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UTStarcom Releases Financial Results for the First Quarter of 2008

ALAMEDA, Calif., May 15 /PRNewswire-FirstCall/ -- UTStarcom, Inc.
(Nasdaq: UTSI), a global leader in IP-based, end-to-end networking solutions
and services, today reported financial results for the first quarter of 2008.

UTStarcom Releases Financial Results for the First Quarter of 2008
UTStarcom Releases Financial Results for the First Quarter of 2008

First Quarter 2008 Revenues of $586 Million


Net sales for the first quarter of 2008 were $586 million as compared to
$476 million in the first quarter of 2007, due to growth in the Personal
Communications Division. Gross margins for the first quarter of 2008 were
15.7% as compared to 15.8% in the first quarter of 2007. The operating loss
for the first quarter of 2008 was $30.9 million as compared to an operating
loss of $52.3 million in the first quarter of 2007. Net income for the first
quarter of 2008 was $25.4 million, or $0.21 per share, as compared to a net
loss of $54.0 million, or ($0.45) per share in the first quarter of 2007.

    The significant items in the first quarter 2008 net income include:

    --  A gain on sale of investments of $48.3 million including Gemdale and
    --  A net $8.5 million tax benefit in China primarily due to a change in
        withholding tax laws

Cash, cash equivalents and short term investments was $305 million at
quarter end, while the total debt was $36 million after paying off $290
of convertible notes and accrued interest during the quarter.

'During the first quarter we made progress in moving the company forward
in terms of both financial and operational results. Our core areas of
Multimedia Communications and Broadband continued to win new business in key
markets while the Personal Communications Division's results benefited from
the introduction of new high end products.'
Peter Blackmore, UTStarcom's
president and chief operating officer, went on to say, 'while we are
encouraged by this quarter's developments, we recognize that this is only a
step along our turnaround path and we will continue to push for improvements
throughout the company's activities.'

    Q2 2008 Guidance

    --  Revenue is expected to be in the range of $580 - $610 million which
        would represent a growth of 8% - 13% above the same period last year
    --  Overall gross margins in the second quarter is expected to be
        approximately 14% depending upon the mix of business between our core
        and Personal Communications business segments
    --  Operating expenses are expected to range between $118-$123 million
        including the cost of certain external professional services

Conference Call

The company will host a conference call to discuss the results. The call
will take place at 2:00 p.m. (PDT) / 5:00 p.m. (EDT) on May 15, 2008. The
conference call dial-in numbers are as follows: United States -- 888-398-3046;
International -- 706-902-1962. The conference ID number is 47434965.

A replay of the call will be available for 30 days. The conference call
replay numbers are as follows: United States -- 800-642-1687; International --
706-645-9291. The Access Code is 47434965.

Investors will also have the opportunity to listen to the conference call
and the replay over the Internet through the investor relations section of
UTStarcom's Web site at:

To listen to the live call, please go to the Web site at least 15 minutes
early to register, and to download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will also be
available on this site.

About UTStarcom, Inc.

UTStarcom is a global leader in IP-based, end-to-end networking solutions
and international service and support. The company develops, manufactures and
markets its broadband, wireless, and terminal solutions to network operators
in both emerging and established telecommunications markets worldwide.
UTStarcom enables its customers to rapidly deploy revenue-generating access
services using their existing infrastructure, while providing a migration path
to cost-efficient, end-to-end IP networks. UTStarcom was founded in 1991 and
is headquartered in Alameda, California. The company has research and
development centers in the USA, Canada, China, Korea and India.

For more information about UTStarcom, please visit the UTStarcom Web site

Forward-Looking Statements

This release includes forward-looking statements, including the foregoing
statements regarding the company's guidance for the second quarter of 2008,
including anticipated revenue, gross margins, operating expenses and cash flow
from operations and anticipated realization of operational improvements, these
statements are forward-looking in nature and subject to risks and
uncertainties that may cause actual results to differ materially. These risks
include the ability of the company to realize anticipated results of
operational improvements and execute on its liquidity plans as well as risk
factors identified in its latest Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and
Exchange Commission.

