Welcome to the Extreme Networks 2011 First Quarter Conference Call. [Operator Instructions] On the call today, from Extreme Networks, are Oscar Rodriguez, President and CEO; Bob L. Corey, CFO. As a reminder, this conference is being recorded today, November 1, 2010. This afternoon, Extreme Networks issued a press release announcing the company's financial results for the first fiscal quarter of 2011. A copy of this release and slide presentation of the supporting financial materials are available in the Investor Relations section of the company's website at www.extremenetworks.com. This call is being broadcast live over the Internet and will be posted on the Extreme Networks' website for replay shortly after the conclusion of the 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 its financial performance, strategies, growth of customers' bandwidth demand, development of new product, customer acceptance of the company's product, customer buying and spending and economic conditions 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: a challenging macroeconomic environment worldwide; fluctuations in demands for the company's products and services; a highly competitive business environment for network switching equipment; the company's 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 any recovery in the global economy; risks related to pending or future litigation and the dependency on third parties for certain components; and for the manufacturing of the company's products. The company undertakes no obligation to update this information on the conference call. More information about potential factors that affect our business and financial results is included in the company's filings with the Securities and Exchange Commission. Throughout the conference call, the company will reference both GAAP and non-GAAP financial results. The company has provided a reconciliation table of GAAP to non-GAAP and the 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 and the audit of the fiscal year is concluded and/or Form 10-K is filed. I would now like to turn the call over to Mr. Bob L. Corey, Executive Vice President and CFO of Extreme Networks.

Okay, thank you, Tyrone, and welcome to the Extreme Networks Q1 fiscal 2011 earnings conference call. As I mentioned, I'm joined today by Oscar Rodriguez, our new President and Chief Executive Officer. I'm delighted to have Oscar on board, and I'll turn the call over to Oscar for his comments regarding our focus and strategy and market dynamics. And then I'll follow up brief comments on the quarter and summarize and provide guidance for Q2 of fiscal 2011. We'll then open up for Q&A. So Oscar, welcome, and take it away.

Thank you, Bob. Let me start the call today by first, thanking Bob for his leadership over the course of the last 9 months and by thanking him for his work in driving efficiency, stability within the organization. Under Bob's leadership, Extreme has delivered a series of improving results with greater predictability while also establishing clear guidance. Working together with Bob, I intend to continue these trends and to build upon the momentum that we have established. By way of a brief introduction, I have now been with Extreme for just over two months, and I'm very pleased to be a part of this team. Prior to Extreme, I had spent all of my 25-year career designing, building, marketing, selling, networking and communications products to both enterprise and carrier markets worldwide. I've held senior Executive positions as part of Alcatel-Lucent's Carrier Ethernet and Enterprise business units. I've held two divisional president positions in Nortel's Data and Enterprise Networking divisions, and I've held president and CEO positions in innovative pure-play communications companies such as Arris Interactive and Riverstone Networks. During my time with these firms, I had the opportunity to build a clear understanding of customer needs in all our core markets, specifically the campus enterprise, data center and Carrier Ethernet markets. Since joining Extreme, I have been conducting a deep and thorough evaluation of the core competencies of the company to better understand our capabilities and to assess any unrealized potential that we may have within the organization. In the next few weeks, we will be finalizing a renewed mission and strategy for the company. I will talk more about the specifics of this strategy on the next call. Prior to joining Extreme, it was clear to me that the company is operating in a growing and exciting market and…

