Good morning, ladies and gentlemen, and welcome to Gartner, Inc. earnings conference call for the fourth quarter of 2007. A replay of this call will be available through March 7, 2008. The replay can be accessed by dialing (888) 286-8010 for domestic calls and (617) 801-6888 for international calls and by entering the passcode 52397907. This call is being simultaneously webcast and will be archived on Gartner’s website at www.gartner.com for approximately 90 days. I will now turn the conference over to Mr. Hank Diamond, Group Vice President of Investor Relations and Corporate Finance for opening remarks and introductions. Please go ahead, Sir.

Good morning everyone and thank you all for joining us. On the call with me today are our CEO, Gene Hall and our CFO, Chris Lafond. Before we discuss our results for the quarter, I would like to remind everyone of four things. First, the rebroadcast, reproduction and retransmission of this conference call or webcast, without the expressed written consent of Gartner are strictly prohibited. Second, if you did not receive a copy of our press release, it is available on our website at www.gartner.com; we are on the FirstCall system. Third, the company will be making statements about its future results and other forward-looking statements during this call. Statements about future results made during the call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations in the current economic environment. Forward-looking statements and projections are inherently subject to significant economic, competitive and other uncertainties and contingencies which are beyond the control of management. The company cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements and projections are specified in the company’s filings with the SEC, including in its annual report on Form 10-K for fiscal year 2006. Finally, during the call the company will be using certain non-GAAP financial measures as defined under SEC rules. We are required. We have provided a reconciliation of those measures to the most direct comparable GAAP measures in the tables and the press release. Before I turn the call over to our CEO, let me briefly review the major points from today’s press release. Starting…

Thanks Gene and good morning everyone. 2007 was another strong year for Gartner. We continued to successfully execute on our long-term strategy with the objectives of accelerating growth and revenue, profitability, and cash flow. We delivered on the financial objectives that we established early in the year, and we are now well positioned to continue to generate double-digit revenue and earnings growth. Let me start today by reviewing our fourth quarter and full year 2007 results before turning to outlook for 2008. I’ll begin with our research segment. Contract value achieved a record $753 million at December 31st. This was an 18% year-over-year increase, 14% FX neutral and our fourth consecutive quarter of high teens growth, as reported. In each of the four quarters of 2007, contract value increased at least 18% year-over-year. And for each of the past three years, we have accelerated the organic growth and contract value excluding the impact of foreign exchange, in the Meta acquisition. As many of you know, contract value is a key leading indicator of our research business, and this performance demonstrates a strong demand for our products despite the uncertain economic environment. I am particularly happy to report that this contract value growth is extremely balanced. Each of our major geographies delivered double-digit increases. All of our client industry segments, including the financial services sector, achieved strong contract value increases both year over year and versus Q3. Similarly, we are experiencing solid growth across all sizes of clients, highlighting the demand and market opportunity for our research products from the highest and largest companies to small and mid-size enterprises. We have experienced no weakness in the demand for our research products. New business continues to be an important contributor to contract value growth, approximately two-thirds of the year-over-year increase in contract…

(Operator instructions). Your first question comes from the line of Peter Appert with Goldman Sachs. Please proceed.

Thanks and good morning. These are very impressive results. Congratulations guys. So, I just have a couple of questions. One, in the context the more challenging macro backdrop, I am wondering if you are rethinking at all your pricing strategies and specifically, whether you might step back from the fairly aggressive efforts you have had in the last couple of year’s increased prices.

Hey Peter, it’s Gene. In terms of our pricing, let me just tell you two things. First, we have not seen any push back on pricing from client’s prospects or our sales people. Having said that, let me just clarify what our pricing strategy is, we have some legacy products out there that people bought before the new set of products we started introducing three years ago, and those products, we have been on a strategy, which I intend to stay on, of increasing the prices modestly, think 5% to 7% a year, and our real price increase strategy is we have new products that are very attractive that are typically priced something like twice as high as the discounted old legacy products. And so, our price strategy is two-fold. If they stick to the legacy products, think kind of 5% to 7% a year; if they upgraded to new products, the clients make a decision to spend, call it on average, twice as much, or that kind of depends on where they start, but I’m going to call it on the average, twice as much, and what we found is, when clients are making that decision, they are just flying for making those price increases and they are also very happy, think of sort of the 5% to 7% on our legacy products as being very reasonable price increases, consistent with what they are doing in the general economy. So the answer is, we are going to keep them on the same pricing strategy that I just described, and we have seen it working extremely successfully. It is of all of the concerns that come out on things; pricing is not one that we see hardly ever.

