Ladies and gentlemen, thank you for standing by. Welcome to the Sonus Networks Q3 2011 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, October 27, 2011. I would now like to turn the conference over to Ray Dolan, President and Chief Executive Officer. Please go ahead, sir.

Thank you, Jason, and good afternoon, everyone. Welcome to Sonus Networks Third Quarter 2011 Results Conference Call. Thank you for joining us today. Before we begin our discussion on the quarter, I'd like to take a moment to introduce 2 new members of our team. Moe Castonguay joined us about 2 months ago as our new CFO. Many of you already know Moe as he's been a strong finance leader within the technology arena for the past 30 years. I am delighted Moe has joined our team and look forward to meeting many of you on the road with him as we make the conference rounds over the coming weeks. You'll be hearing more from Moe in a few minutes to discuss our Q3 results and our outlook. I'd also like to introduce Patti Leahy, who is our new VP of Investor Relations. Patti joined Sonus last month and has assumed the IR responsibilities from Fran Murphy, who remains with the company in his role of VP, Financial Planning and Analysis. I'd like to thank Fran for his dedication to the IR function over the past couple of years. And I'd now like to turn the call over to Patti Leahy, who will take us through the remaining introduction.

Thank you, Ray. Good afternoon. Before we get started, I would like to remind you that a recording of this call and the instruction for accessing it are available on Sonus Networks' Investor Relations website. Please note for, purposes of Safe Harbor provisions, that during this call, we will make projections or forward-looking statements regarding items such as future market opportunities and the company's financial performance. Please note that actual events or financial results may differ materially from these projections or forward-looking statements and are subject to various risks and uncertainties. Discussion of factors that may affect future results is contained in our recent filings with the SEC, which are available on our website. While we may elect to update or revise forward-looking statements at some point, we specifically disclaim any obligation to do so unless required by law. During our call, we will be referring to certain GAAP and non-GAAP financial measures. A reconciliation of the non-GAAP to comparable GAAP financial measures is available in the Investor Relations section of our website at www.sonusnet.com. I would now like to turn the call back over to our CEO, Ray Dolan. Please go ahead, Ray.

Thank you, Patti. Let me briefly touch on our numbers, and then Moe will go into more detail. Revenue for the third quarter was $66.4 million, up 28% from last quarter. This sequential increase in revenue includes the majority of revenue, which slipped into Q3 from Q2 that we discussed on our last call. Our SBC product revenue for the quarter was $10.4 million, up 35% from last quarter. Let me pause here and explain an additional disclosure we're making with respect to our SBC revenue. Going forward, in order to provide a more complete view of our SBC performance, we are also providing total SBC revenue including maintenance and services associated with our SBC products. On this basis, total SBC revenue for the quarter was $13.9 million, up from $10.8 million in Q2 and up from $5.9 million in Q3 of last year. We will continue to report SBC revenue both with and without services and maintenance for the remainder of this year. I'd now like to address 3 primary topics with you before handing off to Moe. First is our 2011 guidance, next is the progress we've made building the team, and finally, I'll give some context around the products and processes that will help drive meaningful growth. So let me step back to help bridge the gap between the guidance given on our last call and the outlook we're providing today. On our Q2 earnings call, we provided our revenue outlook for the full year to be within the range $265 million to $285 million. That range of revenue contemplated closing certain business that would be recognized as revenue in the fourth quarter but is now expected to be recognized in the first part of 2012. Additionally, in this current economic climate, service providers are conserving cash…

Thank you, Ray, and good afternoon, everyone. Total revenues for the third quarter were $66.4 million, up $14.6 million from the second quarter. Revenues of $51.8 million and up $23.7 million from third quarter 2010 revenue of $42.7 million. Total SBC revenue, including products and services, was $13.9 million in the third quarter, $10.8 million in the second quarter, $4.8 million in the first quarter and $5.9 million in the third quarter of 2010. Only one customer contributed greater than 10% of revenue in the third quarter, and that was at AT&T. Our top 5 revenue customers represented 51.5% of revenue this quarter, up from 46% in the second quarter. We reported revenue from 107 customers in the third quarter. This compares to 98 customers in the second quarter. Looking at revenue geographically, domestic revenue accounted for 63% in Q3 versus 78% in Q2 and 74% in Q3 of 2010. While the percentage of domestic versus international revenue will vary by quarter, our objective is to increase the percentage of revenue that comes from international markets over time. Before I go into further detail in our financials, I would like to point out that the following are non-GAAP numbers that exclude stock-based compensation and amortization of intangible assets in both 2010 and '11. We also exclude restructuring charges in 2010. Total gross margin for the third quarter was 64.2% compared to 58% in the second quarter and 56.9% in Q3 of 2010. Product gross margin for the third quarter was 72.8% compared to 67.7% in Q2 and 53.4% in Q3 of last year. The improvement in gross margin is in line with our historical gross margin performance. Service gross margin for the third quarter was 49.4% compared to 47% in Q2 and 51.5% in Q3 of last year. Total operating…

