Barry Hutton – Senior Director of Investor Relations Hong Liang Lu - Chief Executive Officer Peter Blackmore - President and Chief Operating Officer Fran Barton - Chief Financial Officer and Executive Vice President

Paul Wainer – DLS Capital Robert Galtman – Jeffries & Co. Himanshu Shah – Shah Capital Management

Welcome everyone to the UTStarcom quarter one earnings conference call. (Operator Instructions) Mr. Hutton, you may begin your conference.

Earlier today, we issued a press release announcing our financial results for the first quarter 2008. We also expect to have our first quarter 10-Q on file with the SEC by tomorrow. Today’s earnings call will be hosted by Hong Lu, our Chief Executive Officer; Peter Blackmore, our Chief Operating Officer; and Fran Barton, our Chief Financial Officer. Hong will open the call with a brief update on the company’s leadership transition. Peter will then give an overview of our strategic execution and competitive successes. And Fran will follow with a discussion of our first-quarter financial results and second-quarter guidance. After our formal remarks, we will open up the call to take your questions. Before we begin, 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 expectations. 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 Form 10-Q and our current reports on Form 8-K filed with the Securities and Exchange Commission. We would now like to begin the call with some opening remarks from Hong Lu, our Chief Executive Officer.

Before we give an update on our company’s financial and operational results, let me take a few moments to update you on the progress towards our previously announced leadership transition. We’re still very much on track with Peter succeeding me as the CEO effective July 1, at which time I will resume the role of the Executive Chairman. All of this is, of course, subject to final Board’s approval at the time. Peter has been with us now since July 2007. Since that time, he has made very good progress getting to know our business in detail and driving both strategic focus and operational effectiveness. Over recent months, he has progressively taken over more responsibility. In fact, many of the functions that have been reporting to me are now reporting directly to Peter. In addition to his formal responsibilities, Peter now directly oversees finance, HR, and CTO office, the personal communication division and our handsets business unit. The final remaining function to transition to Peter will be our China sales and marketing organization, which we plan to transition prior to July 1. As Executive Chairman, in addition to continuing my Board-related duties, I will look forward to being an ambassador for UTStarcom, where I will focus on our customers’ relationship as well as recommending new business model and technologies to drive future growth for the company. This is an exciting point of transition of all of us, and Peter and I are working towards a very smooth sendoff. Now, I would like to ask Peter to give an update on our operations.

