STRICTLY CONFIDENTIAL

UBS Technology M&A

Discussion of Current Industry Trends

March 2005
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Table of Contents

SECTION 1 M&A Market Conditions 2

SECTION 2 M&A Drivers and Considerations 8
SECTION 3 UBS Overview 14

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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
♦ Large, strategic combinations are back—Proctor & Gamble / Gillette, JPMorgan / BankOne, Cingular / AT&T Wireless,
Sprint / Nextel, Oracle / PeopleSoft, Symantec / Veritas, Johnson & Johnson / Guidant and Wachovia / SunTrust
♦ Significant financial sponsor activity in the middle market
– Taking advantage of depressed market conditions and attractive debt markets

1,500

Source: Securities Data Corporation

1,250 4
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Technology M&A Activity

Technology M&A Volume Has Increased Steadily Since 2002 Lows

500

450
1997 1998 1999 2000 2001 2002 2003 2004
No. of Deals 1,133 1,409 1,862 2,648 1,705 1,318 1,329 1,508

Source: Securities Data Corporation

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

400 5
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M&A Deal Activity is Intensifying

Market recovery in 2003 and stability in 2004 have increased corporate confidence and
created an environment conducive to M&A transactions
♦ 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
♦ Technology M&A deal volume increased 60% in 2004
– M&A pipeline is expected to be strong for 2005

Number of Announced Transactions 1 Technology M&A Deal Volume (US$ Billions) 1

500 120
♦ 179 additional transactions were announced in 2004 compared with
2003

400
♦ Volume of discussions has intensified drastically

3
100325
Source: Security Data Corporation

Note:
1 Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q2
2003

281
300 6
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Current Trends in Technology M&A

TREND OVERVIEW RECENT TRANSACTIONS

♦ A recovery in technology stock prices and increased corporate confidence have driven ♦ IBM / Ascential ($1,100mm)
M&A activity ♦ Symantec / Veritas ($13,521mm)
– Companies have restructured their businesses and increased earnings ♦ Lenovo Group / IBM PC Business
Resurgence in – Companies are eager to make acquisitions to capture upside as market conditions improve ($1,300mm)
Deal Activity ♦ 2004 marked the return of the Technology M&A “mega-deals” ♦ CA / Netegrity ($451mm)
– Deals over $1 billion represented 36% of deal value in 2004, versus 27% in 2003 ♦ Juniper / Netscreen ($3,816mm)
– Return of landscape shaping deals such as Symantec/Veritas, ARM/Artisan and the ♦ Oracle / Peoplesoft ($10,300mm)
completion of Oracle/PeopleSoft ♦ ARM / Artisan ($933mm)
♦
♦
♦ Sector consolidation continues to drive M&A ♦ 3Com / TippingPoint ($408mm)
– As companies refocus on growth, they are seeking opportunities to expand product ♦ Credence / NPTest ($663mm)
Sector
offerings, acquire new technology and achieve critical mass ♦ Serena / Merant ($380mm)
Consolidation
– Regulatory environments created product opportunities for acquirors and at the same time ♦ Cisco / NetSolve ($137mm)
forced smaller listed firms to re-assess the pros and cons of operating on a standalone basis
♦
♦ Mm)
♦ Stock consideration has become a more favorable M&A currency as technology stock ♦ Symantec / Veritas ($13,521mm)
prices have recovered ♦ Safenet / Rainbow ($463mm)
– Most technology companies have been trading at or close to their three-year highs ♦ Credence / NPTest ($663mm)
Stock
♦ In some recent deals, cash consideration has been linked to stock consideration as acquirors – Issued convertible
Consideration
tap into the equity markets to raise funds for acquisitions ♦ Serena / Merant ($380mm)
– Improvements in capital markets have allowed companies to raise cash at a low cost through – Issued convertible
convertibles or straight equity
♦
♦
♦ Private equity players continue to show interest in acquiring technology companies ♦ Carlyle / Insight ($2,100mm)
– Some technology stocks have enjoyed only limited participation in the market recovery ♦ Golden Gate Capital / Blue Martini
– Low interest rates have enabled private equity players to borrow at low costs to fund ($54mm)
acquisitions ♦ Veritas Capital / DynCorp from
Private Equity
– The downturn has created companies with lower cost structures and higher profitability CSC ($850mm)
Activity
– The recent market recovery has provided private equity players with better exit opportunities ♦ Bain Capital, Silver Lake Partners,
Warbug Pincus / UGS PLM from
EDS ($2,050mm)

