Hong Liang Lu - Chief Executive Officer Peter Blackmore - President and Chief Operating Officer Fran Barton - Chief Financial Officer and Executive Vice President

Hamed Khorsand - BWS Financial [Andrew Rosenberg] - Prince Asset Management Velin Mezinev - Donald Smith & Company [Chernin Waters] – Crowell, Weedon Himanshu Shah - Shah Capital

I would like to welcome everyone to the UTStarcom fourth quarter 2007 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Hong Lu.

Good afternoon and thank you for joining us today. I am Hong Lu, UTStarcom’s Chief Executive Officer and I am pleased to host today’s call with Fran Barton, our Chief Financial Officer and Peter Blackmore, our Chief Operating Officer. The agenda for today’s call is as following. Peter will begin with a call with a discussion with the business units update after which I will discuss the China market. Fran will then provide our Q4 financial results giving an update on liquidity and finally he will give the guidance for Q1 and insight into 2008. Then we will turn the call over to question and answers. So, before we begin our formal remarks, I would like to remind everyone that some of the information we will discuss today constitutes forward-looking statements, but actual results could differ materially from our current expectation. To understand the risks that would cause results to differ, please refer to the risk factors identified in our latest annual report on Form 10-K, and in our quarterly reports on our Form 10-Q and current reports on Form 8-K, which are filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Peter.