Okay. That is very helpful. Thank you. And how about changes, to follow up on that, what are you doing for the clients in year 2 or year 3 of the migration to the newer product offerings? Are there price increases built in there?

Generally, no… well, first for the new products we also increase those every year as well. So like I said legacy products whether the clients are paying an increased 5% to 7% a year. The new products we priced, as I have said the entry price is kind of twice as high but on top of that, then each year those go up and we do not discount those. Everyone is on the same pricing plan that has those new products, unlike our legacy products.

Right.

And so those prices do go up. Now there is one exception which is for clients that are particularly low legacy pricing, we have a pricing plan where our client can go from the legacy to the new over a two-year period. They do have the difference in the first year and in the folder which is the second year with a two-year contract with us. But actually, what we are finding is that vast majority of clients actually go straight to the high price as opposed to the two-step plan. But it they are on the high price, there is still going to be increasing each year, call it 5% to 7%.

Got it. I guess I could figure this out from some of the numbers you have given us but you can tell me roughly what percentage of the contract value then is still in and what you would consider to be legacy products?

Peter, if you just go through some of the numbers that we’ve shared and let me just reiterate them for people. So total contract value ended at $753. Our entire research portfolio, which includes both the legacy products and new products is $563 million roughly, executive programs being about $189 million. As we talked about during my section, about $154-155 million is the new Gartner for IT leaders product, about $55-56 million being the new Gartner for business leaders product. So the remainder would be what is left in the legacy products, and that would be Core Research, Dataquest; it would also include Industry and Invest so there are a number of things in there. But that’s roughly how it breaks out.

Okay, great. Very helpful, thanks. And then, on the dialing back of the sales force expansion, can you give a little more of your thought process there, in the context of how successful it’s been in the last couple of years. I guess I’m a little bit surprised that you stepped back. And then I’m also wondering, how does that flow through then, as we think about this inability of growth in 2009 and beyond because presumably you’re going to be adding less new contract value next year?

So, great question. When you cut to the chase, we don’t think of it as a slower growth rate, and here’s why. First, our original plan for 2007 was to harp out 120 salespeople. As I mentioned, we actually harped 143. So we added something about 23 more than we had originally planned. We are still planning to hire another 80 this year, so that when you think about it actually, it’s the 80 plus the 23 so call it 103 that we will add this year. We just happened to get 23 of them on board in December, call it, as opposed to in the first quarter. And so, it’s not quite as big a change as it looks. Secondly, we think that as we look at it, there’s a big opportunity to improve productivity as well. And so what we’re doing really is saying let’s, given the economic outlook, let’s focus a little bit on adding product, on improving productivity, during the first half of the year; we’ll still be hiring modestly but will focus more on productivity. And in the second half, as we see what happens with the economy and our productivity, decide what to do. And so, if we see that productivity is really good, demand is holding up, we could easily go beyond the 80 we talked about earlier, as we did last year when we saw things were going well. But just because we think both productivity improvement and we started the year with 23 more people than we normally would have, is why we kind of cut back a little bit. You shouldn’t take it as a lack of either optimism on demand or anything. It was that from time to time it’s good to focus on productivity as well, and it’s just a small change anyways. Instead of 120, it’s 103 for the full year if you look at it the way I described it.

Sure. Makes sense. And then, would the 80 then be backloaded in the year or be spread through the year?

So, we have 30 on board already and the other 50 are in the second half, spread throughout the second half pretty evenly. As I said, Peter, if we saw conditions either better or worse, we’ll ramp it up or down, but that’s kind of our starting point.

Okay. And then, one last thing then I’ll let someone else speak. Chris, obviously you’ve been very aggressive on the stock buy-back, which makes a ton of sense, I think in the context of the share price performance, so how comfortable are you adding incrementally to leverage beyond what you’ve done already to further accelerate the stock buy-back, and how do you think about leverage ratios in terms of your comfort level?

