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Siemens Enterprise Communications Analyst Webinar

Siemens Enterprise Communications held a video webcast today to update industry analysts on the company's past year's results and activities since Gores Group officially assumed a 51% stake in the company a year ago. The key presenter was Mark Stone, Chairman. Mark Straton, Senior Vice President, Voice and Applications Marketing, also presented a section of the webinar. Also participating was Hakim Akhavan, who was recently announced as the new CEO.The session was positive and upbeat as Stone concisely reviewed four major initiatives of the past year to improve the company's market position, finances, and Go-to-Market strategy.

Item one was for Siemens to outperform the dismal market conditions of the past year, which it did based on shipments and revenues. The voice market last year was off by more than 20% and the data market by about 15%, though things were improving by year's end. Siemens admitted that its revenues were down last year (a very appreciated show of honesty), but the company did better by several percentage points than overall market numbers, according to various research reports, for its voice/application and network infrastructure/security business units. On a very bright note, its professional/managed services business unit actually improved by 10% last year despite the down market.

The next item on the agenda was a strong initiative to shift its traditionally heavy focus on direct sales to more third party distribution channels. This would have the effect of greatly expanding market coverage and potential sales opportunities. Several key partnership relationships have been announced during the past year, such as the very recent deal with Shared Technologies. Another significant partner announcement last year was NetLink's acquisition of Siemens's local assets across these countries: Estonia, Latvia, Lithuania, Finland, Sweden, Ukraine, Greece, Switzerland, Turkey, Ireland, Hungary, Bosnia, Bulgaria, Croatia, Slovakia, Slovenia, Serbia, Romania, Singapore, Malaysia, Thailand, Ecuador, Peru, Portugal, Venezuela, Chile and Canada.

The third item was the organization of the company on a global basis focused on customers, markets, and channels. The historic focus of Siemens has been on large enterprise customers and global accounts. Though they have not ignored the small business segment, the strength of Siemens had been at the high end of the enterprise communications market with the strongest coverage of dispersed geographic markets with local corporate presence. Establishing world class benchmarks for its staff and field organizations and support structure is a primary goal.

The final initiative reviewed was how the company restructured itself to save more than 500 million Euros in costs. This was done by downsizing a bloated organization, scaling back bureaucratic processes, and cutting back on various expenses such as travel, IT, and real estate. Recent and future cost savings mechanisms are designed to ensure long term financial viability and future scalability.

Mark Straton focused his comments on the Siemens voice and applications business unit. After a slow start a few years ago, shipments of its OpenScape platform are beginning to take off substantially for both voice and UC/messaging licenses (though older technology offerings followed the overall market decline). Globally, OpenScape voice shipment orders increased last year by almost 10%, an impressive result considering market conditions. In the US market the increase was multifold, with individual system installation size increasing a factor of 50%. Some upcoming product announcements were also previewed, with the OpenScape name replacing the HiPath branding convention.

Mr. Akhavan's comments were brief in his introduction to the analysts. He comes to the company with strong corporate management and leadership credentials and sees much potential at his new company for future growth and success. Though Siemens has lost sizable market share in North America during the past decade or so, it remains a strong competitor on the worldwide stage for enterprise communications and a force in driving the development of the market.