                                 UTStarcom, Inc.
                      Condensed Consolidated Balance Sheets
                                 (in thousands)

                                                 March 31,        December 31,
                                                     2008              2007
    Current assets:
      Cash, cash equivalents and short-term
       investments                                $305,119          $503,078
      Accounts and notes receivable, net           269,701           343,525
      Inventories and deferred costs               521,794           524,727
      Prepaids and other current assets            156,600           121,636
        Total current assets                     1,253,214         1,492,966
    Long-term assets:
      Property, plant and equipment, net           210,336           209,094
      Long-term deferred costs                     164,922           164,766
      Other long-term assets                       121,181           117,762
        Total assets                            $1,749,653        $1,984,588

    Current liabilities:
      Accounts payable                            $214,263          $148,440
      Short-term debt                               35,907           322,829
      Customer advances                            244,947           229,050
      Deferred revenue                             108,068           100,502
      Other current liabilities                    274,688           302,395
        Total current liabilities                  877,873         1,103,216
    Long-term liabilities:
      Long-term debt                                   267               333
      Long-term deferred revenue and other
       liabilities                                 254,486           259,358
        Total liabilities                        1,132,626         1,362,907

    Minority interest in consolidated
     subsidiaries                                      806             3,705
    Total stockholders' equity                     616,221           617,976
        Total liabilities, minority
         interest and stockholders' equity      $1,749,653        $1,984,588

                                 UTStarcom, Inc.
                 Condensed Consolidated Statements of Operations
                    (in thousands, except per share amounts)

                                                  Three months ended March 31
                                                     2008              2007

    Net sales                                     $585,989          $475,902
    Cost of net sales                              493,910           400,617
    Gross profit                                    92,079            75,285

    Operating expenses:
      Selling, general and administrative           79,744            79,837
      Research and development                      41,400            43,662
      Amortization of intangible assets              1,824             4,046
    Total operating expenses                       122,968           127,545

    Operating loss                                 (30,889)          (52,260)

    Interest expense, net                           (3,254)           (1,815)
    Other income, net                               53,970             3,970
    Income (loss) before income taxes and
     minority interest                              19,827           (50,105)
    Income taxes                                     5,020            (4,341)
    Minority interest in losses of
     consolidated subsidiaries                         510               464
    Net income (loss)                              $25,357          $(53,982)

    Income (loss) per share - Basic                  $0.21            $(0.45)
    Income (loss) per share - Diluted                $0.21            $(0.45)

    Weighted average shares used in per
     share calculation:
      - Basic                                      122,096           120,900
      - Diluted                                    123,098           120,900

                                 UTStarcom, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                 (in thousands)
                                                  Three months ended March 31,
                                                     2008               2007

    Net income (loss)                             $25,357           $(53,982)
    Adjustments to reconcile net income (loss)
     to net cash provided by (used in) operating
      Depreciation and amortization                10,112             14,744
      Gain on sale of investments and
       liquidation of ownership interest in a
       variable interest entity                   (47,848)                 -
      Net loss (gain) on sale of fixed assets           8             (2,699)
      Stock-based compensation expense              4,795              2,755
      Recovery of doubtful accounts                  (680)            (5,281)
      Provision for (recovery of) deferred
       costs reserves                                 320             (1,504)
      Deferred income taxes                       (11,708)                 -
      Other                                          (343)               266
      Changes in operating assets and liabilities:
        Accounts receivable                        75,177             60,296
        Inventories                                 7,650             (2,422)
        Deferred costs                              8,028             (5,222)
        Other assets                              (19,588)           (31,433)
        Accounts payable                           64,287            (41,324)
        Income taxes payable                        1,414              5,969
        Customer advances                          19,902             44,298
        Deferred revenue                           (5,771)           (11,790)
        Other current liabilities                 (34,404)           (79,336)
          Net cash provided by (used in)
           operating activities                    96,708           (106,665)
      Additions to property, plant and
       equipment                                   (7,630)            (5,221)
      Proceeds from the disposition of
       (purchase of) an investment interest        (1,949)             1,800
      Proceeds from repayment of loan by a
       variable interest entity                     7,728                  -
      Change in restricted cash                    (4,517)            10,365
      Purchase of short-term investments           (6,578)           (15,576)
      Proceeds from sale of short-term
       investments                                 58,740             10,483
      Other                                            96                (70)
          Net cash provided by investing
           activities                              45,890              1,781
      Proceeds from borrowings                          -             64,621
      Payments on borrowings                     (288,861)           (64,676)
      Other                                         2,473               (654)
          Net cash used in financing activities  (286,388)              (709)
    Effect of exchange rate changes on cash
     and cash equivalents                           4,823              2,120
          Net decrease in cash and cash
           equivalents                           (138,967)          (103,473)
    Cash and cash equivalents at beginning of
     period                                       437,449            661,623
    Cash and cash equivalents at end of period   $298,482           $558,150

SOURCE UTStarcom, Inc.