Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Sandvine Corporation second quarter results conference call. (Operator Instructions) Certain information presented in this presentation by management of Sandvine that is not historical factual information may constitute forward-looking information within the meaning of securities laws. Actual results could differ materially from a conclusion, forecast or projection contained in such forward-looking information. Certain material factors or assumptions were also applied in drawing a conclusion or making a forecast or projection as reflected in such forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projections in the forward-looking information and details regarding the material factors or assumptions that were applied in drawing such conclusions or making such forecasts or projections are contained the company's annual information form and in other filings made by the company with applicable securities regulators from time to time, all of which are available through SEDAR at www.SEDAR.com. (Operator Instructions) I will now turn the conference over to Mr. Rick Wadsworth, Director of Investor Relations for Sandvine. Please go ahead, sir.

Thank you, Operator. Hello and welcome to Sandvine's Q2 2008 results conference call. During the call we will walk through a slide presentation you can download from the Investor Relations section of our website, Sandvine.com. For those of you following along, we are currently on Slide 2. We will let you know when to change slides. On the call today are Dave Caputo, President and Chief Executive Officer, and Scott Hamilton, our Chief Financial Officer. I'll now turn the call over to Dave for some introductory remarks.

Thanks, Rick, and hello, everyone. We're on Slide 3. For Q2 2008 we recorded $11.1 million in revenue and a $4.6 million loss. Delays in certain opportunities impacted the results for the quarter and our ability to rely upon the material assumptions underlying our 2008 annual revenue guidance of $80 to $85 million. Most notably, given the time remaining in the current fiscal year, we no longer believe that we can rely upon the assumptions that we would earn at least $40 million in revenue from existing customers and $40 million in revenue from new customers. As a result, we are withdrawing that guidance. We debated whether to provide a new annual revenue guidance, but we decided that any reliable range would be too wide to be meaningful. The timing of customer decisions has become increasingly difficult to forecast due to a variety of factors, including the effect of the network neutrality debate on Sandvine's North American installed base, the reduced predictability associated with expansion into new markets such as our entrance in the Tier-one DSL and wireless markets and the increasing number of opportunities we are pursuing through the indirect sales channel. I want to emphasize a few points here. First, we believe that the opportunities are taking longer than expected to conclude but are not being canceled. Second, we aren't aware of any meaningful business lost to competitors. By and large, we believe that the opportunities are still available to be won. Third, while the North American network neutrality debate continues, our customers see reasonable paths forward for traffic optimization and other solutions and are moving down them. Ultimately the debate could make our addressable market in North America bigger than ever, and we like our competitive position. But new opportunities also introduce new competitive risks. Finally, this is actual a positive quarter for Sandvine in many respects. For example, we won 12 new customers in Q2, matching our record for the most new customer wins in a quarter. It was far and away our best quarter in terms of revenue from the DSL market. In fact, for the first time the DSL market was the largest contributor to quarterly revenue. The EMEA region had its strongest revenue quarter ever, and it was our second-best quarter for revenue from reseller partners and the first where any global reseller partner represented over 10% of revenue. As you know, we are currently focused on new customer wins and have identified the development of the DSL market, international markets, and our reseller channel as key components of our long-term growth strategy, so these accomplishments are significant to our long-term success. Later on I will speak to some other encouraging trends that we see in our business. We are in an emerging market. Our growth will not always be smooth, but I can say with as much conviction as ever that we believe that we are in a growing market long term and we are the market leader. We will keep investing to meet that opportunity and stay the leader. Now I'll ask Scott to elaborate on the financial results for the second quarter.

