Welcome to the third quarter 2008 Forrester Research earnings conference call. (Operator Instructions). I would now like to turn the presentation over to your host of today's call, Ms. Karyl Levinson, Vice President of Corporate Communications. Please proceed, ma'am.

Thank you for joining our third quarter 2008 call. With me today are George Colony, Forrester's Chairman of the Board and CEO, Charles Rutstein, Forrester's COO and Mike Doyle, Forrester's Chief Financial officer. Mike will open the call and provide detail on our financial results for the quarter. George will follow Mike and provide a strategic update on the business and our role-based strategy. After George completes his review we'll open the call to Q&A. A replay of this call will be available until, November 5th, 2008 and can be accessed by dialing 888-286-8010. Please reference the pass code 70702977. This call was also available via webcast and will be archived in the Investor Section at Forrester.com. Before we begin I would like to remind you that this call will contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipate, intend, plans, estimates or similar expressions are intended to identify these forward looking statements. These statements are based on the company's current plans and expectations and involve risks and uncertainties that could cause future activities, in results of operations to be materially different from those set forth in the forward looking statement. Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The company undertakes no obligation to update publically any forward looking statements whether as result of new information, future events or otherwise. I now hand the call over to Mike Doyle.

I will now begin my review of the financial performance for Forrester's third quarter and year-to-date results, the balance sheet at September 30th, our third quarter metrics and the outlook for the fourth quarter and full year 2008. Please note that the income statements numbers I'm reporting are pro forma and exclude the following items. Amortization of intangibles, non-cash stock-based compensation expense, professional fees related to the stock option investigation and restatement of the company's historical financial statements, and net realized gains and securities and non-marketable investments. Also, we continue to book an effective tax rate at 39% for pro forma purposes. The anticipated effective tax rate for 2008 is approximately 39%. I am pleased to announce that Forrester achieves a solid third quarter performance and met the financial targets set out on our second quarter conference call despite some challenging economic conditions. I'm also pleased to announce that the integration of Jupiter Research, acquired on July 31s,t is progressing as planned. The results discussed below are inclusive of Jupiter activity for two months. With today's release, we're reporting third quarter 2008 revenues of $59.5 million and pro forma operation margin of 17.9%. Revenue increased 16% versus prior year with 1% attributable foreign exchange and was within our previous guidance. Operating margin performance was just above the upper end of our guidance and one point above prior year. Pro forma earnings per share came in at $0.31 per share, at the upper end of our guidance and up 11% versus year ago. For the nine months ended September 30th, 2008 we are reporting revenues of $177.9 million, up 16% from the same period a year ago. Pro forma operating margin increased 1.5 points to 17.5% for the nine month period ended September 30th, 2008 from 16% during 2007. Pro forma…

Welcome to Forrester's Q3 investor conference call. In my remarks I will address three topics. Number one the economy and Forester's positioning, number two Forrester's three business imperatives and then finally number three, an update on the acquisition of Jupiter Research. Turning first to the economy, we do not believe that technology, Forrester's primary market space, will be as hard hit in this recession as it was in 2001 to 2003. Now why is that? The tech industry had a long way to fall in 2001. Spending was out of control, Y2K efforts were over and the dot com era had ended. The result was a deep tech recession; much more severe than the secular economic slow down. This time around we think the environment is quite different. Tech spending has become much more disciplined in large companies. Return of investor analysis is required for large projects And CFOs scrutinize all large tech expenditures. In the seven intervening years technology has become much more pervasive. Cell phone usage has doubled and broadband penetration has increased five-fold in the United States. This means that large companies must continue to spend money on websites, web marketing, social computing and e-commerce to connect to customers. Finally new technologies, many of which save money, are in the agendas of large corporations. These include green IT, cloud computing, virtualization and social computing. Now this said, there is no doubt that companies will be spending less as they move into recession, and where does this leave Forrester? The company is prepared for a changing economy. Since January of 2008, Charles Rutstein, Forrester's COO, has been working with his team to prepare for a variety of contingencies. Our business is driven by relevancy. Since the second quarter we have been diligently working to generate new research, conference…

