Good afternoon, ladies and gentlemen, and welcome to Extreme Networks’ Fiscal Second Quarter Earnings Release 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. If anyone should require operator assistance during the conference please press the “*” key followed by the “0”. As a reminder this conference is being recorded today, Tuesday January 24th of 2006. I would now like to turn the conference over to Bill Slakey, Chief Financial Officer with Extreme Networks. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone. Thank you for joining us. On the call with me today is Gordon Stitt, President, and CEO of Extreme Networks. This afternoon, we issued a press release announcing our financial results for Q2 FY 2006, copy of which is available on our website at extremenetworks.com. This call is being broadcast live over the Internet today, and it will be posted on our website and available for replay shortly after the conclusion of the call. Let me note that some of the remarks made during this call may contain forward-looking statements about financial and business guidance, product introductions, and customer development. These reflect the Company’s current judgment on those issues. Because such statements deal with future events, they are subject to risks and uncertainties that could cause the actual results to differ materially. In addition, some factors that may be discussed during this call, important factors that could cause actual results to differ materially are contained in the Company’s Form 10-Qs and Form 10-Ks, which are on file with the SEC and are available on our website. And with that, let me turn the call over to Gordon.

Thanks, Bill, and thanks to everyone joining us this afternoon. I’ll begin this call with a summary of the financial results, review our quarterly highlights, and then turn the call back over to Bill for more detailed discussion on our financials. First of all, let me say that we are pleased with how we are managing many aspects of our business, as we are able to generate sequential net income, increased margins, and increased cash flow. We executed on our stock buyback program and reduced our operating expenses. We achieved our earnings goals even though revenue did not meet our expectations. Net revenue for the quarter was 92.8 million, and net income for the quarter was 5.7 million or $0.05 per diluted share on a GAAP basis. Excluding stock-based compensation expense of 1.6 million, non-GAAP net income for the quarter was 7.2 million or $0.06 per diluted share. This is an increase sequentially from $0.05 per diluted share reported last quarter. We experienced strong growth internationally this past quarter. Both our EMEA and Asia-Pac regions increased revenue. EME had, EMEA, excuse me, had revenue increases both year-over-year and sequentially. And in our Asia-Pac region, we saw very strong quarter, a year-over-year increase of 7.4 million. In Japan, the region that I discussed in detail last quarter continued its recovery and enjoyed an increase in revenue. Our Americas business did not achieve the revenue that we planned. Our challenges were mostly in the US market where some large deals that we anticipated were pushed out beyond quarter end. In addition, I don’t believe that we managed our pipeline as well as in previous quarters. We’ve already undertaken steps to address the US market. We’ve made management changes at a variety of levels, and identified actions to better track and increase our…

Thank you Gordon. As always I am going to briefly review our financial results for the quarter and then update our expectations for future performance. This was a good quarter for profitability and improvements in our base operating model, and we did meet or exceed many of our financial goals for the quarter. Gross margins as a percentage of sales expanded again. Operating expenses were down notably in dollar terms. Profitability in earnings per share were improved on a sequential basis despite lower revenues. Cash generation was very good as well with 12.7 million in cash from operations and the repurchase of 6.8 million in stock. We believe this use of our cash is both a very direct step to take to increase the value of our shareholders’ investment in our Company. It’s also a tangible evidence of our commitment to improving shareholder value at Extreme over time. This was also a good quarter for revenue growth outside the US, with international revenues up 15% sequentially and 7% year-over-year. Our performance in the US was weak however, and impacted our overall growth rate. Gordon has taken you through some of the steps we are taking to address this going forward. Revenue for the quarter was 92.8 million consisting of 77 million in product revenue and 15.8 million in service revenue. Our book-to-bill was slightly above one, service revenue were up 9%, compared to the year ago quarter and down 1% sequentially. Product revenue decreased 6% sequentially and 10% year-over-year. Shipment of modular products represented 45% of sales with stackable products representing 55%. The split of enterprise sales and service provider sales was 74% to 26%, similar to Q1 and generally consistent with our typical mix. XOS-based products continue to help drive revenue growth and gross margin expansion for us. All…

Thanks, Bill. To conclude I just wanted to thank our team here for their hard work in improving our business model and for their focus on increasing margins, lowering costs and for providing stronger leverage to our business model. With that, I would like to open the call to questions. Operator?

