Thanks for standing by for UTStarcom’s First Quarter 2011 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host Ms. Jing Ou Yang, Investor Relations for UTStarcom. You may begin.

Hello everyone. Welcome to the UTStarcom’s first quarter 2011 earnings conference call. We distributed our earnings press release earlier today and you can find a copy on newswire services or on our website at www.UTStar.com. In addition we have posted a presentation on our website which you can download and use to follow along with today’s call. On today’s call we have Mr. Jack Lu, our President and CEO; and Mr. Edmond Cheng, our CFO. Before we get started I will read the company’s advisory and forward-looking statements. This call will include forward-looking statements on topics that include but may not be limited to the company’s restructuring initiatives, IPTV revenues, profit margins and projected business model. Forward-looking statements are generally indicated by such words as will, expect, estimate, 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. This including risks and uncertainties regarding the ability of the company into real life, anticipated results of operational improvements, the company’s ability to successfully launch internet TV platform, continued inter release and acquisitions, successfully operate new services business, execute our business plans and the managed regulator matters, as well as risk factors identified in latest annual report on Form 10-K, 10-Ka, quarterly reports on Form 10-Q and current reports on Form-8K as filed with the Securities and Exchange Commission. The company assures no obligation to update any forward-looking statements. I’d now turn the call over to our President and CEO, Mr. Jack Lu.

Thank you, Jing. And hello everyone on the call. As Jing mentioned we can follow along on today’s call by downloading the presentation from our website at www.UTStar.com. Let me start with Slide 4, which covers our operational achievements in the first quarter. This quarter we won new EPON/EOC from cable operators in Hunan, Zhejiang and Jiangsu province in China. This contracts are important to us actually (inaudible) technology that will have a traditionally sold to the telecom operators sales to the cable operators in China. We also received an award from the China’s Ministry of Science and Technology for our innovative Three Network Convergence solutions at a major China cable industry trade show. At this show we were able to benefit in the IPTV solutions to a number of Provincial cables operators and I’m happy that many of these lead are showing early progress now. Meanwhile, we continue to make progress to improve the company’s capital structure. As a result our operating expense decreased 34% compared to the same period last year. And we expect further improvements next quarter. In the first quarter we moved our Beijing headquarters into a [less expensive] more appropriately sized the facility. We also entered into a new lease agreements for our on view and operational facilities in Hangzhou. And we are in the process of moving into the new facility now. These moves give us a dramatic reduction in rental costs at both locations. Now please move to Slide 5, where I will discuss our business in Japan and India. In our last earnings call took place on a day off and that’s taking earthquake and tsunami at the stock in Japan. Our hearts and prayers have been with the people there and we are praying for that (inaudible) our team was last…

Thank you, Jack. Hello everyone. I will start by highlighting the company-wide financial results and then cover performance in our business segments which you may remember a new starting for this quarter. Now please turn to Slide 8. Our first quarter 2011 revenues were 61.3 million compared to 80.8 million in Q1 of 2010 and 76.1 million in the fourth quarter of 2010. The decrease was primarily due to the wind-down of our handset business which resulted in a decrease of 3.9 million in revenue as well as the decrease in the sales of MSAN product. At the same time I’d like to highlight that the sales of our PTN product in Japan increased significantly that is by 6.6 million in the first quarter of 2011 compared to the same period last year. To better understand the demand of our products in the future, let us look at the book-to-bill ratio in the first quarter o 2011 for the equipment sales business. Without the PAS deferred revenue our book-to-bill ratio was 1.03. With the PAS deferred revenue our book-to-bill ratio is 0.64. This shows that our existing business is in a stable and steady position. And near revenue growth will come from our new OSS assessment. On Slide number 9, you can see that gross profit in Q1 of 2011 was 19.1 million or 31% of revenue. This compared 27.2 million or 34% in Q1 of 2010 and 8.1 million or 11% of total revenue in Q4 of 2010. We expect to continue our focus on improving profitability by (inaudible) controls in our pricing processes and by generating higher margin revenue from the new operational support services business in 2011. In addition, the new and streamlined corporate structure improved our internal efficiency and provides added control over cost. (Inaudible) shows…

