TANDBERG Reports Third Quarter 2008 Results

Taiwan, October 17, 2008 — TANDBERG® (OSLO: TAA.OL), today announced unaudited financial results for the third quarter ended September 30, 2008.

Overview of 3Q08:

* Revenue of 210.3 MUSD with volume of 17,487 units
* Operating profit of 45.3 MUSD and pre-tax profit of 55.0 MUSD
* Cash flow from operations of 53.4 MUSD
* Launched full standards-compliant telepresence portfolio
* Expanded relationship with HP

FINANCIALS
Third quarter revenues were 210.3 MUSD compared with 165.3 MUSD in the same quarter last year, representing 27% year-over-year growth. Gross margin for the quarter was 65.9%, compared with 65.5% in the same quarter last year. Selling, general & administrative (SG&A) expenses for 3Q08 totaled 81.7 MUSD, compared with 62.9 MUSD in the same quarter last year. Operating profit was 45.3 MUSD compared with 38.7 MUSD in the same quarter last year. Earnings per share (after tax) were 0.35 USD in 3Q08 compared with 0.22 USD in the same quarter last year.

The Company generated cash flow from operations of 53.4 MUSD in the quarter, which after a net cash outflow from investments of 14.0 MUSD, gave a total cash inflow of 39.4 MUSD. As of September 30, the Company had a cash balance of 93.6 MUSD and an equity ratio of 66.1%.

FINANCIAL TABLES
Click for full press release plus financial tables.

OPERATIONS
Reviewing third quarter results, Fredrik Halvorsen, Chief Executive Officer, stated, “During challenging economic times, our customers are turning to video to help them reduce costs and stay competitive. Video has the potential to significantly reduce costs and offer a defendable Return on Investment, contingent on three conditions being met. First, there must be a complete portfolio for enterprise-wide deployment. Second, the ability to seamlessly integrate video conferencing and telepresence is required to maximize the benefits and usage of the deployment. Third, a global service and delivery capability will ease implementation and protect the investment. TANDBERG delivered on these three imperatives in the third quarter, strengthening its competitive positioning.”

Launch of an industry-defining telepresence portfolio. Expanding the market, TANDBERG introduced a telepresence portfolio that includes the standards-compliant immersive TANDBERG Telepresence T3 system, a new telepresence server and a new package of TANDBERG-certified services that complete the telepresence experience. According to Tim Cureton, group head of telecommunications at HSBC, ‘The TANDBERG T3 will take our use of collaborative global telepresence meetings to a new level, in addition to adding to our portfolio of green technologies that reduce unnecessary travel expense and maintain our status as a carbon-neutral company.’

Enabling seamless integration of telepresence and video conferencing, in High Definition. The TANDBERG Telepresence Server bridges the worlds of telepresence and video conferencing, enabling immersive and cost-effective telepresence across the enterprise. Dominick Dodd, Principal Analyst at Frost & Sullivan, concluded, ‘This announcement is part of a bold move by TANDBERG to leap frog the current generation of telepresence solutions. To fully realize all of the extensive benefits of telepresence, organizations must be able to connect with their existing base of video conferencing systems and desktops, and with those of customers and suppliers. TANDBERG has ‘joined the dots’ of the telepresence puzzle, pulling together the essential elements of interoperability, services, and network with a comprehensive range of endpoint options.’

Further extending and complementing global partner delivery capabilities. HP and TANDBERG expanded their relationship in the third quarter. TANDBERG announced that the Company will provide HP’s world-class managed service and global network solution as an option for its global customer base, providing telepresence and traditional video conferencing customers with greater quality and reliability. At the same time, HP will resell TANDBERG telepresence and high-definition visual communication products to enterprise customers who also purchase HP Halo managed service offerings.

MARKETS
In 2008, TANDBERG sold 17,487 endpoint units compared with 15,398 endpoint units in the same quarter last year, a 14% increase. Network products grew 111% year-on-year in revenue terms.

AMERICAS
Revenue in the Americas during 3Q08 totaled 109.1 MUSD compared with 92.5 MUSD the same quarter last year. Federal performance was strong with solid execution across all areas. The Mid-Atlantic, Southeast and Midwest regions also performed well.

