Good day everyone and welcome to the Sybase Q1 earnings conference call. (Operator instructions). Our speakers today are Chairman, Chief Executive Officer and President Mr. John Chen and Chief Financial officer Mr. Jeff Ross. For opening remarks I will now turn the conference over to Mr. John Chen. Please go ahead sir.

Thank you operator. Good morning everybody and welcome to our call. We’ll begin with Jeff providing the Safe Harbor statement.

Thanks John and good morning everyone. Today certain statements we will make will be forward looking statements, including statements regarding our future growth, future operating results, potential business combinations, market opportunities and business prospects. While these forward looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements which reflect our opinions only as of the date of this call. Also please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events. Throughout today's discussion we will attempt to present some important factors relating to our business that may affect our predictions. Actual results and the direction of our progress and our future growth, if any, could differ materially from statements we make or imply today for a variety of reasons. Those reasons are described in our press release and in SEC filings including our annual report on Form 10K for the year ended December 31, 2007. All non-GAAP amounts disclosed in this conference call have been calculated and presented in accordance with the most directly comparable generally accepted accounting principle financial measures which are posted in the earnings release section of our Investor Relations website at www.sybase.com. And now John will provide an overview of our 2008 first quarter results. John.

Thank you Jeff. Are you sure we’re protected now?

We are fully protected John.

Alright, so we’re extremely pleased, obviously with our Q1 results. I trust that you all have in your hand and the business, Jeff just talked about business in general, business is very good for us. The momentum in the marketplace, good for us, it continues well. And it’s driven mainly really by our unwired enterprise platform and combined with a very healthy business pipeline and very consistent and consistently strong executions. All three of the business segments grew nicely and all major geographies generated solid growth, meeting or exceeding plan. Synergies also continued to develop as evidence, about 20% of all our deals in the quarter, over $0.5 million involved products in more than one segment. As a result, we achieved our best first quarter performance in the company’s 23 year history, I think it’s 24 now, but 24 years history following on the heels of our record 2007 performance. For the 2008 first quarter, total revenue rose 13% to $260.1 million. License revenue increased 13% to $71.8 million. The core database license revenue which includes our flagship ASE and Sybase IQ Analytic servers grew 19% year over year. Total service revenue grew at a healthy 8% on the strength of 9% growth in the maintenance revenue. Messaging revenue benefitted from a strong than expected demand growing 37% to $42.6 million. The non-GAAP operating income grew 44% year over year to $49 million representing the operating margin of 19% which is up from 15% a year ago as we continued to experience the leverage from broad strength across different businesses of ours and increased synergies in the channel. Non-GAAP EPS which rose 46% year over year to $0.39 also well exceeded our expectations. Lastly, cash flow from operation was $94.6 million which is an increase of 36% year over year…

Thanks John. Let me take you through the numbers for the 2008 first quarter. During the first quarter our total revenues increased 13% to $260.1 million. License revenue for the quarter grew 13% to $78.1 million with service revenue growing 8% to $139.4 million and messaging revenue increasing 37% to $42.6 million. All geographies grew year over year. Total revenue for North America increased 7% year over year to $131.7 million and represented 51% of our total Q1 revenue. This percentage is consistent with past quarters. Europe came in at $92 million, up 26% year over year and represented 30% of our total revenue. Lastly our intercontinental region which includes Asia Pacific, Latin America came in at $36.5 million and was up 6% year over year and represented 14% of our total. During Q1 our largest vertical was technology and OEM, followed by financial services, teleco and manufacturing. Non-GAAP operating income for the first quarter increased 44% to $49 million representing 19% operating margin compared with a 15% operating margin in the first quarter of 2007. Non-GAAP net income for the quarter was $35.3 million with non-GAAP fully diluted EPS of $0.39. This was up 46% year over year. On a GAAP basis, operating income increased 69% year over year to $36.2 million representing an operating margin of 14%. GAAP based net income was $24.2 million or $0.27 per diluted share. As John mentioned, cash flow from operations was $94.6 million, up 36% year over year. A more detailed description of the reconciliation between GAAP and non GAAP numbers is contained in the press release distributed pre-market this morning. Additional financial details are as follows: as of March 31st, 2008, our cash balance was $841.3 million including restricted cash of $3.7 million. Obviously this is before the impact of our…