Thank you, Moe. In closing, we are in the middle of a journey to reposition Sonus for meaningful growth and value creation. I feel very good about the progress we've made so far in putting the team together that can execute and in developing our products and processes, which enable us to meet the growing demand for SIP-enabled communications networks. Sonus' strengths play perfectly into this opportunity. I look forward to sharing more of our progress and strategy with you over time. Thanks for your time today as well as your continued support. Patti, please transition us to the Q&A portion of the call.

Certainly, Ray. Jason, would you please provide our callers with the instructions on how to ask a question?

[Operator Instructions] Our first question today comes from the line of George Notter with Jefferies. George C. Notter - Jefferies & Company, Inc., Research Division: I wanted to ask about the $17 million to $20 million session border controller revenue in Q4. Is that expectation reliant on any single large deal or deals? Or is it more a function of many smaller opportunities you expect to land in Q4?

It's neither, George. It's just -- it's not a big deal, but it's just that it had not nor is it a function of a lot of small deals. It's just the basic run rate of our business. George C. Notter - Jefferies & Company, Inc., Research Division: Okay, so just to characterize that business, it's no different than what we've experienced in the last few quarters. Is that fair?

Well, yes. There's always lumpiness in our business, but it -- there's nothing unique in this fourth quarter number that stands out. George C. Notter - Jefferies & Company, Inc., Research Division: Got it, okay. And then I'm happy to see the session border controller revenue run rates going in the right direction here. Can you talk a little bit more about what's behind that. Is it follow-through on the enterprise customers you are looking to leverage through the carriers like AT&T and Verizon? Is it something else that we should be thinking about? And then also, if you could kind of profile these 8 new customers you've added, I'd be very interested to hear about that as well.

Sure. So on the second portion of your question, it's a combination of enterprise and service provider wins that are in that 8 new customer list. And we're excited about that and plan -- and I think it's a good indication momentum. We'd like to build on that, obviously. We want to drive greater and greater results there. The first part of your question, can you repeat that one back again, George? George C. Notter - Jefferies & Company, Inc., Research Division: Yes. I guess I was just interested in better understanding where the incremental traction is coming under from on a session border controller business. Is it through new feature development that's creating more interest among customers? Or is it more a function of improved marketing effort? I guess I'm trying to figure out what's driving this. And again, is it sustainable going forward?

So let me speak to -- I don't think I could attribute it to any one thing, George. We're starting to execute better. Our product's maturing. The category is more understood. We're doing, certainly doing better marketing. It's a cross-section of enterprise take-up as well as the service provider take-up. I would say, it's mostly large enterprise still because, until we get that lower-end enterprise process started and until we can crank the channel, we're not going to see the velocity in that part of the market. But I think that's part of 2012, and as we get there, we'll talk about it. So it's a cross-section of all of the above. George C. Notter - Jefferies & Company, Inc., Research Division: Got it. And then just one last question. Acme, in their conference call, has been referencing potential deals with AT&T in orders that they have. I guess I was just curious, are you guys involved there? I know there's a pretty big installed base of media gateway you guys have in AT&T wireless, and here's an opportunity for you on the session border controller side. That's all I have.

Okay, thanks for that question, George. We'll go ahead and pass. As we have in the past, we're not going to talk about specific customers. [Audio Gap]

Our next question comes from the line of Paul Silverstein with Crédit Suisse. Paul Silverstein - Crédit Suisse AG, Research Division: Ray, I've got a handful of questions related to the SBC business. I'll do it one after the other, if I may. First off, can you tell us what the total SBC customer account is at this point? I know you said you had the 8 new ones. What's the total count?

