Good afternoon. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to the UTStarcom Q4 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator instructions) Thank you. Ms. Linda Rothemund, you may begin your conference.

Good afternoon. This is Linda Rothemund, Investor Relations for UTStarcom. Earlier today, we announced our financial results for the fourth quarter of 2009. That press release is available on our company web site at utstarcom.com. On today’s call we have Peter Blackmore, our Chief Executive Officer; Jack Lu, our Chief Operating Officer; Kenneth Luk, our Chief Financial Officer; and Randy Liao, Director of Investor Relations and Global Treasurer. This call will include forward-looking statements relating to among others, the company's restructuring initiatives projected business model, the closing of the sale of our Hangzhou building as well as the BDA investments. Forward-looking statements are generally indicated by such words as “will,” “expects,” “estimates,” “goals,” “plans” or similar words. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. These risks include the ability of the company to realize anticipated results from operational improvements, execute on its business plan and manage regulatory matters as well as risk factors identified in its latest annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K as filed with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. And in addition, today's call will include certain non-GAAP financial measures. The most directly comparable GAAP information and a reconciliation between the non-GAAP and GAAP figures is attached to the earnings release issued earlier today, and filed on a Form 8-K. The reconciliation is also available on our Web site in the Investor Relations section. Now I will turn the call over to Peter.

Good afternoon, everybody, and thank you very much for joining our call today. Normally, Kenneth and I would be in the same location for this call, but this is one of my few weeks back in the United States rather than being in China, so Kenneth and the others and myself are in different locations. So please bear with us if there are any pauses. Let me start with the quarter four financial results, and as you saw earlier today we issued a press release outlining our financial results for the fourth quarter and for the fiscal year 2009. These results reflect continued traction towards executing our restructuring and to positioning the company for 2010, as we delivered sequential revenue growth and continued reductions in our cost structure in the fourth quarter. While Kenneth will provide more details around our financial results for the quarter, I would like to highlight a few items which include revenue was 116 million for the fourth quarter. This sequential improvement was driven primarily by our core business, and we did also recognize some initial revenues from BSNL phase one. The fourth quarter gross margins of 30% are in line with our expectations for our business going forward. Our operating expenses were 76 million, but that does include a non-cash asset impairment charge of roughly 33 million, related to the sale of our Hangzhou facility. Our current rate operating expenses have steadily declined the year, and once outsourcing of the manufacturing is complete, I want to confirm that we will be well on our way to achieving our target of 100 million in annualized operating expenses. Very importantly, we ended the year with 267 million in cash and short-term investments. This was ahead of our plan. It was also an improvement from the end of…

Thank you, Kenneth. I now like to comment on 2010, before we turn the call over to Q&A. So turning to our outlook for 2010, we will not be providing specific guidance for the year at this time. I'm sure you will understand that given the pending closing of the strategic investment from the BDA. However, I do want to reiterate that we remain committed to achieve the target we have shared with you in the past. We remain focused on completing the major restructuring we announced last June, while continuing to drive a healthy sales pipeline for future growth. To reiterate the 2010 target financial model, you will recall the model anticipates annualized revenues greater than 350 million. Our 2010 revenues will be driven largely by bookings from late 2009 and early 2010. In addition, we also have the benefit for over 100 million in deferred revenues, which we shall recognize in 2010 as we get final customer acceptance. For quarter one 2010, we do want to remark that these will be down significantly compared with quarter four of 2009 for several reasons. First, we only expect a few million dollars in handset revenue in quarter one, as the businesses more or less wound down. Second, we expect to recognize less revenue in quarter one from the BSNL phase one contract that we did in quarter four. And finally quarter one as you know is typically one of the weaker quarters of the year for our core business. For 2010, we do expect gross margins in the high 20s. We changed our product mix to focus entirely on IP -based products and almost completely exited the handset business as I said, which tends to both drive lower margins and higher working capital requirements. In 2010, we will also see the revenue and gross margin benefits from the new TN product, which is high margins. We expect annualized operating expenses to be a less than 100 million once we complete the restructuring and outsource the manufacturing. Restructuring progress we have made continues to make us very confident in our ability to achieve this. So, in summary we have made a lot of progress towards improving the financial and strategic positioning of UTStarcom as we went through 2009. We are optimistic about UTStarcom’s growth potential given the strategic investment by the BDA, and we believe we are well positioned to take advantage of the expansion in both the IPTV market in Japan, and also well positioned to grow our broadband in India and Japan. At this point, I would like to ask the operator to open the call and start the question and answer. Operator?

(Operator instructions) And your first question comes from the line of Paul Weiner [ph].

Everyone here.

Hi, Paul.

How are you doing?

Very well. Thank you.

The OpEx reduction, I mean, you guys have been committed to 25 per quarter. Is there – what's the timeframe on transferring everything to (inaudible), and when you can get all the outsourcing complete?

Right. It will be the end of quarter two. So we expect a big reduction in quarter one, and a final reduction in quarter two to get us to that $100 million run rate, and we're on track to do that.

