Corporate Overview
December 2007
Safe Harbor Statement
Certain matters discussed herein constitute forward-looking
statements that are based on management's current expectations,
and involve risks and uncertainties that could cause actual results
to differ materially from those projected. The risks include, among
others, risks related to the previously disclosed restatement of
Vitesse's financial statements, and Vitesse's failure to file its
required reports under the Securities Exchange Act of 1934.
Furthermore, information provided which is not historical in nature
is considered to be forward-looking pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Vitesse undertakes no duty to update any forward-looking
statements or to confirm forward-looking statements to actual
results or changes in the Company's expectations.
2
The Company
Founded 1984
Initial Offering: December 1991
Symbol: VTSS (Currently trading on Pink Sheets)
Worldwide Presence
Headquarters: Camarillo, California
Five domestic and four international design
centers
California, Oregon, Massachusetts, Texas
Asia, Denmark, Germany, India
450 Employees
3
Management Team
Avnet, National Semiconductor,
TriQuint Semiconductor, Teradyne
2001
Tony Conoscenti
VP, Product Marketing
GAIN Electronics, Prudential Securities, AT&T
Intel, American Microsystem, Intersil, Siliconix,
Alliance Semiconductor, Sun Microsystems
1988
2001
Mike Logan
Phil Richards
VP, Sales (Eastern U.S. & Europe)
VP, Sales (Western U.S. & Asia)
Rockwell International Science Center,
St. Jude Medical
1996
Roy Carew
VP, Quality
Intel (DEC), General Instrument
1999
Paul Matranga
VP, Operations
2003
2006
2007
2007
2006
1986
Tenure
Magnetek, Special Devices
Sabra Bennett
VP, Human Resources
3Com, Audio Processing Technology,
Tritel Telecommunications, CSD Hathaway
Paul Browne
VP, Engineering
Ciena, Internet Photonics,
Lucent (Bell Labs)
Martin Nuss
VP, Strategy and Technology
Capella Photonics, Avanex Corporation,
Actelis Networks
Rich Yonker
Chief Financial Officer
Worldwide Restaurant Concepts, Atlantic
Richfield, Montgomery Ward
Michael Green
VP, General Counsel and
Corporate Secretary
Bell Labs
Chris Gardner
Chief Executive Officer
Experience
Officer
Position
4
Our Focus: Communication Infrastructure
Next Generation Metro and Core Carrier Networks
Enterprise Networks
Metro & Core
Carrier Networks
Data
Centers
High-end
Enterprise
Carrier Networks
SME
Enterprise
Networks
Wireless
Access
Carrier
Networks
Wireline Access
Carrier Networks
Home
Networks
5
Broad Product Portfolio
STORAGE DATA CENTER
& LARGE ENTERPRISE
Cu PHYs
Ethernet MACs
Ethernet Switches
10GbE PHYs
PMDs / PHYs
Signal Integrity
ROC Processor
GbE Switches (5-24 ports)
Router SoCs
GbE Cu PHYs
10GbE PHYs
Signal Integrity
ENTERPRISE LAN
TRANSPORT & SERVICE
ENTERPRISE
Framers / Mappers
Crosspoint Switches
TSI Switches
OTN FECs
PMDs / PHYs
10GbE PHYs
Signal Integrity
CORE & OPTICAL
TRANSPORT
METRO
NETWORKING
Framers / Mappers
Ethernet MACs
Ethernet Switches
PMDs / PHYs
GbE Cu PHYs
Signal Integrity
TSI Switches
Fabric Switches
Network Processors
METRO/CORE CARRIER NETWORKS
IP / ETHERNET EVERYWHERE
6
Our Customers
FY2006
FY2007
Revenue by Tier1 Customer
Tier1 Revenue Growth
75% of
Revenue
35%
Revenue
Growth
7
A History of Innovation
First Fibre Channel Transceiver. >100M 1/2/4G FC ports shipped
First SONET Transceiver. > $1 Billion of SONET ICs shipped
Market Leader in 1 and 10G Ethernet over SONET products
>50 Million Gigabit Ethernet ports shipped
Leading provider of 10Gbs SONET and 10GbE PHY devices
Driving the adoption of 1 and 10 Gigabit Ethernet into Carrier
and Enterprise Networks
For 20 years, Vitesse has led the transition of new technologies in
Communications Networks
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Value Proposition
20 year history as a leading supplier to telecom equipment
manufacturers worldwide
New entrant with number 3 market share in L2 Ethernet
silicon at GbE and 10GbE speeds
Technology leader in enabling high-bandwidth interfaces for
application in both Carrier and Enterprise solutions
Vitesse is uniquely Positioned to enable
Carrier Ethernet in Telecommunication Networks
and
‘Converged Enhanced Ethernet’ in Enterprise Systems
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TXCC
PMCS
BRCM
Enterprise Networks
Metro/Core Carrier Networks
Framers & TDM Switches
Signal Integrity
PHY/PMD
Copper PHYs
Ethernet MACs & Switches
EoS & OTN Mappers
Signal Integrity
PHY/PMD
Copper PHYs
Ethernet MACs & Switches
MRVL
MSPD
CNXT
AMCC
Vitesse
New Entry, No Market Traction
Partial Solution, Limited Market Traction
Vitesse Strategic Investment Area
Complete Solution, Market Traction
Only Provider of Carrier and Enterprise Solutions
Traditional Telecom IC Providers
GbE IC Providers
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Investing in Growth
The World Is Connecting
The New Network:
Five billion users by 2015. Broadband Everywhere
Applications and Services deployed primarily over the Internet
Any application, any connectivity, on any device
Voice, data, video from any source to any destination
All delivered on one ubiquitous global service network
Results in:
100X increase in Traffic
A requirement for increased bandwidth,
simplification, and reliability
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Broadband is driving Traffic Growth
13
The World is converging - onto Ethernet
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FTTx , IP-DSL, mobile access, video services are driving bandwidth demands
To grow revenue , Carriers must shift Cap-X spending to new infrastructure that
enables new revenue generating services in a single converged network
Network of 3 years Ago
Voice
T1/E1
Frame Relay
OC-12
OC-3
DS-3
ADM
Classic SONET
CPE
OC-48
to WAN
ATM-DSL
VoIP
10/100 Ethernet
IP-DSL
OC-3/12
EoS
GbE
GbE
Future Network
CPE
MSPP
Next Gen SONET
OC-192
to WAN
PON
Metro/Core Carrier Market Drivers
Carrier Ethernet is the only technology that promises to change the
economics and address the mismatch of traffic growth and CapEx spend
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Enterprise Equipment Market Drivers
Enterprise equipment market had double-digit growth in
2006 to $104B and is forecasted to grow 20% over
next 3 years.
