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TANDBERG Reports Second Quarter 2009 Results

July 19, 2009 | Chris Payatagool

tandberg_160x46px.jpgRevenue of 204.6 MUSD and Operating Profit of 43.0 MUSD in 2Q09

OSLO & NEW YORK -- TANDBERG (OSLO: TAA.OL), today announced financial results for the second quarter ended June 30, 2009.

Overview of 2Q09:

    * Revenue of 204.6 MUSD (+5.0%)
    * Operating profit of 43.0 MUSD (+4.3%)
    * Cash flow from operations of 52.6 MUSD (+47%)
    * Healthy balance sheet with 208.1 MUSD in cash
    * Strong reception of new products

FINANCIAL

Second quarter revenues were 204.6 MUSD compared with 194.9 MUSD in the same quarter last year, representing 5% year-over-year growth. Gross margin for the quarter was 66.1%, compared with 65.9% in the same quarter last year. Selling, general & administrative (SG&A) expenses for 2Q09 totaled 78.6 MUSD, compared with 77.0 MUSD in 2Q08. Operating profit was 43.0 MUSD compared with 41.2 MUSD in the same quarter last year. Earnings per share (after tax) was 0.24 USD in 2Q09 compared with 0.26 USD in the same quarter in 2008.

The Company generated cash flow from operations of 52.6 MUSD in the quarter, which after a net cash outflow from investments of 16.2 MUSD and dividends paid of 21.0 MUSD, gave total cash inflow of 15.4 MUSD. As of June 30, the Company had a cash balance of 208.1 MUSD and an equity ratio of 64.4%.

OPERATIONS

Reviewing second quarter results, Fredrik Halvorsen, Chief Executive Officer, stated, "The second quarter was marked by consistent execution. Equipped with the strongest product portfolio in the industry, TANDBERG and its loyal partners executed well on the value-based selling model. Strong cash flow generation and a healthy balance sheet reflect the Company's long-term approach.

"TANDBERG has made steady progress in positioning itself for the second half through its focus on video network leadership and standards-based telepresence. In network products, the Company cemented its technology leadership by being the only vendor to demonstrate 1080p symmetric transcoding.

"In telepresence, TANDBERG has taken a community approach to not lock anyone out of the meeting. The TANDBERG telepresence server is a unique differentiator for the Company, enabling connectivity with Microsoft Office Communications Server clients and immersive third-party telepresence systems that may be at partner or supplier locations. This seamless interoperability and B2B communication makes TANDBERG the telepresence solution of choice for organizations such as Ericsson and Bayer.

"The Company has focused on the network and telepresence markets, resulting in increased market share. The Company will also add the Small and Medium-Sized Business (SMB) market to its development plans. As a first step, the Company launched the TANDBERG Quick Set C20, providing easy access to the quality video previously available only to larger customers."

MARKETS

In 2Q09, TANDBERG sold 15,663 endpoint units compared with 16,483 endpoint units in the same quarter last year, a 5% year-on-year decrease (a 4% increase excluding OEM units). Revenue from network products grew 25%, and service revenues grew 22% year-on-year.

AMERICAS

Revenue in the Americas during 2Q09 totaled 99.0 MUSD compared with 87.8 MUSD the same quarter last year. The Northeast Commercial and the Public Sector teams performed particularly well, while the Theatre experienced funding delays at the State and Local levels.

The Theatre saw record interest from C-level executives and drew an enthusiastic response from customers overall, with TANDBERG booth traffic increasing 100% over 2008 at InfoComm, a major industry trade show. The introduction of the new SMB product during the US partner summit was received well by partners.

The Americas Public Sector group enters the third quarter with the strongest team in the industry and a total Federal solution that includes JITC Certified endpoints, infrastructure and management platform. The Public Sector team has strong vertical expertise in Education, Transportation, and Energy, key areas for the stimulus funding, and was awarded "Best in Show" for demonstrating telepresence at the recent DODIIS conference.

Going forward, the Americas will develop an SMB practice and solidify the Company's leadership in value-based selling. The Theatre will also continue to execute on the channel initiative.

EMEA

Revenue in EMEA during 2Q09 totaled 80.7 MUSD, compared with 81.7 MUSD in the same quarter last year. Demonstration activity was at a record high, and the Netherlands, Germany, Italy and the Middle East performed well with several key customer wins. The Theatre continued to experience constrained customer spending and prolonged sales cycles.

The EMEA Theatre received strong customer feedback on the network portfolio, with repeat buying in the quarter. In addition, the EMEA team delivered excellent services sales across all markets and had a strong positive response to new products, including telepresence and the Quick Set C20. There was also good traction with partners.

The EMEA team will continue to drive new solutions through the partner network, including the TANDBERG Codec C20, C60, and C90, and continue to execute on the channel initiative. The Theatre will make targeted investments in both people and partners.