I don't have that number handy, Paul. Paul Silverstein - Crédit Suisse AG, Research Division: All right. Do you -- and I know this may be a bigger issue for us than for you, but can you tell us how many of the 8 were for the newer NBS5200?

How much of the 8 new customers are buying the NBS5200? Paul Silverstein - Crédit Suisse AG, Research Division: Yes, correct. Is it all of them or...

No, no, no, it was a blend. It is going to NBS5200 and the NBS9000. Paul Silverstein - Crédit Suisse AG, Research Division: Okay. And Ray, I think -- I apologize, I may have this wrong, but I think, last round, you told us you had a couple of Fortune 100 customers. And I forget get exactly what you said on the Tier 1. Maybe there was a little bit of confusion in that issue. But can you update us in terms of Fortune 100 penetration as well as Tier 1 service providers that you have committed to the NBS5200?

So we did say we've been designed into a couple of large Fortune 25 players and so those are beginning to become part of our results. We're not going to talk about specific customers. But again, this is part of those large enterprises that mimic closer to carriers. We'll continue to work down that chain into the small-and-medium enterprise side. And I think our success will continue to grow in the enterprise. Paul Silverstein - Crédit Suisse AG, Research Division: I assume those couple of Fortune 25, you haven't yet seen revenue from. That's still to come. And are there any Tier 1s service providers at this point that have committed to the platform?

We have Tier 1 service providers committed to the platform, and both the Fortune 25s are in our revenue base at this point in time. Paul Silverstein - Crédit Suisse AG, Research Division: So you do have Tier 1s committed to the NBS5200?

Correct. Paul Silverstein - Crédit Suisse AG, Research Division: All right. One last question for me, I apologize. But with respect to the legacy media gateway business, do you guys still see that as actually flattish, as opposed to -- I think the history, the 3-year history has been in decline. How much of -- I recognize the delays in CapEx, I appreciate the commentary. But how much -- have you revised your view on that product line?

We are in that process, Paul, and I appreciate you bringing that up. This is -- we got a lot of feedback not just from you but from others in our Investor Day and in our subsequent call. We've done some work and we're going to continue to. Let me see if I can help here and then commit to helping more going forward. First of all, in our current guidance, implies about a 5% reduction in our trunking business this year, all right? So that's I just want to give you little bit of a transparent view into that. You can do the math but I'll try to do the math for you there. A lot of it is -- now, going forward, we haven't figured -- we haven't set sail for 2012 yet, but when we do, we'll talk to you about that. But that's probably consistent with the macro trend. Now our opportunities to do better than that macro trend are that we have a fairly limited geographic spread beyond North America in our trunking business, a little bit in Europe and a little bit in Japan. And we really go to market totally through direct and there may or may not be an opportunity to partner with others to get broader geographic reach. Once we know what our options are, we'll guide to where we see that trunking business going. But that's probably the best color I can give it to you on that now. I hope that's helpful.

Our next question comes from the line of Greg Mesniaeff with Kaufman Brothers.

Question on -- you mentioned that you are planning to roll out a scaled-down version of the NBS5200 in the beginning next year. Can you give us a little more color on that product and what market you plan to target with it?

Yes. The market that we would target with it is the small-to-medium enterprise and basically because it's just a simpler, easier-to-use product that has lower -- designed for lower-session entities. It not only works toward the enterprise but gives us higher margins to go after that. So we're already in that space now but we're in that space with a unified product across the entire enterprise. And all it is, is this will allow us to be more segmented and more targeted in our approach.

Do you anticipate a direct sales strategy or more focused on partnerships and OEM-type relationships?

We'll have a blend of both. I'm assuming that your question is to the small-and-medium enterprise. And the small-to-medium enterprise, that's a channel play for the most part.

Our next question comes from Subu Subrahmanyan from Sanders Morris.

My question is on the session border controller market as well. Can you -- if you can talk about competitively what you're seeing in the environment as the auction leads, which you're already seeing an aggregation, one step below in the #2 position to how you're positioned. Also, can you talk about any kind of pushouts in the SBC side into next year or visibility of the ones you're getting, which drive revenue into next year?