Thank you Jeff. Before moving into guidance I’d like to comment on the environment a little bit and outlook. As our Q1 performance has demonstrated we did not see slowdowns related to the macro or financial services environment, although we continue to take a conservative approach in managing our business. We are well aware of the ongoing risk and uncertainties in the environment and we will be prudent with our expectations. With that, we have reasons to be confident in our near term growth prospects. We continue to see strong demand for our core data products and mobility offerings and we are seeing early success for our mobile banking and mobile office offerings. Our initiatives on maintenance pricing will also contribute to revenue growth and margin improvement this year. We remain committed to our target of 100 basis points of annual operating margin expansion. We are currently putting together plans to gradually accelerate or improve the pace of our operating margin expansion in the future years. In striving for this goal we’re actively exploring opportunity to increase organization productivity and drive higher profitability. So over a longer term, we believe that and this is longer term, we believe we can achieve an annual operating margin up to 30% through revenue growth and productivity initiatives that delivers increased business synergy and greater channel efficiency. The reason we mention this because I think Jeff and I are getting a lot of discussion or questions that we’ve been improving our margin of 100 basis point, operating margin of 100 basis point every year for a number of years now and the question is how long could it go and how far could it. So we’re seeing ourselves up a timeless model that we believe we can achieve which is about 30% at least…

(Operator instructions). Gentlemen our first question today comes from Trip Chowdry with Global Equities Research.

Thank you, very good execution in a really tough environment. I have two quick questions. The first one is regarding the international business, are you seeing any shift this year versus last year particularly in China?

In China? No China did very well the last quarter and has done well in the last three quarters. So no, I have not seen any shift and they expect Q2 to be reasonably good also.

And regarding Sybase 365, that business continues to do very well. I was wondering, what other new initiatives you have in place that you could see say over the next 12-18 months coming off from that division of yours.

We are striving, the most important thing right now, we’re driving into mobile banking and eventually it’ll be mobile payment and mobile remittance. Mobile banking is already started, I think we have about six customers around the world right now. We started that initiative towards the end of last year and then we married that into the FFI platform, so this is the messaging technology on top of the FFI platforms. So it’s been doing very well, well received. We have a [resen] site in Citizens Bank and in a number of sites that we believe will become [resensible] very soon. So that’s the major near term, immediate term initiative. We obviously would need to get more aggressive on data roaming on the worldwide basis. That’s probably a little bit of longer term. And then eventually probably into mobile wallet.

Very good, congratulations on very good executions.

Our next question comes from Alan Cooke, Merrill Lynch.

Thank you. John I noticed your database revenues obviously were, license revenues were obviously really strong and your mobile license revenues were weaker than I expected and I was wondering if you could give a little bit more color on why you had the strength in the database business and not quite the same strength in the mobile business which should be or I understand is your growth business.

Right, the IQ, the database business is driven very much by the IQ strength as well as the continued adoption of ASE and we have good new customers. The mobile business is a pretty seasonal trend on that. We have a number of large OEMs throughout the year but not in Q1, no one large deal in Q1 and it was expected. It was not something that we haven’t planned for. So we would expect that to pickup as the OEM deal comes in.

Okay, thanks and then with regards to the 365 business, can you tell us what the nesting volume was?

40, 1, 40, 40 billion, 41 billion.

Okay and your operating margin, you’re already at 10% for Q1, your target for the year is 10-12%, do you expect to come in above that 10-12% for the year? Are you raising it at this point or keeping it the same?

I’m keeping it the same but I would surely hope, let me put it this way, I’ll be disappointed at the end of the year if it’s not any better. But I’m keeping it the same for now.

Okay and then with respect to maintenance growth rates, can you give us some color on that particularly broken up between the database business and the mobile business?

The databases and mobile business, I don’t have that right in front of me, I mean I’m sure the guys could give it to you later on. [Overlay].

It was rather close [ovelay] materially different.

So the color, we expect on an ongoing basis on the constant dollar roughly about 4% increase year over year and we don’t see a slowdown in that one.

Alright, great, thank you very much.

We’ll go next to Brent Williams with Benchmark.

I wanted to drill in really quickly on the iPhone stuff. What is the sort of the principle business benefit, I mean is this a direct revenue opportunity, is this really more about pull through for the middle-ware and the head end you know the server side opportunity for some of your products or is it mostly an opportunity to pull 365 business or is it really just a marketing coupe so that John you could get up on stage wearing jeans, the black turtleneck and the grey New Balances with Steve Jobs and augment your already impressive coolness?

