I would like to welcome everyone to the UTStarcom fourth quarter 2007 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Hong Lu.

Good afternoon and thank you for joining us today. I am Hong Lu, UTStarcom’s Chief Executive Officer and I am pleased to host today’s call with Fran Barton, our Chief Financial Officer and Peter Blackmore, our Chief Operating Officer. The agenda for today’s call is as following. Peter will begin with a call with a discussion with the business units update after which I will discuss the China market. Fran will then provide our Q4 financial results giving an update on liquidity and finally he will give the guidance for Q1 and insight into 2008. Then we will turn the call over to question and answers. So, before we begin our formal remarks, I would like to remind everyone that some of the information we will discuss today constitutes forward-looking statements, but actual results could differ materially from our current expectation. To understand the risks that would cause results to differ, please refer to the risk factors identified in our latest annual report on Form 10-K, and in our quarterly reports on our Form 10-Q and current reports on Form 8-K, which are filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Peter.

I would now like to give the business unit update. In the last six months, we’ve done a lot of work and there were six main categories and I’d quickly like to cover them. We’ve restructured the company with an 11% cut to headcount. Second, we created a new BU structure to enable focus on our core technologies such as IPTV, NGN softswitch and IP broadband and also focus on the fast growing developing markets where we have a good market presence. Third, we defined non-core areas, which we are managing tightly to either drive profitable growth or we shall monetize these to improve shareholder value. Fourth, we’ve established more operational discipline in the company. Fifth, we worked on supply chain and quality to drive gross margin improvements and also reduce our inventory. And sixth, we implemented a business transformation office to have weekly attention on these changes and ensure that our turnaround builds momentum fast. The quarter four results reflect to some extent these actions. We still have much work to do and I want to stress the commitment of the management team as we put the company back on track. On this call today, we will provide more detail of each of the business units including information on their growth drivers, estimated growth percentages and target margins. As you recall, we structured the company to focus on two core business units, which we call the Multimedia Communications Business Unit (MCBU) and the Broadband Business Unit (BBU). Before I go into each business unit, I would like to reinforce the point. The strength of our core portfolio is not necessarily just in each of the individual products, but also in the strong combination of broadband, softswitch, and IPTV working together. Let’s begin with Multimedia Communications Business Unit (MCBU). We…

I will provide an update on the China market and operations, beginning with the recent regulatory changes in China. Recently, the Chinese government released an official document which stated that both telecom operator and a broadcast operator were free to compete in each other’s field. We believe it is a very good news for the IPTV business in China. The content will continue to be controlled but the distribution will be open. This means that our customers, China Telecom and China Netcom, can offer IPTV services throughout China. As a result, we are seeing a significant increase in the set-top boxes demand in January compared to Q4. In addition, media sources continue to circulate that there will be a reorganization of the telecom industry in 2008. While no official announcement has been made, we believe in the end we will have but three operators, China Mobile, China Telecom and China Unicom, all of which will be able to compete freely in both the fixed and mobile markets in China. If this happens, we believe there will be a more downward pressure in the PAS business in China Telecom and China Netcom focusing their GSM and CDMA business. However, we still believe that our PAS packet mode solution is compelling since the data rate is better than current CDMA and GSM data rates. And at this time we continue to see the demand for our packet mode from both China Telecom and China Netcom. We also believe this would provide an opportunity for us to sell new CDMA and other handsets in China. For our PAS handsets business, we shift our focus in quarter four from a direct sales model to a distribution model. In doing so, we have regained market share in both fourth quarter and early 2008. We’ve also…

I would like to cover the fourth quarter financials, an update on liquidity and some guidance for the first quarter of 2008. So before I give the financial results let me provide an update on some current outstanding issues. First are convertible notes. As you know our outstanding convertible notes are due on March 1. Our plan is to pay off these notes using the existing cash on our balance sheet. We have successfully repatriated from China the funds necessary to completely meet the principle and interest obligations of the notes. Therefore, today, we transferred the full payment due of $289.5 million including principle and interest to the trustee of the notes, and with instructions to pay them when due. That still leaves us in a net cash position with approximately $180 million as of today. We believe that the best use of that net cash is to keep it available for operational needs and therefore we have no plans to do any share buybacks at this time. Two, going concern opinion, also as noted in our press release, we expect to receive a going concern uncertainty paragraph from our independent auditors. As some of you may know, the basis for going concern opinions is typically based on historical results and does not take into account planned improvements that the company has formulated. In our case because we’ve had losses and had negative cash flows and because of the upcoming notes repayment, we expect to receive this going concern modification. Beginning in the fourth quarter of 2007 we have implemented and will continue to implement a number of initiatives to address these concerns and to return the company to profitability and positive cash flows. So some of the initiatives we’ve taken to date include restructuring the company’s operations as Peter…