Thanks, Dave. I remind listeners that unless otherwise specified, all amounts referred to on this call are in Canadian dollars. Slide 4. Revenue for the second quarter of 2008 was $11.1 million as compared to $20 million for the second quarter of 2007 and $8.3 million for the first quarter of 2008. As Dave referred to, the decline in revenue relates to delays in decisions for certain opportunities which was partially offset by some strength in the quarter from reseller partners, the DSL market, and the EMEA region. For the first quarter of 2008, product revenue was approximately 72% of total revenue as compared to 89% in the second quarter of 2007 and 57% last quarter. Service revenue for the second quarter was approximately 28% of our revenue as compared to 11% in the second quarter of 2007 and 43% last quarter. As a percentage of total revenue, Q2 service revenue is abnormally high due to the relatively low level of product revenue experienced during the quarter. Over the longer term, the company expects service revenue will be closer to historical levels of 10% to 15% of total revenue. Slide 5. For the second quarter, approximately 73% of our revenue was derived from the North America region compared to 97% in Q2 of 2007 and 87% last quarter. EMEA had its strongest quarter ever, contributing 25% of revenues. We continue to expect greater international diversification of revenue as we realize the benefit of greater investment in our international sales and marketing efforts and as the Tier-one DSL and wireless market adopt the company's solution on a larger scale. Approximately 46% of our revenue was derived from the DSL market, 33% from the cable market, 19% from the wireless market, and 2% from other markets. This is the first quarter in the company's history where the DSL market was the largest contributor to revenues. Historically, the cable market has represented the vast majority of our sales. In Q2 2007, 98% of our revenue came from cable operators and last quarter 77% of our revenue was derived from the cable market. Slide 6. Approximately 81% of our revenue in Q2 came from our direct sales channel and 19% through our indirect sales channel. Sales through the direct channel represented 99% of our revenue in Q2 of 2007 and 91% of our revenue last quarter. The company's largest customer historically represented 11% or $1.3 million of second quarter 2008 revenues as compared to 47% or $9.5 million for the second quarter of 2007 and 25% or $2 million last quarter. We had three other customers represent over 10% of total revenue in Q2 2008, all of which fell into this category for the first quarter for the first time this quarter, including a global reseller of Sandvine's products. In each of the last six quarters we have had 10% plus customers, a reflection of the increased diversification of our customer base. For fiscal 2008 and beyond, we continue to expect that a significant portion of our revenue will be derived from a small number of customers. Slide 7. Our blended gross margin for the quarter was 77% compared to 81% in the second quarter of 2007 and 75% last quarter. All these results have exceeded our target of a blended gross margin in the 70% plus range. Product revenue gross margin was 74% in the quarter, which was lower than the 81% reported in the second quarter of 2007. The decline relates to a current product mix that is more indicative of both historical results and what we expect to experience in the future. In Q2 of 2007 we experienced an abnormally high level of follow-on software sales, which have higher gross margin levels. Service gross margins of 85% are relatively consistent with comparable periods. Slide 8. For the second quarter of 2008, sales and marketing expenditures were $4.2 million, which represent a 24% increase from the $3.4 million incurred for the same period last year and a 5% increase from the $4 million recorded last quarter. The increases are consistent with the company's strategy to increase its sales and marketing initiatives. Research and development expenses for the second quarter were $5.8 million, which included approximately $500,000 of net government assistance. Excluding government assistance and repayments, research and development expenses in Q2 were $6.2 million, which is a 72% increase from the $3.6 million reported in the second quarter of 2007 and consistent with $6.1 million reported last quarter. The increases are consistent with our strategy to increase investment in R&D to build our technological lead. For the second quarter of 2008, general and administrative expenditures were $2.2 million, consistent with last quarter and representing a 38% increase from the Q2 2007 level. The increase is a result of increased staffing levels, increased occupancy costs and professional fees and foreign exchange losses. Total R&D and SG&A expenses for the quarter were $12.2 million. Total operating expenses for the quarter were $14.2 million, which included $2.1 million of non-cash expenses as follows: Depreciation of $889,000, stock-based compensation of $715,000, and non-cash acquisition-related expenses of $480,000, comprising $400,000 of amortization and $80,000 of non-cash compensation expenses. Slide 9. Net loss for the second quarter of 2008 was $4.6 million or $0.03 per diluted share as compared to net income of $10.3 million for the second quarter of 2007 and a net loss of $7 million last quarter. Slide 10. Sandvine continues to have a strong balance sheet. As of May 31, 2008, Sandvine had $100 million in cash and cash equivalents compared to $113 million at November 30, 2007. Working capital was $119 million compared to $129 million at the end of fiscal 2007. The differences are generally consistent with our year-to-date operating performance. DSOs for Q2 were 90 days, up from 60 days at the end of fiscal 2007 and higher than historical levels. The increase in DSO relates to two main factors. First, the accounts receivable balance includes approximately $2.2 million which has yet to be recorded as revenue and is comprised as part of the company's deferred revenue balance. Backing this amount out results in DSOs of 66 days. Second, a significant portion of the company's revenue was recognized towards the end of the quarter, which increases DSOs as the related accounts receivable would not have been collected by quarter end. Typically, the company expects its DSOs to be in the range of 50 to 60 days, subject to the timing of revenue recognition within a quarter and the amount of accounts receivable related to the company's deferred revenue balance at the end of the period. By the end of Q2, the company had repurchased 535,500 common shares under its normal course issuer bid at an average price of $1.40 per share. Slide 11. As Dave mentioned at the outset, while we were pleased with many aspects of the second quarter and remain confident in Sandvine's long-term opportunity, we have withdrawn our annual revenue guidance. As on all of our previous calls, we caution investors that due to the nature of our business we expect significant variability in the company's quarterly results. This variability may manifest itself in many ways, including but not limited to customer concentration, including the buying patterns of the company that has historically been our largest customer in fiscal 2006 and 2007; product mix; geographical concentration; market segment concentration; sales channel mix; and, most noticeably, recognized revenue. I would also like to remind investors that due to the introduction of new products, the accounting rules surrounding the timing of revenue recognition may become more restrictive and delay the timing and manner that such revenue is recognized. In the event that this materially impacts the company's revenue, investors may need to look to the company's deferred revenue balance to more fully understand the performance for a given period. While continue to experience delays in certain opportunities, we are continuing with our investment plans for 2008, though in a manner that is mindful of the current environment. We still firmly believe that we are in an emerging market that requires increased investment levels to maintain our leadership position to enter or develop certain areas, such as wireless and DSL, and to secure initial deployments within customer networks. I'll now return the call to Dave.

