Inter-Tel Stockholder Presentation

by Mihaylo-Vector Group

September 2006

EXHIBIT 1

2

Mihaylo-Vector Group

Important Notice

This

presentation

reflects

the

opinions

and

beliefs

of

Steve

Mihaylo

and Vector

Capital Corporation (“Vector Capital”) regarding matters related to the proxy

solicitation and their offer to purchase Inter-Tel Corporation.

Steve Mihaylo

and Vector Capital have not sought or obtained the consent of

the authors and publications reprinted in this presentation to the use of their

material.  Any such material should not be viewed as indicating the support of

such

third

party

for

the

views

expressed

herein.

No

warranty

is

made that the

data or information derived or obtained from third parties is accurate.  Certain of

the securities analysts whose statements are excerpted are employed by firms

that

have

performed

services

for

Steve

Mihaylo, Vector Capital and their

respective affiliates.

The Company has disclosed that the Special Meeting of Stockholders on

Tuesday

October

24,

2006

will

be

held

at

10:00

a.m.,

local

time,

at the offices of

Snell & Wilmer, One Arizona Center, 400 E. Van Buren Street, 19th Floor

Conference Room, Phoenix, Arizona 85004.

The Company has disclosed that there were 26,686,491 shares of Inter-Tel

common stock outstanding as of the record date for the Special Meeting.  As of

the

record

date,

Mr.

Mihaylo

was the beneficial owner of an aggregate of

5,179,498 shares of common stock, representing approximately 19.4% of the

shares outstanding as of the record date.

3

Mihaylo-Vector Group

Important Notice Regarding the Proxy Solicitation

Steve Mihaylo

and Vector Capital (the “Mihaylo-Vector Group”) are soliciting proxies for use

at the Special Meeting of Inter-Tel Stockholders scheduled for October 24, 2006 (the

“Special Meeting”), to vote in favor of the proposed Resolution urging the Board to initiate a

sale

of

Inter-Tel

to

the

highest

bidder. THE

MIHAYLO-VECTOR GROUP HAS FILED A

DEFINITIVE PROXY STATEMENT ON SCHEDULE 14A WITH THE SECURITIES AND

EXCHANGE COMMISSION (“SEC”) IN CONNECTION WITH THIS SOLICITATION OF

PROXIES FOR THE SPECIAL MEETING (THE “PROXY STATEMENT”) AND HAS BEGUN

THE

PROCESS

OF

MAILING

THE

PROXY

STATEMENT

AND

A

BLUE

PROXY

CARD

TO

EACH INTER-TEL STOCKHOLDER.  STOCKHOLDERS ARE STRONGLY ADVISED TO

READ THE PROXY STATEMENT AND OTHER RELATED DOCUMENTS, AS THEY

CONTAIN IMPORTANT INFORMATION.  COPIES OF THE PROXY STATEMENT ARE

AVAILABLE

FREE

OF

CHARGE

ON

THE

SEC’S

WEBSITE

AT

HTTP://WWW.SEC.GOV

OR BY CONTACTING MACKENZIE PARTNERS INC. (“MACKENZIE PARTNERS”) AT

(800) 332-2885 OR BY EMAIL AT PROXY@MACKENZIEPARTNERS.COM.

The Mihaylo-Vector Group has hired MacKenzie

Partners to assist it in the solicitation of

proxies

from

the

Inter-Tel

stockholders.

The

Mihaylo-Vector Group has agreed to pay

customary

compensation

to

MacKenzie

Partners for such services and has agreed to

reimburse MacKenzie

Partners for its reasonable out-of-pocket expenses and to indemnify

MacKenzie

Partners

against

certain

liabilities

relating

to

or

arising

out

of the engagement.  In

its role as financial advisor to the Mihaylo-Vector Group, RBC Capital Markets Corporation

(“RBC”) may also assist in the solicitation of proxies from the Inter-Tel stockholders.  RBC

will not receive any fees for or in connection with its solicitation activities, other than the fees

due

RBC

for

its

services

as

financial

advisor

to

the

Mihaylo-Vector Group.

