SONS

Sonus Networks, Inc. (SONS)

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Sonus Networks, Inc. (SONS)

Q3 2010 Earnings Call

November 02, 2010 4:45 pm ET

Executives

Fran Murphy - VP, Finance

Ray Dolan - CEO

Wayne Pastore - CFO

Guru Pai - COO

Analysts

Nicole Greenfield - Credit Suisse

George Notter - Jefferies

Catharine Trebnick - Avian Securities

Subu Subrahmanyan - Sanders Morris Harris

Todd Koffman - Raymond James

Ari Bensinger - Standard & Poor’s

Presentation

Operator

Welcome to the Sonus Networks Third Quarter 2010 Financial Results Conference Call. I would like to remind everyone that today’s call is being recorded and all participants are currently in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions)

At this time, I would like to turn the conference over to Mr. Fran Murphy, Vice President of Finance at Sonus for opening remarks and introductions. Please go ahead, Mr. Murphy.

Fran Murphy

Welcome to Sonus Networks’ third quarter results conference call. Thank you for joining us today.

With me on the call this afternoon are Ray Dolan, who has joined as CEO; Wayne Pastore, our Chief Financial Officer and Guru Pai, our Chief Operating Officer.

Before we get started, I would like to remind you 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. These remarks about Sonus Networks’ future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These projections or statements are neither promises nor guarantees, and instead are predications based on management’s current beliefs and involve various risks and uncertainties, such that actual events or financial results may differ materially from those we have forecasted.

As a result, we can make no assurances that any projections of future events or financial performance will be achieved. For a discussion of important risks that could cause actual events or financial results to vary from these forward-looking statements, please refer to the Risk Factors section of our Form 10-K for the year ended December 31, 2009 and our most recently filed quarterly report on Form 10-Q, which was filed today with the SEC.

Any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of a subsequent date. 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.

Finally, please note that during our call, we will be referring to certain GAAP and non-GAAP financial measures within the meaning of SEC regulation. A reconciliation of the non-GAAP to comparable GAAP financial measures, along with our earnings press release is available in the Investor Relations section of our website www.sonusnet.com under the heading Financial Documents and subheading third quarter 2010 reconciliation of non-GAAP and GAAP financial information.

A recording of this telephone call will be available until November 16, 2010. The instructions for accessing this recording and a replay of the webcast will be available on the Sonus Networks’ Investor Relations website. Please visit www.sonusnet.com, About Us, Investor Relations for details.

I would now like to turn the call over to our CEO, Ray Dolan. Please go ahead, Ray.

Ray Dolan

Good afternoon everyone, and welcome to our third quarter 2010 earnings call. This is my first earnings call since joining Sonus three weeks ago. I will begin with brief overview of my experience and some initial observations; then Guru will review the highlights of the quarter before turning it over to Wayne for the detailed financial results.

As many of you know prior to coming onboard at Sonus I worked for nearly 25 years in the telecoms industry. This experience has given me an appreciation for the competitive environment, which our customers operate and how they select and purchase from their trusted suppliers.

I joined Sonus because I believe our company has significant untapped potential. With our valuable portfolio of innovative products and solutions, strong customer relationships and some of the best employees in the business, Sonus has a strong foundation in place.

For the past several years, the board and the senior management team have been working on a strategic plan to re-establish Sonus’s category leadership and improve our financial performance. We will build on that going forward.

I spent my first three in Sonus meeting with our customers and employees and becoming more familiar with our operations. I look forward over time to meeting with many of you as well. I believe we have a great story to tell and importantly a significant opportunity to build shareholder value.

Before I turn the call over to Guru, let me briefly touch upon our third quarter results. Revenue for Q3 was $42.7 million, down from $61.2 million in Q2 2010 and down from $56.2 million in Q3 ‘09. This decrease was due in large part to several orders being deferred beyond Q3. That said, I worked extensively with our team and the opportunities we have for the balance of 2010. We continue to have a positive outlook ahead and we will be reiterating our full year guidance on revenue.

Wayne will review our guidance in further detail toward the end of the call. Now, I would like to turn the call over to Guru to discuss some of our recent accomplishments.

Guru Pai

Thank you, Ray. Good afternoon everyone. We continued to make good progress with the NBS-5200, our session border control solution build on our new ConnexIP platform. We have signed evaluation agreements with 14 customers to trial the NBS-5200 and we are excited about our healthy pipeline of customer engagements and the early market traction we are achieving. The platform’s value proposition is resonating with a broad set of our customers. The 5200 can maintain performance and throughput during strenuous network conditions such as a prolonged denial of service attack. In fact, independent lab testing has validated our product’s superiority and specifications especially around session density and scalability.

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