Strictly Confidential

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

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2

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

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Technology M&A Activity Technology M&A Volume Has Increased Steadily Since 2002 Lows

500 450 No. of Deals

1997

1998

1999

2000

2001

2002

2003

2004

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 Source: Security Data Corporation

3

100325

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

300

281

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Current Trends in Technology M&A TREND

OVERVIEW

RECENT TRANSACTIONS

Resurgence in Deal Activity

♦ A recovery in technology stock prices and increased corporate confidence have driven M&A activity – Companies have restructured their businesses and increased earnings – Companies are eager to make acquisitions to capture upside as market conditions improve ♦ 2004 marked the return of the Technology M&A “mega-deals” – Deals over $1 billion represented 36% of deal value in 2004, versus 27% in 2003 – Return of landscape shaping deals such as Symantec/Veritas, ARM/Artisan and the completion of Oracle/PeopleSoft

♦ IBM / Ascential ($1,100mm) ♦ Symantec / Veritas ($13,521mm) ♦ Lenovo Group / IBM PC Business ($1,300mm) ♦ CA / Netegrity ($451mm) ♦ Juniper / Netscreen ($3,816mm) ♦ Oracle / Peoplesoft ($10,300mm) ♦ ARM / Artisan ($933mm)

Sector Consolidation

♦ Sector consolidation continues to drive M&A – As companies refocus on growth, they are seeking opportunities to expand product offerings, acquire new technology and achieve critical mass – Regulatory 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 basis

Stock Consideration

♦ Stock consideration has become a more favorable M&A currency as technology stock prices have recovered – Most technology companies have been trading at or close to their three-year highs ♦ In some recent deals, cash consideration has been 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 convertibles or straight equity

Private Equity Activity

♦ Private equity players continue to show interest in acquiring technology companies – Some technology stocks have enjoyed only limited participation in the market recovery – Low 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

♦ ♦ ♦ ♦ ♦ ♦

3Com / TippingPoint ($408mm) Credence / NPTest ($663mm) Serena / Merant ($380mm) Cisco / NetSolve ($137mm)

♦ ♦ ♦ ♦ ♦

Mm) Symantec / Veritas ($13,521mm) Safenet / Rainbow ($463mm) Credence / NPTest ($663mm) – Issued convertible ♦ Serena / Merant ($380mm) – Issued convertible ♦ ♦ ♦ Carlyle / Insight ($2,100mm) ♦ Golden Gate Capital / Blue Martini ($54mm) ♦ Veritas Capital / DynCorp from CSC ($850mm) ♦ 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

Achieve Scale

♦ Customer leverage ♦ Increased distribution and sales support ♦ Market position consolidation ♦ Leapfrog competition ♦ New market entry — product or geography

Expand Product Offering

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

Offer Complete Solution

♦ Capitalize on installed base ♦ Accelerate time to market ♦ 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

Business Rationale

♦Compelling strategic rationale ♦Create or consolidate market leadership position ♦Essential new technologies, markets or products ♦Transaction multiples compared to public comparables and precedent transactions

Financial Considerations

♦Impact on combined company revenue and earnings growth trajectories ♦Effect on margins ♦Revenue and cost synergies ♦EPS accretion / dilution ♦Market perception of target company / merger partner

Market Reaction

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

Execution Risk

♦Anti-trust / regulatory ♦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 existing management continues to execute the strategic vision of the business

♦ Reduces or eliminates execution risks of the current business plan as well as future capital market uncertainties

♦ Proceeds from an IPO can be used to increase scale through acquisitions or fuel organic growth

♦ M&A valuation includes control premium

♦ Shareholders can participate in potential upside should the business continue to execute and market conditions remain favorable CONS ♦ The organization must take on the costs associated with public filing and compliance requirements while managing greater scrutiny by investors ♦ An IPO lock-up prevents current shareholders from achieving immediate liquidity ♦ There is a high degree of uncertainty in future capital market conditions ♦ There is the potential for a downside in valuation should the business lose traction

♦ Can offer a more immediate path to liquidity for current shareholders ♦ Avoids the costs associated with being a public company ♦ Partnering increases opportunity to cross-sell and upsell through larger distribution platform and gain rapid critical mass to better compete CONS: ♦ Primary shareholders relinquish voting control and new management executes the strategic vision of the company ♦ Cash transactions eliminate the upside participation in the pro forma company ♦ 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 markets

♦ Increased cost of being public, especially small cap companies

♦ Drives greater consistency and transparency in reported filings

♦ Entails significant allocation of resources

♦ Increased executive accountability over financial reporting ♦ Increased spending at the CFO and CTO level to meet compliance criteria

Advisory Services Vs. IT Spending Mix for SOX Compliance

)

Source: Gartner 2004 estimates

4,000 3,500 3,000

♦ Not meeting SOX deadline requirements or announcing inadequacies in significant controls can have negative effect on stock price – UTStarcom – Chordiant Software – Interpublic Group

Anticipated Technology Spending to Support SOX Compliance

Se Source: Forrester Research survey of 454 technology decision-makers

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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 Diligence and Preparation

Duediligencemeetings Information Memorandum 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 Powerhouse” FORBES 2004

 

  The UBS Way BLOOMBERG 2004

  World’s Best Investment Bank EUROMONEY 2004

Best Investment Bank THE ECONOMIST 2003

World’s Best Bank EUROMONEY 2003

“

World’s Best Investment Bank INVESTMENT DEALERS’ DIGEST 2002

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

”

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.

”

WORLD’S BEST INVESTMENT BANK EUROMONEY 2004 16

UBS—A Leading M&A Advisor with Rapid Improvement in Market Share

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2003–2004 # of Transactions / Market Share 1

2003–2004 Market Share versus 2000—2002

Goldman Sachs JP Morgan

Lehman Bros

Citigroup

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 deals, equity 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 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 ♦ Strong technology-focused M&A presence with deep industry knowledge and company relationships ♦ Experienced in a wide range of advisory assignments – Buyer advisory – Seller advisory – Cross-border transactions – Merger of equals – Shareholder value protection – Leveraged transactions

2004 Technology M&A Transactions Less Than $1 Billion Financial Advisor Goldman Sachs & Co Morgan Stanley Credit Suisse First Boston UBS JP Morgan Banc of America Securities LLC Citigroup Jefferies & Co Lehman Brothers Rothschild

Rank

Value ($mm)

No. of Deals

1 2 3 4 5 6 7 8 9 10

7,168.2 6,025.4 5,187.3 4,476.8 4,375.4 2,148.2 2,114.1 2,093.0 1,560.4 1,492.6

17 22 15 11 14 5 12 21 9 3

Source: SDC

Selected Recent Transactions

February 2005 US$415 million Sale to eBay

February 2005 US$850 million Sale of Selected DynCorp Units to Veritas Capital

November 2004 US$137million Sale to Cisco Systems

July 2004 US$170 million Sale to FindWhat.com

May 2004 US$663 million Acquisition of NPTest

May 2004 US$380 million Sale to Serena Software

March 2004 US$463 million Sale to SafeNet

January 2004 US$601 million Sale to Manpower

January 2004 US$467 million Financial Restructuring

November 2003 US$295 million 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

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

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 require. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation.

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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.