Sinopac Securities Europe NDR November 2 0~ 27 , 2006 1 Safe Harbor - PowerPoint PPT Presentation

Sinopac Securities Europe NDR November 2 0~ 27 , 2006 1

Safe Harbor Statement All numbers are consolidated. Except for statements in respect of historical matters, the statements contained in this release are "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of D-Link Corporation to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. 2

Agenda � Industry Outlook � Regional Growth � Product Drivers � Overall Business Updates All numbers consolidated except otherwise specified. 2Q/06 numbers are pro forma . . 3

Industry Outlook 4 1

WW SMB and SOHO Networking Market US$ Million CAGR 20% � SMB demands outgrow consumer’s in 2006 & 2007 200000 � High-end switches continuously deployed worldwide 180000 � Security & IP Storages (SAN) gradually ramping up 160000 140000 120000 100000 80000 60000 40000 20000 0 2004 2005 2006 2007 2008 2009 SMB/SOHO Networking Equipment Demand Source:IDC, FY2006 5 2

Switching � LAN switching market growth remains solid � L2 & L3 outgrow L4-L7 � Modular declines but stackable grows US$ Million GigE CAGR 16% 20000 18000 16000 94% 90% 14000 85% 12000 78% 69% 10000 57% 8000 6000 4000 43% 31% 22% 2000 15% 10% 6% 0 2004 2005 2006 2007 2008 2009 Source:IDC, FY2006 F.E. GigE 6 3

WLAN � IEEE delays 802.11n ratification US$ Million CAGR 15% � WiFi association starts to test draft N from Jan/07 � Draft N gradually ramping up from 2H/07 9000 � WiMAX emerges in some areas without last mile 8000 7000 4% 29% 63% 15% 53% 6000 5000 16% 20% 4000 2% 13% 3000 34% 72% 68% 10% 2000 48% 33% 64% 27% 1000 16% 9% 3% 1% 0 2004 2005 2006 2007 2008 2009 802.11b 802.11g 802.11a+g 802.11n Source:IDC, FY2006 7 4

Broadband US$ Million CAGR 17% � VoIP devices rapidly penetrate 120000 � IAD/Triple Play ramping up in N.A. & Japan 5% 4% 100000 10% 3% 9% 8% 80000 2% 7% 1% 63% 6% 60000 64% 1% 65% 5% 66% 40000 67% 66% 20000 22% 24% 23% 26% 25% 28% 0 2004 2005 2006 2007 2008 2009 Cable Modem ADSL FTTX Advanced Technology Source:IDC, FY2006 8 5

Regional Growth 9 6

Revenue by Regions Consolidated 3Q/06 revenue QoQ comparison: � AsiaPac & Others seasonally up 15% � N.A. rose 8% � In NT$ terms, WW 3Q revenue grew 16% � Europe jumped 29% NT$ Million 12000 52% 8000 45% 41% 48% 52% 4000 24% 28% 23% 25% 21% 31% 31% 27% 27% 25% 0 3Q05 4Q05 1Q06 2Q06 3Q06 North America Europe Asia Pacific & Others 10 7

Emerging Markets vs. D-Link Brand Sales US$ Million � Emerging markets remain the fastest growing area � YT3Q06 sales growth over 54% YoY 250 35% 30% 29% 29% 200 25% 23% 22% 150 20% 20% 19% 17% 15% 100 71 62 10% 50 43 43 50 39 33 5% 0 0% 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 Emerging Markets Sales D-Link Brand Sales Emerging markets Sales as % of Brand Sales 11 8

Strength in Emerging Markets � Localization � In Country Operation � Products Differentiation � Customization � Technical Supports � Real-time after Service & RMA 12 9

Product Drivers 13 10

Revenue by Products Consolidated 3Q06 revenue QoQ comparison : � Broadband up 18% � Switch grew 23% � Digital Home rose 12% � WLAN increased 15% NT$ Million 12000 5% 7% 5% 6% 6% 10% 10% 9000 8% 11% 11% 28% 27% 28% 26% 27% 6000 30% 30% 31% 35% 32% 3000 26% 23% 25% 26% 27% 0 3Q05 4Q05 1Q06 2Q06 3Q06 Switch W LAN Broadband Digital Home NIC & Others 14 11