Great question. A couple of things, Peter. First, it’s important to note that if you look back over the last few years, with all the shares we bought back, our overall debt to EBITDA ratios have not dramatically changed. So, as we have gone through this exercise, yes, our debt has gone up a bit. We have funded a lot of this through ongoing cash flow, which we would expect to be part of what we would do going forward. So, even at the current levels of debt, net debt today is about $284 million. We are very comfortable at these levels, in fact, very comfortable increasing from here. So we have increased slightly; I’d be happy to increase more. Certainly, as you look at debt to EBITDA levels below three times debt to EBITDA, we still feel very comfortable and we are well below that. Just to be clear, it’s $294 million of debt, $110 of cash to get to the net number I gave you of $284 of debt. Just to be clear on that. But again, we are more than happy to at these levels take on some additional debt to continue to be aggressive because again, we believe that at the current levels this is a very creative and a very good return of capital for shareholders.

Excellent. Great. Thanks, guys.

Your next question comes from the line of Fred Searby of JP Morgan. Please proceed.

Yeah, thank you. Couple of questions. One is on the consulting business. It’s been very lumpy, but you had a great fourth quarter. But in the guidance, you were sort of saying that’s not going to carry through and I’m thinking about your consulting business. Can you help us think about how economically sensitive it is? There seems to be a component that would be countercyclical. You’ve named a new head of the business but you see it below your target growth rate and you’re seeing 3% to 6%. It looks like maybe deceleration, so is that economic sensitivity? I wonder first if you could help us with that. And then secondly, are you seeing any geographic differentiation in demand and growth, specifically international markets that haven’t been quite as impacted obviously by the credit crunch in Asia and some of the other markets where you could see maybe stronger growth than in the US or is it pretty much still uniform? Thank you.

Those are very great questions. Let me start with the second one first, which is: In terms of demand for all of our products, and there’s not research or consulting organs, all of them. We have seen strong demand across all geographies and across all industries. So, and to your point, demand has been either a little bit stronger in Asia but this year demand has been strong everywhere. So if you looked at our actual demand, and you can see it in both our research contract value growth and the acceleration in backlog in consulting. If anything, in fourth quarter, and we’re seeing that as we speak today, demand has been higher, not lower, and again it’s uniform across the board, all industries, all geographies. So we don’t see any indication in our demand or in our pipeline that we are seeing any impact of the economic uncertainty. In terms of consulting, there are a couple of things going on there. First, as I mentioned, because the economics of research are so attractive, we really could have focused on growing research. Which means that on balance shift some additional resources there, additional management attention and so forth. Which means consulting events will get a little bit less. So that’s one piece of what’s wrong with consulting. The second piece is that our kind of philosophy on thinking about projections is let’s use past performance as the best indicator. Even though we may be doing things and we are doing things we think could accelerate that performance, ensures projections is what we want to use, is what we’ve actually seen, not what might happen. And so if you look at our guidance for consulting next year, it’s really based on that philosophy. There’s no concern on economic impact. Again last year we had the best growth in backlog in consulting as you can see our numbers but we’ve seen I think it’s the fact that they’re in Gartner. And so to your point, it may even be a little counter cyclical given the kinds of things that we do for clients, which is two of the primary businesses are really focused on cost reduction: that’s our benchmarking business, contract optimization services. The third business core has a big component which is also focused on cost reduction. Of course you would not count on guidance on this issue.

Yeah, Fred it’s Chris. Just a couple of things to help make sure people understand the Q4 significant growth we had. And if you recall in Q4 of 2006 we had a particularly weak quarter because our contract optimization business didn’t perform particularly well. We had made some changes to plans that didn’t work out the way we had hoped. We made changes to those, and we had a particularly strong Q4 in contract optimization. So when you kind of normalize for that, that had a pretty significant impact on the reason we were kind of 20% up year over year. So if you normalize for that and then you look forward, it doesn’t look like we’re going from a 20% growth rate to a lower percentage that we have in our guidance of that business of 3% to 6%. So I would not necessarily look at it as a deceleration. You should also note that fourth quarter also always tends to be a relatively strong quarter for us because of some of the seasonality of that contract optimization services and how that business works. So, I just wanted to provide a little clarity on that.

