Barry Hutton – Senior Director of Investor Relations Peter Blackmore - President, Chief Executive Officer & Director Francis P. Barton - Chief Financial Officer, Executive Vice President & Director

[Steven Kaufler – Con Royal] [Scott Hurliman – Robert W. Baird & Co.] Bill Choi – Jefferies & Company

Welcome to the second quarter 2008 earnings conference call. (Operator Instructions) Barry Hutton, you may begin your conference.

Earlier today we issued a press release announcing our financial results for the second quarter of 2008. On today’s call Peter Blackmore, our Chief Executive Officer will provide a strategic update including a review of recent divestitures and operational changes. He will then discuss the highlights relative to certain geographies and business units. Fran Barton, our Chief Financial Officer will then give the segment details of our Q2 financial results and Fran will also discuss third quarter financial guidance and our expectations for the fourth quarter. Before the call begins, I’d like to remind everyone that some of the information we’ll discuss today constitutes forward-looking statements. Actual results could differ materially from our current expectations. To understand the risks that could cause results to differ, please refer to the risk factors identified in our latest annual report on Form 10K, quarterly reports on Form 10Q and current reports on Form 8K which are all filed with the Securities & Exchange Commission. In addition, this presentation includes certain pro forma non-GAAP financial measures. The most directly comparable GAAP information and a reconciliation between the pro forma non-GAAP and the GAAP figures is available on our website in the investor relations section. With that, I’d like to turn the call over to Peter Blackmore.

