Slide 1: 2006 Q1 Investor Conference
2006 Q1 Investor Conference Jan. 20, 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement Except for statement in respect of historical matters, the statement contained in this release are “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking
Slide 3: 1/20/2006
Confidential 1/20/2006
Slide 4: Agenda
Agenda ¾ Financial Review Mason Liu ¾ Business Updates Wonder Wang ¾ Business Outlook John Lee ¾ Q&A 1/20/2006 4
Slide 5: Financial Review
Financial Review Presented by Mason Liu Vice President Finance/Accounting Division 1/20/2006 5
Slide 6: Income Statement Comparison 2004 vs. 2005
Income Statement Comparison 2004 vs.2005 YoY% Amount: NT$ million 2005 2004 Change Net Sales 17,717 100% 13,982 100% 27% Cost of Goods Sold 14,609 82% 11,438 82% 28% Gross Profit 3,108 18% 2,544 18% 22% Operating Expenses 1,753 10% 1,546 11% 13% Operating Income 1,355 8% 997 7% 36% Total Non-Op. Inc
Slide 7: 4Q/2005 QoQ Income Statement Comparison
4Q/2005 QoQ Income Statement Comparison Amount: NT$ million QoQ% 4Q/2005 3Q/2005 Change Net Sales 5,095 100% 4,981 100% 2% Cost of Goods Sold 4,116 81% 4,084 82% 1% Gross Profit 979 19% 897 18% 9% Operating Expenses 509 10% 439 9% 16% Operating Income 471 9% 458 9% 3% Total Non-Op. Inc. (Loss) (75)
Slide 8: 4Q/2005 YoY Income Statement Comparison
4Q/2005 YoY Income Statement Comparison Amount: NT$ million YoY % 4Q/2005 4Q/2004 Change Net Sales 5,095 100% 3,442 100% 48% Cost of Goods Sold 4,116 81% 2,818 82% 46% Gross Profit 979 19% 624 18% 57% Operating Expenses 509 10% 396 11% 29% Operating Income 471 9% 228 7% 107% Total Non-Op. Inc. (Loss
Slide 9: Non-op Income / Loss Breakdown
Non-op Income / Loss Breakdown Amount: NT$ million Q4/05 Q3/05 Q4/04 L.T. Investment Income / (Loss) (80) (19) (15) FX Gain / (Loss) (32) 39 (47) Inventory Gain / (Loss) 35 (20) (64) Financial Income / (Exp.) & Others 2 3 42 Total (75) 3 (84) *2005 figures are non-auditing 1/20/2006 9
Slide 10: 12/31/2005 Balance Sheet YoY Comparison
12/31/2005 Balance Sheet YoY Comparison Amount: NT$ million 12/31/2005 12/31/2004 YoY % Change Cash 710 8% 827 12% -14% S-T Investments 0 - 427 6% -100% Account Receivable 3,757 44% 2,741 39% 37% Inventory 1,865 22% 1,453 20% 28% L-T Investments 993 12% 220 4% 351% Fixed Assets 1,100 14% 1,173 16% -
Slide 11: 12/31/2005 Balance Sheet QoQ Comparison
12/31/2005 Balance Sheet QoQ Comparison Amount: NT$ million 12/31/2005 9/30/2005 QoQ % Change Cash 710 8% 353 4% 101% S-T Investments 0 - - - - Account Receivable 3,757 44% 4,612 50% -19% Inventory 1,865 22% 1,976 22% -6% L-T Investments 993 12% 1,000 11% -1% Fixed Assets 1,100 14% 1,107 12% -1% Tot
Slide 12: Key Financial Ratios - Liquidity / Leverage
Key Financial Ratios - Liquidity / Leverage Unit %, days 2005 2004 Days A/R 67 39 Days Inventory 41 23 Days A/P 60 31 Cash Cycle 48 31 Current Ratio 173 181 Debt/Equity Ratio 79 78 *2005 figures are non-auditing 1/20/2006 12
Slide 13: Key Financial Ratios - Profitability (%)
Key Financial Ratios - Profitability (%) 2005 2004 Net Income/Sales 6% 5% Net Income/Total Assets 12% 13% Operating Profit/Sales 8% 7% Return on Equity 22% 19% EPS (NT$) 3.61 2.87 *2005 figures are non-auditing 1/20/2006 13
Slide 14: Business Updates
Business Updates Presented by Wonder Wang President 1/20/2006 14