(Operator Instructions) Your first question comes from the line of Hamed Khorsand - BWS Financial.

Could you provide some color as to the IPTV field trials that are ongoing, any of them in South America, Middle East, Europe, anything like that?

Our biggest on in South America is Brasil Telecom and it’s gone very successfully, so they are now looking at expansion of that. The Middle East, we are talking with a number of people but we don’t have any projects current there, but we have high hopes that we can break into the Middle East market. And then we did in the call highlight where we are strongest which is China, India, Taiwan and obviously we have a strong presence with SoftBank in Japan using IPTV as well and we saw growth in our China and India and Taiwan markets last year

On the Indian market, any comments on the news over night with MTNL or MTML and their licensing issue.

I am not up to date with that, so I would have to come back to you, which I am willing to do once I’ve looked at it. So I apologize, I missed that news.

Your next question comes from the line of [Andrew Rosenberg] - Prince Asset Management. [Andrew Rosenberg] - Prince Asset Management : Can you talk a little bit about on the IPTV front with 70% I guess of the ‘08 guidance covered by backlog. Is it long sales cycle as to why that might be flat this year?

It’s a long sales, sorry.

Let me just clarify the 70%. The 70% was the whole business unit, so it wasn’t necessarily IPTV; it was the whole MCBU business unit, a good portion of which is frankly PAS.

IPTV is typically a six to nine month sales cycle because people usually spend a lot of due diligence on what product they want. They usually do testing and then it to go live, usually once we’ve got a contract, the first stage would go live after about three months. And they tend to really test that thoroughly and then they’d ramp you know according to their own plans. And we would get obviously revenue, typically the way we do that, we get part revenue at install, part revenue appearing after install and then usually a balance of 20% twelve months later. So that would, that explains you know the revenue recognition timeline. [Andrew Rosenberg] - Prince Asset Management : But talking about some of the follow-ons have you seen a lot of follow-on orders yet from some of the orders you’ve had in contracts you’ve won in China, I think that you talked a little bit about that?

Sure, yes, we are getting some expansion orders in China, so we have talking about not only set-top boxes. Earlier I was mentioning that in Q4 the run rate per months was about 20,000 set-top boxes. And so far Q1 this year we have been seeing that number has been more than doubled and maybe close to 60,000, so it’s actually tripled. But we are delivering roughly about 40,000 today and we see a lot more aggressive plan being put into place by our customers and we’re really getting geared up for supply chain to supply them. And overall we see the both China Telecom and China Netcom, one of their major focus in this year is to grow IPTV, so as this is becoming a relatively hot topic. And there is still some of the uncertainty in the regulatory areas, but that has been one of authorized official letter has been, document came out. But I’m very hopeful that it’s going to clear up a little bit more but I think a lot of the operators are still waiting to see how that is going to come. And if that is being totally open it up we see a significant potential in China for IPTV this year. [Andrew Rosenberg] - Prince Asset Management : What does the margins look like on the set-tops?

I think it’s in high teens in currently but there is a good pressure coming towards us. And so our effort is to see how can we build the product with a higher volume to negotiate with our suppliers and build the better products or redesign the products, etc. So I will probably hope that in the future we will be able to make it towards closer to 20%. [Andrew Rosenberg] - Prince Asset Management : In India on the IPTV front, do margin get squeezed there a little bit? I don’t know if you can talk a little bit about the market in India in particular?

We haven’t seen that yet. All of the contracts I commented on, the new ones, Sri Lanka or India the margin was just as strong as it’s always been. So, so far we’ve probably seen competitive pressure but it hasn’t impacted our margin.

