OSLO & NEW YORK--TANDBERG® (OSLO:TAA.OL), today announced financial results for the first quarter ended March 31, 2007.

Overview of 1Q07:

• Revenue of 128.5 MUSD with volume of 12,866 units
• Pre-tax profit of 29.5 MUSD
• Operating expenses reflect investments in strategic initiatives
• Cash flow from operations of 9.9 MUSD (after non-recurring $12mn cash settlement costs)
• Business priorities for 2007 defined and communicated

FINANCIALS

First quarter revenues were at 128.5 MUSD compared with 82.7 MUSD in the same quarter last year. Gross margin for the quarter was 67.2%, compared with 69.1% in the same quarter last year. Selling, general & administrative (SG&A) expenses for 1Q07 totaled 51.6 MUSD, compared with 36.2 MUSD in the same quarter last year. Operating profit was 29.2 MUSD compared with 17.7 MUSD in the same quarter last year. Earnings per share (after tax) were 0.195 USD in 1Q07 compared with 0.113 USD in the same quarter last year.

The Company generated cash flow from operations of 9.9 MUSD in the quarter, inclusive of non-recurring settlement costs and the impact of taxes and changes in working capital amounting to 30.5 MUSD. Investments amounted to 9.1 MUSD and the net repurchase of shares amounted to 9.8 MUSD, resulting in a total cash outflow of 9.1 MUSD. As of March 31, the Company had a cash balance of 140.3 MUSD and an equity ratio of 61.9%.

OPERATIONS

Discussing first quarter results, Fredrik Halvorsen, Chief Executive Officer, stated, "The market drivers and solid execution enabling TANDBERG's growth in the second half of 2006 continued into 2007. In addition, the industry continued its rapid movement towards converged IP communications, with video becoming an integral part of a total communication solution.

To capitalize on this momentum, TANDBERG will continue to step up investment in R&D, marketing, sales and operations. The Company also announced targeted strategic initiatives to drive a distinct position within the changing competitive landscape. While inventory levels increased, continued tight working capital management is evident from the balance sheet as DSO reached a low of 60.2 days.

MARKETS

In 1Q07, TANDBERG sold 12,866 units compared with 8,124 units in the same quarter last year, a 58.4% increase.

AMERICAS

Revenue in the Americas Theatre during 1Q07 totaled 65.9 MUSD compared with 42.9 MUSD the same quarter last year, with continued strong sales performance and pipeline development. The Theatre experienced balanced growth and consistent execution across the Enterprise sector, especially in Canada and the Pacific Northwest. The Americas team experienced solid traction with the end-to-end solution, which now includes Experia, TANDBERG's telepresence offering, and Movi, the Company's PC video solution which is being trialed with customers. New Executive Briefing Centers showcasing the solutions, and the TANDBERG 1700 MXP, the only High Definition executive desktop system on the market, have been very well received by customers. Enterprise channel development remains a key focus for the Americas, and a new VP of Channels was hired in the first quarter.

EMEA

Revenue in EMEA during 1Q07 totaled 49.8 MUSD, compared with 31.7 MUSD in the same quarter last year. All regions performed well in the Theatre, particularly Northern Europe and the UK. The EMEA team is experiencing good traction in developing large accounts, and in leveraging a usage and adoption program to assist existing customers in driving business benefits. Strengthening the channel delivery model for total solution sales continues to be a key area of focus. A new head of Channels was appointed during the quarter to lead this initiative.

ASIA PACIFIC

Revenue in APAC during 1Q07 totaled 12.7 MUSD, compared with 8.1 MUSD in the same quarter last year. South Asia and Australia continued to show traction while North Asia is performing at expectation, but still below potential. In North Asia, predominantly in China and Japan, the focus remains on building the organization. The Company continues to invest in the region.

STRATEGIC INITIATIVES

IP communication is now being rapidly embraced, driving convergence of voice, video, and desktop collaboration. To establish a distinct position in this market, TANDBERG will provide a Natural Communication experience to customers, enabling customers to engage in every interaction as though it were an intimate, face-to-face discussion. To deliver on Natural Communication, the Company will develop technology and partner to offer a total solution for video-centric converged IP communication that focuses on seamless interoperability, utility-like reliability, scalability and ease of use.

TANDBERG has laid out the following priorities for 2007:

• Sustain strong operating fundamentals. The Company will uphold consistent behaviour in the field to maintain long-term/short-term balance.
• Address areas of opportunity in the core business in 2007, expanding at the high-end with telepresence, driving our global accounts business, and growing business in Asia.
• Invest aggressively to capture the converged IP communication opportunity. In the area of technology development and innovation, the Company will build video-centric solutions and provide visual communication for voice- and desktop-centric applications for converged IP communication. In marketing, TANDBERG will establish a distinct position in the IP communication market. And TANDBERG will build competence and capabilities in its service delivery model and among its channel partners, sales force and the broader organization.

ABOUT TANDBERG

TANDBERG is a leading global provider of visual communication 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.

Via [Business Wire]