As you saw in our press release, our second quarter revenues were $633 million which represents an 18% growth over the same period last year. While the company did have second quarter operating and net losses of $3 million and $39 million respectively, both metrics were improvements relative to the results to the second quarter 2007. We also took significant steps on simplifying our company since the last earnings’ call and as you will have noted, we have exceeded our guidance to you on revenue, on expenses and also on cash flow from operations. At this point I’ll provide an update to our company initiatives and our market position and Fran will then follow me to discuss the quarter results later in the call. Let’s start with the corporate strategy and our divestitures. As you all know, we announced a comprehensive strategic plan late in 2007, we have executed a number of actions relating to the strategy and the plan was very simply to create a better focused and more streamlined company which in turn would enable us to focus on profitable growth in our core technologies and markets. We have recently completed two divestitures as part of this plan. Each of these divestitures was consistent with the announced plan. Strategically these divestitures have streamlined our product offering to better reflect our commitment to IP based technologies particular in the IPTV, NGN softswitch and broadband markets. Our geographic footprint continues to be focused on the world’s fastest growing markets which include Asia, Latin American and Europe. We provide our solutions in these regions through close partnerships with leading telecom carriers in each region. Financially, these divestitures significantly improved our cash and liquidity position while reducing our ongoing operating expenses. Our financial model is now much more transparent so that you can better see the revenue potential and gross margins of our ongoing businesses. Briefly covering the two divestitures, the first was the smaller one which was our MSBU business unit where we divested IP CDMA. On July 31st we completed the divestiture of IP CDMA business which was part of that business unit. This will reduce our op ex by approximately $5 million per quarter and remove an associated operating loss from this business. More importantly, this transaction represents our efforts to streamline our product offerings and corporate structure. On the PCD divestiture, on July the 1st we announced and closed the divestiture of that division and although PCD was a successful business, we had deemed it strategically non-core to our future. Financially, this transaction provided a number of benefits. The divestiture resulted in approximately $240 million in proceeds subject to certain adjustments. Also, we will retain part of the revenues through a supply agreement under which our handset business will sell equipment to the new entity in the United States and the divestiture will reduce our op ex by approximately $10 million per quarter. There is also additional upside potential from the three year earn out provision that generate up to $50 million. For clarity, our remaining handset business has two R&D centers, one in China, one in Korea. In China we shall continue to leverage our strong brand name to design and supply PHC, CDMA and GSM handsets primarily to the China market which continues to grow. The Korean R&D center continues to design products and recognize revenues via our supply agreement with the new PCD standalone business. We also have future growth opportunities in the telematics and machine-to-machine device areas. I’d like to briefly mention our other business units which is CSBU, we have technologies in that division which will either be monetized or moved in to the two core BUs in the next three to four months and as a result we expect to benefit from additional cost savings as part of this change which will also further simplify the company. Let me now move to operational changes in op ex going forward. We have made a number of operational changes that together improve the underlying efficiency of the company. However, we still have work to do, but progress is clearly being made. This quarter our op ex declined as we saw benefits from our initiatives and also the resolution of some of our legacy issues. Although the op ex is still above our long term targets, quarter two expenses were now at the lowest point in the last six quarters and with the divestitures that run rate will come down further. We shall be taking further action to adjust our operating structure now that we have divested PCD. Our R&D program has been narrowed so that we’re investing the dollars in fewer and more focused areas and this gives us a better return on our R&D investments. In the second quarter, the SG&A expenses declined by approximately $10 million and we expect to see further improvements later this year. I want to leave a very clear message that improvements in op ex levels and operations will continue in 2008 and obviously in to 2009. Let me now move to the growth focus in the latter half of the year and 2009. The most critical driver of our future success clearly must bet growth in bookings and revenue. We are very encouraged as the markets to which we sell to have high cap ex requirements and the carriers continue to invest in next generation IP services. We see many opportunities across our portfolio of IP based solutions and in selected handset markets. Later this year we plan to add our sales and pre-sales support teams in each of our geographies to help drive our growth plan. We’re going through a planning exercise on our 2009 growth plan and we aim to share our initial thoughts with you in the quarter three earnings call. A quick update on our geographies; one of the central principles of our strategy is to continue to accelerate our presence in the worlds’ fastest growing economies. UTStarcom’s origin was in China and that continues to be our leading market. We’ve also obtained market leadership in India and we have begun to make headway in Latin America, certain parts of Europe and the Middle East. All the signs indicate that our focus on these geographic regions is the right move. In China and India third party consultants expect the number of people in the middle class to grow by seven to 10 times by the year 2020. This expansion of wealth is expected to drive a related expansion of cap ex of spending and specifically in the areas of IPTV, NGN and broadband, the cumulative cap ex between 2008 and 2012 is projected to be $76 billion representing a combined [cager] of roughly 20%. Because of these trends, we continue to see high demand from carriers looking to build out their infrastructure and modernize their networks. In China, we do assume a short term impact as the telecommunication mergers take place given the normal realignment in people and processes that must accompany such integration. However, the long term investment and technology trends are moving in our favor and we are optimistic that the restructuring of China’s telecom industry will have a mid and long term positive impact for us. A brief mention of the Olympics because it is obviously topical. They start this Friday, as you are aware and the first time the games were broadcast using IPTV. Many of you have asked how the games will impact our business in IPTV. An event of this magnitude in China will clearly increase the awareness of IPTV and showcase the various features and system capabilities of our system. For the first time the Chinese viewers will enjoy a completely interactive Olympic experience which incorporates a time shift option to review exciting moments they may have missed or want to see again, use of our capability to record events for later viewing and the ability to select games that would have previously been missed due to the conflicting program schedule. In India, our innovative technology and our ability to execute effectively continued to be widely recognized by third parties. For the second year in a row, Via India named UTStarcom as India’s most trusted company in the areas of IPTV and broadband and the Telecom Equipment Manufacturers Association, TEMA awarded UTStarcom it’s Excellence in Telecom Services Solution Award which recognizes our innovation in the IPTV, NGN and Broadband areas and our impact on the growth of India’s telecom market. Very importantly, we secured another strategic win with our partner Aksh in India and together we shall benefit from the rollout of the new BSNL IPTV services to 20 cities in India starting almost immediately. I will talk about our Latin America, Europe and Middle East plans in further calls. Let me now move to a business unit discussion. I want to highlight just a few key customers and product developments relating to these units. Starting with the multimedia communications business unit; this business unit achieved some milestones in the quarter. Our IPTV product now has 956,000 live subscribers as of June the 30th. This is a growth of 100,000 subscribers or nearly 13% since our last earnings call. Our market share in mainland China is 62%, nearly twice that of our nearest competitor and this success is a testament to the principles we discussed over time. Specifically, we have proven our ability to satisfy the demands of the end users who are meeting the technological and economic needs of the operators and this ability has been