I think yes, I’m ordering the rimless glasses to go with what you just talked about. I think its black jeans, no, okay. Good question, so to be really specific about our strategy with the iPhone, iPhone is going to make its way, already made its way into enterprise and the CXO, or we’re hearing a lot from our customers, CXO really wanted that and it’s, you know the IP books are pulling their hair out because the current iPhone design using active sync from Microsoft, does a couple of things. Number one is the email is not secure. And number two is it doesn’t really work well other than a Microsoft environment. I guess you could do iMap on Yahoo and Google mail, but Yahoo and Google mail isn’t exactly the enterprise mail. So it’s really more surrounding security. The other play that we have is heterogeneous, so it really is not about being cool, it’s about being able to be the only vendors that not only provide secure environment and device management environment which Apple probably won’t get to. But more importantly it’s heterogeneous so if I walk into an organization like a major Fortune 500 or Global 2000 account and I say okay you got RIM, you got Palm you got Symbian, Microsoft, you got iPhone, you got all the other environment don’t you want to just manage it with one server and one architecture and nine times out of ten everybody says yes. So that’s really the value add to it, it’s not about being cool or whatever. Now as far as the other question regarding channel, you know I love to strike an arrangement with Apple so that they could help us distribute it too. That said, they’re just releasing the STK and they’re putting up iStore and so forth so that remains to be seen whether we could actually get to an arraignment or agreement to do pricing and so forth. We’re working on that. So I would say that it’s really, your question comes in how do I position my product in the market and uniqueness that I offer to drive more. And then the question is it’s not about messaging 365, the revenue is going to come in iAnywhere, it’s because and we’re going to sell the iAnywhere Office suites and iPhone security one bridge as well as device management [faria] is in the iAnywhere suites.

Got it, great and then secondly just a little more detail on icon performance, where did you see strengths or any softness, more on the mobile side, more on the database side, as I say, either strengths or softness or any particular geo’s within icon.

The icon business from a regional perspective, Latin America remains strong, Japan, China, Korea are probably the top three or four places. And these organizations, these geographies projected to be strong throughout the year continuously. Regarding product mix, very much IPG product, very much database and IQ oriented pretty much I would say. With the exception of iAnywhere is stronger in Japan. And because of the KK organizations there, that’s about. iAnywhere business are very dependent on large and OEMs which we have a very strong pipeline for the year. And that’s generated mostly by in the North America region or the European Nordics region. So that’s kind of the mix. But that’s always been the business mix.

Great, thanks for taking my questions.

We’ll go next to Steve Koenig with KeyBanc Capital Markets.

Good morning, thank you. Two areas to question you about, first on the iAnywhere side. John can you give us kind of a refresher on where you are in terms of your product cycle for the various iAnywhere components?

With the exception of the one bridge product, which has a new release coming out probably within the next 30 days, everything is fresh. I mean the device managements are fresh on the [efaria] and the iAnywhere mobile suite [unintelligible].

And I believe SQL Anywhere came out this quarter, was there other releases in Q1 as well?

SQL Anywhere was the only major one in the iAnywhere space.

Okay, so I guess what I’m getting at is do you see any risk around product transitions like we had in Q4 in 06 I believe it was.

Not [when] I planned it, no.

Okay so given kind of where you are with the product cycles and some of the initiatives you just talked about in mobility, how should we think about iAnywhere license growth for the year kind of a little bit longer term than one quarter basis.

Right, I still believe that we could do 10% growth year over year in iAnywhere as a segment and iAnywhere segment is pretty much 50/50 in terms of license and services so I think you just assumed that it’s going to be 10%, maybe slightly a little better than that.

Okay. Terrific. And then last question for you John, on the database side and the IPG side, can you give us any sort of qualitative commentary on your visibility toward large deals, whether they’re site license renewals or other large deals in your pipeline over Q2, Q3 timeframe.

Q2, we have very good visibility with our pipeline. You know that said anything could happen and you know in the software business, it isn’t finished until it’s finished and you know I supposed that June is going to be a major month for us from that perspective. But that said, we have enough pipeline to cover the, we have a model obviously of coverages into the revenue conversion so we believe that the guidance that we’ve provided are very sound for Q2. We have a number of deals in Q3 and 4, although being further out, under a normal year I would say we have more than enough to finish off the year. I still believe that’s the case by the way and I just want to be a little caution on that but everything we guided in terms of high end of the revenue range and the EPS guidance and all that, we have vetted it many times inside the company here in this last couple of weeks and we are standing behind it.

