Good afternoon ladies and gentlemen and welcome to the Extreme Networks 2009 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question-and-answer session. On the call today, the Extreme Networks are Mark Canepa, President and Chief Executive Officer and Karen Rogge, Senior Vice President and Chief Financial Officer. As a reminder, this conference is being recorded today, April 23, 2009. This afternoon, Extreme Networks issued a press release announcing the company's financial results for the third fiscal quarter of 2009. A copy of this release is available at the company's website at www.extremenetworks.com. This call is being broadcasted live over the Internet and will be posted on the Extreme Networks' website for a replay shortly after the conclusion of this call. The company has asked me to remind you that this conference call contains forward-looking statements that involve risks and uncertainties, including statements regarding the company's expectations, regarding its financial performances, strategy, growth of customer bandwidth, demands, development of new products, customer acceptance of the company products, customer spending and economic conditions in the company market. Actual results could differ materially from these projects in the forward-looking statements. As a result of this certain risk factors including, but are not limited to fluctuations in demand for the company's products and services. A highly competitive business environment for network switching equipment; its 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 a dependency on third parties for certain components and for the manufacturing of the company's products. The company undertakes no obligation to update the information on this conference call. More information about potential factors that could affect our business and financial results is included in the company's filings with the Securities and Exchange Commission, including, without limitation, under the captions: Management's Discussion and Analysis of Financial Condition and Results of Operations, and Risk Factors, which are on file with Securities and Exchange Commission. Throughout the conference call, the company will reference both the GAAP and non-GAAP financial results. The company has provided a reconciliation table for the GAAP to non-GAAP and information on the tables that accompanying the press release on the website. Please go to the Investor Relations section of the company's website at www.extremenetworks.com. In addition, all announced results are preliminary and may be subject to change when the review of the fiscal quarter is concluded and our Form 10-Q is filed. I'd no like to turn the conference over to Mr. Mark Canepa, President and CEO of Extreme Networks. Please go ahead sir.

Thank you, Patty and thank you all for joining us today. Revenue for the quarter was $77.2 million, down 6% from the quarter last year. Pro-forma EPS was $0.01 per share. I am pleased with the cost cutting effort we put in place and our ability to retain pro-forma profitability in a very tough economic market. While book-to-bill was below one and while we were cash flow negative for the quarter primarily due to timing of payables and receivables, we were able to maintain constant inventory levels despite a drop in demand for the quarter. Our business this past quarter was slow to start and was more back-end loaded than normal, with linearity weighted even more than usual towards the last few weeks of the quarter. Karen will go into further detail on the financials in a few moments. The slowdown that started in the U.S. last summer has spread to other economies across the globe and we would expect that could be at least a few quarters until capital investments and operating expenditures begin to recover. To add more color to do what we have seen in our geographies compared to Q3 last year, the enterprise business saw a significant drop in North America consistent with the depth of the U.S. enterprise slowdown. The enterprise business was roughly flat in EMEA and was up in Asia Pacific. The Service Provider business was very strong in North America and up significantly from last year, reflective of our focus on the carrier market. The developing business with any key strategic partners more than offset the macroeconomic slowdown. In EMEA and APAC, we saw a slowdown in the SP business consistent with the trend of lower carrier spending. While we wait for signs of a recovery, we continue to make progress. For…

Thanks Mark. Revenues declined this quarter as a result of the global macroeconomic downturn. In light of these conditions, we took expenses out of the business, increased gross margins and we're profitable on a pro-forma basis. Revenue for the quarter was $77.2 million, which is down 6% from a year ago quarter. Product revenue was $62 million, down 15% from Q2 and 8% from a year ago quarter. While the steepest decline was in the Americas, the economic downturn appears to have spread across the globe to each of the geographies we serve. Our service business continues to show further signs of improvement and it was up both year-over-year and on a sequential basis as our customers looked to ask to help them project the value for their network investment. For the quarter, services revenue was $15.2 million, up 4% from a year ago and slightly up from Q2. The ratio of enterprise to service provider sales for the quarter was 69% and 31% respectively and inline with historical averages. Sales of new products introduced into the market in the past 24 months, was 35% down slightly from the prior quarter, primarily due to the maturing of our Summit 450 and 250 product families. As we ramp our newer products, such as the BlackDiamond 20K and Summit 650, we believe this ratio will increase over the coming year. The ratio of stackable and modular product sales was 60% and 40% respectively, which is in line with our historical pattern. Looking at revenues by geography for the quarter, revenues in North America was $26.9 million, which declined 13% from a year ago and 19% from Q2 as the extent of the recession in the U.S. appeared to deepen. At the start of Q3, customers were reluctant to commit to purchase decisions.…

Thank you, Karen. And this concludes our prepared remarks, and we're now ready to take your questions. Patty?