most evident in China and now more recently in India and we expect this success to translate to other regions as well. Regarding our relationship with Tiscali, which we mentioned on previous calls, we have achieved final acceptance for our mSwitch deployment. Not only does this represent a milestone for our softswitch offering, but it also bodes well for our position in the European market. We’re also very excited about our growing relationship with Brazil Telecom. In addition to our existing IPTV offering we are now finalizing an arrangement under which our mSwitch solution will enable the carrier to launch one of the first fixed mobile convergence networks in the world. This is another important foothold in to Latin America and further signals UTStarcom’s technological leadership. I stated before that we’ve made a concerted effort to focus our R&D efforts on the areas that could be leveraged in to multiple revenue streams. In the July press release we announced that a subsidiary of China Telecom will use the same IPTV technology to introduce interactive digital advertising systems in 14 Guangzhou cities. This project will utilize both our set-top box and running stream software to deploy 3,600 concurrent IPTV steams in to a range of supermarkets, department stores and office buildings. Let me move now to the broadband business unit; our broadband leadership in India has been recognized throughout the commercial sector. On the Phase I of the BSNL contract, the validation testing is now 100% complete and the acceptance test is in process as the final items are now being worked. In addition, we have received the advance purchase order from BSNL for Phase II of the multi play contract which will result in a formal purchase order this quarter. The value of that order would be in excess of $80 million to us. Our long standing relationships in China Netcom and China Telecom have created and opportunity for GEPON product, as UTStarcom was named as the vendor in five separate provinces. Also, an update on our transport network product; if you remember, at our June analyst day we mentioned the development of this product as the core packet transfer network or TN product for short and we’ve achieved a milestone in that development. During the quarter we have performed several important product tests to very large carriers and we have high expectations for this product line. Let me just summarize before I hand it over to Fran. We executed successfully on a number of important items in the past few months. We announced two divestitures that represent our strategic goal of streamlining the company to focus squarely on IP technology and broadband technology in the most exciting markets of the world. These transactions also provide us with increased liquidity and a lower op ex space going forward. Operationally, we were able to reduce our expenses to a level both below the prior period and our quarter two guidance. We did this in a manner that enabled us to continue to make investments in carriers and pursue our market opportunities. Over the next few months we will continue to reduce our operating expenses consistent with our new structure. As we move forward towards 2009, our primary focus will be on growing the revenue base and improving the gross margins. We recognize that many of you have asked about our business forecast for 2009. The team is now actively reviewing those plans and putting the execution strategy in place so during our quarter three earnings call we hope to give you some insight regarding our plans for next year. At this point, I’d like to ask Fran to discuss the second quarter results and the guidance for the third quarter. Francis P. Barton: I’ll start with an overview of the results and then go in to segment details. In the second quarter, total revenues were $633 million an 18% increase from the second quarter in 2007. This growth was mostly driven by increased revenues in PCD plus a strong contribution from our multimedia communications business. Our gross margin during the period was 13% and the year-over-year decline reflects lower gross margins in the handsets and broadband business units. The operating expenses of $113 million represent a year-over-year improvement of $22 million and a sequential improvement of $10 million from last quarter. While we are pleased with this improving trend, the op ex does continue to reflect some unusual items which we expect to wind down by the end of the year. The operating loss of $31 million is an improvement of $24 million over the year ago period. The net loss for the second quarter was $38.8 million or $0.31 per share based on 123 million shares. This is also an improvement from the second quarter 2007 when we reported a net loss of $61.7 million or $0.51 per share. In the second quarter 2008 our non-PCD bookings grew for the consecutive period and reached $211 million. During the second quarter we used roughly $37 million in cash flow from operations versus the $97 million we generated during the first quarter. As a result, the first half of 2008 reflects a positive $60 million in cash flow from operations. Our liquidity position has improved greatly since year end. In March, we repaid our convertible notes and we now have only $20 million in total debt and, as I mentioned before, year-to-date cash flow from operations has been positive. In addition, on July 1st, we sold PCD which provided approximately $240 million in additional proceeds comprised of roughly $216 million in cash that was received immediately plus approximately $24 million that is held in escrow accounts. I’d now like to go through some of the segmented financial results. First I’ll discuss the broadband business unit which includes our MCN, MSTP and GEPON products. The BBU generated revenue of $36 million versus $38 million in the second quarter of 2007. This slight decline reflects the decline in our IP DSLAM and CPE products which was mostly offset by growth in MSAN and optical areas. As these areas grow, our broadband customer base continues to get stronger and more diversified. The second quarter broadband gross margins were at 5% versus 26% during the prior year. This reflects a $7 million charge driven primarily by foreign currency fluctuations relating to an ongoing infrastructure on tract in India. Excluding that charge, the quarterly gross margin would have been 25%. We are confident that our remaining contracts in India which are spread across multiple customers will be profitable for us. In fact, in the first half of 2008, our broadband contracts in India excluding this one customer are booked at an anticipate gross margin of approximately 30%. Next, I’ll cover the multimedia communications business unit which includes our IPTV, NGN and pass infrastructure business. This quarter the multimedia communications unit achieved a year-over-year growth of 17% and produced revenue of $74 million versus $63 million in the same period last year. The growth was primarily attributable to increased sales of IPTV set-top boxes in China plus some growth in NGN softswitch. The gross margins of 39% were down from the 44% we saw in the second quarter of 2007. The lower gross margin reflects that fact that set-top boxes made up a higher portion of the total product mix this quarter. Again, I’ll remind you that the related IPTV rolling stream activity generally has a longer revenue recognition cycle but it also has a much higher gross margin than set-top boxes so we should see these benefits overtime in both the revenue and the gross margin lines. PCD, our North American distribution operation was divested on July 1st but, it’s operations are included in our Q2 results. PCD’s Q2 revenues grew to $449 million compared to $358 million in the same period last year. Meanwhile, the gross margins were 8.1% this quarter well above the 4.5% result from a year ago. The revenue and gross margin advances reflect both increase in the average selling price and the number of units sold. Keep in mind that because this business was sold on July 1st, our Q3 result will not reflect any activities from PCD. As Peter mentioned, our handset business provides PHS, CDMA and GSM handsets. Second quarter revenues were $50 million which was down from $62 million in the second quarter of 2007. This reflects the continued decline in both volume and price for our past handset business as service providers look towards next generation technology and the restructuring of the China Telecom market. We saw this segment’s gross margins decline to 14% this quarter versus 36% for the same period last year. This was primarily due to an inventory reserve for a cancelled order for a PCD customer and our efforts to clear out older handset models. Going forward, our sales to PCD will be treated as third party transactions and the revenue will be recorded in the handset segment. Next, the services segment provides professional services in support of the broadband and multimedia communications operations. So, as these units grow, the service revenue should also increase. The second quarter revenue from services was $16 million compared to $11 million in last year’s second quarter. This growth was mostly in China. The gross margins improved to 30% this quarter versus 1% in the same period last year. This segment continues to show improved margins as we have been able to provide our services while holding costs in check while utilizing