I would now like to give the business unit update. In the last six months, we’ve done a lot of work and there were six main categories and I’d quickly like to cover them. We’ve restructured the company with an 11% cut to headcount. Second, we created a new BU structure to enable focus on our core technologies such as IPTV, NGN softswitch and IP broadband and also focus on the fast growing developing markets where we have a good market presence. Third, we defined non-core areas, which we are managing tightly to either drive profitable growth or we shall monetize these to improve shareholder value. Fourth, we’ve established more operational discipline in the company. Fifth, we worked on supply chain and quality to drive gross margin improvements and also reduce our inventory. And sixth, we implemented a business transformation office to have weekly attention on these changes and ensure that our turnaround builds momentum fast. The quarter four results reflect to some extent these actions. We still have much work to do and I want to stress the commitment of the management team as we put the company back on track. On this call today, we will provide more detail of each of the business units including information on their growth drivers, estimated growth percentages and target margins. As you recall, we structured the company to focus on two core business units, which we call the Multimedia Communications Business Unit (MCBU) and the Broadband Business Unit (BBU). Before I go into each business unit, I would like to reinforce the point. The strength of our core portfolio is not necessarily just in each of the individual products, but also in the strong combination of broadband, softswitch, and IPTV working together. Let’s begin with Multimedia Communications Business Unit (MCBU). We have high confidence in the technology and the opportunities in MCBU. Primary drivers of growth are our RollingStream IPTV solution and our mSwitch next generation switching network or NGN solution. Focusing on our NGN solution, this is designed to support the growing number of advanced voice and data services as we see tremendous growth in Internet traffic and the end of life of traditional TDM switches. We’ve designed our mSwitch to allow the provision of next generation services but also significantly reducing operating expenses of current products. mSwitch supports multiple call types over all access technologies and currently supports over 60 million NGN customers globally. While PLDT is our largest network transformation project to date, our success there is winning us new customers worldwide. For example, last year a major European carrier, Tiscali in Italy asked us to supply them with our MSAN equipment. And just prior to year end, the carrier asked us to replace their entire TDM switching network with our softswitch. This is obviously a very key strategic decision for Tiscali and a very strategic win for us. We are currently implementing this project with them. In quarter four, we also won our first NGN softswitch in Taiwan. Other recent notable contracts include Brasil Telecom, where our softswitch is supporting applications for fixed mobile convergence and IPTV, with TOT in Thailand, and also recently Nextel in Argentina. It is clear that this technology is gaining momentum and we believe we have the best performing softswitch on the market. Moving to IPTV, our RollingStream solution is designed to enable operators to expand their revenue streams and compete with the cable industry. And according to recent research the global IPTV market size excluding set-top boxes, many system integration is projected to be approximately 4 billion in 2010. Our RollingStream solution is one of the only single vendor, end-to-end open IPTV systems in the world, is currently supporting over 750,000 subscribers in deployments throughout the world leading markets and has enjoyed market share leading positions in China, India and Japan. And I’d remind everybody that the 750,000 subscribers are up from 600,000 in our last conference call. In the fourth quarter of 2007 we announced important new IPTV contracts in the Fujian Province in China as well as with a new customer in Taiwan, Markwell. And interestingly Markwell is also our first win with a cable TV operator and we see additional opportunities with that class of carrier. We also won another IPTV order in Sri Lanka with SLT; Sri Lanka Telecom’s and will be rolling out that system in quarter 2 of 2008. We have also won another IPTV contract with a new customer in India, and will be announcing that in our next earnings call. In addition, we also announced the official launch of the IPTV service in Brazil with Brasil Telecom. I would like to remind you that we have greater than 65% share in China and clearly the dominant share in India, well over 80%. We are also seeing continued growth in IP surveillance, which is an offshoot of our IPTV technology. We won two new contracts in two cities in China and are looking at additional business in several additional provinces in China. Our view is that these two product areas, NGN and IPTV are at the beginning of their life cycles and bookings can ramp fast. We are very pleased with the momentum they are gaining in their respective markets and believe the revenue for each of these product lines can grow in excess of 80% in 2008. Also included in this business unit is the PAS business, which has a valuable installed base although it does continue to decline. Despite the decline in PAS, the growth in IPTV and NGN enables us to offset that decline, making MCBU revenues flat in 2008. Gross margins for the MCBU should be in the range of 35% to 40% and this includes a combination of the higher margin network equipment and the lower margin customer equipment such as set-top boxes. Importantly, the order backlog for MCBU already supports greater than 70% of the revenue planned for 2008 and the margins for these bookings is at the levels just stated. Let’s turn to the Broadband Business Unit or BBU. This includes our traditional broadband and access and transport products such as IP DSLAM; iAN-8000, which is our next generation multi-service access network, MSAN; GPON, which is our optical access product; and NetRing, which is our multi-service optical transport product line. We anticipate revenue growth in this business unit to be between 15% to 20% in 2008. The broadband business is being driven by the global demand for data and multimedia applications. Our broadband solutions are designed to support operators who are building triple and quadruple play converged networks using either copper or fiber. Our MSAN provides concurrent support for multiple applications including traditional voice and next generation media services over either copper or fiber and we currently have over 25 million lines deployed with Tier 1 and Tier 2 carriers globally. Our GPON suite of products is deigned to provide bandwidth intensive, high margin applications over fiber such as video-over-IP. UTStarcom was the first vendor to introduce a GEPON solution globally and is one of the top 5 vendors worldwide and that’s a quote from Infonetics Research, which specializes in this type of analysis. Our NetRing is a third generation family of products that supports optical backbone and core networks in India, Korea, Taiwan, Japan, China and South America. We are beginning to see good momentum for the combination of our IPTV, NGN and our broadband access products. And this combination of products also provides good solid differentiation. Importantly, we also expect gross margin improvement for the BBU throughout 2008 and should be consistently above 20% per quarter. Backlog for BBU supports greater than 30% of revenue for the 2008 plan and the current orders already show [inaudible] just stated. Let me comment now on services. Our services organization is in both China and international and supports our core product portfolios. Services revenues are expected to be flat in 2008 with margins of approximately 30%. However, we have an opportunity to build up our services business as we are clearly selling solutions when implementing complex networks based on NGN and an IPTV and is our intention to build up this business. Let’s move to the Terminals Business Unit. The Terminal Business Unit or TBU consists of all handsets sold and supported, our PAS business in China and elsewhere, as well as those in support of our PCD business in the United States and South America. This business unit is driven by the growth in PCD related CDMA sales which are offset by declines in the PAS business in China. We expect overall growth of approximately 15% in 2008. The TBU is also actively looking at additional technology and geographic markets to drive growth and margin improvement beyond 2008 including WCDMA technology. In addition, in the area of telematics, we have won some important initial contracts with global automobile manufacturers. We will provide updates on these in the future. Margins in this business will fluctuate depending on product mix but will be in the low 20% range. Moving to the other areas, in our new segment reporting we’ve consolidated our MSBU and CSBU into another category. The CSBU or Custom Solutions Business Unit is primarily comprised of applications from the CommWorks acquisition some years back. These products include IP-based messaging services and Tracks, our transaction gateway product. This business unit also includes its own services organization, which generates revenue in the service of its deployments. Revenue for this business expected to nearly double in 2008 approaching $40 million annually. Gross margins are very good for these businesses at typically above 50%. We believe this business will be profitable in 2008. The Mobile Solutions Business Unit or MSBU is comprised of our MovingMedia 2000 IP-based CDMA and GSM business. With an all-IP network and distributed software architecture called MovingMedia, this is designed to enable wireless service, withstood significant back haul cost savings and the ability to offer new value-added services in remote and niche applications. This business is expected to grow by over 30% in 2008 with gross margins of approximately 40%. Let’s move to PCD. PCD business continues to exceed our expectations. Quarter 4 was another record quarter for this division with revenues of over $560 million and gross margins of 6.2%. During the fourth quarter, we launched three new smart phone devices based on the Microsoft Windows platform including the Touch Smartphone at Sprint. In addition, we launched the ultra slim CDM1450 at Metro PCS and added two new colors of our G’zOne ruggedized phone with Verizon. During the quarter we shipped a total of 2.8 million units of which approximately 25% were UTStarcom units. With growing revenues and improving margins, the PCD team continues to do a great job and we are clearly very pleased with their performance. Let me comment on the supply chain. We made a number of improvements in the supply chain in quarter four including the first phase of outsourcing our Terminals business, which generated a one-time cash saving of $5 million and a 0.5-point margin improvement in Terminals business. Overall we also improved inventory turns to five as compared to 3.7 in the third quarter. Our supply chain improvements done in the last six months are having an impact and we believe will benefit margins by 3 percentage points in 2008 and we expect to continue to increase inventory turns by a factor greater than 35%. Let me now summarize. A lot of progress is being made and we also know from customer feedback that they approve of and support our more focused strategy. We are seeing the benefit of that strategy as we illustrated with some key quarter four wins and also with our confidence in the margin and growth goals for 2008. Our focus in 2008 will be to grow our core business and continue to focus on our operational improvements. We are also actively pursuing our liquidity plan to strengthen our cash position, which does include the divestiture of certain non-core assets. We need your understanding that whilst we should be aggressive here it is difficult to talk about specifics until, for example, we have reached agreement for a transaction. Clearly, our objective is to strengthen the core business and manage or divest non-core to improve shareholder value as quickly as we can. Now I would like to hand it over to Hong.

