Welcome to the second quarter 2008 earnings conference call. (Operator Instructions) Barry Hutton, you may begin your conference.

Earlier today we issued a press release announcing our financial results for the second quarter of 2008. On today’s call Peter Blackmore, our Chief Executive Officer will provide a strategic update including a review of recent divestitures and operational changes. He will then discuss the highlights relative to certain geographies and business units. Fran Barton, our Chief Financial Officer will then give the segment details of our Q2 financial results and Fran will also discuss third quarter financial guidance and our expectations for the fourth quarter. Before the call begins, I’d like to remind everyone that some of the information we’ll discuss today constitutes forward-looking statements. Actual results could differ materially from our current expectations. To understand the risks that could cause results to differ, please refer to the risk factors identified in our latest annual report on Form 10K, quarterly reports on Form 10Q and current reports on Form 8K which are all filed with the Securities & Exchange Commission. In addition, this presentation includes certain pro forma non-GAAP financial measures. The most directly comparable GAAP information and a reconciliation between the pro forma non-GAAP and the GAAP figures is available on our website in the investor relations section. With that, I’d like to turn the call over to Peter Blackmore.

As you saw in our press release, our second quarter revenues were $633 million which represents an 18% growth over the same period last year. While the company did have second quarter operating and net losses of $3 million and $39 million respectively, both metrics were improvements relative to the results to the second quarter 2007. We also took significant steps on simplifying our company since the last earnings’ call and as you will have noted, we have exceeded our guidance to you on revenue, on expenses and also on cash flow from operations. At this point I’ll provide an update to our company initiatives and our market position and Fran will then follow me to discuss the quarter results later in the call. Let’s start with the corporate strategy and our divestitures. As you all know, we announced a comprehensive strategic plan late in 2007, we have executed a number of actions relating to the strategy and the plan was very simply to create a better focused and more streamlined company which in turn would enable us to focus on profitable growth in our core technologies and markets. We have recently completed two divestitures as part of this plan. Each of these divestitures was consistent with the announced plan. Strategically these divestitures have streamlined our product offering to better reflect our commitment to IP based technologies particular in the IPTV, NGN softswitch and broadband markets. Our geographic footprint continues to be focused on the world’s fastest growing markets which include Asia, Latin American and Europe. We provide our solutions in these regions through close partnerships with leading telecom carriers in each region. Financially, these divestitures significantly improved our cash and liquidity position while reducing our ongoing operating expenses. Our financial model is now much more transparent so that you…

I’ll start with an overview of the results and then go in to segment details. In the second quarter, total revenues were $633 million an 18% increase from the second quarter in 2007. This growth was mostly driven by increased revenues in PCD plus a strong contribution from our multimedia communications business. Our gross margin during the period was 13% and the year-over-year decline reflects lower gross margins in the handsets and broadband business units. The operating expenses of $113 million represent a year-over-year improvement of $22 million and a sequential improvement of $10 million from last quarter. While we are pleased with this improving trend, the op ex does continue to reflect some unusual items which we expect to wind down by the end of the year. The operating loss of $31 million is an improvement of $24 million over the year ago period. The net loss for the second quarter was $38.8 million or $0.31 per share based on 123 million shares. This is also an improvement from the second quarter 2007 when we reported a net loss of $61.7 million or $0.51 per share. In the second quarter 2008 our non-PCD bookings grew for the consecutive period and reached $211 million. During the second quarter we used roughly $37 million in cash flow from operations versus the $97 million we generated during the first quarter. As a result, the first half of 2008 reflects a positive $60 million in cash flow from operations. Our liquidity position has improved greatly since year end. In March, we repaid our convertible notes and we now have only $20 million in total debt and, as I mentioned before, year-to-date cash flow from operations has been positive. In addition, on July 1st, we sold PCD which provided approximately $240 million in additional…

(Operator Instructions) Your first question comes from [Steven Kaufler – Con Royal]. [Steven Kaufler – Con Royal]: You probably didn’t get any questions just because you gave so much information which is great. It’s everything we need but it’s a lot to absorb so if you don’t mind I’d like to get this into a little bit bigger chunk, you went over all of it but if we could just think of the business in three parts and then two timeframes. The three parts are ongoing handset business, infrastructure not including [pass] and pass infrastructure. Do you have it handy to look at the major metrics on those two businesses for Q2 and for the Q3 guidance?

I think because path and infrastructure are mixed in MCBU and handsets bridges two segments it would be a reorganization. I think we could say is some of the pieces, for example if you took handsets for pass first and say that pass business will be declining from Q2 to Q3 and probably beyond that as well. I think everybody already knew that. The other half of handsets is our CDMA handsets which is actually growing from Q2 to Q3 and that’s a growing business. [Steven Kaufler – Con Royal]: Do you have the levels handy, Fran, or is that not available at the moment?

No I probably don’t have.