our excess capacity. Finally, this quarter the other segment included our custom solutions unit which provides customized telecom solutions including PDSN and the mobile solutions unit which focused on the IP CDMA market which was divested on July 31st. Revenue for this period was $9 million versus $6 million a year ago. At this point, I’d like to discuss some items that discuss the overall corporate activity as opposed to any particular business segment. We’re pleased that our operating expense levels continue to decline due to both planned reductions and the resolution of certain legacy issues. In the second quarter the op ex was $113 million which was $10 million lower than Q1 and $22 million lower than the prior year. As Peter mentioned we do plan to make further op ex reductions going forward. As a result of the above, our second quarter operating loss was $31 million or 5% of revenues. This does represent an improvement from the second quarter of last year when our operating loss was $55 million or 10% of revenue. Additionally we incurred a tax expense of $4.6 million for those regions where we have made a profit and finally the net loss that resulted from all of this is $38.8 million or $0.31 per share. This result is an improvement from the year ago net loss of $61.7 million or $0.51 per share. For the second quarter our book-to-bill ratio when you exclude PCD was $1.0 million and now I’ll cover a few balance sheet items. As of June 30 cash, equivalents and short term investments were $255 million and the total debt was as I said before $29 million which leaves us with a net cash position of $226 million. Let me remind you that those amounts do not include proceeds from the PCD divestiture which closed on July 1st. That transaction added an additional $216 million in cash that was immediately received plus another $24 million that is held in various escrow accounts. The accounts and notes receivable on June 30 were $153 million which is not directly comparable to prior periods because our Q2 balance sheet classified certain receivables as assets held for sale in expectation of the PCD and MSBU divestitures. For the second quarter the total company had a DSO of 38 days and our ongoing business had a DSO of 73 days. As of June 30 our total inventory level was $343 million which again is not comparable to prior periods due to PCD and MSBU inventories which were classified as assets held for sale and you can see this if you look at our press release where we have attached a balance sheet, you can see the classification of assets and liabilities held for sale and it kind of masks what the PCD inventory was that gets included in that account, that’s an accounting rule. Similarly the accounts payable at the end of Q2 was $180 million which again does not include items which were deemed held for sale. In terms of cash flow from operations recall that in Q1 we generated a positive $97 million through some aggressive working capital actions in advance of our March repayment of our convertible notes. On the last earnings call we also said that we were likely to see reversal of those gains during the second quarter. In fact in the second quarter we used less than half of the previously gained cash flow so overall in the first half of the year we’ve generated a positive $60 million in cash flow from operations. With this result plus the money we received from the PCD divestiture we have sufficient to run the company for the foreseeable future. I’d now like to explain our new business structure a little bit now that we’ve divested PCD and MCBU. I think it may be helpful to you. Going forward all the business units stay the same except for the handset unit where in Q2 all of CDMA North American handset sales were recorded as PCD revenue. From Q3 onward CDMA sales in North America will be recorded in the handset segment and PCD will now be our end customer. All future CDMA sales to PCD will be recorded as an external sale. But to allow for proper comparability for historical CDMA shipments I’ll try to estimate for you what the external revenue would have been if we didn’t have PCD at that time. The method we used was to take the historical unit shipments to PCD and assume a typical profit margin split so PCD could enjoy a normal distributor’s margin and our handset business could enjoy a designer’s margin. Because this is an estimated adjustment to these historical results we have provided a GAAP reconciliation which you can find in the Investor Relations section of our web page. Making these estimates Q1 2008 revenue for our current business structure would have been about $190 million on an apples-to-apples basis and the Q2 2008 revenue would have been about $240 million. I’d now like to switch to guidance for the third quarter we expect total revenues to be in the range of $170 million to $190 million. It’s important to consider that expectation in the context of recent changes in our business model. We do expect our third quarter revenue to be slightly lower this quarter for some very good reasons but Q4 revenues will be very strong. Relative to the third quarter I’d like to point to these two issues. First keep in mind that our non-PCD revenues in Q2 did exceed our prior guidance by roughly $60 million as we were able to recognize certain revenues in Q2 which have previously been forecast to hit the P&L during the second half of this year and secondly we now project that our supply agreement with the divested PCD business will generate less revenue for our handset unit in the near term than we had anticipated. The reduction in our expected shipments to PCD is due to lost or delayed contracts by PCD which will impact our Q3 revenues by about $20 million. During the quarter we do expect total company gross margins to be in the mid 20% range with the multimedia communications unit expecting to generate gross margins quite a bit above that average. Comparable gross margins for Q1 and Q2 if you exclude PCD and the IP CDMA business would have been approximately 30% and 21% respectively for those two quarters. We are projecting the operating expense trends to continue to improve in Q3. We expect the total op ex to be just above $100 million in Q3. That number does include still some special expense items relating to the divestitures. Finally we expect our Q3 cash flow from operations to be negative due to the Q3 losses and the pre-billed on a new large contract that Peter just mentioned and the growth in working capital associated with the expected revenue growth in Q4 in 2009. This will leave us in the year-to-date cash flow from operations usage of about $50 million at the end of Q3. In addition to the cash flow from operations result the cash from the PCD sale of roughly $216 million will show up in the cash flow from investing activities which is different than cash flow from operations. And I will reiterate our view that we have enough cash to run the business going forward. Now just a couple of words on the fourth quarter. Without being too specific I do want to provide some directional thoughts on the fourth quarter. As Peter said the real story going forward will be the company’s ability to generate revenue growth over time. Over the past few months we’ve executed some strategic divestitures, we’ve had successes in improving our operating efficiencies and we have made progress in building relationships with customers in key geographic regions. While these successes have resulted in lower expenses and increased bookings we recognize that much of the revenue has not yet become evident on the P&L so as we look forward through the remainder of this year we do expect a strong fourth quarter for revenues. The growth will be from all the segments except for handsets and the gross margins should remain the mid 20% range depending on mix. Regarding op ex we do think that the downward trend will continue again into Q4. This will make the full year 2008 cash flow from operations approximately a usage of about $100 million. So before we open the call for questions I’ll leave with you with a few summary thoughts. First in the second quarter you saw us take a number of actions which were consistent with our strategy. In particular we executed two divestitures. Financially these transactions lower our expenses while improving both our cash position and reducing our working capital requirements. Operationally they’re relatively clean deals that leave us with very little in the way of remaining obligations or risks. Strategically both deals streamline our company to better focus on IP based in the fastest growing regions. Second we believe we’re making progress on our strategic plan. During the second quarter we continued to improve our internal processes and we lowered our op ex by $22 million or 16% while still investing in the business and we will take further action to reduce the expense levels. Third our sales team is consistently winning attractive business in key markets and they are consistently doing this in the face of competition. The second quarter represents the third consecutive quarter of bookings growth. Finally looking forward to late 2008 and into 2009 the management team is focused on executing our growth strategies. We’re increasingly excited about our growth opportunities as we approach 2009 and we look forward to discussing these plans with you later this year. At this time we will open it up for Q&A.