Thank you. Ladies and gentlemen at this time we will begin the question and answer session. If you have a question please press the “*” key followed by the “1you’re your touchtone phone. If you would like to decline from the following process please press the “*” key followed by the “2”. You will hear a beep tone prompt acknowledging your selection. Please ask one question and one follow up and re-queue for additional question. If you are using the speaker equipment you will need to lift the handset before pressing the numbers, one moment please for the first question. Our first question comes from Mark Sue with RBC Capital Markets. Please go ahead.

Hi, Gordon. Hi, Bill.

Hi.

I think Extreme has missed three out of their last four December quarters, but you have always managed to grow revenue sequentially in every single June quarter. Is it a sales force incentives issue or is it something else? And what component of the miss in the US was end market weakness, or was it execution? And did you see some CapEx rush at the end of the quarter?

There is a number of questions in there, Mark. I’ll address the last one in terms of was it market weakness or internal execution. As we stated, I don’t think we did a great job of pipeline management, although I can certainly put my finger on a number of large deals that we did anticipate we would ship within the quarter that were delayed beyond the quarter boundary.

Any thought just on how you can change your incentives so that you can have sequential growth moving forward at a December quarter versus having very strong June quarters?

Well, I don’t have good answer to that, Mark. I am not sure that a sales incentive program is at the root of this problem.

Got it. And what was the book-to-bill? I don’t think I’ve got…

Slightly above one, Mark.

Okay.

Okay, thank you. Next question please.

Thank you. Your next question comes from Alex Henderson, with Citigroup. Please go ahead.

Well, so June quarter you guys had a major debacle in Japan and you were waiting for that to roll off here in the March quarter so you can get back to the growth trajectory and now you are busted in the US. How should we be thinking about this company’s growth prospects over time, when you can’t seem to put together more than two or three quarters without missing, having a serious debacle in your operations, which looks like from everything we can tell, was more company specific than end-market specific?

Yeah Alex, this is Gordon. Like I said in the last answer, we do accept that there were operational issues in the US, but we also did see some behavior of delays, just delays in terms of business that we have won, but that was not delivered. We are very focused on the US operations. It is our largest market. But I do want to comment that the other markets in terms of Europe and Asia did have very, very strong quarters.

So if I can follow up, the, certainly the guidance here is below anybody’s forecast for the March quarter. So we’re still, even with business being delayed out of the quarter, it would still look like you are well off the growth curve that anybody had anticipated coming into this earnings release. Either the Street is missing something or your execution has got some more serious problems to it. What is it specifically in the environment that’s causing a periodic miss, one geography at a time, the way you’ve seen over the last year? To be blunt about it, you still haven’t grandfathered the problem in Japan yet.

Well, again there is a couple of questions in there, Alex. In looking at Japan, we had, Japan used to be a very high percentage of our business, in the high teens and low 20s. As the carrier build-outs there have been lumpy, we saw that drop to a lower level, but that has grown over the last couple of quarters. Although we haven’t seen high level of growth there yet, we’ve put in place, I believe, the right infrastructure to head that direction. Specifically on Japan.

Thank you. Your next question comes from Subu Subrahmanyan with Sanders Morris. Please go ahead.

Thanks. If I could take another shot at, just what happened in the US, are you suggesting that some of the delays in deal closing that you saw were market phenomenons? And just, can you talk about overall activity, was it end of the quarter deals didn’t close, which did it affect your linearity?

