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UTStarcom Releases Fourth Quarter and Full Year 2007 Financial Results

ALAMEDA, Calif., Feb. 28 /PRNewswire-FirstCall/ -- UTStarcom, Inc.
(Nasdaq: UTSI), a global leader in IPTV and IP-based broadband and switching
solutions, today reported financial results for the fourth quarter of 2007 and
for the full year ended December 31, 2007.

UTStarcom Releases Fourth Quarter and Full Year 2007 Financial Results
UTStarcom Releases Fourth Quarter and Full Year 2007 Financial Results

Fourth Quarter Revenue of $806 Million up 14.5% Year-over-Year

Company Also Announces it has Transferred $289.5 Million To the Trustee of its Convertible Notes Due March 1, 2008 to Pay in Full its Principal and Interest Obligations Under the Note


2007 Financial Results

Net sales for the fourth quarter 2007 were $806 million as compared to
$704 million in the fourth quarter of 2006. Gross margins for the fourth
quarter 2007 were 12.7% as compared to 11.1% in the fourth quarter of 2006.
Net loss for the fourth quarter of 2007 was $24.6 million, or a loss of
($0.20) per share, as compared to a loss of $42 million, or ($0.35) per share
in the fourth quarter of 2006.

    Certain significant items in the fourth quarter include:
    -- A restructuring charge of $14.5 million
    -- A $23 million non-cash impairment of long lived assets primarily
       related to the IP-CDMA business unit
    -- A tax accrual of $17.1 million related to China withholding tax on
       dividends and capital gains for anticipated future remittances
    -- A cash gain of $53.5 million related to the sale of securities

Net sales for the full year 2007 were $2.5 billion as compared to $2.5
in 2006. Gross margins for the full year 2007 were 13.0% as compared
with 15.7% in 2006. Net loss for the year was $195.6 million, or a loss of
($1.62) per share, as compared to a loss of $117.3 million, or ($0.97) per
share in 2006.

'Beginning in the fourth quarter of 2007, we launched a number of
initiatives, including a restructure of the Company to focus on our core
growth technologies, including IPTV, and IP-based softswitch and broadband
devices. Through 2008, we shall be very focused on continued operational
improvements and the execution of our new strategy,' stated
Peter Blackmore,
chief operating officer of UTStarcom. 'We are also actively pursuing our
liquidity plan to strengthen our cash position, which includes the divestiture
of certain non-core assets. We are committed to fulfilling our goal of
returning the company to profitability and positive cash flows.'

Convertible Notes

The Company also announced that it has transferred $289.5 million to the
Trustee of its 10 7/8% Convertible Subordinated Notes, due March 1, 2008 in
full repayment of its principal and interest obligations under the Notes.

Added Blackmore, 'We are very pleased to be able to pay off the Notes
using our own cash; we worked hard to ensure that we would not dilute our
equity holders.'

Going Concern

As a result of the Company's recurring net losses, the continued use of
cash in its operations, and the repayment of the convertible notes described
above, the Company expects its independent registered public accounting firm
will issue a going concern uncertainty explanatory paragraph in its audit
report on the financial statements for the year ended December 31, 2007.

However, management believes that it has developed a liquidity plan that,
if executed successfully, will provide sufficient liquidity to finance the
Company's anticipated working capital and capital expenditure requirements for
the next twelve months.

    Q1 2008 Guidance
    -- Revenue is expected to improve modestly year-over-year and should be in
       the range of $500-$520 million.
    -- Overall gross margins in the first quarter is expected to be
       approximately 13%
    -- First quarter operating expenses is expected to range between $115-$120
       million, excluding any one-time items
    -- Gains of approximately $35 million from the sale of securities
    -- Cash flow from operations is expected to be about neutral

Conference Call

The Company will conduct a conference call, which is open to the public,
to discuss these results. The call will take place today, February 28, 2008 at
2:00 p.m. (PST). The conference call dial-in numbers are as follows: United
-- 888-398-3046; International -- 706-902-1962. The conference ID
number is 34095806.

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 34095806.

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

About UTStarcom, Inc.

UTStarcom is a global leader in IP-based, end-to-end networking solutions
and international service and support. The company sells its broadband,
wireless, and handset solutions to operators in both emerging and established
telecommunications markets around the world. 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. Founded in 1991 and headquartered in Alameda, California, the
company has research and design operations in the United States, China, Korea
and India.