We break it out slightly differently so we’re not being really obtuse but the way we break it out is China, international and the Korea TBU and in China we have handsets in China as well as the infrastructure in China. International attends just with the infrastructure. Korea TBU is separately sold to the new stand alone PCD and we also break it down by the business units like [inaudible] so we don’t quite do it as you’re asking. [Steven Kaufler – Con Royal]: Maybe I could go offline with Barry and/or Fran.

[Inaudible] work and share it with you.

I think the big pictures though are the pass infrastructure your third category is something that’s declining over time and will continue. [Steven Kaufler – Con Royal]: But I thought I heard you say that you expect that to go up in Q4. Did I hear that right?

I don’t think we made any comments about pass infrastructure specifically.

Basically in MCBU you have a combination of IPTV, Softswitch and the pass infrastructure and the growth in IPTV and Softswitch offsets the decline in pass infrastructure so you may have heard that. Other than what Fran has said the pass. [Steven Kaufler – Con Royal]: Pardon me Peter, did you say that the growth in IPTV offsets the decline in pass infrastructure?

That’s what I said, yes. [Steven Kaufler – Con Royal]: You’re not meaning to say that it’s a net zero sum gain, do you?

No, what I was trying to say was in that business unit MCBU, you have IPTV revenues which includes set top boxes, the infrastructure, you have the Softswitch NGN and then you have the remains of the PHS infrastructure business not the handsets and what we said we’d see roughly flat revenues for the year because IPTV Softswitch growth offsets declines in pass infrastructure.

There isn’t a lot of decline in pass infrastructure, it’s the handsets that are falling off. The infrastructure is drifting downward but not nearly as much as handsets. [Steven Kaufler – Con Royal]: I guess that’s one of the things I wanted to get at is why? What’s really driving any additional spending with negative sub-growth and all the other things going on?

The PHS spending is on a long lead time so a lot of the contracts are placed six months before, we get the revenue recognized after six to nine months so most of the PHS revenues this year we’re pretty accurate forecasting because the orders are placed long on ago. That’s different to the handsets where you get seven billed within three months usually and therefore if people stop ordering the handsets you see it visibly in one quarter but it’s harder to forecast the trend. The PHS infrastructure is pretty straightforward to forecast.

We’ve got a fairly substantial backlog in other words of infrastructure. [Steven Kaufler – Con Royal]: I’m not going to make you go back through all of this but a couple of key points would be helpful now. I understand what’s in MCBU and you do have those breakdowns. What was MCBU revenue and gross margin in Q2 please?

That’s what we just gave. I’m just going to go back and read it the way I wrote it before. MCBU revenue was $74 million in Q2 and gross margin was 39% in Q2.

Revenue growth was 17% from a year ago and the margins were slightly down because the set top box funding was higher. [Steven Kaufler – Con Royal]: Did you give guidance for this unit or are you just basically putting all infrastructure together in the guidance?

I don’t think we’re giving guidance by the business unit level, we’re giving company guidance and then we report actual so in our 10-Q which is coming out on Monday you will see we do a segment report, what were the actuals, but we don’t go forward with BU forecast, we just do a company forecast. [Steven Kaufler – Con Royal]: I’ll get to one little chunk of your question then I’ll leave it and try to go offline on this but basically the two infrastructure elements are MCBU and broadband infrastructure. Correct?

Correct. [Steven Kaufler – Con Royal]: What’s the apples-to-apples on revenue Q2 versus the guidance for I think you said $170 million to $190 million for Q3? Basically the whole remaining company minus the handsets.

We haven’t given guidance by segment for Q3 if that was your question. We’re giving the company guidance for Q3. [Steven Kaufler – Con Royal]: Then let’s do it this way and I know you gave this, of the revenues you reported what percentage was PCD again?

We said in Q2 PCD was $449 million. It was about 71% of the company in Q2 on base revenue. [Steven Kaufler – Con Royal]: So it was what, $633 million minus $449 million?

Yes, but you can’t do that either so the problem is, well depending on what you’re going to do, remember that on a going forward basis that’s why I gave you the restated Q2 and why I gave you the restated Q1 so you wouldn’t do it. You don’t know how to do it because all of the sales that went from Korea design center to PCD in Q2, in Q3 are going to be external revenue and so I went back and estimated that for you and that was in the analytics. [Steven Kaufler – Con Royal]: I understand. You’re trying to provide apples-to-apples which is great, what is apples-to-apples Q2 to Q3 on revenue under that definition?

Q2 was about $240 million and Q3 is about, if you want to take the midpoint in the range, it was about $180 million. Then what we said was remember that we have a big growth in Q4 after that so remember that we had a huge overage in Q2 for a number of contracts that were going to be in the second half that ended up getting recognized in Q2 and that’s why we exceeded our guidance. [Steven Kaufler – Con Royal]: What do you mean by an overage in a contract?