4

Mihaylo-Vector Group

Executive Summary

We

encourage

all

stockholders

to

vote

FOR

the Resolution

urging the Board to initiate a sale of the Company to the

highest bidder

Maximizes value and eliminates execution risk by Management and the

Company

–

Our original $22.50 offer was an attractive price

–

In an effort to avoid this proxy contest, we proposed an increase to $23.25

–

Sale process may attract even higher bids

In our view, Inter-Tel has not articulated a credible plan to generate

greater value

We do not believe that the Special Committee is seriously exploring a sale

–

If they are, the Resolution is consistent with that exploration

We will withdraw our offer if the Resolution does not receive strong

support from stockholders

–

Withdrawal of our offer may have an immediate, negative impact on         

Inter-Tel’s stock price

5

We Believe Our Offer Delivers Compelling Value Now

6

Mihaylo-Vector Group

Summary of the Mihaylo-Vector Group’s Offer

Cash offer of $22.50 per share

Offer to increase to $23.25 per share subject to Board’s

willingness to start a sales process

Total equity value of $646 million

Proposed offer subject to no conditions other than commencing

a sale process and/or execution of definitive agreements with

the Mihaylo-Vector Group

–

No due diligence contingency

–

No financing contingency

Proposed offer of $23.25 reflects an approximately 26%

premium to the Company’s enterprise value on March 3, 2006,

the trading day prior to Mihaylo’s

original 13D filing

(1)

Proposed offer of $23.25 reflects an approximately 18%

premium to unaffected stock price of $19.74 on March 3, 2006

(1) Based

upon

Inter-Tel’s

cash

balance

of

$167

million

as

of

12/31/05.

Calculated

using

Treasury Stock Method.

7

Mihaylo-Vector Group

$18.00

$19.00

$20.00

$21.00

$22.00

$23.00

$24.00

9/20/05

10/28/05

12/08/05

1/20/06

3/02/06

4/11/06

5/22/06

6/30/06

8/10/06

9/20/06

-

1,000

2,000

3,000

4,000

An Attractive Offer

Price

Volume

(000’s)

Proposed

Mihaylo-Vector Offer: $23.25

Original

Mihaylo-Vector Offer: $22.50

1-Year Average: $20.85

Source: FactSet.  Data as of 9/20/06.

Pre-13D Price: $19.74

Mihaylo-Vector

agreement

announced

13D filed

Initial $22.50

offer

Proposed offer

of $23.25

Unconditional

$22.50 offer

8

Mihaylo-Vector Group

03/03/05

04/22/05

06/15/05

08/05/05

09/27/05

11/18/05

01/09/06

03/03/06

60

70

80

90

100

110

120

NASDAQ Telecom Index

NASDAQ

S&P 500

Inter-Tel

Stock Performance 12 Months Prior to 13D Filing

Inter-Tel

(28.3%)

11.9%

NASDAQ

S&P 500

6.3%

Source: FactSet.  Data as of 9/20/06.

Inter-Tel significantly underperformed the market and relevant indices

prior to the 13D filing

17.7%

NASDAQ

Telecom

9

Mihaylo-Vector Group

03/03/06

03/31/06

04/28/06

05/26/06

06/23/06

07/24/06

08/22/06

09/20/06

75

80

85

90

95

100

105

110

115

120

125

Inter-Tel

S&P 500

NASDAQ

NASDAQ Telecom Index

Stock Performance Since 13D Filing

We believe INTL stock would trade significantly lower

without the proposed Mihaylo-Vector offer

NASDAQ

(2.2%)

3.0%

S&P 500

11.8%

Inter-Tel

Source: FactSet.  Data as of 9/20/06.

NASDAQ

Telecom

(3.0%)

10

Mihaylo-Vector Group

“[At $24.01] Inter-Tel currently

trades…

at a significant

premium to its closest peer

Avaya…

and to Cisco…

Inter-

Tel is also trading at a

premium to the S&P 500

multiple of 16.0 times based on

the consensus First Call

forward earnings estimate,

despite historically trading at a

20% plus discount to the

market.”

–

JPMorgan, April

2006*

17.3x

21.4x

18.5x

17.3x

11.5x

20.4x

Nortel

Inter-Tel at

Proposed

$23.25 Offer

Avaya

Cisco

Aastra

Unaffected INTL P/E Multiple

Premium

Proposed Offer Values Inter-Tel at a Premium to Peers…

Source: FactSet

and I/B/E/S estimates as of 9/20/06.

(1) INTL’s

unaffected stock price based on pre-13D closing price of $19.74 on March 3, 2006. 

