Stratex Networks — Merriman Curhan Ford & Co. Investor Summit 2006
23 slides from Stratex Networks's conference presentation, Sep 20, 2006
Slide 1: Merriman Curhan Ford & Co. Investor Summit 2006
(NASDAQ: STXN) Merriman Curhan Ford & Co. Investor Summit 2006 Sept. 20, 2006
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation constitute "forward-looking statements." Forward-looking statements in this presentation include, but are not limited to, the expected benefits and costs of the transaction; the anticipated timing of completion of the transaction; an
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find it Additional Information and Where to Find It This presentation is for informational purposes only. In connection with the transaction, the parties will file a registration statement on Form S-4, which will include a proxy statement/prospectus, with the Secu
Slide 4: Recent Event: Announced Merger of Stratex Networks and Harris Microwave Communications Division
Recent Event September 5, 2006 Announced Merger of Stratex Networks and Harris Corporation's Microwave Communications Division
Slide 5: Our Strategic Innovation Model - Initiated 2002
Our Strategic Innovation Model - Initiated 2002 Legacy Pt-Pt Microwave Eclipse Nodal Architecture Served Market Expansion Licensing Solution Expansion Scale Expansion Operating Leverage Negative Profitable 10-12+% 12-15% ROS Size
Slide 6: Stratex Investment Highlights
Stratex Investment Highlights Eclipse approach - strong results Growing profitability Established market presence Expanding global customer base Expanding markets and channels Solid Strategy for the Future Innovation Creating Sustainable Results
Slide 7: Annual Revenue Profile
Annual Revenue Profile FY03 Q104 Q204 Q304 Q404 FY04 Q105 Q205 Q305 Q405 FY05 Q106 Q206 Q306 FY06 Q406 Q107E Eclipse 0 36 36.9 40.3 40.9 3 41.3 35.5 37.3 26.4 24 30.1 25.7 22.2 134.6 17.9 Revenue Other 180 3.3 153 4.7 8.1 12.2 14.7 156 24.8 30.9 33.3 96.4 46.1 Eclipse 2.8 4.6 Estimate 64 Deferred Re
Slide 8: Value Innovation Driving New Business Model
Value Innovation Driving New Business Model Eclipse Nodal Transmission System Product Platform Value-Added, Software Based Solutions Legacy Point-to-Point Microwave Products (Multiple) Eclipse Innovation Model Quarterly Releases Generational Releases
Slide 9: Eclipse Product Family Revenue
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Revenue 36 36.9 40.3 40.9 41.3 36.2 41.8 35 48.4 47.3 46.2 Eclipse 3.3 4.7 8.1 12.2 14.6 24.8 30.9 33.3 46.1 51 Eclipse 2.8 4.6 Eclipse Product Family Revenue
Slide 10: Significant Financial Improvements
Significant Financial Improvements Excludes FAS123R and non-cash restricted stock plan charges Net Income Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 $(0.04) $(0.01) $0.01 $0.03 $0.05
Slide 11: Recent Event: Announced Merger of Stratex Networks and Harris Microwave Communications Division
Recent Event September 5, 2006 Announced Merger of Stratex Networks and Harris Corporation's Microwave Communications Division
Slide 12: Harris Stratex Networks
Harris Stratex Networks Industry Leadership Scale Innovative solutions Financial performance Complete Infrastructure Solutions End-to-end wireless transmission capabilities Transport, access, and carrier-grade Ethernet microwave systems Nodal processors Software upgrades Network management solutions
Slide 13: Snapshot of the Two Companies
Snapshot of the Two Companies (Microwave Communications Division) Continuing improvement in financial performance LTM revenue of $349M, growing at 9% Generated $21.7M in Non-GAAP operating income* and margin of 6.2% Latest quarter Non-GAAP operating margin* reached 9.1% Continuing improvement in fin
Slide 14: Transaction Overview
Transaction Overview Financial Structure Harris contributes Microwave Communications Division and $25M of cash for approximately 56% ownership Stratex shareholders exchange their shares for approx. 44% ownership Two-year standstill, with limitations in years three and four Fiscal year ending June 30
Slide 15: Compelling Strategic and Financial Rationale
Compelling Strategic and Financial Rationale Creates significantly greater scale -- the largest independent provider of wireless transmission network solutions Compared to all suppliers - #3 Globally and #1 in North America Delivers complementary global distribution channels Minimal customer overlap
Slide 16: A Leading Global Provider of Wireless Transmission Network Solutions
Global Market Harris Stratex 15% Stratex 6% Harris 9% A Leading Global Provider of Wireless Transmission Network Solutions North American Market Harris Stratex 48% Estimated based on calendar year 2005 global market of $3.5 billion Source: Management estimates Harris 46% Stratex 2%
Slide 17: Complementary Global Distribution Channels With Less Than 5% Overlap
Complementary Global Distribution Channels With Less Than 5% Overlap $ 175 $ 11 $ 186 $ 29 $ 22 $ 51 $ 21 $ 56 $ 77 $ 100 $ 81 $ 181 $ 24 $ 72 $ 96 North America Latin America Middle East/Africa Europe (incl. Russia) Asia Pacific * Based on the latest twelve months ended June 30, 2006 Revenue by Reg
Slide 18: Microwave Market Growth Expected
Microwave Market Growth Expected Total Global Market Growth of 8%; Strong Positioning in Higher Growth Segments Source: Management estimates 2006 2007 2008 2009 PDH access 2317 2461 2608 2859 PDH Transport 200 210 210 215 SDH Access (incl Ethernet) 713 847 976 1083 SDH Transport 705 711 750 780 ($ i
Slide 19: Unmatched End-to-End Product Portfolio
Unmatched End-to-End Product Portfolio Other Independent Suppliers Transport SDH PDH Access SDH PDH Network management solutions IP Turnkey planning, engineering, and implementation Source: Management estimates
Slide 20: Solid, Achievable Plan for Cost Synergies
Solid, Achievable Plan for Cost Synergies Cost of goods sold Increased outsourcing on some products to low-cost contract manufacturers Supply chain volume leverage Low-cost design architecture "best of the best" Operating expenses* Duplicate administrative and overhead costs Adherence to common engi
Slide 21: Harris Stratex Networks Performance Targets
Harris Stratex Networks Performance Targets Latest twelve months performance* Latest twelve months performance* Targets Harris Microwave Stratex Networks 2008-2009 Year-over-year revenue growth 9% 28% 10-15% Gross margin 34% 30% 40% Operating expenses as % of sales 27% 24% 25% Operating income margi
Slide 22: Summary
Summary The transaction is projected to be accretive to both Stratex and Harris shareholders From inception, creates a leading global provider of wireless transmission network solutions with leadership products and services Provides the scale to win major contracts, deliver sustainable growth, and c
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