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The Story Behind the Numbers

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Today we announced our second quarter earnings, and I’m now able to talk more directly about how well our business is doing. I want our customers, partners and prospects to see the state of our business clearly and not be misled or confused by recent headlines or what competitors might be saying. We’re not surprised to see competitors that are increasingly feeling the sting of our success try to create FUD; however that kind of activity only makes us more determined to maintain our momentum in the market. The reality is that our business continues to be fundamentally sound and our customer base is growing.

Our numbers speak for themselves. Our second quarter revenue of $30.6 million reflects a solid 36 percent revenue growth from the same period last year, and calendar 2007 revenue is 50 percent above calendar 2006, significantly better than our addressable market, which grew at an annual rate of 14 to 19 percent from the first 9 months of calendar year 2006 to the first 9 months of calendar year 2007. We also experienced non-GAAP net income of $3.8 million, a new record for ShoreTel. These numbers reflect a healthy company. I am pleased to report that more than 700 new customers joined the ShoreTel family in the second quarter, and customer satisfaction was at a record high during the quarter, demonstrating that we’re continuing to deliver world-class products with the lowest total cost of ownership.

For example, yesterday we announced our new Microsoft Dynamics CRM Integration Application, which provides a single interface for CRM and call control for streamlined business processes, and today we announced our new ShorePhone IP 565g color phone, to the delight of many of our users.

Also, beginning this month, we rolled out a special incentive promotion to encourage new customers to join the growing family of satisfied ShoreTel customers. Those interested in taking advantage of these promotions can contact us through our Web site at www.shoretel.com and click 'speak to a representative'.

Several additional new products and new customer wins are on the horizon. I look forward to sharing our progress with you.

John W. Combs