Yes, the infrastructure margin we are still seeing in China is very healthy as well, so we will see how our task is to, how we go to improve our set-top boxes there. [Andrew Rosenberg] - Prince Asset Management : Selling off non-core assets, you talked a little bit about that. Would that include all facets of non-core? I am kind of looking at some of your branded products, would that be included in non-core?

Well, we prefer not to go into detail because it’s not quite like a company like General Electric saying it’s going to sell its plastics division. We have to be sensitive to the revenue protection and sensitive to our customers because we want to manage that very well. So if you will excuse us we won’t give any more comment on that other than to say obviously its non-core assets and ones we think really would be better off outside our portfolio. We will keep some of our non-core assets because clearly some of them are getting quite attractive. [Andrew Rosenberg] - Prince Asset Management : Looking at the guidance on the quarter, Q1 OpEx of $115 to $120, is there any way of bringing that down to under $110 the second half of year? Is there any way to get that even lower? Is that kind of being conservative with kind of OpEx guidance or can you talk a little about that?

Yes, it’s where we are right now and I think we all internally are thinking about that as well. And we haven’t yet got any specific plans to get it lower but we know that we need to, and we know that we want to. So we are giving the guidance for what we see before us either actions that are taken or imminent. And after that we’ll let you know as we are taking further ones. So we are going in that direction. I don’t want to pre-set an expectation until we’ve done the work and figured out how to do it specifically

Yes we are very conscious of shareholder value and we’ll take the right action. So we will give you an update on the next earnings call on that.

We understand that it is not satisfactory.

Your next question comes from the line of Velin Mezinev - Donald Smith & Company. Velin Mezinev - Donald Smith & Company: What’s the balance on the goodwill and intangible accounts is my first question. And secondly, you lost $25 million on a GAAP basis in the quarter while the shareholder equity fell by $83 million, if you could explain what accounts the difference?

In terms of the intangibles, I believe it was something around $20 million more or less, so rounded number is $20 million, basically intangibles and goodwill. So stuff we had picked up when we acquired some of these businesses years ago and now given our overall situation, that looks like that value is not being maintained, the customer lists, goodwill, that sort of thing. The reconciliation is something I am going to have to do offline because I know it’s reconciled because all the debits equaled all the credits, but I haven’t done that specific analysis. So if you give me a call afterwards, I will be happy to take you through that.

Your next question comes from the line of [Chernin Waters] – Crowell, Weedon. [Chernin Waters] – Crowell, Weedon : How much of the Gemdale and Infinera stock has been sold and how much remains?

Yes, basically all of it’s been sold for Gemdale and approximately all of it for Infinera. Call it for your purposes; let’s say it’s all been sold. [Chernin Waters] – Crowell, Weedon : Have you considered selling and leasing back the 2.7 million square foot building in China?

Yes. I didn’t mean to be flippant, so. So there’s all the, you can imagine a lot of complexities when you get tax grants and special favors and special benefits from the government, so there is a lot of complexities in that. So there is many things to do. You could if it sell, if not a sale and leaseback you could lease excess space. You could take a loan against it. There is a number of activities not just sale and leasebacks. So we are going through the whole list. We think we are aware of what the whole list is and we think we will end up doing the right thing to get some value there. [Chernin Waters] – Crowell, Weedon : The PCD sales, revenues expectations for 2008, what is the figure you are looking at?

So, I just want to make sure I understood the question, was the question what was our 2008 PCD revenues?

No what’s your expectation for this year for PCD revenue?

It’s somewhere in the 4% to 6% revenue growth range for 2008 versus 2007.

I do want to also clarify the question around Gemdale. So although all has been sold, because you asked me the question in February I don’t want you to think that it all got sold in Q4 of last year because this is a Q4 call. So in the eight weeks of this year we also sold some of it, we will announce that but as of today of course it is all sold but I announced that there was a $55 or $56 million gain in our Q4 numbers. That is the Q4 portion of the sale and there is a Q1 portion of the sale which has been done, I will do that on the next conference call.

Your next question comes from the line of Himanshu Shah - Shah Capital.

You had a decent quarter, why didn’t you pre-announce?

Well we did not think it was that spectacular. We are pleased with the revenue. A lot of that revenue came from PCD which doesn’t have a lot of flow through to profit. And we thought it was a good quarter.