The timing was expected in Q3 or 4 and we were able to fortunately [inaudible].

Revenue recognition.

Everybody who has been following us knows that in any particular quarter some large contracts slip out or get pulled in which you can’t always guess. These are very complex acceptance criteria with our customers and because of that we sometimes have huge slips or pull forwards but we try to look at over time and not get hung up on quarterly details and look at it in six to nine month chunks, it’s easier to understand. [Steven Kaufler – Con Royal]: What kind of visibility do you have on this big uplift in Q4? Do you actually have the orders?

In many cases, yes, we have backlog.

But order issuance more a revenue recognition because. [Steven Kaufler – Con Royal]: That would speak to the pass stuff, but pass has always been on a much, you had tons of visibility because you basically ship it out there, get paid a lot and then just wait for it to be recognized but the rest of the business never really worked that way. Is it more in that mode now?

Certainly parts of broadband do, now where we’re getting into these complex multi-product sales where the whole contract has in it a broadband component, maybe an IPTV or switch, it’s all lumped together so we actually do have reasonable visibility.

Your next question comes from [Scott Hurliman – Robert W. Baird & Co.] [Scott Hurliman – Robert W. Baird & Co.]: I just was wondering if you could give me a little bit more visibility into the IPTV set top box business specifically. I think you said that your live subscribers were up 100,000 quarter-over-quarter, is that in line with the number of boxes you shipped in the quarter or can you give me any visibility into that?

To some extent, yes, except sometimes carriers hold a small inventory, they very rarely hold a big inventory for obvious reasons but they would flow through that inventory and then order additional set top boxes so the two do match each other but may not be exactly the same. [Scott Hurliman – Robert W. Baird & Co.]: But I should be thinking about the set top box shipments at about 100,000 quarter-over-quarter or 100,000 in Q2?

Yes, except for the ones that they had available to send out to the customers and I don’t have the breakdown but they match pretty well. [Scott Hurliman – Robert W. Baird & Co.]: I was wondering, you guys said about 900 and some customers but I believe China Netcom was the one that was saying that they’ve got 980,000 subscribers so I was trying to reconcile you guys are both at China Telecom and China Netcom, if one customer is that large how can we figure that out and get more visibility into your specific shipments there?

We get our statistics from them so they should match up. The thing you have to be very careful of is are they really live subscribers as opposed to people that are planning to sign up and we’ve always been very diligent on our calls to make sure we don’t have a number that has a different reference point. [Scott Hurliman – Robert W. Baird & Co.]: It’s basically bookings rather than ship?

We can give you more detail, Barry will be happy to phone you back and give you more detail because we’ve been tracking this very carefully because it’s such an important issue. So we can give you chapter and verse on it. [Scott Hurliman – Robert W. Baird & Co.]: I’d appreciate that and then can you talk a little bit about when we’re going to start seeing more IPTV box shipments out into India?

All of the projects, I’m just reminding people, we want everything in the last 12 months so this is about a couple of years behind China, if you think about it, and people have put pilots out but a pilot could be just a few thousand set top boxes. The one that’s most advanced is MSNL because they’re they carrier that covers New Delhi and Mumbai so they’ve got a number of growth plans and they’re doing quite well. The [Bar T1] is just in the very early stages and the other two we announced previously Goer only just started implementing so it’s very early stage and then Sri Lanka again only just started implementing although it’s outside India. The new one we announced they had a coming out party this week with our partner Ashk and VS&L so they demonstrated it but they’ve got the subscribers coming on. It’s very early days but I expect they’ll be ramping in 2009.

Your next question comes from Bill Choi – Jefferies & Company. Bill Choi – Jefferies & Company: I joined a little late, you might have answered this already but just looking at all the segments excluding the PCD here you guys had better than expected performance over on the handsets both CDMA pads and so forth but when you talk about this sequential decline the September quarter can you go into what segments you’re looking for that sequential declines please?

Basically we took revenue in quarter two which we had planned for quarter three so the quarter two revenue was up significantly and primarily in the broadband and MCBU businesses, it was up $60 million because we originally guided you to $120 million to $130 million, it was up $60 million. So some of that would be coming off but the majority of the shortfall is frankly in the Korea handset division because there was a lost contract which we are planning in quarter three and which will not occur, PCD lost the contract and in turn we can’t ship the product which is one of the reasons we had the write down in inventory in quarter two which reduced our margins so that’s the primary reason. We’re not seeing any particular slowdown in the two core businesses. In fact had we recognized the revenue in the normal pattern you would have seen growth.

I think virtually all of the decline is a combination of the two handsets, China handsets and Korea CDMA handsets.

Is that clear? Bill Choi – Jefferies & Company: That’s fine.

I show no further questions in queue at this time.

Let’s close the call if there are no more questions. Obviously we’ll follow up with one on ones and Barry and everybody is available. Thank you all very much for joining the call. Thank you.

Thank you.