take that question. We had expected that our newer products would be the larger sellers for the quarter, right? And that was where we particularly were hard hit, because when we brought down inventory in Q4, it was our high runners that were selling in Q4. And then as the supply chain firmed up in Q1, the higher volume products we had difficulty getting to ship. Steve Salberta – Boenning & Scattergood: And what is or why was there a change there in demand? Do you have a lot of demo units out there I mean or is it just a function of decision making by your customers?

Yes, what we are trying to say is, we didn’t really see a significant change or drop in demand. What we saw was continued demand and our inability to deliver the products is what impacted the revenue, right? So we saw our bookings in backlog actually increased by over $6 million going into Q2. And our supply chain basically extended their lead times as they were trying to assess the economic recession impact like we were in Q4 as well, right? So we are trying to be really clear, there is not a decrease in demand for our products. It really was the combination of Q4 taking the inventory down and the supply chain firmed up on us in Q1. Steve Salberta – Boenning & Scattergood: Okay. Can you tell us how much of your revenue guidance or I guess the implied product revenue – how much of that you have covered in backlog at this point?

Yes, we don’t disclose the actual backlog. But we did comment in our prerelease because of the demand situation, the backlog and deferred revenue did increase by over $6 million in the quarter, but we don’t disclose the total backlog. Steve Salberta – Boenning & Scattergood: Okay. And then finally on service revenue, I see that down sequentially. Were there maintenance contract catch-up payments in June?

Yes, that’s right. Yes, for the June – the June release, we commented there was an annual catch-up benefits that we recorded in Q4. So we are continuing to see renewals of service contracts going forward, but the downtick you are mentioning was particularly strong in Q4 and more normalized in Q1. Steve Salberta – Boenning & Scattergood: Okay. My last question guys. When do you expect to get to the 11%? Is there a time period in that short-term target?

I would kid around tongue-in-cheek as fast as we can. The reason we did the restructuring was to position the business, so we can really accelerate earnings, right? And I can’t give you a hard timeframe to get to 11%, but we are going to be as aggressive as we can to get to the double-digit operating income contribution. Steve Salberta – Boenning & Scattergood: Great, thank you.

All right, thank you.

Thank you. Our next question comes from the line of Rohit Chopra with Wedbush Securities. Please go ahead. Rohit Chopra – Wedbush Securities: How are you doing, Bob?

I am good. Thank you. Rohit Chopra – Wedbush Securities: Can I just come back to that new target model instead of asking the timeframe? Is there an implied revenue that you want to throw out there for 11%?

No, but what I will throw out there is that a $1 of incremental revenue generates about $0.45 of operating income additional contribution, so. You guys can work the calculation there. Rohit Chopra – Wedbush Securities: All right, thanks.

Okay. Rohit Chopra – Wedbush Securities: What specifically was unavailable or what specifically was the item that was -- where the lead times had actually doubled?

Yes, as long as the lead times are on the chips, right? We use outside assembly plants to actually configure the board and the boxes, et cetera, so it was mostly on the chips. Rohit Chopra – Wedbush Securities: And then, I think this is important, because of the – has been an issue for a while with Extreme. And I just wanted to see -- are you also making changes in the channel? And I think we’ve had this conversation before, but is it part of the restructuring to sort of revamp the channel, try to expand the channel potentially, or is there anything going on there?

No, actually we feel we have great relationships with our channel partners. As a matter of fact, I just attended the North American channel partner conference last week and we are trying to strengthen our relationships with the channel, and because we need them to be successful, they need us to be successful, so. We are calling channel partners from time to time, right, to drive efficiencies, but there is no change in the basic go-to-market or channel structure. Rohit Chopra – Wedbush Securities: All right, and then two last questions. Any change in your Avaya relationship this quarter, is there anything changing there?

No, no, we had a good quarter with Avaya and we continue to have a good strong relationship with them. Rohit Chopra – Wedbush Securities: Right. And then last question, will it be possible to provide us with the total amount of NOLs you actually have right now?

Yes, I think I can go find that out, but it should be in the 10-K for the annual report right in the footnote, so probably didn’t change that much for Q1. Rohit Chopra – Wedbush Securities: I appreciate it.

All right. Okay. I will make a note and then I will follow up and try to give it to you. Rohit Chopra – Wedbush Securities: Thanks Bob. I appreciate it.