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M&A and IPO Activity in the Technology Sector

Number of Announced M&A Transactions and IPO Filings

3,000

2,500
Source: Securities Data Corporation and UBS Equity Capital Markets Group

Note: Oracle/PeopleSoft included as 2004 M&A transaction, original hostile offer was first launched in Q3 2003

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SECTION 2

M&A Drivers and

Considerations
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Principal Drivers of Technology M&A

♦ Critical mass and financial strength

♦ Customer leverage
Achieve
Scale ♦ Increased distribution and sales support
♦ Market position consolidation
♦ Leapfrog competition

♦ New market entry — product or geography

Expand ♦ Capture new customer bases
Product ♦ Buy vs. make — time to market
Offering ♦ Engineering talent and/or management acquisition
♦ Off-income statement R&D

♦ Fill product gaps

Offer ♦ Capitalize on installed base
Complete ♦ Accelerate time to market
Solution ♦ Strengthen channel partnerships
♦ Offer one-stop shop

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

♦Compelling strategic rationale

Business
Rationale ♦Create or consolidate market leadership position
♦Essential new technologies, markets or products

♦Transaction multiples compared to public comparables and precedent transactions

♦Impact on combined company revenue and earnings growth trajectories
Financial
Considerations ♦Effect on margins
♦Revenue and cost synergies
♦EPS accretion / dilution

♦Market perception of target company / merger partner

Market ♦Consistent, simple to understand story
Reaction ♦Financial parameter clarity
♦Price paid / consideration mix

♦Time to closure
Execution ♦Anti-trust / regulatory
Risk ♦Tight contract terms
♦Integration strategy

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Process Considerations
Public Offering Versus Sale

Initial Public Offering Sale of Business

PROS: PROS:
♦ Primary shareholders retain voting control and ♦ Reduces or eliminates execution risks of the current
existing management continues to execute the business plan as well as future capital market
strategic vision of the business uncertainties
♦ Proceeds from an IPO can be used to increase scale ♦ M&A valuation includes control premium
through acquisitions or fuel organic growth
♦ Can offer a more immediate path to liquidity for
♦ Shareholders can participate in potential upside current shareholders
should the business continue to execute and market
♦ Avoids the costs associated with being a public
conditions remain favorable
company
CONS
♦ Partnering increases opportunity to cross-sell and up-
♦ The organization must take on the costs associated sell through larger distribution platform and gain
with public filing and compliance requirements while rapid critical mass to better compete
managing greater scrutiny by investors
CONS:
♦ An IPO lock-up prevents current shareholders from
♦ Primary shareholders relinquish voting control and
achieving immediate liquidity
new management executes the strategic vision of
♦ There is a high degree of uncertainty in future capital the company
market conditions
♦ Cash transactions eliminate the upside participation
♦ There is the potential for a downside in valuation in the pro forma company
should the business lose traction
♦ Integration and execution risk of combined business

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Sarbanes-Oxley 404 Compliance

Benefits Costs

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

Advisory Services Vs. IT Spending Mix for SOX Anticipated Technology Spending to Support SOX
Compliance Compliance

4,000 Se
Source: Gartner 2004 estimates
3,500 Source: Forrester Research survey of 454 technology decision-makers

3,000 13
S
)
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Typical Timing of an M&A Transaction

