Ladies and gentlemen, thank you for standing by for UTStarcom's Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce the host for today's call, Fei Wang. Fei Wang, you may begin.

Okay, thank you. Hi, hello everyone and welcome to UTStarcom's second quarter 2015 earnings conference call. Earlier today, we distributed our earnings press release and you can find a copy on our website at www.utstar.com. In addition, we have posted a slideshow presentation on our website, which you can download and use to follow along with today's call. On today's call, we have Mr. William Wong, UTStarcom's Chief Executive Officer and Mr. Min Xu, UTStarcom's Chief Financial Officer. Before we get started, I will read the company's advisory on forward-looking statements. This call will include forward-looking statements relating to the company's business, strategic initiatives and the performance for the second quarter 2015. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially and adversely from the company's current expectations. This includes risks and uncertainties related to, among other things, changes in the financial condition and the cash position of the company, changes in the composition of the company's management and their effect on the company, the company's ability to realize anticipated results of operational improvements and benefits of the divestiture transaction, the ability to successfully identify and acquire appropriate technologies and businesses for inorganic growth and to integrate such acquisitions, the ability to internally innovate and develop new products, assumptions the company makes regarding the growth of the market and the success of the company's offerings in the market and the company's ability to execute its business plans and manage regulatory matters. The risks and uncertainties also include the risk factors identified in the company's latest Annual Report on Form 20-F and current reports on Form 6-K as filed with the Securities and Exchange Commission. The company is in a period of strategic transition and the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this conference call are based upon information available to the company as of the date of this call, which may change and the company assumes no obligation to update any such forward-looking statements. I will now hand the call over to UTStarcom's Chief Executive Officer, Mr. William Wong.

Thank you, Fei Wang, and hello, everyone. As Fei mentioned, you can follow along with today's call by downloading the presentation from our website at www.utstar.com. Also unless otherwise stated all figures mentioned during the call are in U.S. dollars. I will first take you through an overview of our financial and operating highlights for the second quarter 2015 and then I will share an update with you on our strategic initiatives, current company direction and our near-term business outlook. I will then turn the call over to our CFO Min Xu, who will share with you the details of our first quarter financial performance. Please turn to slide five. While Min will walk you through the full detail in just a bit, let me provide a topline summary of our overall financial results for the second quarter. Please note that in today's discussion Min and I will mention certain non-GAAP financials. In today's earnings release, in addition to disclosing financial measures prepared in accordance with GAAP, we also provided non-GAAP financial measures which we believe better reflect the company's core business status and the development trend. Min will give more information on the GAAP and non-GAAP financial measures specifically related to the second quarter during his remarks. As stated during this last quarter's call, the company has revised its business strategy which has resulted in a modified revenue profile for this and subsequent quarters. Non-GAAP second quarter revenues were $16.7 million, in line with our expectations set and shared last quarter. Second quarter gross margin was 16.2%. We continue to maintain a strong balance sheet with and from a cash perspective we ended the quarter with cash and cash equivalents in the amount of $73.5 million. Now let me walk you through some of the key operational highlights in…

Thank you, William, and hello everyone. I will now take a few minutes to discuss our second quarter 2015 financial results. Please turn to Slide 14. Before I walk through the financial details, I would like to highlight a few key items for the second quarter. Second quarter non-GAAP revenues were within our guided range of $15 million to $20 million. Non-GAAP gross margin increased sequentially to 16.2% largely due to improving product mix. Our cash balance at the end of the quarter was $73.5 million, an improvement from last quarter and we had zero debt. As part of our effort to monetize our investments, we received $10 million cash repayment from IPTV and $0.7 million cash refund from our Cortina investment during the quarter. In addition, we received $6 million ESA loan repayment in July. As a result we recorded $4.6 million gain from the investment during the quarter. In the second quarter, we recognized $11.8 million sales that were subject to the Indian Department of Telecom agreement or DoT agreement. This revenue was previously deferred due to the difficulty in assessing the potential liability in the event of a network security breach. With relaxed regulation and five-year operation record, the company concluded that the likelihood of non-compliance is low and thus recognized revenue during the quarter. Given the non-cash and a one-time nature of the revenue we excluded the impact from our non-GAAP financials. Please turn to Slide 15 for non-GAAP revenue review. Please note that non-GAAP revenues excluded legacy IPTV revenues and Indian DoT related revenues. In the second quarter total non-GAAP revenues were $16.7 million in line with our initial expectation of $15 million to $20 million and below the previous quarter's revenue of $32.4 million. The sequential revenue decrease was due to a decline in…

