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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Certicom Corporation conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session for analysts and institutional investors. Instructions will be provided at the time for you to queue up for questions. (OPERATOR INSTRUCTIONS) I would like to remind everyone that this conference call is being recorded today, Tuesday, November 6, 2007 at 11:00 a.m. Eastern time.

I'll now turn the conference over to Dana Broadworth, Investor Relations Consultant.

Good morning and thank you for joining us. On the call from Certicom are Bernard Crotty, President and Chief Executive Officer, and Herve Seguin, Chief Financial Officer. This call is also being webcast live on the Company's web site at www.Certicom.com.

During the call, management may make projections or other forward-looking statements regarding future events or future financial performance. Actual performance, events, or results may differ materially. Please refer to the Company's most recent annual reports and other documents filed with the securities regulators for discussion of factors that could cause actual results to differ materially from any forward-looking statements. I remind you that all dollar amounts discussed today are in U.S. dollars.

I'll now turn the call over to Bernard Crotty.

Good morning. I trust that you have all seen the pre-earnings news release that was issued last night. I'll briefly summarize the news and then we will take your questions.

Certicom's revenue for the second quarter of fiscal '08 ended October 31, 2007 is expected to be lower than what management believes are market expectations. The quarter's revenue is expected in the range of U.S. $3.1 million to $3.5 million. The revenue disappointment is due to a combination of factors, including the complexity of the strategic deals we focus on and our product development shift towards more complete security solutions in response to changes in market demand.

Over the next few quarters, we may encounter revenue variability as we adapt to changing market dynamics, progress through the Sony patent litigation case, and proceed with executing our growth strategy. While we're disappointed with this quarter's revenue, it is important to note that we have not lost any second quarter prospective deals and our pipeline of opportunities remains robust. Furthermore, our outlook remains bright based on several encouraging factors. Our growing portfolio of design wins provides a strong base for building recurring revenue. The evidence of global adoption of Certicom's technology continues to accumulate. Our product development strategy is making excellent progress. The expected range for our operating cost expenses for the second quarter is U.S. $6.1 million to $6.5 million, consistent with the expense guidance given last quarter.

With regards to the CEO search, we expect to make an announcement about the Company's new CEO by December 31, 2007.

There have been no updates on the Sony case since our last earnings call in September. We're currently progressing through the broad discovery phase in which both parties are to provide certain documentation. Following this phase, we expect that the Markman hearing will be scheduled for mid-2008.

Certicom's complete second quarter results will be released after market close on December 4, 2007.

That concludes our prepared remarks. With the help of the operator, we will now take your questions.

(OPERATOR INSTRUCTIONS) David Wright, BMO Capital Markets.

You did not mention the cash position and that is obviously critical number. I can appreciate you have not finished with all of your work for the quarter, but could you give us an indication where you expect the cash position might end up in quarter?

Certainly, David. We still have a very strong cash position. As you know, our company is still debt free. We expect the cash to be somewhere in the $40 million range when we complete the tallying of the quarter.

Okay, so slightly above or below is what you're suggesting?

I'm sorry?

Around like, below $40 million is possible?

Let's strike $40 million as a number. We have not finalized it will, but it will be very, very close to that number.

Okay, that's good. You just mentioned, Bernie, the Markman ruling being mid next year, so things are kind of unfolding a little slower than what I've seen in the past with other rulings. So are there delays going on in the process or something that helps you resolve potentially the litigation without fully using the courts, or is it just unfolding as you expected?

I think it's unfolding as we expected, David. We view mid-2008 just to make sure that we do not -- we provide what will ultimately be an accurate estimate. It could be early 2008. We do not have visibility on it yet, so from our perspective, it is unfolding exactly per scheduled for the book and we expect that th Markman hearing will be in early to mid-2008.

Okay. And I don't think you're going to give this out on a quarterly basis, but design wins was a measure that I think you offered last quarter as see businesses growing and our backlog is building. Any indication on your design win opportunities?

David, what we set the last meeting is that we were going to disclose the design win on an annual basis because quarter by quarter is not something that is a measure of progress. I think what's a measure of progress is over time, so we decided at this point to disclose that information on an annual basis. So you will not be -- we're not planning on disclosing that information this quarter.