Sure, Subu. So trends, I do believe we are now a strong second in emerging, even stronger second to Acme based on the numbers that we've put before you today. The reason we gave you both the products-only as well as the product and service and maintenance is that so that you could see that transparently and compares on an apples-to-apples basis with others that report that way. So that's just where we see ourselves competitively. I love our position. Obviously, I'd love to be in the lead right now, but I love our position because we've leveraging some new designs and some new capabilities that operators are appreciating and I think, frankly, people want to see competition in the category across the board. So that's where I see it. As far as trends that'll cause us to guide into 2012, I think it's premature for us to do that. We'll do that on our next call. We'll give you some sense as to how things are rolling forward. At this point, I'd just like to stick to our 37 to 40 on the product basis for this year.

Understood. I was just trying to figure if there was any pushouts you've felt, like, from fourth quarter into next year as given the environment, given some longer-term contracts that we're hearing about.

No, I don't have anything to say about that at this point, Subu, sorry.

Our next question comes from the line of Todd Koffman with Raymond James. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: As it relates to the product comments you made scaling down the NBS5200, is that then to suggest that maybe some of the very large scale, very large subscriber telco opportunities you are not or will not be going after?

Todd, no, that's not the implication at all. This is an opportunity for us, by scaling down, to go more aggressively and more targeted at the small-to-medium enterprise. I think we're very well positioned with the NBS5200 and the NBS9000 to go after the large service provider opportunity, and we'll continue to innovate there. And we'll have more to say about that as we go into 2012. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: Are those products that are targeted on the telco side for the very large subscriber opportunities? Are you currently aggressively chasing those? Or are you really more focused on the enterprise, small enterprise?

No. Okay, so most of the results that you're seeing here are from the service provider opportunity. Now those are large for -- on a couple of dimensions. One, they are large because of just the total session density. Two, they're large because they're starting to go after beyond voice and into video and other opportunities, which we think we are very well positioned to go after, so there's a huge opportunity we're focused on right now. And they tend to line up well for the go-to-market strategy that Sonus has used traditionally, which is largely direct to the service provider. The 5100 opportunity is all incremental to us, Todd. The enterprise opportunity is all incremental. Todd K. Koffman - Raymond James & Associates, Inc., Research Division: Just one last quick one. Is the current product line well suited for these very large-scale wireless opportunities?

Yes.

Our next question comes from the line of Alex Henderson with Miller Tabak. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: Let me start with something just a little different. The inventory decline sequentially from June quarter to September quarter, going into a quarter where you're expecting a nice ramp in revenues, is that a function of linearity in the September quarter? Or is that -- how do I rationalize that?

No, actually it's just our focus on operational efficiency. Certainly, with the Flextronics, we have an extensive amount of flexibility to handle significant volumes, so that's not an issue. We have been focused at bringing it down. Part of it was as a result of the transition from the previous contract manufacturer to Flextronics. But we do want to have our inventory turns at a higher rate, so it's just part of our ongoing strategy to keep our balance sheet as lean as possible. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: So now that I'm getting nearer. It's something -- chance to answer something that's completely different that what was asked before. Let's go back what everybody else is asking. The issue on the SBC is, think, is one of lumpiness. You've had a history over a number of years of very lump-in, lump-out kind of quarterly results. And I'm a little nervous about the first quarter of really strong SBC sales being a lump-in and then you have a dramatic falloff back to 1Q of, say, $5 million or $10 million, and everybody's like, "Ah! What happened?" So I know you don't want to give guidance for the March quarter, but can you talk a little bit about how you see that progression out of that quarter? Is it going to be smoother than it's -- than our historical experiences?

That's certainly our goal, Alex. [Audio Gap] That the sales to carriers and service providers are just lumpier than sales to the enterprise, and we're still mostly exposed to the service provider. The NBS9000 sales are lumpier than the NBS5200 sales and we're still proportionately a blend to that. And NBS5200 is going to accelerate as it matures and becomes more and more part of the product strategy and roadmap. And that's all occurring [Audio Gap] than session sales above the platforms and chassis that we sell, all of which should generate greater linearity, greater predictability, greater visibility going forward. But for now, it's premature, I'm not going to give you a guide into Q1. It wouldn't be a good thing right now. But we're working really hard on that. [Audio Gap] Our performance a lot better. So that -- those are the areas that we're looking for. And now I do expect it to settle out, I just don't want to put a time on it. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: I know you don't want to talk about [indiscernible] customers. But your Tier 1 customer is predominantly [Audio Gap] customers predominantly using this for managed services. Is that correct?