(Operator Instructions) Your first question comes from [Steven Kaufler – Con Royal]. [Steven Kaufler – Con Royal]: You probably didn’t get any questions just because you gave so much information which is great. It’s everything we need but it’s a lot to absorb so if you don’t mind I’d like to get this into a little bit bigger chunk, you went over all of it but if we could just think of the business in three parts and then two timeframes. The three parts are ongoing handset business, infrastructure not including [pass] and pass infrastructure. Do you have it handy to look at the major metrics on those two businesses for Q2 and for the Q3 guidance? Francis P. Barton: I think because path and infrastructure are mixed in MCBU and handsets bridges two segments it would be a reorganization. I think we could say is some of the pieces, for example if you took handsets for pass first and say that pass business will be declining from Q2 to Q3 and probably beyond that as well. I think everybody already knew that. The other half of handsets is our CDMA handsets which is actually growing from Q2 to Q3 and that’s a growing business. [Steven Kaufler – Con Royal]: Do you have the levels handy, Fran, or is that not available at the moment? Francis P. Barton: No I probably don’t have.

We break it out slightly differently so we’re not being really obtuse but the way we break it out is China, international and the Korea TBU and in China we have handsets in China as well as the infrastructure in China. International attends just with the infrastructure. Korea TBU is separately sold to the new stand alone PCD and we also break it down by the business units like [inaudible] so we don’t quite do it as you’re asking. [Steven Kaufler – Con Royal]: Maybe I could go offline with Barry and/or Fran.

