Sonus Networks, Inc. (SONS)

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Sonus Networks (SONS)

Q4 2010 Earnings Call

February 28, 2011 4:45 pm ET


Raymond Dolan - Chief Executive Officer, President and Director

Fran Murphy -

Wayne Pastore - Chief Financial Officer, Senior Vice President and Treasurer


Peter Reed - Mass Capital Managment

Ari Bensinger - S&P Equity Research

Catharine Trebnick - Avian Securities, LLC

Nicole Greenfield - Credit Suisse

Subu Subrahmanyan - Sanders &

George Notter - Jefferies & Company, Inc.

Paul Silverstein - Crédit Suisse AG

Alex Henderson - Miller Tabak & Co., LLC



Good afternoon, and thank you for standing by. Welcome to the Sonus Networks Fourth Quarter and Full Year 2010 Financial Results Conference Call. [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

Thank you, Lindsay, and good afternoon, everyone. Welcome to Sonus Networks' fourth quarter results conference call. Thank you for joining us today. With me on the call this afternoon are Ray Dolan, our Chief Financial Officer; Rajiv Laroia, our Chief Technology Officer; and Wayne Pastore, our Chief Financial 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 predictions 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 or uncertainties that could cause actual events or financial results to vary from these forward-looking statements, please refer to our recent filings with the SEC, including the risk factors describes in our Form 10-K

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

And finally, please note that 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,, under the heading Financial Information and subheading Quarterly Results.

A recording of this telephone call will be available until March 14, 2011. The instructions for accessing this recording and a replay of the webcast will be available on the Sonus Networks Investor Relations website. Please visit, About Us, Investor Relations, for details.

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

Raymond Dolan

Thank you, Fran. Good afternoon, and welcome to our fourth quarter earnings call. I'm very pleased to start our call today by telling you that the Sonus team posted the strongest revenue quarter since Q4 2008, and the fourth highest quarter in Sonus's history. I asked the team to focus on executing better when I arrived in mid-October. And they delivered on several fronts and it shows in our results. The execution, innovation and focusing on customers will be recurring themes as we move forward together.

Let me briefly touch on our numbers, and Wayne will go into much more detail. Revenue for Q4 was $83 million, up from $42.7 million in Q3 2010, and up from $68.7 million in Q4 2009. For fiscal year 2010, revenue was $249.3 million, up $21.8 million from fiscal 2009 and $4.3 million above the upper end of our guidance. Our NBS revenue for the year came in slightly greater than $24 million, which is essentially flat to 2009. While this is lower than the expectations that may have been set, I am pleased to report that we saw increased interest across multiple customers and a meaningful contribution to our bookings in Q4 from the NBS-9000 and the NBS-5200.

Regarding our NBS 5200 product, we have booked 12 orders today with an additional 20 active evaluation agreement outstanding and more in process. It is noteworthy that of the 12 booked orders, half of these went from "to order receive" within the 90-day cycle. These results give us confidence that we should see greater acceleration in our NBS-5200 going forward.

Before handing the call over to Wayne for detailed discussion of our results, I'd like to take a couple of minutes to talk about the team at Sonus and my current views about our product position in the industry. First, I'm grateful for the support and welcome I've received from the entire team at Sonus. I'm very impressed with the talent we have, the energy our team has been demonstrating and the spirit of innovation that is alive and thriving. This is the fire that helps Sonus capture market leadership and transporting TDM voice networks to IP voice, and it would be the foundation for our expansion into adjacent markets going forward.

I'd like to discuss recent changes in our leadership team. First, late last year, we announced Guru Pai's departure as our COO for personal reasons. Since then, Guru's team has reported directly to me, and I have used this opportunity to get closer to all areas of the business. Recently, we announced the appointment of Rajiv Laroia to our senior leadership team. In his role as Chief Technology Officer, Rajiv will help us accelerate key areas of our current roadmap, as well as define our future technology direction.

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