Thanks, Scott. We're on Slide 12. We continue to measure Sandvine's progress by the growth in our service provider customer base and the number of subscribers they represent. At the end of the quarter, our customer base included over 110 service providers in over 40 countries. Combined, these service providers represent over 60 million broadband subscribers. In all, we won a record-tying 12 new customers in the quarter. We won eight DSL providers, three cable cos, and one wireless operator. DSL operators now represent approximately 45% of our installed base. These statistics, along with the revenue analysis that Scott provided, demonstrate the returns we are getting from our investment in the DSL and wireless markets, both key to our future growth. We won four new customers from EMEA, seven from North America, and one from Asia-Pac. In all, we expanded into four new countries in this quarter. This success comes directly from our increased investments in our international sales and marketing efforts. Two of our new customers in Q2 were DSL service providers with more than one million broadband subscribers each. While both placed relatively modest initial orders, winning large carriers is key to our future growth. Additionally, both of these customers were won through our strategic reseller relationship with Alcatel-Lucent. This adds to our recent wins through Mitsubishi and Huawei. We view continued traction with our strategic reseller partners as key to Sandvine's future growth and are pleased to see our investments in this area starting to pay off. Twelve customers bought the PTS 14000 for the first time in Q2, bringing the total to over 40 customers. The PTS 14000 continues to extend its lead as the most proven intelligent broadband network solution that delivers 10 gigabyte Ethernet performance. Overall, we see a number of trends evolving in our business. First, we are seeing as much or more interest in products from our service creation, operation support, and network integrity solution suite combined as we are seeing for traffic optimization solutions, the traditional driver of our business. In the first half of this year we have seen more customers order these newer solutions and more RFPs and RFIs for these solutions than for products from our traffic optimization portfolio. Second, we are seeing more diversified interest by end market. So far this year we have received more RFPs and RFIs from each of the DSL and wireless markets than we have for cable, which were early adopters in our space. The same comment can be made for RFP and RFI activity throughout 2007. Third, we are seeing more diversified interest globally. Both for the first half of fiscal 2008 and all of 2007, North America has only been the third-largest source of RFPs and RFIs among our four sales regions. Finally, the PTS 14000, our market-leading 10 gigabyte product, is becoming the biggest component of our platform sales. Sandvine is evolving into a diversified solutions partner for service providers of all access types globally. We create intelligent broadband networks and we are building an ever-growing portfolio of solutions to help service providers worldwide take advantage of that intelligence to make the Internet experience better for their subscribers and make their own businesses more profitable. Slide 13. While our other solutions are gaining broader appeal, we expect traffic optimization to continue to be a significant part of our business. Consequently, in Q2 we launched Sandvine FairShare as the latest solution in that product suite. Sandvine's FairShare gives service providers more levers and dials to define fairness in their network. The solution has enhanced abilities to pinpoint the most congested network segments and apply policy to them. The policies can be application specific or subscriber specific or, most powerfully, a combination of both. For example, FairShare could locate congested network segments at a moment in time, identify the heaviest users within them, and restrict their traffic by, say, X percent. Or instead of restricting heaviest users' traffic by a flat amount, FairShare could use application awareness to set individual limits by application. For example, if a voice over IP phone call or video stream were restricted by X percent, they may become useless, with the call being unintelligible or the video unwatchable. So a service provider could let all VoIP calls and video streams crop their network freely and only limit heavy users less time or real-time sensitive