Traffic growth is driving dramatic increases in server and
storage density
Needs:
Cost: More bandwidth (2x), lower price (10x)
Reliability: Guaranteed data delivery
Simplicity: Single converged networking platform
‘Converged Enhanced Ethernet’ is the right technology to provide the
combination of cost, power, latency, and reliability
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As a Result…Cap-X Spend Continues to Increase
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And….Market Growth Shifts to Ethernet
SONET PHY/PMD IC Market
4% CAGR
Source: IDC. RHK,
57% CAGR
10 Gigabit Ethernet IC Market
SONET Mapper/Framer IC Market
Carrier Ethernet Equipment Market
8% CAGR
27% CAGR
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Stable Base
Accelerating Growth
Vitesse is Positioned to Lead the Transition
Market leader in 10GbE PHYs
Best-in-class Signal Integrity for 1 to 10G
Lowest power, highest integration GbE PHYs & GbE Switches
Market leader in 10GbE PHYS
Best-in-class Signal Integrity for 1 to 10G
Market leader in 5- & 8-port GbE Switches
Industry’s first GbE SoC Router solutions for Media Gateways
Market leader in Ethernet over SONET Mappers
Best-in-Class MACs for Metro Aggregation
Market leader in 10G SONET and 10GbE PHYs
Market leader in Ethernet over SONET Mappers
Market leader in 10G SONET & 10GbE PHYs
Vitesse
Moves to GbE
and 10GbE
High-End
Enterprise
Moves to
10GbE
Moves to 1GbE
Moves from
SONET to
Ethernet
Moves to
10GbE OTN
Trends
SME SMB
Data-Center
Market
Metro
Core
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Wireless
Access
Wireline
Access
Our Served Market is Expanding
Andy
EoS Mappers
Storage
Networks
Enterprise
Networks
Metro/Core
Carrier
Ethernet
MAC/Switch
Signal
Integrity
SONET
Framers/
Mappers
Switches
$320 $130
$464 $265
$142 $132
$255 $30
PRODUCT
FAMILY
$749
Optical
Copper
Total
$1016M $1471M IC TAM
Served Market $2.5B
Investment Level
CAGR ~ 20%
SONET
Ethernet
PHY/PMD
Source: Infonetics, IDC, RHK, Vitesse
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Vitesse Networking Solutions
24 + 2 10GbE
Port Switch
Carrier Ethernet
Switch
Quad / Octal
Cu PHY
16/24
Port Switch
Cu PHY
5/8 Port
Switch
G-RocXTM
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Vitesse Complete Solutions
Typical System Architecture
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Financials
September 2007
Christopher R. Gardner
Chief Executive Officer
Rich Yonker
Chief Financial Officer
Financial Results
Vitesse is not currently filing financial statements with the
Securities and Exchange Commission and is in the process of
restating and auditing its financial statements for 2006 and 2007.
As such, the financial results in this presentation are unaudited
and are therefore subject to change.
Vitesse plans to file audited financial statements for fiscal 2006
and 2007 in first calendar quarter of 2008.
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2007 Re-Structure Complete
Financial Position
Cash flow positive from operations
Growing Cash Balance
Restructured Debt
Market Approach
Two large IC market segments
Differentiated technology advantages
Expanding Tier 1 customer relationships
Corporate Structure
Filled key management positions
Rebuilt accounting and finance team
Re-constituted Board of Directors
Investing for Growth
Integrated R&D organizations
Focused on high-growth markets
Investing in new product development
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Sales History for All Product Segments
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Traction at Tier1 Customers
27
Improved Profit Margins
Stable Consumption (Sales). Decreasing Operating Expenses.
$ Millions
28
Stronger Balance Sheet
Higher Cash Position. Lower Inventory Levels.
Fiscal Quarters
$ Millions
29
Sustainable Positive Cash Flow From Operations
Fiscal Quarters
$ Millions
30
Long-Term Targets
Income statement targets as % of revenues
Gross margins of 55% to 60%
R&D expenses of 25% to 28%
SG&A expenses of 11% to 14% (excluding depreciation)
EBITDA of 17% to 22%
Balance sheet targets
5 turns of inventory per year
Accounts payable and accounts receivable at normal industry levels
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Key Takeaways
New management team guiding business improvements
Improved financial position and operational structure position the
Company for sustained performance
20 year history of technology innovation and recognized leadership in
high speed optical and telecom products
Solid Tier 1 customer relationships with OEM leaders
Recent sale of storage assets completed. Renewed focus on
Networking and Enterprise better align Company resources with
growth opportunities in Carrier and Enterprise Markets
Improved Corporate Governance; new Board members and Corporate
Governance policies
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Thank You
Backup
Christopher R. Gardner
Chief Executive Officer
Rich Yonker
Chief Financial Officer