(Operator Instructions). Your first question comes from the line of Laura Lederman – William Blair & Company. Laura Lederman – William Blair & Company: I wanted to start off by asking about any signs of economic weakness that you've detected, any vertical markets, any geographies? We're hearing from the Microsofts and the [SAP]s of the world. Obviously they're a lot larger than you are and very, you know, selling different products and services that you do. But did you detect any signs at all even at the end of September when things got so strained for a lot of companies?

Couple comments, I'll give you generally here. First off, we did not see material differences in any of the segments in which we play, nor any of the vertical industries in which we play. So despite what we saw on the news, what all of us read, there was no material difference in the performance, for example, in the financial services sector, for us versus others. I will say it is a more challenging environment from a sales perspective. We continue to see longer sale cycles than we saw certainly a year ago. We see a requirement for more signatures than we saw a year ago. We're seeking to run the business to accommodate that need, building larger pipelines, with larger coverage, for example. But ultimately what we're seeking to do, of course, is drive relevance, as George noted, both in good times and in bad. So the research that we're writing hopefully is meeting with receptive ears. Laura Lederman – William Blair & Company: You mentioned that the sales cycles are longer versus a year ago. What about sequentially?

I think only modest change if any in the quarter or versus Q2. Laura Lederman – William Blair & Company: Okay, moving along, can you talk a little bit about pricing? You mentioned sales cycle a little longer. Are your customers any more price sensitive or are they pretty much not balking at all? In other words, what I'm trying to get at is discounting.

Yes. I would say discount rates have not materially moved either, either sequentially or year on year. You may recall, [Laura], that we did not do a price increase at mid-year this year. We are in the midst of perhaps one of the biggest looks at pricing and packaging that we've done in many years. And as we said on the last call we anticipate making some changes there in 2009. We are focused on discounting, which I think it's at the heart of your question, and I think we're making good progress there. Laura Lederman – William Blair & Company: Can you talk a little about the changes you're thinking of making a pricing and packaging and would that change if the economy remains week enough in '09? And on that view any updated thoughts on IT spending and what you guys are looking for in '09 and what type of economic scenario that's predicated upon?

Good question, Laura, on the pricing front obviously we’re not going to bring a price increase into an economic storm. It's just not going to happen. So we'll be very smart. We're doing lots analysis presently but we're going to make the call in early 2009 as to where those prices will come down. Laura Lederman – William Blair & Company: But what types of things when you talk about major changes in packaging and pricing? Can you give us a sense of that?

Well, Laura, we're doing I would say a very deep look at it. That may or may not in fact result in major changes in the packaging or anything else. As George said we're cognizant of the environment in which we operate here. So we will be prudent about the changes which we make. All I want to suggest to you at this point though is that the amount of analysis that we're doing, the rigor with which we're doing it is greater than probably at any point in the past. Laura Lederman – William Blair & Company: And George, any thoughts on IT spending for '09 and also, what type of [G&P] that's predicated on? And a related question do you guys a budget push in Q4?

It always happens. I mean, it may be less so in this quarter but it always happens. We’ve observed that for many, many years. So let me give you Andy Bartel's numbers Laura, which he's our accountant who follows tech spending. He has tech spending up in 2008, 5%. He has tech spending up in 2009, 6%. Now it looks a little bit deceptive. If you look up on a quarterly basis he is showing weakness in Q4 of '08, Q1 of '09 andQ2 of '09 potentially that weakness bleeding over into Q3 of '09. Well he has, it goes 5%, 6%, it's 2% in those three quarters. So that there's – the curve bends down pretty radically here but then it bends back up, we think, middle of next year or end of next year. Laura Lederman – William Blair & Company: Final question from me, and then I'll pass the baton, if you look at' 09 and I realize you're not giving guidance for '09, would it look sort of similar to '08 in terms of growth and that sort of thing because it seems as though most investors that are calling don't care about' 08 anymore. They really care about value in what we think the numbers look like in '09. So I realize that puts you in an uncomfortable position but whatever you're willing to give us would be great.

