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
1,411

1,328

1,250 1,219

1,045
Vo lume up 41% in 2004
1,000 vs. 2003
($ in billion)

750

608
530 529
500
433
407

296

250
154
110 116
97

0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Securities Data Corporation

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Technology M&A Activity

Technology M&A Volume Has Increased Steadily Since 2002 Lows

500 $485 3,000

> $10bn
450 95 $1bn - $10bn
2,500
400 < $1bn

No. of Deals
350
$311 2,000
Deal Value (US$ Billions)

300

No. of Deals
65 233
250 1,500

200
148 1,000
$143
150 $124
25 $103
24
100 $85
60 22
157 36 $65 $64 500
26 15
50 98 19 17
58 58 65 65
46 47
0 0
1997 1998 1999 2000 2001 2002 2003 2004

1997 1998 1999 2000 2001 2002 2003 2004

No. o f De als 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

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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
394 60% 102.6
371 399 370 (1% )
400 325 352 345 100
281 $64.2
300 80 $64.9
200 60
100 40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004
2003 2004

 179 additional transactions were announced in 2004 compared with 2003

 Volume of discussions has intensified drastically

Source: Security Data Corporation

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

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Current Trends in Technology M&A

TREND OVERVIEW RECENT TRANSACTIONS

 A re co ve ry in te chno lo g y sto ck price s and incre ase d co rpo rate co nfide nce 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
Re surg e nce in – Companies are eager to make acquisitions to capture upside as market conditions improve ($1,300mm)
De al Activity  2004 marked the re turn o f the Te chno lo g y M&A “me g a-de als”  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)

 3Com / TippingPoint ($408mm)
 Se cto r co nso lidatio n co ntinue s to drive M&A 
– As companies refocus on growth, they are seeking opportunities to expand product  Credence / NPTest ($663mm)
Se cto r
offerings, acquire new technology and achieve critical mass  Serena / Merant ($380mm)
Co nso lidatio n
– 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)
 Sto ck co nside ratio n has be co me a mo re favo rable M&A curre ncy 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)
Sto ck
 In some recent deals, cash consideration has been linked to stock consideration as acquiro rs – Issued convertible
Co nside ratio n
tap into the e quity marke ts 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 e quity playe rs co ntinue to sho w inte re st 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

3,000 350

309 2,648
300
2,500

250
No . o f Anno unce d M&A De als

235
2,000 1,862

No . o f IPOs File d
1,705
200
1,508
1,500 1,409
1,318 1,329
150
1,133
124
1,000 100
100

60
500
50
23 19 21

0 0
1997 1998 1999 2000 2001 2002 2003 2004
M&A IPO

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


Criticalmassandfinancialstrength

Customerlev
erage
A
chieve
Scale 
Increaseddistributionandsalessupport

Mark
et positionconsolidation

Leapfrogcompetition


Newmark
et entry—product orgeography
Expand 
Capturenewcustomerbases
P
r oduct 
Buyv
s. mak
e—timetomark
et
O
ffering 
Engineeringtalent and/ormanagement acquisition

Off-incomestatement R
&D


Fillproduct gaps
O ffer 
Capitalizeoninstalledbase
C
om plete 
Acceleratetimetomark
et
Solution

Strengthenchannelpartnerships

Offerone-stopshop

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

Compellingstrategicrationale
Business
R
ationale Createorconsolidatemarket leadershipposition
E
ssentialnewtechnologies, marketsorproducts

T
ransactionmultiplescomparedtopubliccomparablesandprecedent transactions
Impact oncombinedcompanyrevenueandearningsgrowthtrajectories
F
inancial
C
onsiderations E
ffect onmargins
R
evenueandcost synergies
E
PSaccretion/ dilution

Market perceptionof target company/ mergerpartner

M arket Consistent, simpletounderstandstory
R
eaction F
inancialparameterclarity
Pricepaid/ considerationmix

T
imetoclosure
E
xecution Anti-trust / regulatory
Risk T
ight contract terms
Integrationstrategy

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

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Sarbanes-Oxley 404 Compliance

Benefits Costs

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

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

4,000
Security 61%
3,500
3,000 Storage 52%
($ millions)

2,500
2,000 Process Control 40%
1,500
Record Management 39%
1,000
500 Business Intelligence 36%
0
ERP 30%
2003 2004 2005 2006 2007
Advisory Services IT Spending
0% 10% 20% 30% 40% 50% 60% 70%

Source: Gartner 2004 estimates Source: Forrester Research survey of 454 technology decision-makers

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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 Due diligence meetings

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 Investment Best Investment Bank World’s Best Investment
Powerhouse” BLOOMBERG 2004 Bank THE ECONOMIST 2003 Bank
FORBES 2004 EUROMONEY 2004 INVESTMENT DEALERS’
DIGEST 2002
World’s Best Bank
EUROMONEY 2003

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

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Share

2003–2004 2003–2004 Market Share

# of Transactions / Market Share 1 versus 2000—2002

Goldman Sachs 459 14.8% +23%

JP Morgan 426 13.8% Lehman Bros +9%

Citigroup 403 13.0% Deutsche Bank +6%

Morgan Stanley 377 12.2% Lazard +3%

CSFB 333 10.8% Goldman Sachs (1% )

322 10.4% Citigroup (2% )

Deutsche Bank 265 8.6% JP Morgan (5% )

Merrill Lynch 262 8.5% Morgan Stanley (11% )

Lehman Bros 252 8.1% Merrill Lynch (23% )

Lazard 197 6.4% CSFB (38% )

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

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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 presence Financial Adviso r Rank Value ($mm) No . o f De als
with deep industry knowledge and company Goldman Sachs & Co 1 7,168.2 17
relationships Morgan Stanley 2 6,025.4 22
Credit Suisse First Boston 3 5,187.3 15
 Experienced in a wide range of advisory UBS 4 4,476.8 11
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

Fe bruary 2005 Fe bruary 2005 No ve mbe r 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 No ve mbe r 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

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.

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. 19