Peter Blackmore - Chief Executive Officer Jack Lu - Chief Operating Officer Kenneth Luk - Chief Financial Officer Randy Liao - Director of Investor Relations and Global Treasurer

Good afternoon. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to the UTStarcom first quarter 2010 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)

Good afternoon. Earlier today, we announced our financial results for the first quarter of 2010. 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 other things, the company's restructuring initiatives, projected business model, the closing of the sale of our Hangzhou building, and the strategic investment of the Beijing development area. 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 Form 8-K. Now I will turn the call over to Peter.

Thank you and hello everybody. It’s good for you to join the call today. I happened to be in the US this week and Kenneth is in China so please bear with us if they are any slight delays between us during the call. I’d like to start by talking about our first quarter 2010 financial results which we released earlier today. While Kenneth will provide more detail, I’d just like to discuss some factors that drove the key financial and operational metrics for our business. Importantly, our first quarter results for the first time were almost entirely based on the performance on our core products. These are the ones that will drive bookings and revenue going forward. I’d remind you that core revenue does include the past restatement that will continue until the end of 2011. Revenue was $81 million for the quarter. This sequential decline from quarter 4 was as expected and as you remember in quarter 4, we had some accelerated revenues from BS&L because we started revenue recognition of that and got the full year of 2009 all in quarter 4, and we also recognized a very small amount of handset revenues in quarter 1 in an immaterial amount as we’ve now completely exited this business and this compared with the $17 million we recognized in quarter 4. The first quarter gross margins were 34%. This was above our target gross margin expectations for our business. It does represent some one time items but also the positive impact of serving higher margin broadband products including the TN product. Our operating expenses were $46 million which did include a restructuring charge of $7.5 million. We also had a bad debt charge of $4 million. In addition, we sold certain assets and liabilities related to our remote access…

Thank you Peter and good afternoon everyone. Before we step into key business unit performance, I will start by highlighting the company-wide numbers presented by both GAAP and non-GAAP basis. First of all, I will talk about our GAAP results. In the first quarter of 2010, our GAAP revenues were $81 million compared with $119 million for the same period a year ago. The vast majority of the year-over-year difference was due to the buy down of our handset business. Total was offset by our increasing broadband point-of-sale. The GAAP gross profit in Q1 was $27 million or 34% of revenues, which is higher than our gross margin target. This compares to gross profit of $22 million or 18% in the first quarter of 2009. The year-over-year improvement in gross margin is mainly due to the [ferration] of the past deferred revenue amortization and to the increase in sales of our high margin of our PTN product. Our GAAP operating expenses were $46 million, a decrease of $35 million from the same period a year ago as the result of restructuring and out of costs reduction administrative. The total operating expenses of $46 million includes two significant items. First we had $7.5 million of restructuring charges primarily related to the 2009-restructuring plan. Total restructuring costs record through March 31, 2010 related to the 2009 restructuring plan was $47.8 million. Second, we also recorded an additional bad debt reserve of $4 million in Q1. On the other hand, we have a net gain of $1.8 million in the collection of the sale of the Legacy business. The GAAP operating loss in Q1 was $19 million, which represents a significant improvement from a loss of $59 million in Q1 ’09. Our run rate operating expenses have also declined from the [prior] quarter.…

Thanks Kenneth. Let me turn now to our outlook for 2010 and as previously, I’d like to reiterate that we’re not providing specific guidance for the full year at this time given the pending closing of the strategic investment from the BDA. However, we remain very committed to the target business model we have shared with you over the last several quarters. To remind you, this 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, I’d also remind you we have the benefit of $100 million in deferred revenues which we should recognize in 2010 as we get final customer acceptance. We anticipate revenues for quarter 2 will be in the same or similar range as they were for quarter 1 of this year. We expect gross margins in the high 20s and as you can see, we’ve changed our [part] mix to focus entirely on IP based products and have now exited the handset business which tended to have lower margins and higher working capital requirements. In the first quarter we started to see the revenue and gross margin benefit of our new TN product. We do expect annualized operating expenses to be less than $100 million once we complete the restructuring and outsource manufacturing which we are very close to doing. Equally important [inaudible] this operating model is the fact we have simplified the company so it is clearly focused on two core technologies which are IPTV and optical broadband. We’ve also primarily focused the company on the China and India markets plus SoftBank. Our strategy is simple to understand and I think you’d agree is very targeted indeed. In summary, we have made significant progress towards restructuring the company and improving the business model. The company is very close to achieving the cost base of approximately $100 million a year and we will also be prepared to make further improvements [inaudible] cost structure going forward. In closing, the building transaction will provide a cash infusion which will further strengthen our debt free balance sheet and provide the financial resources required for the company to prosper in 2010 and beyond. As you can expect, the focus is now firmly on growth as the other operational aspects have been well taken care of in the last 12 months. Management is working hard on ramping books, IPTV, and optical broadband technologies in our target markets of China, India, and Japan. At this point I’d like to ask the operator to open the call and prepare for Q&A.

(Operator Instructions) There are no questions.

I would like to thank everyone for joining the call. I appreciate it and look forward to talking to you. Thank you very much.

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