I will provide an update on the China market and operations, beginning with the recent regulatory changes in China. Recently, the Chinese government released an official document which stated that both telecom operator and a broadcast operator were free to compete in each other’s field. We believe it is a very good news for the IPTV business in China. The content will continue to be controlled but the distribution will be open. This means that our customers, China Telecom and China Netcom, can offer IPTV services throughout China. As a result, we are seeing a significant increase in the set-top boxes demand in January compared to Q4. In addition, media sources continue to circulate that there will be a reorganization of the telecom industry in 2008. While no official announcement has been made, we believe in the end we will have but three operators, China Mobile, China Telecom and China Unicom, all of which will be able to compete freely in both the fixed and mobile markets in China. If this happens, we believe there will be a more downward pressure in the PAS business in China Telecom and China Netcom focusing their GSM and CDMA business. However, we still believe that our PAS packet mode solution is compelling since the data rate is better than current CDMA and GSM data rates. And at this time we continue to see the demand for our packet mode from both China Telecom and China Netcom. We also believe this would provide an opportunity for us to sell new CDMA and other handsets in China. For our PAS handsets business, we shift our focus in quarter four from a direct sales model to a distribution model. In doing so, we have regained market share in both fourth quarter and early 2008. We’ve also introduced a number of new PAS models, which have a very good acceptance in the market. In terms of our IPTV business, while we believe that new regulation is a positive, we still believe it would take a time to the market to mature. We continue to maintain approximately 70% subscriber market share and we will have about 500,000 subscriber at the end of January. In 2008, we believe both China Telecom and China Netcom will focus their business on IPTV and therefore we expect faster booking growth. These bookings will translate into revenue in 2009 and beyond. As Peter discussed our IPTV business has also created new market opportunities. In IP surveillance for example, we won two new contracts in the fourth quarter in Tongcheng and Hangzhou. We are also currently working on several surveillance projects with the government and health department in China. We’re also seeing IPTV as a new opportunity for us to get into the enterprises and advertising market in China. Another area where we are seeing interest in China is for our mSwitch and broadband and access technology. In order to improve backbone networks in China Telecom and China Netcom, we are looking to upgrade our past softswitch platform to Release 5 which we believe will open more opportunity for our broadband multi-services access and optical network and reduce operating cost for our customers. Finally, internally we’re seeing higher employees’ morale as a result of the announcement of our new strategic directions. We’re seeing much better working relationships in most of the departments even with the Q4 restructuring. We have had a number of the high-level government officials and customer visits to show their supports of the company and we’re seeing the much higher level of the sales activities compared to a year ago. All of this leads me to be very optimistic about our opportunity in China as far as our ability to execute on those opportunities. With that, I would like to turn the call over to Fran.