[Inaudible] work and share it with you. Francis P. Barton: I think the big pictures though are the pass infrastructure your third category is something that’s declining over time and will continue. [Steven Kaufler – Con Royal]: But I thought I heard you say that you expect that to go up in Q4. Did I hear that right? Francis P. Barton: I don’t think we made any comments about pass infrastructure specifically.

Basically in MCBU you have a combination of IPTV, Softswitch and the pass infrastructure and the growth in IPTV and Softswitch offsets the decline in pass infrastructure so you may have heard that. Other than what Fran has said the pass. [Steven Kaufler – Con Royal]: Pardon me Peter, did you say that the growth in IPTV offsets the decline in pass infrastructure?

That’s what I said, yes. [Steven Kaufler – Con Royal]: You’re not meaning to say that it’s a net zero sum gain, do you?

No, what I was trying to say was in that business unit MCBU, you have IPTV revenues which includes set top boxes, the infrastructure, you have the Softswitch NGN and then you have the remains of the PHS infrastructure business not the handsets and what we said we’d see roughly flat revenues for the year because IPTV Softswitch growth offsets declines in pass infrastructure. Francis P. Barton: There isn’t a lot of decline in pass infrastructure, it’s the handsets that are falling off. The infrastructure is drifting downward but not nearly as much as handsets. [Steven Kaufler – Con Royal]: I guess that’s one of the things I wanted to get at is why? What’s really driving any additional spending with negative sub-growth and all the other things going on?