As I’m sure everybody knows, from June to August of 2007, we conducted a broad strategic review of our business and our competitive position. Last September, we then announced our strategy built around a product suite led by IPTV, our next generation softswitch, and the related IP broadband products. We also said we would target these offerings at specific geographic markets, which offer the most opportunity for growth. This focus on our core business areas of multimedia and broadband is beginning to pay off. Customers appreciate the tighter focus of our business, and we are now better at selecting specific accounts and geographies where we believe we can really differentiate our offering from the competition. I will mention a few specific customer examples when I discuss the particular business segments in a few minutes. Also in September, we designated certain segments such as our personal communications, mobile solutions and custom solutions business units as non-core segments. At the time, we stated that it would make strategic and financial sense to look at alternatives in these businesses, and we are actively doing that. However, the timing and execution of such transactions is obviously dependent on many factors. But we remain clear on our strategy. We want to focus on the core businesses. In the meantime, we continue to manage these other areas tightly, and in recent quarters, we have seen some significant improvements. In particular, the quarter one results were very strong in PCD as reflected in both revenues and gross margins. And I want to say that the management team at PCD continues to do an exceptional job. The strategy announced in September also places a premium on greatly enhanced internal operations. We formed the business transformation office to drive management actions around operational and financial discipline. Some areas of note include our enhanced liquidity. In quarter one we did repay $290 million of debt and interest. In addition, we improved our net cash position by approximately $90 million, from a combination of operational improvements and onetime efforts. I do want to reiterate that we see limited need for operating requirements for our cash over the full year of 2008, so we are confident that we have adequate cash to run the business even without divestitures. On our supply chain management, in quarter one, we did make changes, which led to a $6.4 million improvement in cost savings, and that represented 133% of our own quarter one target in this area. However, there is still work to do in long-term margin improvements, in improved delivery times, and overall inventory management. Steady progress is being made, and we have milestones throughout the year that we will comment on as we meet them. Talking about headcount, in the past two quarters, our headcount has decreased by 946 people, which represents 16% of our total population. That includes the 11% announced in quarter four. And additionally, approximately 125 people in quarter one related to restructuring in our China terminals business. These reductions are very targeted and consistent with our strategy. Specifically, we have not planned any further reductions in our core business research and development, as we want to protect and strengthen this strategic R&D. We believe we have a good R&D model going forward with costs as a percentage of revenue targeted to be between 10% and 12% by 2009 as previously stated. And we believe this is a very competitive benchmark. Our focus is also on continuing to reduce our OpEx. A number of you have commented that our OpEx is still too high, and you are right. However, we need to make a distinction between certain operational needs, for example sales, marketing, research and development and supply chain, from the administrative needs like finance, IT and legal. But first, sales, R&D and supply chain are getting close to benchmark levels. And in fact, we have just authorized more investment in sales to help drive revenue and bookings growth. In contrast, the administrative costs have been higher than benchmark goals for some specific legacy reasons. Information technology was slightly high in quarter one due to the go-live implementation date on our new ERP system, and that is stabilizing the second half. And as the implementation continues to go well, those costs will get to benchmark. Finance and accounting are clearly too high, but that overage is tied directly to the underlying need to resolve our historic accounting issues, including the identified material weakness and working with our auditors, who, by the way, are doing a great job supporting us through this, to gradually reduce our internal costs as well as our audit fees. The legal area has had a number of expensive items to deal with, including investigations with both the SEC and the Department of Justice. We recently reached a settlement with the SEC. We are still in the process with the Department of Justice investigation, but we believe we should get resolution on this matter in the months to come. As we resolve these matters and put them behind us, the costs clearly come down. Just as importantly, management’s energy can be focused back on 100% developing technologies serving our customers and pursuing the most attractive market opportunities. Let me touch briefly on the macro-economic overview. The Street is rightfully concerned about the impact of an economic slowdown in the telecom sector. However, I would like to point out that the geographic footprint of UTStarcom’s core business is focused on regions with rapidly growing economies, large populations, and generally less market saturation. These demographics are clearly working toward our advantage today. And across Asia, Latin America, Eastern Europe, we continue to see good demand for our core product portfolio of IPTV, next generation softswitch, and broadband. At this time, let me recognize that we have recently received a number of questions about India, and I wanted to briefly discuss our experience in that country. We have done business in India for a number of years, and we have had some mixed results. But we have learned a lot and going forward see India as an important market for UTStarcom. So just to highlight some of the learnings of operating in India, we expanded rapidly in India in the last 18 months to two years. We do have one large contract for multi-play, which has been loss making. That situation is well known to you. On the positive side, we have successfully completed Phase I of that contract. It also gave us a strong market share lead in broadband in the Indian market. Due to the GAAP rules, revenue recognition of the contract will be amortized over 10 years, even though we are receiving cash each quarter as we achieve the milestones. Our knowledge and approach to India is much different today. First, UTStarcom now has an internal structure which ensures