From our perspective we obviously give full year guidance at the year end call, which will give us a full flavor on that and obviously a lot's predicated on what happens in the fourth quarter. So I think at this stage it's premature for us to give any financial perspective on 2009.

Your next question comes from William Sutherland – Boenning & Scattergood Inc. William Sutherland – Boenning & Scattergood Inc.: Mike, can you speak to the FX impact in Q3 in terms of, I guess, did you speak to it in terms points of revenue growth?

We did. We pick up a point on the quarter, Bill, and when you look at our guidance for the fourth quarter [ratient] to sustaining it, sort of going the other way just because, as you know, there's been a lot of movement in foreign exchange particularly with the euro and the pound in the last, obviously in the last 30 days. And so were anticipating that and we factored that into our guidance. That it will actually move the other way in the fourth quarter for us. William Sutherland – Boenning & Scattergood Inc.: So a negative point of revenue growth.

Yes, that's right. William Sutherland – Boenning & Scattergood Inc.: Okay then it’s obviously if rates stay where they are then we should sort of assume that going into next year, all things else equal.?

Yes, I'm the last guy to try and project foreign exchange rates at this stage of the game, right? William Sutherland – Boenning & Scattergood Inc.: Right, I'm just saying giving your mix?

Yes, I think that’s right. If you look at our mix within the U.S., outside the U.S., Bill, I think that's going to be reasonably stable. It has been the last two years. So foreign exchange will really impact accordingly in next year if we have that same kind of movement. William Sutherland – Boenning & Scattergood Inc.: I noticed for two quarters at least now you've had just a little bit faster growth domestically than international. Is that result of deliberate focus do you think.?

No, I don’t think so. I think that a little bit of fluctuation with the numbers and how some of the numbers round. I think Mike's point is right. We're not going to see any material change here in the foreseeable future. William Sutherland – Boenning & Scattergood Inc.: What percentage of your bookings occur in Q4, and renewals?

It's approximately 40% of our bookings activity is fourth quarter. So it's for us obviously significant. Which again is why we talked, when we talk 2009 it's difficult to get our arms around what we think that might be until we see that. William Sutherland – Boenning & Scattergood Inc.: In a normal year, a more normal year, would you put your pricing in after the bulk of the bookings or do you do it in anticipation of the Q4 booking cycle.

It's historically been in mid-summer. Typically in July when we take pricing up and so this year, and actually our discussion around pricing strategy had occurred prior to all of this economic turmoil. This was something that had been something on the strategic agenda for us for some time. So we normally do it mid-year. We postponed it because we we're in the middle of this review which was planned, so typically it’s been mid-year.

It's also not all together unusual, Bill, to do a January increase. For example this year we did a January increase on user groups, on data and some of your other things. William Sutherland – Boenning & Scattergood Inc.: Just a couple of more, on the sales force attrition you said you we're going to work to further improve it. What kind of steps do you think will be most meaningful at this point to improve that further?

Well I think those probably come in two categories. If you look at the attrition that we are seeing about half of it is performance-based today. And so while I'm happy with the edge that our sales leaders are showing, if we can make investments to get more people to plan then obviously the need for performance-based terminations declines. So we're making investments there, mostly in development and training on sales skills. The other bit that I think we can affect is about 25% of the total and that is the voluntary attrition. And there of course that's about making the job more attractive to people so that they stay in that job for a longer period of time. And the remaining portion, about 25% of the turnover, is stuff that I would classify as sort of out of our control. That's people retiring, people relocating and that sort of thing.