Switch Sales Breakdown � High-end switch sales in YT3Q06 delivered over 87% YoY growth � Pull-through more SMB products such as Security, IP Storage (SAN) NT$ Million � Switch remains the highest margin amongst all of product segments 3500 3000 2500 61% 44% 2000 53% 55 50% % 32% 35% 1500 1000 56% 39% 50% 45% 47% 65% 68% 500 0 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 F.E. GigE 15 12

WLAN Sales Breakdown � In terms of D-Link WLAN Breakdown, 11g remains the largest pie NT$ Million � Super G MIMO / Pre-N gradually ramping up, over 70% QoQ growth for 3Q06 4000 3500 10% 10% 4% 3000 10% 7% 4% 8% 9% 6% 9% 2500 2000 86% 88% 89% 86% 87% 1500 78% 83% 1000 500 13% 8% 2% 1% 2% 0 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 802.11b 802.11g 802.11a+g MIMO/802.11n draft 16 13

Broadband Sales Breakdown NT$ Million � VoIP worldwide continuously deployed by Telco/ISP 3500 � D-Link VoIP sales in 3Q06 delivered over 181% YoY & 30% QoQ growth 3000 15% 37% 2500 17% 5% 22% 35% 10% 2000 95% 90% 1500 85% 83% 78% 65% 1000 63% 500 0 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 ADSL VoIP/IAD/VDSL 17 14

Overall Business Updates 18 15

Dominance in Key Segments Market Shares by Products D-Link is, in unit terms, � #1 in SOHO/SMB Ethernet LAN Switch � #2 in Home/SOHO WLAN, next to Linksys/CSCO 30% 27% 27% � #5 in Broadband XDSL, after Siemens, Thompson, and etc. 25% 19% 20% 17% 15% 10% 10% 7% 5% 0% SMB/SOHO Switch WLAN Broadband 1Q 2006 2Q 2006 Source: In-Stat Research Reports, 1Q 2006 and 2Q 19 16 2006

#1 in SOHO/SMB Market Allied Telesyn HP Procurve Nortel 2Q/06 3.3% 3Com Siemen 3.7% 1.7% s 10.5% Thomso 1.3% n Netgear 1.2% 14.8% Belken Netgear 14.8% 1.1% Zyxel Linksys 20.4% 1.1% Linksys 23.8% Others 20.4% 14.5% Source: Compiled from In-Stat 2Q 2006 Wireless LAN Equipment Market Share Report In-Stat 2Q 2006 Ethernet LAN Switch Market Share Report In-Stat 2Q 2006 Broadband Equipment Market Share Report 20 17

New Products Releases 22 New Product Announcements in Q3 Significant Highlight: 2-bay SATA network L2+ Wireless switches 2-bay SATA network L2+ Wireless switches storage enclosure storage enclosure • 24 wireless or wired ports • 24 wireless or wired ports • Internet file sharing • Internet file sharing • Central management • Central management • Critical failsafe Disc mirror • Critical failsafe Disc mirror • Secured and seamless • Secured and seamless • Built-in media server function roaming • Built-in media server function roaming Day & Night, Audio & Video IP Cam Day & Night, Audio & Video IP Cam � Full-featured Wireless Surveillance Camera � Full-featured Wireless Surveillance Camera � Support 16 simultaneous viewing and motion detection � Support 16 simultaneous viewing and motion detection recording recording 21 18

High Dividend Payout � Payout more cash over stock � Limited employees’ bonuses dilution � High yield rate NT$ Per Share Dividend & EPS 6.0 100% 89% 90% 5.0 80% 70% 4.0 60% 56% 3.0 50% 47% 44% 41% 40% 40% 35% 2.0 31% 30% 20% 1.0 12% 10% 10% 4.70% 4.81% 4.10% 2.80% 3.00% 0.0 0% 2001 2002 2003 2004 2005 Stock Dividend C ash Dividend EPS Adjusted EPS Payout ratio Yield rate 22 19 Employees' Bonuses as % of Net Income

4Q/06 Outlook Consolidated � 4Q Guidance � 4Q revenue flat sequentially � Gross margin maintains 31% � Upsides � Thanksgiving & Christmas shopping in N.A. & Europe � Emerging markets continuously grow � Downsides � 11n ratification delays � Cool down of economy 23 20

Q & A For complete financial and press releases, please visit http://ir.dlink.com 24