Yes, Subu, this is Gordon. The decline came, as Bill mentioned, largely in the month of December. We did see business delay from both new and existing customers. So, I don’t believe this was a situation where we were looking for big budget flushes. We had a pipeline there and we had expectations for revenue coming in and this deferral came literally during the last several weeks of the quarter, and it did catch us by surprise.

Understood. Was it, part of it Avaya-related or was this just along Extreme sales?

It’s hard, it’s hard to break out whether it was specifically related to Avaya or to frankly a particular channel. But at these levels of revenue, we do have some very large customers, and particularly in the large enterprise space. When you look at a $1 million deal or a larger deal that moves across a quarter boundary that can have a very significant impact on our overall sales level, clearly. That said, we are proud of the fact that even given that drop and those deferrals, that we were able to maintain our profitability at a very high level, relatively high level.

Got it, thanks.

Thank you. Next question please.

Our next question comes from Samuel Wilson with JMP Securities. Please go ahead.

Good afternoon. A few small questions, but a number of them. First, what was linearity for the quarter if it’s normally 20, 30, 50, what was it this time around?

Well Sam, it was slightly better than that, but that was a result of coming in with the hole in the revenue in the last week or two of the quarter.

Got it, okay. And how about US Federal business in particular. Did you notice anything where was it, mainly, US enterprise was the problem?

Our Federal business experienced the same issues our enterprise business did in the US.

Got it. And then lastly, a few other questions. First, book-to-bill slightly above one, but you had deals push out at the end of the quarter. Does that mean the deals in fact have not been booked yet?

Yes, that’s what we mean by deal having them pushed out, it was not signed, not booked; it’s not in the backlog.

Got it. And lastly, why is accounts receivable up quarter-on-quarter if, at the end of the quarter, you had a revenue fall off? I mean, a lot of that should have been through the billing cycle and usually you would see DSOs go down in those cases.

Yes, it was the function of particular channels and mix we were doing our business in some of our larger reseller type more favorable terms than others.

Got it thank you.

Thank you, Sam.

Your next question comes from Christin Armacost, with SG Cowen. Please go ahead.

Thank you. Could you tell us how much, exactly Avaya was down sequentially in the quarter? And also, on some of the new products, can you give us a sense of their contribution and sort of the wireless LAN and the security areas?

Christin, we don’t break out Avaya sales directly quarter-to-quarter. But it was down a few million dollars enough to impact things. As it relates to new products, XOS-based products and new product revenues, they were up as a percentage of revenue; in some cases up in dollar terms sequentially. But in other cases down in dollar term sequentially primarily as a result of what was happening in the US.

Thank you. And then in your OpEx, you are making good progress and bringing the OpEx down to the 44 million to 46 million. How are you driving your OpEx down there in terms of either employee headcount or sales and marketing and R&D by the major expense category?

Yes. In some cases we are, we recently opened up our facility in Chennai and what that has allowed us to do is bring in-house functions, we were preciously doing outsourced. Actually in doing that, we’ve had a very positive effect on R&D, among other things. On the sales and marketing side, the revenues, excuse me, operating expenses are coming down with revenues. In some case little bit more focus on where we’re investing dollars particularly in the recent quarters as it relates to product intros and such. On the G&A side, having worked through some of the previous legal issues that’s helping us on those operating expenses there. We’ll continue to work this and I think the $44 to $46 million a quarter range is a range you can use for a few quarters yet.

Great, thank you Bill.

Thank you.

Thank you. Next question comes from Tim Long, with Banc of America Securities. Please go ahead.

Thank you. A few questions here. Back to the margins side having the similar type of operating margins on a lower revenue base. I’m just curious, since the miss was very late in the quarter, surprised you were able to swing your OpEx that much of your manufacturing absorption. Should we assume that had that revenue not missed or pushed out that you were managing the business for 10% plus operating margins? Or is there something else I’m missing there? Second question, when you talk about the US market being up sequentially, I think Gordon also mentioned some management changes that are occurring. Could you talk about any potential impact that that, those management changes may have on your near-term business? That seems like that could be a risk there. And then third, if you could just talk about the new sales hired for Federal or what’s your sense of timing for a little more traction in that business because there needs to be more certifications to get into some of the larger programs?