No. [Audio Gap] Appearing some level of managed services but that's just actually just starting. And [Audio Gap] Use it differently than Tier 1s in the U.S. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: And looking at the NBS5200-NBS9000 mix in the quarter of -- not for the September quarter but rather the December quarter, is it [Audio Gap] larger than the older product in terms of revenues? I know you don't want to set it down exactly. I was just trying to get the general trend of it.

Yes, it's too soon to tell because NBS9000 orders can come in, in a larger size and very lumpy. And even though that would be fundamentally very healthy for the business, it would skew ratios so I don't want to. [Audio Gap] Pleased with the progress on the NBS5200 and the NBS9000 and we'll take all we can get of both. But I do see the trend to be direct in your -- in responding to you. I do see the trend to be toward the NBS5200 over time. Whether that'll be in Q4, it's too soon to tell. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: Okay. Last question, and I'll see the floor. The Tier 1s in the U.S. are showing some unusual trajectory relative to their CapEx spending, going into 4Q. Have you seen any pertubation in what you're seeing from your key customers relative to that normal seasonal pattern and potentially acquisitions at least one of them might have been doing that could cause some softening of what would normally be a seasonally much stronger quarter?

So let me just caveat, Alex: We're not going to talk about specific customers. And I know you know that, but I just want to be clear. But with regard to trends, no, yes, there's some consolidation out there and so we expect that we're exposed to those customers that are doing what you'd expect them to do in consolidation. And then others, as we said in our prepared remarks, we've not forecast a traditional fourth quarter budget flush and we'll see where that plays out. But at the same time, we're fairly small part of the broader U.S. CapEx piece so I would suggest that looking to us as to tell as to what the broader trends are is probably not the best place to look. I'm just being candid with you.

Our next question comes from the line of Ted Moreau with WJB Capital.

I'd like to welcome Moe and Patti to the team. Quick question on -- so you said revenue is being pushed into 2012, how much -- but you also talked about a lack of a budget flush. So how much is the difference in the new guidance budget flush versus revenue being flushed -- excuse me, pushed?

Yes, so Ted, I'm not going to give specifics on that but I will do to try to help if you want to reverse into that kind of a model. A kind of a year-end budget flush we might gauge is a very fuzzy number because it's very hard to -- people don't send in their purchase order and label it budget flush. But if we were to look back, and we've tried to do that, I might go with the rule of thumb that we've probably been exposed to about $5 million to $10 million budget flush in year end. If in fact that's part of it, you can reverse the math out and figure out kind of what the rest of it is.

And then so on the SBC stuff, are any of the recent service provider wins or any of the opportunities that you see on the horizon related to voice over LTE?

None of our current success or near-term projects are a result of voice over LTE. I think there may be some initial wins for some folks that are lined up well for that, but most of that project is not going to be meaningful, in my opinion, until 2013, probably.

Okay,, that's helpful. And then, so you guys mentioned you're targeting more international revenue over time. Can you kind of just remind us, like, how you might go about attacking that -- those opportunities international and when we might start to see some traction there?

Well, we are -- this is a -- that's basically part of our broader go-to-market strategy. We are bringing on additional sales and marketing hedge in various parts of the region and we'll want those result. Take a little while to ramp that up so we're not going to try to put a clock on that, but our -- what Moe stated in his prepared comments were that one of our goals is to diversify our revenue mix beyond just North American-centric, Western Europe and Japan and move more broadly into other strategic growth areas.

[Operator Instructions] Our next question comes from the line of Catharine Trebnick with Northland securities.

Ray, on the last, let's see, June, in June when you had the Analyst Day in New York, you discussed a channel strategy that you were unveiling in 2012. Can you update us on the channel strategy? And of the 8 new customers, are some of them through a new channel, or are they direct?