Okay, great, thanks a lot and congratulations on the quarter.

Thank you.

We’ll take our next question from Kirk Materne with Banc of America Securities.

Hey guys, thanks very much. Maybe Jeff or John, could you just talk obviously maintenance revenue growth has finally started to tick up a little bit, is that just based solely on the fact that you guys have had pretty good license growth over the last year and have you done anything around pricing, I think at one point in time you guys were talking about maybe trying to put through a price increase on maintenance, can you just talk about that a little bit and whether or not that sort of high single digit range is a decent one to think about for the rest of the year on that business.

No.

Yes we can talk about it but [overlay].

Kirk I believe that model reflected roughly about 4%, it’s probably more realistic, maybe hopefully we may pick up a little bit, the pricing increase what we called a COLAr, cost of listing adjustment was put in pays and last June and it’s been through all these times, you know [unintelligible] new license growth, so yes you should see an uptick there a little bit but I wouldn’t go as bullish as the 8-9% you see in Q1.

As John described before, we did get FX benefit and if you take that out we’re expecting more like 4% for the year.

Okay, that’s fair. And then just on Sybase 365, another really good solid quarter, John just when we’re thinking about it more from a sequential basis over the course of the year, is it going to be somewhat similar to last year where you sort of strong start to the year to a little bit flattish 2Q, 3Q and then ramps back. I mean is it going to be more back end loaded or are there things happening in 2Q and 3Q where it can be a little bit more linear in its progression.

No I think the model, because, I mean it ties into a lot of interesting things, I mean we started talking about things like Valentine’s Day, this that and the other. I mean so you know I think the model you have is right. The model is like we’re probably going to see. I still expect to see growth by the way Q2 and 3 but not going to be the growth that you’re seeing sequentially from a Q4 to Q1 and all that. And then it will uptick in the back end of the year. I believe that is a reasonable model for us. Now the upside in that, it’s going to be, if we could get enterprise to get even more aggressive on using the messaging as a campaign of course that doesn’t tie to any seasonalizations.

Okay, great and then just one housekeeping question for Jeff. Just pro forma tax rates you were using for 2Q and going forward this year.

36%.

36%, okay, great, thanks guys.

We’ll go next to Horatio [Zambrano] with Jefferies & Co. Horatio [Zambrano]: Hey, thanks guys congratulations on the quarter here. Just real quick, I missed which verticals you guys said were the strongest, I think teleco and another one but so you, can you just highlight what percent of revenues in the quarter came from financial services and if you saw any sort of, I know you’re pretty broad in that vertical but anything in the securities industry sort of starting to tighten up for you guys there?

Right so technology in OEMs is the largest that typically it’s about 30% of our business. Which is the other thing in Q1 that we saw. The next one is the financials and the financial, teleco is running pretty much neck and neck, about 18-20%. And no we have not seen any slowdowns even in the brokerage houses, the deals are all there, we were able to close them and convert it. So that’s the best I could provide as a report at this point. Horatio [Zambrano]: Okay. And it looks like from the IPG license strength that it was, obviously you had a very strong quarter in IQ but it sounds like ASE was also strong. Is the shared, what’s really driving that growth right now because I don’t think the shared disk cluster is out yet if I’m not mistaken.

It is out but it’s not in the revenue. So that’s. It is out. We have a couple of wins, small wins but it’s not the reason why it was driving the ASE revenue. It’s really continuing adoption of the ASE 15. Right now to the best of our estimates, about 50% of our base already converted to ASE 15. So it’s the latest, kind of the continuous upgrade of [baysian] to the ASE at the latest release. Horatio [Zambrano]: Okay and then last question real quick on the messaging gross margin, I know that you guys have been trying to stabilize that given the mix of international messaging, do you guys feel pretty comfortable now with the range you guys have talked about for that?

Yeah, 10-12%, yeah we feel comfortable.

Gross margin or net margin? Horatio [Zambrano]: Yeah, gross margin actually.

That’s also in a pretty good, we had an uptick one point. So it’s, that’s in a, you know it will depend on the mix it’s going to bounce a little bit, up one, down one but it’s not going to be dramatically different. Horatio [Zambrano]: Okay, alright, thank you very much guys.

