STRICTLY CONFIDENTIAL

UBS Technology M&A

Discussion of Current Industry Trends

March 2005

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Table of Contents
SECTION 1 SECTION 2 SECTION 3

M&A Market Conditions M&A Drivers and Considerations UBS Overview

2 8 14

SECTION 1

M&A Market Conditions

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M&A Volume in the US

Current rebound in activity across all industries is reflective of a return to a healthier market
j Large, strategic combinations are backProctor & Gamble / Gillette, JPMorgan / BankOne, Cingular / AT&T Wireless, Sprint / Nextel, Oracle / PeopleSoft, Symantec / Veritas, Johnson & Johnson / Guidant and Wachovia / SunTrust j Significant financial sponsor activity in the middle market Taking advantage of depressed market conditions and attractive debt markets
1,500 1,411 1,328 1,250 1,219

1,045 1,000

Volume up 41% in 2004 vs. 2003

($ in billion)

750 608 530 500 407 296 250 97 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 110 116 154 529 433

Source: Securities Data Corporation

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Technology M&A Activity

Technology M&A olume Has Increased Steadily Since 2002 Lows

500 450 400 350 Deal Value (US$ Billions) $311 300 65 250 200 150 100 50 58 0 1997
1997 No. of Deals 1,133

$485 95

> $10bn $1bn - $10bn < $1bn No. of Deals

3,000

2,500

2,000 No. of Deals 233 1,500

$143 25 $85 26 60

148 $124 24 157 98 36 65 2000

2000 2,648

1,000 $103 $65 19 46 2002

2002 1,318

$64 17 47 2003
2003 1,329

22 15 65

500

58 1998
1998 1,409

0 1999
1999 1,862

2001
2001 1,705

2004
2004 1,508

Source: Securities Data Corporation Note: Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q3 2003

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M&A Deal Activity is Intensifying

Market recovery in 2003 and stability in 2004 have increased cor orate confidence and created an environment conducive to M&A transactions
j Technology companies are exiting defensive, "survive the downturn" mentality and reviewing strategic options Recalibrating under invested businesses Capturing upside as economic conditions continue to improve j Technology M&A deal volume increased 60% in 2004 M&A pipeline is expected to be strong for 2005 Number of Announced Transactions 1
500 400 300 200 100 Q1 Q2 Q3 2003 Q4 Q1 Q2 2004 Q3 Q4 281 325 352 371 399 370 394 345

Technology M&A Deal olume (US$ Billions) 1

120 100 80 60 40 2002 2003 2004 $64.9
(1% ) 60%

102.6

$64.2

j 179 additional transactions were announced in 2004 compared with 2003 j Volume of discussions has intensified drastically
Source: Security Data Corporation Note: 1 Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q2 2003

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Current Trends in Technology M&A

TREND VERVIEW
ri j A recover in technology stock prices and increased corporate confidence cti ity p i s r structur t ir usi sses i creased ear i s panies are eager t ake acquisiti ns t capture upside as arket c nditi ns i pr arked t e return of the Technology A ega-deals j eals er illi n represented f deal alue in , ersus in eturn f landscape shaping deals such as y antec/ eritas, / rtisan and the c pleti n f racle/ eopleSoft

RECENT TRANSACTI NS
j I / scential ( , j Sy antec / eritas ( j enovo roup / I ( , ) j / etegrity ( j Juniper / etscreen ( j racle / eoplesoft ( j / rtisan ( j j j

Sector Consolidation

j Sector consolidation continues to drive A s companies refocus on growth, they are seeking opportunities to expand product offerings, acquire new technology and achieve critical mass egulatory environments created product opportunities for acquirors and at the same time forced smaller listed firms to re-assess the pros and cons of operating on a standalone asis j Stock consideration has ecome a more favorable A currency as technology stock prices have recovered ost technology companies have een trading at or close to their three -year highs j In some recent deals, cash consideration has een linked to stock consideration as acquirors tap into the equity markets to raise funds for acquisitions Improvements in capital markets have allowed companies to raise cash at a low cost through converti les or straight equity j Private equity players continue to show interest in acquiring technology companies Some technology stocks have enjoyed only limited participation in the market recovery ow interest rates have enabled private equity players to borrow at low costs to fund acquisitions The downturn has created companies with lower cost structures and higher profitability The recent market recovery has provided private equity players with better exit opportunities