Okay, the other thing is just to make sure I'm correct here. Cash in the quarter went up about $29 million, correct?

Correct.

With $7 million of that coming from the deposit on the building?

Correct.

So was there any other kind of non-operational stuff, did the other 22 come from actual operation in cash management?

Yes, and Kenneth please comment that while he is preparing, it was all operational from good accounts collection and just managing the business well, Kenneth.

Yes, yes. I think exactly that is the case. We had very good collection in Q4.

How much of that kind of benefits from cash management – have you gotten all the low hanging fruit, I mean, are we going or going forward are we looking more into an environment where your cash is going to be truly from operations or is it going to be closer to EBIDTA or do you still have some beneficial cash management things that are going to continue to make your cash look a lot better than your P&L? Like that, I’m just wondering how much longer it can go on.

It's more from operations in the future, but we've given very good cash management instructions to the field. So I would continue to expect accounts receivable collections to be good, but really you're on the right issue Paul that in the future it's more from just running the business well.

Right. So, I got, I mean you're going to – so you’re like – because of the seasonality, I mean you're likely to actually see more cash burns over quarter two and quarter three but obviously much lower than they have been in the past few years.

Not in quarter three, in quarter one and quarter two, and also we have a little bit more restructuring because the cash is recognized when the people leave the company. So we’ll have some restructuring in quarter one and little bit in quarter two as well.

Okay, great. You mentioned, did you say book-to-bill was less than one?

Less than one, correct.

Is that for the entire company or were you talking specifically about the one segment at that time?

No, the entire company.

Entire company, okay.

All right.

(Operator instructions) And your next question comes from the line of Stephen Koffler. Stephen Koffler – Con Brio: Hi there. Back on sort of the cash flow going forward, if you could just repeat some of these details, so you were showing cash at $267 million roughly at the end of Q4. I guess, I heard two additional components. Do you still have cash to collect closing on those building sale, correct?

Correct. Stephen Koffler – Con Brio: How much is that please?

$118 million to collect. We have also already received, but it will be in the quarter one numbers another $6.6 million. So it's $118 million plus $6.6 million and $118 million will come in, the roundabout the close of quarter one. So some of it may come in quarter two. We’re not quite sure yet. It depends on just when the building finally closes. Stephen Koffler – Con Brio: All right, but basically sometime by the end of quarter two, we collect $118 million plus $6.6 million, correct?

Correct. Stephen Koffler – Con Brio: That’s for the building.

Correct. Stephen Koffler – Con Brio: Now, I think you’ve said something about taxes. Are you recording a gain on this sale?

No, we basically took an impairment against book value. You should remember the book value is $160 million. So in quarter four, we have an impairment of $33 million. Stephen Koffler – Con Brio: Okay. So, didn't you say something about taxes related to the building?

You know, taxes – excuse me, I misheard you. Taxes related to the building, that was the numbers I gave you were net of taxes. Stephen Koffler – Con Brio: Okay, so I'm just curious why are the taxes on the sale? Is there a gain?

The taxes are just the normal Chinese taxes on a building transaction. Stephen Koffler – Con Brio: Okay. So it has nothing –

Nothing to do with the capital gain, no. Stephen Koffler – Con Brio: Okay, then I guess the other piece of non-operating cash flow going forward is these investments from the agencies you noted. How much of those and what's the timing again please.

$48.5 million and it's a consortium, about $25 million of that is the Beijing BDA, the balance is a group of investors and the consortium was led by (inaudible) Capital and we expect, and the key element receiving that is closure of the Beijing transaction, which is going through the normal government approval process and we expect it to close in April. Stephen Koffler – Con Brio: Okay. Have you already issued the equity associated with this transaction?

It will be done at closing. Stephen Koffler – Con Brio: At closing. Okay. And how many shares of that?

Just speak up.

Roughly 20 million and 22 million.

22 million. I was just asking 20 million to 22 million shares. Stephen Koffler – Con Brio: Okay, fine. Last question, can you just review the mechanics of the BSNL shipment that led to book-to-bill below 1?

Basically the book-to-bill was without BSNL. Had we got BSNL it would clearly be above 1 because the BSNL order will be large as we did intimate in the past? So we’re expecting the BSNL order in quarter two. Stephen Koffler – Con Brio: Okay. So, what happened there, you know, what's behind the slippage, and why are you confident and are you confident it’s the same dollar amount you’re counting on earlier?

It was a change in management, the key management level, the person who had to put forward the phase three for signature by BSNL. That management position changed in the middle of quarter four, and the new management actually wanted to go through it and make sure they were happy with it and that caused a delay. So we are expecting the order in quarter two as I said. Stephen Koffler – Con Brio: Okay, thanks very much.

Thank you.

(Operator instructions) And there are no further questions at this time.

We’d like to thank you all very, very much for listening to the call. Thank you. And operator, let's close the call.

This concludes today's conference call. You may now disconnect.