Okay. And in order to -- getting back to the cash situation, in order to keep costs down, what sort of things are you looking at if there is a need to cut back on expenses?

David, you raise a very valid point. One of the issues that we're always faced with is the impact of the Canadian dollar. As you know, we have a hedging program that helps us go through the peaks and valleys of those changes, but ultimately we are still faced with those changes. It has a significant -- it can have a significant impact on us next year should the dollar remain at the level it is at now.

We undertaken a program in the Company to the review all of our expenses to see where we can cut back without hurting our ability to take advantage of the opportunities that are in front of us with some of the customers we're speaking to. So we do have an active program ongoing that will hopefully see us negate the impact of the Canadian dollar and also to make some true savings in our expense base until we have a better flavor of the growth rate.

Your new Silicon Valley office, does that offset any expenses anywhere else in the Company or was that additional expense?

Our objective as we started out in this whole initiative of turning our technology over to a hardware chip environment is that we were going to make that budget-neutral, so whereas we have spent some money setting up that office, we found savings elsewhere and we continue to find some more.

Okay, thanks very much. I will pass it on to someone.

Izet Elmazi, TD Newcrest.

Just on costs some more, how much of the current period's expected costs were litigation-related?

Again, we are in day five or so of our quarter, so we are tallying all that up, but we estimate that to be in the $0.5 million range, roughly, for this quarter.

Okay. And that is slightly below what you had guided to previously?

No, it is in the same range. I would have to go back. I think we said we thought our other legal expenses would be in the $400 million range in the quarter. So it is within the expectation we had.

Okay, and with respect your costs, they are expected to come into what you previously guided, even though your revenue is down. Can you just talk about where some of those -- that investment is going beyond the litigation? Are you adding sales reps? You talked about comments on changes in market and product development. Can you talk about some of those issues?

In terms of expenses, our expenses have not gone up quarter over quarter. I think what we are finding is we did agree internally here to invest additional funds about a year ago, and so what we are now seeing is the impact of a year later having this level of costs built into the Company. The cost specifically went at the time in increasing our investment in our field organization in order to attempt to take advantage of some of the opportunities we're seeing in front of us, and also in terms of product development.

So that is still where those dollars are. We still have a significant amount of the increase we've seen year over year going to product development and market development. On the product side, one of the evidence you see is the hardware initiative that we announced in California. Obviously we have offset that by some other costs and we will continue to do that.

And if I could just pick up on Herve's thread there, our product development we're quite pleased with. In our quarter we did book a very important transaction right at the end of the quarter in the gaming industry and we will be making an announcement about that over the next couple of weeks. That's is a very significant win for us on the product development side in terms of developing a more complete solution and it was booked very late in the quarter, so it did not have much of a revenue impact, but very significant in terms of the solution aspect of that product, the quality of the customer, and the revenue implications going forward.

Okay. And then finally with respect to new licenses, assuming that your reoccurring revenue was flat in the period, new licenses were a gain in the $1 million to $1.5 million range. What does that mean for future reoccurring revenue? Last quarter we learned that some of the recurring revenue includes products that come off -- come to end of life and are no longer continued. Could you just talk about implications of the lower license revenue rates?

I think it is a little early for us to comment on the impact of the quarter because we're still digesting the quarter. We're still gathering all the information. We still have to go through our quarter-end view, quarter-end audit and so on and so forth. It is a little early for us to be able to comment on that, but the comment still maintains from -- that we said last quarter is still valid. We get design that come in. These design wins do not provide immediate recurring revenue. They give us an opportunity to participate in our customers successes, whether they be great or little, as those product are rolled out.

Just as a reminder, typically, products get rolled out somewhere in the area of anywhere between six and 18 months after we get a design win. So there is always a delayed reaction to any design win that we may have, so to the extent that we may or may not have been able to disclose the number of design wins we got this quarter may not be indicative of the revenue in the quarter, because a lot of these design wins do not have material or very significant upfront revenues. A lot of them are down the stream when products get deployed and we start receiving some value for every unit shipped.

Okay, thanks for that. Finally, in the press release you mentioned that no deals were lost to competitors. Can you just talk about who those possible competitors could be, given your patent portfolio?