Thank you, sir. (Operator Instructions). And our first question comes from the line of Rohit Chopra from Wedbush Morgan Securities. Please go ahead.

Hi Karen, hi Mark. This is Sanjit (ph) for Rohit Chopra.

Hi, how are you doing?

Very good thanks. Let's talk first about Europe and what's going on there. I think Eastern Telco was an area of strength. And can just may be maybe talk about what the dynamics for Eastern European service providers?

Sure. Well Eastern Europe is not at monolithic block and certainly, as you know with the capital flow is flowing from Eastern Europe to west -- back into Western Europe. There is certainly some pressure on the Eastern European companies in general to raise sufficient capital. However, our current incumbence are continuing with their network deployments. I spoke about of T-Com Croatia for example, they were one of the recipients of the BlackDiamond 20K product and so we are actually very excited about augmenting their network deployment. I personally went and visited exaggerate (ph) Croatia Telecom just last month and had a very positive meeting with them. So, a number of them are continuing our business, for example in Russia, there's a lot of deployments even that are taking place there. So, in our base, obviously people are careful, but we see continuation of the business. That said, we're being cautious and we know that even our customers aren't totally immune from the overall environment. And so, we continue to watch this thing carefully and see how the situation in Eastern Europe develops.

Got it. A couple of more questions. I think in your prepared remarks, you talked about may be some pricing pressure or intensifying competitive environment.

Yeah.

Well -- is that coming from larger players or there is more with smaller guys?

Well, if you look at any particular deal, most of the time there is not a smaller player that's competing against us. The competition is really would be with Cisco. And so it's a function of the dynamics of -- is there an account that there are big deal for Cisco to want it to save it or not and things of that nature. But in general, we see the customers themselves are -- their budgets are being cut, and they're much more careful and so in general, you have to look at the overall environment that's taking place out there and how we need to respond to it. Certainly, we're out there with competitive products and we want to be successful with our customers and so where necessary, we get aggressive to win the business.

Got it. And then Karen may be you could walk us through the improvement in gross margins sequentially, that was nice to see. Can you just may be walk us through may be the sustainability of that on the services side? And then may be talk about the uptick on the product gross margins sequentially as well?

Okay. We'll start first about the services gross margin. We just see improved services gross margins this quarter driven by two factors, once more longer term and the other shorter term. As I mentioned, we're seeing the benefits long term for the reduced repair cost due to our improvements in product quality. And then shorter term, we are seeing an improvement due to our ability to utilize previously expensed inventory. And based on business circumstances in prior periods, we expensed the portion of our inventory that we can now utilize. We have remaining 1.6 billion of previously expensed inventories that we intend to utilize over the next few quarters based on customer needs. So we can expect to see that over the next several quarters as well. In terms of the product gross margin, we have good product gross margin on a sequential basis especially in light of the lower revenue sequentially. And on the products standing in house (ph) the 1.2% point improvement in gross margins was basically driven by a lower distribution cost in the quarter and our strong expense controls that were somewhat little bit offset by the way we're going. Does that answer your questions?

Absolutely Karen, thank you. And my last question, I know you guys were not going to talk about guidance. But you did say the quarter was heavily back-end loaded. Now given the first couple of weeks of April, is there -- do you see things may be not getting worse or are things kind of leveled off and may be you can talk about the first couple of...

It's way too early to tell, right? I mean we -- it's too early to tell.

Fair enough.

Thank you. (Operator Instructions).

Okay. If there are no further questions, thank you Patty...

Thank you, sir.

Thank you Patty for driving the conversation today. Thank you all for joining us this afternoon. I want to thank all of our employees for their ongoing dedication and effort during these challenging times. We look forward to speaking with all of you again at our next conference call. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.