traffic, such as file sharing or e-mail. FairShare can also consider the history of the policy applied to subscribers in order to better balance restrictions amongst the heaviest users. In any case, once FairShare detects that congestion in the network segment has been relieved, the heaviest users' traffic can once again flow freely. While other similar-sounding solutions have recently been announced, we aren't aware of any that offer the obvious benefits of full application awareness. Sandvine's FairShare is currently being trialed, and we are encouraged by initial feedback. We are also encouraged by the continuing interest in our peer-to-peer policy management solutions outside of North America. It is important for you to remember that network neutrality is still for the most part a North American debate. As our recently published white paper revealed, peer-to-peer file sharing is still the biggest contributor to network congestion. Popular variants of peer-to-peer applications are designed to take up maximum network resources at a moment in time. A handful of heavy users can seriously deteriorate the Internet experience of the many, so focusing traffic optimization policy on this application is still deemed a very reasonable and effective approach in most regions of the world. Also since our last conference call, Sandvine has launched its Solutions Partner Ecosystem, which extends Sandvine's product offerings through pre-integrated joint solutions with other best of breed vendors that focus on improving subscribers' quality of experience. Sandvine's initial partnerships are with content caching solutions provider PeerApp and a content control solutions provider, Netsweeper. Content caching improves service quality and optimizes transit usage by caching popular content within a service provider's network. Content control solutions let service providers offer subscribers the ability to filter their Internet experience from inappropriate content. Without Sandvine, both types of platforms see all network traffic regardless of its applicability to the solution. Sandvine improves their efficiency by identifying and diverting just the relevant traffic for the relevant subscribers to them, thereby helping Ecosystem partners scale more efficiently and enabling their deployment in some of the busiest and most complex network locations. Sandvine is also receiving meaningful interest from leading vendors in advertising optimization which increase the relevancy of advertising information presented to subscribers and online pricing frameworks which deliver the transactional awareness and control that wireless service providers need to offer subscribers flexible personalized service plans. Slide 14. We firmly believe that Sandvine is in an emerging market that will grow over the long term. There are five trends that continue to sustain this conviction. First, the overall broadband market is growing rapidly. It is largely expected to double by 2011. Second, billions of dollars will be invested over the long term to create nextgeneration networks capable of delivering all services over IP. Even with fears of a looming recession, the IP edge and core routing market accelerated in Q1 2008 according to research firm Ovum-RHK. We view this as positive news. Third, there is a steady proliferation of popular applications being offered over the Internet. To deliver each with the quality of experience that subscribers demand requires intelligence in the network. Fourth, there is a non-deniable trend that service providers are migrating their networks to 10 gigabyte Ethernet. To quote recent Infonetics' research, "Ethernet is growing toward being the dominant mode of transmitting data traffic around the world, with tens of millions of gigabyte Ethernet and 10-gigabyte Ethernet ports." Finally, data traffic on mobile wireless networks is experiencing extraordinary growth in major networks around the world. The more IP traffic these networks see, the more we believe our solutions are required. As long as these trends continue, we remain confident in Sandvine's vision. Slide 15. Finally, I am pleased to report that for the second consecutive year Sandvine has been named one of the best places to work in Canada. It is difficult to overemphasize the value of a happy, motivated team to any company's success, so as always, I would like to extend my heartfelt thanks to the Sandvine team for their efforts and the fantastic attitude they bring with them to make our workplace great. Operator, we'll now take questions.