Competitors for us in large measure are internal development groups for various companies, so you would have companies who would choose to develop their own, whether they use ECC or not is a question. They may use existing technologies or they may -- some of them will even choose to download open source technology from the Internet, which, in some cases, does includes some patented technology (technical difficulty) that we have patents to. So that's by and large the biggest competitor we have in the area.

Thanks a lot.

(OPERATOR INSTRUCTIONS) [Eyal Osine], Cannacord Adams

Maybe you guys can give us a little more visibility in what you're seeing maybe into the fourth quarter of the year. That's going to be entering 2008 and you're going to -- there should be some contracts you should start hitting from the NSA contract you signed in the past. Can you give us more visibility there?

I think the most important thing that we want to stress to the group is that we're very optimistic about the future and that optimism is grounded around the robustness of our pipeline, the portfolio of design wins, our new product development, etc. So we're very, very optimistic about the future. We are disappointed in the first-half results and when we look out at it and try to make sense of it, we realize we have got some ground to cover, but we're very optimistic because of the size and quality of that pipeline of opportunities.

We wish we could give more precise guidance, but we are dealing with some dynamics in the marketplace that make it difficult for us to give the type of guidance that would be meaningful. One of the uncertainties in the marketplace is clearly the Sony litigation. It is being talked about by a number of our customers. One major multinational indicated that they would wait to see how that litigation proceeded before concluding the transaction. So that uncertainty makes it very difficult for us to give the type of specific guidance that would be helpful to you and would be more responsive to your question.

The only way we can assess it is to acknowledge the disappointment in the first half, but to reaffirm our optimism, to reaffirm the size of the opportunities in front of us, which are very, very significant, to note the progress that we've made by way of design wins and new products. We highlighted for you the progress we have made in gaming and stay tuned for what will be some important announcements there. We are also trying to share with you the challenge that some of the uncertainty in the marketplace is creating for us.

I think you have to add all of those up together to make an assessment of it. We are very optimistic about it for the reasons I mentioned, but we're not in a position to call out specific guidance on the second half outlook.

Okay, so is there anyway you can give us maybe -- do you guys have any more visibility to what kind of products are being rolled out by your customers over the next few quarters that you have signed in the past that will give you some sort of visibility without actually giving us numbers, maybe just like X number of devices will be starting to ship in maybe two quarters out or something along those lines?

I track every one of those contracts, because I try and get the visibility going forward and I review that every quarter. So that is a moving target, because our customers have got moving targets of their own. But we're very confident that some of these products are due to come out in the marketplace. I cannot say how successful they're going to be. As you know, our success rests without our customer, so we are on top of it. We understand it. But I think it's one of those that is dangerous to say it is going ship next month because we don't know. We have had some disappoints in the past and some of those disappointments was not to do with us. It was due to all sorts of market factors that are external to Certicom.

Okay, thanks.

David Wright, BMO Capital Markets.

My question was just answered. Sorry for the delay there. I was just going to ask you, but you have summed up basically what the revenue problem appears to be and no one -- I did not ask it directly first time around. So, thank you.

Izet Elmazi, TD Newcrest.

Bernie, can you just talk about where you see the biggest opportunities in your pipeline going forward in terms of your focus verticals?

Well, I think they are very, very wide-ranging, the opportunities in front of us. I think that the way to look at this is to look at the five key markets that we've identified, which includes mobility. Amongst them, we're seeing lots of opportunity in the mobility market. We're seeing lots of opportunities at the enterprise level. It is very, very wide-ranging and I would not ant to call out any particular one right now as being at the top of the list, other than tell you that the opportunities exist in all of those markets. We are actively pursuing them, and where the short-term traction is going to be, I cannot tell you.

Okay.

Herve, I don't know if you would add to that.

Okay. And, Herve, can you just remind us if you have an issuer bid in place and if so, given your cash balance, you still got a significant amount, your thoughts on supporting the stock with some buybacks.

Okay, number one is we do not have one in place. We have certainly had discussions at this end and we've decided that it was not prudent for us to do it at this point. We believe that we went and raised that cash from our shareholders in order to be able to exploit and execute on our strategic business plan. That has not changed. We believe that the forces being at play, it is not clear to us if it would be wise use of our cash to go and buy back our stock at this point.

Okay, thanks a lot. That is it for me.

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

Well, thank you for joining us this morning. I remind you that our second quarter earnings conference call will take place on December 5. That concludes our call. Thank you very much.

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