Okay, so a lot of questions there. Let me try and handle the operating margin question. We previously laid out a goal of getting our operating margins to a 9% to 14% range sometime during this fiscal year. So you can assume that we are trying to run the business to get into that range and we’re doing so for the current quarter. And yes, you might infer that had we, run at higher revenue rates, certainly operating profits would have been higher. Some of the ability to turn expenses on short notice included things like holiday shutdowns, et cetera, which could be implemented. As far as the Federal, new changes in Federal, Gordon I will turn that one to you…

Yes, Tim, let me address some of the organizational changes. I want to be clear that these changes have already happened in terms of the organization. We are ramping the headcount in the US, and given that percentage decline, I do believe that there is upside ahead of us in that market. In the Federal, we did bring on a new leader of that business during the December quarter. And as you suggest, there is a long tail some of those deals. But we do have installed customer base there, and we do expect to see revenue from that customer base as well an aggressive workforce toward winning some new business there. You asked about certifications and the answer, the short answer is, yes, we do have the certifications. There is a long list, and we’d certainly be happy through that with you offline.

Okay, thanks. Next question please.

Next question comes from Jiong Shao with Lehman Brothers. Please go ahead.

Thanks. I’ll stick with one follow-up and one question. The follow-up is for the deals pushed out to March, I was wondering could you talk about how many of them are, if any of them or half of them have been closed, have been booked? And I’ll ask a question later.

Yes, this is Gordon. I think that, given where we are in the quarter very early on, I don’t have a good answer for that yet.

Okay, fair enough. Could I have, I’ll leave a longer-term question for you. If you look at the space, enterprise LAN switching space, it seems like over the last seven or eight years, the number of players in the space has been increasing, but lot of the products increase in a somewhat commoditized. The long talk about the industry consolidation hasn’t happened, so I was wondering, could you talk about what are your view on this space? And if the industry starts to consolidate, where Extreme stands?

So, there is a, again there is a couple of questions in that. Let me address, Jiong, the question of commoditization. And I think one thing that is difficult today is that a lot of the market research firms have bunched a lot of products together. For example, taking Layer 3 products and Layer 2 products; the lines blurred and so they’ve grouped all those products together. If I look at some segments of that market, and let’s say for example, this small and medium business segment I would tend to agree that that is commoditizing. And the functionality is pretty high in a lot of companies’ product and certainly sufficient for a small business to build a network. And we all see that in the networks we built at home in terms of the cost of products. I think when you come to the large enterprise market, and more particularly, to the Metro Ethernet market which are the two markets in which we participate; that it’s far from commoditization. The skills, both in terms of the support skills or systems engineering skills, and the products and technology that’s necessary to build a 10,000 or 20,000, or 30,000 node network is significant. Although I would agree with you that there are more players in the overall switching business than there were eight years ago, there aren’t more players in the large enterprise space, in that a lot of the new entrants have approached it from the very low cost segment and addressing the small and medium business. So, I hope that answers your question.

Okay.

Thank you. Next question, please?

Our next question comes from Long Jiang, with UBS. Please go ahead.

Yes, hi, good afternoon. A couple questions very nice sequential growth in Asia-Pac. Just wondering, was this concentrated, was this growth concentrated in one to two carriers, or it was more spread out? Also you mentioned that growth was driven by project-related upgrades. Can you tell me how long will such upgrade projects typically last, before the spending turn down?

Yeah, this is Gordon. The second question again, in terms of when you look at upgrades, it depends very much on the particular customer. So I hesitate to make any generalizations. We have seen in some parts of the world a network upgrade where we have won the next generation network. We’ve seen that upgrade being installed over the course of many quarters; six to eight quarters. There is other cases in some other regions where we see an upgrade go through pretty quickly and sometimes within a single quarter or bridged over two quarters. So, that’s something that’s very difficult to predict, again, as the carriers operate. That business does tend to be lumpy.