If you look at this issue internally we are very focused on middle management in sales and improving sales improving that over the next 12 to 18 months. In fact we're spending some pretty significant development dollars in that space. William Sutherland – Boenning & Scattergood Inc.: Okay. And last George, you mentioned that you're very pleased with how the clients viewing the complementariness of your research and Jupiter's. What happens when you fully integrate Jupiter and it just becomes a Forrester line? Do you think it will still, that the client will still want both pieces?

Yes, I think, I think the answer is yes of course, that that's a core part of why we did the deal. Jupiter covered a number of things that the people in our roles need that we did not cover. And so the complementary nature of that is apparent right off the bat. The forecasting that they did, once again very complementary to our own, so as we create the packaging for those two sets of intellectual property to come together into what we give to our clients. I think we're actually maybe surprised on the upside as how complementary it is.

Yes, it’s a one plus one equals two. I mean we saw a number of Jupiter clients actually enrich into the Forrester contracts in Q3. And then you look at, of course, the theory behind the acquisition is we saw them as complementary and fact that's being borne out. William Sutherland – Boenning & Scattergood Inc.: And then last, George, the tech spending numbers you guys have put out. Is that U.S. or worldwide of Europe?

Those are U.S. The worldwide numbers are coming out I think in another couple of weeks.

(Operator Instructions). Your next question comes from the line of Brian Murphy – Sidoti & Company. Brian Murphy – Sidoti & Company: Mike, I guess with the addition of Jupiter you picked up 19 sales heads there, which are pretty much in line with your growth target for the sales force. Just backing that out it looks like you added an additional sales hit organically. I mean, would you be adding, do you just have net adds sales force over the next couple of quarters?

I think yes. Our game plan is to continue to – we haven't pulled back on the targeted growth in sales at 15 to 20%. I think we had an opportunity and we picked up some growth rate sales folks with Jupiter. And I think we're looking to leverage what we picked up there as we integrate into the M&S group. So I think in aggregate we are still looking to be at the 15 plus range for the full year and going forward. Brian Murphy – Sidoti & Company: Yes, just going forward, just thinking about growing the sales force, is that mostly going to come through acquisition?

I think that it will be a blend. I think that number that Mike is giving, that 15 to 20% that's a good number. That will come with both organic and potentially with the right deals through M&A.

I don't think that – we don't plan to make the 15 to 20% through acquisitions. I think it will be permanently organic growth. Brian Murphy – Sidoti & Company: Okay, great, and just to follow up on the question about product integration. Did you put out a timeframe for that?

We have not given a specific timeframe. But we're rolling it into that same packaging and pricing analysis that I spoke about earlier. And so we'll probably be announcing that early next year. Brian Murphy – Sidoti & Company: I think you guys referenced your consulting business slowing a bit. Is that more due to the environment or internal focus?

I think that's really internal focus. We set a goal for ourselves this year of moving one to two points of the revenue from non-syndicated consulting to core syndicated business, the research and FLB and data businesses. Of course we're doing that in part, as George mentioned, by creating incentives for the sales force to sell those products. And in fact that's worked out just as we have planned and so that's the shift that we are seeing. Brian Murphy – Sidoti & Company: Okay, so that's sort of mid single digit growth on the service line. Is that sort of a good run rate to think about going forward?

That depends on the overall '09 numbers.

Yes it does, so it’s probably, it's premature to talk about 2009. So I think for the balance of the year it's probably reasonable although we were surprised in a good way last year with the consulting in the fourth quarter, so.

I think you're thinking about the model and I think it's fair that we'll seek to grow the syndicated line faster, and the research services line faster and the other line will trail slightly.

I think on this topic Brian, we are going into this recession, unlike '01, '02, '03, with a wider portfolio of products. Consulting is an important component in the product set to have going into a recession. It doesn't totally hedge us, but it will help balance the portfolio

It is a little hard if you think about your model for the fourth quarter it is a little hard to take out the seasonality. In fact consulting is seasonally stronger in Q4 as well. Brian Murphy – Sidoti & Company: Got it, and you guys mentioned that you're projecting tech spending to be the sort of back end loaded next year. Would you expect your business to be more back end loaded than usual?