Okay, thank you, Oscar. As in previous periods, we have posted a slide presentation on our website at www.extremenetworks.com under Investor Relations that we hope you'll find useful. As a reminder, all of my comments will be non-GAAP, except for the revenue and the number of common shares. Non-GAAP results exclude stock-based compensation, restructuring charges and litigation settlements. There's a reconciliation from non-GAAP to GAAP financial results in the slide presentation under Investor Relations at our website that I just mentioned. Once again, before I go any further, I want to thank every employee in our organization for their dedicated efforts and commitments, which contributed directly to our Q1 performance. Based upon strong sales in Europe and Asia-Pacific, we're reporting total revenue of $83.8 million for the quarter, which is on the high side of our previously issued guidance of $81 million to $84 million. Our revenue of $83.8 million for the quarter were also reporting earnings at the midpoint of our earnings guidance, with net income of $4.8 million or $0.05 earnings per share. During Q1, we continued to perform and drive operational execution as we reported $83.8 million of net revenue, representing an increase of 26% year-over-year and a small seasonal decrease from Q4 of 2%. With regard to product revenue by geography, the Americas reported $21 million, EMEA reported $32 million and Asia-Pac reported strong performance at $16 million. The product revenue for the Americas represented a 25% decrease from Q4 as the number and size of larger deals in the U.S. were down in the quarter and we saw softness in the Eastern part of the U.S. At the beginning of the quarter, we executed some changes in the sales organization in the Americas that we believe will create a stronger organization but which we believe…

[Operator Instructions] We have a question or comment from Rohit Chopra of Wedbush.

This is actually Sanjit Singh with Wedbush for Rohit Chopra. I had a question on the gross margin. What's your expectation next quarter in terms of competition affecting the gross margin? Do you have larger deals out there where we could see further downsides to gross margins going into next quarter?

Yes, this is Bob. Our thinking, like we said on the call here, is we expected our gross margins to continue to be in our financial guided range of 57% to 59%. The deals in Korea were highly competitive and strategically important to us in that market, so those margins impacted our overall performance, but we're still guiding 57%, 59% going forward.

And can you talk a little bit about some of the sales force changes that you guys implemented in the U.S.? Were these changes implemented -- how long ago were these changes implemented and was this implied in your original guidance for this quarter?

Well, this is Bob. I'll take a shot and then Oscar may want to comment on it. It was a middle of Q4 in May of last quarter that we announced the change in the overall leadership of the worldwide sales force, along with the combining of management under one executive for sales and the customer services group. And Mike Seaton was promoted to the Worldwide Sales and Service, Vice President at that point. And we finished out the quarter and had what we thought was a pretty strong performance for Q4, and I think exceeded our guidance for the quarter. In the beginning of Q1, we had reassigned the person then who was running VP of North America for Sales to be Alliance and OEM partner group because we believe that's important for the growth of the company, so additional spending, additional sales channel to the market. At the same time, early in the quarter, we split the North Americas into three regions instead of basically two or three territories. So the change was effected late in July, is that right? And we think that the change hampered our ability to execute in the quarter. Clearly, we understand some of the issues. Mike Seaton is on top of the issue. Like I said, we expect to have Q2 performance from North America be a lot better than what we saw in Q1.

Just to parse it out, do you think the performance of the U.S. this quarter, was that more due to what you guys refer to as some spending cautiousness on the part of distributors and customers? Or was it more the sales force changes?

This is Oscar. I believe it was a combination of -- both of those factors impacted our ability to drive revenue in the Americas region over that. It is a combination of both things. The other thing I will add to what Bob said a little bit earlier about the puts and takes and hows and whys of how the changes were made with the sales management team is that I believe that the Alliances team is now focused to be able to drive better alliances and more focused to drive future revenue based on that. So I think it's a good move from an execution perspective, but it's a question of getting to put through the puts and takes of getting that team up and running and, of course, getting the transition done in the Americas.

[Operator Instructions] And I'm showing no further questions or comments at this time. I would like to turn the conference over to Mr. Oscar Rodriguez for any closing remarks.

Very good. Well, we had only one question this time. It's very much appreciated from the Wedbush team. I look forward to -- and Bob and I both look forward to speaking with you next time. As I said in my prepared statements in the script, I will have a better view of the strategy and be ready to talk to you about, not only the strategy, how we see the new renewed strategy for Extreme as a company, but also points of execution and how we'll be measuring ourselves to that strategy. Thank you very much for joining, everyone, and I look forward to speaking with all of you over the course of the next few months. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.