Switching gear to India, you took $8 million charge in the quarter, is that it, because you sounded like last time when you spoke in October that you took $32 million in the third quarter. And my recollection is that you made a statement that that was going to be it. So should we expect some negative surprises out of India going forward?

So first of all, I do hope that I would never made that statement because with a complex multi-year project like this, it’s every quarter we are going to have to reassess, revalue and the cost of producing, acquiring product, delivering product, various contractual arrangements including penalties and so forth. So we are going to have to every quarter go through and do an accounting and see whether it goes up or down. And by the way we’ve had some quarters where it’s gone the other way. So I would hope I wouldn’t be so foolish as to say that we are done. So what we say is that everything we know is booked and if we get some good news next quarter we will reverse it. If we get some bad news we will unfortunately have to book it.

So you should understand the Phase 1 of this project we’ve delivered virtually all of the equipment. There is a tiny bit left to deliver so, and the project is up and running. So obviously Fran has got to be rightly cautious but a bulk of the work has been done and the customers are very pleased.

On Japan, I am in the impression that you are going to be bidding for the order in the second quarter. The question is what are the chances because you already did the first phase of the work?

I am not too sure what your question about the order, which order you are talking about?

Well the order that you received back in ‘05 and I am in the impression that they are going to be issuing another tender. Is that so or that is not the case from your perspective?

Well, we are talking about many, many different projects with our customers predominantly in Japan is SoftBank and they have many different projects. And if you are saying that it is a continuation with our first order, if there is any opportunity we are extremely pleased because they are very happy with our performance so far. And predominantly we are the only bidder, so not only bidder we are the only supplier in the past. So, and so I think if they have any order out there we are in a very good position.

Hong, staying on China what percent of the revenues approximately will be coming from China in 2008 in your opinion?

I think it’s roughly, I think we have to be careful, probably roughly around 20% or so, 25%.

On the softswitch, I know you got an order from Tiscali. Any orders like that we should expect over the next 12 to 18 months?

I think we are very pleased with the progress we are making. A lot of people are very pleased with the potential savings from a operational side. Particularly we have been demonstrated, in PLDT had shown that there is a significant potential saving in energy savings, the real estate savings and the headcount savings. And so after we have make that as a showcases, we have gained a lot of momentums, so we’re not the only one very pleased. Our operators are very extremely pleased, so all I can tell you is the activity is very high.

Yes, the activity is high. We have to leave it at that and we’ll obviously, looking forward to a lot of momentum here.

Do you think, Peter, the India contracts are going to be profitable going forward? You are doing a lot of business there but you really haven’t made any money there and I’m just wondering is there light at the end of the tunnel here?

Let me step back a moment. The large contract that the government telecom’s carrier we’ve publicly said is not profitable. We’ve taken a reserve. All the other India contracts are actually profitable. So India is a profitable area for us and we learned a lot in that first government contract, so if we take further contracts we’d do a better job with the government carriers. The private carriers we have lots of profitable contracts.

Your next question comes from the line of Hamed Khorsand - BWS Financial.

Are there any specific countries in the Middle East you’re targeting with IPTV? Turkey, Pakistan, what kind of timeframe are you looking for before there is news?

Well, the timeframe would be sort of the course of this year because they are very early in discussions. It’s impossible for us to be more specific and they’re in some of the Arab countries and we would also discuss with Turkey, yes.

So your negotiations probably also maybe end of the year then?

No we are not in firm negotiations yet, we’ve just started. We haven’t done a lot of work in the Middle East. So let me step back. We haven’t done a lot of work in the Middle East but it is a very fast growing part of the world, also a very wealthy part of the world. So as part of the 2008 plans, we put extra sales resources into the Middle East. We’ve just run a very successful conference over there targeting a number of carriers. So, we’ve started a dialogue. It’s far too early to say we are in contract negotiations. So I apologize if I sounded more aggressive in that before. But I do think it’s going to be a good area for us.

There are no further questions at this time. Are there any closing remarks?

I’d just like to thank all of you and we’ll get back to work and you’ve got our, the management team here commitment. So, I think it was a good quarter but we are now very focused on 2008. So, thank you all for joining us. I appreciate it.