Thank you. (Operator Instructions) Your first question comes from Gus Papageorgiou - Scotia Capital.

I'm just trying to understand. I mean, you're saying that you matched your record quarter for 12 customer wins in the quarter, so you're clearly gaining some traction here but, you know, visibility is clearly deteriorating. So I'm just wondering, is it that, the larger customers that you're waiting on, is it that they're not - are they the ones that are deferring orders, or what am I missing here? I mean, I'm trying to reconcile these two influences.

I guess there's two things here. There's clearly our largest customer not doing follow-on orders of any significant form, so that's a big part. And then, for the new customers, you know, we continue to gain traction, and with some of the larger customers we've won, they've been modest initial orders. But in every one of those cases we expect to do followon sales to those guys. And then I guess if we reflect back at the beginning of the year, we thought we would be much further along with some larger opportunities at this point in the year. And we're just seeing those big customers take longer to get through their very specific purchasing cycle and how quickly they get to a deployment phase. But we really like our competitive positioning by winning more deals. We don't believe we're losing any deals of any significance.

I'm just wondering, Dave, can you, when you talk about the bigger customers, can you kind of give us a little more color, both geographically and by access point? So do you find is it the wireless guys that are taking longer or are the wireless guys kind of accelerating versus DSL? And kind of between, say, North America and Europe, are you seeing both geographies deferring or is kind of one moving faster than the other?

Well, we're really just seeing EMEA turn on here. You know, it's the first time we've had 25% of our sales from EMEA and it was, you know, almost $3 million in sales. That was the largest sales we've ever received from those guys. The two large deals that we won this quarter from a service provider size perspective, they were both EMEA carriers. And, again, modest initial orders but we fully expect that we'll see follow-on orders in both those cases.

And in North America, do you sense North Americans are kind of delaying more than the rest of the world?

Certainly from our installed base perspective, our traditional installed base, we're seeing more delay there. And so I would say just yes in general, it's more from a North American perspective.

Your next question comes from Nick James - Panmure Gordon & Co.

I just wanted to ask about the nature of your DSL deployments so far, and whether these are still kind of quite early stage or is there signs of these ramping towards the type of deployments you saw in the cable market and the kind of the time scales and expect in that type of ramp profile?

So, you know, the DSL providers, we were excited to win a couple more with over a million subscribers. These guys reference themselves quite a bit, and so we're excited from the perspective that we're getting more and more traction there. But it's still early days for us in the Tier-one DSL market, so it's too soon to say definitively how they're going to do their rollouts. And the application that they're buying will dictate how it's rolled out as much as any other factor, including their access type. But we still expect that the DSL carriers will more quickly, once they make the final decision, get to a network-wide rollout as opposed to tactically in isolated network locations.

I think to add to that, I expect that we'll see a similar trend that we've seen with our existing installed base, where a service provider will deploy for a particular set of functionality and, consistent with our historical strategy, it's going to be our objective to first get the platform in the network and then, with all of our customers, we see opportunity to go back and sell them follow-on software modules. So I expect that, irrespective of access market, whether it be wireless, DSL or cable, that's most likely going to be the same story across the board.

Okay, so in DSL which applications are you currently seeing the most interest in?

It's definitely on the service creation perspective, so network demographics to understand what's happening on their network, to understand the business case for the service creation side of things. And there is congestion issues on the DSL network, particularly where there's an ETN backbone off the DSLAM. We're seeing that those links are starting to get maxed out here as well. So it's a combination of rolling out new services as well as understanding the business case for those services. And then on the wireless side we're seeing quite a bit of interest in advice of charge, making sure that subscribers don't get surprise bills and that they understand what it is that they're consuming on their networks, and having frameworks in place that they could sell different tiers or service offerings on the wireless data side that are understandable to consumers and are easy to enforce.

And just one follow up. You kind of reiterated your strategy to increase spending on R&D. What do you mean by increase, and at what extent do you kind of - you know, if revenue continues in the numbers that we're seeing currently, would you look to address the level of R&D to kind of restore profitability?

So right now we continue to believe that we're in an emerging market, and so we'll continue to focus on making the investments that we think are necessary for the long-term success of the business. Although opportunities are taking longer to conclude, I think the fact that we don't believe that we're losing business and that a lot of the opportunities that we believe are out there are still out there to be won. And so from a cost structure standpoint, we don't have intention to modulate that in the short term. That being said, we continue to spend, being mindful of the environment that we're in.

Okay, but what, I mean, can - in terms of increasing spending, does that mean you'll just actually absolute increase until your visibility improves or you will continue to increase your spending on R&D?

We haven't given any specific guidance with respect to numbers, Nick, other than to say that we're going to continue to invest.

Your next question comes from Arinder S. Mahal - Dundee Capital Markets. Arinder S. Mahal: Just on customer concentration, you mentioned you had three customers more than 10%. Can you just give me what the aggregate was for these three?

It was actually four. It was four for the quarter, and they were 62%. And that brings - if you look on Page 14 of our MD&A, there's a chart there - but that brings three customers representing [43%]. Arinder S. Mahal: Forty-three?

Some of those customers don't overlap. Arinder S. Mahal: Just on the [RFP] front, can you tell us what the number is now as far as the [RFP] standings and some sort of distribution, both in [inaudible] terms and also on a segment basis?

On a what basis was the - Arinder S. Mahal: On the different access types.