And what about…

And as far as where the revenue came from, it was spread across multiple carriers and in fact, multiple countries in Asia-Pac.

Okay.

Thank you.

Yes, thanks. My second question has to do with the product mix between modular and stackable.

Yes.

For several quarters, the mix, the percentage of modular switching continues to decline. You have said that you expect the mix from modular switching to eventually recover to above 50%.

Yes.

Now, is that, are you still expecting that to happen sometime during the year or you think it’s going to be pushed out to next year…

Yes.

And what would be the catalyst for your modular switching to go up?

Well the catalyst for it to become more a 50, 50 mix would be stronger sales in the US. It is just the nature of our business that outside the US we have a higher mix of stackables generally in the revenue stream, and inside the US it’s a slightly higher mix of modulars. So the fact that US revenues were unexpectedly low this quarter also affected the mix of stackable/modular. As the US recovers and becomes a more traditional part of our total revenue stream, I would expect stackable and modular to shift around.

Okay. One last quick question.

One more.

Okay. Are you going to pay off the $200 million convertible debt by year-end? And you are going to continue to carry out this share buyback program. What kind of net cash level are you comfortable with on the balance sheet?

Yes. I think that the right sort of net cash balance for a company like us to carry is something around 50% of revenues. At a balance plus or minus that number, I think we are at the right balance. It is certainly more than enough to run the business day-to-day; gives you a little flexibility to be opportunistic on things and gives customers comfort. Hence the thinking on the use of cash to both repurchase shares and pay back the note. With that, let me move on the next question.

Next question comes from John Mark Duncan with Pacific Growth Equities. Please go ahead.

Good afternoon. Can you talk a little bit more about the US? You’ve said that you’ve experienced some deal push outs and also some pipeline management issues. Can you explain if there’s, or talk about if there is any turnover that is effecting execution here?

As we said, there have been management changes that have been instituted so, certainly there is some turnover, yes.

Okay. But there has been some management changes instituted. I mean there, there seems to be at least, you do here regionally that, there is certainly some sales turnover in North America beyond, maybe some forced management changes.

Yes, again let me directly address your question and say that, yes, there has been turnover in the sales force and certainly that impacts results.

Okay, and then on to Japan. Obviously it looks like we did have a little sequential improvement here for the quarter. Can you talk about the expectations that you have as we go into 2006 year. I think you have laid the groundwork in terms of distribution and may be trying to get into the enterprise. But you see some opportunity for carrier upgrades in that region? Or just what are you thinking along the lines of Japan?

Okay. I want to be clear and say, you asked about the question about the calendar year and so my comments are about the calendar year and not any particular quarter. We do see significant opportunities in Japan during calendar year 2006. We have a large install base of Metro Ethernet within the Japan market across many, many customers. Some of those networks are again a little long in the tooth; have been installed for three to five years, and we do expect there to be upgrades there. Given our strong position in that market and in our install base, we expect that that will contribute significantly to Japan in this calendar year.

Next question comes from Tal Liani with Merrill Lynch. Please go ahead.

Hi guys. I want to focus not on the results, but rather on the bigger picture and I want to go back to the question that Alex asked at the beginning of the conference call. It seems like you’re trying harder and harder and harder in the same area of switching, while Cisco has been gaining share if you look at the market share data over the last two years. And you would argue that you have a better solution, scalable, carrier-class, whatever. What are your steps, or what are the expected steps that you’re taking in order to reverse the trend, and I am referring here more to your product strategy, long-term focus? Thank you.