I would like to cover the fourth quarter financials, an update on liquidity and some guidance for the first quarter of 2008. So before I give the financial results let me provide an update on some current outstanding issues. First are convertible notes. As you know our outstanding convertible notes are due on March 1. Our plan is to pay off these notes using the existing cash on our balance sheet. We have successfully repatriated from China the funds necessary to completely meet the principle and interest obligations of the notes. Therefore, today, we transferred the full payment due of $289.5 million including principle and interest to the trustee of the notes, and with instructions to pay them when due. That still leaves us in a net cash position with approximately $180 million as of today. We believe that the best use of that net cash is to keep it available for operational needs and therefore we have no plans to do any share buybacks at this time. Two, going concern opinion, also as noted in our press release, we expect to receive a going concern uncertainty paragraph from our independent auditors. As some of you may know, the basis for going concern opinions is typically based on historical results and does not take into account planned improvements that the company has formulated. In our case because we’ve had losses and had negative cash flows and because of the upcoming notes repayment, we expect to receive this going concern modification. Beginning in the fourth quarter of 2007 we have implemented and will continue to implement a number of initiatives to address these concerns and to return the company to profitability and positive cash flows. So some of the initiatives we’ve taken to date include restructuring the company’s operations as Peter mentioned to reduce headcount by 11% and therefore reduce our operating expenses. Secondly, we are refocusing the company’s direct sales efforts to specific regions and targeting customers that have the highest potential return. For the remaining regions and customers we are forming OEM partnerships with certain strong regional vendors. The combination of these two initiatives lowers both our operating costs and our SG&A. Fourth, as Peter also mentioned implementation of supply chain and manufacturing efficiencies to improve gross margins including the outsourcing of certain manufacturing, which will also reduce our inventory levels. In addition, we are also reviewing a number of additional initiatives, which may include the potential sale of non-core assets to generate cash and reduce working capital. We have active discussions ongoing in this regard and we’ll report any results when appropriate. We also have the license or sale of certain of our numerous non-core patents. We are also looking at potentially taking on additional lines of credit. We are also looking at potentially additional capital through either public or private financing and finally, we will be performing additional expense reductions as necessary. In summary, I want to give a clear message about our cash situation. We normally do not provide mid-quarter cash updates but in this case, I believe it is helpful to do so. I do need to point out though that our cash fluctuates significantly throughout the quarter due to collections and disbursement cycles and on any given day isn’t necessarily representative. But having said that at year-end, we had approximately $503 million of cash and short-term investments and $323 million of debt. Therefore our net cash was $180 million. As of today, setting aside the $290 million for the notes, we are still at a net cash position of roughly $180 million. This is made up of cash of about $228 million offset by $48 million in our remaining short-term debt. About half of the cash is here in the U.S. and half is in China. We feel that our current cash as well as our liquidity plans will be adequate for the foreseeable future. Now on to the discussion of our financial results for the fourth quarter of 2007, revenue for the fourth quarter of 2007 was $806 million which represents a sequential increase of approximately $160 million, or 25% above Q3 levels and versus our guidance of flat to slightly up. By business unit, some of the revenue drivers were as follows, one, the Multimedia Communications business unit Peter mentioned earlier, which includes our IPTV, NGN, PAS, etc., was $118 million as compared to $57 million in Q3. The Broadband business unit, which is our DSLAM, MSAN, GEPON, MSTP and so forth, was $51 million as compared to $41 million in Q3. The Terminals business unit, which has our PAS, CDMA and some GSM handsets in there was $43 million as compared to $59 million in Q3. And the Custom Solutions business unit, which is our IP messaging and Tracks, sales were about $6.5 million as compared to $2 million in Q3. Mobile Solutions, where our IP CDMA product is was about $1 million as compared to $10 million in Q3 and our Services Business Unit sales were $18 million as compared to $19 million in Q3. And finally PCD sales were $560 million in Q4 as compared to $458 million in Q3, an increase of 22% sequentially. Overall, our book-to-bill ratio was 0.8 in the fourth quarter compared to 0.9 in the fourth quarter of last year. The book-to-bill for non-PCD was 0.6 primarily due to the higher seasonal revenues in China. While the PCD book-to-bill was 0.9 which is typical for large seasonal revenue swings in the fourth quarter. Now covering gross margins, overall our gross margins came in at approximately 12.7% of sales, up 2.7 points from Q3 and consistent with our guidance. PCD margins were 6.2%, while total non-PCD margins were approximately 27% combined. By business unit, let me give you some of the gross margins. The Multimedia Communications business unit was 46.8%. Broadband was negative which is due to an $8 million loss provision for certain costs to complete a contract in India. The Terminals BU margins were 27%. Custom Solutions BU margins were 86%. Mobile Solutions margins were 27% and the Service margins were 51%. The total operating expenses for the quarter were $155 million of which $41 million was R&D, $76 million was SG&A