that the sales and finance teams work closely together before a contract is won. Second, we are selective about which contracts to pursue, and ensure that they meet specific margin and cash flow requirements. In the last 12 months, we achieved some impressive successes following this strategy. We now have a customer base that includes five of the different top tier one players, MTNL, BSNL, Bharti, Reliance and Tata, plus a range of second and third tier operators. Over the past 18 months, we have won four separate IPTV contracts in this region totaling $46 million. These contracts were booked with gross margins typical for IPTV, which, as we have stated, is normally 35% or greater depending on the combination of infrastructure and set-top boxes. Some of these contracts also included our broadband products. And just over the last few days, we have been named as the most respected broadband provider in India for the second year in a row. These customer opportunities, coupled with our improved internal structure, provide our company with a significant upside potential in this large and growing market. Now let me move to the core business units and some of the key statistics about them, first, the multimedia communications business unit, MCBU, which includes IPTV, next generation softswitch, and PAS. We do see new business models developing well for IPTV. In India, for example, we have tested these models with MTNL and our partner AKSH, and now UTL in Goa. It’s clear that our model can produce a viable business case for carriers at ARPUs per subscriber well below what you would expect to see in the U.S. or Europe and the model is driven by advertising revenues, and it’s showing to work. An example of this would be our recently announced contract expansion with United Telecom Ltd. in Goa, India, which will integrate our IPTV, our GEPON and mSwitch products into a single network to provide triple play services. We were successful because we had the best offering in the market, and we provided a clear business model for the customer. A similar situation in MCBU holds the Tiscali win which we announced last quarter. This obviously focused on NGN. In April, I made a visit there to see our progress and the first pilot of NGN had already gone live, replacing some competitive Class 5 switches. Our ability to have a well integrated offering on MSAN plus NGN in addition to our proven ability to implement quickly is making the competitive difference. We continue to be on track for 80% growth in IPTV and NGN softswitch in 2008. We see good bookings, and also continue to maintain the margin level we have previously talked about, which is 35% to 40%. However, in MCBU, this will be offset by the expected decline in our PAS business. So year-over-year, the MCBU should be roughly flat for 2008. As another point of reference, at the end of April, we had 850,000 IPT subscribers. This is up 13% from the 750,000 figure we reported just three months ago. Also, we are developing some related businesses, based on our IPTV technologies, such as IP surveillance, which we have mentioned before, and also now digital advertising. Both these are new. We are testing them in China where we have won contracts in both areas. And once we have established a good business model, plan to expand our market coverage. Another core business segment is our broadband business unit, BBU, which includes our IP broadband products such as MSAN and GEPON, and broadband back turns are being upgraded to MPLS through to triple or quadruple play services. MSAN deployment is increasing versus declining trends for IP DSLAM, and there is a growing demand for GEPON products in which we have a very competitive offering. We continue to expect broadband growth in 2008 of 15% to 20% as demand for data and multimedia usage drives operators to build converged triple or quadruple play networks. We also see continued improvement in our margin model and the bookings margin. Despite the quarterly volatility, we do expect the long-term gross margins in the broadband segment to exceed 20%. In March this year, we announced an agreement with Jersey Telecom to architect and deploy a new end-to-end all IP fixed voice network by providing MSAN and mSwitch next generation services. This is notable because we are replacing Jersey’s current PSTN network and beat both Sonus and Huawei for the business. Jersey picked UTStarcom because of our coordinated integration between MSAN and mSwitch. They view that any other vendor would have likely required significant and costly integration work to do this. Let me touch a moment on services. To meet a critical strategic needs for our carriers, our services business segments offers professional services in conjunction with the core areas I just mentioned, multimedia and broadband. This business is modest for us today, but we are working on expanding it. The services segment can provide a meaningful gross margin and revenue stream to the company. This will be done organically as we win new contracts, particularly around IPTV and NGN softswitch, which need to take advantage of our professional services skill sets. I do want to set a realistic objective that we will ramp up as our core business ramps, but this does give us added revenue and margin. Let me now turn to the non-core business units. Despite the non-core designation in the personal communications division, is a significant part of the company today. In quarter one, PCD’s revenue exceeded expectations and reached $431 million, clearly a great achievement. In quarter four, we launched the high-end HTC Smartphones, 5800 and 6800 series. As a result, the first quarter saw our product mix trend towards the higher price and higher margin products. In fact, the average selling price increased 48% to reach $209 during this quarter. We continue to have strong sales of our data products to virtually all CDMA carriers in North America. We also launched the next generation rugged phone from Casio Hitachi, the CE-211, exclusively to Verizon. This model is equipped with the same rugged features of its predecessor and also the push-to-talk capabilities. In April, we announced that UTStarcom was the first company to launch an advanced wireless spectrum phone in North America, and the successful launch of this AWS system was highlighted at the CTIA conference. So let me briefly summarize before I hand on. We have achieved a good deal in the last 12 months. However, I am very aware, as is the whole management team, that there is still a lot to do, and our team is actively engaged. We do see a lot of upside with our clear strategic focus, and we’re working hard to take advantage of that. I would also like to confirm that we’re still looking towards profitability in 2009 as we have committed in previous calls. So now, I would like to invite Hong back to talk about specific changes and opportunities in the China market.