We've not necessarily – we haven't drawn a correlation to tech spending and Forrester performance. So I think the, I don't anticipate that our mix closing deals and bookings are going to change dramatically. I think that's all George was talking about was just pretty much [Andy's] projections for how tech spending itself will flow. Ours doesn't necessarily mirror that pattern. Brian Murphy – Sidoti & Company: And just one more, I'm new to this story, historically what percentage of your growth has come from price increases?

We've talked about historically it's ranged from 3 to 5% and that's been the case for probably the last three years, in terms of the data I've looked at.

Your next question comes from [Joe Ostos] – [OSI] [Joe Ostos] – [OSI]: Concerning the 15 to 20% sales force adds, I know you don't want to get into '09 much but could you talk about is this something that would be layered in as you see success? Or as the economy strengthens or how would you look about layering that relative to just the economics that we could be seeing in the next 12 to 18 months?

The way we look at it and what we stated before, and we won't get into specific 2009 items, but we've always said that if in fact we ran into a real economic headwind that one of the tools that we have is the ability to flex that hiring. We have the ability to slow it down if we believe that in fact things have slowed to a point or the ability to accelerate it. And we made a conscious decision at the end of last year when it was somewhat uncertain about how the economy was going to perform in the first half of 2008. We made a conscious decision to put our foot on the accelerator and hire because we believed frankly that it wasn’t going to happen that soon, and not that we were that prescient but it proved itself out. If in fact things are slowing and we see that, and that's the beauty of our model, we can see a little bit further out with the syndicated model, we'll in fact slow down hiring if we believe that's appropriate or we will accelerate it if we believe the opportunities are there. [Joe Ostos] - [OSI]: And then on the pricing study you're doing, is this being driven by customer feedback or is it more internal questions that you want to have answered before progressing?

I would say it's both of those Joe, and much, much more. We have a tremendous amount of client input that has gone into it, across geographies and across our client groups. But also of course we’re thinking about where we want Forrester's business to be over the long haul.

I think that it will also reflect being two years into role-based. And adjustments we want to make based around the business model driven with the role-based business model.

Your next question is a follow-up question from Laura Lederman – William Blair & Company. Laura Lederman – William Blair & Company: Can you talk a little bit about where the sales force attrition is? I think I remember it's like n the low 20's . Is my memory too high?

I think your memory's right on Laura. And we are it's down from a year ago to George's point, but it is still sitting in the mid-20s which from our perspective is not where we would like to be. Again, it is an improvement. But we think we have a tremendous amount of opportunities in that area still. Laura Lederman – William Blair & Company: Where would you like it to be?

I think I'd say with any high performing organization, I think if we could get it down around 20 over the course of the next year. I think that we would be happy. When you're a high performing organization there's a certain natural level of attrition that occurs as a result of performance management. And so I don't ever expect that we will be single digits at all. I think 20 would be a good target for us next year. Laura Lederman – William Blair & Company: And, final question, which is a little bit more discussion on the acquisitions. Have you seen the prices already come down? Would you do big ones, little ones, I'm not quite sure what's out there would they be in all three areas in terms of data and vendors?

I think again when we've talked about in past calls, there's a couple north of 50 million. There's a couple around 50 million and a lot of little guys. I think that no one likes to adjust the price given the economic conditions, but I can definitely feel a softness creeping in here. There's that factor. The other factor is the capitalization of these firms. As you know Jupiter's owned by MCG, a private equity firm, and their lines of credit were being heavily tightened. And that really helped us make the deal at the end of the day. So those two factors, I can already feel a little bit of that creeping in Laura.

Operator there are no more questions?

No ma'am not at this time

Thank you very much for joining Forrester's quarterly call. Enjoy the rest of your day.

Thank you for your participation in today's conference. This concludes the presentation.