Welcome to UTStarcom Second Quarter 2010 Earnings Call. Earlier today, we issued a press release announcing our financial results for the second quarter. This press release is available on the company's website at utstar.com. On today's call we have Peter Blackmore, Chief Executive Officer; Jack Lu, Chief Operating Officer; and Edmond Cheng, Chief Financial Officer. This call will include forward-looking statements relating to, among other things, the company's restructuring initiatives, projected business model, and the closing of the BEIID investment. 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, increase bookings, successfully transition to new management team and headquarter location, execute on its business plan, 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. 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 in Form 8-K. With that, I will turn the call over to Peter.

Thank you and hello everybody, and thank you very much for joining our call today. I am in the US, and Edmond and Jack are in China, so please bear with us if they are any slight delays during the call. I would like to start with summarizing our second quarter 2010 financial results, which we released earlier today and then I will turn the call over to Edmond, who will provide greater detail around our financial results for the quarter. So let's start with quarter two. As you would have seen revenue was $73 million for the second quarter, this is slightly down $8 million from the $81 million in the first quarter. The revenues were in line with our expectations. Also, I want to remind you about two transactions that occurred during the quarter. We sold our Latin American IP Messaging and US PDSN assets in the quarter. You will also recall we announced the sale of China PDSN in quarter one, which will benefit from the one-time gain from the China PDSN divestitures in quarter three. That transaction is also now closed with the final signatures were received early in July. Gross margins were 31% for the second quarter, which reflects healthy margins for both IPTV and the Broadband businesses and I am pleased we have managed to deliver solid gross margins for three consecutive quarters. Operating expenses were $28 million for the second quarter, which included two one-time benefits. A small one benefit from restructuring reversal of 216,000 and a net gain of $2.1 million related to the divestiture of IP Messaging and US PDSN Assets. On the overall cost structure, we continue to reduce it. We shutdown all our locations in Latin America and two locations in US during the quarter, in conjunction with this,…

Good morning, everyone. Before discussing the key business unit performance, I would start by highlighting the company-wide numbers presented on both GAAP and non-GAAP basis. In the second quarter of 2010, GAAP revenues were $73.2 million, compared with $80.2 million for the same period a year ago. The year-over-year decrease was primarily due to the one-time of our handset business and partially offset by an increase in the sales of broadband infrastructure segment. The GAAP gross profit in Q2 was $22.9 million, or 31.3% of revenues. This compares to gross profit of negative $15.8 million, or negative 19.8% in the same period a year ago, when we recorded inventory reserve and obtain settlement related to certain handsets sold to PCD, LLC. Our GAAP operating expenses were $28 million, a decrease of $41.6 million from the same period a year ago, as the result of restructuring and other cost reduction initiatives. The total operating expenses of $28 million includes the following significant items. First, we had $0.2 million of restructuring reversals primarily related to the 2009 restructuring plan. Total restructuring costs in 2010 recorded through June 30th, related to the 2009 restructuring plan was $6.9 million. Second, we have recognized a net gain of $2.1 million related to the sale of our IP Messaging and US PDSN Assets in the quarter. Our run rate operating expenses also have declined from the first quarter and we believe we are well on our way to achieve a run rate of close to $100 million in OpEx. Our plans to outsource our manufacturing operation are still in progress. The GAAP operating loss in Q2 was $5.1 million, a significant improvement on the loss of $85.4 million in Q2 of '09, reflecting a better margin profile and dramatically improved costs structure. Including other income expense…

I would like now to look to our outlook for 2010 and we need to reiterate that we are not providing specific guidance for the full year at this time, as we undergo this management team transition. However, the management team remains committed to achieving the target business model we have shared with you over the last several quarters. Given the delay in achieving some orders such as BSNL, we are now targeting annualized revenue of $325 million. Revenues for the first half of 2010 were $154 million. We are very focused on ramping bookings as I hope you have heard from the call. We are encouraged by the positive news from BSNL regarding Phase 3 and also by the momentum we are building at Softbank, now that the software testing is complete. A lot of good work is going to building our bookings and revenue in China. We will also have the benefit of over $100 million in deferred revenues, which we will recognize in 2010, as we get the final customer acceptance. We continue to expect gross margins in the high-20s given our focused on IP based products. Our margin performance from the last three quarters testifies to our ability to achieve that. We expect annualized operating expenses to be close to $100 million and we are well on our way to achieving this target as the last quarter's results illustrate. In summary, we have made significant progress towards restructuring and simplifying the company as well as improving the financial model. We will have a strong management team and board in place to drive the future strategic direction of the company. We remain focused on ramping bookings for IPTV and optical broadband technologies in our target markets of China, India and Japan. At this point, I would like to ask the Operator to prepare for Q&A. Operator, please.

(Operator Instructions) The first question is from Jean Lu.

Good morning. Just one question on your income statement. What [color you can provide ] you had [cash] loss of $4.8 million. What does the 4.8 million include?

Edmond, could you take that please.