* Permission to use the quoted material was neither sought nor obtained.

(1)

Non-

Inter-Tel

Average: 17.2x

“Based on our estimates, the

offer values Inter-Tel at 24x

2006 or 18x 2007 EPS.  These

multiples are above the average

of INTL’s

peers.”

–

Kaufman

Bros., August 2006*

2007E P/E Multiple

11

Mihaylo-Vector Group

25% premium to Inter-Tel’s average NTM P/E for the 12 months prior to the 13D

…and a Meaningful Premium to Inter-Tel’s own

Historical Multiples

Source: FactSet

as of 9/15/06.

21.1x

18.0x

16.9x

16.9x

10.0x

13.0x

16.0x

19.0x

22.0x

25.0x

Mihaylo-Vector

Proposed $23.25

Offer

24 Months Average

Pre-13D

12 Month Average

Pre-13D

1 Day Prior to 13D

NTM P/E Multiples

12

Mihaylo-Vector Group

Proposed Offer Above Most Analyst Price Targets

“We continue to believe the current offer of

$22.50 is a fair valuation.”

–

Kaufman Bros.,

July 2006*

Company

Last Update

Rating

Price Target

Wedbush Morgan

8/28/06

Hold

$21.00

Morgan Keegan

8/28/06

Outperform

N/A

Kaufman Bros.

8/22/06

Hold

$22.00

Brean Murray

8/14/06

Stong Buy

$26.00

JP Morgan

8/11/06

Underweight

N/A

Canaccord Adams

7/27/06

Hold

N/A

Bear Stearns

7/27/06

Peer Perform

N/A

Lehman Brothers

7/27/06

Equal Weight

$18.00

Most

analysts

have

12

month

price

targets

below

the

Mihaylo-Vector proposed offer

$26.00

$22.00

$18.00

$21.00

$15.00

$18.00

$21.00

$24.00

$27.00

Brean Murray

Kaufman Bros.

Wedbush Morgan

Lehman Brothers

Proposed Mihaylo-Vector Offer: $23.25

Avg. 12 Mo. Price Target: $21.75

* Permission to use the quoted material was neither sought nor obtained.

“We view the [$22.50] offer as attractive, as

the stock historically has traded at a discount

to its peers.  Moreover, Inter-Tel had been

facing some early challenges in its transition to

IP-PBX products amidst increased competition

from larger OEMs such as Avaya, Cisco and

3Com.”

–

Canaccord

Adams, June 2006*

13

We Believe Special Committee and Management May

Not Be Acting in the Best Interests of Stockholders

14

Mihaylo-Vector Group

They say:

The Special Committee “is in fact conducting a serious and

thorough review of the Company’s strategic options.”

(1)

Our view:

You should ask yourself whether the Special Committee is

really serious about exploring all options or whether it has

erected a smoke-screen to thwart, discourage and delay the

Mihaylo-Vector Group’s proposed $23.25 offer

The Mihaylo-Vector Group’s proposed Resolution will ensure

that the Special Committee  follows through on its promises

to review all options

You should ask yourself whether the Special Committee will

continue its “serious and thorough review”

if the Mihaylo-

Vector Group’s offer is withdrawn

–

The Company did not even announce that the Special Committee

had authorized the Company’s financial advisor to review and

explore various strategic options until August 11, 2006

Myths vs. Realities: Are All Options Under Review?

(1) Inter-Tel press release dated August 25, 2006.

15

Mihaylo-Vector Group

They say:

The proposed $23.25 offer “is subject to a number of

conditions.”

(1)

Our view:

The only conditions are the Board commencing a sale

process and/or executing definitive agreements with the

Mihaylo-Vector Group

The Mihaylo-Vector Group’s proposed $23.25 offer is all

cash and without any due diligence or financing

conditions

The bid is fully-financed and supported by a committed

debt package from Deutsche Bank and RBC

Myths vs. Realities: Is Our Offer Firm?

(1) Inter-Tel press release dated August 21, 2006.

16

Mihaylo-Vector Group

They say:

The Special Committee rejected the “revised conditional”

proposed $23.25 offer because they did not believe it “is

sufficiently attractive to warrant departing from a thorough

review of the Company’s strategic options.”