expenses and $38 million were other operating expenses. Included in these operating expenses were some unusual expenses such as $14.5 million in restructuring charges. Secondly a non-cash impairment of $23 million of long-lived assets, primarily related to our MSBU division and about a $4 million catch-up for stock option related expenses. Net interest and other income and expenses were income of approximately $50 million in the fourth quarter, of which $54 million was related to the proceeds of the sale of Gemdale equity during the quarter. This was offset by net interest expense related to our convertible notes. Income tax expense was $22 million for the quarter. You may not be aware that the tax laws in China changed recently, now foreign unremitted earnings will be subject to withholding tax, and therefore, we accrued $11.7 million for any potential future dividends from China. In addition, we accrued $5.4 million in China withholding tax on the sale of our Gemdale stock. Therefore our total net loss for the fourth quarter was $24.6 million or a loss of $0.20 per share. Let me now move over to the balance sheet. Cash and short-term investments were $503 million at the end of the fourth quarter, a reduction of approximately $141 million from Q3 levels. The reduction in net cash at the end of the quarter can be primarily attributed to the pay down of $92 million of short-term debt in China and a reduction of approximately $45 million in accounts payable. So, our net cash position, as I said earlier, was about $180 million at the end of the quarter. Our total short-term debt balance was approximately $323 million at the end of Q4, which reflects as I said earlier, pay down of China borrowings of approximately $92 million during the quarter. The convertible notes balance of $275 million is also included in short-term debt and as I said that money has been sent to the trustee. Accounts receivable balance was $331 million for the quarter, a slight decrease from Q3. Our DSO came in at 37 days which was another new low for the company and compares to 47 days last quarter and 54 days in Q2. This reflects continued improvements to both our non-PCD DSO as well as PCD, as well as mix change to a higher PCD portion of total revenue. Inventory, our inventory level was approximately $525 million at the end of the fourth quarter reflecting a decrease of $85 million from Q3 levels from continued tighter operational controls. Cash flow, we used approximately $141 million of cash in the fourth quarter, as I mentioned earlier, of which $28 million was used in operating activities primarily accounts payable and $92 million was related to paying down our short-term debt as I said. So nearly all the cash usage was for paying down debt or paying down payables. Now, let me give some guidance for the first quarter of 2008. We expect that overall revenue should be approximately $500 to $520 million. This decline from Q4 levels is due to the Q1 seasonality and also reflects the continued decline of the PAS business. Our overall gross margins in the first quarter should be around 13%. The first quarter operating expenses should range between $115 and $120 million. Finally, we believe we will be roughly cash neutral for cash flow from operations during the quarter. With respect to 2008, I really don’t want to give specific guidance yet but I will share some preliminary thoughts with you on the full year. We believe that revenues should improve overall by approximately 3% to 6% year-over-year. Margins should also improve year-over-year and come in between 14% and 16%. And finally, excluding any unusual expenses, our operating expenses should decline and stay consistently below $110 million per quarter during the second half of the year. At this time, we still believe the most likely breakeven point will occur in 2009. However, we continue to put operating plans in place to attempt to reach breakeven late this year. I’ll give you some business unit specifics for ‘08 from some initial thoughts. The MCBU revenue should be roughly flat in the $300 to $330 million range. As Peter said earlier over 70% of this is driven by backlog that we already have in place and we have additional visibility from our sales pipeline. And as Peter also mentioned the margins here should be in the 35 to 35 plus percent range. BBU revenues should be approximately $170 to $190 million in 2008. About 30% of this is driven by backlog already in place while the remainder, of course, is based on the sales pipeline. Margins for this BU should improve and come in consistently above 20% in 2008. The TBU, Terminals business unit revenue should be approximately $200 to $220 million with margins in the low 20s. CSBU should be approximately $40 million in revenue with margins in the 70% range. PCD revenues should be up approximately 4% or 5% next year or this year with gross margins holding in the 6% range. Service revenues are expected to be approximately $60 million with margins in the mid 30s. So looking back on 2007, we spent a lot of effort, a lot more effort than we anticipated sorting out our historical problems. We fully covered all of them with you so I am not going to repeat them now. Our most recent and one of our important challenges were to pay off the convertible note which is, as I said, now in progress. We now can look forward to giving our primary focus to running the business. Specifically, we will be focusing on our core businesses. In all of these we expect revenue growth and margin improvements with the exception of PAS. We also expect growth in our non-core businesses as well but some of these may be divested. We will also continue to focus on reductions to operating expenses. This could include some additional select business unit restructuring as well. Finally, we will be continuing to focus on liquidity. So we believe our plans in all of these areas are realistic, although we realize there is a lot of hard work for all of us to ensure that the plans are successful. Our management team and all of our employees are optimistic about our future and excited about our opportunities. So with that, I’d like to turn the call over to Q&A.