Thank you, Min. Turning now to Slide 23. I would like to recap our go forward strategy and priorities with you. First, we will continue to focus on high margin revenue driven by our broadband business. We continue to see our broadband business as the key driver of our business globally. In order to support this aggressive strategy we will expand existing and developing new relations in each markets for our products and services. Second, we revised our approach to key markets and in doing so achieved a healthy geographic diversification. We remain focused on key growth markets and we are making significant progress in a diverse range of both established and the emerging markets including Japan, U.S., LATAM, Bangladesh, Myanmar. We expect to share an update on our progress in this regard as we move forward. Third, cost cutting efforts we are exploring to make our business agile and nimble. We continue to access our current business model and are actively looking where we can reduce costs while still supporting our business transformation. Lastly, we will continue to add value to our strategic investments in UiTV and aioTV with the goal of monetizing these investments and generating good return in the future. Both of these investments are growing in prominence and gaining a stronger share of their respective markets. As they continue to grow, we firmly believe that they will add value to our portfolio and will ultimately yield good return in the future. We will share updates on their progress as we go. As mentioned earlier, we believe we have delivered on the strategic adjustments we set out in the last quarter. We firmly believe that these adjustments will support our business and to build a stronger, more competitive and more profitable UTStarcom in the long-term. We will continued to focus on this business transformation into the second half of this year while simultaneously expanding our share of the higher end of the market. We thank you for your support as we continued to work hard to deliver improved value for our business and our stakeholders. With that, Min and I would like to take your questions. Operator, please open the line for Q&A.

Thank you. [Operator Instructions] And your first question comes from the line of [indiscernible] from Rosenblatt Securities. Your line is open. Please go ahead.

Hi, thanks for taking my call. These questions are actually on behalf of our analyst, John Treenan who could not make it today. Could you please give more color on your updates in Japan, when should we expect the business turnaround and what are the steps are you looking to increase value to shareholders? Thank you. I also have a followup.

Maybe I'll start with that and Min could chime in. Actually in Japan, all along we know we have a great strong business with Softbank all this time around and we have stated couple of quarters ago that we would start to diversify our business in Japan. And we’re very happy to report that at the end of last year, we already won the second carrier in Japan and at the current time, we’re working very diligently and expanding our business with the second carrier as well as with our entrenched customer Softbank. Now we’re also going beyond that. We’re not stopping at these two carriers. So right now we have assembled a new team that is going out to a third major carrier in Japan, so that we would continue to expand our presence and leverage on our strong local support and capability that we have established over in Japan over the years.

Adding to William’s point, so we have always been trying or working very hard to add new customers to our customer portfolio and in addition to that we always want to expand our sales providing new service and new products to our existing customers. Doing that will help us expand our revenue and improve our margins and in return we can - our target is to achieve operating cash flow positive and eventually achieve a profitability to add value to our investors.

Great, thanks guys. One more question. Could you also give us more color on how recently some Chinese listed company purchased all shares from Shah Capital at over $6 per share?