We’ll go to our next question from Brad Sills with Lehman Brothers.

Hey guys, thanks for taking my questions. Good quarter. Just a question, just to follow on the question there on ASE, can you describe a little bit of what are the growth drivers there, between you know core ASE 15 upgrades and what that’s doing for core database licenses versus some of these existing options like encryption and portioning cache on those.

Most of them, I mean I don’t really get a lot of money out of ASE platform upgrade because it’s in the ongoing maintenance price. [Overlay]. So the answer of the question is I mean we have 240 some new customers come into ASE in the quarter and they’re not really typically huge, they’re always smaller. So that’s not the major driver. I don’t have the map in front of me but if I have to guess, that probably contribute no more than 10-20% of the ASE growth number. But the majority therefore must have to come from the ASE adoption in the 15 and comes from buying the new options like the encryption and the insertion type option.

Sure, okay great. And then I guess just early interest in the shared-disk cluster, how’s that, how’s the reception been so far?

Very, very strong. We have I guess a presentation on Wall Street roughly within the last 30 days and a lot of the people comes to our technology briefing and two customers got up and spoke for us, compared us with other people’s shared-disk cluster like Oracle and [unintelligible] about ease of use and performance and ability to get in store quickly. We have very strong endorsement with a number of firms on Wall Street. And if you, by the way, I don’t want to give you the name right now because I’m not 100% sure that these people would love to reference it, but if you would like to talk to one or two of those, work through Charlie and Lynn and see how we could organize ourselves and make a phone call connections, be more than happy to do so.

Okay and then just last question, within iAnywhere I know you guys have been focusing on kind of getting channel build through the SI channel, just you know just maybe comment on how that’s going in terms of pipeline build or even just progress this quarter.

The pipeline build is okay. We have been doing very with a couple of very big names. And lots of activities. I haven’t really seen a lot of revenue comes through yet and I’m hoping to see that in second half. One of the major area that one of the major SI is focusing on is in the utility markets. [Not] that we have a good play in there and that one you have to stay tuned a little bit and I hope that I could see some real revenue benefit in the second half of the year.

Got it, great, thanks.

(Operator instructions). We’ll take a follow up from Steve Koenig at KeyBanc Capital Markets.

Great, so a question on the messaging side, you know you’re getting good growth this quarter in the application messaging. You know which is possibly a more fragmented market than your carrier messaging. How do your margins look in that business compared to the others and you know how do you stay on track with your margin plan if you get more revenue growth out of that segment which is probably a little more competitive?

Actually enterprise messaging application messaging from enterprise is up a very reasonable margin for us it’s actually a higher margin than [indeed brock] sale that we provided to telecos. So from that perspective it’s actually a little better margin for us than others.

Okay and is that because of, is it rich messaging is helping there or what’s helping that margin?

I haven’t heard from Marty on the rich messaging helping them and I think rich messaging really is MMS itself. That really is because on enterprise campaign their requirements are different and you know they’re not as price sensitive.

Okay, great, thanks.

And having no other questions in queue at this time, Mr. Chen I’d like to turn it back to you for closing remarks.

Great, thank you. Thank you everybody and I appreciate the questions. I’m sure that we are all here to answer any discussion you may want to have and other questions. During the week of the Sybase [conference] which is the middle of May by the way on Thursday, as a reminder, Thursday May 15, we will be hosting an Y enterprise analyst day in New Jersey, New York, New Jersey area, I’m sorry I don’t know exactly the location. Focusing on the analytics and mobility and including a number of very interesting customer presentation. A number of times I heard from all of you that hearing from customer directly and how to us the NY enterprise platform, our technology in mobility is something of strong interest and we’re lining up a pretty good set of presentations of that. The following day on May 16th, which is a Friday, the former Fed Chairman Allen Greenspan will deliver a keynote address at a customer launch of our analytics platform. Wow, this is a mouthful. And the next platform for capital market at the New York Stock Exchange. We obviously are extremely excited about these events and we believe it by the way also show our wall street customers that we are very much committed to Wall Street initiative and we look forward to seeing and speaking with you all over those events or in the coming quarters. Thank you for participating on this call today and I’m looking forward to reporting a great result in 90 days.

Ladies and gentlemen, thank you so much for your participation, this does conclude today’s conference and you may now disconnect your lines.