(Operator Instructions) Your first question comes from the line of Hamed Khorsand - BWS Financial. Hamed Khorsand - BWS Financial: Could you provide some color as to the IPTV field trials that are ongoing, any of them in South America, Middle East, Europe, anything like that?

Our biggest on in South America is Brasil Telecom and it’s gone very successfully, so they are now looking at expansion of that. The Middle East, we are talking with a number of people but we don’t have any projects current there, but we have high hopes that we can break into the Middle East market. And then we did in the call highlight where we are strongest which is China, India, Taiwan and obviously we have a strong presence with SoftBank in Japan using IPTV as well and we saw growth in our China and India and Taiwan markets last year Hamed Khorsand - BWS Financial: On the Indian market, any comments on the news over night with MTNL or MTML and their licensing issue.

I am not up to date with that, so I would have to come back to you, which I am willing to do once I’ve looked at it. So I apologize, I missed that news.

Your next question comes from the line of [Andrew Rosenberg] - Prince Asset Management. [Andrew Rosenberg] - Prince Asset Management: Can you talk a little bit about on the IPTV front with 70% I guess of the ‘08 guidance covered by backlog. Is it long sales cycle as to why that might be flat this year?

It’s a long sales, sorry.

Let me just clarify the 70%. The 70% was the whole business unit, so it wasn’t necessarily IPTV; it was the whole MCBU business unit, a good portion of which is frankly PAS.

IPTV is typically a six to nine month sales cycle because people usually spend a lot of due diligence on what product they want. They usually do testing and then it to go live, usually once we’ve got a contract, the first stage would go live after about three months. And they tend to really test that thoroughly and then they’d ramp you know according to their own plans. And we would get obviously revenue, typically the way we do that, we get part revenue at install, part revenue appearing after install and then usually a balance of 20% twelve months later. So that would, that explains you know the revenue recognition timeline. [Andrew Rosenberg] - Prince Asset Management: But talking about some of the follow-ons have you seen a lot of follow-on orders yet from some of the orders you’ve had in contracts you’ve won in China, I think that you talked a little bit about that?

Sure, yes, we are getting some expansion orders in China, so we have talking about not only set-top boxes. Earlier I was mentioning that in Q4 the run rate per months was about 20,000 set-top boxes. And so far Q1 this year we have been seeing that number has been more than doubled and maybe close to 60,000, so it’s actually tripled. But we are delivering roughly about 40,000 today and we see a lot more aggressive plan being put into place by our customers and we’re really getting geared up for supply chain to supply them. And overall we see the both China Telecom and China Netcom, one of their major focus in this year is to grow IPTV, so as this is becoming a relatively hot topic. And there is still some of the uncertainty in the regulatory areas, but that has been one of authorized official letter has been, document came out. But I’m very hopeful that it’s going to clear up a little bit more but I think a lot of the operators are still waiting to see how that is going to come. And if that is being totally open it up we see a significant potential in China for IPTV this year. [Andrew Rosenberg] - Prince Asset Management: What does the margins look like on the set-tops?

I think it’s in high teens in currently but there is a good pressure coming towards us. And so our effort is to see how can we build the product with a higher volume to negotiate with our suppliers and build the better products or redesign the products, etc. So I will probably hope that in the future we will be able to make it towards closer to 20%. [Andrew Rosenberg] - Prince Asset Management: In India on the IPTV front, do margin get squeezed there a little bit? I don’t know if you can talk a little bit about the market in India in particular?