Slide 15: Peer Comparison: 2004 vs. 2005
Peer Comparison: 2004 vs. 2005 NTD: 200 184 177 150 140 140 136 122 129 123 109 110 104 2004 100 2005 55 50 0 Alpha Accton Cybertan Zyxel Cameo Gemtek Growth: 27% -24% 11% 18% 101% -15% 1/20/2006 15
Slide 16: Revenue Breakdown By Business Unit 2005 vs. 2004
Revenue Breakdown By Business Unit 2005 vs. 2004 2005 2004 Europe Others 3% D-Link N. America 5% 42% Europe Others D-Link 13% N. America 2% 4% 48% 17% China China 16% 12% Japan 21% Japan 17% 1/20/2006 16
Slide 17: Revenue Growth By Business Unit 2005 vs. 2004
Revenue Growth By Business Unit 2005 vs. 2004 80 70 60 50 40 30 20 10 Unit: NT$0.1 billion 0 North D-Link Japan China Europe Others Total : America 2004 67.07 24.09 16.51 24.31 2.15 5.67 139.82 2005 74.95 36.43 27.92 23.76 8.54 5.56 177.17 Growth 12% 51% 69% -2% 297% -2% 27% 1/20/2006 17
Slide 18: Revenue Growth By Business Unit 4Q05 vs. 3Q05 vs. 4Q04
Revenue Growth By Business Unit 4Q05 vs.3Q05 vs.4Q04 25.00 20.00 15.00 10.00 5.00 0.00 North : D-Link Japan China America Europe Others Total 4Q04 18.10 4.74 3.95 5.71 0.80 1.12 34.42 3Q05 21.28 9.39 8.97 6.11 2.50 1.55 49.81 4Q05 21.33 11.50 6.38 7.49 2.84 1.41 50.95 1/20/2006 18
Slide 19: Revenue Breakdown By Product Line 2005 vs. 2004
Revenue Breakdown By Product Line 2005 vs. 2004 2005 2004 Digital Home Others 2% 4% Broadband Digital Home Others 32% 1% 4% Wireless Broadband 21% Wireless 17% 33% NIC 2% NIC 3% VoIP 10% Switch VoIP 9% 29% Switch 33% 1/20/2006 19
Slide 20: Revenue Growth By Product Line 2005 vs. 2004
Revenue Growth By Product Line 2005 vs. 2004 60 50 40 30 20 10 0 Digital Total : BB VoIP Switch NIC Wireless VDSL Others Home 2004 46.22 12.8 45.73 3.83 23.01 2.07 N/A 6.14 139.82 2005 57.45 18.39 51.03 3.25 36.82 2.90 4.03 3.30 177.17 Growth 24% 44% 12% -15% 60% 40% - -46% 27% 1/20/2006 20
Slide 21: Revenue Growth By Product Line 4Q05 vs. 3Q05 vs. 4Q04
Revenue Growth By Product Line 4Q05 vs.3Q05 vs.4Q04 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Digital : BB VoIP Sw itch NIC Wireless VDSL Others Total Hom e 4Q04 11.19 1.75 11.10 1.07 7.07 0.91 1.33 34.42 3Q05 16.69 4.65 14.92 1.07 10.32 0.42 0.95 0.79 49.81 4Q05 13.50 5.72 15.53 0.87 1
Slide 22: Business Outlook
Business Outlook Presented by John Lee CEO 1/20/2006 22
Slide 23: Industry/Product
Industry/Product ¾LAN/MAN- ¾Increasing internet traffic and 10G (and upcoming 100G) drive the high end switch market. ¾Strong demand on GPON/GEPON by Telco and MSO. ¾Broadband- ¾From ADSL2+ to FTTx+VDSL (and VDSL2) ¾Triple play (data + voice + wireless) to quadruple play (data + voice + wireless + v
Slide 24: Industry/Product
Industry/Product ¾Wireless- ¾11n stimulates WLAN market ¾Integration of Wi-Fi and WiMAX. ¾Digital Home- ¾IPTV to drive demand of IP STB. ¾New devices surrounding TV sets (STB, DVBx, DMA, Photo Viewer, …) 1/20/2006 24
Slide 25: Business
Business ¾Japan: Stable shipment on ADSL2+, IAD, Switch and Wireless products. More demand on GEPON+VDSL solutions. ¾North America: Focus on Switch ODM business. Stable revenue growth from current customers. New customer engagement is the driving force to grow. ¾Europe: Engaged with first-tier custo
Slide 26: www.alphanetworks.com IR@alphanetworks.com
www.alphanetworks.com IR@alphanetworks.com