One other thing I’d add, Fred, is that as you mentioned we had a leadership change to consulting, but there really isn’t any parameters. Warren, he’s been with us for 11 years, and has had a series of jobs within consulting, has been very successful; in fact, he led our core consulting business worldwide, which has performed very well, probably the best of the three consulting segments. So he has a great track record and I think it really positions us well in terms of leadership.

Okay, great. Thanks guys.

Your next question comes from the line of Laura Letterman with William Blair. Please proceed.

You had a great quarter guys. Can you tell us a little bit about acquisitions going forward as the environment this week or this year prices will go down or do you remain looking out there for different types of properties and if so, what type of things would you look at?

Hi, Laura. Gene. Great question. We have a group that is in charge of identifying, evaluating, and negotiating acquisitions and we try to make sure that we have the capacity to do it as well. We see that as a core part of our strategy. We are always looking and evaluating the companies and if we see opportunities, we will certainly go after them. In fact, at any given point in time, we have a number of targets that we’re looking at.

Just in case, but when you talk to your CIO’s and you probably have more access to them than anybody else, what are they saying about that budget? Should we expect them to go down and I guess part two of the question is if they do expect their budgets to go down, what have they said about your services in terms of how they fit within that concerning budget and burden and you hit it a little bit that they said that they would remain strong, but can you talk a little bit about details about what’s going to happen in budgets and how that impacts you? Thank you.

Sure. So it really varies by geography at that. So if you talk in Asia Pacific, budgets are going up and people are planning to spend more and even though there are alert of obviously the economic issues in the US, there’s no thought of there might be a budget cut or anything like that when we talk to Asian clients. When we talk to European clients, there is actually a very similar story that the general thought is that budgets are going to go up and it’s kind of business as usual. In the US, there’s a nix where people are concerned and I think it’s more that budgets haven’t been cut but there are people in certain industries, you can guess which ones, that have a concern that their budgets could decline at that. Now, in fact it goes by geography but overall is quite positive. And then secondly, with regard to our services, even though our budgets are likely to decline, clients are very enthusiastic about our services. And I’ll give you an example. If you have a large financial institution that’s spending a billion dollars on buying equipment, they’re making a draconian budget cut that says instead of a billion you have to spend $800 million? Which is a big reduction if you’re selling stuff to that company. On the other hand, they’re still buying $800 million, and when you look at our services, we’re now, my boss, the CIO as well as the CEO expect that he still delivers stuff at 20% less. I have to be more effective and if I pay Gartner $70,000 to help me make that $800 million more effective, that’s an incredible value. And so, that’s the value we provide and that’s how CIO’s and others in IT think about us. It is such a small expense and it helps them do what they need to do even in an uncertain economic environment.

Final question then I’ll pass it on. Looking at the exhibitor piece of the events business that has been very, very profitable and honestly, there were some issues there that you made some changes. Can you talk about the progress there and whether if you look at the high-tax bureau coming up or the one in the fall whether the business is starting to pick up in terms of those trade show booths?

. :

Once again, congratulations on a good quarter. Thank you.

Thank you!

Your next question comes from the line of Bill Sutherland with Boenning and Scattergood. Please proceed.

Hi, this is actually Bill Vittorio for Bill Sutherland. Just have one quick question. What was the ending diluted share count as of December 31?

Alright, Bill. Just give me one second. The ending of fully diluted share count on December 31 was 1059.15 for the quarter. In fact, that’s fully diluted so our actual, if you look at shares outstanding, they actually end at just right around 100 or slightly below 100 given the aggressive share repurchases we had in the quarter. So, that number obviously is the average of the quarter. I just want to make sure to point out that it’s been coming down pretty significantly.

Great. Thank you.

Sure.

(Operator instructions). At this time, there are no further questions in cue. I will now the call back over to Gene Hall for final remarks.

Thank you for joining us today. We appreciate you hearing out our results there. We look forward to seeing you on March 6th at our investor day. Take care.

Thank you, ladies and gentleman for your participation in today’s conference. All parties may now disconnect. Enjoy your day.