Good day ladies and gentlemen and welcome to the third quarter 2009 NaviSite earnings conference call. (Operator Instructions) At this time, I would now like to turn the call over to your host for today’s conference, Mr. James Pluntze; please proceed sir.

Thank you, good afternoon and welcome to NaviSite’s third quarter fiscal year 2009 earnings conference call. Arthur Becker, NaviSite’s CEO is also with me today. We will be discussing our financial results and sharing key business highlights from our third quarter of fiscal year 2009 which ended April 30, 2009. We’ll also be providing an outlook for the fourth quarter of fiscal year 2009. Before we get started please be aware that the information we’re about to discuss includes forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties. The company’s actual results could differ materially from those discussed in this call. Factors that could contribute to such differences include but are not limited to those items noted in the company’s SEC filings. The forward-looking information that is provided by the company in this call represents the company’s outlook as of today and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and other developments may cause the company’s outlook to change from that which is discussed today. We will also discuss NaviSite’s EBITDA performance for the third quarter of fiscal year 2009. Please note that EBITDA is not a recognized measure for financial statement presentation under United States Generally Accepted Accounting Principles, US GAAP. \ The company believes that the non-GAAP measure of EBITDA provides investors with a useful supplemental measure of the company’s actual and expected operating and financial performance by excluding the impact of interest, taxes, depreciation, and amortization. The company also excludes impairment costs, stock-based compensation, severance, costs related to our discontinued operations and other non-operational charges as such items are considered to be non-operational in nature. EBITDA does not have a standard definition and therefore may not be comparable to similar measures presented by other reporting companies. Management uses EBITDA to assist in evaluating the company’s actual and expected operating and financial performance. These non-GAAP results should not be evaluated in isolation of or as a substitute for the company’s financial results prepared in accordance with US GAAP. A table reconciling the company’s net loss as reported to EBITDA is included in the condensed consolidated financial statements in NaviSite’s third quarter fiscal year 2009 earnings press release. Now I’d like to turn the call over to Arthur Becker, NaviSite’s Chief Executive Officer.

Thank you James and good afternoon everyone. We are pleased to report our results for the third quarter of fiscal year 2009. I’d like to first start with the financial results, discuss the operating results for the quarter, and then share our outlook for the fourth quarter of fiscal year 2009. As reported in our press release an hour ago, revenue for the third quarter of fiscal year 2009 that ended on April 30, was $37.3 million which was at the upper end of our guidance range of $36.5 million to $37.5 million for the quarter. Revenue this quarter represents a slight decrease of 5% compared to $39.3 million recorded in the same quarter last year and is down 1% from the $37.7 million reported in the second quarter of this fiscal year. The decline in both the year over year and sequential revenue continues to be related to lower professional services revenue as we’ve discussed in our previous quarterly calls. Recurring revenue from our enterprise hosting and application management business was $35.4 million for the third quarter, within our guidance range of $35 million to $36 million and representing a year over year increase of 7% and flat sequentially. The flat sequential revenue is mainly the result of slower installations of some of our larger and more complex enterprise hosting bookings during the first half of this fiscal year. We expect these accounts to begin generating revenue in the fourth quarter of this fiscal year. Our professional services revenue was $1.8 million for the third quarter, a decline of approximately $4.2 million from the $6.2 million recorded in the same period last year and down from $2.0 million recorded last quarter. These declines reflect the decision we took earlier in the fiscal year to focus our offerings on our…

Thanks Arthur, as Arthur previously mentioned revenue for the third quarter of fiscal year 2009 was $37.3 million, down 1% from the second quarter of fiscal year 2009 and down 5% over the third quarter of fiscal year 2008 but within our guidance range. This revenue decline as we mentioned was due to the expected lower revenue from our professional services business throughout the fiscal year which is down 71% from the same quarter last year and down 10% from the prior quarter. Recurring revenue from our hosting and application management services was $3.5.4 million for the third quarter representing a year over year increase of 7%, essentially flat sequentially. Hosting revenue was also within our guidance range of $35 million to $36 million for the quarter. NaviSite generated gross profit of $12.5 million or 33% of revenue for the third quarter of fiscal year 2009 as compared to $12 million or 30.6% of revenue for the same fiscal quarter of 2008 and $12 million or 32% of revenue for the second quarter of fiscal year 2009. Our cash gross profit which excluded depreciation, amortization, and noncash stock compensation was 51% for the third quarter fiscal year 2009, up from 46% for the same quarter in fiscal year 2008 and up from 48% recorded in the second quarter of fiscal year 2009. The increase in gross profit and cash gross profit for the third quarter mainly reflects the decline of our lower profit professional services business during the fiscal year. Income from operations was $1.7 million in the third quarter of fiscal year 2009 as compared to income from operations of $2 million in the third quarter of fiscal year 2008 and $1.6 million in the second quarter of fiscal year 2009. The decline in income from operations compared to…

