I would like to welcome everyone to the UTStarcom Q3 2008 earnings conference call. (Operator Instructions) Mr. Hutton you may begin your conference.

This is Barry Hutton. I'm the UTStarcom's Senior Director of Investor Relations. I want to apologize for the delay in starting the call this afternoon. There were some delays in getting our filings across the newswires which did happen at 5:00 eastern time. We wanted to give you a little bit of time to review those results before the call. With me today are Peter Blackmore, our Chief Executive Officer and he will provide an update on our company including highlights relative to certain key business units, Viraj Patel is our Interim Chief Financial Officer and he will give the segment details of our Q3 financial results and fourth quarter guidance. And finally before opening the call for questions, Peter will close with some brief comments about 2009. Before the call begins, formally I would like to remind everyone that some of the information that will be discussed 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 10-K, our quarterly reports on Form 10-Q and current reports on Form AK which are filed with the Securities and Exchange Commission. In addition, today's call will include pro form non-GAAP financial results. The most directly comparable GAAP information and a reconciliation between the pro form non-GAAP and GAAP figures is attached to the earnings release issued today. The reconciliation is also available on our web site in the investor relations section. Now I'd like to turn the call over to Peter.

Thank you for joining our call. Earlier this afternoon we issued our third quarter financial results which included revenues of $181 million which did meet our guidance. Our gross margins of 32% and operating expenses of $92 million were both favorable to our guidance. Our operating expenses declined by $24 million year over year reflecting the actions in recent months and reduced our operating loss to $35 million. In addition I would like to highlight that as of September 30, we had a net cash position of $331 million. This is $150 million increase in net cash compared to December 31, of last year and clearly the stronger balance sheet would be an advantage during the current uncertainty in the financial markets. I'd now like to look briefly at our corporate strategy and business unit detail. As you know, we are in very volatile economic times. In this environment it is very important that our management team remains focused on executing the company's strategic plan. During the third quarter, we hit some very important milestones along the way and we expect to achieve more of these in quarter four and early 2009. In order to emphasis our competitive position, I want to highlight our strategic priorities which tie directly to our business model and long term prospects. Our strategic priority has been to streamline the company and create increased focus on the IT based products and services which specifically include IPTV, Next Generation Networks and the IP broadband offerings. During the third quarter we rationalized some of our non-core assets. On July 1, we sold our personal communications division in a deal that effectively ended the company's activities as an equipment distributor and then on July 31, we completed the announced divestiture of RCD portion of our mobile solutions units.…

As you know this is the first quarter for which we are reporting results without PCD. In order to make the year over year comparisons relevant, I'll report certain non-GAAP results which have been adjusted to reflect 2000 results as if PCD were a separate entity at that time. As Barry mentioned earlier, we have prepared a non-GAAP reconciliation covering each of those metrics for each of the quarters of 2007 through the current quarter. Those tables are attached to the earnings release issued earlier this afternoon and are also on our web site. In the third quarter we had revenues of $181 million compared to non-GAAP revenues of $248 million a year ago. This result is impacted by areas in which we previously expected the declines, mainly PAS infrastructure and PAS handsets. We did see revenue growth in our IPTV solutions and NGN solutions in this quarter compared to the quarter earlier year. Gross margins in the period were 32% much stronger than the non-GAAP gross margin of 16% recorded last year. The strong margin results in Q3 were driven sales of high margin NGN product and certain other one time activities such as supply rebates and reduction in our third party commissions. In contrast, the 2008 results were negatively impacted by certain one time charges including some planned exit of non-core products. Regarding operating expenses, our efforts to reduce the expense levels were successful in the third quarter as OpEx came in at $92 million including a $3.5 million net gain from divestiture so OpEx is $96 million for quarter three. More importantly, the third quarter results reflect the ongoing operational improvements as well as reduction in expenses related to certain Legacy issues that we expect to benefit from going forward. The third quarter 2008 OpEx level represents…

Before I open the call to Q&A I wanted to acknowledge what I did previously commit to providing you with certain information about 2009 business model. In the last three months we have done extensive analysis of the bookings outlook for 2009 across all regions. Currently we continue to see booking growth in developing countries despite the challenges in the global economy. As we have said, 70% of our business is in China and India and if we add in the other developing economies we're marketing like Asia and Latin America, the consolidate number is 85%. China and India continue to have a positive GDPS for 2009 and as a result we are better positioned than many companies, with the emphasis on IPTV and GN soft switch and IP broadband in these target markets. Based on this, we continue to see positive growth in bookings in 2009 and currently we estimate 10% plus. We shall continue to review this. We're also assessing revenue growth. Historically it been easy for us to forecast bookings versus revenue but obviously we want to get both right. Our quarterly run rate on operating expenses has improved a lot in 2008 with the actions we have taken but clearly we need a further significant reduction in 2009. To that end we are developing specific initiatives which reduce our 2009 operating run rate by 15% to 20%. We shall have a call on these details later in the quarter so that you can model 2009 better. And now we'll open the call to questions.

(Operator Instruction) Your first call comes from [Paul Weyner – DLS Capital] [Paul Weyner – DLS Capital]: You talked a little bit about the Korean hand set division. Is that all cash flow positive?

In China it's cash flow positive. The part in Korea that serves PCD is not cash flow positive. [Paul Weyner – DLS Capital]: When do you have to make the decision to make that cash flow positive?