Now I’d like to start the China discussion with an update on the earthquake. We are very fortunate in that none of our operations or employees or those of our joint venture partner were affected by the tragedy. However, many others were not so lucky, and we wish to extend our sympathy to many people that have been impacted. It has been widely reported that the whole both GSM and CDMA networks in an area went down due to the earthquake, our PAS networks stayed up and, in fact, played an active role in initial emergency response. To further assist in the recovery effort, we are donating approximately 2,000 handsets for the first responders in the area. And our service engineers are on-call 24 hours a day to support the rescue efforts. In addition, both the company and its employees are making a donation to assist in an area. In China, the company has donated approximately RMB1 million plus the China employees have donated approximately RMB250,000 outside of China, where having established the relationship with the International Red Cross and the Red Crescent Societies, so our employees can make donations directly to the China relief effort. Now, let me transition to a discussion of our China business. Our strategy in China is focused on three things. One, growing IPTV and the related products; two, initiate a jump start on the broadband activities; and three, manage the declining trend in PAS as much as possible. Now let me start with IPTV. With respect to IPTV, we had approximately 583,000 subscribers in China at the end of April, representing over 60% of market share. This is an increase of approximately 87,000 subscribers since we last updated the number during our year-end conference call and showed a nice acceleration in the market. We have had particular success developing our relationship with China Telecom companies for both expansion opportunity and new contracts. For example, in Shanghai, we signed an IPTV expansion contract valued at just over $7 million. In addition, we’re in the process of signing another contract with them for additional $3.7 million in revenue. Also, with the China Telecom, we won our first contract in Hunan Province, beating key competitors. There are also a number of additional contracts for IPTV in negotiations in Jiangxi, Shanxi, Anhui, and Fujian provinces. We have also seen a number of additional opportunity in IPTV-related areas. For example, we won a bid with the China Telecom in Guangdong Province for our interactive advertising technology. We have also seen additional opportunities in various industries applications for IP surveillance. For example, we’re working in Anhui Province with a number of cigarette retailers to add IP surveillance. There are 250,000 retailers provincially and 25,000 retailers in Hefei, the capital city alone. We believe this is a great potential and repeatable business. We’re in discussions in Shanxi, Hainan and Hunan provinces for similar projects. Moving on to broadband, we’re very pleased to be beating and are breaking through in our GEPON business in China. For example, we’re working with the China Telecom for GEPON contracts in the Jiangsu, Zhejiang, and Fujian provinces. We’re also looking at the expansion contract with the China Telecom for gigabit EPON in Ningxia Province and are planning the trial with the Hunan Province and Jiangxi Province. With China Netcom, we are expanding our GEPON business in the Heilongjiang, Shandong and Hunan provinces. We are pursuing enterprise opportunity for gigabit EPON and have won a small, but important contract with China’s State Administration of Radio, Film and TV in the Vinan Province. Moving to our PAS business, the PAS business continues to decline in the long term, but we have seen some short-term positives. In Q1, we shipped approximately one million handsets. According to the recent GFK market survey report, our PAS handset market share is back up above 30% again. We are also seeing the higher booking in Q1 and Q2 than initially expected. China Netcom in Beijing placed a special order for 50,000 handsets for usage at Olympic Games. We believe that our packet data solution can help offset some of the decline in the PAS business. We also believe that we have proven that PAS packet data is one of the better data solution in the market currently. We continue to work with both China Telecom and China Netcom to upgrade their PAS infrastructure to support packet data services. Thus far, we have seen demand from several cities including Shanghai, Hangzhou and Beijing totaling approximately 100,000 data cards. From a regulatory perspective, there is still no official word on the timing of the reorganization of the operators in China. We believe the earliest it would take place is in Q4 this year. In anticipation of these changes, we are heavily focused on data for the PAS business, IPTV and broadband for the fixed line business. Now Fran will review the financials.