Okay. So last call we have pretty good insight on what it was for 2007. We're not going to be updating that on a quarterly basis for competitive reasons. We'd rather give it on a more historical basis. But I think today I gave some additional color on that in that we're seeing much more RFP activity in Europe, EMEA region in particular. We're seeing much more on the DSL side and the wireless side, in fact, if you add DSL and wireless together, much more than on the cable side. And that the RFP activity remains brisk. Arinder S. Mahal: Because in '07, I think the last number you guys gave was 60 in '07. Is that correct?

It's approximately that, yes. Arinder S. Mahal: And then I think on the call you also mentioned that, you know, two-thirds of these were outside North America. Yet if I look at the, sort of the new [customers] - I appreciate that, you know, EMEA has had the strongest quarter to date, but if you look at the new customer additions, most of these continue to come from North America, and this is where the net neutrality debate is really applicable. There seems to be a bit of a disconnect here. Any comment as to why this may be the case? Is Europe sort of slow due to macroeconomic reasons or is there something else going on here?

I think I'm going to stop pontificating about the economy. It's just I've been asked about it too often since that last call. But I will say is I wouldn't call it a disconnect so much as I would say it speaks to the latent demand of our product that the European telcos are going through their very long, drawn-out process on making their decisions. And, you know, some of the business we won this past quarter might have been RFPs that were out maybe two years ago. So it just gives you some insight in terms of how long some of these decisions take. But we still believe that these are real and active opportunities, and we really like our competitive positioning in them. Arinder S. Mahal: So as we [inaudible], you know, these long-standing RFPs, what kind of dialogue or activities do you have on an ongoing basis with some of these, you know, key opportunities?

You know, it ebbs and flows. It could be answering 50 or 100 questions per day to them being in a quiet period, if you will, where they don't want to hear from any of the vendors as they go through their selection criteria. But I would say that we, again, have never been busier in terms of the daily and regular interaction we have with service providers on the aggregate of all the RFPs. Arinder S. Mahal: So it's fair to say some of the major opportunities, you have active, ongoing dialogue?

Oh, it's very, very safe to say that. You know, that's, you know, why our sales, our SEs, our consulting system engineers, that's why they exist, to have those dialogues. Arinder S. Mahal: Just on the wireless side, I mean it seems to be - I appreciate that this is sort of a relatively new segment, you know, that you've really started sort of focusing on the last little while, but if you look at the last three quarters, the new customers seem to have stalled in the four to five range, and yet we continue to see sort of rampant data traffic go up here and also new applications. And there was a sort of perceived sense of urgency when you initially started talking about wireless that you felt that the sales cycles would be shorter here. I mean, what's going on here? Are these customers who are using Layer 3 functionality to satisfy near-term needs or is there something else going on?

Well, I think it's important to note, you know, I'm not sure I said the sales cycles would be faster on wireless so much as I said that we started getting phone calls and our phone calls being responded to sooner than we expected. And I think what's going on here is if you look at mobile data, it's still a very small number on the amount of traffic that's on these service providers networks but it's growing so rapidly that the wireless providers are fully contemplating what it would mean as those links start to get more and more utilized and what is the bandwidth management solutions they have to put in place and what are business models that make sense for selling mobile data solutions. So the activity, I'm quite happy with where we are with wireless providers. And we've won the four or five deals, but also that we are in constant communication with some very large wireless providers on helping them figure out what their solution longer term is. Arinder S. Mahal: When do you see this sort of - the segment breaking out? I mean, if I look into the second half, there's several high-profile [CG] devices coming on the market, not to mention the ongoing popularity of data modems, the USB modems. So when do you see this thing breaking out or is this segment also heavily influenced by the net neutrality debate?

We don't see it so much as being impacted on the network neutrality debate. Everybody seems to really understand that there's a cost per bit on the wireless mobile data side. And it's really tough to predict, Arinder. It's one of the reasons why we're withdrawing guidance here. You know, I think the one thing I feel comfortable saying is that, you know, over the next four years I don't believe that there'll be a single IP network that delivers Internet experiences to consumers that won't have the layer of intelligence that we're talking about when we talk about Sandvine solutions, that it will be very obvious to everyone that different traffic, different applications make different demands on networks, and that everybody knows what a good phone call sounds like. Everybody knows what good streaming video looks like, and that's what they're going to expect in their mobile or any experience, any access technology experience when they're being delivered those types of applications. Arinder S. Mahal: I didn't think that net neutrality was that big of an issue on the wireless side. That's why I'm a bit surprised, you know, that we haven't seen more traction here. Is there risk of any sort of combination of device side functionality coupled with network side in the wireless space, or are you seeing any solutions that couple both the device and the network side?