We haven’t seen that yet. All of the contracts I commented on, the new ones, Sri Lanka or India the margin was just as strong as it’s always been. So, so far we’ve probably seen competitive pressure but it hasn’t impacted our margin.

Yes, the infrastructure margin we are still seeing in China is very healthy as well, so we will see how our task is to, how we go to improve our set-top boxes there. [Andrew Rosenberg] - Prince Asset Management: Selling off non-core assets, you talked a little bit about that. Would that include all facets of non-core? I am kind of looking at some of your branded products, would that be included in non-core?

Well, we prefer not to go into detail because it’s not quite like a company like General Electric saying it’s going to sell its plastics division. We have to be sensitive to the revenue protection and sensitive to our customers because we want to manage that very well. So if you will excuse us we won’t give any more comment on that other than to say obviously its non-core assets and ones we think really would be better off outside our portfolio. We will keep some of our non-core assets because clearly some of them are getting quite attractive. [Andrew Rosenberg] - Prince Asset Management: Looking at the guidance on the quarter, Q1 OpEx of $115 to $120, is there any way of bringing that down to under $110 the second half of year? Is there any way to get that even lower? Is that kind of being conservative with kind of OpEx guidance or can you talk a little about that?

Yes, it’s where we are right now and I think we all internally are thinking about that as well. And we haven’t yet got any specific plans to get it lower but we know that we need to, and we know that we want to. So we are giving the guidance for what we see before us either actions that are taken or imminent. And after that we’ll let you know as we are taking further ones. So we are going in that direction. I don’t want to pre-set an expectation until we’ve done the work and figured out how to do it specifically

Yes we are very conscious of shareholder value and we’ll take the right action. So we will give you an update on the next earnings call on that.

We understand that it is not satisfactory.

Your next question comes from the line of Velin Mezinev - Donald Smith & Company. Velin Mezinev - Donald Smith & Company: What’s the balance on the goodwill and intangible accounts is my first question. And secondly, you lost $25 million on a GAAP basis in the quarter while the shareholder equity fell by $83 million, if you could explain what accounts the difference?

In terms of the intangibles, I believe it was something around $20 million more or less, so rounded number is $20 million, basically intangibles and goodwill. So stuff we had picked up when we acquired some of these businesses years ago and now given our overall situation, that looks like that value is not being maintained, the customer lists, goodwill, that sort of thing. The reconciliation is something I am going to have to do offline because I know it’s reconciled because all the debits equaled all the credits, but I haven’t done that specific analysis. So if you give me a call afterwards, I will be happy to take you through that.

Your next question comes from the line of [Chernin Waters] – Crowell, Weedon. [Chernin Waters] – Crowell, Weedon: How much of the Gemdale and Infinera stock has been sold and how much remains?

Yes, basically all of it’s been sold for Gemdale and approximately all of it for Infinera. Call it for your purposes; let’s say it’s all been sold. [Chernin Waters] – Crowell, Weedon: Have you considered selling and leasing back the 2.7 million square foot building in China?

Yes. I didn’t mean to be flippant, so. So there’s all the, you can imagine a lot of complexities when you get tax grants and special favors and special benefits from the government, so there is a lot of complexities in that. So there is many things to do. You could if it sell, if not a sale and leaseback you could lease excess space. You could take a loan against it. There is a number of activities not just sale and leasebacks. So we are going through the whole list. We think we are aware of what the whole list is and we think we will end up doing the right thing to get some value there. [Chernin Waters] – Crowell, Weedon: The PCD sales, revenues expectations for 2008, what is the figure you are looking at?

So, I just want to make sure I understood the question, was the question what was our 2008 PCD revenues?

No what’s your expectation for this year for PCD revenue?

It’s somewhere in the 4% to 6% revenue growth range for 2008 versus 2007.

I do want to also clarify the question around Gemdale. So although all has been sold, because you asked me the question in February I don’t want you to think that it all got sold in Q4 of last year because this is a Q4 call. So in the eight weeks of this year we also sold some of it, we will announce that but as of today of course it is all sold but I announced that there was a $55 or $56 million gain in our Q4 numbers. That is the Q4 portion of the sale and there is a Q1 portion of the sale which has been done, I will do that on the next conference call.

Your next question comes from the line of Himanshu Shah - Shah Capital. Himanshu Shah - Shah Capital: You had a decent quarter, why didn’t you pre-announce?