(1)

Our view:

The proposed $23.25 offer is a compelling bid and a sale

of the Company is the best way to maximize stockholder

value

Ask yourself why the Special Committee did not disclose

the opinion of its financial advisor as to the adequacy of

the proposed $23.25 offer

Without the Mihaylo-Vector Group’s actions, the Special

Committee would not have undertaken its recently

initiated review of strategic options to maximize value for

stockholders

Myths vs. Realities: Was Our Proposed Increase

Properly Evaluated?

(1) Inter-Tel press release dated August 25, 2006.

17

Mihaylo-Vector Group

Ask yourself whether Inter-Tel’s Board might take future actions designed to

adversely impact a sales process

They say:

The Special Committee is “committed to enhancing value for all

Inter-Tel shareholders.”

(1)

Our view:

Management and the Board are not acting in the best interests of

stockholders:

From March 24 to March 29, the Board authorized new

indemnification agreements for its directors and selected

officers

On April 7, the Board raised the salaries of the CEO and COO

The Special Committee rejected both of the Mihaylo-Vector

Groups’

proposals without negotiation

Myths vs. Realities: Is the Special Committee

Committed to Enhancing Value?

(1) Inter-Tel press release dated August 11, 2006.

18

We Believe that Management

Lacks a Credible Plan for Growth

19

Mihaylo-Vector Group

16.3%

7.9%

11.4%

10.8%

7.9%

12.3%

5.7%

(0.1%)

1.2%

0.6%

53.1%

52.6%

52.9%

53.8%

51.1%

52.1%

50.5%

50.6%

49.8%

49.0%

(1.0%)

4.0%

9.0%

14.0%

19.0%

24.0%

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

47.0%

48.0%

49.0%

50.0%

51.0%

52.0%

53.0%

54.0%

Recent Financial Performance of Inter-Tel

We believe that declining growth and margins create significant execution risk

by Management and Company for stockholders

YoY

Revenue

Growth

Gross Margin

“We believe upside is limited until

the company demonstrates new

products have begun to gain

traction and the gross margin

rebounds toward historical levels.”

–

Kaufman Bros., July 2006*

“We believe the uncertainty of the

company’s current path, margins

difficulties and low growth would

speak for a path towards a lower stock

price…

We see no fundamental

reason why the stock should trade at

a premium to peers given the

lackluster top line growth and margin

headwind from increased competition

and the introduction of new IP

products.”

–

JPMorgan, April 2006*

* Permission to use the quoted material was neither sought nor obtained.

20

Mihaylo-Vector Group

Management’s Guidance: “Trust Us”

In our view, the Special Committee’s rejection of the Mihaylo-Vector

proposals can be summarized as:

Trust us that we have a plan to accelerate revenue growth;

Trust us that this plan will lead to EPS and share price growth;

Trust us that the timeframe to achieve these growth targets is consistent

with your investment horizon;

Trust us that the research community does not understand the Company;

Trust

us

that

we

have

a

strategic

plan,

but

we

have

not

publicly

disclosed

what it is

Can you afford to trust Inter-Tel’s Management and Board?

21

Mihaylo-Vector Group

Where’s the Plan?

In our opinion:

Management has not provided investors

with accurate guidance on the impact of

new product introductions

Management has not provided investors

with financial guidance which would

support assertions of greater intrinsic

value

Despite having agreed to provide us due

diligence material, and our having

entered into a confidentiality agreement,

the Company has not shared its strategic

plan with us

“We remain concerned about Inter-Tel’s competitive

position, as we see increasing evidence of fierce

competition from OEMs such as Avaya, Nortel, and

Cisco.  Despite the improvement in the

SMB

(<100

lines) business this quarter and Inter-Tel’s strong

managed services approach, we are particularly

concerned about potential pressure from Cisco’s

LinksysOne

SMB

offering.”

–

Canaccord

Adams,

July 2006*

“It is too early to have conviction that new IP-based

products will allow INTL to deliver sustainable EPS

growth.  If the IP-based products disappoint, it will

be difficult for INTL to improve direct sales to

customers with existing leases, and thus both revs

and GM% would be impacted.  We currently

continue to maintain a cautious view due to

competition from

CSCO

and AV, which have more

mature

VoIP

products, and heavy discounting from

NT.”

–

Bear Stearns, July 2006*

* Permission to use the quoted material was neither sought nor obtained.