I'm not sure I understand the question, Arinder? Arinder S. Mahal: Oh, I guess what I'm getting at, are there solutions out there that have, you know, both the client side, which would be on the device and then also on the network-based solution, because on wireless not only do you have to be aware of the IP traffic, but you also have to manage the radio resources.

Right. Oh, I see what you're saying. So there's going to be many different ways to skin the cat of delivering a good quality of experience to subscribers. To the extent that a device could be smarter about what it's doing at one moment in time in that, you know, prioritizing resources for a phone call or a web experience or a GPS experience, there's many reasons to do that just to optimize the experience on the device itself. I don't ever think that a client-side solution will exist without there being a solution that manages the competing resources that are going to happen in the network. Arinder S. Mahal: Yes, that's my - I guess that's what I'm getting at. Are you seeing any competitive solutions that come from both the client side and the network side and that may put you at a disadvantage?

So I would say I've not seen anything, any combined forces, of that type that were seen as a competitor to us, no. I think service providers very much, if they could solve this in the network, want to solve it in the network.

Your next question comes from Todd Coupland - CIBC World Markets.

Just one last question on this wireless train. So Dave, is the point here that these 3G devices, USB modems, iPhone, what have you, they just need to grow in terms of use in the market and people's taking up those data plans before those carriers will need to implement wider Sandvine-like solutions.

I think that's going to be one of the leading indicators for sure, Todd, that the more data they consume, the more that service providers want to make flexible rate structures and charging plans for how that data is consumed, the more that data is consumed that malicious activity or malicious traffic starts appearing on the network, the more service providers will turn to people like us to help solve those problems.

And we haven't really seen streaming of television to mobile devices in North America, but I guess it is more common in Europe. Is that a driver or do these tiered plans and data consumption, is that a bigger point?

I think the bigger point is the different data plans that service providers are going to be selling. But, you know, I also believe it's inevitable that there's going to be streaming media everywhere on mobile devices, and that more and more of that will be done over IP and when that happens traffic will have to be managed in those situations. And certainly users will have to be very aware of what it costs to do that on that device.

And is it - one last point here - is it something that can be dealt with sort of on a hot spot basis in the wireless networks so as they grow their 3G subs, the carriers will deal with the hot spots similar to what happened in cable?

I think it's too early to tell, but, you know, wireless service providers that we've spoken to make it very clear that they want to do stuff across their network because - and particularly from the service creation perspective - it's not worth them having a solution in one part of their network and not another part of their network because so much of their spend has to do with their advertising and awareness that a solution exists. And so on the service creation side, it's just not worth it for them to only make it available in some markets and not other markets.

And in the two, I think, you know, you've talked about European wins in the past in wireless. Are those now deployed and up and running so, you know, you're able to start to see some - to get some history there with that customer or is that still deploying?

Yes. No, certainly we have deployments is various stages of deployment, but we're absolutely running in wireless networks, and particularly our network demographics tool. You should be very aware that in the wireless network, it is very much a system. And from the perspective of to achieve the ultimate goal, you often have to be integrated to their provisioning system or integrated to their billing system or integrated to their authentication system. And it's as you continue to make those integrations to adjacent business systems that they can achieve the ultimate goal that they're trying to achieve, and that is, you know, make sure they're able to deliver customized service plans to each of their subscribers.

In terms of DSL, the million plus sub guys that you won, have those begun to ship or did that ship in Q2 or does that come later this year?

It's in Q2, Todd.

Those two guys were shipped in Q2?

Yes.

Okay. And I think you said those were initial shipments, so there should be some follow on?

Sorry, Todd. Could you say that again?

Did you say that those were the initial shipments and there should be follow on or is that largely completed?

Yes. No, I think that, for those customers we'll expect additional orders from them. The timing of that is perhaps a little bit unclear. But certainly, you know, to the platform store, we certainly expect follow-on business from that, but we also expect deployment business.

And then just on FairShare, a number of your customers are trialing that. What's you sense on the length of the trials for that product, and is it material once they get through that and start to deploy?

Yes. You know, FairShare has received quite a bit of interest and particularly in North America. And we fully expect that people will be through their trials and make decisions on FairShare-type rollouts over the next 12 months or so.

But is it a material - let me call it a patch for lack of a better description, but once they start to deploy, is this something that can move the needle of your overall business?