The company enjoyed a better than expected first quarter, and the results were seen in both the revenues and gross margins across all the segments. Total revenues were $586 million, a 23% increase from the first quarter of 2007. Our gross margins during the quarter were 15.7%, essentially flat with the same period a year ago. The operating expenses of $123 million were expected for a few reasons that I will outline in a minute. We also had the benefit of a few one-time items. All of these things combined resulted in a net income of $25 million, or an EPS of $0.21. Now, I will provide further details on the first quarter, focusing on the business unit results. I’ll start with the segment level details on our core business areas of multimedia communications, broadband and services. One, multimedia communications business unit revenues of $67 million versus $73 million in the first quarter of ’07, these revenues were primarily driven by PAS and next generation networks that contributed 97% of the total. Though PAS revenues increased by 15%, total revenue declined from the first quarter of 2007 because of a decline in sales of Q-Box and E-Box, which we exited in late 2007. We also had good bookings growth for IPTV. However, the revenue recognition on IPTV is such that the impact won’t hit our P&L for a period of time yet. Gross margins for multimedia were 49% this quarter compared to 31% in the first quarter of ‘07. This, again, was primarily due to a combination of product mix, a greater contribution of PAS and NGN revenues compared to 2007. Secondly, our broadband business unit, this business unit generated revenue of $26 million versus $27 million in the first quarter of ‘07. While the gross margins were 9% versus 16% in the prior year. For the broadband segment, overall sales were flat while we had growth in both CPE and Optical. This was offset by a decline in our IP DSLAM offering. During the quarter, gross margins were negatively impacted due to an additional provision for anticipated losses relating to a 2006 infrastructure contract in India. If not for this loss provision, our broadband business unit gross margins would have been 24%. As Peter discussed earlier, we believe our ability to manage similar contracts in India has improved greatly. We’re now optimistic about the opportunities in India. Our services unit, which operates in conjunction with our core product portfolio, had first quarter revenues of $11 million versus $13 million last year. Gross margins were 21% versus only 5% in the first quarter of ‘07. We were able to support the China business while making expense reductions in this business unit. As such, the segment was able to achieve the gross margin improvement. We had a strong quarter in the personal communications division. Revenues of $431 million were up from $288 million in the same period last year. Meanwhile, the gross margins were 7.6% this quarter versus 5.8% last year. During the quarter, we benefited from a change in product mix. The UTStarcom branded products accounted for 25% of the business versus 51% of the units in the first quarter last year. The net result was a significant increase in the average selling price per unit of $209. The number of units sold also increased slightly and hit 2 million units. This shift towards higher-end products and a higher average selling price helped the gross margins this quarter. However, going forward, the gross margin level will likely fluctuate depending on the product mix from the different vendors. Our handset segment, which we previously referred to as terminals, designs and manufactures handsets to support our China PAS business and PCD. The segment revenue, which is specifically driven by our PAS business in China, was $44 million this quarter, versus $70 million in the first quarter of ‘07. The gross margins were essentially flat at 37% versus 36% last year. This quarter, the revenue decline was due to changes in both volume and price as the PAS business continues to decline and next generation technologies are implemented. And finally, the other segment is made up of our mobile solutions and custom solution units. In this area, the revenue was $7 million versus $6 million in the first quarter of ‘07. Gross margins were 75% versus 93% last year. Overall for the corporation, our book-to-bill ratio was approximately 1.2 in the first quarter, the same as it was during the same period last year. The book-to-bill for non-PCD was 1 compared to 1.1 in the first quarter of 2007, while the PCD book-to-bill was 1.3 compared to 1.2 in the first quarter of last year. We saw healthy bookings in our non-PCD bookings, which amounted to approximately $150 million in the first quarter of 2008. And we expect these bookings to increase by about 25% in the next quarter. In the first quarter, the operating expenses were $123 million. Although, this was somewhat higher than we guided, it was also a $4.5 million decrease from the first quarter of ‘07. Let me discuss operating expenses in two parts. The R&D cost of $41 million was in line with the past two quarters, despite a meaningful cost of living increase for the staff based in China. Strategically, we’ve narrowed our portfolio of products, which enables us to make bigger bets in fewer areas. The SG&A costs were essentially flat at $80 million. Last year we benefited from a $5.3 million bad debt recovery. In this quarter, we did incur higher than expected professional services fees. Going forward, we will continue to manage expenses tightly. As such, we still anticipate bringing operating expenses down to $110 million per quarter during the second half of this year. The operating loss for the corporation was $31 million or 5.3% of revenue. This is an improvement from first quarter ‘07 loss of $52 million, which was 11% of revenue. The net interest expense of $3.3 million was up from $1.8 million in the same period last year due to a combination of lower cash balances and declining interest rates in 2008. During the quarter, our other income included a few special items, which clearly helped us. Most specifically, the gain on sale of investments was approximately $48 million, including Gemdale and Infinera. Our SEC documents have listed these investments and others as short-term held-for-sale items. Our