Productivity-based selling continued to yield good results despite longer decision cycles. Services sales improved, and customer and partner feedback on the new telepresence portfolio was outstanding. Strong activity and interest levels continued.

The Americas team will continue to invest in productivity-based selling and focus on global channel development.

EMEA
Revenue in EMEA during 3Q08 totaled 77.4 MUSD, compared with 54.0 MUSD in the same quarter last year. Healthy growth continued in the Theater, albeit at a slower rate than the first half due to the challenging economic climate. North and Central Europe continued to perform well.

The new products and services portfolio was well-received by customers and channel partners. A record number of partners attended the annual EMEA Partner Summit. The Theatre saw traction with Systems Integrators and Video Conferencing Specialists within the quarter, reflecting the value of the partner model.

The EMEA team will continue to invest in demonstrating Return on Investment and in further building out partner network and competencies.

ASIA PACIFIC
Revenue in APAC during 3Q08 totaled 23.8 MUSD, compared with 18.9 MUSD in the same quarter last year. Continued investment in channels and the organization will be needed in the fourth quarter.

While not closed in the quarter, North Asia progressed well with several large deals. Continued investment is required for sustainability in China.

South Asia recorded good progress in government sales throughout the region. There was also good momentum in the enterprise business in Singapore and Hong Kong, and in the education vertical in Australia.

STRATEGIC INITIATIVES
TANDBERG has set priorities to capture market expansion and differentiate through a scalable and robust network solution. The newly launched immersive telepresence system, complemented by the telepresence server and service options, fulfill these commitments. They join the portfolio announced in the second quarter that includes the TANDBERG Telepresence T1 single display system and the TANDBERG Codec C90 telepresence engine.

• The TANDBERG Telepresence T3 immersive system provides an executive “across the table” experience. The exclusive design works in tandem with innovative technology invisible to the user. The Full HD (1080p) telepresence engines, large Full HD screens and PrecisionHD 1080p cameras, which are positioned for direct eye contact, ensure that participants appear as if they are in person. The TANDBERG Telepresence T3 is interoperable with all standards-compliant PC, desktop and room video systems, including HD systems.

• The industry-first TANDBERG Telepresence Server bridges the worlds of telepresence and video conferencing. Any type of standards-compliant video system can be added to a TANDBERG telepresence meeting at the best possible quality, including HD. The server also provides robustness and reliability through the unique TANDBERG transcoding technology, which allows systems with varying capabilities on different networks with different bandwidths to join into the same telepresence meeting.

• TANDBERG Total Service is delivered by a partner network to offer customers a global offering with localized delivery. Certified managed service providers ensure continuous managed or hosted service performance. The TANDBERG Total Service portfolio includes fulfillment, network and management services to guarantee consistency at every stage.

Another priority for TANDBERG has been to deepen strategic relationships. TANDBERG and HP recently unveiled a new managed service offering and an expanded reseller agreement. Through the HP and TANDBERG alliance, both companies will offer customers greater access to products and services that can unite globally dispersed teams and enhance the communication experience. Included in the alliance: 1) HP will resell TANDBERG telepresence and high-definition visual communication products to enterprise customers who also purchase HP Halo managed service offerings; 2) TANDBERG will provide HP’s world-class managed service and global network solution, the HP Halo Video Collaboration Service, as an option for its global customer base; 3) HP will continue to manufacture and sell its current line of fully immersive telepresence hardware solutions. The resulting improvements in the overall video collaboration experience can drive significantly higher usage rates that can increase productivity at the workplace while decreasing travel costs and carbon emissions.

FINANCIAL TABLES
Click for full press release plus financial tables.

FINANCIAL STATEMENTS – BASIS FOR PREPARATION
The enclosed consolidated condensed financial statements have been prepared in accordance with IAS 34, “Interim Financial Reporting”.

SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and methods of computation used in the preparation of the financial statements are consistent with the policies used in the annual financial statements for the year ended December 31, 2007. The enclosed consolidated condensed financial statements should be read in conjunction with the 2007 annual financial statements, which include a full description of the Group’s accounting policies.

ABOUT TANDBERG
TANDBERG is the leading provider of telepresence, high-definition videoconferencing and mobile video 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.