Thank you, Edmond. While we have substantially measured through the most of the recorded period of our restructuring and we are also getting traction in IPTV’s including IPTV, iDTV and the Internet TV. We realized that we must make more serving of process to improve cash flow management and the (inaudible) of OSS services. We are focused this and making every effort to drive performance in this area. We anticipate that growth of the operational support service business will start to materially increase in the third quarter. This will come as a combination of organic growth through new agreements and also acquisitions. Some of which are already in the pipeline. I look forward to reporting on our progress in this area in the future. Finally I wanted to make it clear that we still believe that we are on track for the target we set on our last calls for 2011. As a reminder of the targets, I think we see on Slide 14, our total revenue for the year in the range of 300 to US$320 million, 10% of total sales in 2011 from our new OSS service business. Operating expenses of less than a US$100 million and breakeven in 2011 on a full-year basis. Thank you all for listening in. At this point I’d like to ask the operator to open us for the Q&A. Thank you.

Thank you. (Operator Instructions). Our first question comes from Mike Barone of Sidus Investment.

I was wondering if you could talk a little bit about your cash flow expectations for Q2. It seems like you had a couple of issues in Q1 that might not reoccur in Q2, and I just wondered if you would give us any guidance on cash flow for Q2 from an operating standpoint?Thank you.

We expect Q2’s operating cash flow to continue to improve, in fact we will be trying very fast to look at a situations where it will be close to (inaudible) situation there.

Okay. That’s a major improvement is there any specific reasons behind that?

One of the major reasons behind that is we have been stepping up the effort of collections because of situation happened in Q1. So that is something that we are catching up with the collection effort that will be the primary driver for that.

Also there are some physical reasons because of the Chinese New Year, that’s our traditional phenomena.

Our next question comes from Jun Zhang of Wedge Partners.

My first question is what do you think the cable operator spending right now and any updates on the BT model. And what do you think [ran date] the corporation with 200 media group and also the international radio company revenue contribution starting Q1 or Q2 any insights of that. Thanks.

Okay. So, according to our observation and our (inaudible) customers from the cables sides, we can see the spending for their cable operators still increasing. So, we see lot of activities for [special] deals and corporation is in China. As for our operation with SMAC and CII, to actually that we disclosed before. What we called iTV.cn is actually based on operations with CII. Which still to be the major China’s for CII’s content deployment to our set of Chinese to us. So, we also mentioned we projected a significant revenue for this time in operation on the Q3 this year.

And my second question is what do you think about the talk of IPTV spending, thinking of the government suspend the network convergence process. And what do you see the IPTV spending right now and how is UTSI positioned in that market right now. Thanks.

From (inaudible) that we comment on the PNC progress. So actually the most official message here from government is we are strived to working on [PUC] by Chinese government. And that was recent in total of 5 year plan. So, that is no doubt about that, although some of the operators from their own intra study (inaudible) but that is a government deal. So, no doubt as well going forward and according to all our competition with related government officials that is directly a message in recent week especially mentioned the MIIT, Ministry of Information Industry they are shipping in year's who called there is no support just (inaudible) possibility.

And also what’s the revenue coming from Japan and India right now into 1 percentage revenue?

The percentage of revenue in quarter one coming from Japan is 44.4%. Coming from India is 10.8%.

So, any idea revenue contributions from other Southeast Asian markets?

We expect other Southeast Asian market to be [flat] in the first half, but we are looking at increasing demand in second half at this point. Particularly we are working on the project in Thailand and Taiwan.

My last question is, how do you see the process of cost reduction Q2 or is this possible in the Q2 to be profitable. And any ideas or insights?

We optimistically I’d say looking at Q2 to be very close to breakeven level.

(Operator Instructions) Our next question comes from Ke Chen of Shah Capital Management.

There is a strong dose of smartphone on the streets in China. Could you talk about the potential opportunity to transfer PAS to Wifi station in China?

Yes, this is one of the strategic initiatives that we are working on. But you know because of the government policies and the frequency allocation for PHS this is viewed a kind of sensitive question into MIIT, but some of our customers from telecom operators in certain (inaudible) start to talk to us trying to convert the originally PHS base station into Wifi 3G offload (inaudible) stations. So, actually we have some trial orders already in Q4 and the Q1 this year. This is actually one of the key area that we are working with telecom operators that has continued to leverage our strength in other fields.

So, this new business is not in your guidance in 2011 yet.

Yes, because we are seeing in the final stages we will only make it sure before we can put these guidance.

And there is still (inaudible) of government policy as well.

Yes.

(Operator Instructions) Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments.

Thank you for joining us on today’s earnings conference call. We look forward to updating you on our second quarter 2011 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.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect and have a great day.