The PHS spending is on a long lead time so a lot of the contracts are placed six months before, we get the revenue recognized after six to nine months so most of the PHS revenues this year we’re pretty accurate forecasting because the orders are placed long on ago. That’s different to the handsets where you get seven billed within three months usually and therefore if people stop ordering the handsets you see it visibly in one quarter but it’s harder to forecast the trend. The PHS infrastructure is pretty straightforward to forecast. Francis P. Barton: We’ve got a fairly substantial backlog in other words of infrastructure. [Steven Kaufler – Con Royal]: I’m not going to make you go back through all of this but a couple of key points would be helpful now. I understand what’s in MCBU and you do have those breakdowns. What was MCBU revenue and gross margin in Q2 please? Francis P. Barton: That’s what we just gave. I’m just going to go back and read it the way I wrote it before. MCBU revenue was $74 million in Q2 and gross margin was 39% in Q2.

Revenue growth was 17% from a year ago and the margins were slightly down because the set top box funding was higher. [Steven Kaufler – Con Royal]: Did you give guidance for this unit or are you just basically putting all infrastructure together in the guidance? Francis P. Barton: I don’t think we’re giving guidance by the business unit level, we’re giving company guidance and then we report actual so in our 10-Q which is coming out on Monday you will see we do a segment report, what were the actuals, but we don’t go forward with BU forecast, we just do a company forecast. [Steven Kaufler – Con Royal]: I’ll get to one little chunk of your question then I’ll leave it and try to go offline on this but basically the two infrastructure elements are MCBU and broadband infrastructure. Correct? Francis P. Barton: Correct. [Steven Kaufler – Con Royal]: What’s the apples-to-apples on revenue Q2 versus the guidance for I think you said $170 million to $190 million for Q3? Basically the whole remaining company minus the handsets. Francis P. Barton: We haven’t given guidance by segment for Q3 if that was your question. We’re giving the company guidance for Q3. [Steven Kaufler – Con Royal]: Then let’s do it this way and I know you gave this, of the revenues you reported what percentage was PCD again? Francis P. Barton: We said in Q2 PCD was $449 million. It was about 71% of the company in Q2 on base revenue. [Steven Kaufler – Con Royal]: So it was what, $633 million minus $449 million? Francis P. Barton: Yes, but you can’t do that either so the problem is, well depending on what you’re going to do, remember that on a going forward basis that’s why I gave you the restated Q2 and why I gave you the restated Q1 so you wouldn’t do it. You don’t know how to do it because all of the sales that went from Korea design center to PCD in Q2, in Q3 are going to be external revenue and so I went back and estimated that for you and that was in the analytics. [Steven Kaufler – Con Royal]: I understand. You’re trying to provide apples-to-apples which is great, what is apples-to-apples Q2 to Q3 on revenue under that definition? Francis P. Barton: Q2 was about $240 million and Q3 is about, if you want to take the midpoint in the range, it was about $180 million. Then what we said was remember that we have a big growth in Q4 after that so remember that we had a huge overage in Q2 for a number of contracts that were going to be in the second half that ended up getting recognized in Q2 and that’s why we exceeded our guidance. [Steven Kaufler – Con Royal]: What do you mean by an overage in a contract? Francis P. Barton: The timing was expected in Q3 or 4 and we were able to fortunately [inaudible].

Revenue recognition. Francis P. Barton: Everybody who has been following us knows that in any particular quarter some large contracts slip out or get pulled in which you can’t always guess. These are very complex acceptance criteria with our customers and because of that we sometimes have huge slips or pull forwards but we try to look at over time and not get hung up on quarterly details and look at it in six to nine month chunks, it’s easier to understand. [Steven Kaufler – Con Royal]: What kind of visibility do you have on this big uplift in Q4? Do you actually have the orders? Francis P. Barton: In many cases, yes, we have backlog.