For more information about UTStarcom, visit the company's Web site at

Forward-Looking Statements

This release includes forward-looking statements, including the foregoing
statements regarding the Company's expectations with respect to its
anticipated results for the first quarter of 2008, anticipated realization of
operational improvements, and the Company's developing plans to provide
sufficient liquidity to finance the Company's anticipated working capital and
capital expenditure requirements for the next twelve months. 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)

                                                December 31,      December 31,
                                                    2007              2006
    Current assets:
      Cash, cash equivalents and short-term
       investments                                $503,078          $671,169
      Accounts and notes receivable, net           343,525           411,140
      Inventories and deferred costs               524,727           635,838
      Prepaids and other current assets            121,636           126,879
        Total current assets                     1,492,966         1,845,026
    Long-term assets:
      Property, plant and equipment, net           209,094           213,155
      Long-term deferred costs                     164,766           176,649
      Other long-term assets                       117,762           148,475
        Total assets                            $1,984,588        $2,383,305

    Current liabilities:
      Accounts payable                            $148,440          $304,869
      Short-term debt                              322,829           102,758
      Customer advances                            229,050           265,812
      Deferred revenue                             100,502            95,742
      Other current liabilities                    302,395           275,489
        Total current liabilities                1,103,216         1,044,670
    Long-term liabilities:
      Long-term debt                                   333           275,161
      Long-term deferred revenue and other
       liabilities                                 259,358           282,621
        Total liabilities                        1,362,907         1,602,452

    Minority interest in consolidated
     subsidiaries                                    3,705             6,493
    Total stockholders' equity                     617,976           774,360
        Total liabilities, minority interest
         and stockholders' equity               $1,984,588        $2,383,305

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

                                   Three months ended   Twelve months ended
                                      December 31,          December 31,
                                     2007      2006       2007        2006

    Net sales                      $806,330  $704,456  $2,466,970  $2,458,861
    Cost of net sales               704,326   626,253   2,145,519   2,073,117
    Gross profit                    102,004    78,203     321,451     385,744

    Operating expenses:
      Selling, general and
       administrative                76,146    87,547     319,145     334,455
      Research and development       40,575    43,559     168,275     182,869
      Amortization of intangible
       assets                         3,824     4,304      15,961      18,871
      Gain on sale of semi-conductor
       design assets                      -         -      (4,271)    (12,291)
      Impairment of goodwill and
       other long-lived assets       19,912         -      19,912           -
      Restructuring charges          14,474         -      14,474           -
    Total operating expenses        154,931   135,410     533,496     523,904

    Operating loss                  (52,927)  (57,207)   (212,045)   (138,160)

    Interest (expense)/income, net   (6,612)    1,734     (18,216)      3,141
    Other income, net                56,318   (11,198)     64,796       1,092
    Loss before income taxes and
     minority interest               (3,221)  (66,671)   (165,465)   (133,927)
    Income taxes                    (22,164)   23,991     (32,898)     15,024
    Minority interest in losses of
     consolidated subsidiaries          828       651       2,788       1,558
    Net loss                       $(24,557) $(42,029)  $(195,575)  $(117,345)

    Loss per share - Basic and
     diluted                         $(0.20)   $(0.35)     $(1.62)     $(0.97)

    Weighted average shares used
     in per-share calculation:
     - Basic and diluted            121,340   120,741     121,059     120,657

                               UTStarcom, Inc.
                Condensed Consolidated Statement of Cash Flows
                                (in thousands)

                                                Twelve months   Twelve months
                                                ended December  ended December
                                                   31, 2007        31, 2006

    Net cash (used in) provided by
     operating activities                         $(218,209)          $66,079

    Cash flows from investing activities:
      Property, plant and equipment, net            (27,324)          (26,274)
      Proceeds from sale of semiconductor
       design asset                                   4,271            35,965
      Proceeds from sale of long-term
       investments                                    3,334               775
      Change in restricted cash and long-
       term investments                               6,591            20,882
      Short-term investments, net                    41,950             4,028
      Investment in affiliates, net of cash
       acquired                                         (79)             (302)
      Other                                             695               991
    Net cash provided by investing
     activities                                      29,438            36,065
    Cash flows from financing activities:
      Borrowings, net                               (61,605)         (100,113)
      Other                                           3,500               604
    Net cash (used in) financing
     activities                                     (58,105)          (99,509)
    Effect of exchange rate changes on
     cash and cash equivalents                       22,702            13,417
    Net (decrease) increase in cash and
     cash equivalents                              (224,174)           16,052
    Cash and cash equivalents at
     beginning of period                            661,623           645,571
    Cash and cash equivalents at end of
     period                                        $437,449          $661,623

SOURCE UTStarcom, Inc.