As I stated during the call earlier, the binding term sheet is currently at the term sheet's base right now. So we’re not in a position to speculate on such an arrangement between individual investors. However, as I stated again, we do very much welcome investors who see the promises and particularly the underlying value with the UTStarcom and who see the long-term strategic value that the company is bringing, because if you look at the business we are in the blink of turning around. At the same time, there is plenty of cash in the company with very little or actually zero debt and a very substantial sizeable investment portfolio that we have and we are beginning to show tell tales of monetizing those investments that you see with the return of money from IPTV and ESA. So hopefully, more and more investors will begin to see the true value of the company and we welcome investors who would want to join the investment group for UTStarcom.

Just a few more comments, so as indicated by the 13D filing filing, the timeline for this deal is expected to close late October and so at this point, it’s just kind of private transaction between investors. If there are any company-specific events, we will definitely put out an update.

Okay. Thanks guys. Much appreciate it.

Thanks a lot.

Thank you.

Your next question comes from the line of Chris Irons [ph] from the Markets Edge. Your line is open. Please go ahead.

Hi guys, how are you doing? Sorry to beat a dead horse again on this peculiar 13D transaction, but that is really what we have our question about also. I understand that the term sheet isn’t supposed to close until October. We’ve read the initial terms on the term sheet, but I guess what we’re trying to figure out is what is the intention of the transaction? And then kind of what is the future plan of the company after the transaction? It’s peculiar to see a premium of 200% of the current price and so we’re just trying to put a little color around what the intention is of this transaction?

Yes certainly, as I say that there is not a whole lot we can comment upon this at this moment, the only thing that I would add is that this is a strategic investor. I mean if you look at the premium they are offering obviously there is a lot of [indiscernible] in this investment and this is the extent that we can talk about it. I’m sure as they get closer to a more definitive agreement and so forth then at such time there may be more information can be revealed by the investors and of course by the time if and the deal closes, then I am fully sure investor and the company would have a full-blown detailed discussion of the strategy moving forward.

Right, we would hope so. Just one followup real quick. Is there any additional information that you can give us about the buyer of the transaction the Smart SOHO International Limited? We’re trying to find out whether that is like an affiliated or related party of Shanghai Feixun Communication Co. they share the same President this [indiscernible]?

There is nothing further that we can discuss at this point unfortunately from our perspective.

Sure. Okay all right, well thanks for taking the call.

Thank you.

Thank you.

[Operator Instructions] You have a question from Jun Zhang from Rosenblatt Securities. Your line is open. Please go ahead.

Hi, William and Min. So, yes I think my question is the potential opportunity from this transferring as I understand that the company that going to potentially acquire stakes from Shah Capital kind of bought is the telecom equipment company, it is limited with Huawei or ZTE in China. So, I'm just wondering if there is any synergy or potential opportunity from this deal? Thanks.

Jun thanks for calling in and as I stated, unfortunately there is a lot of whole lot of detail that we can't discuss at this moment. This proposed deal is still in the term sheet phase right now. So I think by the time they close this then we would be able to disclose a lot of information with the new investor if it closes, but at this moment I do apologize there is not a whole lot of information that we can share or disclose at this point.

No problem. So and also I just want to - trying to figure out what is the cash flow most likely in the second half although trying to make kind of around revenue the business growth, but I just want to trying to figure out what the cash flow looks like in the second half? Thanks.

Yes, so we don’t provide guidance on cash flow, but I can give you some color. So at this point, I think we’re still trying to achieve cash flow breakeven. So I would still expect for second half the total cash flow from operation will be negative. However, as I mentioned before, we received the $6.0 million cash repayment from the ESA loan, so that would definitely help our cash balance, but in general I wouldn’t expect too much volatility in terms of a cash flow in terms of cash balance.

Okay, thanks a lot. That’s all my questions, Thanks

Thank you.

Thank you, Jun.

[Operator Instructions] Thank you. There are no further questions at this time. I would turn the conference back to your host for closing comments.

Okay, thank you for joining us on our second quarter 2015 earnings conference call. We look forward to updating you on our third quarter 2015 results in a few months' time. Feel free to get in touch with us any time if you have any further questions, concerns or comments. Thank you everyone.

That does conclude today’s call. Thank you for your participation. You may all disconnect.