Yes. Jean, that $4.8 million loss in other income, $4.6 million was due to Forex losses and that is due to our long position in India Rupee, which has depreciated about 4% and which was actually offset by our loan position in Japanese Yen with appreciation of 5%. As of June end we have India Rupees exposure of 107 million and Japanese yen exposure of 34 million.

All in terms of US dollars, right?

All in terms of US.

Alright, maybe one more on India. I've heard that the Indian government have imposed a very stringent requirements for Chinese telecom equipment vendors to enter the market. Could you just to stay with us for more color on the requirement that you have to meet and how you are doing to meet them?

Yes, I will handle that. These requirements have been clarified most recently as last week. So we really have up-to-date news. The telecom security clearance is not much, simple to understand for all vendors whether they are manufacturing in China or elsewhere. For China, its manufacturing, obviously we now need to manufacture in India. That's why we specified on the call that we are in the process of establishing that and we need to do final software testing in India. So we clearly understand the requirements and are positioned to work with the Indian authorities to get the security clearance.

Okay, perhaps just last question. Regarding the approval of the BDA deal, do you think you can close the deal? I know you probably have surmounted the biggest hurdle. Do you think you can close the deal, say, by the end of the third quarter or sooner than that?

That certainly we'd like to do it much faster than that if possible because we have now got the government approvals obviously and we are dealing with the BDA, so the timing is very much up to them versus us. We you have little ability to influence it but now their approval is there, we feel confident we can close it quite fast.

(Operator Instructions). The next question is from Ari Bensinger.

Yes, I am from Standard and Poor's. I may have missed it, but what was total cash deferred revenue in the quarter, and what was its impact on the gross margin?

Edmond, can you take that please?

Yes, certainly. Total cash deferred revenue for the quarter is $23.2 million. What was the second question, again, Ari?

How much did it benefit gross margin?

It carried an average gross margin percentage of 45%.

So, forward looking at a truer revenue run rate, you're recognizing revenue through 2011, is it fair to say that because last quarter was also around $23 million. Is it fair to say that your run rate is running in between $50 million and $60 million currently absent the orders that you are going to receive?

That's correct.

Okay, and then what was the percentage of your revenue that relates to IPTV given that that's your primary growth driver?

Almost all the MCBU revenue is IPTV that Edmond was talking about.

Can you give a percentage of your customer, SoftBank, what they represented in the quarter?

Edmond, I don't have the details of revenue from SoftBank, do you?

No. We probably don't have any SoftBank revenue for Q2, but we'll be expecting some in Q3.

We'll get back to you with the clarification on Q2, but the order, which I commented on the call, the 10 million order that came in July, so we would ship that in this quarter.

And the new BNSO order, the $50 million for Phase 3, what time period do you expect that to cover? Right now you still have to go through security clearance but the once it begins?

Once it begins we would ship quickly because typically they have a 90 day requirement to complete all shipments, in other words, a three months requirement to complete all shipments.

On your optical TN product, it certainly looks promising. Can you give us some color on how it did on the quarter and your growth outlooks given wireless backhaul market seems to be, one of the fairly promising markets out there?

I agree with you and you are absolutely right. This is why the SoftBank order is very important because SoftBank have a reputation as a mobile carrier to be an earlier adopter, and they typically are quite aggressive on picking technology and moving forward and they have this product in test for effectively a year. So they really stress tested in a lot of the environments, and then we talked about on the call having to test in China and number of other orders which were getting through our partner NEC, I mentioned, SK Telecom and T-Mobile. Obviously, we are looking to take advantage of this product in India as well with the mobile operators, so we are excited about TN and obviously we got to continue to push it hard, but we believe we have a leading product.

Last quarter, you mentioned in the 10-Q that it was, I don't know if this number is accurate, a 14% of revenue or has it stayed steady or is there?

We will get back to you with that number, Ari, because unless Edmond knows it I can't quote it off the top of my head.

Is it growing sequentially?

Let us get back to you with that specific number because obviously revenue is dependent on FAC, it's certain that the orders are growing, yes, which is key indicator.

Last question, you are making progress in your cost structure, but you are still burning cash. Can you have any internal forecast for your cash burned for the rest of the year and at what level do you expect to be breakeven in terms of revenue given the operating targets you gave of overall 20% gross margins and on their $100 million in OpEx and then (inaudible)?

We are getting very close to breakeven, as I think you can see. So I am leaving you to work that calculation yourself but if you look at the next two quarters, clearly we can get into that territory with the right performance. So I think we are absolutely moving in the right direction, and Edmond can you comment on the cash please?

We are also working on improving on the working capital management for (inaudible). In terms of the operating cash flow, we're looking at continuing on the improvements from Q1 and that we were looking at continues improvement into Q3 as well. At this moment, there are no one pull any specific number, but Q3 operating cash flow will definitely be showing an improvement over Q2.

(Operator Instructions) There are no further questions at this time. Are there any closing remarks?

I just want to thank everybody for joining the call, and to the people who asked the questions. Appreciate it very much. Operator, let's close the call.

Thank you for participating in today's conference call. You may now disconnect.