Catharine, there may be a small portion of that 8 that came through channel, but my guess is not. It was principally direct. Most of our business still is direct. With regard to our channel strategy, it's very consistent with what Todd laid out there. We will look at a comprehensive product channel and target offering and launch that early in 2012. We're on track for that. So a lot of that is going to be enabled by the development of the streamline NBS5200, which will be streamlined in more than just technical sense, it will be an entire go-to-market model that's appropriate for that channel. And then a lot of marketing support and all kinds of other things that you'd expect to see in the channel program, which we're building now and are showing up, in part, in our cost structure ahead of those results is what's contemplated in the first half of next year.

And then one other question: Of the 8, any of these international? Or are they mostly domestic? The 8 wins, are they announced on new customers or SBCs?

Both.

Yes, they are both.

Okay, both. Can you 75-25? Or you don't want to go there?

No.

Yes, we're not going to go there.

Our next question is a follow-up question from Alex Henderson with Miller Tabak. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: I wanted to go into the cost line items a little bit. Your OpEx cost has stepped up not only in the quarter but in the guidance for the upcoming quarter, and I was wondering if you could delineate a little bit more about what's going on there. Is that just strictly a function of higher sales causing higher commissions? Or how should we be looking particularly at the marketing line?

Sure, Alex. This is Ray. I'll take a shot at that, thinking it through, really, from the strategy point. And I'll give Moe an opportunity with, what, 6 weeks in the sell model [ph] to give us a quantitative response to that, as well. This is a invest-for-growth strategy, and I'd like to think we are very, very well positioned and exposed to some growth markets. And we're going to go for that, obviously not recklessly but very, very thoughtfully and very strategically. We've spread additional heads across engineering R&D as well as sales and marketing and we'll continue to scale the channel, which is part of the guidance going forward, that Moe laid out for Q4. You might ask, why would we do that? Well, I think, we are -- we have already made it past the transition from a trunking company into an SBC company and we're going to accelerate from here, so we're going to invest in our feature roadmap, we're going to invest and stratify our entire SBC line and then we are going to do further and further product integration beyond that in 2012. So we're bringing in the technical resources and the sales and marketing resources now and we'll continue to do that. I'm very, very excited that some of the trends that are out there in SIP and the enterprise and in cloud computing and managed services and many other trends are very, very favorable to us with our heritage of transitioning TDM networks to IP networks. A lot of things are lining up our way. And we're going to invest in that growth and focus on it. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: So just as I think through the strategic implications of what you said relative to our exercise of forecast in 2012 and beyond, should we be thinking about 2012 as kind of that investment period, so don't expect incremental upside to profit? And that certainly comes through to the bottom line that you'd probably step forward and reinvest that. Or should I view it as a little bit more disciplined than that, some attempt to drive profitability above breakeven to a $0.01 kind of numbers and sustain a little bit better result?

So I'll try that again, and then I will hand it up to Moe because it's starting to get a little bit financial. So one -- if you don't mind, I'm going to dodge it a little because we're going to guide and when we guide -- and we'll disclose those numbers and talk to you very openly when we can. But philosophically, I would encourage you to think of it as a continued investment year. But when you say -- or are we going to be disciplined and drive to the bottom line, we're going to be very disciplined in some portion of our incremental growth that absolutely drive to the bottom line. We're working that out right now and making sure that we are appropriately balanced between what I believe is our responsibility to go after growth and our responsibility to show and demonstrate that we can also generate operating leverage. And so when we come back to that, you can test us against those dual goals, and there will some balance there. But it's just we are working out those details right now. Moe, do you want to add any numbers there?

If you looked at the numbers, we basically gave guidance of $39.5 million to $41 million. So therefore, some of that cost us are the full quarter effect of the people who we just hired, being here for a full quarter. And then we did indicate that we'd hire a small number of people in the fourth quarter. And so that would account for the incremental investment. But all I can do is obviously agree with Ray: Certainly, our goal has been to reposition the company so we can take advantage of this very exciting market opportunity ahead of us, and a lot of that positioning has been done in 2011. Alex B. Henderson - Miller Tabak + Co., LLC, Research Division: Well, if I could just follow up to this a little bit more than on that. I mean, you've traditionally had a lot of lumpiness in your numbers. If you were to lump back down to, say, a $50 million revenue number, just hypothetically, would the SG&A come down or the sales of marketing particularly come down with that? How much of the sales of marketing is flexed against the revenue line?