But order issuance more a revenue recognition because. [Steven Kaufler – Con Royal]: That would speak to the pass stuff, but pass has always been on a much, you had tons of visibility because you basically ship it out there, get paid a lot and then just wait for it to be recognized but the rest of the business never really worked that way. Is it more in that mode now? Francis P. Barton: Certainly parts of broadband do, now where we’re getting into these complex multi-product sales where the whole contract has in it a broadband component, maybe an IPTV or switch, it’s all lumped together so we actually do have reasonable visibility.

Your next question comes from [Scott Hurliman – Robert W. Baird & Co.] [Scott Hurliman – Robert W. Baird & Co.]: I just was wondering if you could give me a little bit more visibility into the IPTV set top box business specifically. I think you said that your live subscribers were up 100,000 quarter-over-quarter, is that in line with the number of boxes you shipped in the quarter or can you give me any visibility into that?

To some extent, yes, except sometimes carriers hold a small inventory, they very rarely hold a big inventory for obvious reasons but they would flow through that inventory and then order additional set top boxes so the two do match each other but may not be exactly the same. [Scott Hurliman – Robert W. Baird & Co.]: But I should be thinking about the set top box shipments at about 100,000 quarter-over-quarter or 100,000 in Q2?

Yes, except for the ones that they had available to send out to the customers and I don’t have the breakdown but they match pretty well. [Scott Hurliman – Robert W. Baird & Co.]: I was wondering, you guys said about 900 and some customers but I believe China Netcom was the one that was saying that they’ve got 980,000 subscribers so I was trying to reconcile you guys are both at China Telecom and China Netcom, if one customer is that large how can we figure that out and get more visibility into your specific shipments there?

We get our statistics from them so they should match up. The thing you have to be very careful of is are they really live subscribers as opposed to people that are planning to sign up and we’ve always been very diligent on our calls to make sure we don’t have a number that has a different reference point. [Scott Hurliman – Robert W. Baird & Co.]: It’s basically bookings rather than ship?

We can give you more detail, Barry will be happy to phone you back and give you more detail because we’ve been tracking this very carefully because it’s such an important issue. So we can give you chapter and verse on it. [Scott Hurliman – Robert W. Baird & Co.]: I’d appreciate that and then can you talk a little bit about when we’re going to start seeing more IPTV box shipments out into India?

All of the projects, I’m just reminding people, we want everything in the last 12 months so this is about a couple of years behind China, if you think about it, and people have put pilots out but a pilot could be just a few thousand set top boxes. The one that’s most advanced is MSNL because they’re they carrier that covers New Delhi and Mumbai so they’ve got a number of growth plans and they’re doing quite well. The [Bar T1] is just in the very early stages and the other two we announced previously Goer only just started implementing so it’s very early stage and then Sri Lanka again only just started implementing although it’s outside India. The new one we announced they had a coming out party this week with our partner Ashk and VS&L so they demonstrated it but they’ve got the subscribers coming on. It’s very early days but I expect they’ll be ramping in 2009.

Your next question comes from Bill Choi – Jefferies & Company. Bill Choi – Jefferies & Company: I joined a little late, you might have answered this already but just looking at all the segments excluding the PCD here you guys had better than expected performance over on the handsets both CDMA pads and so forth but when you talk about this sequential decline the September quarter can you go into what segments you’re looking for that sequential declines please?

Basically we took revenue in quarter two which we had planned for quarter three so the quarter two revenue was up significantly and primarily in the broadband and MCBU businesses, it was up $60 million because we originally guided you to $120 million to $130 million, it was up $60 million. So some of that would be coming off but the majority of the shortfall is frankly in the Korea handset division because there was a lost contract which we are planning in quarter three and which will not occur, PCD lost the contract and in turn we can’t ship the product which is one of the reasons we had the write down in inventory in quarter two which reduced our margins so that’s the primary reason. We’re not seeing any particular slowdown in the two core businesses. In fact had we recognized the revenue in the normal pattern you would have seen growth. Francis P. Barton: I think virtually all of the decline is a combination of the two handsets, China handsets and Korea CDMA handsets.

Is that clear? Bill Choi – Jefferies & Company: That’s fine.

I show no further questions in queue at this time.

Let’s close the call if there are no more questions. Obviously we’ll follow up with one on ones and Barry and everybody is available. Thank you all very much for joining the call. Thank you. Francis P. Barton: Thank you.