Thank you James, I’d like now to take this opportunity to discuss a few details about some strategic actions that we’ve taken to continue to improve our operating performance amid both the soft economic climate as well to increase our growth objectives for the next quarter and for the next fiscal year. As we’ve previously announced we have consolidated our sales effort under Brooks Borcherding, Brooks joined us in April as the Chief Revenue Officer, and Senior Vice President of Sales, and is responsible for driving our sales strategy and accelerating the top line growth for the company. Brooks joined NaviSite from Cisco Systems where he was responsible for strategy, planning, business development, and sales operations for the enterprise east division, responsible for driving revenue from large enterprise customers that will be a key attribute for NaviSite. Brooks is leading our sales and account management organization to better position our resources to address our expanding market opportunity. We are experiencing a new wave of opportunity emerging from the enterprise market and we are leveraging our significant experience with application management, its knowledge base, set of tools and protocols, to address the demand by enterprise customers for cloud based services. This service which we are calling our app structure cloud service is a clear differentiator for NaviSite and our goal to meet our enterprise customers’ demand for services based on virtualization with its associated benefits. We have several significant customers already using app structure and are in discussions with several very large prospects as well as a number of strategic vendor relationships to enhance and expand this very offering. Somewhat unique to the market the NaviSite app structure platform has been designed to accommodate the varying needs and price points of application tiers rather then a one size fits all offering.…

(Operator Instructions) Your first question comes from the line of James Breen - Thomas Weisel Partners

Just a couple of quick questions, first one there’s that nice bump up in EBITDA margins this quarter wondering if that’s going to be a good run rate going forward and if you’ve seen pretty much the majority of the professional services business stabilize now.

I think that we’ll see same quarter comps stabilize now after the fourth quarter because pro services really declined dramatically beginning Q1 of this fiscal year so we think that pro services business will no longer be impairing results after this fourth quarter.

I think you can sort of derive that professional services number by looking at the revenue guidance and subtracting out the hosting guidance and you can see where we’re thinking pro services is going to be in terms of its guidance for the fourth quarter. And as far as EBITDA guidance we are sort of guiding in the same range which I would think would indicate to you that we are comfortable that that is a range we can continue to maintain. And we also saw some incremental G&A expenses this quarter so had we not seen the bad debt expense or increased legal expenses for the quarter we might have seen a little bit higher EBITDA for this quarter even.

And then if you could maybe talk a little bit about CapEx going forward, where it could be and how it might break out.

CapEx is related to our, the success of our bookings so as bookings would increase we would expect to see a need for CapEx. I think we’re cognizant that we don’t want to spend too much on CapEx. We want to make sure that its something where our customers are benefiting, we’re benefiting so I would think that the range that we have been in, sort of the $2.5 million or so to $3 million a quarter is kind of the range we would expect to continue to be in.

Any update on America’s Job Exchange.

Yes, we decided to respond to questions on that rather then make an announcement. James why don’t you just give them a quick summary on that.

As you know we’ve disclosed this as a discontinued operations for, now its in the second year and we are holding that out for sale. We’re continuing to take offers on that and the business itself continues to move forward and I think revenue has been growing reasonably well. I think you can see that we’re reporting its essentially EBITDA and cash flow neutral so its not taking away profitability from our business. So we’re hopeful that we’ll find the right home for it at some point in the future but until then, we’ll maintain our investment in order to continue its revenue growth but also watch the profitability and cash flow to make sure that it doesn’t detract from our overall business.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Thank you all of you who did attend and we’ll speak to you after the end of our fiscal year. Thank you very much.