We'll be making a decision Korea this quarter. It's not made yet but it is also one of the things we will include on the call later this quarter because we have to make sure that business is positive in 2009. [Paul Weyner – DLS Capital]: Will you be in a position to tell us how much of an impact that might have?

Yes. We'll absolutely give you the detail on the call. [Paul Weyner – DLS Capital]: The $331 million in cash, does that include any of the $24 million that was held in escrow? Has any of that been released?

No, it doesn't include any money in escrow. [Paul Weyner – DLS Capital]: What are the terms and times for that last $24 million?

I can break that into two pieces. One of them has to do with closing conditions that we're in the process of finalizing with AIG, and the other $10 million gets removed a year from now after the sale of the business. [Paul Weyner – DLS Capital]: So is it safe to say that $14 million we might see by the end of the year?

I would say so.

Potentially. It depends on the closing conditions. [Paul Weyner – DLS Capital]: That $14 million I assume the minus $35 million to $45 million you talked about, that's strictly cash flow from operations? So if you got the $14 million back that would be slightly better in terms of total cash burn.

Yes.

Your next question comes from Andrew Rosenburg – Footprints Asset Management. Andrew Rosenburg – Footprints Asset Management: On the $70 million you recognized in the DS&L contract for the quarter, how much of that flows through into revenues? Is all of that going to come into revenues in the fourth quarter?

That was just a booking. A lot of the equipment is in the process of being delivered in this quarter and next quarter, but the revenue recognition to that is tied to milestones in the contract, so it will come late 2009 to 2010. Andrew Rosenburg – Footprints Asset Management: There's none of that or just a small portion would be in the fourth?

There is no revenue in the Q4 numbers. As I mentioned in part of my comments, these are multiple year implementations and these are large contracts so the revenue recognition happens after the completion of the implementation cycle. Andrew Rosenburg – Footprints Asset Management: The margin profile you mentioned should be better than last year, but will it be better than the 10% you had this quarter from that one specific DS&L deal?

I would expect it to be in the low single digits. Andrew Rosenburg – Footprints Asset Management: You mentioned the OpEx cuts, 15% to 20%. How easy is that to do? Are there restrictions in China that prevent you from doing certain cuts there?

We didn't specifically mention where they would come from. What I would do is in the call later in the quarter we can be explicit where we get that from. We're very confident about the 15% to 20% but obviously I'm not ready to announce the details today. There aren't any particular restrictions in China. We'll do some head counts. The markets we operate on it's fairly straightforward to manage that type of production if we need to do it. Andrew Rosenburg – Footprints Asset Management: You mentioned the China cable being a new market for you. How big is that in terms of revenue? Is it small?

The initial contract is less than $5 million but it was very strategically important because we've broken into the cable market internationally with a cable market in Thailand and we hadn't broken into the cable market in China and we see that it has a lot of potential from talking to this particular customer and other customers. Andrew Rosenburg – Footprints Asset Management: Are there any more of those out there?

We are bidding on additional ones now. Andrew Rosenburg – Footprints Asset Management: How rational is pricing right now with some of your competitors that you see?

It continues to be tough. From these big contracts, broadband products continues to be very competitive so we pick and choose which ones we go after. Despite competitive pricing on IPTV and Ngen, we continue to have a very strong margin structure and we haven't yet seen that impacted despite the competition. That's primarily where we're selling software, so software traditionally has a much better margin profile.

Your next question comes from Bill Choi – Jefferies & Co. Bill Choi – Jefferies & Co.: You mentioned you haven't really seen any impact with everything that's going on in the macro from the tier one carriers, but anything from the smaller guys, the tier two and tier three players in India? Are you seeing any slow down there?

Not in India or China. 70% of our business comes from India and China and so far we're pleased to say we haven't seen an impact. We'll watch it very carefully but so far that's the position.

The other think I'd like to say is that most of our customers that are in India are in very strong financial condition. We haven't seen any effect.

Really it's the big five, BS&O, NT&O, Lance, they're very strong. Bill Choi – Jefferies & Co.: On the handset side of things, did you say the sales in the quarter were $35 million?

No, it was the purchase of the parts for China which is still primarily PAS in the quarter. I just made the comment about CDMA because as PAS declines, the question is how do you replace those revenue streams, and we're launching CDMA handsets so we're launching two late quarter fall for revenues in 2009 and then we have a additional CDMA handsets in 2009, so we can build up a revenue stream to replace PAS. Bill Choi – Jefferies & Co.: The Korean based business was that the $35 million.

I'm sorry, I misunderstood. The $35 million, that's correct. Bill Choi – Jefferies & Co.: How does that compare to last year?

That's well over last year.

If you look at our pro forma information it's all there. You can see it. Part of the reason would be in anticipation of the sale of the business units; the PCD did buy a lot of inventory from us prior to the sale of the business. Bill Choi – Jefferies & Co: Is there any color you can give around margins by segment in Q4?

One would expect on the handset side, it would be a lower margin which we expect to be a little bigger proportion in Q4. But consolidated we expect it to be low to mid 20's.

Soft switch should be fine; broadband will depend on the mix of products. The main reason for the margin reduction quarter on quarter was a greater volume of handsets being sold into Korea.

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

I'd like to thank everybody for listening. We're delighted to talk with you individually and Barry will be reaching out to you. Thanks again for your support.