So, yes, you know, it's certainly not a patch. FairShare is the latest and most sophisticated element of our traffic optimization portfolio. And the fact that any way that you want to define fairness or reasonable network management in your network on a per subscriber, per application or both perspective, you will be able to achieve that with our product, our solution, FairShare. And so we do see it as material in that no matter where people come down on their interpretation of network neutrality, they'll be able to achieve their goals. And if you take it to the extreme, that you say that subscribers should be able to dictate their own prioritization of their own traffic per application, you know, that's almost nirvana for us where subscribers are deciding their own priority of, you know, their VoIP over their e-mail and that sort of thing, deeper into their network. FairShare enables that, and if that's where - if someone's interpretation of network neutrality comes out, I think that would be something that would be very favorable for us.

And just lastly, you know, you obviously have a high market share and footprint within cable. The other solutions that are out there that are being tested for this, can they actually run on your equipment or would that need to be a separate and distinct decision to deal with this issue?

It really depends on the level of complexity that they are required to meet their goals. Certainly there would be examples in our installed base where it would make sense to at least communicate with our devices and there would be less complex, less effective approaches where maybe communication with our devices wouldn't be necessary.

Your next question comes from Michael Urlocker - [Unidentified Firm].

I wonder if you could, Dave, talk about - from the wireless carrier standpoint, I think we all understand wireless data usage is soaring - if you had to provide a guess as to when wireless carriers hit a pain point or a crisis point that requires them to do something, when do you think that's coming?

You know, it's going to be different for different service providers depending on how aggressively they price data consumption on their network and get devices out there capable of consuming mobile data. I certainly believe every single one of them will be there inside of four years, and we're already seeing that some of them are getting there sooner than that. But I think short of that, Michael, it would probably be irresponsible for me to guess.

Okay. And in terms of a management team, you have to look into an uncertain market that's evolving and emerging. What do you think is the top or the top few operational risks that you need to navigate through?

You know, we like our position here in terms of we're not losing any significant deals. Yes, they're being delayed, but we still like the prospects of us winning in that space. As we are having to juggle and manage the DSL space, the cable space, and the mobile data space, we're very focused on being number one in each of those access technologies. And so juggling the requirements lists such that we are able to be the best in all three of those categories is something that is challenging, but something we believe we're absolutely up for. And then as we transition from traffic optimization as being the lion's share of our business to date to service creation and network integrity and subscriber communications for our service providers, you know, making sure we're doing the right investments for the right feature sets in each one of those, that's the thing that we have to spend quite a bit of our time on, and I believe we are making very good decisions in both of those cases.

And you did say that the company plans to increase its spending. Certainly revenue, I understand you've withdrawn guidance. You actually don’t control your revenue, but you do control your spending. You spent something like $29 million in the first half of the year on operating expenses. What's the outlook for the second half? Would it be $35 or higher than that?

So consistent with what we've done in the past, we're not going to give specific guidance on expenses. The thing that we've continued to focus on is we are mindful of the environment that we're in and that our revenue hasn't come along as we had anticipated. That being said, I think that continuing to focus investments in the area of R&D, to take advantage or to make sure that we continue a leadership position and to develop solutions for the access market that Dave just spoke of, is paramount to the long-term success of our business, and at the same time ensuring that we have enough feet on the street to address those potential markets. And so this may be skewing the question a little bit, but the reality is we will continue to invest but we're not giving specific guidance on those numbers.

And my last question is, you know, certainly this company is a leader in the cable business. You were a pioneer early on with success here. You had one cable customer, you know, that's been responsible for a lot of your success so far. Their sales have - your sales to that customer have declined something like 90% over the past few quarters. What is that customer telling you now and what were they telling you in January in terms of their requirements or their likelihood to purchase?

I guess there's a couple parts to that question, Michael. Let me just say right now we're up to - almost half of our customers are now DSL so, as we said a couple of years ago that we were going to increase our focus on DSL, we're seeing that pay off for us. Cable is largely a North American thing. In the rest of the world, DSL is generally the number one access technology for delivering the Internet experience to consumers, so we're quite happy with the progress we're seeing there. We don't really comment on opportunities with individual customers here. Let me just say we have a very good relationship with our historically largest customer, and we think there are many opportunities and projects that we'd like to re-earn our business with them on. And I like our competitive positioning with that customer. Did we think at the beginning of the year that we would see such a rapid decline in sales from our largest customer? I would say, no, we did not think we would see that.

Gentlemen, there are no further questions at this time. Please continue.

Thanks, Operator. On behalf of Scott and Dave, thanks for your questions and for attending Sandvine's conference call. We look forward to speaking with you again soon. Goodbye.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. You may now disconnect your lines.