{ q y

| ptp nm w z r

j j

Private Equity Activity

arlyle / Insight ( , mm) olden ate apital / lue artini ( mm) j eritas apital / ynCorp from CSC ( mm) j ain Capital, Silver ake Partners, arbug Pincus / S PLM from S( , mm)

r l o pp nm

ptxm l

v utm q l

j j j j

ih

Stock Consideration

) 332

15

@ A6@ % 4

332

87 % 

Resur ence in Deal Acti it

om / TippingPoint ( mm) j redence / PTest ( mm) j Serena / erant ( mm) j isco / etSolve ( mm) j m) j Symantec / eritas ( j , mm) j Safenet / ainbow ( mm) j redence / PTest ( mm) Issued convertible j Serena / erant ( mm) Issued convertible

r t x s vwrt ryyt x s wvut sr d PPRReG F E F PPIIR IH G W c PPbH a RG Y PPH S`G Y FX PPIIR H G U V P Q F ED

) , ) , ) , )

D XW ED PPH TS RH G PPIIH H G

  

 

gf

$ 10)

C $ $ 8$ B $ 6 $ ' %$ # " ( &        p i h k j j

) usiness

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M&A and IPO Activity in the Technology Sector

Number of Announced M&A Transactions and IPO Filings
3,000 30 2, 00
eals

3 0 2, 4

300

23 ,

2 0 , 0

No. of Announced M&A

, 0

, 33

24 00

0 M&A IPO

Source: Securities Data Corporation and UBS E uity Capital Markets Group Note: Oracle/PeopleSoft included as 2004 M&A transaction, original hostile offer was first launched in Q3 2003

2000

200

2002

2003

~ 

23

2004

00

~ 

,000

,3

,32

~ ~

~ 

, 00

,40

2,000

2
No. of IPOs Filed

200

0 00 0
7

~ 

~~

~ ~

SECTION 2

M&A Drivers and Considerations

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Principal Drivers of Technology M&A

j Critical mass and financial strength

Achieve Scale

j Customer leverage j Increased distribution and sales support j Market position consolidation j Leapfrog competition j New market entry

product or geography

Expand Product ffering

j Capture new customer bases j uy vs. make j

time to market

j ngineering talent and/or management acquisition

ff-income statement

j Fill product gaps

Offer Complete Solution

j Capitalize on installed base j ccelerate time to market j Strengthen channel partnerships j

ffer one-stop shop

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M&A Considerations
A number of factors to consider in ursuing any M&A transaction

Business Rationale

j Compelling strategic rationale j Create or consolidate market leadership position j ssential new technologies, markets or products j Transaction multiples compared to public comparables and precedent transa ctions

Financial Considerations

j Impact on combined company revenue and earnings growth trajectories j ffect on margins j evenue and cost synergies j PS accretion / dilution j Market perception of target company / merger partner

M arket Reaction

j Consistent, simple to understand story j Financial parameter clarity j Price paid / consideration mix j Time to closure

Execution Risk

j nti-trust / regulatory j Tight contract terms j Integration strategy

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Process Considerations
Public Offering ersus Sale

Initial Public Offering PROS: j Primary shareholders retain voting control and existing management continues to execute the strategic vision of the business j Proceeds from an IPO can be used to increase scale through ac uisitions or fuel organic growth j Shareholders can participate in potential upside should the business continue to execute and market conditions remain favorable CONS j The organization must take on the costs associated with public filing and compliance re uirements while managing greater scrutiny by investors j An IPO lock-up prevents current shareholders from achieving immediate li uidity j There is a high degree of uncertainty in future capital market conditions j There is the potential for a downside in valuation should the business lose traction PROS:

Sale of Business

j Reduces or eliminates execution risks of the current business plan as well as future capital market uncertainties j M&A valuation includes control premium j Can offer a more immediate path to li uidity for current shareholders j Avoids the costs associated with being a public company j Partnering increases opportunity to cross-sell and up-sell through larger distribution platform and gain rapid critical mass to better compete CONS: j Primary shareholders relin uish voting control and new management executes the strategic vision of the company j Cash transactions eliminate the upside participation in the pro forma company j Integration and execution risk of combined business

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Sarbanes-Oxley 404 Compliance

Benefits j Intended to restore investor confidence in U.S. public markets j Drives greater consistency and transparency in reported filings j Increased executive accountability over financial reporting j Increased spending at the CFO and CTO level to meet compliance criteria Costs j Increased cost of being public, especially small cap companies j Entails significant allocation of resources j Not meeting SOX deadline re uirements or announcing inade uacies in significant controls can have negative effect on stock price UTStarcom Chordiant Software Interpublic Group

Advisory Services s. IT S ending Mix for SOX Com liance

4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2003

Antici ated Technology S ending to Su Com liance

Security

ort SOX

illions)

Source: Gartner 2004 estimates

Source: Forrester Research survey of 454 technology decision-makers

10

20

30

40

50

2004 Advisory Services

2005

200 IT Spendin

2007

30

usiness ntelli ence

ecord Mana e ent

39

Process Control

40

0 70
12

Stora e

52

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Typical Timing of an M&A Transaction

Illustrative Timeline of a Sell-Side Controlled Auction Engagement
Weeks Activity Action Organizational meetings 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Due Diligence and Pre aration