prior conversations indicated our intention to monetize these positions and both of these investments are now fully converted to cash. In the period, we also had a $5.7 million gain on currency changes. In the quarter, we enjoyed a tax benefit of $5 million compared to an expense of $4 million in the first quarter last year. The primary driver was the change in withholding tax laws in China. As a net result of all of these activities, UTStarcom generated a first quarter net income of $25 million, or an EPS of $0.21 based on 123 million diluted shares. Now I will cover cash flow from operations. Cash flow from operations was $97 million this quarter. It’s important to note that prior to March 1, we initiated a number of particularly aggressive working capital actions in advance of the pending March 1 note maturity. These actions gave us a cash flow from operations benefit that we do not expect to maintain quarter-over-quarter. In the second quarter, we expect to give up those gains such that over the first half of the year, the cash flow from operations should be roughly breakeven [inaudible] the usage over the course of the year it is reasonable to think our cash flow from operations will be closer to breakeven, as we previously guided. Now, I’ll move to a discussion of a few key balance sheet items. At the end of the quarter, the cash equivalents and short-term investments stood at $305 million versus $503 million on December 31. Keep in mind this change reflects the March repayment of $290 million in convertible notes and related interest plus the positive cash flow from operations metric I spoke about earlier. About $174 million or 57% of our cash is now held in China. Total debt fell to $37 million from $323 million, primarily because of the debt repayment during the period. I have already discussed the working capital strategy used during the quarter, but I want to call out a few specific items on the balance sheet. The accounts receivable balance was $240 million, which is down from last quarter. Our DSO of 41 days compares to 68 days in the first quarter of 2007, and is slightly higher than last quarter. Non-PCD DSO was 103 days compared to 107 in the first quarter of last year. PCD DSO was 19 days compared to 42 in the first quarter of last year. As the mix of our business changes, we expect the overall DSO to fluctuate as well. Our total inventory was $522 million as of March 31, which was about $3 million lower than last quarter and $133 million lower than the first quarter of last year. Peter previously talked about our progress bringing efficiencies to inventory and the supply chain. Now, let’s turn our attention to the guidance for the second quarter. Total revenue for the second quarter should be in the range of $580 to $610 million. This would represent a 0% to 4% growth over the first quarter levels. And this would be about 8% to 13% above the second quarter of last year. The second quarter sales for non-PCD revenue should range between $120 and $130 million. The timing for revenue recognition should allow for stronger growth in the second half of 2008. PCD revenue is expected to be between $460 million and $480 million. Overall gross margins are expected to be approximately 14%, reflecting changes in our product mix. Non-PCD margins are expected to be about 36% depending on the mix, while the PCD margins will be about 6.5%. Recall that the first quarter product mix in PCD was skewed towards the high-end products, particularly the HTC Smartphones. In the second quarter, it’s likely that gross margins will be lower due to a more traditional product mix. We expect Q2 operating expenses of between $118 and $123 million. This reflects our anticipation that some of the professional services expenses will continue during this quarter. We believe that our efforts continue to be on track, however, to reduce operating expense to the $110 million level in the second half of ‘08. In the other income line, we now anticipate receiving approximately $2 million in revenue from the licensing or sale of our IP assets patents. This revenue signifies the beginning of our program to monetize some of our IP value. Finally, we believe our cash flow from operations will be negative as we expect a reversal of most of the strong gains in working capital from the first quarter. As such, the cash flow from operations over the first half should be roughly breakeven or slightly negative. As for the full year, we expect the cash flow from operations to be neutral, as I said earlier. So in an effort to improve our communications with the Street, we will undertake a few actions. In April, we already hosted an IPTV Webinar, highlighting our products and related opportunities. On June 10, we’re holding an analyst day in New York City to spend a day with the analysts telling our story. Our annual shareholders’ meeting is scheduled for June 27. During the second half of the year, we plan to participate in a few road shows and investor conferences. Some of you have already spoken to our new Senior Director of Investor Relations, Barry Hutton, who joined us at the end of the first quarter. He will be coordinating all of these events as we go forward. So to summarize, this has been a complex quarter with lots of moving pieces. Two of our biggest challenges, however, were solved recently. The first one was on March 1 we repaid the convertible note with cash from our internal sources. This reduced liquidity concerns by many investors. And secondly, we announced the settlement with the SEC for a number of historical issues that have occupied our time and attention. We’re happy to have this one behind us. From a financial perspective, we were able to exceed our expectations for revenue, gross margins and profits this quarter. Also our customers continue to recognize our technology and excellent product offerings. In addition, our operations are improving by reducing supply chain costs, having more pricing discipline and gradually reducing operating expenses. We still have challenges, however, as we have not yet returned to a sustainable profitability. We continue to believe this will take place soon, but is now a realistic goal for 2009. We are all committed to achieve that goal. And with that, I’d like to open this up to questions and answers.