Look Tal, first of all in comparison to Cisco, we participate really, in two segments, that is, call one segment be the mid-size and large enterprise segment and the Metro Ethernet space. Cisco’s market approach is considerably broader than that in that they have been seeing strong growth in their small and medium business segment, which is not an area that we participate in at all. It’s hard, I mean I look at that on a customer-by-customer basis, and we beat Cisco a lot. It’s sometimes tough to capture an account from them, but we certainly have done it during not only this past quarter, but in previous quarters. I don’t know of any good tracking for the, that breaks out specifically by market segment in terms of looking at large enterprise. So it’s really hard to determine what the share changes there are. I would say though that, again, in looking at this marketplace, that there is a part of the market that not only is open to buying a non-Cisco solution that is the part of the market that doesn’t want to buy from the market share leader. But, I would say that there is a part that won’t buy from them for whatever reason. Whether it’s because of the size of the company and difficult to get a response or because they want a leading edge solution that’s technology based. So, I think you get to a point where, frankly, for them it becomes very difficult to grow market share in a particular segment. I think you can see that in terms of looking at their overall corporate strategy and diversifying into new market areas. I think they are having tougher time gaining share, again, in the particular segments that we play in.

So, if I use my follow-up question also on the same issue, so, Gordon, wouldn’t you think that you would need maybe to expand into other areas? You see your competitor foundry going into routers, going into Layer 4-7. You, yourself said that Cisco is successful because they are going into SMB, and the, subsequent question would be, so why wouldn’t you try and go into other areas? So the question is bigger, so what is the future direction of the company? Are you just going to try and do more of the same or are you are going to try and diversify into other sections, other areas?

I think the answer is pretty clear. We’ve made investment in the security space over the last, the investment has been over the last 18 months, but we are just starting to see the benefits from a revenue perspective. We made a significant investment there, not only in our core technology that is the ability to build security within the switch, but also in security appliances. You can expect to see more from us in that area both from a software perspective, from products, and from partnerships. We see the security space as an adjacent space. It’s also an opportunity to be best-of-breed and to have a market leading solution. I think we have a unique opportunity given our switch architecture to embed that in and to not have a perimeter security solution, but a core security solution. So that’s one area where we’ve made some visible steps. I think you will see some future steps from us in that area. So, I would say we are not just going to build Layer 3 switches, but we will build and emphasize areas that are a key part of the network infrastructure. Again, just one comment over the, whether it’s a switch or a router, the line between a Layer 3 switch and a router is, from a product perspective, is blurring. We tend, well, we do call our products switches largely because that’s what we’ve called them in the past, a Layer 3 switch by definition does routing. Many of our products are very effective routers and are used in the network as routers. It just happens that we classify them as Layer 3 switches. So I think when you look at that and you look at an enterprise router or an enterprise switch, they are really one and the same in today’s market.

Thank you. Next question comes from William Becklean with Oppenheimer & Company.

Thanks. This is actually Priya Parasuraman for Bill. Just going back quickly on that US businesses, the order push outs, were they related to XOS-based products or were they more legacy products?

This is Gordon. Not sure the answer to that. It would vary on a deal-by-deal basis, but I suspect that there was a lot of XOS product in there, given those are our newer products and are focused on our largest customers.

And the Avaya relationship, where do you see that going by the end of the year?

Well, our partnership with Avaya is a strong one and we see increased success coming from that.

You wouldn’t be willing to put a number on it, in terms of percentage of revenue?

No, we haven’t, we have not forecast that.

But we would expect that on a sequential basis from here, Avaya is a growth through the year and than we’ll get to next December and we’ll see where the sequential pattern is there. I’d be disappointed if we didn’t see a sequential improvement in Avaya revenues here in March.

Thank you.

Thank you. Next question, please?

Next question comes from Wojtek Uzdelewicz with Bear Stearns. Please go ahead.

Yes, hi. It’s actually Matt Schnaub for Wojtek. I have a question about your APAC revenues; can you clarify for me? This is, I think largest revenues in a few years, and so what are you seeing? Are you seeing a few carriers buy a lot of equipment and now they are going to deploy it over the next 2, 3 quarters? Or are you seeing these carriers just buying what they need quarter-by-quarter and you expect this to continue for 2 or 3 quarters at this rate?