Due diligence meetings Information Memorandum Preparation of management presentation Finalize buyer list Initiate contact with buyers

Marketing

Negotiations and Closing

Deliver Information Memorandum Finalize management presentation and data room Buyer due diligence

Receipt and review of final proposals Negotiate and sign definitive agreement Closing

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SECTION 3

UBS Overview

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UBSA Leading Global Financial Services Firm

Our strength is backed by industry accolades

Wall Street Powerhouse FORBES 2004

The UBS Way BLOOMBERG 2004

Worlds Best Investment Bank EUROMONEY 2004 Worlds Best Bank EUROMONEY 2003

Best Investment Bank THE ECONOMIST 2003

Worlds Best Investment Bank INVESTMENT DEALERS DIGEST 2002

UBS is a banking giant but, a Wall Street powerhouse? Oh Yes. This is a house thats grown out of its regional shell to assume premier proportions in world finance. But its the push into the rarified realm of Investment Banking that sets UBS apart.
BIG KID ON THE BLOCK

UBS has achieved what once seemed impossible for any European investment bank: it has broken into the front rank in the US market, source of roughly half the global investment banking fee pool. In the 12 months ending in April 2004, it doubled its share in announced US M&A deals.
WORLDS BEST IN ESTMENT BANK EUROMONEY 2004

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FORBES

UBSA Leading M&A Advisor with Rapid Improvement in Market Share

20032004 # of Transactions / Market Share 1
oldman Sachs JP Morgan Citigroup Morgan Stanley 40 459 42 1 . %

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20032004 Market Share versus 20002002

+2 % Lehman ros Deutsche ank Lazard Goldman Sachs Citigroup JP Morgan Morgan Stanley Merrill Lynch (2 %) ( (1%) (2%) (5%) (11%) +9% + % + %

12.2%

22 . %

10. %

Deutsche ank Merrill Lynch Lehman ros Lazard

2 5 2 2 252 197

. %

.1%

Notes: Data represents all M&A deals worldwide greater than $100 million in transaction value. Full credit given to ac uiror and target advisor(s). Excludes withdrawn deals, e uity carveouts, exchange offers, and open market repurchases 1 Market share based on number of transactions. Market shares do not sum to 100% due to multiple advisors on each transaction (e.g., target advisor and ac uiror advisor)

UBS has ositioned itself as one of the leading M&A advisors worldwide and has un recedented momentum, ca turing more market share than any other bank since 2002

. %

CSF

%)

CSF

10. %

1 .0%

1 . %

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Overview of UBS Technology M&A Group

Technology M&A Ex ertise
j Strong technology-focused M&A presence with deep industry knowledge and company relationships j Experienced in a wide range of advisory assignments Buyer advisory Seller advisory Cross-border transactions Merger of e uals Shareholder value protection Leveraged transactions

2004 Technology M&A Transactions Less Than $1 Billion

Financial Advisor oldman Sachs Co Morgan Stanley Credit Suisse First oston BS JP Morgan anc of merica Securities LLC Citigroup Jefferies Co Lehman rothers othschild
Source: SDC

Rank

Value ($mm)

No. of Deals

7 8

Selected Recent Transactions

M ay S 380 million Sale to Serena Software

M arch S 4 3 million Sale to SafeNet

January S 01 million Sale to Manpower

January S 4 7 million Financial estructuring

November US 295 million Sale to NetScreen

February S 415 million Sale to e ay

February S 850 million Sale of Selected ynCorp nits to eritas Capital

November S 137million Sale to Cisco Systems

July S 170 million Sale to Find hat.com

M ay S 3 million Acquisition of NPTest

11 4

17

7, . , .4 , 7. 4,4 . 4, 75.4 , 48. , 4. , . , .4 ,492.

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Contact Information

UBS Securities LLC 555 California Street Suite 4650 San Francisco CA 94104 Tel. 1-415-352 5650

www.ubs.com

UBS Investment Bank is a business group of UBS AG UBS Securities LLC is a subsidiary of UBS AG

This presentation has been prepared on a confidential basis solely for the use and benefit of the company; provided that the company and any of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the company relating to such tax treatment and tax structure. Distribution of this presentation to any person other than the company and those persons retained to advise the company is unauthorized. This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of UBS.

This presentation has been prepared by UBS Securities LLC (UBS) for the exclusive use of recipient (together with its subsidiaries and affiliates, the company) using information provided by the company and other publicly available information. UBS has not independently verified the information contained herein, nor does UBS make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information contained in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of UBS from the information provided by the company and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. UBS expressly disclaims any and all liability relating or resulting from the use of this presentation. This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The company should not construe the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The company should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein. This presentation does not purport to be all-inclusive or to contain all of the information which the company may re uire. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation.

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