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TANDBERG Reports First Quarter 2009 Results

Revenue of 193.3 MUSD and Operating Profit of 40.8 MUSD in 1Q09

OSLO and NEW YORK, April 23, 2009 – TANDBERG® (OSLO: TAA.OL), today announced financial results for the first quarter ended March 31, 2009.

Overview of 1Q09:

• Revenue of 193.3 MUSD (+8.5%)
• Operating profit of 40.8 MUSD (+9.2%)
• Cash flow from operations of 36.0 MUSD (+52%)
• Volume of 16,610 units (+10.2%)
• Significant new products launched in the quarter
• Industry seeing effects of constrained capital expenditures

FINANCIALS
First quarter revenues were 193.3 MUSD compared with 178.1 MUSD in the same quarter last year, representing 9% year-over-year growth.  Gross margin for the quarter was 66.0%, compared with 65.6% in the same quarter last year.  Selling, general & administrative (SG&A) expenses for 1Q09 totaled 74.3 MUSD, compared with 69.8 MUSD in 1Q08.  Operating profit was 40.8 MUSD compared with 37.4 MUSD in the same quarter last year.  Earnings per share (after tax) were 0.25 USD in 1Q09 compared with 0.22 USD in the same quarter in 2008. 

The Company generated cash flow from operations of 36.0 MUSD in the quarter, which after a net cash outflow from investments of 17.2 MUSD, gave total cash inflow of 18.8 MUSD.  As of March 31, the Company had a cash balance of 193.4 MUSD and an equity ratio of 65.6%.    

FINANCIAL TABLES
Click for financial tables.

OPERATIONS
Reviewing first quarter results, Fredrik Halvorsen, Chief Executive Officer, stated, "The first quarter reflected an unwavering focus on sales execution and balance sheet discipline at TANDBERG.

The quarter results were mixed. The video industry is seeing the effects of constrained capital expenditures and prolonged sales cycles across geographies.  At the same time, TANDBERG’s flexible business model and operational integrity enabled high-quality earnings and strong cash flow."

The quarter was also distinguished by significant new product introductions from the Company. Filling out an already strong personal video line-up, the E20 video IP phone and Movi High-definition PC video solution started shipping this quarter. For executive offices and team rooms, the new TANDBERG Profile systems are making superior 1080p high-definition video conferencing accessible, with the 52" single screens shipping this quarter followed by the 42" single screen and 52" dual screen systems in 2Q09. With the telepresence-grade TANDBERG Codec C60, which shipped in 1Q09, TANDBERG has provided its integrator channel with advanced solutions for building out installations easily and without compromising quality. These shipments complete a major product cycle upgrade for endpoints and the Company is confident that its portfolio is the strongest in the industry.  The product line roll-out will be completed in 2Q09, with a focus on partner training, with the full impact to be seen in the second half of the year.

The interest in telepresence and video conferencing has never been higher.  The Company believes the technology will continue to become essential to every communications platform.

MARKETS
In 1Q 2009, TANDBERG sold 16,610 endpoint units compared with 15,077 endpoint units in the same quarter last year, a 10% year-on-year increase.  Revenue from network products grew 47%, and service revenues grew 23% year-on-year.

AMERICAS
Revenue in the Americas during 1Q09 totaled 94.3 MUSD compared with 80.4 MUSD the same quarter last year.  Canada and Southeast businesses performed well.  Positive momentum in the Public Sector offset prolonged Enterprise decision cycles.  The Theatre also had several marquee wins featuring TANDBERG Total Telepresence solutions.

In the first quarter, the Public Sector practice was successfully formed, merging the Federal team with State, Local, Education and Medical teams.  The New Way of Working program was launched, drawing over 800 clients and partners to Executive Briefing Centers.  Also in the quarter, the Theatre experienced strong network and service sales.

The Americas will continue to focus on ROI and business case selling for C-level executives.  The roll out of the new product set to the partner base will be completed, and continued focus will be placed on the partner excellence program.

EMEA
Revenue in EMEA during 1Q09 totaled 80.3 MUSD, compared with 77.7 MUSD in the same quarter last year.  The most mature markets, including the Nordics and Germany, held up well, while emerging markets such as Russia and Eastern Europe showed weaker performance. 

EMEA strengthened its position in the Public Sector, particularly in the UK and the Nordics. It also established a strong competitive position with TANDBERG Total Telepresence and its interoperability story.  In addition, the Theatre had strong network and service sales.

Going forward, EMEA will continue to execute around the telepresence initiative and focus on educating the partner network on the new solutions. The Theatre will also continue tight cost control.

ASIA PACIFIC
Revenue in APAC during 1Q09 totaled 18.7 MUSD, compared with 20.0 MUSD in the same quarter last year. The Theatre's disappointing performance reflected a challenging economic environment across different markets.

Results in North Asia reflected a solid performance in China while Japan faced a particularly difficult environment and execution issues.  Continued investment in the organization and channels is a priority.

South Asia experienced longer decision cycles across all regions in the enterprise business.

2009 STRATEGIC INITIATIVES
Video conferencing:  As the economic environment continues to be a challenge, the underlying drivers of video conferencing remain in place.  Organizations are turning to video to do more with less and to transform their businesses to meet the changing needs of the market.  These companies are choosing TANDBERG solutions for an absolute level of quality, the completeness of the portfolio and ease-of-use.  In addition, customers have labeled TANDBERG as a "safe investment" with low Total Cost of Ownership, strong integration with Microsoft Office Communications Server 2007 and interoperability across product lines and with legacy third party systems.

Further validating this technology leadership, TANDBERG was the first company to demonstrate 1080p at 60 frames per second. The demonstration at VoiceCon in Orlando, FL, showcased TANDBERG FluidHDtm, the most natural video communication experience possible.

With an unparalleled product line now shipping, focus will be on training the sales teams and partners and bringing more Executive Briefing Centers online.

Network-centric approach:  As customers recognize the benefits of video, the need for scalable video solutions will grow.  With an intelligent network at the core of large deployments of endpoints, management and security controls make it possible to have tens of thousands of users in a single video community.  The TANDBERG Video Communication Server and TANDBERG Management Suite, at the video network core, have been enhanced this quarter for scalability and the TANDBERG MSE 8000 multipoint control unit continues to have the highest High Definition port capacity.

The Company's network-centric approach to scalable video will enable video endpoints to fully interoperate across solutions and markets.

Telepresence.  The momentum for telepresence continues to build. Early success for the TANDBERG T3 is being driven by its ease of use, high quality experience and its interoperability with standards compliant video conferencing, including PC video and third-party telepresence systems.

The opportunity in the telepresence market now lies with federation between service, network and video vendors.  To capture this market, TANDBERG will develop a credible service provider partnering proposition and offer certified managed services to ensure the best possible telepresence experience for the customer.

OSLO and NEW YORK, April 23, 2009
The Board of Directors of TANDBERG asa

Jan Chr. Opsahl (sign.) 
Chairman

Fredrik Halvorsen (sign.)
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 from Oslo, Norway.  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 +1.617.614.4912 (international), +1.800.591.6948 (U.S. callers) and 0808.234.7616 (U.K. callers). The audience passcode for the call is TANDBERG. 

Second quarter results will be presented on July 16, 2009 at 5:45 pm CET / 11:45 am ET.   For further information please contact Geir Olsen, ph. +44 7766254782.

FINANCIAL TABLES
Click for full press release plus financial tables.

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.