Hi, Matt, this Gordon. So, our business in Asia-Pac is a mix of enterprise and carrier, and we won some, just some terrific enterprise deals in that part of the world. So, I don’t want to put too much emphasis on the carrier business. That said, the carrier business in Asia-Pac has been a great one for us. We have a number of leading customers. I mentioned on the formal part of the call Korea Telecom has been a customer of ours for quite a few years. In terms of buying practices, it’s of course hard for us to tell, but in general, carriers buy and then deploy that equipment fairly quickly, they don’t let it sit around. The pattern of buying and network expansion is really based upon their demand level and the take-up level they have of new services. So in some cases if it’s a brand new service, for instance, they will buy a modest amount and then over the next couple of quarters as service take-up comes, they will continue to buy. If it’s an existing service, that may be just a standard order from them every quarter or more or less frequently, again, depending upon the customer, very difficult to predict. That’s why we’re always are careful to say that is a lumpy business. Again, Asia-Pac was very strong as you suggest, the highest level in quite a few years, and good balance in that market and very good execution by our team.

Are you willing to clarify there how much of the growth was driven by service provider versus enterprise that might be a little more sustainable?

I am not willing to break it down by markets. You’ve seen the percentage of the carrier business. If you look at our overall numbers, being at the, in the 20 to 25% range; been pretty consistent. Bill, this quarter it was?

It was a little bit above that.

Towards the high end. I think you could surmise by the US being down and the US, as we’ve said being a largely large enterprise that, there was pretty strong growth in the Metro Ethernet segment. I think there is a lot of underlying growth just overall in Metro Ethernet that we hope to capitalize on.

Understood. And quickly on the XOS transition, you mentioned it was greater than 25% of your revenues this quarter. Last quarter I think you said it was greater than 20. And actually it seems a little bit like a slow transition. Do you have thoughts on that and how you would expect it to continue to play out?

The mix between carrier and enterprise?

No, XOS products?

I am sorry.

As a percentage of total product bookings?

We do expect that XOS will continue to increase as a percentage. All of our new chassis systems are based on XOS. We do have some older systems that continue to be used and deployed by customers and continue to be competitive in the markets that are ExtremeWare-based. We don’t have any plans to convert those systems to XOS. So, it isn’t an instantaneous change over, but you will see XOS revenue grew as a percentage. Also, many of our new Summit switches are stackable switches; are XOS based, where today there is only one segment of our product line that’s XOS based. So you will see that pickup here during the calendar year.

Okay. Thank you Matt. I understand there is one last question on the line.

Thank you. Our last question will come from Cobb Sadler with Deutsche Bank. Please go ahead.

Hi, thanks a lot. Quick question, could you break out 10 gig revenue as a percentage of total?

We don’t break that out as a percentage of total, Cobb.

Okay and just, the weakness in North America, do you think, are you seeing any sort of product transition from the XOS software versus ExtremeWare? Is there any sort of hesitation on the part of your customers to wait?

There’s, again, this varies customer-by-customer. We have a lot of customers that have a mix of ExtremeWare and XOS. To be very clear, there is no inter-operability issues, many people have networks that are mixed XOS and ExtremeWare. In fact, certainly any customer that’s been a customer for several years has a mix on their network.

Okay great. And just back to the 10 gig, I mean, is it more than 5% now, or can you not even not do you not want to tell us that?

That is more than 5%

Okay, thanks a lot

Thank you.

All right, thank you everyone.

Thank you ladies and gentlemen. That does conclude today’s teleconference. If you would like to listen to replay of today’s conference, you may dial in at 303-590-3000 or 1-800-405-2236 followed by the access code of 11050009 and then followed by the # sign. Once again those numbers are 303-590-3000 or 1800-405-2236 followed by the access code of 110500099 and followed by # sign. Once again, thank you for your participation in today’s conference and at this time you may disconnect.