ASIA PACIFIC

Revenue in APAC during 2Q09 totaled 24.9 MUSD, compared with 25.3 MUSD in the same quarter last year. The team delivered a significant Australia deal in the New South Wales Department of Education and Training, equipping over 2,300 schools.

In North Asia, China experienced good traction with high-profile customer wins, and identified improvement opportunities in Japan. The Region will see continued investment in the organization, with particular emphasis on an improvement plan for Japan. The South Asia team performed well, and observed strong interest in the telepresence solution.

2009 STRATEGIC INITIATIVES

Entering 2009, the Company's priorities were to take a network-centric approach to video, to establish technology leadership in telepresence, and to make high quality video accessible to everyone. TANDBERG made distinct progress towards these goals in the second quarter.

Network-centric approach: TANDBERG expanded its network portfolio in the quarter. First, TANDBERG released 1080p capability in its multipoint control units with no port loss, solidifying its technology leadership. The Company also became the only vendor to demonstrate 1080p symmetric transcoding, an advanced quality standard.

In addition, the Company introduced a compact version of the award winning chassis-based TANDBERG Telepresence Server and the Compliance Appliance, an industry-first scalable recording solution serving industries from healthcare to finance.

Telepresence: The Company's Total Telepresence portfolio experienced strong traction with leading Fortune 500 companies, including Ericsson and Bayer, who are selecting TANDBERG as a way to drive efficiencies, improve business processes and decrease carbon emissions.

TANDBERG's approach to telepresence is to bridge the worlds of video conferencing and telepresence, regardless of network or product. Putting the TANDBERG Telepresence Server at the core of the network enables customers to build a video community and strongly differentiates TANDBERG.

    * As previously introduced, the interoperability between Microsoft Office Communications Server 2007 and TANDBERG Telepresence Server offers customers a rich and integrated communications experience.
    * The Company announced in the second quarter that the TANDBERG telepresence is the first and only immersive telepresence solution that maintains the multi-screen, high-definition telepresence experience when calling out to a third-party telepresence system.
    * In addition, TANDBERG customers can connect with customers and suppliers. This ability will be enhanced through a memorandum of understanding with BT to deliver the first global non-proprietary solution for inter-company telepresence and video conferencing.

Video accessible to everyone: Bringing video to a wider audience, TANDBERG announced that it will serve the SMB market. The TANDBERG Quick Set C20, introduced in the second quarter, is the first-of-its-kind 1080p video conferencing solution designed specifically to meet the unique needs of the SMB. The Quick Set C20 makes implementing high-quality, easy-to-use visual communications solutions, or expanding existing solutions, simple.
 
 
OSLO and NEW YORK, July 16, 2009


The Board of Directors of TANDBERG asa
 
 Jan Chr. Opsahl (sign.)                                                                                              

Fredrik Halvorsen (sign.)
Chairman                                                                
Chief Executive Officer
                                                               

WEBCAST/CONFERENCE CALL DETAILS

Today at 5:45 pm Central European Time and 11:45 am Eastern Time, Fredrik Halvorsen, Chief Executive Officer, will host a live webcast/conference call. Additionally, a PowerPoint presentation will accompany the webcast /conference call. To access the webcast, please visit: https://tandbergevents.webex.com

For those who prefer to dial-in, the conference call can be accessed at +1.617.614.3933 (international), +1.800.203.4313 (U.S. callers) and 0808.234.7616 (U.K. callers). The audience passcode for the call is TANDBERG.

Third quarter results will be presented on October 15, 2009 at 5:45 pm CET / 11:45 am ET. For further information please contact Geir Olsen, ph. +44 7766254782.

FINANCIAL STATEMENTS - BASIS FOR PREPARATION


The enclosed consolidated condensed financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting".

SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and methods of computation used in the preparation of the financial statements are consistent with the policies used in the annual financial statements for the year ended December 31, 2008, revised for new standards and interpretations adopted for 2009 as explained in note 1 to the 2008 annual financial statements. The enclosed consolidated condensed financial statements should be read in conjunction with the 2008 annual financial statements, which include a full description of the Group's accounting policies.

ABOUT TANDBERG

TANDBERG is the leading provider of telepresence, high-definition videoconferencing and mobile video products and services. The Company has dual headquarters in New York and Oslo. TANDBERG designs, develops and markets systems and software for video, voice and data communication. The Company provides sales, support and value-added services in more than 90 countries worldwide. TANDBERG is publicly traded on the Oslo Stock Exchange under the ticker TAA.OL. Please visit www.tandberg.com for more information.

TANDBERG is a registered trademark or trademark in the U.S. and certain other countries. All other trademarks are property of their respective owners.

 







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