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Veraz Networks and Dialogic Analyst Call to Discuss the Proposed Merger (VRAZ
May 13, 2010 8:30 am
Ron Vidal – Investor Relations
Doug Sabella – President, Chief Executive Officer
Nick Jensen – Chairman, Chief Executive Officer, Dialogic
Albert Wood – Chief Financial Officer
[Greg Veznaz – Needham & Co.]
Jim Kennedy – Marathon Capital Management
Previous Statements by VRAZ
» Veraz Networks, Inc. Q4 2009 Earnings Call Transcript
» Veraz Networks, Inc. Q3 2009 Earnings Call Transcript
» Veraz Networks, Inc. Q2 2009 Earnings Call Transcript
Good morning, everyone and thank you for joining us today. With me on today’s call are Doug Sabella, President and Chief Executive Officer of Veraz Networks, Nick Jensen, Chairman and Chief Executive Officer of Dialogic and Al Wood, Chief Financial Officer of Veraz Networks.
First, we’ll share some thoughts on the news today and then we’ll take your questions. A webcast of the call as well as the press release are available on our investor relations website at www.veraznetworks.com We would like to remind you that some of the comments we’ll make today are forward-looking including statement regarding Veraz’s and Dialogic’s prospects for improving their products and services, creating new business opportunities and the expected timing of the close of the merger.
These statements involve a number of risks and uncertainties that could cause actual results to differ from those anticipated including regulatory factors, changes in economics, business, technological and competitive factors, and the failure of Veraz and Dialogic to work together effectively.
Please refer to Veraz’s SEC filings including Veraz’s report on Form 10-Q for the quarter ended December 31, 2009 for additional risk factors that may affect the outcome of these forward-looking statements. Copies of these documents may be attained as of today, and you should not rely on them as representing our views in the future.
We undertake no obligation to update these statements after this call. Any future product, feature or related specification that may be reference on today’s call are for information purposes only and are not commitments to deliver any technology or enhancement. Veraz reserves the right to modify future products at any time.
Veraz will be filing a proxy statement and we encourage you to read it when it becomes available because it will contain important information about the proposed transaction.
And now I’d like to turn over the call to Veraz’s President and CEO, Doug Sabella.
This is a very exciting announcement for Veraz and our customers. As you know, Veraz has achieved its market position by enabling its service provider customers to optimize and secure their voice and data networks. We have a long admired Dialogic for their ability to enable their service provider and enterprise customers to deliver innovative solutions to the most pressing video, voice and data opportunities and to create and lead new markets in the process.
That’s why we’re confident that the combination of our companies will deliver three key benefits; highly complementary customer solutions, global customer scale and profitable growth. Said differently, we believe that this merger will create a leading enabler to unleash the power of video, voice and data for 3G and 4G service provider networks.
Veraz and Dialogic have a very complementary portfolio of products that work well together with very little overlap. With solutions covering mobile video, session transport, session control and management and a broad array of enterprise products, we are well positioned to deliver an end-to-end value proposition for customers enhanced by a very well established global support and service portfolio.
In turn, we feel that these solutions will deliver gross margins that are consistent with industry leaders, especially as we transition our mix to favor software and services. With 3,000 customers served by the combined company, we will now be present in over 80 countries and in eight of the ten largest mobile carriers, yet no one customer will account for more than 4% of the revenue, and this diversity is clearly a plus.
Customers will also come to appreciate our enhanced scale with over 1,000 employees to serve our global opportunities. This transaction is being classified as a share exchange with Veraz shareholders to own 30% and Dialogic shareholder to own 70% of the combined company respectfully.
We expect the deal to close in the second half of 2010 subject to stockholder and regulatory approval as well as the customary closing conditions. The new company will retain the Dialogic name and expects to continue to be traded on the NASDAQ exchange.
While tech deals are often done for many reasons, it is undeniable as the scale of potential credibility that this deal represents for our combined companies. Following the merger and subsequent integration of the two companies, we expect Dialogic on an annualized basis after excluding adjustments to revenue and expenses under purchase accounting rules, transaction related costs and one time charges to have revenues in excess of $250 million, gross margins of 60% to 65% and EBITDA of 10% to 15% of revenue defined as earnings before interest, taxes, depreciation, amortization and stock compensation expenses and including expected operational cost synergies.
We believe that these types of results can only serve to enhance our story and to further assure our customers that Dialogic is a company with which they can do business with for years to come.
Our merged company will enable us to serve our service provider, communication equipment manufacturers, ISV’s and distributors even better with scope and scale. Our customers will include eight of the ten largest mobile carriers, four of the five largest communication equipment manufacturers and a rich ecosystem of ISV’s and distributors throughout the world.