Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question comes from the line of Troy Jensen from Piper Jaffray. You have the floor.
Troy Jensen – Piper Jaffray
Congratulations on the great results you guys have in a tough environment.
John Combs
Thank you.
Mike Healy
Thanks, Troy.
Troy Jensen – Piper Jaffray
Okay. John, I agree with you. Nortel’s struggles are a huge opportunity for you guys given their big installed base. Have you seen any evidence that customers are getting worried about the Nortel product line and reaching out to you? Are you guys running any types of replacement deals to try to win over the Nortel installed base?
John Combs
We are not running currently any programs targeted at their base. We have some excellent existing working relationships with some of the largest Nortel distribution partners. End user customers are clearly concerned, especially those who bought in the last 12 to 24 months, because I understand that the R&D that they might have expected in enhancements from the product are not going to happen, but they have a gigantic installed base. Right today, Troy, they are at about 16% of the U.S. market and 11% of the worldwide market, so they have a significant installed base of customers. I would say that most of their sales, I believe, were to their installed base much more than to new customers but we are actively working to go out and recruit their partners. We believe that partners who are selling Nortel have had the best relationship with their customers, are in best position to convert them in short term.
Troy Jensen – Piper Jaffray
That's fair. Then on the international expansion side, if you look out one to two years, any sense what percentage of sales this could be for ShoreTel?
John Combs
Troy, I would not want to venture a guess. We have been in Europe now for 4.5 years; in Australia and New Zealand, for a like period of time; much more or less, 12 to 24 months in Asia market. And the one thing we have learned is that it takes a long time to build a distribution and build momentum in the market. What's really helping to drive our business worldwide is the multi-location capabilities of our product which make it very conducive to installing in customers' installed base throughout the world and so that is really the major driver of the business for us. I’d like to have it be a 30/70 split in the near term, but it’s very difficult to be able to predict when that might happen.
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