Illustrative Timeline of a Sell-Side Controlled Auction Engagement

Weeks

Activity Action 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Organizational meetings
Due
Duediligencemeetings
Diligence
and Information Memorandum
Preparation
Preparation of management
presentation

Finalize buyer list

Initiate contact with buyers

Marketing Deliver Information Memorandum

Finalize management presentation and data room

Buyer due diligence

Receipt and review of final proposals

Negotiations Negotiate and sign definitive agreement

and Closing
Closing

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SECTION 3

UBS Overview
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UBS—A Leading Global Financial Services Firm

Our strength is backed by industry accolades

“Wall Street   The UBS Way   World’s Best   Best Investment Bank World’s Best
Powerhouse” BLOOMBERG 2004 Investment Bank THE ECONOMIST 2003 Investment Bank
FORBES 2004 EUROMONEY 2004 INVESTMENT
DEALERS’ DIGEST
World’s Best Bank
2002
EUROMONEY 2003

“ “
UBS is a banking giant but, a Wall Street powerhouse? UBS has achieved what once seemed impossible for
Oh Yes. any European investment bank: it has broken into the
front rank in the US market, source of roughly half the
This is a house… that’s grown out of its regional shell
to assume premier proportions in world finance. But ” global investment banking fee pool. In the 12 months
ending in April 2004, it doubled its share in announced
”
it’s the push into the rarified realm of Investment
US M&A deals.
Banking that sets UBS apart.
WORLD’S BEST INVESTMENT BANK
“BIG KID ON THE BLOCK”
EUROMONEY 2004
FORBES
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Market Share

2003–2004 2003–2004 Market Share

# of Transactions / Market Share 1 versus 2000—2002

Goldman Sachs

JP Morgan Lehman Bros

1
Citigroup
deals, equity carveouts, exchange offers, and open market repurchases Deutsche Bank
Notes: Data represents all M&A deals worldwide greater than $100 million in transaction value. Full credit given to acquiror and target advisor(s). Excludes withdrawn

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
acquiror advisor)
UBS has positioned itself as one of the leading M&A advisors worldwide and has
unprecedented momentum, capturing more market share than any other bank since 2002

Morgan Stanley Lazard

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Overview of UBS Technology M&A Group

Technology M&A Expertise 2004 Technology M&A Transactions Less Than $1 Billion

♦ Strong technology-focused M&A Financial Advisor Rank Value ($mm) No. of Deals
presence with deep industry Goldman Sachs & Co 1 7,168.2 17
knowledge and company relationships Morgan Stanley 2 6,025.4 22
Credit Suisse First Boston 3 5,187.3 15
♦ Experienced in a wide range of
UBS 4 4,476.8 11
advisory assignments JP Morgan 5 4,375.4 14
– Buyer advisory Banc of America Securities LLC 6 2,148.2 5
– Seller advisory Citigroup 7 2,114.1 12
– Cross-border transactions Jefferies & Co 8 2,093.0 21
– Merger of equals Lehman Brothers 9 1,560.4 9
– Shareholder value protection Rothschild 10 1,492.6 3
– Leveraged transactions Source: SDC

Selected Recent Transactions

February 2005 February 2005 November 2004 July 2004 May 2004
US$415 million US$850 million US$137million US$170 million US$663 million
Sale to eBay Sale of Selected DynCorp Sale to Cisco Systems Sale to FindWhat.com Acquisition of NPTest
Units to Veritas Capital

May 2004 March 2004 January 2004 January 2004 November 2003
US$380 million US$463 million US$601 million US$467 million US$295 million
Sale to Serena Software Sale to SafeNet Sale to Manpower Financial Restructuring Sale to NetScreen

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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

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
UBS Investment Bank is a business group of UBS AG 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
UBS Securities LLC is a subsidiary of UBS AG 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
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transaction described herein. This presentation does not purport to be all-inclusive or to contain all of the information which the company may require. No investment, divestment or other financial decisions or actions should be
based solely on the information in this presentation.

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 19
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