Well, sales and marketing costs, for the most part, of -- if you'd look at the feet on the street, obviously those are relatively fixed costs. They're obviously commissions, which are -- a relatively small component of the cost are a function of bookings and revenue in any given quarter. But you're absolutely correct, if we do have lumpiness on the revenue side, you will expect to see some fallout on the bottom line. So our goal is obviously to [indiscernible].

Our next question is a follow-up question from Paul Silverstein with Crédit Suisse. Paul Silverstein - Crédit Suisse AG, Research Division: Maybe this is for Moe. Is there any difference from a gross margin and underlying profitability perspective of NBS5200 revenue as opposed to NBS9000 revenue?

Well, it really depends. They're both products. Depending on how they're configured, you can have obviously different gross margins. If you're shipping an NBS9000 and it doesn't have a lot of cards in it, then obviously, you have the chassis and a lot of fixed costs, which over time, you can expand to. So there is the potential if you're looking at that product versus the NBS5200, and let's assume that it's a NBS5200 with -- where someone buys lots of sessions. Then the margins could be higher in the NBS5200 than on NBS9000. So it just varies on how the products are configured. Paul Silverstein - Crédit Suisse AG, Research Division: Well, let's assume -- can we assume the same configuration for both products will -- the gross margin will look like in that event?

Well, in similar configurations, they'd probably be at least as good in the NBS5200. But Paul, this is Ray Dolan. I would say, another issue is out there, where is the market right now and certain competitors? I don't see any reason why we wouldn't, over time, grow to substantially similar margins, but I would temper that short term as, as we start to sell into accounts who tend to deploy at lower-session densities and then grow into higher-session densities, we could end up having slightly lower margins in our SBC category and then growing into market margins over time. Paul Silverstein - Crédit Suisse AG, Research Division: Ray, apologies, I just want to make sure I understood what you just said. I thought the numbers support the fact that your SBC business has higher margins than your media gateway business. I think you just said the opposite.

No, no. I'm not talking about by comparison in the media gateway business, Paul. You're right, the SBC category for us does have a slightly higher product margin associated with it. What I'm talking about, though, is since there are comps out there for product margins in other SBC players, I don't see any reason why we can't approach that over time as we sell into accounts and then sell at the full-session densities with boxes once they're deployed. Paul Silverstein - Crédit Suisse AG, Research Division: All right. So to be clear, if I look -- as a direct comp, if Acme is in the 80 -- in the low mid-80s range, you're saying you don't see why, over time, your NBS5200 -- and I'm not sure if you're saying for the NBS9000, but why can't get to that 80 -- low- to mid-80s, is that the statement?

Okay, so I wouldn't put a specific number on it, Paul, but I -- that logic stands. But here is why I wouldn't: Those numbers are going to move around a little bit, competition is going to change those numbers. But what I'm saying is I believe we are competitively very well positioned to be no worse than anybody else as this category migrates. And it's early days for us so I'm not capable of forecasting pricing in the category, as you've asked others too. And I understand the need to do that analytically. What I'm trying to say is, as this all evolves and settles down to whatever the market norm is for the category and there's plenty of new entrants coming in, we think we're going to go nose-to-nose and compete very, very well with the ramp by -- what I'm trying to call out is that there'll be a ramp of lower-session density initial sales that will then fill out and become closer to market norms. That's -- and then you can decide what numbers you want to put on that because I really hesitate to put any specific number on 80 or 70 or whatever. Paul Silverstein - Crédit Suisse AG, Research Division: And I'm not trying to pin you down, but you're saying, all things being equal, there's room for upside in your margins from here should you continue to execute on the SBC opportunity.

Sure. One thing to remember is that most of these are new deployments so most of the boxes that go out, whether it's the NBS5200 or the NBS9000 go out with open slots in them, or the license count is relatively low, and it's certainly an opportunity to increase those over time. And certainly, the margin on those upgrades are higher, so over time, we should expect better margins.

Right.

And there are no further questions at this time.

Okay, thank you, Jason. As Ray mentioned, we will be attending several investor conferences in the coming weeks and look forward to meeting many of you there. For details about our IR outreach plans for the fourth quarter, please feel free to contact me. You can find my details on the IR website. This does conclude this evening's call. Thank you, again, for joining us. We appreciate your interest in Sonus Networks.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.