Sure.

Thank you. (Operator instructions) Our next question comes from the line of Douglas Ireland with JMP Securities. Please go ahead. Douglas Ireland – JMP Securities: Hi Bob, this is Doug. (inaudible) on an airplane.

Hi Doug, how are you doing? Douglas Ireland – JMP Securities: Good, thank you. I have a couple of questions. First, you have talked about streamlining the business and eliminating a lot of the overheads, but headcount hasn’t come down quarter-over-quarter. So I was just wondering if we are going to see a change there – a further change or if that’s completed?

Yes, sure, yes. The part of the restructuring we’re eliminating 70 heads, about 9% of the headcount that we exited Q1 with. So we are at 788 coming out of Q1, we will be down to 718, but we are probably down there right now, because obviously we completed the restructuring last week. Douglas Ireland – JMP Securities: Okay, great. And then to go on from that, are you going to be able to continue to support these three areas of focus which I mean there is a lot of overlap, but there is a lot of differences between the datacenter, enterprise and carrier markets. I am just wondering if those three which seem to cover all of switching in my mind are all going to be equally supportive.

Yes, we are going to – our stated strategy is that we provide network solutions, right, for the enterprise, the service provider and the datacenter markets. We feel we are going to get tremendous efficiencies out of the consolidation of the business unit structure. Just a quick example, if you take engineering as a point in case, we had three business units and they were each doing development at three different locations. We do engineering development here in Santa Clara, in RTP and in Chennai. So if you do the math, that’s nine different groups working on software and hardware development and trying to interface, connect them and make them work together, all right? So by consolidating the business units, we are going to really a consolidated engineering structure run by Suresh, right? And we think we will get much greater efficiencies and a sufficient bandwidth continues to develop and make the investments to support those markets. Douglas Ireland – JMP Securities: Okay, because I was at SUPERCOMM last week and I was thinking about how different the demands in the carrier market are from the demands of the enterprise and then switching closet versus datacenter, just seems like an awful lot to support and sell as you go forward.

Yes. We have Gordon here. Hold on a minute.

Yes, hi, Doug. How are you doing? Douglas Ireland – JMP Securities: Good.

Yes, I understand your question. I think one way to look at it in terms of our development is we develop a series of platforms and those platforms need to be high availability. And on top of those platforms, we build layer two and layer three services in software, something that we do across all of our markets. So there is a lot of commonality. When you look – and again using your example, there are certainly some features that are specific to the metro Ethernet carrier market, there are some features that are specific to the hosting markets, there are some features that are specific to the large enterprise market. But the bulk of the platform engineering and the core high availability XOS and the layer two and the layer three services, it’s literally the same. Douglas Ireland – JMP Securities: Okay. Yes, I just looked at it and it seemed like a lot support as you trim down, but I am sure that you’re – you have got that well planned out.

Yes, just one added comment as Bob noted, by bringing our different engineering teams together under one leader, I think we will be able to drive much higher efficiencies even with the lower overall corporate headcount. Douglas Ireland – JMP Securities: Great. Now the last question I had was in terms of the life-time warranty and I know that HP was offering that and it was putting some pressure on the other competitors. Do you see that affecting your margins going forward as you maybe lose the ability to charge for that service and support?

Well, yes, obviously I mean we can’t charge for it nor providing any other it’s going to be a margin hit. We’ve kind of run the numbers. We don’t anticipate it’s going to be a material margin hit, right? And we think we are going to expand the other service offerings and hopefully continue to mitigate or offset any margin hit from that limited life-time liability. Douglas Ireland – JMP Securities: Okay, great.

All right, thanks, Doug.

Thank you. At this time, I am showing no further questions, I will turn back the call back to management for any closing remarks.

Okay, well, I guess that’s pretty much all we have for today. I want to thank everybody for dialing into the call and looking forward to give you an update in January on our fiscal Q2 that ends in December. Thank you very much.

Thank you, sir. Ladies and gentlemen, this does conclude the Extreme Networks 2010 first quarter conference call. If you’d like to listen to a replay of today’s conference, please dial 303-590-3030 or 1-8-00-406-7325 and entering the access code 4166330. We would like to thank you for your participation. You may now disconnect.