Well we did not think it was that spectacular. We are pleased with the revenue. A lot of that revenue came from PCD which doesn’t have a lot of flow through to profit. And we thought it was a good quarter. Himanshu Shah - Shah Capital: Switching gear to India, you took $8 million charge in the quarter, is that it, because you sounded like last time when you spoke in October that you took $32 million in the third quarter. And my recollection is that you made a statement that that was going to be it. So should we expect some negative surprises out of India going forward?

So first of all, I do hope that I would never made that statement because with a complex multi-year project like this, it’s every quarter we are going to have to reassess, revalue and the cost of producing, acquiring product, delivering product, various contractual arrangements including penalties and so forth. So we are going to have to every quarter go through and do an accounting and see whether it goes up or down. And by the way we’ve had some quarters where it’s gone the other way. So I would hope I wouldn’t be so foolish as to say that we are done. So what we say is that everything we know is booked and if we get some good news next quarter we will reverse it. If we get some bad news we will unfortunately have to book it.

So you should understand the Phase 1 of this project we’ve delivered virtually all of the equipment. There is a tiny bit left to deliver so, and the project is up and running. So obviously Fran has got to be rightly cautious but a bulk of the work has been done and the customers are very pleased. Himanshu Shah - Shah Capital: On Japan, I am in the impression that you are going to be bidding for the order in the second quarter. The question is what are the chances because you already did the first phase of the work?

I am not too sure what your question about the order, which order you are talking about? Himanshu Shah - Shah Capital: Well the order that you received back in ‘05 and I am in the impression that they are going to be issuing another tender. Is that so or that is not the case from your perspective?

Well, we are talking about many, many different projects with our customers predominantly in Japan is SoftBank and they have many different projects. And if you are saying that it is a continuation with our first order, if there is any opportunity we are extremely pleased because they are very happy with our performance so far. And predominantly we are the only bidder, so not only bidder we are the only supplier in the past. So, and so I think if they have any order out there we are in a very good position. Himanshu Shah - Shah Capital: Hong, staying on China what percent of the revenues approximately will be coming from China in 2008 in your opinion?

I think it’s roughly, I think we have to be careful, probably roughly around 20% or so, 25%. Himanshu Shah - Shah Capital: On the softswitch, I know you got an order from Tiscali. Any orders like that we should expect over the next 12 to 18 months?

I think we are very pleased with the progress we are making. A lot of people are very pleased with the potential savings from a operational side. Particularly we have been demonstrated, in PLDT had shown that there is a significant potential saving in energy savings, the real estate savings and the headcount savings. And so after we have make that as a showcases, we have gained a lot of momentums, so we’re not the only one very pleased. Our operators are very extremely pleased, so all I can tell you is the activity is very high.

Yes, the activity is high. We have to leave it at that and we’ll obviously, looking forward to a lot of momentum here. Himanshu Shah - Shah Capital: Do you think, Peter, the India contracts are going to be profitable going forward? You are doing a lot of business there but you really haven’t made any money there and I’m just wondering is there light at the end of the tunnel here?

Let me step back a moment. The large contract that the government telecom’s carrier we’ve publicly said is not profitable. We’ve taken a reserve. All the other India contracts are actually profitable. So India is a profitable area for us and we learned a lot in that first government contract, so if we take further contracts we’d do a better job with the government carriers. The private carriers we have lots of profitable contracts.

Your next question comes from the line of Hamed Khorsand - BWS Financial. Hamed Khorsand - BWS Financial: Are there any specific countries in the Middle East you’re targeting with IPTV? Turkey, Pakistan, what kind of timeframe are you looking for before there is news?

Well, the timeframe would be sort of the course of this year because they are very early in discussions. It’s impossible for us to be more specific and they’re in some of the Arab countries and we would also discuss with Turkey, yes. Hamed Khorsand - BWS Financial: So your negotiations probably also maybe end of the year then?

No we are not in firm negotiations yet, we’ve just started. We haven’t done a lot of work in the Middle East. So let me step back. We haven’t done a lot of work in the Middle East but it is a very fast growing part of the world, also a very wealthy part of the world. So as part of the 2008 plans, we put extra sales resources into the Middle East. We’ve just run a very successful conference over there targeting a number of carriers. So, we’ve started a dialogue. It’s far too early to say we are in contract negotiations. So I apologize if I sounded more aggressive in that before. But I do think it’s going to be a good area for us.

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

I’d just like to thank all of you and we’ll get back to work and you’ve got our, the management team here commitment. So, I think it was a good quarter but we are now very focused on 2008. So, thank you all for joining us. I appreciate it.