(Operator Instructions) Your first question comes from the line of Paul Wainer – DLS Capital Paul Wainer – DLS Capital: In your last call, you laid out some full-year revenue targets, and you expressed them in ranges. Would you like to comment on that, given the success of the first quarter?

Yes, I think generally, I don’t think we thought of them as targets, but more as indications of where we were heading. So I think generally speaking, we are confident that we’ve hit the first milepost in Q1 and, therefore, we should be on track to be in the range of those for the rest of the year, Paul. Paul Wainer – DLS Capital: I’d say you exceeded the first milepost. I’m wondering if it’s safer to assume that you’re closer to the top end of that range now.

Well, to be safe, I think we’ll just hold on that for right now. So it’s a little early. One quarter doesn’t make a year.

I’d like to have the second quarter behind us, Paul, for obvious reasons, and then we can perhaps give an updated guidance for the second half of the year. But let’s leave it at that for the time being if you understand. Paul Wainer – DLS Capital: The working capital improvements that you saw in the first quarter, you expect to be fully reversed. Or you don’t think there’s more to be squeezed out of there?

When you look over a period such as a year, you get a sense of where you’re heading. And we’ve been saying that for the year we looked like we’d probably be about neutral. In any given quarter, depending on when the inventory comes in and when the bills get paid, you can fluctuate up and down, up and down. And just as within the quarter, every month varies fairly dramatically, frankly. So the things that happened in Q1, a number of which, by the way, we drove operationally for our own reasons, will eventually settle back at, water seeks its own level. So we have improvements to make, we’ll continue to make. We needed to make those improvements, by the way, to get to zero for the year. So it wasn’t as if it was business as usual. So just to be clear to everybody, we could give back all of those gains. We could give back more than all of those gains in a quarter, and then we can get them back again in Q3, or it will fluctuate back and forth. But if you try to not isolate Q2 just as Q1 doesn’t make a year, Q2 doesn’t make a year. So at the half, we expect to be around breakeven. At the year-end, we expect to be around breakeven. And in between, we can fluctuate fairly dramatically. We’ll always try to fluctuate to the good side, but there will be quarters when we don’t. Paul Wainer – DLS Capital: The PC division is having so much success now. And obviously, is that changing the tenor of the talks you’re having, to dispose of that non-core asset? Or can you give us any update on the potential disposition of that asset?

As before, we really can’t, but I did say in my prepared remarks that I do think the future of the company is focused on the core businesses, and PCD is non-core, which gives you that we haven’t changed our position there. But we’re very pleased with the performance and we’ll work with them for the foreseeable future. But I don’t want to change the strategic position we’ve outlined in the past, because it still holds.

Your next question comes from Robert Galtman - Jeffries & Co. . Robert Galtman - Jeffries & Co.: First, going back to the PCD business, I know you mentioned that margins expected to be down in Q2. Can you just give us a little more color there? Obviously, the high-end handsets, HTC devices you mentioned helped out in Q1. But just what you’re seeing broadly in the market and how we should expect that to trend later in the year as well.

But generally, we had tremendous consumer satisfaction with the launch that was the very end of last year, some of the HTC Smartphones, and that played out through the first quarter. We would love to see that continue and perhaps it will and perhaps the follow-on replacement will do that as well. But I think the market has usually got a certain mix to it that we’ve been following over some time. So we are expecting to return back to the 6% or so gross margins, which we are very pleased with 6%, by the way. 6% is one of the highest we’ve ever done in our history. So we wouldn’t want to set the expectation of 7% or 7.6% or something like that going forward. But we will obviously sell as many high-end as we can and do that.

And PCD’s business really, the purpose of that is to try to get as many suppliers as you can. And right now, we have been successful to the extent that our supplier base is of course HTC, Sharp, Casio, Pantech and UTStarcom is one of them as well. And overall, we have been seeing the improvement in the margin overall. So it really depends on the mixture of that. But in the future, there is a higher potential that we will be accepting more other companies to participate. And once they will be able to do that, their margin position will be enhanced. And yet, this business is very, very difficult. And we have already achieved the highest margin quarter in our company’s entire history. And we don’t want it to say that can be repeated easily. But the tendency is that we wanted to keep that as a goal to be able to not only beat that, but we don’t want it to set the high expectation for every quarter at this time. Robert Galtman - Jeffries & Co.: Looking at the targets a little bit, I know with the OpEx target in particular, you mentioned that would look to bring OpEx down to $110 during the second half. I think last quarter you had maybe mentioned below $110 each quarter in the second half. Can you just give us some clarification around that? Is that $110 maybe later in Q4? Or would that be both in Q3, Q4 as well?

Well, we’ll target it for Q3. I think Q4 we should certainly be there. We’re not stopping at $110, and so the language we may have used was at $110 or just under $110 or whatever, so it’s not intended to be over $110. Its $110 or under. But we will hold the expectation for now at $110. As we get a couple of these one-timers behind us, we can start operating at that level shortly. So we will try for Q3, but we will certainly be there for Q4. Robert Galtman - Jeffries & Co.: On the gross margin side, I know that you mentioned last quarter, I think you were looking for 14% to 16% now, provided that toward the lower end. What is that delta? Which particular business line does that primarily come from?

So this is so mix dependent. So in the biggest, the first chunk is PCD at 6% or 7%, and the rest of the company at 30% something. Now the rest of the company at 30% something is also made up of everything from 10% sometimes on CPE and 15% on set-top boxes or 20%, up to 50% on some certain infrastructure products. So the first break is PCD, non-PCD. That’s the big swing factor. And then within the 30% plus rest of company, that can move up three or four points. If it’s PAS, it’s 50%. If it’s set-top boxes, it’s 20%. And so what we’re going to have to do is on a quarter-by-quarter, see which product lines are getting Rev-Rec that quarter, and that’s going to bounce around. So I would rather you not think of it as 15% or 14% or 17%. That is just a number that’s frankly meaningless. The low-margin distribution business is a business model, so the rest of the company is a business model with some low-end margins. So maybe I have over-explained it, but I’m not trying to avoid you, but I’m saying it really varies.

The key thing to remember is what Fran said in his prepared remarks, 36% guidance for the core business.

The non-PCD.

