AirTies response to the crisis. September 2009

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1 AirTies response to the crisis September 2009

2 Company Overview Established Feb 2004, in Istanbul by US-Silicon Valley management and technical team Focus: wireless triple play devices (xdsl, WLAN, VoIP, IPTV) for service providers and consumers in EMEA One of the few companies developing both home networking and video products In 3 years displaced dozens of major brands to become the dominant player with 60% market share in Turkey Entered into IPTV market with SD and HD STBs, shipping to 2 Tier1 operators (Turk Telekom and Smart Digivision India).

3 0 to 60% Market Share in Turkey in 3 Years AirTies Revenue $M Silicon Valley style culture 170 professionals, 21 US/foreign experience, 60+ R&D engineers Over 4.0 M satisfied customers Brand built by delighted customers recommending AirTies Customized products per service provider operate flawlessly Intuitive installation and user interface 7/24 technical support in Turkish, English, Greek & Russian Features driven by customers Retail & Service Provider channels

4 Unique model: Internal R&D and tech support Fast response to consumers, market needs, service providers, time to market Continuous improvements result in flawless products and less support calls Taiwan ODM Production, Quality Distributor Channel Sales Resellers Sale Installation Support Education IEEE, Wi-Fi Standard Technology Chip vendor Chipset & Drivers AIRTIES R&D & Sup New Features Bug Fixing Improvements Technical Support USERS New Standards & Chipsets Problem

5 Vision: Wireless life Broadcast TV DVB-T, S, C Networked Blueray Remote access Internet ADSL / Fiber IPTV / Web TV VoIP Wireless Gateway 300 Mbit 2.4/5GHz Wifi Video Distribution Automesh Air 7320 HD/DVBT IPTV Pause TV Browser DLNA Broadcast to IP Air 4420 Shared Disk with movies, music, photos and files PVR Dijital picture frame Air 7100 SD Data Voice Video distributed in unified wireless home network View any content (photos, movies, music) from any source (local, broadcast or internet) on any television in home AirTouch: Secure installation by a single touch of a button Modular, upgradeable: High Definition, 11n, NAS, Networked PVR

6 Crisis hit in September AirTies Revenue $M Q $10M revenue vs $16M forecast resulting in net loss of $2M vs forecast of $2M net profit 6 month excess inventory Service providers & channel partners with excess inventory New ADSL subscriber's dropped from 1M in 2008 to 200K in 2009 Interest rates jumped from 6% USD to 25% YTL Classical response Cost controls Cleaned house Payment terms Pricing from vendors

7 Historical core business collapsed AirTies Revenue $M Historical sales to retail and ISP s of modem/routers collapsed Historical strategy was High growth Reinvest profits Tolerate inefficiencies Revised strategy Slow growth, focus on profits Internal process & efficiency Focus on retail/upgrade market Invest in new products Invest in new markets ISP modem ISP VoIP ISP IPTV Retail Int Retail

8 New products saved the company AirTies Revenue $M Prior investments in products delivered results VoIP at Kocnet IPTV at TT & India Retail low priced products Retail high end products Revised channel incentives to end user consumption End user oriented campaigns Progress in international retail ISP modem ISP VoIP ISP IPTV Retail Int Retail

9 2010 growth engine new products & markets AirTies Revenue $M ISP modem ISP VoIP ISP IPTV Retail Int Retail Sharing movies, music, photos, printers,.. Network set up at a touch of a button Personal content and IPTV on TV Wireless video to multiple TV s Web TV, content & TV anywhere Partners SeaChange, Orca, Nordijia, Goome, Verimatrics, Irdato bringing customers IPTV wins at India, Russia, Netherlands, Israel,. Retail at Greece, Ukraine, Russia, Azerbaijan Expanding to US, Balkans,.

10 Summary Classical cost control during times of crisis is not adequate to survive Markets can change so rapidly that your core business can collapse Success requires ongoing investment in innovation, new products and new markets

11 Thank you

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