Extreme Networks F2Q07 (Qtr End 12/31/06) Earnings Call Transcript

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2007-01-25 18:18:17.0

Tags: Extreme Networks

Question-and-Answer Session

Operator

(Operator instructions)

Our first question comes from Sam Wilson with JMP Securities. Please go ahead, sir.

Sam Wilson - JMP Securities

Good afternoon, gentlemen. A clarification and a couple of questions. On the clarification, I just missed what cash from operations was.

Then, in terms of questions, just two: could you give us a sense of OEM sales and what the pricing environment was like during the last quarter? Thank you.

Michael Palu

I’ll take the question on cash from operations and I’ll let Mark answer the second question.

So it’s a little bit difficult to speak directly to cash flow from operations, given the fact that we are not presenting full financial statements in the current quarter. I did try to highlight in my prepared remarks some of the changes in the balance sheet accounts that I think will have an impact on the cash, namely the increase in the receivables in the quarter and the increase in inventory over the last few quarters, and the reduction in payables, which I think from those balance sheet account changes, we’ll see a use of cash from operations in the current quarter.

Sam Wilson - JMP Securities

That’s what I thought.

Mark A. Canepa

Now, on the OEM sales, first of all, the overall pricing environment clearly continues to be very competitive. We’re out there kind of slugging it out every day, but that said, you’ve seen from our remarks that our overall product margins improved well this quarter, so our product costs are competitive. I feel that we have the wherewithal to go fight that competition.

Now, with regard to the question of OEM sales, depending on -- we don’t break out OEM as a particular segment of our sales. What I could tell you is that we’ve been talking about sales to our strategic partners, Avaya, Ericcson and Siemens, and together, those three are at their highest levels they’ve ever been, so we continue to enjoy a lot of success with that kind of strategic partnerships.

Sam Wilson - JMP Securities

Yes, I understand. Actually, I was asking specifically about the security products you OEM and --

Mark A. Canepa

Oh, okay. You know, I don’t have that data with me. I know we’ve been pretty aggressive this past quarter. We’ve run a number of promotions. We’ve tied together wired and wireless and security, so we’ve enjoyed good growth in unit counts of our Sentriant product line, for example, but I don’t have that revenue breakout off the top of my head here.

 

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