Non-PCD, and then 6.5% for the PCD business. And that mix drives the overall ratio. And obviously we aim to work on improving it all the time. But we’ve got to be sensible when we give guidance. Robert Galtman - Jeffries & Co.: Can you provide some color regarding the losses in India and what you have been able to do to improve that and how you don’t see that happening again in the future?

It’s all to do with one very, very large contract and the Phase I is complete. I think we’ve got just a few items to deliver, some CPE devices. So once that Phase I is behind us, and we have obviously accrued losses for that, and they were quite significant. But the other business we’ve got in India, as I tried to indicate from my remarks, are quite healthy margins. We’re very pleased with them. Obviously some of the revenue recognition in India gets delayed because under the GAAP rules [inaudible] brand-new business for us in India, so they get recognized as we apply the GAAP rules to it. But the underlying margin model is good and the bookings are good. So that’s why we are confident that we can manage that business well going forward. And we learned a lot from one large contract, and the benefit there from that contract has propelled us to a market share leadership position in India, which does have some value to us.

Yes, if I could just add, Peter, because I know one of the people, probably one of the follow-up questions that is probably going to come is the same question we get every time is, “Why do you keep having these things happen?” You can imagine a contract which the terms are fixed, and you bid and accept the terms you are given. And when there are features where it says what amounts to most favored nation pricing type terms. So if anybody comes up with a price for something we’ve got on our delivery list, that’s lower than we’ve been charging or we’re used to charging, we are obligated to honor that. And that type of language happens to us once in a while and we have to adjust, and that means we take an incremental loss. So things happened with competitive pricing structure from our competitors. So that hit us this quarter. Should we get this thing all delivered shortly, then we’re protected, once you’re delivered. It’s only while you’re still shipping and delivering products. So we’re nearly done on that phase in terms of delivery.

Your next question comes from Himanshu Shah - Shah Capital Management. Himanshu Shah - Shah Capital Management: What are, on the non-core assets, your initial thoughts on the usage of cash when you do sell PCD division?

We haven’t sold anything yet but, as you can imagine, we try to think of those things and what would we do. So like every prudent management team, you take a look at your anticipated needs over the next year or two, and your anticipated sources, and you determine you’ve got excess cash. If you determine you’ve got excess cash, you’d better do something clever with it, and that would mean any number of things. One of your favorite questions is, “Would we do a stock buyback?” So that would go in the category of something you’d do if you determined you had excess cash. But one, we haven’t got the excess cash. We haven’t got any cash yet. We haven’t got any divestitures yet. But we have the classical list and we have our investment bankers and lawyers advising us, and we’re going through that list. We’re very understanding of what those options are. We have no decisions. If we had one, I wouldn’t be able to tell you right now anyhow. So I think you understand that as well. Himanshu Shah - Shah Capital Management: What would be the OpEx, in that case when you do divest the non-core assets? If you have gauged, you can give us some guidance that would be great.

PCD varies around G&A of around let’s call it, $10 million a quarter. If that went that way that’s a number. If we looked at the IPCDMA business, I think it’s around $6 million or so per quarter. If we went that way, the custom’s business unit is probably, I don’t know, another $10 million a quarter or something like that. So those ranges, $6 to $10 for three different business units that are currently designated as non-core. Himanshu Shah - Shah Capital Management: Hong, I got a question on the PAS data that you mentioned in your remarks, that from your studies it turns out to be a better solution. You’ve been talking about this since middle of third quarter of last year. You also mentioned about the order uptick in this quarter for the next quarter in your book-to-bill. Are we seeing some effects of that, or are we going to see PAS data products hitting your top line sometime in the second half of this year or beyond?

Well, Himanshu, we have actually gained some contracts in our infrastructures to upgrade them to be able to handle the packet mode. So we have tried out several cities already, and so we have been start making some delivery of our products. And some of the cities that we have been engaged in, for instance in Hangzhou, in a very short period of time, but they have increased their users close to 10,000 in about two or three months’ time. And typically, the ARPU is higher, so we are very pleased with the customers’ uptick. And when we start testing the region with the customers to put our product against the Edge product and CDMA 1x product and ours, and we clearly come up to be a more favorable solutions. And so therefore, our customer has decided to go with us. So in other regions that we start testing, such as in Beijing, Shanghai, Shanghai is really not up to the packet mode yet. They are still using the circuit mode, so their data speed, the maximum is 64K. But if you upgraded to the packet mode, they would be able to do anywhere between 80K and 110K, depends on the situations. So we wanted to be able to demonstrate to the other regions. Shanghai is one of the region we really want them to convert, but we haven’t convinced them to convert it to the packet mode at this time.

There are no further questions at this time.

Let’s close the call then. Thank you, once all again for joining us. Really appreciate it. Thank you.