22

We Believe that Adopting the Resolution is in the

Stockholders’

Best Interests

23

Mihaylo-Vector Group

Adopting the Resolution is in Stockholders’

Best

Interests

Consistent with the Special Committee’s stated goal to explore strategic

options

–

In over six months since

Mihaylo’s

13D filing, the Company has not disclosed

a superior offer to the proposed $23.25 offer

Enables a market check to determine the true value of the Company while

still providing the compelling proposed $23.25 offer today

The Resolution is non-binding

–

Stockholders are not

being asked to vote on the proposed $23.25 offer

–

It does not restrict the Special Committee’s ability to select the best

alternative to maximize stockholder value, or require the Special Committee to

conduct a sales process with undue haste or create a “fire sale”

atmosphere

24

Mihaylo-Vector Group

Best Alternative for Stockholders: Sale of Inter-Tel

We believe that a sale of the Company is the preferred liquidity

event for

stockholders compared to any other strategic alternative available to Inter-Tel

Sale of the Company

Share Buyback

Extraordinary Dividend

to Stockholders

Full liquidity for all

stockholders

Compelling value of

$23.25 available

TODAY

May be taxable only on

the gain portion of sale

No execution risk

related to Company and

Management

Partial liquidity

Entire dividend may be

subject to taxation

Reduced cash / increased

leverage will increase risk

for stockholders (credit

rating downgrade, etc.)

Share price drop ex-

dividend

Continued execution risk

related to Company and

Management

Positive impact on share

price

Partial liquidity

Selling stockholders will

likely receive a premium

lower than that proposed

by Mihaylo-Vector offer

Reduced cash / increased

leverage will increase risk

for stockholders (credit

rating downgrade, etc.)

Continued execution risk

related to Company and

Management for

stockholders who do not

sell in the buyback

We believe that dividends and share repurchases don’t enhance value,

they simply distribute your cash

25

Mihaylo-Vector Group

Risks of Voting Against the Proposed Resolution

No guarantee that the Special Committee and Management will

take steps to implement any strategic options to enhance

stockholder value

No guarantee that the Special Committee will not attempt to

accelerate

growth

via

risky

acquisitions,

thereby

diluting current

stockholders

No guarantee that new products will gain traction quickly

No guarantee that the stock price will not be severely impacted

–

Company’s operational performance has been weakening

–

Market benchmarks indicate significant potential downside

26

Mihaylo-Vector Group

What Happens if the Offer is Withdrawn?

We believe that Inter-Tel’s stock may fall significantly given market benchmarks

NASDAQ Telecom

Inter-Tel

(28.3%)

11.9%

NASDAQ

S&P 500

6.3%

17.7%

12 months

prior to 13D

NASDAQ

(2.2%)

3.0%

S&P 500

11.8%

Inter-Tel

NASDAQ Telecom

(3.0%)

Since 13D

“For former CEO Mihaylo

to significantly

raise his bid, in the face of just 4% top

line growth in 2006E and 3% in 2006E

and declining gross margins, strikes us

as unreasonable…

We do not believe a

sale of the company is imminent, and

over time, we expect INTL shares to give

back their recent acquisition premium.”

–

JPMorgan, August 2006*

“Since former CEO Mihaylo’s

$22.50/share offer, we no longer believe

the stock trades on fundamentals.  We

see little potential for another bidder to

step in here, and we do not expect

Mihaylo

to raise his bid.  Should the board

reject the offer, we expect the shares to

trade back down to the high teens.”

–

Canaccord

Adams, July 2006*

* Permission to use the quoted material was neither sought nor obtained.

27

Mihaylo-Vector Group

Next Steps for Stockholders

Vote FOR

the proposed Resolution to urge the Board to initiate a

sale of the Company by voting by telephone, by Internet or by

completing and returning the BLUE proxy card

Call Inter-Tel and demand that they agree to:

–

Initiate a sale process for the Company to the highest bidder

–

Negotiate with the Mihaylo-Vector Group with respect to its compelling

proposed $23.25 offer

Protect your interests as a stockholder and call Inter-Tel at    

(480) 449-8900

Please let us know that you called Inter-Tel by contacting MacKenzie

Partners by telephone at (800) 322-2885 (toll free) or (212) 929-5500

(collect)

or

by

email

at

proxy@mackenziepartners.com

If you have any questions or require assistance, please contact

MacKenzie

Partners